Speech by Minister Lim Hng Kiang at the ASEAN Business Club Forum at Four Seasons Hotel

Mr Tony Fernandes

Members of the ASEAN Business Club Advisory Council

Distinguished guests, ladies and gentlemen

1.               Good morning. Let me thank the CIMB ASEAN Research Institute and the ASEAN Business Club for inviting me to speak at this forum. 

ASEAN’s Growth Potential

2.               As Mr Fernandes has rightly pointed out, ASEAN is important to every ASEAN Member State. To this, I would add that if and only if all ASEAN Member States share the same vision and commitment will we be able to continue keeping ASEAN important to the rest of the world.

3.               With a consumption and production market of 600 million people and an average annual GDP growth rate of 6 percent compared to the global average of 4 percent in the last decade (2002-2012), ASEAN is today the seventh largest economy in the world. Indeed, ASEAN has the third largest GDP in Asia, at US$2.3 trillion in 2013. 

4.               Many analysts converge in their optimism on ASEAN’s prospects.  A Deloitte study recently projected that five of the top 15 manufacturing locations in the world will be in ASEAN by 2018. The Asian Development Bank estimates that the size of the middle class will rise from a quarter (24 per cent) of the population in 2010, to 65 per cent in 2030.  This rapidly growing middle class with its increased spending power will be a key growth driver of consumer demand.  By 2050, ASEAN is projected to be the fourth-largest economy in the world (after the EU, US, and China).

Integration as ASEAN’s Game Changer

5.               But potential alone doesn’t guarantee results. The ability of ASEAN to fully realise its potential and maintain its proportionate share of global growth depends fundamentally on our collective vision and the values underpinning it.  That is, maintaining regional stability, keeping markets open, taking on pro-growth policies, and strengthening our efforts at integration.  This was the collaborative spirit with which ASEAN first formed in 1967, with the first five members holding the belief that countries in Southeast Asia would have a stronger voice in addressing major powers if they could speak together, and where peace, cooperation, and ultimately integration would serve its interests where individual efforts could not.  That point in history was surely a game-changer for ASEAN then.  What is ASEAN’s game-changer now?

6.               With 2015 fast approaching, ASEAN countries have made steady progress in realising the ASEAN Economic Community.  Virtually all goods in ASEAN already move throughout the region tariff-free. The focus now is on eliminating non-tariff barriers, improving trade facilitation and harmonising standards to ensure that businesses will operate in a stable and predictable environment.  Stronger rules for protection of your investments in ASEAN have been established under the ASEAN Comprehensive Investment Agreement. ASEAN members are now aligning their domestic regulations with the Agreement. When these internal processes are completed, these stronger rules will provide opportunities to generate more investment and create jobs.

7.               Businesses can also look forward to more seamless customs procedures, a major concern for businesses with production networks across the region.  ASEAN countries are working hard to put in place harmonised ASEAN-wide trade facilitation initiatives. These include a self-certification system, which will allow exporters to certify export documents on their own. Another initiative that will reduce costs for businesses is the ASEAN Single Window. When concluded, it may be the first regional initiative that will link the single windows of all 10 ASEAN countries electronically, which will enable businesses to reduce cost, and enjoy simpler and faster custom clearance of goods in ASEAN.

Integration – Businesses can play a Part

8.               Governments and businesses need to work in tandem.  Many of you here represent companies with a regional or global network.  You would have a vested interest in ASEAN, and the ease with which you move your goods, services, labour, and capital across the region.  In this regard, this forum has an important function in bringing together key industry leaders and stakeholders to discuss and effect positive changes in the region. 

9.               The AEC 2015 journey will not be the end of the road for ASEAN.  Indeed, the game-changer for ASEAN will be further deepening our economic inter-dependence regionally.  But this has to be done in a manner that is relevant to today’s business realities.  As Mr Fernandes said earlier, ASEAN is not only about inter-government discussions.  Businesses play a critical role, in telling us where the barriers to trade lie, and where the bottlenecks in our regional and global value chains are. To that end, ASEAN countries are now working to develop its post-2015 economic agenda.  As businesses with networks around the region, we would welcome your input to shape the next phase of integration.  Last year’s Network ASEAN Forum produced a series of Lifting the Barriers Reports, which pointed out there were several areas where improvements in infrastructure and connectivity policies could be further regulated to reduce boundaries across ASEAN and drive further integration. At the ASEAN Economic Ministers meeting last month, the ASEAN Business Advisory Council presented its recommendations to tackle barriers to trade. We value this business feedback and invited the Council to surface these specific issues so that officials may resolve them with the respective authorities. These are all important endeavours to boost ASEAN’s efforts towards deeper economic integration.

Integration beyond the Region

10.           That said,

integration does not just stop at ASEAN’s borders. The ongoing negotiations of the Regional Comprehensive Economic Partnership or RCEP are a defining point in our endeavour towards deeper integration beyond the region.  The RCEP will bring ASEAN and its six FTA partners in closer economic linkages with each other, and will integrate a third of the world’s GDP and over three billion people, or 45% of the world’s population.  The RCEP seeks to consolidate ASEAN’s existing FTAs and is aimed at setting open, simple, and flexible trade rules for businesses to operate easily in, in order to further integrate ASEAN into the global value chain. 

11.           We are not alone in seeing the value of pursuing trade liberalisation and reform through FTAs.  The ongoing negotiations of the Trans-Pacific Partnership (TPP), the trilateral China-Japan-Korea FTA and the Trans-Atlantic Trade and Investment Partnership (TTIP) between the US and EU are significant regional integration efforts.  Many of their members are major trading partners of ASEAN.  While they may signal a shift in trade and economic gravity away from ASEAN, these initiatives also offer the prospect of still larger integration with ASEAN.  Together with the TPP, the RCEP could provide a possible pathway to a Free Trade Area of the Asia-Pacific, which, if realised, would be an unprecedented boost to economic interconnectivity.

12.           Ladies and gentlemen, deepening integration is the only way forward if ASEAN wants to remain relevant, and compete successfully in an increasingly globalised world. Individually, most ASEAN countries may be too small to be game changers in the global market. With integration, we have a better chance of leveraging our collective strengths to respond to global opportunities and challenges.

Conclusion

13.           To sum up, I am optimistic on ASEAN’s prospects.  ASEAN’s community building efforts have enjoyed strong political and economic support and commitment, stemming from a shared value since 1967 in the imperative of regional integration.  As a business community that is well-placed to take advantage of the opportunities in the region, there is much to look forward to. I encourage you to continue to lend your voice to the ASEAN community, to work with us in partnership in our common goal to increase trade flows, create jobs, and boost growth. On this note, I wish you a productive session ahead.  Thank you.