ASEAN economy has proven itself to be resilient, but there are lingering challenges and risks, including the sovereign debt crisis and fiscal problems in some developed markets, rising food and commodity prices, and continued financial market stresses. The ASEAN Economic Ministers made the observation and reminder at the 43rd ASEAN Economic Ministers (AEM) Meeting held here on 10-11 August.
“ASEAN’s recovery as a whole has matured as both export and domestic demand fueled growth to expand by 7.5 per cent last year. Intra-regional trade and investment flows also showed upward momentum and are likely to support domestic growth this year, which is projected between 5.7 per cent and 6.4 per cent. ASEAN’s merchandise trade grew at 32.9 per cent last year, as trade value jumped from US$ 1.54 trillion in 2009 to US$ 2.04 trillion last year, after the 19 per cent decline in 2009,” they said.
As an attractive foreign direct investment (FDI) destination, ASEAN has maintained its allure. FDI into ASEAN reached US$ 75.8 billion last year, doubling the 2009 level, and surpassing the pre-global crisis peak in 2007 of US$75.7 billion. Over the last ten years, FDI flows in ASEAN grew at an annual average rate of 19 per cent.
The week-long Economic Meetings in Manado this week also included the 25th ASEAN Free Trade Area (AFTA) Council and the 14th ASEAN Investment Area (AIA) Council Meetings, both held annually.
Despite the encouraging figures, the Ministers reminded each other that ASEAN should remain vigilant in the face of global economic climate and stressed that ASEAN should continue to harness its competitiveness through deeper integration and implement its economic integration initiatives in a timely manner.
ASEAN has benefited from a strong economic growth and increased commitments from its Member States. By end-April this year, ASEAN has completed almost 68 per cent of measures due under Phase I (2008-09) and Phase II (2010-11) of implementing the ASEAN Economic Community (AEC) Blueprint, as greater efforts were exerted to reach the goals of an AEC by 2015.
The ASEAN Economic Ministers had gathered in Manado, North Sulawesi this week to continue their work on building the time-bound AEC by its target year 2015, and to discuss ways to further engage Dialogue Partners and other stakeholders in the process. Given that Indonesia is the Chair of ASEAN this year, this week’s Meetings were chaired by the country’s Trade Minister, H.E. Dr Mari Elka Pangestu. Coincidentally, Indonesia is the largest market by population in ASEAN, at over 231 million people.
In line with Indonesia’s ASEAN Chairmanship theme “ASEAN Community in a Global Community of Nations”, the Ministers had earlier outlined their economic vision for 2011 – first, to achieve significant progress in realising the ASEAN Community by 2015 which includes more emphasis on the AEC Blueprint’s third pillar – towards a region of equitable economic development – for a more inclusive Community; second, to increase the utilisation of the ASEAN+1 Free Trade Area agreements while responding to the evolving regional architecture, and identifying and implementing ASEAN initiatives that may contribute to the global community; and third; to start thinking of an ASEAN vision beyond 2015.
Apart from intra-ASEAN economic cooperation, the Ministers also attached great importance to engagement with ASEAN Dialogue Partners to support ASEAN’s 600-million-people-strong integration into the global economy.
This week, the Ministers had Consultations with the relevant Ministries from eight of ASEAN’s ten Dialogue Partners – Australia and New Zealand (as one), China, India, Japan, Republic of Korea, Russia, and the United States. So far, ASEAN has ongoing Free Trade Area (FTA) agreements and economic partnerships with China, Japan, Republic of Korea, India, and Australia and New Zealand.
The Ministers also held collective discussions with the Plus Three countries – China, Japan and Republic of Korea – and the East Asia Summit (EAS) participating countries.
Concurrently, on the sidelines of Saturday’s Meetings, the inaugural ASEAN Trade Facilitation Forum was held. It was the first time that business representatives from ASEAN Member States, the United States and the wider region converged for the first time to engage in a direct dialogue with the Ministers and Senior Economic Officials to discuss strategic measures to boost trade and investment in the region. The US-ASEAN Business Council also unveiled its first ASEAN Committee, Committee, chaired by Procter & Gamble Vice-President for ASEAN, Mr Sam Kim.
At the 13th ASEAN Mekong Basin Development Cooperation (AMBDC) Ministerial Meeting, the Ministers were informed that as of 29 July this year, 37 projects have already started, while 14 projects still require funding totalling US$272.5 million. All 51 projects are diverse in areas and cover those of infrastructure, trade and investment, agriculture, forestry and minerals, industry, tourism, human resource development, as well as science and technology.
At the Meeting, they also emphasised the need for the activities under the Singapore-Kunming Rail Link (SKRL) Project to be aligned and synchronised with those of the Master Plan on ASEAN Connectivity (MPAC). This year’s AMBDC Meeting is the first since the ASEAN Leaders adopted the MPAC at the 18th ASEAN Summit in Ha Noi, Viet Nam on 28 October last year. They advised that given that the SKRL is one of the many key actions under the MPAC, the Special Working Group on the SKRL should coordinate closely with the ASEAN Connectivity Coordinating Committee (ACCC).
The SKRL Project is a flagship project of the AMBDC and a priority agenda in the ASEAN transport cooperation. The circular rail link will connect the capital cities in Cambodia, Lao PDR, Myanmar, Viet Nam and Thailand, and goes on for 7,000 km.
The AEM, which started in 1975 and meets annually, oversee the implementation of measures in the AEC Blueprint that fall under their purview, including those pertaining to trade in goods, services, and investment. The Declaration on the ASEAN Economic Community Blueprint was signed by the ASEAN Leaders on 20 November 2007. Next year’s Meetings will be held in Cambodia, next year’s Chair of ASEAN. Its Senior Minister and Minister of Commerce of Cambodia, H.E. Cham Prasidh, has announced that they will be held in Cambodia in late August next year.