H.E. Peter B. Favila, Secretary of the Department of Trade and Industry, Philippines

H.E. Elmer Hernandez, Undersecretary of the Department of Trade and Industry

Distinguished Guests

Delegates

Ladies and Gentlemen, Good Morning

My topic today is about ASEAN, specifically, ASEAN as an Investment Destination. This is quite an lengthy topic and I could go on for hours because ASEAN today has a lot to offer.

As we put it, “One ASEAN, Many Opportunities”

Now, you may ask, what opportunities does ASEAN have to offer?

For this forum, I will focus on three main points.

Firstly, when you invest in an ASEAN Member Country, you do not only invest in one country but, in effect, all ten because really from one ASEAN country you have access to all others.

As you may already know, ASEAN has embarked on an ambitious integration process, which will culminate in the creation of an ASEAN Economic Community (AEC) by 2015.

What does this AEC constitute? We liken it to a house, which has four pillars:

a single market and production base,

a highly competitive economic region,

a region of equitable economic development, and

a region fully integrated into the global economy.

These are inter-related and mutually reinforcing objectives.

Now what does this mean for you, businessmen? If I may explain, one by one:

Under the Single Market and Production Base pillar, you may transport your goods, services, capital and even labour across the ten countries. The idea is to make the whole ASEAN region not just a market for your goods and services but also your production hub.

To date, substantial progress has been achieved in this through the ASEAN Free Trade Area-Common Effective Preferential Tariff, the ASEAN Investment Area, the ASEAN Industrial Cooperation (AICO) Scheme and the ASEAN Framework Agreement on Services. But with the drive for an AEC, we would like to achieve more.

Under the Highly Competitive Region Pillar, the patents and licenses (intellectual property rights) of your goods and services are made secure not just in the country where you are located but in the whole region. ASEAN has now become a preferred choice by investors (for the automotive sector, for instance) because, unlike some of our competitors in the region, our intellectual property record is more sound and reliable.

Moreover, under this Pillar, you will have the necessary infrastructure to do your business not just in your country of investment but also in the region.

Under the Equitable Economic Development Pillar, the opportunities in ASEAN are not just limited to big enterprises but also to small and medium enterprises (SMEs). ASEAN recognises that the backbone of its economy is really SMEs.

At the same time, the opportunities should also extend to the newer Members of ASEAN (Cambodia, Lao PDR, Myanmar and Viet Nam), as well as the less developed regions of the original Members of ASEAN. ASEAN recognises the varying levels of development in the region and that each level of development provides different opportunities.

Under the Integration into the Global Economy Pillar, your market access and production opportunities are not only limited to ASEAN but also to its Free Trade Agreement (FTA) partners.

Currently, we are negotiating FTAs with China, Republic of Korea, India, Japan and Australia and New Zealand. And in these negotiations, we are ensuring that the interests of the ASEAN business sector are met through substantial market access and adequate protections are in place.

To achieve the objectives of the 4 pillars, the ASEAN Economic Ministers has tasked the senior officials to draft an AEC Blueprint, which would guide us until 2015. To date, the Blueprint has been drafted and will be one of the documents for consideration by the Ministers when they meet later this week.

Secondly, ASEAN is very diverse that it has everything for everyone. It comprises over 550 million people – a market size that is comparable to the European Union.

For tourism, each ASEAN Member Country has a wealth of culture and history with both natural and cultural tourist attractions. Moreover, the advent of budget airlines, allows tourists to travel reasonably around the region.

For business, it has more developed economies, which offer high value added business opportunities, and lesser developed Economies, which have cheap and productive labour.

Each ASEAN economy offers you a comparative advantage in a number of sectors. And they come with investment incentives and related packages.

ASEAN has identified these as 11 priority sectors for integration (now 12 with the addition of logistics) and these include agro-based products, air-travel, automotives, e-ASEAN, electronics, healthcare, logistics, tourism, textiles and apparel, logistics, rubber-based products, wood-based products.

Thirdly and, importantly, ASEAN is located in one of the fastest and most dynamic regions in the world, i.e. Asia. As such, it is continually evolving for the better.

In 2006, the GDP of ASEAN grew by 6.0 percent, much higher than expected. This is expected to grow further in 2007

The ASEAN Leadership recognises that in order for to secure its place as a favoured investment and business destination in the region, it must continually improve its business environment. As such, ASEAN is responsive to the needs of business. All our initiatives are in fact aimed at making doing business in the region easier.

And we deem that this is recognised by investors, as reflected in ASEAN’s FDI figures. For instance, FDI into ASEAN grew by 17% in 2005 to US$41 billion from US$35 billion in 2004. This is higher than ASEAN’s FDI in 1997, which was at US$34 billion, the region’s highest FDI Flows prior to the Asian Financial Crisis. This has reinforced ASEAN as an attractive investment destination.

In 2006, FDI Flows are even higher. The ASEAN Investment Area (AIA) Council will announce the latest FDI figures at the Press Conference of the 10th AIA Council Meeting.

As such, the numbers indicate a bright prospect for the region, specifically for investors like you.

Based on those three reasons, I highlighted that ASEAN should be your investment location of choice. We as policy-makers are elated by the prospects of the region as we approach 2015. And in this regard, we would like you to be with us as we integrate our economies and thereby, assist you in growing your businesses and expanding your operations.

So, welcome of all you, invest in ASEAN.

Thank you for your kind attention.