FORUM ON

THE ASEAN COMPREHENSIVE INVESTMENT AGREEMENT

KEY NOTE ADDRESS AND OFFICIAL OPENING BY

YB DATO’ SRI MUSTAPA MOHAMED

MINISTER OF INTERNATIONAL TRADE AND INDUSTRY MALAYSIA

ON

‘ACIA AND ITS ROLE TOWARDS ACHIEVING THE ASEAN ECONOMIC COMMUNITY IN 2015’

AND

LAUNCHING OF THE ACIA GUIDEBOOK FOR BUSINESSES AND

ACIA HANDBOOK FOR INVESTMENT PROMOTION AGENCIES

21 March 2013, Berjaya Times Square, Kuala Lumpur

H.E. Dr. Lim Hong Hin,

Deputy Secretary General of ASEAN

Distinguished Speakers, Delegates and Guests

Ladies and Gentlemen,

1. Thank you for your presence here. We meet today to mark one more milestone in our journey to make the ASEAN Economic Community (AEC) a reality, and that is with the coming into force of the ASEAN Comprehensive Investment Agreement on the 29th of March 2012.
2. The ACIA is an agreement that encompasses all four major aspects of investments, namely liberalisation, facilitation, protection and promotion, with benefits now extended also to foreign investors who are based in ASEAN. It is the third of a set of agreements – the other two being the ASEAN Trade in Goods Agreement and the ASEAN Framework Agreement on Services – that collectively represent a comprehensive set of rules that govern the conduct of business within ASEAN and with ASEAN.
3. The introduction of the ACIA completes the final piece of this legal framework and the countdown towards December 31, 2015 – the target date for the realisation of the AEC. All ASEAN states are working hard to meet targets set for the progressive liberalisation of trade in goods and services, cooperation in customs and trade facilitation, as well as a reduction of costs and barriers in doing business within the region. Malaysia looks forward to assuming the Chair of ASEAN in 2015 and witness the historic realisation of an ASEAN Community.
4. Meanwhile, ASEAN’s growth into a strong and competitive economic region continues unabated. While the economies of the United States and the Eurozone have been experiencing difficult times, ASEAN states have been growing at a steady trot. Here are some telling statistics:
   • The combined GDP of ASEAN countries increased by almost 170% in the past ten years, and currently stands at UD$2.2 trillion.
   • ASEAN GDP growth was at 5.2 per cent in 2012 and has been projected to grow between 5-6 per cent annually for the period of 2013 to 2017 by the IMF World Economic Outlook in 2012.
   • In 2011, ASEAN’s global trade with the rest of the world, reached US$2.4 trillion and intra-ASEAN trade stood at US$598.2 billion.
   • In 2011, the flow of FDI into ASEAN topped US$89 billion and intra- ASEAN investment reached US$17.6 billion.
5. Let me give you the perspective of the Malaysian Government on the ACIA. We welcome the coming into force of the ACIA. We view it as part of the body of measures that are needed to make the AEC a reality. On our part, we are working hard to fulfil our obligations under the ASEAN Economic Community Blueprint agenda.
6. Ladies and gentlemen. The success of ASEAN is not by coincidence but rather due to the many initiatives taken to deepen economic integration of the region; to create a single market which provides a huge market for doing business and for attracting FDIs. ASEAN is now implementing the third phase of the AEC Blueprint Measures (2012-2013). The overall implementation rate of ASEAN reached 74.5% as at December 2012. The Final Phase of implementation (2014-2015) will commence in January 2014.
7. The formation of an ASEAN Economic Community is not without challenges. The AEC requires countries to realign domestic policies with regional commitments; some of which will require amendments and changes to existing domestic rules and regulations. Malaysia and the other ASEAN Member States are confident that through collective efforts these challenges can be overcome. All Member States are giving priority to the implementation of key AEC measures.
8. Here’s an update of our scorecard:
   • Overall, Malaysia’s implementation rate is commendable at 87.7% with the full implementation of 300 measures out of 342 measures specified in the AEC Blueprint. Efforts are being doubled to implement the outstanding measures. We are committed to meeting all our obligations.
   • We have also completed on schedule the elimination of duties for intra-ASEAN trade, liberalised 96 services sub-sectors; and
   • We have also simplified Customs procedures, and implemented other initiatives covering transport connectivity, agriculture, telecommunications, tourism and healthcare.
9. In 2013, the business community is expected to witness further market liberalisation measures. Malaysia and the other ASEAN countries will be further liberalising the services sector under the 9th Package of Commitments where new sectors will be committed for market opening by end of this year.
10. Among the other key priorities of ASEAN is addressing non-tariff barriers which continue to impede intra-ASEAN trade and investments. We are enhancing the ASEAN Non-Tariff Measures (NTMs) database and strengthening engagement with the private sector. We are now in the process of establishing a robust mechanism to identify and reduce or eliminate NTBs.
11. ASEAN will remain important in Malaysia’s pursuit to advance economic growth. In 2012, ASEAN accounted for 27% of Malaysia’s external trade compared with 25% in 2011. Malaysia’s trade with ASEAN totalled RM358.1 billion in 2012 from RM330.8 billion in 2011.
12. Besides trade expansion, Malaysia is among the top investing countries in a number of ASEAN Member States.  In 2012, FDI flows from Malaysia to other ASEAN Member States were RM22.1 billion and inflows from other ASEAN Member States to Malaysia were RM23.2 billion.
13. It cannot be denied that ASEAN today has a presence in the world economy. It has entered into FTAs and engaged in dialogues with various countries and regional entities. Its importance will continue to grow, and I have no doubt its clout in world affairs will increase further once the ASEAN Framework for Regional Comprehensive Economic Partnership (RCEP Framework) is concluded.
14. The RCEP which involves ASEAN, China, Japan, Korea, India, Australia and New Zealand is one of the most ambitious regional economic integration initiatives in Asia. It will bring together the leading economies in Asia with a population of 3.4 billion people, combined GDP of US$17.23 trillion and representing 43.9% of world trade. It is the collective will of all these 16 countries to work towards strengthening economic integration among them and at the same time contributing towards global economic growth.
15. At the national level, the Government of Malaysia has also implemented measures to make the business environment more investor-friendly. This is good for Malaysia as well as for ASEAN. This effort is being led a public-private sector task force called Pemudah. Pemudah has been taking the lead to identify and eliminate bureaucratic bottlenecks, improve efficiency and accountability, and generally improve the delivery of public services to the public.
16. To further improve governance and transparency, Malaysia has also committed itself to what is known as an OECD Investment Policy Peer Review exercise. The review covers a wide range of policy areas, such as investment policy, corporate governance, financial sector development, infrastructure development, responsible business conduct and green investment.
17. There is one other development which I think is worth noting, ladies and gentlemen. More and more ASEAN companies are now operating in other ASEAN countries. Malaysian companies such as Maybank, CIMB, Sime Darby Berhad, Ingress Autoventures, Sapura, Dominant Semiconductors and Air Asia, for example, have large regional footprints in ASEAN. We are also witnessing more ASEAN companies coming into Malaysia to do business – companies such as Temasek Holdings, San Miguel Corporation, RGM Indonesia and FPT Vietnam. These cross-border activities are an encouraging development.
18. I am also pleased to note that the ACIA Guidebooks for businesses and investment promotion agencies will be made public today. They will help to improve understanding of the ACIA and assist policy makers formulate programmes to support investors.
19. It is with great pleasure that I now launch the ‘ACIA Guidebook for Businesses’ and the ‘ACIA Handbook for Investment Promotion Agencies’.

Thank you.