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ASEAN's dream of economic union far from reality
2007-01-14
Southeast Asian nations have pledged to create one of the world's largest free-trade blocs by 2015, but for a region that runs from super-rich Brunei to impoverished Myanmar, analysts wonder how realistic that goal is. At their annual summit Saturday, leaders of the 10 members of the Association of Southeast Asian Nations (ASEAN) affirmed their strong commitment to accelerate the establishment of a free-trade zone by 2015. The move would liberalise the movement of goods, services, investment and capital across a region of almost 570 million people, around one-tenth of the world's population. "ASEAN is committed to expanding its trade area to create one of the world's greatest trading blocs by 2015," Philippine President Gloria Arroyo proclaimed when she opened the summit. But the grouping's members range from the modern, advanced island state of Singapore with a per capita GDP of some 28,600 dollars to poor communist Laos, where per capita GDP is around 2,000 dollars. Singapore's elder statesman and one of ASEAN's founders, Lee Kuan Yew, said in an interview last year: "To have one currency, a borderless community, I don't see that, not yet." Michael Clancy, an economist and CEO of the Philippine Business Leaders Forum, said ASEAN was moving very slowly towards economic integration. "It has adopted the European model but unlike Europe, it does not see the same urgency at the rising economic might of China and globalisation. "ASEAN may boast a market of more than 550 million people but it is a market fragmented with huge disparities between member states," he told AFP. China currently dwarfs ASEAN in terms of attracting foreign direct investment -- 60 billion dollars in 2005 compared to 30 billion for ASEAN, of which more than 60 percent went to Singapore. Southeast Asia also has much work to do on harmonising regulations. "When it comes to rules and regulations, individual member countries still impose their own separate laws," Matthew Daley, president of the Manila-based US-ASEAN Business Council, said in a recent interview. "China has a market of 1.2 billion and the same rules apply throughout." Although ASEAN has been cutting tariffs it is a slow process, one senior regional diplomat said. The Economist Intelligence Unit, in a report for the ASEAN Business and Investment summit last December, stressed the need for further tariff cuts and unified customs rules within the bloc. "If goods could move freely and tariff-free within the trade bloc as well as into markets further afield, then ASEAN would certainly become a more attractive place for firms to locate their factories," it said. The president of the Asian Development Bank, Haruhiko Kuroda, expressed optimism about the process. He said in a weekend interview that ASEAN has already achieved "substantial economic integration" but a single currency was a long way off. "It's a natural development for ASEAN but it will not be easy. Such a move will be a major political challenge for ASEAN," Kuroda said. Talk of monetary union has gone on for years and gained momentum following the 1997 Asian financial crisis, but it is no longer seen as a high priority within the bloc. Michael Wootton, chairman of the Manila-based British Business Council, called in a recent interview with the Business Mirror for Southeast Asian leaders to show more dedication and commitment in their single market vision. "It seems ASEAN is struggling to get its act together. There is not enough horsepower to get it running," Wootton said.
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