the global relevance of the association of south … 3_03...southeast asia. • china-asean fta,...
TRANSCRIPT
Enrico Letta
Italy-ASEAN Association – Chairman, Dean Psia-
SciencesPo, Paris
Milan, 14th June 2018
The global relevance of
the Association of
South-East Asian
Nations (Asean)
Overview The intervention will focus on the following topics:
• The ASEAN Way, how does it work and what
is its integration model?
• Some data about the ASEAN’s leading
countries
• The trade relation EU-ASEAN, between the
bilateral and the region-to-region approach
• The main regional issues: the China-ASEAN
relationship; the relevance of the manufacturing
sector; the socio-economic differences among the
ASEAN Member States; the different shades of
‘stability’ among the MSs; where is the ASEAN
Way leading?
The ASEAN Way
How does it work and what is its integration model?
• ASEAN promotes cooperation and facilitates economic,
political security, educational and socio-cultural
integration. Since its formation in August 1967, its
principal aim has been accelerating economic growth and
socio-cultural evolution.
• The 'ASEAN Way' refers to a methodology of solving
issues that respects the cultural norms of Southeast Asia:
informal, personal, based on compromise and consensus.
Critics object that the ASEAN Way forces the organisation
to adopt only those policies which satisfy the lowest
common denominator.
The ASEAN Way
How does it work and what is its integration model?
• The ASEAN community is organized among 3 pillars: Security, Economic and Socio-
Cultural Communities.
• The ASEAN Secretariat’s basic function is to provide efficiency in the coordination of
ASEAN organs and for more effective implementation of ASEAN projects and activities. It
is based in Jakarta and Dato Lim Jock Hoi from Brunei is the Secretary General.
• The Chairmanship of ASEAN rotate annually. A Member State assuming the
Chairmanship shall chair the ASEAN Summit, the Coordinating Council, the 3 Community
Councils, and the relevant ASEAN Sectorial Ministerial Bodies and the Committee of
Permanent Representatives. Singapore is the Chair for 2018.
• The ASEAN Economic Community (AEC) is the most developed of the 3 pillars. A single
market exists since 2015; banking and financial integration is foreseen for 2020.
Some Data
The ASEAN leading countries
• The ASEAN area is
foreseen to become the
fifth economic power in the
world by 2022.
• Its integration, as well as
national peculiarities are
pivotal in reaching the goal.
Source: WEO Database, IMF, October 2017 - The Future of ASEAN – Time to Act, PwC Growth Markets Center, May 2018
Some Data
The ASEAN leading countries
• The GDP champion is, by
far, Indonesia, while
Singapore leads the ‘per
capita’ ranking.
• Growth-wise, Laos and
Cambodia have the best
performance.
• The aggregate GDP is
close to $2.900 billions with
an average growth of 4,8% Source: ASEAN Secretariat, 2017; WEO Database, IMF, October 2017; World Bank, 2018 - The Future of ASEAN – Time to Act, PwC Growth Markets Center, May 2018
Some Data
The ASEAN leading countries
• Singapore leads the way
both in education and
health.
• Myanmar and Laos are the
worst performers.
• Philippines represent the
average of the area: 36%
of tertiary educated people
and almost 26/1000 under-
5 mortality rate. Source: ASEAN Secretariat, 2017; WEO Database, IMF, October 2017; World Bank, 2018 - The Future of ASEAN – Time to Act, PwC Growth Markets Center, May 2018
ASEAN-EU Trade relations Between the bilateral and the region-to-region approach
• ASEAN represents the EU's 3rd trading partner outside Europe, after the US and China.
The EU is ASEAN 2nd largest trading partner after China, accounting for around 13% of
ASEAN trade.
• The EU is the largest investor in ASEAN countries accounting for 22% of total FDI
inflows in the region. EU companies have invested an average of €19 billion annually in
the region.
• EU's main exports to ASEAN are chemical products, machinery and transport equipment.
The main imports from ASEAN are machinery and transport equipment, agricultural
products as well as textiles and clothing.
• Negotiations for a region-to-region FTA with ASEAN were launched in 2007 and paused
in 2009 to give way to bilateral FTAs negotiations (Singapore and Malaysia were
launched in 2010; Vietnam in 2012; Thailand in 2013; Philippines in 2015; Indonesia in
2016).
ASEAN -EU Trade relations
Between the bilateral and the region-to-region approach
• The European Commission and the ASEAN MSs are undertaking a stocktaking exercise
to explore the prospects towards the resumption of region-to-region negotiations.
Meanwhile, the European Commission finalized negotiations of a bilateral FTA with
Singapore in October 2014 and with Vietnam in December 2015.
ASEAN-EU Trade relations
Between the bilateral and the region-to-region approach
• Singapore is the EU's largest commercial partner in ASEAN,
accounting for slightly under one-third of EU-ASEAN trade and
roughly two-thirds of investment flows. Over 10.000 EU
companies are established in Singapore and use it as a hub to
serve the whole South Pacific.
• The FTA is the first deal between the EU and a the Southeast
Asian economy, but still awaits for ratification by the Council and
the European Parliament (foreseen before the end of 2019).
• The agreement is considered to be a new generation FTA, as it
has ambitious chapters on services, public procurement,
intellectual property rights, energy, SMEs, environment and labor
standards.
ASEAN-EU Trade relations
Between the bilateral and the region-to-region approach
• In 2016, the EU-Vietnam FTA was concluded. The legal review is
currently on-going and will be followed by translation into the
EU's official languages and Vietnamese. The Commission will
then present a proposal to the Council and the EP.
• EU exports to Vietnam are dominated by electrical machinery,
aircraft, vehicles, and pharmaceutical products. Vietnam's key
export to the EU are telephone sets, footwear, textiles, coffee,
rice, seafood, and furniture. The EU has a negative trade
balance in goods with Vietnam.
• The FTA deal includes the elimination of nearly all tariffs.
Vietnam will liberalize tariffs over a 10-year period. The
agreement also covers public procurement, investment, IPR,
sustainable development and labor.
Regional issues
The China-ASEAN relationship
• Initially, ASEAN was a grouping of non-communist nations in the frontline of the Cold War in
Asia. China fought against Vietnam in the 1979 war and continues to have fraught relations
with several ASEAN MSs with overlapping territorial claims in the South China Sea.
• In contrast to ongoing political tensions, China-ASEAN economic interactions have
flourished since the 1990s. Regional value chains in East Asia have become more
prominent. The manufactured components for assembly in China come primarily from
Southeast Asia.
• China-ASEAN FTA, China’s first one, entered into force in 2010. China-ASEAN trade
increased to $40 billion in 2000 and is forecast to reach $1.000 billion by 2020. China,
ASEAN, South Korea, Japan, Australia, New Zealand, and India are currently negotiating a
Regional Comprehensive Economic Partnership agreement.
• The One Belt One Road Initiative highlighted the importance of China’s commitment to
infrastructure investment, and creation of the AIIB promised funding to Southeast Asia.
Regional issues
The relevance of the manufacturing sector
• Manufacturing has been one of the key sectors contributing to ASEAN’s growth, and this is
expected to continue with a 6,6 % annual growth rate from 2016 to 2020. The drivers of
manufacturing’s growth are its 630 million consumers and, in particular, the burgeoning
middle class, with its rising incomes and consumption.
• Supplementing this are ASEAN’s global exports, that capitalize on the maritime trade
routes to other countries, particularly in Asia-Pacific. ASEAN also continues to have
attractive operating costs, such as low labor costs, drawing businesses from other large
manufacturing bases (i.e. China).
• A robust economic outlook for ASEAN will continue the steady demand for fuels, but given
the region’s inadequate production capacity to meet domestic needs, its reliance on
imports will also rise significantly, raising concerns over energy security.
Regional issues
Socio-economic differences among ASEAN MSs
• Integration of civil societies and national
business environments is still far from what we
saw among EU founding members in the 1950s.
• Based on Poverty, HR Weakness and Economic
Vulnerability, Laos, Cambodia and Myanmar are
to be considered, according to the UN, as Least
Developed Countries.
• Singapore (5th) and Brunei (30th) are among the
50 most developed countries in the World and
Indonesia is a member of G20.
• Malaysia, Vietnam, Thailand and the Philippines
are ‘Tiger Cub Economies’, trying to follow the
path of the 4 Tigers of the 1990s.
Regional issues
Different shades of stability among ASEAN MSs
• Stability has shown to be one of key factors for growth, as shown by
Singapore and Brunei.
• Nevertheless political stability and economic growth are not enough
anymore to gather the attention of businesses and investors, if not
combined with a strong belief and a thoughtful promotion of regional
integration and free and fair trade.
• Inequality, corruption, poor labour and environmental standards, and
discrimination of minorities are still evident in many countries.
• Machismo of the Filipino Duterte, the Rohingya crisis in Myanmar,
religious and political terrorism in Indonesia, Malaysia and the
Philippines, and the South China Sea disputes are main sources of
concern over stability in the region.
Safest Countries in the World
Index, safearound.com
1st Denmark
6th Singapore
43rd Vietnam
51st Malaysia
56th Cambodia
69th Indonesia
85th Laos
98th Thailand
100th Philippines
129th Myanmar
160th Syria
N.C. Brunei
Regional issues
Where is the ASEAN way leading?
• ASEAN as a group will be the fifth economic power in the World by 2022.
• Banking and financial integration, foreseen for 2020, is pivotal to this development. To go
beyond forecasts ASEAN needs to speed-up negotiations for an FTA with the EU and the
RCEP with China, Japan, India, South Korea, Australia and New Zealand.
• Fighting corruption and discrimination, adopt golden standards on competition and
sustainability is of paramount importance. Addressing stability and security issues, as well
as energy dependency, will be key elements to lead ASEAN to the role of global power.
• Deepening the yield of political integration, based on shared norms and values, would
make ASEAN the EU best partner in addressing global issues, while it is already the most
attractive area for European businesses.
Thanks for your attention.
References:
• https://www.asean.org
• https://ec.europa.eu/trade
• https://cpianalysis.org
• https://safearound.com
• https://www.cia.gov/library/publications/the-world-factbook/
• https://data.worldbank.org/
• The Future of ASEAN – Time to Act, PwC Growth Markets Center, May 2018
• EU-ASEAN Business Sentiment Survey, EU-ASEAN Business Council, 2017
• Il Miracolo ASEAN, Kishore Mahbubani, Jeffery Sng, Arel – Il Mulino, 2018