Shankaran Nambiar. Senior Research Fellow. Malaysian Institute of Economic Research. Malaysian Institute of Economic Research

Transcription

1 Shankaran Nambiar Senior Research Fellow

2 Outline Introduction ASEAN Economic Community (AEC) ASEAN as a Single Market & Production Base Trade Agreement and ASEAN Malaysia as ASEAN s Investment Hub

3 Introduction ASEAN is a potentially large region Consists of 10 member states ASEAN is a market with a population of 6 billion people (i.e. about 9% of global population) ASEAN covers 4.46 million Km 2 over 3% of total land area on earth

4 ASEAN: Some Indicators GDP (US$ Billion) GDP per Capita (US$) , , ,

5 ASEAN: Some Indicators Total Trade (US$ Billion) FDI Inflows (US$ Billion) ,

6 ASEAN: Some Indicators Population (Million) Poverty Rate (%) of population living below US$ 1.25 PPP/capita/day

7 USD billions World & ASEAN FDIs % Share Year ASEAN FDI (USD billions) World FDI (USD billions) Share of ASEAN FDI to World FDI (%) 2.00

8 ASEAN Economic Community (AEC) Single Market and Production Base Competitive Economic Region Equitable Economic Development Integration into the Global Economy

9 AEC The AEC Blueprint: AEC will establish ASEAN as a single market and production base with the goal of making ASEAN more dynamic and competitive 4 pillars to AEC: 1. Single market and production base 2. Competitive economic regions 3. Equitable economic development 4. Integration into global economy

10 AEC 1. Single market Free flow of goods, services, investment, skilled labour 2. Competitive economic region 3. Equitable economic development 4. Integration into global economy Freer flow of capital Competition policy Consumer protection IPR Infrastructure development Taxation E-commerce SME development Coherent external economic relations - Set 95% tariff elimination target - Adopt common concession - Introduce trade facilitation Enhanced ASEAN voice

11 ASEAN Initiatives 1. Single market and production base Trade facilitation ASEAN Single Window Gateway National Single Windows Mutual recognition arrangements (MRAs) To achieve free flow of services ASEAN Trade Agreement on Services (AFAS) ASEAN Comprehensive Investment Agreement (ACIA) to liberalise and protect cross-border investment activities ASEAN Exchanges collaboration of stock exchanges ASEAN Agreement on the Movement of Natural Persons

12 ASEAN Initiatives 2. Competitive Economic Region Introduction of competition law and policy by 2015 ASEAN Highway Network (AHN) ASEAN Power Grid (APG) Trans-ASEAN Gas Pipeline (TAGP) To connect gas pipeline infrastructure of AMS ASEAN Open Skies Policy 3. Equitable Economic Development Strategic Action Plan for ASEAN SME Development ( ) Initiative for ASEAN Integration (IAI) ASEAN Framework for Equitable Economic Development (AFEED) 4. Integration into global Economy RCEP

13 AEC and Investment Impact of FDI flows: 1. ASEAN Comprehensive Agreement on Investment (ACIA) is a comprehensive framework that will increase investment into ASEAN 2. Establishment of AEC and improvement of trade flows will raise level of FDI in region 3. Larger market will attract more foreign MNCs 4. Regional agreements (i.e. EU, NAFTA) have positive impact on FDI

14 Investment, ACIA and its Benefits ACIA has many benefits that it will bring to investment flows into ASEAN They are as follows: Adopting international best practices that help protect investors and their investments and providing increased protections Following recent trends in international investment practices that encourage less restrictive investment regimes Including portfolio investment and intellectual property as well as broader definitions of investors and investments Allowing third-country nationals to benefits from the ACIA Encouraging a higher level of transparency in investment rulemaking Adopting Investor-State Dispute Settlement mechanisms (ISDS) and promoting alternative dispute resolution methods.

15 Investment, ACIA and its Benefits... ACIA will help the ASEAN region through: Create the necessary environment to promote all forms of investment and new growth areas in ASEAN Promote intra-asean investment, particularly investments from ASEAN-6 (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand) into the less developed ASEAN countries Nurture the growth and development of Small and Medium Enterprises Promote joint investment initiatives focusing on regional clusters and production networks

16 Regional Comprehensive Economic Partnership (RCEP)

17 RCEP Led by ASEAN Reduce noodle-bowl effect Arising from ASEAN+1 FTAs with China, India, Japan, South Korea, Australia and New Zealand RCEP includes trade liberalisation in goods, services, and investment, technical cooperation, IPR and dispute settlement Emphasises ASEAN centrality and flexible

18 OBECTIVES OF RCEP The RCEP aims to: Streamline and consolidate the existing ASEAN+1 FTAs with China, Japan, Korea, India, Australia, New Zealand; Improve commitments and reduce the gaps in the ASEAN+1 FTAs to create a highly competitive economic area; and Provide for the strengthening of the regional production and supply network, and integration into the global economy. RCEP evolved from studies recommendation to established ASEAN+3 and ASEAN+6 FTA. Taking into consideration of these studies and its impact to the economy of the region, RCEP negotiation was launched with an important characteristic of ASEAN Driven Process.

19 Why RCEP? More than 3 billion people (almost 50% of world population Combined GDP of more than US$17 trillion Over 40% of world trade

20 SCOPE AND COVERAGE OF RCEP The scope and coverage of RCEP goes beyond the ASEAN+1 FTAs: Trade in Goods, Trade in Services and Investments Comprehensive market access Trade and business facilitation Trade remedies Economic and technical cooperation Competition policy and Intellectual property rights Dispute settlement mechanism E-commerce and SME

21 SIGNIFICANCE OF RCEP TO MALAYSIA Strengthening existing trade and investment linkages. Currently Malaysia s trade with RCEP countries accounts more than 50% of Malaysia s external trade; Expanding and facilitating market access to all RCEP participating countries under one FTA - market access to almost 50% of global population; Sources of raw materials and minerals, knowledge sharing, technology and other economic cooperation- leveraging on the advantages and strength of regionalism; Wider choices for business and consumers - reduce cost of doing business through harmonisation of rules; and RCEP is a deliverable for Malaysia during its chairmanship on ASEAN in 2015.

22 RCEP Open accession clause Any ASEAN FTA partner can choose not to participate immediately Participation of any other external economic partner In addition to AEC s 5 priority service sectors Air transport E-ASEAN Healthcare Tourism & Logistic services RCEP s other foci are: Transportation Distribution Telecommunication, & Financial services

23 RCEP RCEP would accept the priorities set by the AEC for free flow of goods: Elimination of tariffs Elimination of non-tariff barriers Put in place rules of origin responsive to new challenges Simple, harmonised trade facilitation Achieve customs integration ASEAN Single Window

24 RCEP 3 kinds of connectivity: physical Institutional, and People-to-people Liberalisation of services such as to contribute to formation and development of regional production and distribution networks Strengthen links with global production chains In sum: RCEP to promote economic cooperation To be business-friendly To promote SME growth

25 Malaysia as ASEAN s Trade & Investment Hub Malaysia is a balanced economy Malaysia has a strong institutional and regulatory framework since post-colonial times Malaysia has a tradition of liberalisation

26 Malaysia as ASEAN Hub Malaysia in preparation for RCEP and TPP All ASEAN states may not be interested in TPP Preparation for TPP will give Malaysia an advantage in ASEAN With RCEP and TPP, Malaysia will have the best of both worlds and it will be linked to the most powerful economies in the world

27 Malaysia as ASEAN s Hub Malaysia has accomplished many achievements: National Single Window Standards & Conformance Trade Facilitation Good score on non-trade measure Investment Liberalisation Investment Facilitation

28 Malaysia as ASEAN s Hub Key agencies facilitating investment: 1. MIDA 2. Pemudah

29 Malaysia as ASEAN s Hub MIDA To promote foreign and local investments in the manufacturing and services sectors To undertake planning for industrial development in Malaysia To recommend policies and strategies on industrial promotion and development to the Minister of International Trade and Industry To evaluate applications for manufacturing licences and expatriate posts; tax incentives for manufacturing activities, tourism, R&D, training institutions and software development; and duty exemptions on raw materials and components; and duty exemptions on machinery and equipment for agricultural sector and selected services sector Issuance of confirmation letter for the application of import duty and/or sales tax exemption on machinery, equipment, spare parts, consumables, prime movers and container trailers for manufacturers in the principal customs area (PCA), companies engaged in a hotel business and haulage operators under the self-declaration mechanism, effective 2nd May 2014 To assist companies in the implementation and operation of their projects, and offer assistance through direct consultation and co-operation with the relevant authorities at both the federal and state levels To facilitate the exchange of information and co-ordination among institutions engaged in or connected with industrial development To further enhance MIDA's role of assisting investors, senior representatives from key agencies are stationed at MIDA's headquarters in Kuala Lumpur to advise investors on government policies and procedures. These representatives include officials from the Ministry of Human Resources, Immigration Department, Royal Customs Malaysia, Department of Environment, Tenaga Nasional Berhad and Telekom Malaysia Berhad.

30 Malaysia as ASEAN s Hub PEMUDAH To review the status of the public services delivery system in terms of processes, procedures, legislation and human resource and to propose new policies for improvements; To benchmark best practices to improve the ease of doing business; To enhance collaboration among public and private sector agencies to improve Malaysia s competitiveness; To monitor the implementation of policies, strategies and procedure that would improve the efficiency and effectiveness of the public and private sector delivery system; and To take appropriate action to address issues in line with the National philosophy of 1Malaysia, People First, Performance Now.

31 OPPORTUNITIES FOR TAIWAN 31

32 Opportunities for Taiwan Economic cooperation Framework Agreement (ECFA) between People s Republic of China and Republic of China - June 2010 Taiwan s accession to WTO Jointed WTO under the name Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu i.e. the WTO model Taiwan and Singapore have concluded negotiations for ASTEP (Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu) Engagement with ASEAN useful Taiwan RCEP Taiwan - Malaysia 32

33 Opportunities for Taiwan Improved trade possible with AEC and RCEP Take advantage of services liberalisation in Malaysia: Take advantage of promoted services sector NKEAs Telecommunications; healthcare & tourism; ICT; market support, engineering; logistics; environmental management, solar and renewable energy; education Further investment in traditional areas and in above areas But, undeniable diplomatic issues to be resolved 33

34 Conclusion ASEAN is a vibrant economic region Growth and investment opportunities in ASEAN will increase in the decade to come AEC and RCEP will make ASEAN more attractive for trade and investment with ROW Malaysia is a potential trade and investment hub for ASEAN

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