SBF Website
Section: Media Centre
Level 2: SBF Focus on Growth Opportunities in ASEAN Economic Community 2015
Keynote Speech by Mr Robert Yap, President, SNEF, at ASEAN Economic Community 2015 SME Forum
at Grand Ballroom Level 4, Grand Copthorne Waterfront Hotel, on 28 May 2014, Wednesday, 9.30 AM
Mr Lee Yi Shyan, Senior Minister of State for Trade and Industry, and for National Development
Distinguished Guests
Ladies & Gentlemen
1. A very good morning to you! It gives me great pleasure to address you today and to share with you on this
effervescent topic of the ASEAN Economic Community which remains close to my heart.
2. ASEAN is a growing market of 600 million people with a combined GDP of US$2.1 trillion and an expected
growth rate of 5% for the next 5 years. Over the years, ASEAN members have progressed with sound
liberalisation policies, emphasis on education and substantial poverty reduction. As a result of these
policies and peace in ASEAN, there is the formation of a growing affluent, middle-income population for
many ASEAN countries.
3. The region’s robust economic growth is primarily driven by its demographic dividend fuelling domestic
consumption, as well as investment in productive sectors. The countries’ strength range from natural
resource-based production to highly capital intensive industries such as electronics, textiles and the
automotive sectors.
4. Collectively, the region has a highly competitive production base, stemming from relatively good infrastructure
and low waged skilled workers. Investors also benefit from ASEAN’s geographic location between India,
China and Japan, which in turn helps it to participate in the Asian production network.
5. ASEAN is registering rapid growth in services and knowledge-intensive industries such as tourism, hospitality,
education and healthcare industries. The growing demand for infrastructure is opening new opportunities
for investments and employment in the region. Given rapidly rising health care costs in many ASEAN
countries due to aging population and improvement in healthcare for the less developed ASEAN countries,
opportunities exist for mutually beneficial cooperation in health care activities and in medical supplies. The
rising affluence of the population has strong implications on demand for lifestyle consumer goods and
financial products.
6. The F&B industry in particular has huge growth potential in the next few years to come; and this means more
efforts are required in the areas of regulatory harmonization, trade facilitation and increased engagement
between the private sectors and industry associations such as the ASEAN Food & Beverage Alliance
(AFBA). The non-profit AFBA, is currently working closely with the ASEAN secretariat to enhance intra-and
extra-regional trade in food products as well as support the realisation of the AEC.
7. The AEC Blueprint, established in 2007, crystallised ASEAN's goal of regional economic integration through 4
pillars:
i)
Firstly, a single market and production base;
ii)
Secondly, a highly competitive economic region;
iii)
Thirdly, a region of equitable economic development, and
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SBF Website
Section: Media Centre
Level 2: SBF Focus on Growth Opportunities in ASEAN Economic Community 2015
iv)
Fourthly, a region fully integrated into the global economy.
8. The ASEAN Trade in Goods Agreement came into effect in 2010. It is a comprehensive document that
consolidates all commitments related to trade in goods. As a single market and production base, ASEAN
will promote the free flow of goods, services, investment, skilled labour and capital.
9. ASEAN has already achieved significant progress in the removal of tariffs. As of 1st January 2010, the
ASEAN-6 comprising Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand applied zero tariffs
to 99% of goods. Moving in tandem, the CLMV countries — Cambodia, Laos, Myanmar, and Vietnam —
have also set out to achieve the same goal by 2015.
10. Whilst tariffs have come down, there are still significant non-tarriff barriers or non-tarriff measures within
ASEAN. The focus now is to remove these through trade facilitation cooperation. There are also market
access restrictions which need to be tackled, including the removal of measures which discriminate
between local and foreign investors and services suppliers, and the increase in foreign equity
participation.
11. My assessment of ASEAN’s progress for the first pillar of AEC of creating a single market and production
based is mixed. We have achieved, perhaps 80% result, but not 100%. More efforts are definitely needed
for structural reforms behind the borders and to chip away at protectionalism of domestic industries. I am
optimistic that this will happen as ASEAN governments show political will to make these changes. They
understand that a unified trading region will facilitate the development of production networks, bridge
fragmented trade opportunities, and allow ASEAN to become central to global supply chains.
12. I will briefly touch on the 2nd pillar of creating a highly competitive region and the third pillar of a region with
more equitable development. These pillars are still very much work in progress. For the region to be truly
competitive, infrastructural development is important. In 2010, ASEAN leaders adopted the Master Plan on
ASEAN Connectivity that is expected to link ASEAN by enhancing development of physical infrastructure.
13. The region is currently embarking on a massive programme of infrastructure developments using the PPP
approach to implement key projects. One such project is the development of road networks linking the
Mekong based countries of Thailand, Cambodia, Vietnam, Laos and Myanmar to each other and to China
and also India. Another is the high speed rail project between KL and Singapore. These projects are
beginning to excite local and international businesses.
These are real game-changers in improving
ASEAN’s sub-regional competitiveness.
14. However, the development gap between ASEAN countries is large. The per capita GDP of Singapore and
Brunei is more than twenty times that of Myanmar or Laos. The infrastructural connectivity is therefore
important to drive growth in less developed areas. Local SMEs development is also getting more attention
by ASEAN governments as they recognise the importance of these small enterprises for inclusive growth.
15. ASEAN is more successful in the 4th pillar of integrating ASEAN into the global economy. Beyond its own
Free Trade Agreement, ASEAN has realised FTAs with key partners such as China, Japan, India, Korea
and Australia and New Zealand. Further plans are underway to establish the Regional Comprehensive
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SBF Website
Section: Media Centre
Level 2: SBF Focus on Growth Opportunities in ASEAN Economic Community 2015
Economic Partnership (RCEP), which is a wider regional agreement involving ASEAN and its Free Trade
Agreement Partners.
16. One of the key benefits of the AEC integration is resilience to external shocks. This was analysed through
various IMF studies conducted from 2011 to 2014. The ASEAN 5 economies - Indonesia, Malaysia,
Singapore, Thailand and the Philippines have developed strong intra-regional and international trade
linkages, consistent with a high degree of business cycle co-movement among themselves and with key
trading partners.
17. Intra-regional trade currently accounts for more than 20% of the region’s total trade with the world, a larger
share than the region’s trade with China, Japan, the United States, or the European Union. And while
most ASEAN-5 countries’ GDPs are vulnerable to global and regional shocks, their domestic demand
dynamics seem relatively resilient to external shocks, barring very large ones. This resilience of intraregional demand may have been supported by the increasing intensity of intra-regional trade in final
consumption goods.
18. Interestingly, despite its role as a key trading partner for ASEAN-5, growth in China does not appear to have
that much of a direct impact on growth in the region after global demand is controlled for over the period.
This suggests that ASEAN’strade with China may have been mainly a conduit for global demand for
ASEAN-5.
19. This will certainly change in light of the growing importance of China as a source of final demand for the
region. Going forward, deepening intra-regional integration and the continued building of macroeconomic
and financial buffers against external shocks could further boost growth and resilience in ASEAN.
20. The vision of AEC is ambitious given its timeline. Therefore, do not expect to see a new ASEAN in 2015.
Achieving the milestones set in the AEC Blueprint requires cooperation and coordination amongst different
agencies and alignment of each member countries’ policies to the regional initiatives. The development
gap amongst member countries is diverse and enforceability of the AEC framework can be challenging.
21. There are challenges that our Singapore companies need to be continually aware of. Firstly, companies in
ASEAN may find it onerously difficult to fulfil the requirements on Rules Of Origin (ROO) such as those
stipulated in the ASEAN-China and ASEAN-India FTAs.
22. In contrast to tariff reform. There has been some progress by ASEAN member states in the elimination of
their non-tariff barriers or “NTBs” in short. Singapore companies are well advised to review domestic
regulations with a supply-chain approach and in consultation with producers, downstream users and even
final consumers to tap into these growth and business opportunities.
23. Most of the ASEAN economies impose not only non-tariff barriers on imports, but also maintain high export
restrictions. Companies should also note that most ASEAN member states require export licensing or
impose export taxes at least for some products, including on intra-ASEAN trade.
Singapore SME
companies need to understand the different tariff and non-tariff systems in place in each of the different
ASEAN member states.
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SBF Website
Section: Media Centre
Level 2: SBF Focus on Growth Opportunities in ASEAN Economic Community 2015
24. Given these challenges in tapping into the growth opportunities in the various ASEAN markets, there is a
mechanism within ASEAN that can address such problems at the highest level of government.
The
ASEAN Business Advisory Council or ASEAN BAC was formed in April 2001 with the mandate to provide
private sector feedback and guidance to the ASEAN Leaders to boost ASEAN’s efforts towards economic
integration. Each ASEAN country is represented by 3 members with one representing the interest of Small
and Medium Enterprises.
25. The topmost deliverable for ASEAN BAC is the Report submitted to ASEAN Leaders at the annual Leaders
Summit. This Report reviews and identifies issues to facilitate and promote economic cooperation and
integration as well as annual recommendations for the consideration of the Leaders and the ASEAN
Economic Ministers.
26. Another key deliverable is the annual ASEAN Business Awards or ABA. ABA recognises enterprises that
contribute to the growth and prosperity of the ASEAN economy, was started in 2007 during Singapore's
chairmanship of ASEAN BAC. These ABA winners can be labelled as ASEAN Brand Champions.
27. In 2013, seven (7) Singapore companies clinched eight (8) out of the 21 ASEAN Business Awards (ABA)
from a field of 68 applicant companies throughout ASEAN. The seven Singapore ABA winner companies
were DBS Bank, Keppel Land, Batamindo Shipping & Warehousing, Biomax Technologies, OKH Global,
Rigel Technology and Serrano Holdings.
28. For 2014, SBF as the national secretariat of ASEAN BAC Singapore will be organising a Singapore business
mission to Myanmar to participate in another key activity of ASEAN BAC which is the ASEAN Business
and Investment Summit (or ASEAN BIS) in mid-November 2014. ASEAN BIS brings together private and
public sector organizations, government representatives and captains of industry from within and outside
ASEAN for dialogue and networking, and provides an interactive platform to advance industry and
business deals in the region.
29. As a representative member of ASEAN BAC Singapore, I am happy to mention here that the ASEAN BAC,
which has met for 57 times over the past 13 years, has been moving the ASEAN EC boulder forward and it
is now rolling with greater speed.
30. ASEAN BAC has over the years organised many activities which have helped raised problem areas to the
leaders in ASEAN. One key activity is the Survey on ASEAN Competitiveness which has been conducted
by the NUS’ Lee Kuan Yew School of Public Policy.
Professor WongMarn-Heong will be sharing
interesting details of her survey later this morning.
31. In concluding my speech, I would like to reassure our Singapore companies here today that the political and
economic will to achieve the vision of the ASEAN Economic Community is gathering momentum. It is an
exciting development that our companies must choose to understand and exploit. I therefore invite you to
probe and venture into this promising region of the ASEAN Economic Community which has been and
continue to be Singapore’s vast hinterland. Thank you.
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SBF Website
Section: Media Centre
Level 2: SBF Focus on Growth Opportunities in ASEAN Economic Community 2015
About Singapore Business Federation (SBF)
As the apex business chamber, the Singapore Business Federation (SBF) champions the interests of the
business community in Singapore, in trade, investment and industrial relations. Nationally, SBF acts as the bridge
between the government and businesses in Singapore to create a conducive business environment.
Internationally, SBF represents the business community in bilateral, regional and multilateral fora for the purpose
of trade expansion and business networking. For more information, please visit our website: www.sbf.org.sg
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