« The voice of the European Service Industries for
International Trade Negotiations in Services »
Enhancing Cooperation:
Innovation, Industry and Investments
Kuala Lumpur, 26 April 2012
09h00–17h30
"Doing Business in Malaysia & in ASEAN Economic Community:
Priorities of the EU Services Sectors "
Pascal Kerneis
ESF (European Services Forum)
« The voice of the European Service Industries for
International Trade Negotiations in Services »
ESF Membership covers a large range of services sectors and Horizontal federations:
• Insurance
• Banking
• Business services: IT &
Computer; consulting,
advertising, after-sales services,
News Agencies
• Professional services:
 Legal services,
 Accountants,
 Architects,
 Engineers, etc.
• Construction services
• Distribution services
• Postal & Express Delivery
• Audio-visual services
• Energy related services
For more information, see www.esf.be
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Environmental services
Telecommunication services
Tourism
Air Transport
Maritime Transport
&
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BUSINESSEUROPE
Confederation of Danish Industries (DI)
Confederation of Finnish Industries (EK)
Confederation of Swedish Enterprises (SN)
Irish Business and Employers
Confederation (IBEC
• Confederation of French Enterprises
(MEDEF)
« The voice of the European Service Industries for
International Trade Negotiations in Services »
ESF MEMBERS INCLUDE:
For more information, see www.esf.be
« The voice of the European Service Industries for
International Trade Negotiations in Services »
World Economy:
Percentage of GDP by Sector - 2011
« The voice of the European Service Industries for
International Trade Negotiations in Services »
THE IMPORTANCE OF THE EU IN GLOBAL SERVICES TRADE
If we take intra and extra EU together, EU
export of services represent 42% of global
export of services
EU is by very far the biggest
exporter of services: 24% of world
export of services
Services Exports in Millions $US - Source: World Bank & WTO
« The voice of the European Service Industries for
International Trade Negotiations in Services »
INTEGRATION BOOSTS SERVICES TRADE
• Text
• Text
58%
42%
– Text
In Yellow is the EU Internal Market on Trade in Services (58% of total)
6Source: Eurostat
26 April 2012
« The voice of the European Service Industries for
International Trade Negotiations in Services »
Outflows of FDI to the world - $ Billion – Source: OECD
Share of EU in World FDI Outflows
Share of services in EU FDI
“Other” is
also:
electricity,
gas, water,
construction,
real estate…
= Partly
services
70%
70%
70%
53%
54%
Extra EU outward FDI stock of the EU - € Billion – Source: Eurostat
« The voice of the European Service Industries for
International Trade Negotiations in Services »
Integration facilitates investment
EU Member States
Services FDI stocks
destination
Outside
EU
35%
Origination of FDI
stocks held inside EU
From
outside
EU
33%
Inside
EU
65%
Source:
Eurostat
 Would
From
inside
EU
67%
Source:
Eurostat
that scenario also apply to AEC after 2015?
«« The
of of
thethe
European
Service
Industries
for for
Thevoice
voice
European
Service
Industries
International
Trade
Negotiations
in Services
»
International
Trade
Negotiations
in Services
»
Current EU Trade Policy
Only 30
Countries,
not 153
WTO
Members!
•China
•Taiwan
•Saudi-Arabia
•Vietnam
•Ukraine
•Cambodia
•CariForum (15)
•Korea
•Columbia
•Peru
. Ukraine
. Morocco
. Egypt
. Georgia
. Jordan
. Moldova
. Tunisia (EU “Acquis”)
•Canada
•India
•Singapore
•Central America (6)
•Mercosur (4)(?)
•Malaysia
•Russia
•Kazakhstan (?)
•Japan (?)
•Indonesia(?)
•Thailand(?)
•Vietnam
•Philippines(?)
•Taiwan (?)
•Mexico
•Chile
DDA+
Market
access
level
WTO
UR
(1995
1997)
DDA
Offers
(July
2008)
WTO
Accession
since 2001
Multilateral
Old
EU
FTA
US
FTA
+
•US Parity
•Market Acc +
•Public Proc +
•Mode 4 +
New
EU
FTAs
Bilateral
•Market Acc +
•Public Proc.+
•IPR +
•BIT +
•SOE +
•Reg. Coop. +
« The voice of the European Service Industries for
International Trade Negotiations in Services »
EU Bilateral Trade Agreements
Canada
Ukraine
Georgia,
Moldova
USA
Japan
Korea
GCC
suspended
Cariforum (15)
Mexico
India
Vietnam
Philippines
Thailand
Central America (6)
Colombia
Singapore & Malaysia
Mercosur (4)
Peru
EPAs +/-50:
•WAEMU
•CEMAC
•COMESA
•EAC
•SADC
Indonesia
EPA Pacific (14)
Chile
The EU FTA Negotiations are covering a very large number
of countries, including key emerging countries (Russia PCA,
BIT with China?)
EU:
(27)
EPAs with ACP:
Implemented FTA:
(18)
Concluded FTA:
(64) FTA under negotiations : (18) “Scoping Exercise”:
(9)
(5)
« The voice of the European Service Industries for
International Trade Negotiations in Services »
EU Services Exports and Imports per sectors
(2010 - € 1 000 million)
40%
« The voice of the European Service Industries for
International Trade Negotiations in Services »
ASEAN Countries are already big exporters of services
Countries
Value (US$ Bio)
World share (%)
World rank
EU
685
24,4
1
Singapore
112
4
6
Thailand
34
1,2
15
Malaysia
33
1,2
17
Indonesia
16
0,6
23
Philippines
13
0,5
27
Vietnam
7
0,3
37
ASEAN 6
215
7,6
3
USA
518
18,5
2
China
170
6,1
3
Source: WTO – ITS 2011
ASEAN Specific Commitments in the U. R. (or upon accession)
Sectors
Max Poss.
Brunei
1 2
46 26
7 6
5
5 5
4
16
14 17
5
4
5 3
4
24 11
5
Cambodia (LDC) 24
Indonesia
« The voice of the European Service Industries for
3 International
4 5 6 Trade7 Negotiations
8
9 in Services
10 11 » Total
Laos (LDC)
Malaysia
23
5
4
15 1
3
15
2
Not yet a WTO Member
23 1
2
5
35 162
1 19
1
11
2
88
54
2
65
3
47
60
66
23
16
2
2
2
3
1
2
1
15
2
11
2
2
16 107
Myanmar (LDC)
Philippines
4
Singapore
7
20 15 5 ?
Thailand
21
6
3
1 3
4
13
Vietnam
26 22
5
4 4
3
21
2
1: Business Services; 2: Communication Services; 3: Construction & Related Engineering
Services; 4: Distribution Services; 5: Education Services; 6: Environmental Services; 7: Financial
Services; 8: Health Services, etc.; 9: Tourism, etc.; 10: Recreational Services, etc.; 11: Transport
Services; 12: Other Services
« The voice of the European Service Industries for
International Trade Negotiations in Services »
IMPORTANCE OF SERVICES IN A SUSTAINABLE DEVELOPMENT
 Attract FDI in Infrastructure
Attract transfers of expertise
services:
and of know-how of foreign
• Telecoms, IT related
service suppliers, which in
services,
turn initiate:
• Logistics (Transports, Express
Courier, Distribution, etc.),
•Local jobs creations
• Energy distribution network,
•Staff vocational training, etc.
• Water and Waste
•Better quality of the services,
management,
• Financial services System,
•Cheaper services,
etc.
•More choice for the
• Tourism (Hotel, travel,
consumers
leisure, etc.)
•Reduction of the cost of doing
Experience shows that
foreign service suppliers
business for local SMEs.
that invest in a country do it
for a long period.
« The voice of the European Service Industries for
International Trade Negotiations in Services »
Main barriers to FDI/Establishment (Mode3) in Services
Sectors:
• Obligation to enter the market through joint venture
• Limitations on capital ownership
• Limitations on licences allotted to foreign companies
• Restrictions on branching,
• Lack of National Treatment in many services sectors
• Local employment requirements
• Long and burdensome administrative procedures
• Restrictions on real estate access
• Lack of transparency in domestic regulation (economic
needs tests, etc.)
« The voice of the European Service Industries for
International Trade Negotiations in Services »
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List of criteria that a CEO looks at when taking
a decision to invest in a developing countries:
Potential market (size, income per capita, follow the demand, i.e. corporate
customers)
Existing competition, special treatment for local players
Benefits prospects at short, medium and long terms
Good governance (level of corruption, transparency of the legislation, etc.)
State of the regulation (existing barriers at all levels, independent
regulatory authority, implementation of the regulations, i.e. Regulatory
Certainty)
FDI incentives (special zones, tax incentives, corporate tax, etc.)
Business Environment (incl. availability of human capital, level of education)
Country Risk Assessment: political stability, GATS/Trade agreement sector
specific binding commitments, BITs, etc. i.e.
the GATS/BITs/FTAs Commitments are only additional criterion for
companies to tick. But they can often make the difference. For the
Developing countries, it is an additional opportunity to seize as to attract
FDI.
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SERVICES SUB-SECTORS FOR LIBERALISATION announced by PRIME MINISTER (April 2009)
Business Services
« The voice of the European Service Industries for
Regional Distribution Centre (CPC 87909). International
Trade
in Services
Total
= 6 Negotiations
services sectors,
not 27;»
International Procurement Centre (CPC 87909).
Technical Testing and Analysis Services (CPC 8676).
Autonomous liberalisation for
Management Consulting Services (CPC 8650).
Commitment at 5 digit level, i.e.
Computer and Related Services
extremely restrictive !
(CPC 841; 842; 843; 844; 845; 849).
Health and Social Services
All veterinary services (CPC 9320).
Welfare services to old person and the handicapped (CPC 93311); to children (CPC 93312); Child day-care services
(CPC 93321); Vocational rehabilitation services for handicapped (CPC 93324).
Tourism Services
Theme Park (CPC 96194); Convention and Exhibition Centre (CPC 87909); Travel Agencies and Tour Operators
Services (For inbound travel only) (CPC 7471); Hotel and Restaurant services (for 4 and 5 star hotels only) (CPC
64110 and CPC 64199); Food Serving Services (for services provided in 4 and 5 star hotels only) (CPC 642 643).
Sporting and other recreational services
Sporting Services (CPC 9641) (Sports event promotion and organisation services)
Transport Services
Class C Freight Transportation (Private Carrier License – to transport own goods) (CPC 7123).
Rental/Leasing Services without Operators
Rental/Leasing services of ships that excludes cabotage and offshore trades (CPC 83103); Rental of cargo vessels
without crew (Bareboat Charter) for international shipping (CPC 83103).
Supporting and Auxiliary Transport Services
Maritime Agency services (CPC 7454).
Vessel salvage and refloating services (CPC 7454).
Sector-by-Sector Analysis of Malaysia GATS DDA Revised Offer
« The voice of the European Service Industries for
International Trade Negotiations in Services »
1) Professional and Business Services
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•
Legal Services - No new offer since the UR – very limited commitments
Accounting, Auditing and Bookkeeping Services – No new offer since the UR – very limited
commitments
• Taxation Services – No new offer since the UR
• Architectural and Engineering services – New offer - Weak offer
• Computer and Related Services – acceptable offer
• Other Business Services - No offer – not enough
2) Communications Services
• Postal and courier services – Nothing new - no commitment in the Uruguay Round – weak offer
• Telecommunications – Nothing new - Weak offer
• Audiovisual – Nothing new
3) Construction Services – Weak offer
4) Education services – limited offer
5) Distribution Services - Nothing new - no commitment in the Uruguay Round, Bad Offer
6) Environmental Services – Nothing new – No commitment in the UR - Disappointing offer
7) Financial Services and Insurance – Weak offer
8) Health Services – Weak offer
9) Tourism Services – Nothing new – Disappointing offer
10) Transport services – No offer – weak offer
Liberalisation package for the financial sector announced in April 2009:
The voice
the European
Service
for
• Issuance of new licences to«strong
andof
world-class
players
in Industries
categories:International
Trade Negotiations
in Services
o In 2009, up to 2 new Islamic
banking licences
to foreign players
to »
establish new Islamic banks with paid-up capital of at least USD1 billion;
o In 2009, up to 2 new commercial banking licences to foreign players that
will bring in specialized expertise;
o In 2011, up to 3 new commercial banking licences to world class banks that
can offer significant value propositions to Malaysia; and
o In 2009, up to 2 new family takaful licences.
• Flexibility will be accorded for an increase in the foreign equity limits from
49% to 70% of investment banks, Islamic banks, insurance companies
and
takaful operators. The foreign equity limit for domestic
commercial banks will remain at the current 30%;
• Locally incorporated foreign commercial banks will be allowed to establish 4
new full-fledged branches with effect in 2010 and 10 microfinance
branches
with effect from this year;
•
Labuan offshore players be given flexibility to establish an operational
and
management office in Kuala Lumpur;
• Greater flexibility will also be accorded for employment of expatriates in
specialist areas that can contribute to the development of the financial
sector.
Autonomous Reform = complex and very limited
Concrete examples of restrictions in Financial Services in Malaysia:
• Malaysia: Banking: 30% foreign equity cap;
• Malaysia: Banking & Insurance: Restriction to acquire shares in any other commercial or merchant
bank (5%)
« The voice of the European Service Industries for
International Trade Negotiations in Services »
The European Services Companies would like therefore
that Malaysia and ASEAN countries:
• substantially improve offers in the current DDA round;
• accept to bind existing practice, i.e. consolidation under
the WTO rules all autonomous domestic reforms that
have been undertaken since the end of the UR FS in
1997;
• create new business opportunities by allowing at least
foreign equity majority ownership (51%);
• consider doing in regional EU-ASEAN RTA or in bilateral
negotiations with the EU what is believed not doable
in the WTO.
« The voice of the European Service Industries for
International Trade Negotiations in Services »
THANK YOU FOR YOUR ATTENTION !
Pascal KERNEIS
Managing Director
European Services Forum – ESF
168, Avenue de Cortenbergh
B – 1000 – BRUSSELS
Tel: + 32 2 230 75 14
Fax: + 32 2 320 61 68
Email: esf@esf.be
:
Website
www.esf.be