Asean countries will be required to reform laws and regulations to facilitate trade and investment growth within the region under the Asean Economic Community (AEC), which will come into effect in 2015, keynote speakers said at a conference yesterday.
Speaking at the Department of Trade Negotiations' Annual Symposium 2012 on "AEC 2015 & Beyond", Asean secretary-general Surin Pitsuwan urged governments and all involved sectors to modify rules and open up more to facilitate investment and trade.
"The amendment of laws and regulations is a challenge for all Asean members now. Although Asean members have committed themselves to be more open to investment from each other, their stringent laws and regulations have obstructed the growth of trade and investment in the region," Surin said.
The Asean chief added that due to the slowdown in the global economy, more foreign investment is coming to Asean as they are seen as dynamic markets with potential. Of the total foreign direct investment worth US$78 billion (Bt2.35 trillion) in Asean in 2010, more than 70 per cent was in the service sector. This showed that the region has moved to another stage in development, where people want a better quality of life, while the manufacturing sector is reaching its crest. Surin said that Asean would see less investment in manufacturing but more in the service sector to facilitate manufacturing that is already here.
He added that intra-Asean trade is still small at only 25 per cent, compared with other economic groups. To ensure sustained development of the region, Asean needs to considerably boost internal trade.
He urged the setting up of a fund to support technology and help increase management efficiency of enterprises to ensure competitiveness under the single market.
Surin said Thailand should look ahead of the political conflict and concentrate more on development of the country and the region.
Deputy Premier and Finance Minister Kittiratt Na-Ranong said Asean would now be prompted to move rapidly following the fast developments in Burma and the change in the mindset of the Burmese people, who are ready to embrace development.
Mohamed Ariff bin Abdul Karim, professor from the Malaysian Institute of Economic Research, said that Asean needs to strengthen intra-regional trade amid the volatile global economy. To adjust to the sluggish global economy, Asean must accelerate structural reforms to facilitate trade growth among member states.
"Intra-regional trade will gain greater prominence for Asean in the face of slower extra-regional export growth. Domestic and regional demand will be the main drivers for the economic growth of Asean," said Ariff.
Mathew Verghis, World Bank lead economist in Bangkok, said Asean is moving to a new stage of growth and strong economy as more service investments are coming to the region following Asean integration.
He suggested that Asean should move to high value-added regional trade, improve the quality of human resources by focusing on education development, and facilitate more service investment as the global trend is to grow through the service sector.
Thai Commerce Minister Boonsong Teriyapirom said the government is striving to increase the efficiency of Thai enterprises to ensure their competitiveness in the upcoming seamless Asean market.
Sarasin Virapol, executive vice president, Charoen Pokphand Group of Companies, said the government should make some positive interventions in the private sector.
"The AEC will create a lot of opportunities. The question is how to make use of those opportunities. On behalf of the private sector, we are relying on the 'visible hand' of the government in removing all major challenges and obstacles to be confronted by local firms," said Sarasin. He said local entrepreneurs would face major obstacles in the wake of the AEC pertaining to mobilisation of capital, shortage of skilled labour, government over-regulation and strict control, and tax burden.
Sarasin said that in the local agricultural sector, for instance, individual farmers still lack access to capital. Farmers do not have enough assets and fixed income to grow their agricultural business and the government should do something to help farmers access capital and technology, he said.