ASEAN must focus on building single market

Co-operating with neighbours to build a single market and production base would be one of the best measures to turn Southeast Asia into a highly competitive global economic region, said Asia Development Bank’s Country director Ayumi Konishi.

Speaking at a two-day seminar on Challenges in Co-operation and Communication for Development in Southeast Asia which ends today, Konishi said that increasing momentum towards regional economic integration by looking at domestic and neighbouring markets was considered to be the most appropriate way of “rebalancing” growth in a sustainable way.

He said that a functioning ASEAN Economic Community would reduce transaction costs and enhance the investment climate.

“Businesses and investors treat ASEAN as a collection of 10 different countries rather than a single economic entity. Deeper integration with standard business parameters and improved trade facilitation, and easing of capital flows among ASEAN members would significantly improve the competitiveness of the region as a whole,” said Konishi.

He suggested that careful consideration of supply chains would be a key for transport corridors to have actual economic value.

With experiences from the regional economic crisis over the past decade and a successful reform of an economic base which focuses on the strategy of quality products at competitive prices, Asia has gained sufficient reserves and a financial system to respond to the crisis better than other regions, said Konishi.

The regional 5.2 per cent growth may have been significantly below the extraordinary 9.6 per cent growth in 2007, but it showed that our region is shifting toward supplying its own growing domestic needs – which acted as a buffer against external shocks.

However, Konishi voiced his concerns that the pick-up in growth among advanced economies and robust growth in China would affect the momentum.

In addition, the return of capital flows to the region – either by sheer or volatility – could destabilise the recovery, he said.

Konishi suggested that ASEAN countries should carefully plan for their exit strategies from fiscal and monetary stimulus packages as bad timing or inappropriate monetary and fiscal policy could derail the recovery.

Deputy director general of the Japan International Co-operation Agency, Masayuki Karasawa, said that the region should also think of measures to prepare for social safety which ensure the sustainable development of the economy in the future.

The head of Regional Desks from the Organisation for Economic Co-operation and Development, Kiichiro Fukasaku, said that ASEAN economies were well placed to emerge stronger from the global crisis, but development would likely be uneven across countries unless necessary measures were taken such as promoting green growth, developing infrastructure, narrowing the development gap and generating greater participation of the public in building the ASEAN community.

In other closed sessions yesterday afternoon and today, representatives discussed measures of aid effectiveness to foster economic integration and communication to help poor people benefit from economic development. — VNS

Tags: Asean markets