Ponciano Intal Jr. Senior Researcher Economic Research Institute for ASEAN and East Asia (ERIA) 4 March 2013, Jakarta

Transcription

1 Ponciano Intal Jr. Senior Researcher Economic Research Institute for ASEAN and East Asia (ERIA) 4 March 2013, Jakarta 1

2 Pillar 1: Single Market and Production Base Free flow of goods, services, investment & skilled labor; Freer flow of capital. Focus on PIS Pillar 2: Highly Competitive Economic Region Transport facilitation, infrastructure, ICT and connectivity; IPR, taxation, competition policy Pillar 3: Region of Equitable Economic Development SME development; Initiative for ASEAN Integration Pillar 4: Region Fully Integrated into the Global Economy Coherent approach to external economic relations

3 Source: Author s, ASEAN Economic Community Blueprint (ASEAN Secretariat)

4 ASEAN Integration Matters: Potential Economic Impact of AEC Measures on AMSs GDP Tariff Elimination Tariff Elimination+20% Services Liberalization Tariff Elimination+20% Services Liberalization+20% Improved Trade Facilitation Source: Computed by Itakura for MTR project. 4

5 Brunei Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam Major examples CEPT rates very low to nearly zero NSW operational in 5 AMSs ATIGA ROOs business friendly ASEAN + 1 FTAs/RCEP Chiang Mai Initiative RIATS in force under ASEAN - X Liberal Investment Regime in many AMSs (based on ACIA) % Rule (AIA) 70% Rule (AIA) 51% Rule (ACIA) 70% Rule (ACIA)

6 Overall: A number of substantial achievements. A few difficult ones. Much remains to be done.

7 Free Flows of Goods Tariff Elimination Almost done. Success story of political commitment Overall, success story also on impact: Higher intra-asean trade share Intra-ASEAN trade more spread out among AMSs Gravity Model results show many industries where imports are responsive to tariff differentials 7

8 NTBs/NTMs Voluntary approach yielded few NTB elimination Some success in solving complaints on NTMS under current matrix of actual cases approach (35 cases) No comprehensive and up to date NTM database. No definition of NTBs or degree of NTB effects of NTMs Need for a robust mechanism to address NTB effects of NTMs Fully implement standstill and transparency mechanism Institutionalize phase down/modification of NTMs approaches Establish third party monitor and technical resource re NTMs; e.g. ASEC with support from research institutions Institutionalize national dialogue/feedback with private sector linked with regional level processes 8

9 Free Flows of Goods (cont d) Trade Facilitation Top priority for private sector Major achievement in NSW in 5 AMSs Huge gap between best and poor performers; but emerging success story if with strong political support Standards and Conformance Second top priority for private sector Despite some achievements, especially on standards, S & C implementation varies widely among AMSs and sectors Constrained by weak implementation capability and/or inadequate facilities in some AMSs Addressing TBTs is a long term, continuing, technically complex, wide-ranging process 9

10 Percentage GOOD NEWS: Percentage of Respondents in ASEAN Stating Improvement in Customs Performance during Worse No change Minor&substantial improvement 15 10

11 Free Flows of Services Robust liberalization in Modes 1& 2 but mixed liberalization performance in Mode 3 under AFAS among AMSs Slow liberalization in financial services and Mode 3 for air transport services Free Flows of Investment Relatively open especially manufacturing; substantial achievement Some AMSs near global best practice in investment facilitation Private sector noted improvements in investment facilitation and climate factors in a number of AMSs, esp. CLMV and Malaysia Room for improvement still significant Freer Flow of Capital Slow progress in capital market development and financial liberalization Free Flows of Skilled Labor Significant progress on implementation mechanism for engineering and architecture Key bottleneck: revision of domestic regulations to be consistent with provisions of MRAs 11

12 Source: FTAP model projections from Philippa Dee (2012) 12

13 ASEAN share to the FDI flows to the developing world increased secularly during Intra-ASEAN FDI flows increased very substantially. An emerging success story of AEC. But 15.5 % of total intra-asean FDI to total ASEAN inward FDI may still be low. Gravity model results: Positive impact of AFTA/AEC on ASEAN FDI ASEAN FDI inflows from outside ASEAN is mainly skill-biased ( hence, Singapore dominance) 13

14 Transport Facilitation/Infrastructure Substantial progress in RIATS but AFAFGIT, AFAMT and AFAFIST not yet off the ground ICT Broadband corridor still under study. ICT initiatives picking up steam since approval of ICT Master Plan in 2011 Energy Completion of APG and TAGP not likely by 2015 but ASEAN energy cooperation initiatives expanding Competition Policy Regional guidelines approved but mixed performance of competition policy authorities. Some AMSs lacking comprehensive competition laws IPR Action Plan has been reasonably implemented (e.g., ASPEC). New membership to global filing system. But the level of IPR activities remain low and piracy rate stays high. 14

15 Pillar Three Effectiveness of SME regional cooperation initiatives have been low or at best moderate. IAI projects have been relatively satisfactory but underfunded. Impact of projects could be higher with greater focus, better coordination of IAI projects with those of DPs, and with more stakeholder consultations Pillar Four Major achievements through ASEAN + 1 FTAs and adoption of RCEP framework ASEAN + 1 FTAs provide limited benefits Challenge to ASEAN centrality by CJK FTA and TPP 15

16 East Asia Integration Matters: Potential Economic Impacts of Development of ASEAN++ FTA (Regional Comprehensive Economic Partnership) Notes: ASEAN Brunei is proxied by Rest of South East Asia in the simulation, excluding Myanmar. Coexistence of Five ASEAN+1 FTAs No estimates for Myanmar because of GTAP Coexistence of Five ASEAN+1 FTAs and CJK FTAs model constraints. ASEAN+6 FTA Cumulative Percentage Point, deviation from baseline, 2011 to 2015 Source: Computed by Itakura for MTR Project 16

17 PRIORITIZATION and IMPERATIVES

18 AEC is a continuing and evolving CHALLENGE and DRIVER for ASEAN SEIZE the MOMENT: toward AEC 2015 as ASEAN LANDMARK ACHIEVEMENT AEC 2015 a golden opportunity for a big push for concerted domestic reform initiatives among AMSs Basic foundations toward competitive, single market and production base under AEC are SET IN PLACE 18

19 Way Forward to AEC 2015 Ensure Implementation of Priority AEC Measures Ensure Success Stories by 2015 in AEC Measures Mainly Beyond 2015 Address Institutional Issues AEC 2015 Note:: AEC Measures prioritized into Priority AEC Measures for 2015 and AEC Measures Mainly Beyond Prioritization is essentially on relative importance for AEC

20 Priority AEC Measures for 2015 Tariffs (almost done) NTMs/NTBs Trade Facilitation Services Liberalization Investment Liberalization Investment Facilitation Transport Facilitation Rationale: Central and foundational elements of ASEAN economic integration and connectivity IAI SMEs RCEP (negotiations) Leaders initiatives for equitable development Open regionalism. ASEAN benefits more from East Asia integration Note: Main policy actions need to be implemented by 2015 but continuing, expanding and deepening efforts beyond 2015 Much of RCEP implementation beyond

21 AEC Measures for mainly Beyond 2015 Standards and Conformance MRAs on Professional Services Financial integration and market access Competition Policy and Consumer Protection IPR Energy ICT Agriculture Taxation Possible Success Stories by 2015 MRAs on engineering services, and architectural services MRAs in electronic and electrical equipment (EEE)and in pharmaceuticals Agreement on harmonized technical requirements in EEE ASEAN regional guidelines on competition policy Many cooperation initiatives on agriculture, food and forestry Note: Each of the AEC measures above has priority actions that need to be implemented and be success stories by 2015 Objective: to put more bang into AEC 2015 and to build building blocks for effective implementation of the AEC measures beyond

22 ERIA undertook limited survey of private sector views in all ASEAN Member States in ASEAN private sector supports the key AEC measures Facilitation measures strongly preferred to liberalization measures Top 9 priorities are: trade facilitation measures (efficient & transparent import/export clearance), then standards & conformance (standards harmonization and conformity assessment capability), followed by investment facilitation, then transport and connectivity measures Apparent Message: Accelerated facilitation; Measured liberalization

23 Highest ranking: Trade facilitation measures Second: Third: Fourth: Fifth: Sixth: customs and import/export clearance; ROO Standards and conformance measures Conformity assessment and strengthen certification bodies Harmonization of standards in ASEAN to international standards Investment facilitation and promotion measures Adoption of international best practices in investment facilitation Investment promotion on ASEAN investment opportunities Transport facilitation and connectivity measures ASEAN transport facilitation framework agreements ; ICT Liberalization-related measures Eliminate import quotas and non-automatic import licenses Accelerate mutual recognition of professions in the ASEAN Competitiveness measures Competition Policy ; IPR NOTE: LOWEST RANKING: Investment Liberalization measures 23

24 Address NTB Effects Systematically Deliver Better on Facilitation Trade facilitation Investment facilitation Transport facilitation and connectivity Forge Ahead on Liberalization Investment liberalization Services liberalization Enhance AEC Blueprint Third Pillar SME development Initiative for ASEAN Integration (IAI) 24

25 Deepen ASEAN Integration with East Asia and Ensure ASEAN Centrality Build Building Blocks for a Well Performing Single Market and Production Base beyond 2015 Standards and Conformance; MRAs on professional services and labor mobility; Financial market integration; ICT and Energy; IPR; Competition Policy; Agriculture; Etc. 25

26 Address Institutional Issues and Manage Regulatory Reform Monitoring of AEC Efforts Third Party Monitoring and Technical Resource Supplementary Track 1.5 Mechanism Dispute Settlement ACT EDSM Private Sector Involvement Participation at sector/working group level Streamline public-private dialogues Workloads of ASEAN Meetings Concerted Domestic Regulatory Reform 26

27 Identifying NTBs and NTMs with large NTB effects very difficult Difficulties in inter-agency coordination hamper seamless customs/trade and investment facilitation in some AMSs Inadequate skilled personnel and laboratories major bottleneck to S& C initiatives in some AMSs Financial constraints temper connectivity initiatives in infrastructure Difficulties in implementation of regional agreements. And more Thus, forging ahead towards AEC needs private sector engagement and support, research community inputs, government political will, and partner countries support 27

28 Toward an FTA + (Plus) or Common Market - (Minus) in a Broader Economic Region? From ASEAN FTA + to RCEP Tremendous challenges on tariff reduction timetables and exclusions, rules of origin (ROO) harmonization, NTBs and NTMs, extent of liberalization in services and investment, harmonization of customs, standards and conformance, etc 28

29 Possibilities and Challenges: Possible Action Agenda under Jakarta Framework on Moving AEC Forward beyond 2015 (2) Plug ASEAN firmly into the innovation, green and networked economy world future E.g., Expand industrial and service clusters, regional networks and connectivity in ASEAN; Strengthen IPR, human capital, R & D and creativity as competitiveness tools for ASEAN Accelerate community building and engender harmonious relations in the ASEAN E.g., Deepen regional cooperation initiatives on crises, disasters, food and energy security; Build ASEAN identity and preserve cultural heritage; Expand people to people connectivity initiatives 29

30 Strengthen and deepen ASEAN s role in the global community of nations E.g., Facilitate deeper integration in East Asia (e.g., ASEAN +3 or +6), with greater focus on facilitation and cooperation measures? Encourage ASEAN cohesiveness and develop common platform in regional and international forums; Strengthen ASEAN regional architecture. Deepen AEC beyond 2015 closer towards a Single Market and Production Base within a decade and a half E.g., Seamless ASEAN Single Window; Single maritime and aviation markets; Effective standards and conformance assessment regime; Freer flow of people; Regional competition and IPR policies; Effective macroeconomic consultation and coordination 30

31 Estimates of East Asia s Middle Class METI: 880 million (2008) incl. NIEs ERIA-Intal Estimates: Estimate A: $3-12 per capita per day PPP (similar to D & B and McKinsey and China) ASEAN 7 : 156 million mid-2000s (excl. BD, Myr, S) China : 526 million mid-2000s India : 96 million mid-2000s Estimate B: $4 30 per capita per day PPP (similar to METI) ASEAN 7 : 111 million mid-2000s China : 378 million mid-2000s India : 49 million mid-2000s

32 Mario Monti, Italy s PM: I believe that reform can not take hold if it does not gradually come into the culture of the people (Time Magazine, 20 February 2012, p.18) Get more deeply involved and engaged in the reform, institution building, integration, and community building process regionally and domestically Be better informed and prepared for AEC. Thailand a good example. Frequent seminars on AEC across the country incl. for top management by high ranking Thai officials. Yet most SMEs don t understand AEC. Many SMEs worried they can t compete under AEC. Yet AEC and MPAC facilitation, connectivity and infrastructure measures would benefit SMEs most.

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