ASEAN sees new common market urgency amid EU woes

by Arlina Arshad, AFP

Posted at Nov 16 2011 04:41 PM | Updated as of Nov 17 2011 12:41 AM

NUSA DUA - The depth of the eurozone crisis and the risk of export markets evaporating is pushing Southeast Asia to speed up creating its potentially huge common market, officials said Wednesday.

At a summit this week on the Indonesian island of Bali, the 10-member Association of Southeast Asian Nations (ASEAN) will review stuttering progress on an ambitious plan for a common, barrier-free market by 2015.

"The impact of the European Union may have an impact on us, so we have to monitor that carefully and take... measures to mitigate whatever downside risks," ASEAN Deputy Secretary-General Sundram Pushpanathan told AFP.

"ASEAN will have to focus on its own integration in terms of trading trust. How do we improve trade, how do you invest in each other and not just depend on foreign direct investments."

ASEAN, a disparate club of democracies, monarchies and military-backed regimes in various stages of economic development, is still far from being an integrated economy where goods, services and people can move without barriers.

The majority of goods within the bloc do move tariff-free, but a recent National University of Singapore study found 81 percent of businesses surveyed in ASEAN countries did not believe a common market was achievable by 2015.

Among the regulatory and legislative preparations due for implementation by 2009, 20 percent had not been enforced by the end of 2010, the researchers said, mainly due to resistance by individual countries.

The yawning gaps between the region's economies -- including the wealthy city-state of Singapore and underdeveloped Laos and Myanmar -- have acted as a formidable barrier to integration.

But Indonesian Trade Minister Gita Wirjawan told reporters in Bali that the economic crisis in Europe and the United States was a chance for ASEAN to "behave more collectively."

"It's an opportune time given the uncertainties that are happening in Western European countries and in the US," he said.

"There is more reason for us to basically behave more collectively and I don't see any reason why we are not going to be able to do that."

ASEAN has a total population of more than 600 million and forecast GDP of $1.8 trillion this year. Most of its members are weathering the global economic crisis relatively well, mainly due to growing domestic demand.

The region's finance ministers project average economic growth of around six percent this year, and the bloc has a proportionately younger population than China, giving it good prospects for the future if the single market can be achieved.

Pushpanathan said that besides integrating, to maintain growth ASEAN countries must seek new markets outside moribund developed countries struggling to emerge from the global financial downturn and now facing a new debt crisis.

"Of course the EU and US are important to us, but at the same time there are other emerging markets that we can sell our products to like Central Asia, Latin America and the Gulf," Pushpanathan said.

He said talks Wednesday focused on "how we can position ASEAN collectively to new markets and new opportunities and I think we stand a good chance at reaping the benefits."