By: San Peng
TWO decades ago, Indonesia, Malaysia, the Philippines and Thailand were riding high. Collectively, they were dubbed the ‘tiger cub economies’. Growth was sizzling. Exports were up, up and only up. Nine per cent gross domestic product growth rate was ‘normal’ until the 1997 Asian financial crisis ended the party.
Today, the tiger cubs have grown up. Sure, they are a little battered and bruised but also sobered up by the experience. Plus they have been eclipsed by other beasts with sexy acronyms — BRIC, MIKT, N-11, etc.
Fifteen years after the Asian financial crisis, the tiger cubs have evolved into a different creature. For starters, the region no longer relies on the ‘muscles’ that had powered it earlier, such as manufacturing, electrical and electronics and natural resources. Consumer and government spending; IT, including business process outsourcing; property development; and intra-region investments are fuelling growth across the region.
The big four economies — Indonesia, Singapore, Malaysia and the Philippines — are more diverse and more interconnected than ever before. (Intra-Asean trade reached RM8 trillion last year.) At a time when the region’s largest trading partners — Europe, the United States and Japan — are still reeling from the effects of the global recession of 2009, it is gratifying to note that the World Bank has forecast 5.8 per cent GDP growth for the region this year.
In the last two decades, the poverty rate in Southeast Asia has roughly halved. A vibrant economy is also vital for the creation of a middle class who will consume, invest and drive dynamism. Amid all this, there is a grand and ambitious pan-Southeast Asian dream that will be realised in two years and set to bring us closer than ever: the Asean Economic Community (AEC).
The AEC blueprint was signed in 2007. It is a comprehensive document designed to enmesh 10 economies based on four goals: to create a single market and production base; create a competitive economic region; bring about equitable development; and integrate fully the region to the global economy.
In one stroke – if AEC is really up and running by 2015 – the entire Asean region will be a single market. There will be a free flow of goods and services, investments, capital and skilled labour. It’s ‘Open Sesame’ time. There are 650 million consumers out there waiting to be served and cajoled into parting with their baht, rupiah or dong.
At the same time that Asean is pursuing economic integration and liberalising markets, the bloc is negotiating the Regional Comprehensive Economic Partnership (RCEP). Sixteen Asia-Pacific nations will commence talks in Brunei in May “with a view to completing them in 2015”, AFP reports. RCEP covers the 10 Asean members plus Australia, China, India, Japan, New Zealand and South Korea. It could transform the region into an integrated market of more than three billion people with a combined GDP of US$17. 3 trillion. The goal is to liberalise trade in goods and services, investment, in addition to dealing with economic cooperation, intellectual property, competition and dispute settlement.
Separately, Brunei, Malaysia, Singapore and Vietnam are negotiating the Trans-Pacific Partnership (TPP) with other Apec members – Australia, Canada, Chile, Mexico, New Zealand, Peru and the United States. Japan has also gained approval to join the talks. TPP, too, aims to liberalise trade in nearly all goods and services. More importantly, sensitive sectors like agriculture will also be included. The pact covers nearly 40 per cent of global economic output or about a third of all world trade. Talks are officially slated to conclude at year-end.
This is where the action will be in the next two years. What is astonishing is that so many of its citizens seem oblivious to the opportunities that the AEC, RCEC and TPP present. Apart from perhaps industry players and the business press, there is little ‘mainstream’ discussion and debate of the pros and cons of the free trade pacts.
Whatever outcome of the general election, it is in the interest of the government to ‘sell’ the big picture of the Asean – and beyond – dream. Access to a potential billion customers is not something to be scoffed at. It is imperative that Malaysian businesses and enterprising individuals are ready, set and go when the three trade pacts come into force by 2015.
Photo credit: Tourism Malaysia