ASEAN Community 2015 ‘on track, but still more work to do’

The Indonesian Trade Ministry’s data shows that 73.4 percent of measures required to set up the community have been fulfilled. Indonesian Trade Minister Mari Elka Pangestu, who chairs the annual ASEAN Economic Ministers Meeting this year in Manado, North Sulawesi, spoke to The Jakarta Post’s Rangga D. Fadillah and Yohanna Ririhena about the progress of the grouping. The following are excerpts:

Q: How far has ASEAN fulfilled its goal to establish an ASEAN Economic Community (AEC) by 2015?

A: We have reviewed the implementation progress. Most of the plans in the AEC Blueprint have been implemented on track. However, our attention is on issues that are not yet entirely on track, including the health and logistic sectors.

We have accomplishments in tariff reductions and customs and are still working on the services sector. Governments need to finalize their committment on priority sectors.

There is also progress on a Single Window mechanism, with Laos agreeing to join by the end of this year. It is good news, now that eight countries have joined the mechanism, which is part of larger trade facilitation.

The percentage target for investment increase?

I don’t think we have set a target. Investment will increase as economies grow in the region.

Last year, investment within ASEAN increased 12 percent. The figure is much larger, around 30 percent, if combined with investment from dialogue partners such as Japan, South Korea, China, India, Australia and New Zealand. We have agreements with them. Those who want to invest in this region can access ASEAN plus six.

How about ASEAN’s effort to minimize the prosperity gap?

As chair of ASEAN, Indonesia has chosen the third subpilar in ASEAN Economic Community, which is to attain inclusive and equitable growth for ASEAN. For that reason, we are working to issue guidelines related to lessen [the development] gap within ASEAN.

We have prioritized small and medium entreprises, as 96 percent of bussiness units in ASEAN are operated by small- and medium-scale enterprises [SMEs]. SMEs contribute between 30-60 percent of work force absorbtion in ASEAN.

ASEAN also has the ASEAN Investment Area [AIA] to minimize the gaps between member states, especially Cambodia, Laos, Myanmar and Vietnam. It focuses on capacity building and facilitation.

This area could be widened, especially if there is commitment from dialogue partners to assist ASEAN. Infrastructure is one possibility to shorten the economic gap.

This is also related to connectivity. The ASEAN Master Plan of Connectivity and the ASEAN infrastructure plan are facets of issues discussed at the financial ministers level to support infrastructure development in ASEAN.

Infrastructure projects are not only aimed at connectivity, but also efficiency, competitiveness and equity.

For example, connecting North Sulawesi and the Philippines will benefit both areas.

For now, the Singapore-Kunming project will connect Cambodia, Laos, Myanmar and Vietnam. Don’t forget, we also have to pay attention to sea connectivity.

What are the concrete plans to boost the development of small- and medium-scale enterprises (SMEs) in ASEAN?

We plan to create a database for SMEs which would support potential for exporters.

With the database, buyers can see products offered by the enterprises. The database can also be used to strengthen networks among SMEs. We will also facilitate and assist them to meet standards set by importing countries.

What I want to emphasize is we want to ensure that SMEs enjoy benefits of ASEAN’s economic integration. We will encourage them to be exporters, provide them with information with which countries we have free trade agreements and what they need to do to enter to the destinations’ markets.

Regarding the current global crisis, what do we need to do to survive?

I think this is the time for us to stick together to face the current uncertainties in the world economy. In 2009, following the global economic downturns in 2008, ASEAN’s growth slumped to 1.6 percent, but then
rebounded to 7.6 percent in 2010.

The trend proves that we did feel the negative impacts of the crisis, but we could recover very fast. It shows that the region is resilient and we are increasing market for each other.

Will crisis response mechanisms such as the Chiangmai Initiative and the bilateral swap be prepared to face the current crisis?

We cannot talk about that. That’s the authority of ASEAN’s finance ministers. But, the underline is all of those mechanisms emerged in response to the 1997/1998 crisis aiming to be a ‘seat-belt’ if there is huge capital outflow, such as what happened during the crisis. But the regional mechanism is only complementing the global mechanism coordinated under the International Monetary Fund.