Asean Establishes Landmark Economic and Security Bloc

Jakarta Globe, Trinna Leong, November 22, 2015

Asean leaders joined China's Premier Li Keqiang at the summit in Kuala Lumpur,
Malaysia. (AFP Photo/Fred Dufour)

Kuala Lumpur. Southeast Asian nations on Sunday established a formal community that attempts to create freer movement of trade and capital in an area of 625 million people with a combined economic output of $2.6 trillion.

The community declaration was signed by leaders of the 10- member Association of Southeast Asian Nations (Asean) in Kuala Lumpur, this year's host of the group's annual summit.

Twelve years in the making, the Asean community is a landmark in the 48-year history of a group founded at the height of the Cold War as an anti-communist bulwark.

The Asean Community includes a political, security and socio-cultural dimension in a region with governments ranging from communist in Vietnam and quasi-military in Myanmar to the kingdom of Brunei and the boisterous democracy of the Philippines.

But it is the economic community that offers the most concrete opportunities for integration in a region whose combined gross domestic product (GDP) would make it the world's seventh-largest economy.

In practice, Asean has already virtually eliminated tariff barriers among the 10 countries, said Malaysian Prime Minister Najib Razak, the summit host, at the signing ceremony. "We now have to ensure that we create a truly single market and production base, with freer movement of goods and services."

At the closing news conference, however, he said Asean had no specific deadline for achieving zero tariffs, but would aim for "meaningful deliverables that can be done every year when we meet at the Asean summit."

The combined GDP of the Asean economies is expected to grow from $2.6 trillion to $4.7 trillion by 2020, Najib said, and could become the world's fourth-largest economy as a bloc as early as 2030.

The countries aim to harmonize economic strategies, recognize each other's professional qualifications and consult more closely on macroeconomic and financial policies.

They have also agreed to enhance the connectivity of their transportation infrastructure and communications, better facilitate electronic transactions, integrate industries to promote regional sourcing, and enhance private-sector involvement in the economy.

Eight groups of professionals will be able to work more easily throughout the region: engineers, architects, nurses, doctors, dentists, accountants, surveyors and tourism professionals.

Asean groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Reuters

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"Message for South America" - Nov 16, 2015 (Kryon Channelling by Lee Carroll) - New


"The End of History" -  Nov 20, 2010 (Kryon channelled by Lee Carroll)

" ... South America and the New Energy

South America is starting to consider the same thing. My partner was just there and I allowed him to see the energy of the potential future in that land.

I would like to paint history for you regarding South America. There was a time when every single country had a dictator. Less than 15 years ago, they had failing economies and currencies that were worthless. Trouble and strife and killings were the norm. Marauding drug lords openly killed in the streets and corruption was everywhere. Even the politicians created fear and many disappeared overnight, never to be seen again. Today it isn't that way. Today, there is an ongoing stability as one country after another brings a new, positive, stable energy to their cultures. So, without a concentrated effort by any kind of multi-national leadership or direction, how could this have changed in only 15 years?

Within the entire continent, there's only one dictator left. What's happening? If you think that's amazing, there is a move afoot that you're not going to hear about yet. But they're discussing it right now, so let me tell you what they're thinking. "What would happen if we took these countries and eliminated the borders?" Sound familiar? They're talking about it. In back rooms where nobody is reporting it, they're saying, "What about a plan of eventually having one currency from the top of Columbia to the bottom of Chile? And we would be strong and we would be unified." And dear ones, I'm here to tell you, that it's going to work, and it might not take 50 years. Soon the one dictator will be gone, and the unification can begin.

There's a shift happening on this planet ...."

Indonesian Air Carriers Nose Up, Engines Idle, in Effort to Stall Asean Open Sky

Jakarta Globe, Muhamad Al Azhari, Dec 22, 2014

Residents look at an airplane near Yogyakarta's Adisucipto International
Airport, in this Aug. 3, 2014, file photo. (JG Photo/Boy T. Harjanto)

Jakarta. Indonesia’s aviation industry is not ready to face the Asean Economic Community’s plans for a single market by the end of 2015 unless the government helps reduce airlines’ costs by simplifying tax codes, curbing airport inefficiencies and reducing the cost of jet fuel, executives from airlines operating in the country said.

Under the AEC framework, the Association of Southeast Asian Nations (Asean) aims to create a single aviation market by end of 2015 through an “open sky policy” that would see conciliation of its 10 member states’ varying trade regulations.

Asean’s member states of Indonesia, Malaysia, the Philippines, Thailand, Vietnam, Singapore, Brunei, Cambodia, Laos and Myanmar are collectively home to more 600 million people.

Domestic carriers have resisted fully joining a truly unified regional aviation market by actively lobbying the government to protect or mitigate perceived threats posed by competitors in Singapore, Malaysia and Thailand.

While Indonesia could potentially offer foreign carriers plenty of access points, only five airports have been opened to the open sky policy that the bloc’s members states agreed to schedule for takeoff by the end of 2015.

Those airports are Banten’s Soekarno-Hatta International Airport and airports in Surabaya, Medan, Makassar and Bali.

Airlines have taken recently to remind the government that they are not ready for such liberalization.

Sunu Widyatmoko, the president director of Indonesia AirAsia, the local affiliate of Malaysia-based AirAsia Group, said airlines operating in Indonesia, Southeast Asia’s largest economy, feel over-burdened by many inefficiencies that have weakened their competitiveness and ability to offer cheaper ticket prices compared to regional rivals, especially those from Singapore.

“We are not operating on a level playing field,” said Suno, who has been the chief of IAA since July 1.

“From the cost side, we lose. We are being burdened many factors, including taxes, airport inefficiencies and most importantly higher fuel prices,” he said.

Sunu’s remarks came during a recent informal meeting with the Jakarta Globe at which he was accompanied by Dharmadi, who sits on IAA’s board of commissioners.

Dharmadi, who served as IAA’s president director from Dec. 2007 until handing over duties to Suno in July, highlighted the problem of dangerous ambiguities in Indonesia’s tax system.

He said tax officers in Indonesia often lack understanding about the nature of the aviation business.

Dharmadi pointed to a Ministry of Finance regulation that states airlines can enjoy zero import duties and zero value added tax for imported spare parts.

In practice, however, to secure this benefit, airlines must submit their request to the government beforehand. It then takes the tax office five working days to approve the request.

“Can you imagine if we are forced to do that? We will have our planes not flying for five days. That will hurt our business,” said Dharmadi, who prior to joining AirAsia, had more than 32 years of experience at national flag carrier Garuda Indonesia.

Another issue is that Indonesia still charges airlines an operational lease tax — an excise no longer charged elsewhere in the world.

Dharmadi said the Indonesian National Air Carriers Association (INACA) met with the finance minister and coordinating minister for the economy to discuss these issues. According to Dharmadi, the two ministers promised a quick solution.

“If we can resolve this, it can reduce some burdens,” he said. Others, however, still remain.

According to Dharmadi, the cost of jet fuel in Indonesia is 12 percent higher than that paid by elsewhere by regional rivals such as Singapore.

Airlines operating in the country thus have no other choices but to “squeeze” Pertamina, which holds a monopoly on the country’s jet fuel distribution, on its terms, service conditions, and high fuel prices. “That is not healthy,” said Dharmadi.

Some inefficiencies that may contribute to higher jet fuel prices, including refinery capacity limitations; the cross subsidy system that covers high distribution costs in remote areas and fees the energy company has to pay to regulators, he said.

Dharmadi also called on airport operators — principally the domestically dominant state firms Angkasa Pura I and II — to invite the airline industry’s input whenever they plan to expand some airports.

Indonesia’s airports suffer from capacity problems, both in terms of passenger terminal throughput and aircraft slots.

Indonesia’s busiest airport, Soekarno-Hatta, now handles 62 million passengers per year — almost three times its original design capacity.

The airport is currently expanding its third terminal to serve up to 20 million more passengers annually.

Still, Dharmadi criticized the ongoing development for the third terminal.

“You can build a lavish airport with big terminals, but if you don’t add runways, it will not boost traffic,” he said.

Furthermore, he called on regulators and airport operators to not charge high airport taxes for low-cost carriers, as it deters passengers from flying with them.

Meanwhile, government officials are proceeding to with plans for Indonesia to accept the AEC’s Asean Open Sky.

Hemi Pramuraharjo, a spokesperson with the aviation directorate general at the transport ministry, said the government plans to open more takeoff and landing slots to foreign airlines as part of the country’s commitment to implement the open sky policy under the AEC framework.

“We want to have balanced proportions. If foreign airlines cannot enter Indonesia, then the impact will be that our airlines cannot come to their countries. There is reciprocity issue,” Hemi said on Dec. 18.

He said currently 72 percent of flight slots in the Soekarno-Hatta are filled by domestic flights and the remainder for international flights. Indonesia wants to boost international flight slots to 30 percent and reduce the domestic flight slots to 70 percent, he added.

“The ideal figure should be 35 percent, 65 percent for international flights and domestic [flights, respectively]. We will be pushing there, not only for Soekarno-Hatta, but also for five airports that will be open during the Open Sky,” Hemi said.

However, an INACA executive was furious to hear about the plan.

Bayu Sutanto, who heads the chartered flights division at INACA said the plan to add slots for international flights is a “careless” plan, considering the nation’s airport infrastructure is not supportive.

He also questioned the ability of the government to negotiate with other countries to open their markets.

Bayu, an executive from Trans Nusa, a carrier that offers specialized flight services in Indonesia’s eastern areas, such as East and West Nusa Tenggara, Bali and Makassar, said the transport ministry should involve the local industry whenever they plan to take any major decision.

“We are the ones who know when Garuda Indonesia is blocked from opening flights in other countries, but government turns a blind eye,” he said.

Bayu pointed to Malaysia as an example of a country that, he says, always consults with the aviation industry before opening their airports up to foreign players.

However, former Garuda chief Emirsyah Satar rebutted the accusation that the local airline industry is seeking the government’s protection from the open sky policy.

“We want to have an equal, level playing field with foreign carriers. We just want to be competitive, no more,” Emirsyah said.

With additional reporting from Investor Daily

Southeast Asia Would Be Better if It Fixed Flaws, McKinsey Says

Jakarta Globe, Arientha Primanita, Nov 11, 2014

Shopping malls are getting busy for 'Midnight Shopping.' (AFP Photo/Adek Berry)

Jakarta. Southeast Asia could enjoy stronger economic growth if countries in the region focused on three areas that would increase productivity and competitiveness, consulting firm McKinsey Global Institute said in a report.

The Association of Southeast Asian Nations — comprised of member states Indonesia, Brunei, Cambodia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — have emerged as one of the world’s most dynamic growth markets, the report said.

As a single entity, the region ranked as the seventh-largest economy in the world. With a combined gross domestic product of over $2.4 trillion, its economy was more than 25 percent larger than India’s in 2013.

The report, “Southeast Asia at the Crossroads: Three Paths for Prosperity,” suggested that greater regional integration, urbanization and new technologies and innovation were key to accelerating productivity and creating broad-based prosperity.

“In all three of these areas, long-term thinking and investment by the public and private sectors could create economic opportunities worth hundreds of billions of dollars and place the region on a faster and more sustainable trajectory through 2030,” Oliver Tonby, managing partner of McKinsey & Company, said in a statement sent to the Jakarta Globe on Monday.

According to the report, greater integration could improve cost competitiveness for companies by up to 20 percent in many sectors by creating regional economies of scale and improved inventory and logistics management. The report recommended member states fully implement the Asean Economic Community (AEC) integration plan.

Some 81 million households in Southeast Asia are part of the “consuming class,” the report said. When combined with the forces of urbanization, that number may double to 163 million households by 2030.

Urban growth may demand more than $7 trillion of investment in core infrastructure, housing and commercial real estate across the region through 2030.

The report added that technology and innovation are also growth factors in the region, which it said is becoming more tech savvy.

McKinsey Global Institute is the research arm of consulting firm McKinsey & Company, which charges top dollar for what it describes as “unparalleled management insights” and “deeper understanding of the evolution of the global economy.”

20th ASEAN Summit to discuss single economic community

Linda Yulisman, The Jakarta Post, Phnom Penh, Cambodia, Mon, 04/02/2012

Leaders of ASEAN members pose for a group photo during the opening

 ceremony of the 20th ASEAN summit in Phnom Penh, capital of Combodia, 

April 3, 2012. The summit kicked off here on Tuesday. (Xinhua/Zhao Yusi)

The 20th ASEAN Summit is scheduled to kick off on Tuesday in Phnom Penh, Cambodia, with the establishment of the ASEAN Economic Community (AEC) in 2015 being the top agenda.

Ahead of the two-day meeting, the ASEAN economic ministers on the ASEAN Economic Community Council (AEC Council) are discussing several issues pertaining to the planned economic integration of ASEAN on Monday.

Among the key issues are the implementation of the AEC blueprint, challenges of service sector integration, the progress of cooperation in customs and the finance, energy and agricultural sectors, and ASEAN connectivity, according to a Trade Ministry statement.

“This time the deliberation on the ASEAN economy and its integration is critical, particularly in relation to the internal and external cooperation of ASEAN in addressing the current issues of the world economy,” Trade Minister Gita Wirjawan said in the statement.

During the meeting, Indonesia will highlight the urgency of ASEAN countries’ responsiveness to the challenges faced by business players in the region, he added.

The summit will also run along with other meetings, including ASEAN leaders’ meeting with the Inter-Parliamentary Assembly (AIPA) representatives and civil society organizations representatives on Tuesday. Earlier last week, senior officials, including economic officials, conducted preparatory meetings for the summit.

The Indonesian delegation led by Vice president Boediono is scheduled to arrive on Monday in the Cambodian capital.

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Asean to consider sustainable growth

The Bangkok Post, WICHIT CHANTANUSORNSIRI, 8/04/2009 at 12:00 AM

How best to co-ordinate fiscal stimulus programmes and set the foundations for sustainable economic growth will be high on the agenda for Asean finance ministers meeting this week in the seaside resort of Pattaya.

Over six months after the crisis began with the near-failure of the US financial system, some promising signs have emerged that the massive monetary and fiscal stimulus programmes enacted worldwide are beginning to bear fruit.

But Somchai Sujjapongse, the director-general of the Fiscal Policy Office, said the key was to ensure that stimulus funds have a lasting, beneficial impact on jobs, productivity and future growth.

"The leaders fortunately have moved in the right direction, and are looking at how not only to build up employment, but how to ensure sustainable growth once the current crisis passes," he said.

The global financial crisis has taken centre stage at the Asean meetings this year. While regional economies have escaped the bank collapses that have plagued the US and Europe, growth across Asia has plummeted with the sharp decline in export demand.

The meetings started yesterday with the arrival of finance and central bank deputies from Asean, Korea, Japan and China, with the 13th Asean Finance Ministers' meeting on Thursday. Country leaders will meet in Pattaya through the weekend, with the programme to close on Sunday with the Asean Global Dialogue conference, featuring the leaders of international organisations such as the United Nations, the World Bank, the International Monetary Fund, the World Trade Organisation and the UN Conference on Trade and Development.

Officials hope to further progress on plans to upgrade the Chiang Mai Initiative bilateral swap programme into a larger, multilateral pool to serve as a financial lifesaver against future crises. They want to increase it by 50% to $120 billion.

China, Japan and Korea will provide 80% of the funds for the pool, with the remainder financed by Asean. The five largest Asean economies - Singapore, Malaysia, Indonesia, the Philippines and Thailand - will contribute $4.5 billion each, with Laos, Burma, Cambodia, Vietnam and Brunei the rest.

Discussions will include details of pool operations, with officials tentatively agreeing that countries could borrow for terms of 90 to 360 days at interest rates set at LIBOR plus 150 basis points.

Dr Somchai said Thailand, which holds the Asean chair this year, will push for an Asean infrastructure fund to channel the region's savings into infrastructure investments across the region.

Finance Minister Korn Chatikavanij proposed each country contribute to the fund based on their readiness, with financing from direct budget allocations, foreign reserve holdings or even private sector investments.

Countries could tap the fund to finance domestic infrastructure programmes, with the Asian Development Bank serving as a guarantor for bond issues.

Ministers will also discuss ways of facilitating trade and investment across the region to create an Asean Economic Community (AEC) by 2015.

"Investment and market liberalisation will be the highlight of the meetings," Dr Somchai said.

Capital market integration will also be on the agenda, with ministers hoping to endorse an implementation plan ultimately aimed at building up the region's markets by facilitating cross-border securities listings and investment.

Asean finance ministers will also discuss policies and issues raised at the G20 meetings held earlier this month in London, a conference attended by China, Japan, Korea and Indonesia as members and Thailand as Asean representative.

Dr Somchai said Asean ministers will also discuss co-operation in the region's life and non-life insurance sectors, including regulatory standards, customs procedures and work towards the creation of an Asean "Single Window" to facilitate customs clearance as well as initiatives to guard against money laundering and terrorist financing.

Financial sector liberalisation will also be discussed. This will be the fifth round of negotiations towards sector liberalisation under the AEC framework, and the Asian Development Bank has agreed to perform a "financial landscape assessment" to help assess the readiness of different markets for liberalisation.

Capital account liberalisation is on the agenda, aiming to reduce barriers to portfolio investment and foreign direct investment, either through outright capital controls, taxes or other barriers.

Capital unity `will take ages'

Ika Krismantari, The Jakarta Post, Jakarta | Wed, 03/25/2009 1:09 PM

Indonesia has cast doubt on the viability of an integrated capital market among ASEAN member states by 2015, citing regulatory differences.

Lack of a common regulatory framework shared between states was among the daunting factors dampening the realization of the plan, chairman of the capital market and financial institution supervisory agency (Bapepam-LK) Fuad Rahmany said during a seminar Tuesday.

JP/Irma

He added there was so much to be done before being able to realize the dream of having a single integrated capital market in the ASEAN region by the 2015 deadline.

"I don't know whether this can be achieved by 2015; we're still at the discussion stage," he said.

He also said that among the obstacles was a way to synchronize the regulations that were issued by each member country.

This included policies relating to taxation, investor protection and dispute settlements.

Most ASEAN member states have inherited deep-rooted legal systems from their former colonial occupiers, making it difficult to adopt a single regulation to suit all needs.

The Indonesian legal system, for instance, is heavily influenced by that of the Netherlands, while the legal systems of Singapore and Malaysia are closely linked to that on the United Kingdom, and the system in the Philippines resembles that in the United States.

ASEAN has embarked on an ambitious plan to have an integrated capital market under its ASEAN Economic Community (AEC) blueprint.

Under the single integrated capital market system, investors and companies in ASEAN countries can freely trade securities in any market at competitive costs.

There will also be an ASEAN virtual bourse, known as the ASEAN linkage, which will act as a single stock market featuring the region's top 200 companies.

The ASEAN linkage is scheduled for a launch next year.

"It may not be realized. Harmonizing each of the members' regulations will take ages," Fuad said.

However, he said Indonesia would remain committed to forming the capital market integration because such a system was deemed inevitable.

"The globalized market is heading to a more integrated system. And as part of the community, we support it."

Former Hong Kong Securities and Futures Commission chairman and chief adviser to the China Banking Regulatory Commission, Andrew Sheng, said the capital market integration should be prioritized during this time of crisis.

He said ASEAN could use the moment to rise as a new power to possibly replace the Western market system, which was losing credibility.

"By having a combined market force, we will have more liquidity and a bigger scale to be able to compete globally," he said.

Asean Members To Sign Two Trade Pacts

BANGKOK, Feb 25 (Bernama) -- Two important trade agreements are expected to be signed at the 14th Association of South-East Asian Nations (Asean) Summit. 

Deputy secretary general for Asean Economic Community (AEC), Pushpanathan, said the agreements -- Asean Trade in Goods Agreement and Asean Comprehensive Investment Agreement -- would not only boost trade liberalisation among the ten members of the grouping but also facilitate the process. 

"The Asean Trade in Goods Agreement is a comprehensive agreement not only for trade liberalisation but will also facilitate Customs and standards," he said during a special session on AEC after the opening of 2008 Asean Business and Investment Summit here on Wednesday. 

The agreement, which will first go through a ratification process, will have clear guidelines, among others, on tariff reductions. 

He said the business community would know when certain product tariffs would be reduced. 

"There is a schedule attach to it. So, they can be prepared well ahead," he said. 

Pushpanathan said the Asean Comprehensive Investment Agreement would provide a clear timeline for investment liberalisation in line with the AEC. 

"The benefits will be extended to foreign-owned Asean-based investors," he said. 

RP bizmen preach Asean integration

Max V. de Leon / Businessmirror.com, MONDAY, 23 FEBRUARY 2009 23:41 

FILIPINO business leaders plan to launch an appeal to their counterparts in the Asean not to cave in to the present financial crunch and seek “protectionist” policies from their respective governments, because that will derail the region’s economic integration. 

Donald Dee, one of the Philippine representatives to the Asean Business Advisory Council (Asean-Bac) meeting in Bangkok this week, said “on the contrary, this is actually a good time to accelerate the major facets of the Asean integration because robust regional trade would compensate for the slowdown in other key markets like the United States.” 

“We have to make sure that there will be no bottlenecks and that we are all committed to continue opening our markets to each other,” added Dee, also chairman of the Philippine Chamber of Commerce and Industry (PCCI). 

He said among those that should be accelerated are the single-window scheme for Customs operations and the uniform tariff nomenclature. These will be achieved through the harmonization of tariff, standardization of customs processes and procedures, and electronic submission of customs documents 

Through this, the Asean Green Lane will be realized resulting in seamless movement of goods within the region he said. 

At the Asean-Bac meeting, the private sectors of the different Southeast Asian economies will compare notes on how each member-country is coping with the crisis. “We will also see what other things we can do as a bloc in addressing the crisis,” he said. 

Dee will be joined by industrialist Jose Concepcion Jr. and Miguel B. Varela of the Makati Business Club at the conference, which will serve as a sidelight to the Asean Business and Investment Summit. 

In a statement, Varela said the Asean meet, with the theme “People to People: Commitment towards Asean Prosperity,” will focus on the critical role of the business community to realize a speedy integration of the region. 

The adoption of the Asean Charter and the Asean Economic Community (AEC) Blueprint, he said, has given the business community the leverage to rapidly expand across the region. 

 “The Charter and the blueprint are important milestones in Asean’s evolution. The Charter for one gives the Asean people ownership of the region and helps build a global image for Asean, while the Blueprint has established benchmarks that will guide the creation of the AEC by 2015,” added Varela. 

The countries making up the Asean have over 560 million in total population, a total land area of 4.5 million square kilometers, a combined GDP of almost $1.1 trillion and total trade of about $1.4 trillion.