News Room - Business/Economics

Posted on 26 Oct 2009

ASEAN free trade to commence on schedule

Indonesian Trade Minister Mari Elka Pangestu confirmed the ASEAN (Association of Southeast Asia Nations) free trade area (FTA) would start up on time with planned tariff cuts by January 2010.

 

Speaking on the sidelines of the 15th ASEAN Summit here over the weekend, Mari said that the tariff reduction targets due for 2010 would be completed on time. The creation of the ASEAN FTA is part of steps to transform the region into a single economic entity which will become the ASEAN economic community in 2015.

 

“In essence, the ASEAN economic community, is right on track although the implementation rate presently is still only 73.79 percent,” said Mari who has just been sworn in for a second term in her post.

 

According to an assessment made between the beginning of 2008 up to September this year, the group now has a total of 103 action plans, 76 of which have been implemented. The remaining 26.21 percent includes the ASEAN Single Window and the ratification of various agreements.

 

”During the leaders meeting, economic ministers were told to keep on working on implementing the blueprint,” Mari said.

 

For Indonesia, she added, it was the blueprint on infrastructure and health sectors that could probably not be implemented on time. In terms of framework agreements on goods and services including the national single window, she said, Indonesia was considered on track.

 

“There are few things, such as on  investment, which have yet to be implemented but we are sure they will be in the near future,” she said.

 

She said free trade agreements with ASEAN dialog partners  India, Australia and New Zealand were all entering the implementation stage, while those with China, Korea and Japan had already started.

 

Commenting on the Japanese Prime Minister’s proposal for the establishment of an even  bigger East Asian community, Mari said that basically there had not yet been agreement or disagreement on the issue. “Everybody agrees that there should be reasons for East Asia integration,” she said.

 

In terms of East Asian economic cooperation, she added, it was the next logical step for ASEAN because the grouping had already completed many economic integration steps.

 

“What we need to discuss, and I think it’s quite clear from the discussion even among the leaders, is that economic ministers need to think through how we would  achieve this in the best way and maintain East Asia as an open region,” she said.

 

During the ASEAN+3 (with China, Japan and Korea) summit on Saturday, participating leaders asked their economic ministers to begin discussing the East Asian free trade agreement as soon as possible. The value of trade between these regions reached US$480 billion last year.

 

On Saturday and Sunday leaders of the ASEAN member states held a series of summits with the bloc’s dialog partners, namely China, Japan, Korea, India, Australia and New Zealand, both as individual countries and as a group.

 

ASEAN groups together Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam

 

During the summit with China on Saturday, ASEAN leaders welcomed the former’s initiative to start a US$10 billion fund on investment cooperation and a $15 billion commercial credit to support  development of infrastructure in ASEAN.

 

Chinese Prime Minister Wen Jiabao announced during the meeting that mobilization of the first tranche of US$1 billion of the investment fund was nearly completed and it should be available within a year.

 

He said China had decided to increase the concessional loan part of its ASEAN commercial credit from US$1.7 billion to US$ 6.7 billion.

 

The ASEAN summit was officially closed Sunday, with the signing of a final documents from the ASEAN+1, ASEAN+3 and East Asian summits held since Friday in the seaside resorts of Cha-am and Hua Hin, some 200 kilometers from the Thai capital city of Bangkok.