ASEAN Strategic Plan & Action

ASEAN Economic Community 2015

ASEAN Strategic Plan of Action–– Direction and Action needed ––

SUPHAT SAQUANDEEKULExecutive Director, Bureau of ASEAN Affairs

Department of Trade NegotiationsMinistry of Commerce

CONTENT1. ASEAN -- background & key indicators --2. Towards ASEAN Economic Community 20153. What will be the changes in AECs?4. ASEAN with ASEAN Plus5. What are benefits / impacts from AEC6. Are you ready for AEC 2015?7. Opportunities & Challenges for ASEAN Food

Industry in AEC

ASEAN ASEAN –– background & key indicators background & key indicators ––

ASEAN (Association of South East Asian Nations)

CAMBODIACAMBODIA

ASEAN -6

Established in 1967CLMV

5

Country Populations(million) Country GDP

(million$) Country GDP per Capita ($) Country Export

(million$) Country FDI(million$)

1.Indonesia 231,4 1.Indonesia 546,527 1. Singapore 36,631 1.Singapore 269,832 1.Singapore 16,809

2.Philippines 92,2 2.Thailand 264,230 2. Brunei 26,486 2. Malaysia 156,891 2. Vietnam 7,600

3.Vietnam 86.0 3.Malaysia 191,618 3. Malaysia 6,822 3. Thailand 152,497 3. Thailand 4,976

4.Thailand 66.9 4.Singapore 177,569 4. Thailand 3,951 4. Indonesia 116,510 4. Indonesia 4,877

5.Myanmar 59.5 5.Philippines 161,357 5. Indonesia 2,364 5. Vietnam 56,691 5.Philippines 1,948

6.Malaysia 28.3 6.Vietnam 96,317 6.Philippines 1,750 6 Philippines 38,335 6. Malaysia 1,381

7.Cambodia 14.9 7.Myanmar 24.024 7. Vietnam 1,120 7. Brunei 7,169 7. Myanmar 579

8.Singapore 6.1 8.Brunei 14,147 8. Lao PDR 910 8. Myanmar 6,341 8. Cambodia 530

9.Lao PDR 5.0 9.Cambodia 10,368 9. Cambodia 693 9. Cambodia 4,986 9. Brunei 370

10.Brunei 0.4 10.Lao PDR 5,742 10.Myanmar 419 10. Lao PDR 1,237 10. Lao PDR 319

Source: ASEAN Secretariat , Statistics of Year 2009

GDP: Gross Domestic Productions / FDI : Foreign Direct Investment

Towards Towards AEC AEC 2015 2015

ASEAN COMMUNITYAC : 2015

ASEANSocial-Cultural

Community(ASCC)

ASEAN Security

Community(ASC)

ASEANEconomic

Community(AEC)

AEC BLUEPRINT

& Strategic Schedule

One VisionOne IdentityOne Community

What will be the changes in What will be the changes in AEC AEC ??

(Common Effective Preferential Tariff)

1. Single Market & Production Base

Year2015

Free flow of goods

Free flow of services

Free flow of investment

Free flow of skilled labor

Freer flow of capitals

e-ASEANTaxation

Intellectual Property

Competition Policy

Infrastructure DevelopmentConsumer Protection

2. Competitive Economic Region

3. Equitable Economic Development 4. Integration into Global Economy

Supporting development of SMEs

Narrowing development gapbetween ASEAN-6 & CLMV

Enhanced Participation in global supply network

Coherent approach toward external economic relations

FTA with Non-ASEAN Countries

ASEAN Economic Community : AEC

AEC GOALS

1 January 2010 ASEAN-6 reduced Import duty to 0%

1 January 2015 CLMV will reduce Import duty to 0%

Products in Sensitive List : import duties must be ≤ 5%

Products in Highly Sensitive List : more flexible tariff rates but must be agreed upon by other member states.

Rice & Sugar

Malaysia, Indonesia, Philippines

Except for

Products :

Countries :

AEC Blueprint : Free Flow of Goods

AEC Blueprint : Free Flow of Goods

Brunei

ThailandThailand coffee, potato, copra, cut flowers

coffee, tea

Laosome animals, meat of bovine, swine, poultry, some vegetables and

fruits, rice, tobacco

Cambodia poultry, fish, some vegetables and fruits

Malaysia some animals, swine, poultry, eggs, some plants and fruits, tobacco

Myanmar bean, coffee, sugar, silk, cotton

Philippines some animals, swine, poultry, tapioca, corn

Vietnam some animals, poultry, eggs, some plants, processed meat, sugar

Singapore and Indonesia none

Tariff rateTo be reduced to

5%

5%

5%

5%--

5%

5%

5%

5%

ASEAN–6 by 1 January 2010

CLMV by 1 January 2015

Products in Sensitive List : import duties must be ≤ 5%

Malaysia Rice at 20% in 2010

Indonesia

Philippines

Rice at 25% in 2010 Sugar: from 40% to 5-10% in 2010

Sugar: 38% till 2011, from 2012 be reduced gradually to 5% in 2015

Rice: 40% till 2014, then be reduced to 35% in 2015

: more flexible tariff rates but must be agreed upon by other member states.

Rice & SugarMalaysia, Indonesia, Philippines

Products :

Countries :

AEC Blueprint : Free Flow of Goods

Products in Highly Sensitive List

other sectors 51%

Logistics sector

ICT, Health, Tourism, Air Transport

51%

AEC Blueprint : Free Flow of Services

ACIA covers liberalization, protection, facilitation, and promotion

Investment : 1. Agriculture2. Fisheries3. Forestry4. Mining5. Manufacturing

Extend non-discriminatory treatment to investors in ASEAN

Revise AIA ACIA (ASEAN Comprehensive Investment Agreement )

AEC Blueprint : Free Flow of Investment

AEC Blueprint : Free Flow of Skilled Labor

MRAs enables the qualifications of services suppliers recognised by one ASEAN country to be mutually recognised by another ASEAN member

ASEANASEAN and ASEAN Plusand ASEAN Plus

Enhancing ASEAN External Economic Relations

ASEAN-Korea FTA

ASEAN-Japan CEP

ASEAN-China FTA

ASEAN-India FTA

ASEAN-Australia- New Zealand FTA

ASEAN-GCC

ASEAN-MERCOSUR

Future possible FTA Existing FTA

ASEAN-Russia

ASEAN-EU

ASEAN-Canada

ASEAN-US

Others Dialogue Partners

Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates

Argentina, Brazil, Paraguay, Uruguay, Venezuela

ACFTAChina

AJCEP

Japan AKFTA

Korea

AIFTAIndia

Goods : Since July 2005 ~

Services : Since 2007 ~

Investment : Signed on 13 Aug 09

Goods / Services / Investment : Signed in 2008

For Thailand effective on 2 June 09

Goods / Services : ASEAN except Thailand since 2007For Thailand Services : Signed on 26 Feb 09, Effective on 1 June 09/ Goods effective on 1 Oct 09Investment all ASEAN :Signed on 2 June 09 Effective on 31 Oct. 09

Goods / Services / Investment:

Signed on 26 Feb 09, Effective on 1 Jan 10

New ZealandAustralia &

AANZFTA

Goods : Signed on 13 Aug 09,Effective on 1 Jan 10

Services/Investment : under negotiations

FTA between ASEAN and Dialogue Partners-at present

AEC

ASEAN Plus3

ASEAN Plus 6

Enhancing ASEAN FTA

ASEAN 10 : Population: 590 ml. ( 9% of global population)GDP :1,499 billion US$ ( 2% of global GDP)

EAFTA (ASEAN +3) : Population: 2,068 ml. ( 31% of global population)GDP :9,901 billion US$ ( 18% of global GDP)

CEPEA (ASEAN +6) : Population: 3,268 ml. ( 50% of global population)GDP : 12,250 billion US$ ( 22% of global GDP)

CEPEA (Comprehensive Economic Partnership in East Asia) (ASEAN +6)

New ZealandAustralia

India

EAFTA (East Asia FTA) (ASEAN +3)

China Japan

Korea

AEC

What are benefits / impacts What are benefits / impacts from AEC?from AEC?

Who will benefit from AEC ?Who will benefit from AEC ?

Stakeholders Impacts

Manufacturer

Larger economies of scale reduce production costs enhance competitiveness

More choice of inputs/materials from other ASEAN at lower prices

Service ProviderExpanded markets for services

Enhance competitiveness

More choice of services experts

ExporterGreater demand for exports

Strengthen business networks & partnerships across ASEAN

FarmerExpanded markets for agricultural products both within and outside ASEAN

Increase of income

ConsumerGreater choices and varieties of goods and services through increase in intra-regional trade

Who will be affected by AEC?Who will be affected by AEC?

Stakeholders Impacts

ManufacturerUncompetitive manufacturers with high cost of production may be defeated by other competitors in ASEAN.

Service ProviderMore competitors in the market

Valuable human resources may be taken by other ASEAN.

Exporter

More intense competition

High possibility of going out of market unless having measures for improving efficiency, quality, and innovation.

FarmerWill be competed with better quality goods at competitive prices

Income might decrease

ConsumerExposed to harm from low quality products unless measures for consumer protection are in place.

Are you ready for Are you ready for AEC 2015AEC 2015??

Emphasis on quality, design, standards etc

Do not overlook “ Unseen Opportunities”

Differentiateyour products & services

Thinking out of a box

Creativity and Sustainability

Cut down costsRaw material / inputs from ASEAN at lower prices

Improve efficiency & management

Know your markets Study consumers’ behavior in AEC

Try to turn “rivals” into “partners”Know yourself& your rivals

Increase your strength / reduce weakness

Become a part of ASEAN food supply chain

How to Draw Your Strengths from AEC ?

Search for suitable markets for your products & services

Whether joint venture or wholly owned enterprise ?

Learn culture, attitude, social value , ways of thinking etc of other ASEAN people

Expand Business in ASEAN

Ensure the readiness ofHuman Resources

How to Draw Your Strengths from AEC ?

Whether local employees or dispatch ones ?

“How to retain them with us?”Maintain your “precious”personals

Opportunities & Challenges Opportunities & Challenges For Food Industry in AEC For Food Industry in AEC

Larger market increased demand for foodGreater access to the ASEAN (& Asian) market

Creation of ASEAN production networks through partnerships with ASEAN food producers

Complete or partly relocation of manufacturing base to CLMV

Solving professional/skilled-labor shortage problem in the region

OpportunitiesOpportunities for Food Industry in AECfor Food Industry in AEC

Economy of scale reduce cost of productions enhanced competitiveness

More choices to import raw materials/semi-final products from other ASEAN at lower prices

Increased competition in trade, investment and resources

R&D and Innovation

Encouragement of administrative reforms in pace with rapidly changing environment in ASEAN

Higher competition in professional/skilled labor market

Challenges Challenges for Food Industry in AECfor Food Industry in AEC

Risk to exposure to low-quality products & services from other ASEAN & ASEAN Plus countries

Encouragement on improvement of products and services

Thank You

One VisionOne IdentityOne Community