Bangkok--18 Feb--Inside Investor
Economic community on track, but ‘implementation gaps’ remainouth China Sea conflict to be resolved in ‘peaceful and constructive manner’SEAN requires $60 billion annually for infrastructure development
In an exclusive interview with Inside Investor, the new ASEAN Secretary-General Le Luong Minh said that he expects the ASEAN Economic Community (AEC), after being established by the end of 2015, to lift per capita income in the ASEAN-5 nations (Indonesia, Malaysia, Thailand, the Philippines and Singapore) between 17 and 26 per cent.
“When the AEC will be realised by 2015, it is expected to add up to $69 billion in ASEAN GDP from a baseline figure (2008) and to between $117 billion and $264 billion in FDI stocks per annum. It will also increase per capita GDP in ASEAN-5 by between 17 and 26 per cent on average, and will contribute to significant productivity improvements in smaller ASEAN economies,” Minh said.
He, however, acknowledged that there are still several challenges to be addressed as the AEC, two years ahead of the formation of the bloc, presently has just around 74 per cent of respective measures in place.
“A number of measures are still pending particularly in services liberalisation, standards and conformance, customs integration, and connectivity. Thus it is important that implementation bottlenecks are addressed,” Minh said.
“Priority areas are, for example, the elimination of non-tariff barriers, removal of restrictions on cross-border investments, implementation of mutual recognition arrangements for services sectors and facilitating movement of capital,” he added.
“In investment, one priority is to increase equity participation in local industries and reduce business costs; and in facilitating freer flow of capital, harmonising withholding taxes can be the goal,” Minh said.
“Countries’ capacities to implement the various AEC measures also need to be enhanced, as well as the financing requirement of some of these measures,” he said.
With regards to the South China Sea conflict, a territorial dispute between China and some ASEAN nations, Minh said that “efforts are continued to address the South China Sea issues in a peaceful and constructive manner.”
“Our policy on regional disputes will remain guided by relevant principles enshrined in the ASEAN Charter and the Treaty of Amity and Cooperation in Southeast Asia,” Minh said.
Pointing at the infrastructure needs of the region, Minh said that ASEAN countries will have to spend $60 billion annually in this decade to improve infrastructure standards and connectivity.
“It is estimated that ASEAN countries will require infrastructure investments of $60 billion annually for this decade alone. Over the next five years, governments in the region will spend between 1 to 3 per cent of their GDP on infrastructure investment. One source of funding is the ASEAN Infrastructure Fund which was established by the finance ministers in 2011. Other sources of funding could also be tapped from domestic capital market, public-private sector partnerships, international financial institutions and external partners,” Minh said.
Read the full interview onwww.investvine.com