ASEAN KEY DESTINATIONS
Malaysia, ASEAN gear upfor AEC
AS THE ASEAN Economic Community (AEC) takes into effect at end of 2015, many have questioned Malaysia’s preparation, being the chairman of ASEAN this year.
From the perspective of a non-ASEAN member, Malaysia together with its ASEAN members are geared towards welcoming the AEC in achieving the goal of regional economic integration.
Among the AEC’s objectives are to promote a single market and production base, develop a highly competitive economic region and a region that is fully integrated into the global economy.
Chairman of the European Union-Malaysia Chamber of Commerce & Industry (EUMCCI) Fermin Fautsch said the outlook for Malaysia and ASEAN is positive, be it among the 10 members or the soon-to-be AEC with other countries.
According to him, ASEAN is expected to be the world’s sixth largest economy by 2020 but in order to achieve that status, each of its members needs to strengthen intra-trade within the community before trading as a community with other trading blocs.
This is possible as most of the tariffs within ASEAN have been removed, making the trading process easier, he said.
“More than 98 per cent of goods are basically no tariff and this will benefit the ASEAN countries while soon be benefiting other countries that are trading with the ASEAN community.
“Currently the intra-trade in ASEAN is only about 25 per cent as most are trading with the big countries such as the United States, the European Union, Japan and China,” he told Bernama.
He said this is normal as countries would normally want to build their business relationships with big countries with higher Gross Domestic Product (GDP).
Taking the EU as an example, he said the countries in the grouping are also focused on building relationships with growing economies instead of among the EU members. But today, after more than 40 years and with 28 countries, intra-trade among the EU members accounts for 60 per cent.
Each member needs to support one another and together, they will form a bigger trading bloc, which is a type of inter-governmental agreement, he explained.
Fautsch added that ASEAN would accelerate faster as there are now 10 member countries with the number to grow soon.
However, he said, “integration is a journey and it will not happen overnight”.
There are challenges that need to be addressed, especially in making sure all countries have excellent infrastructure, he said.
“Having good infrastructure such as a good roads, airports, electricity, water supply as well as telecommunications is crucial. It provides convenience to the companies from other countries that are doing business in the country.
“Compared with some of its members, the infrastructure in Malaysia is very good but perhaps more investment is needed in some less populated areas,” he added.
Asked about the relationship between the EU and ASEAN once the AEC comes into effect, he said it would definitely become stronger. “With a GDP of US$18 trillion, the EU is still the largest investor in the world and it is an important partner for Malaysia and ASEAN.
“We were ranked as the second foreign investor in the manufacturing sector in Malaysia last year, after Japan, and with the economic integration it will be positive to Malaysia and ASEAN in terms of attracting foreign direct investment,” he said. As for Malaysia, Fautsch said, not only did it receive interest from big companies to invest here, but mid-sized companies are also setting up a presence in various sectors here.
“With the latest incentives announced by the government, I am sure that it would attract more companies coming here while the current companies will expand their establishment,” he added.
It was reported that Malaysia’s five economic corridors are set to stay firmly on the radar of local and foreign investors with the many business activities and job opportunities, driven by new tax incentives.
The incentives include 100 per cent income tax exemption for up to 15 years for newly established companies or existing entities that expand operations into less developed areas throughout Malaysia.
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