ASEAN KEY DESTINATIONS
Asean looks at trade deals, SMEs
The members of Asean need to remain vigilant in the face of growing global risks and harness their members' competitive strengths through deeper integration in order to remain relevant, senior ministers say.
The 10-member bloc continues to perform well economically, with average expansion in exports and domestic demand of about 7.5 percent each last year, according to data released at the 43rd meeting of the Asean Economic Ministers in Manado earlier this month.
Intraregional trade and investment flows continue to show upward momentum this year and are expected to support gross domestic product growth of between 5.7 percent and 6.4 percent.
The combined GDP of the region was estimated at US$1.5 trillion last year. Merchandise trade within Asean expanded by 32.9 percent from 2009 to $2.04 trillion in 2010 after a 19 percent decline in 2009, reflecting the impact of the global economic downturn.
Asean has remained an attractive destination for foreign direct investment (FDI) which reached $75.8 billion in 2010, doubling from 2009 and surpassing the previous 2007 record of $75.7 billion.
Intra-Asean FDI inflows rose 132% in 2010 and accounted for 16% of all foreign direct investment in the region. In the service sector alone, FDI inflows totaled $49.2 billion or 65.7 percent of all Asean FDI.
Manufacturing sector FDI totaled $21 billion or 28.1 percent of total flows, with mining and quarrying 5.5 percent of the total.
However, ministers acknowledged concern about downside risks including EU debt, fiscal problems in other developed markets including the United States, and rising food and commodity prices. As a result, they said, Asean must be vigilant and continue to pursue economic integration to ensure the region will be less vulnerable to external shocks.
A recent Asian Development Bank study said that by 2050, Asia's GDP of $148 trillion, compared with $16 trillion now, would account for more than 50% of world gross domestic product. Its per capita income could rise sixfold to $38,600 to reach the global average and would be similar to European levels today _ though Europe and North America will remain much richer in per capita terms.
By nearly doubling its share of global GDP (at market exchange rates) from 27 percent last year to 51 percent by 2050, Asia would regain the dominant global economic position it held 250 years ago, before the Industrial Revolution, said the ADB.
The so-called Asia-7 economies (China, India, Indonesia, Japan, South Korea, Malaysia and Thailand) had a combined population of 3.1 billion (78 percent of Asia) and a GDP of $14.2 trillion (87 percent) in 2010. By 2050 their population share is expected to fall to 73 percent, while the share of GDP would rise to 90 percent of Asia's.
These seven economies alone will account for 45 percent of global GDP. Their average per capita income of $45,800 (by purchasing power parity or PPP) would be 25 percent higher than the global average.
The Asean ministers also agreed to establish the Asean SME Advisory Board to help small businesses benefit from the formation of the Asean Economic Community (AEC) in 2015 and free trade agreements with partners including China, Japan, South Korea, India, Australia and New Zealand.
Srirat Rastapana, director-general of the Thai Trade Negotiations Department, said China and Japan proposed integrating dialogue partners' agreements into a single pact.
Japan proposed including 16 countries: the 10 Asean economies and six dialogue partners, while China proposed 13 countries, without India, Australia and New Zealand.
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