ASEAN's business leaders propose solutions to single-market bottlenecks and barriers to regional free trade

The launch of the ASEAN Business Club’s Lifting-The-Barriers Reports in Jakarta on 29 November is a benchmark for the business sector’s contribution to policy solutions for the forthcoming ASEAN Economic Community and expanding channels of engagement. The six reports outline bottlenecks and barriers hindering free trade in the region as well as highlighting possible solutions to accelerate integration efforts to meet the AEC’s 31 December 2015 deadline.

The launch was attended by the ASEAN Secretary General, H.E. Le Luong Minh, who delivered a keynote address highlighting progress towards the AEC through government-to-government processes and acknowledging the critical importance of increased private sector engagement through various platforms such as the LTB Initiative.

Le Luong Minh, Secretary General of ASEAN, addressing the launch of Lifting-The-Barriers Reports in Jakarta,

Representing the ABC, Mr Nazir Razak, CEO of CIMB Group, expressed optimism in the future of ASEAN economic integration, but warned that there was a "high risk of a disorderly start" to the AEC. He noted that a joint statement by the ASEAN Economic Ministers during 2013 indicated that the AEC Blueprint was in its final stages and had a completion rate of 79.4%. On closer inspection however, “although we have made good progress in eliminating most tariff lines (99.65%), Non-Tariff Barriers (NTB) between ASEAN countries remain high.”

Identifying economic nationalism – protecting vested interests - as the AEC’s “greatest challenge”, he observed that the AEC Blueprint does not clearly define what an NTB is, “so many trade-distorting measures persist despite specific deadlines. Also, there remain substantial exclusions to free trade even among the ASEAN 6 as states have made use of an extensive ‘exclusion system’ for products and services.”

Mr Razak reiterated three key elements of a set of initiatives he argues will help spur economic integration:

  • More power and funding to the ASEAN Secretariat.
  • An ASEAN minister in each member government to promote ASEAN domestically.
  • Iconic projects such as the development of an ASEAN Exchange, ASEAN Ratings Agency and even an ASEAN [FIFA] World Cup to capture the ASEAN public’s imagination and sense of common identity.

“We cannot solely depend on governments to push forward the ASEAN agenda,” he said. “The business community must step up and take the lead in pushing forward the ASEAN agenda – in the long run we all stand to win from a truly integrated ASEAN.”

Later during the launch, Mr Razak also called for “open talk” on “who may lose” through integration, to ensure the preparedness all stakeholders.

Dr Munir Majid, Advisor to the LTB initiative, provided an overview of the reports. He began by quoting a survey conducted by the US Chamber of Commerce (with AmCham Singapore) during 2013 which indicated that 54% of American companies in the region responding “had an ASEAN strategy and looked forward to the full implementation of the AEC.

In comparison, he said, “local firms and SMEs” have just been learning more about the AEC and are “scrambling to find footing.” The difference is, he said, is that the foreign companies had the capacity to formulate strategy “and even propose policies that would improve the business environment” and held consolations with ASEAN ministers to present their concerns and discuss solutions.

The Lifting the Barriers initiative is the ASEAN business equivalent, he said, to engage with the ASEAN and National Secretariats and to push outcomes. “Although there is already an existing architecture of engagement with the policy makers, we believe we have to expand the channel and intensify this level of engagement with substance and actionable policy recommendations, as we become an ASEAN Community.”

Patrick Walujo (Co-chair ASEAN Business Club Indonesia), Le Luong Minh (Secretary General of ASEAN), Nazir Razak (CEO, CIMB Group), Dr Munir Majid (Advisor to Lifting-The-Barriers Initiative) 

The LTB process began with the ASEAN Business Club - a fully private sector driven initiative of ASEAN’s leading businesses - organising the inaugural Network ASEAN Forum with the support of the CIMB ASEAN Research Institute (CARI). The Forum convened the region’s top industry leaders to discuss pertinent integration issues and oversaw six sector-based roundtables. The key discussion points were then combined with sector research, with assistance from international consulting firms, into the final reports.

The six reports – aviation (with assistance from the Aviation Sector, Centre for International Law), financial services (Boston Consulting Group), capital markets (Oliver Wyman), healthcare (Accenture), connectivity (Bain & Company), and infrastructure/power/utilities (McKinsey & Company) – generally identified economic nationalism, human resource constraints, regulatory congestion and underdeveloped infrastructure as the major obstacles.

Each of the detailed reports provides extensive background information and new ideas and solutions, many of which are interchangeable between sectors.

Aviation: an “ASEAN Community carrier” approach; United stand on traffic rights; Movement of professionals and mutual recognition of qualifications; Assisting lesser developed member states through an alliance model.

Financial Services: Pan-ASEAN Banking Pass; Free talent mobility; ASEAN Alliance; ASEAN Credit Bureau; ASEAN Rating Agency; Free data flow; Standardisation of document requirements.

Capital Markets: Clarifying the benefits to stakeholders, particularly SMEs; Increasing transparency; Simplifying listing requirements; Use of English in document submission across ASEAN; Uniform response time; Single tax payment point; Coordination of investor education.

Healthcare: ASEAN-wide medication approval process; Easing requirements for medical tourists; Mutual recognition of clinical qualifications;

Connectivity: Coherent transparent regulatory framework for international roaming, mobile advertisements and payment systems; Sufficient upfront investment in and review of project preparation; mechanisms for long term financing;

Infrastructure, Power and Utilities: Improved project selection; Optimising infrastructure portfolios; Streamlining project delivery approval and land acquisition; Making the most of existing infrastructure assets.

Any or all six of the LTB Reports can be downloaded in PDF format via online application to the Network ASEAN Forum.

Download the reports here.