By Mikhail Raj Abdullah
KUALA LUMPUR, Sept 23 (Bernama) -- Malaysia's role as the chair of ASEAN in promoting trade and investment in Southeast Asia, as well as deepening integration through greater interdependence, is crucial for its long-term economic survival amid the uncertainties of the international marketplace.
Foremost among these vagaries are the debilitating tariffs imposed by the United States on its trading partners, including all ASEAN members, coupled with protectionist tendencies, which warrant members joining hands effectively to step up economic resilience and tackle these challenges head-on.
Malaysia’s focus on ASEAN’s economic outcomes, which aligns with its own Priority Economic Deliverables (PEDs), becomes increasingly significant, especially as some member states face high tariffs.
The deliverables include practical strategies for the region to not only emerge as a key single market expanding trade exponentially within, but also attract investments from external sources, which ultimately must benefit Southeast Asia’s 680 million population.
Against such a backdrop, the ASEAN Economic Ministers (AEM) Meeting, chaired by the Ministry of Investment, Trade and Industry (MITI), beginning September 23 in Kuala Lumpur, becomes critical for member states to go beyond their symbolic clasping of hands and translate economic vision into deliverables.
Among the PEDs which come under the direct purview of the economic ministers are expanding trade with China and India, upgrading free trade agreements with economic superpower China, which is the biggest investor in the region, bolstering economic cooperation between ASEAN and the Gulf Cooperation Council (GCC) countries, as well as the adoption of the ASEAN Sustainable Investment Guidelines (ASIG).
Others include supporting the electric vehicle implementation roadmap, ASEAN Centre of Excellence for Micro, Small, and Medium Enterprises (MSMEs) in Green Transition, a framework for the Integrated Semiconductor Supply Chain and the substantial conclusion of the ASEAN Digital Economy Framework Agreement (DEFA) Negotiation.
The PEDs will be presented at the 46th ASEAN Leaders’ Summit in October to be chaired by Prime Minister Datuk Seri Anwar Ibrahim.
It was a victory of sorts for Malaysia for being able to garner a consensus on the PEDs at the AEM retreat in Desaru, Johor, in March, after having assumed the chairmanship of ASEAN just two months earlier from the previous chair, Laos.
These PEDs, which were endorsed in March, just a month before the “Liberation Day” tariffs were announced in April this year, have unwittingly become more significant, especially after Donald Trump targeted more than 60 countries, including all 10 ASEAN countries, some of which were slapped with import duties as high as 49 per cent.
America’s heavy-handed move roiled global markets, forcing many countries, including economic majors such as China, Japan and the European Union (EU) and Southeast Asian economies to negotiate to reduce tariffs as well as rewire their long-standing trade and investment policies.
A major thrust of the regional grouping is the ASEAN Economic Community (AEC) Strategic Plan 2026-2030, which, under the current circumstances, must be implemented soonest possible to drive deeper integration and strengthen resilience.
As MITI Minister Tengku Datuk Seri Zafrul pointed out, AEC is a “living, breathing roadmap” which, accompanied by a comprehensive suite of key outcome indicators, signals to the world that ASEAN is evolving in a manner that will strengthen its leadership and unity.
And, as Malaysia has stressed consistently, ASEAN must get its act together to emerge as a key regional trade and investment destination not just regionally but globally as well.
Admittedly, ASEAN is now the world’s fourth-largest economic grouping, but that’s not going to automatically raise trade and investments.
More needs to be done through greater political will and commitment in areas such as dismantling non-tariff barriers and embracing definitive national policies, including people-centric initiatives which gravitate towards regional economic integration.
While ASEAN’s merchandise trade last year totalled US$3.84 trillion, trade in services was at US$1.29 trillion and foreign direct investment (FDI) inflows reached US$226 billion, the target would be to grow these figures exponentially.
To this end, it is encouraging to note that the AEC strongly emphasises market openness and willingness to engage with external partners, even as parts of the global economy are becoming increasingly more inward-looking.
Given the rising uncertainty plaguing the global trading arena, AEM needs to send a clear message to their leaders convening for their summit in October here to swiftly operationalise AEC strategies and goals.
This entails ASEAN leaders resolving to undertake their best efforts towards making Southeast Asia a single market and production base that is highly competitive, equitably developed, and fully integrated into the global economy.
No less important is for ASEAN to further advance economic linkages with other countries, for which Malaysia’s ability to convene the ASEAN-Gulf Cooperation Council (GCC)-China Summit in May is a feather in the cap for Malaysia’s chairmanship.
It is undoubtedly a step in the right direction as it paves the way for regional economies to explore new markets for business.
On an individual country basis, Malaysia would commence the first round of free trade agreement (FTA) negotiations with GCC countries in December, with the explicit aim of expanding economic linkages with the six oil-rich GCC states.
The GCC states are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
Anwar, who is also Finance Minister, pointed out when chairing the ASEAN-GCC-China Summit that the time is now ripe for Malaysia, as well as ASEAN together with China, the world’s second largest economy, to expand trade with GCC countries.
The move could lessen Southeast Asia’s dependence on the US as a major export destination and reduce the financial impact of the costly tariffs.
Within Asia, ASEAN’s quest to conclude negotiations for an expanded ASEAN Trade in Goods Agreement (ATIGA) with regional superpowers China and India is undeniably the right path to its end as well.
To be signed at the leaders’ summit in October, ATIGA would bolster the existing bilateral free trade pacts and deepen economic integration while boosting supply chain resilience.
This month’s AEM, which comes just before the highly anticipated summit in October, also gives member nations the opportunity to discuss increasing economic linkages with dialogue partners.
They include major economies such as Japan, South Korea, the Closer Economic Relations (CER) countries of Australia and New Zealand, Canada, the European Union (EU), as well as Timor Leste, which would most likely be admitted into the ASEAN grouping as its 11th member.
Other key areas to drive regional integration include a digitally connected ASEAN Community, the ASEAN Power Grid, fostering inclusive and sustainable growth and promoting small and medium enterprises, which are the backbone of regional economies.
Member states should also endeavour towards narrowing development gaps among the region’s economies, harmonise trade regulations and import and export procedures, including shipping and Customs procedures, all of which would go towards making ASEAN a single market, able to attract investments from all over.
Malaysia’s major quest as ASEAN chair at AEM is to ensure that the economic benefits from a more conducive environment for increased trade and investment trickle down comprehensively to businesses, the private sector and most importantly to the people.
-- BERNAMA
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