Australia’s Support for ASEAN Economic Integration
AEC Symposium for SMEs
Parkroyal Hotel Yangon, 13 October 2014
Mr Simon Merrifield
Australian Ambassador to ASEAN
Deputy Minister for National Planning and Development Dr San Lwyn, His Excellency Dr Lim Hong Hin, Deputy Secretary General of ASEAN, distinguished guests, ladies and gentlemen. Mingalabar. What a pleasure it is to be here in Yangon once again, I city I called home for three years until 2011, and a place I first visited in 1982. Room tariffs at The Strand were $2 a night back then but I couldn’t get that rate on this occasion.
It is inspiring to be amidst the optimism that abounds in Myanmar in 2014. It has been a year of great achievement for the Myanmar Government with its exceptional performance as ASEAN Chair and this bodes well for the nation’s future. It reveals many things about the potential of Myanmar as a country, but most of all it speaks of a special quality in the Myanmar people, one shaped by commitment and determination.
That special quality will no doubt be put to good use as Myanmar’s private sector positions itself to the new realities of a rapidly changing domestic scene and ongoing regional economic integration. Myanmar’s future prosperity will depend on how well Myanmar business responds to these difficult but exciting challenges.
For those locals in the audience, it is not news to you that Australia is a great friend and supporter of Myanmar. What you may not know is that Australia is also a long-time supporter of ASEAN’s ambitious economic integration agenda, and that support is manifested in a number of ways. That includes:
- through technical cooperation programs delivered through the ASEAN Secretariat, one of which supports the symposium today,
- through our billion-dollar plus suite of bilateral and regional development programs that contribute to narrowing the development gap within ASEAN, and
- through successfully negotiating high-quality free-trade agreements, most recently the comprehensive and high quality ASEAN-Australia-NZ FTA.
We have become close and dependable partners in the trade policy space through these endeavors, which is why we are enthusiastically pursuing together an even greater vision, a 16-member FTA know as the Regional Comprehensive Economic Partnership – a very important element of ASEAN’s broader East Asian economic integration ambitions.
The ASEAN-Australian partnership marks its 40th anniversary this year and our cooperation traverses many fields. If one area stands out, it’s our economic engagement, where two-way trade now exceeds $92 billion and growing – indeed, that figure is more than twice what it was a decade ago. Few would have predicted in 1974, when the ASEAN-Australia relationship began, that by 2014 ASEAN would be Australia’s second largest trading partner, eclipsing both Japan and the EU, and second only to China.
Australia admires ASEAN for its accomplishments and its vision and we have every interest in seeing the ASEAN economic community work. The success of that endeavor rests on the combined efforts of many, but most particularly upon ASEAN’s economic policy makers and business leaders.
ASEAN has been showing leadership on regional economic integration for over 20 years and it is clear to see that that leadership is paying off. ASEAN has outpaced the rest of the world in GDP per capita terms with average real growth since the 1970s of more than 5%, making it the world’s seventh largest economy. Extreme poverty is declining – from around 14% in 2000 to 3% in 2013, and the “middle class” is exploding.
I am sure members of this audience will have noticed the build-up of pressure as the December 2015 deadline for achieving the AEC looms. For any endeavor in life, there is nothing like a deadline to keep minds focused on the ultimate long term goal.
I doubt anyone expects the momentum built in the last few years to come to an end when the AEC is declared in 14 months’ time. For Governments, the work will be far from over, and for business, the opportunities will only grow. December 2015 is an important stepping stone rather than an end point. I have every expectation that the momentum we see today will be just as important to ASEAN post-2015.
While Myanmar has been busy chairing ASEAN this year, Australia has been working hard as Chair of the G20. The G20 agenda has close complementarities with the AEC, with focus on infrastructure, trade, development and competition. Discussions on the G20 development agenda are focused on key areas to ensure the benefits of growth are widely spread, truly sustainable and inclusive. This includes increasing financing for infrastructure investment by encouraging the right conditions to attract private sector investment in developing economies. The G20 is on track to deliver a package of infrastructure actions that will begin to address the $1 trillion annual global infrastructure deficit. Australia as G20 Chair is committed to ensure that it remains a key forum to boost global growth.
Australia welcomes the contribution from Myanmar, as chair of ASEAN, to the G20 agenda, in its efforts to link the ASEAN and G20 agendas, particularly in relation to building the right infrastructure that supports economic development and integration. Australia will be delighted to welcome President Thein Sein to the G20 Summit in Brisbane next month as Chair of ASEAN, immediately after the East Asia Summit in Nay Pyi Taw.
I look forward to the discussion under Session 3 today on the policy environment for SMEs. Australia has long supported increased participation of SMEs in regional supply chains, particularly in the CLMV. For instance our Cambodia Agricultural Value Chain (CAVAC) program is helping Cambodian farmers increase their productivity by addressing market constrains in the rice and vegetable value chains. The program has worked with companies in the seed, fertilizer, pesticide, milling and export markets to improve access to regional supply chains.
I’m very pleased to see women in business reflected in today’s SME panel. Women play such a critical role in small and medium business sector across this region, and it is important their voices are heard and their ideas acted upon. At Australia’s recent NGO policy dialogue in Hanoi we heard some inspiring success stories from women entrepreneurs in the region. These discussions were a good reminder of the challenges faced by women in accessing the benefits of the AEC.
We know from the AEC scorecard process that more than three-quarters of AEC objectives have been implemented, and we also know from the ASEAN Integrated Monitoring Report published earlier this year that ASEAN economic integration has been trade creating, that intra-ASEAN trade has been boosted and ASEAN’s trade with the rest of the world has grown.
But we also know that there are hard yards ahead: Identifying and reducing non-tariff measures, building competitiveness, reducing trade costs, and protection of intellectual property rights. The policy challenge is particularly confounding for the smaller economies, notwithstanding the gains they are making.
Any discussion of NTMs can get technical and tedious very quickly. It’s important to remind ourselves just how basic the core issues really are. One striking recent example is how automated customs procedures at ports and border posts in Cambodia reduced clearance times down from 6 days in 2010 to 1.4 days in 2014
The AEC is proving to be an anchor for the deeper reforms needed to increase competitiveness. Foreign Direct Investment has grown significantly in the Mekong region, where Governments have begun reforms needed to drive down trade costs. That is why Australia has been supporting efforts to narrow the development gap through helping countries address the crippling impact of non-tariff measures.
We will continue to invest in these important reforms with a focus on supporting efforts of the less wealthy ASEANs to modernise customs transit and logistics systems, in line with the ASEAN Single Window.
I am confident that Governments will make economic policy choices which seek to improve governance, economic opportunity, labour skills and transparency if a truly inclusive AEC is to eventuate.
I hope that today will offer an opportunity for those business people among us to get firsthand information about how companies can make the most of the opportunities the AEC presents ….AND to give policy makers a reality check with their questions and feedback – about what’s needed for businesses to step up investments in the region.
Australia has a profound and enduring interest in ASEAN and ASEAN has never been more important than it is today. Our region's prosperity owes much to ASEAN's achievements. We stand to enhance our commitment to ASEAN’s economic goals beyond the 2015 ASEAN Community target. Today’s symposium is an important initiative from the ASEAN Secretariat. I wish you well for today, and I look forward to a stimulating discussion.