Confe r e nc e on Sustainability T r e nds: Ke ys for Gr e e n Busine ss in AE C Ba ng kok, T ha ila nd Aug ust 9, 2013 ASE AN Busine ss a nd AE C 2015: F ive Obse rva tions Cie lito F . Ha bito, Ph.D.
AE C 2015: T he F our Pillar s SINGL E COMPE T IT IVE E QUIT ABL E INT E GRAT ION MARKE T & E CONOMIC E CONOMIC INT O PRODUCT ION RE GION DE VE L OPME NT GL OBAL BASE E CONOMY Compe tition F r e e flow of SME polic y goods de ve lopme nt Cohe r e nt F r e e flow of Consume r appr oac h (pr ofe ssional) pr ote c tion towar d Initiative for se r vic e s e xte r nal ASE AN Inte lle c tual F r e e r flow of e c onomic inte gr ation pr ope r ty skille d la bor r e lations (IAI): r ights F r e e flow of Assistanc e to inve stme nt Infr astr uc tur e E nhanc e d le ss- de ve lopme nt F r e e r partic ipation de ve lope d move me nt of T axation in global me mbe r c apital value c hains E -c omme r c e state s
AE C a nd ASE AN Busine ss: F ive Obse rva tions 1. ASE AN e c onomie s ar e gaining mome ntum. Gro wth o utlo o k g e ne rally favo rable 2. Mor e c omple me ntation, le ss c ompe tition. Mo re trade within industrie s (intra-industry) 3. Ove r all be ne fits of inte gr ation outwe igh the c osts. E c o no mie s o f sc ale , stro ng e r c o he sio n 4. Some will be ne fit mor e than othe r s. Gains will diffe r ac ro ss & within me mbe r c o untrie s 5. Inc lusive ne ss and sustainability ar e of par amount impor tanc e . So c ial and e nviro nme ntal c o nc e rns are ke y
1. ASE AN e c onomie s a re g a ining mome ntum Gro wth o utlo o k g e ne rally favo rable
L e ve l of T r ade & Inve stme nt L a st 2 Ye a rs Ne xt 5 Ye a rs Sourc e : AmCham 2012/ 13 Busine ss Outlook Sur ve y
Inve stme nt Opportunity Outlook in ASE AN Pe r c e ntage of US Inve stor s Who Se e Positive Outlook Sour c e : AmCham 2012/ 13 Busine ss Outlook Sur ve y
2. More c omple me nta tion, le ss c ompe tition Mo re trade within industrie s (intra-industry)
T he Cha ng ing Sha pe of Globa l T ra de Dramatic growth in inte r me diate g oods tra de with the de ve lopme nt of g loba l va lue c hains Sourc e : She rry Ste phe nson (2013)
Cha ng ing T ra de Pa tte rns Value c hains F rom this (1995)… transc e nd national boundar ie s: Boe ing air plane s; iPhone s & iPa ds a re “Ma de in the Wor ld,” not “Ma de in USA” or “Ma de in China ” T o this (2005)… Mor e intr a- r e gional tr ade within Asia e spe c ially South E ast Asia Sourc e s: She rry Ste phe nson (2013); OE CD
ASE AN in the 1990s • Ske ptic s pre dic te d little impac t and be ne fit fro m ASE AN F re e T rade Are a (AF T A) • Suppo se dly pro duc ing larg e ly the same pro duc ts, he nc e like ly to e nd up c o mpe ting rathe r than c o o pe rating • L e d so me ASE AN-6 me mbe rs to push fo r se nsitive lists and e xc lusio n lists (e spe c ially Philippine s and I ndo ne sia)
Philippine s- ASE AN T r ade Patte r ns • T hailand ts: Mo to r ve hic le s, e le c tro nic s, pe tro le um T op impor and c he mic als op e xports: Mo to r ve hic le parts, e le c tro nic s & T e le c tric als, and mine rals • Singapor e ts: E le c tro nic s, mac hine ry and pe tro le um T op impor op e xports: E le c tro nic s & e le c tric als, mac hine ry, T and pe tro le um • Ma la ysia ts: E le c tro nic s, pe tro le um and c he mic als T op impor
T hailand- ASE AN T r ade Patte r ns • Hig h I ntra-I ndustry T rade (I I T ) I nde x be twe e n T hailand and Malaysia, Sing apo re , Myanmar, I ndo ne sia & Philippine s • L o w I I T I nde x with L ao PDR, Brune i and Vie tnam • Rising I I T I nde x with Malaysia, Sing apo re , Cambo dia, Myanmar, L ao PDR, Brune i • F alling I I T I nde x with I ndo ne sia, Philippine s Sourc e : Sujinda Che msripong (2011)
T hailand- ASE AN T r ade Patte r ns T op 10 Produc ts in T ha ila nd’s Intra - Industry T rade with ASE AN Sourc e : Sujinda Che msripong (2011)
T r ade in ASE AN/ AE C F e a ture s • L arg e ly intr y in nature (trade in pro duc ts a-industr be lo ng ing to the same industrie s), e .g . � Philippine s e xpo rts inte rme diate e le c tro nic c o mpo ne nts, disk drive s, watc he s to Sing apo re , T hailand and Malaysia; impo rts finishe d pro duc ts � T hailand impo rts mo to r ve hic le parts fro m Philippine s, e xpo rts mo to r ve hic le s in re turn • T rade re latio nships in ASE AN are inc re asing ly c o mple me ntary rathe r than c o mpe titive in nature ; the opportunitie s lie in re gional and global value c hains or pr oduc tion ne twor ks
3. Ove ra ll be ne fits of inte g ra tion outwe ig h the c osts E c o no mie s o f sc ale and stro ng e r c o he sio n
AE C Be ne fits and Costs Be ne fits c o no mie s o f sc ale � L • E o we r unit c o sts • Gre ate r e ffic ie nc y � L o we r pric e s fo r all • Hig he r pro duc tivity � Hig he r inc o me s • Stro ng e r inte rde pe nde nc e � Gre ate r re g io nal harmo ny and pe ac e Costs • Gre ate r vulne rability to supply c hain disruptio ns? • T rade dive rsio n fro m c he ape r no n-AE C so urc e s? • Diffe re ntial g ains/ be ne fits; ine quitable g ro wth?
4. Some will be ne fit more tha n othe rs Gains will diffe r amo ng and within c o untrie s
Unbalanc e d Gains • So me will g ain mo re , and so me may be hurt – bo th ac ro ss and within me mbe r e c o no mie s • AE C po se s mo re c halle ng e s but also g ive s mo re o ppo rtunitie s fo r le ss de ve lo pe d me mbe rs • I de ally, big g e r winne rs must be able to assist lo se rs; c re ative c o mpe nsating me c hanisms ne e de d ac ro ss and within me mbe r c o untrie s (e .g ., I AI ; tax and e xpe nditure po lic ie s) • Big busine sse s are be tte r po sitio ne d than SME s to re ap the g ains
ASE AN Busine ss: Que stions to Ponde r • E xpansio n o ppo rtunitie s and ne w thre ats fro m fro m wide r c o mpe titio n • L e ve rag ing inc re ase d c o nsume r de mand • E ffic ie nc y e nhanc e me nts thro ug h supply c hain de sig n & lo c atio n o f vario us busine ss func tio ns • Oppo rtunitie s fro mc apital marke ts inte g ratio n (wide r ac c e ss to c apital, listing o ptio ns, e tc .)? • Attrac ting and plac ing skille d labo r fo r maximum pro duc tivity • Ne w laws and c o mplianc e pro c e sse s Sour c e : KPMG
5. Inc lusive ne ss & susta ina bility a re of pa ra mount importa nc e So c ial & e nviro nme ntal c o nc e rns are ke y
Ge tting to “RICH ASE AN” by 2030 • Re silie nt, I nc lusive , Co mpe titive and Harmo nio us ASE AN • Re so urc e -base d e c o no mic g ro wth will te st e nviro nme ntal sustainability • F urthe r c halle ng e s inc lude the ‘ middle inc o me trap’ , c limate c hang e , g lo bal financ ial instabilitie s, rising e ne rg y c o sts, amo ng o the rs
ASE AN Busine ss: T he Wa y F orwa rd • F ind strate g ic po sitio n in c ro ss-bo rde r value c hains/ pro duc tio n ne two rks • L o o k be yo nd AE C to ward g lo bal value c hains (and ho w AE C fits in): RCE P, T PP, WT O • Opt fo r inc lusive value c hains vs. ve rtic al inte g ratio n as c o ntributio n to inc lusive g ro wth • Pursue the triple bo tto m line o f Pe o ple , Plane t and Pro fit; fo ste r So c ial E nte rprise and Gre e n E c o no my
hank You! T
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