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7 - Infrastructure Development in ASEAN
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- By Mahani Zainal Abidin, Institute of Strategic and International Studies, Firdaos Rosli, Institute of Strategic and International Studies
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- Book:
- ASEAN Economic Community Scorecard
- Published by:
- ISEAS–Yusof Ishak Institute
- Published online:
- 21 October 2015
- Print publication:
- 06 May 2013, pp 136-162
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Summary
I. Introduction
Since the formation of ASEAN Free Trade Area (AFTA) in 1992, ASEAN has made significant strides in transforming the region into an area for free movement of capital, goods, services, and its people. In 2003, ASEAN moved a step closer towards a greater regional integration by adopting the Bali Concord II that comprises three pillars — ASEAN Economic Community (AEC), the ASEAN Political- Security Community (APSC), and the ASEAN Socio-Cultural Community (ASCC). ASEAN leaders later agreed to accelerate the establishment of the AEC from 2020 to 2015, with the belief that integration can close the development gap amongst its member states.
The AEC vision is to ensure that the ASEAN region be a single market and a production hub by 2015. One of the measures for achieving this vision is the level of regional intra-trade. The intra- ASEAN trade is stagnant at around 25 per cent, with trade between Malaysia and Singapore accounting for more than half of the total. Economists believe that to ensure self-reliance, ASEAN has to achieve at least 40 per cent of intra-regional trade. The availability of a good physical infrastructure system that connects ASEAN member states is an important and necessary factor that can increase intra-regional trade and contribute to regional integration.
According to the Asian Development Bank Institute,1 there are four reasons why infrastructure can generate a higher cycle of higher demand, productivity and growth, consistent with ASEAN's long-term development goals. These are:
Infrastructure plays a significant role in promoting and sustaining economic growth in the region;
Infrastructure development is necessary to accelerate economic integration within the region, particularly in the area of trade and investment;
Addressing inequalities in infrastructure development is critical to the wider objective of reducing development gaps among ASEAN countries and income inequality and poverty within each country; and
Infrastructure development is necessary to improve resource sharing and efficiency in the region to provide basic needs, such as water and electricity.
Realizing the importance of infrastructure, ASEAN countries initiated cooperation in the areas of transport, ICT and energy facilities even before the AEC.
14 - Achieving the AEC 2015: Challenges for the Malaysian Private Sector
- from Part II - Challenges For The Private Sector
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- By Mahani Zainal Abidin, Institute of Strategic and International Studies, Malaysia, Loh Geok Mooi, Institute of Strategic and International Studies, Malaysia, Nor Izzatina Abdul Aziz, Institute of Strategic and International Studies, Malaysia
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- Book:
- Achieving the ASEAN Economic Community 2015
- Published by:
- ISEAS–Yusof Ishak Institute
- Published online:
- 21 October 2015
- Print publication:
- 15 May 2012, pp 224-248
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Summary
In January 2007, heads of ASEAN governments declared their strong commitment to accelerating the establishment of the ASEAN Economic Community (AEC) to 2015 as envisioned in the ASEAN Vision 2020. The ASEAN Economic Community Blueprint which comprises four thrusts was adopted. Out of the four thrusts in the AEC Blueprint, more progress has been made in the first, third, and fourth thrusts which aim at fostering (1) a single market and production base, (3) a region of equitable economic development, and (4) a region fully integrated into the global economy, compared with the second thrust (2) on making ASEAN a highly competitive economic region. Ministers have been tasked to implement the AEC Blueprint and report to the Council of the ASEAN Economic Community on the progress of its implementation.
Since then significant progress has been made on the free flow of goods under the first thrust via the removal of tariffs through the ASEAN Free Trade Area (AFTA). Except for Sensitive and Highly Sensitive Unprocessed Agricultural Products, ASEAN Six, which includes Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, have eliminated the import duties on 99.65 per cent of traded tariff lines since 1 January 2010, while Cambodia, the Lao PDR, Myanmar, and Vietnam (CLMV) have 98.86 per cent of their traded tariff lines reduced to 0–5 per cent.
While AFTA has fostered intra-ASEAN trade since 1992 when it was first established, recent numbers since 2007 show little improvement in trade. This could be due to the unavoidable contraction in trade as a result of the global financial and economic crisis, especially since a significant portion of ASEAN's trade comes from supplying to the advanced economies that were affected by the global crisis. Intra-ASEAN trade rose by 13.6 per cent to US$458 billion and comprised 26.8 per cent of total ASEAN trade in 2008.
14 - Malaysia-Singapore Economic Relations: Once Partners, Now Rivals. What Next?
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- By Mahani Zainal Abidin, Institute of Strategic and International Studies, Malaysia
- Edited by Takashi Shiraishi
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- Book:
- Across the Causeway
- Published by:
- ISEAS–Yusof Ishak Institute
- Published online:
- 21 October 2015
- Print publication:
- 15 December 2008, pp 231-249
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Summary
INTRODUCTION
When the British ruled the entire Malay peninsula, the links between the various parts of their empire were established almost unconsciously. The economies of the various Malay States and Strait Settlements were interdependent, and Singapore, Penang, and Kelang were their gateways. Singapore grew rich on trade provided by the shipment of rubber and tin from Malaya and this same trade funded the development of the Malay hinterland. Since their separation in 1965, both Malaysia and Singapore have made good economic progress and as their development took on different profiles, they needed each other more and more. The old ties remain and Malaysia continues to supply goods and labour to Singapore, which in turn provides facilities for trade, and other services such as the financial sector. Thus, the first phase of economic relationship between the two countries after their separation can be characterized as complementary.
The expanding global economy, foreign direct investment inflows, and growth in Southeast Asia, have contributed to the advancement of the Malaysian and Singapore economies. Singapore's gross domestic product (GDP) grew by 8 per cent per annum from 1960 to 1999. For Malaysia, the growth rate was slightly lower, which is natural when you take into account that it started from an agriculture base and was a larger economy. During 1970–99, the Malaysian GDP expanded by 6.9 per cent per annum. Although small, lacking in physical resources and dependent on its neighbours for the supply of resources, such as water, labour, and food, Singapore has outpaced its neighbours in economic performance. Singapore widened its economic horizon and strove to be a service centre for the Southeast Asian region. Its role as the regional entrepôt has greatly assisted Singapore's growth.
Even though Malaysia's economic achievement is laudable, Singapore's progress, despite the above constraints, is impressive. Its performance is illustrated by the following selected indicators: Besides having the highest per capita income in the region, Singapore's international foreign reserves in 2003 at US$103 billion is larger than Malaysia's (US$54 billion). Considering that Singapore's population is only one fifth of Malaysia's, its GDP at US$87 billion in 2002 was nearly as large as Malaysia's (US$95 billion). In 2002, its exports amounting to US$128 billion were more than Malaysia's (US$92 billion).
10 - ASEAN and Its Inter-Regional Economic Links
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- By Mahani Zainal Abidin, Department of Applied Economics at the Faculty of Economics and Administration, University of Malaya.
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- Book:
- ASEAN Beyond the Regional Crisis
- Published by:
- ISEAS–Yusof Ishak Institute
- Published online:
- 03 November 2017
- Print publication:
- 19 March 2001, pp 243-273
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Summary
Introduction
ASEAN was founded in 1967 with political motives and was not intended to be a cohesive economic entity or bloc. The ASEAN economies are mostly open in nature and as a consequence, they depend very much on economic relations with other countries outside the region. This is generally thought to be one of the key factors in both ASEAN's formation and its success. The Bali Summit in 1976 formalized the nature and structure of ASEAN's external political and economic relations, and these relations must be consistent with the following objectives:
a) To accelerate their efforts in improving market access for their raw materials and finished products outside the ASEAN region by way of seeking the elimination of all trade barriers in these markets, in developing new usage for these products, and in adopting approaches and actions in dealing with regional groups and individual economic powers;
b) To co-operate in the field of technology and production and improve the quality of exports and products, and to develop “new products” with the specific view of diversification of export products;
c) To adopt joint approaches to international commodity problems by way of the existing instruments with a view to contributing to the establishment of a New International Economic Order;
d) To give priority to stabilization and increase of export earnings of those commodities produced and exported by ASEAN through commodity arrangements, including buffer stock schemes and other means.
Three factors pushed ASEAN to seek extra-regional relations: economic, political, and the need to strengthen the evolution of ASEAN. The economic reasons were the most compelling. At the early stage of their development processes, the ASEAN countries depended on primary commodities, and they were thus very vulnerable to international price fluctuations. If ASEAN were to have closer relations with the developed countries, which were the biggest buyers of these commodities, then such co-operation would be a first step towards stabilizing prices. Most of the ASEAN economies adopted export-oriented industrialization as their engine of growth and for this they needed good export market networks. ASEAN was also the recipient of a large flow of foreign direct investment (FDI), in industries that assembled or processed imported intermediate goods to be exported back to the developed countries. Therefore, ASEAN needed close and cordial relations with the countries which were the sources of these investments.
ASEAN Economies: Continuing Competitiveness through Industrial Restructuring
- from THE REGION
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- By Mahani Zainal Abidin, University of Malaya
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- Book:
- Southeast Asian Affairs 1997
- Published by:
- ISEAS–Yusof Ishak Institute
- Published online:
- 21 October 2015
- Print publication:
- 07 September 1997, pp 15-32
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Summary
The recent economic slowdown in some ASEAN countries has been accompanied by inflationary pressures and current account deficits. This raised questions about the ability of these economies to sustain growth and competitiveness. Questions were of the type: Can the cubs grow up to be tigers? Nevertheless, the slow-down that had prompted such questions still supported growth rates much higher than those of many other countries. The most attention was given to the falls in growth in Thailand, Singapore and Malaysia; the first two economies are expected to register growth of only (!) 7.0 and 7.7% respectively in 1996 (Table 1). The Malaysian slow-down is also significant but it may be considered more of a soft landing, because the 1996 GDP growth was still expected to be a relatively high 8.2% — in fact, this relatively slower growth was welcomed for its effect of relieving labour and resource shortages. In the case of Indonesia, although the estimated GDP growth rate of 7.6% was slightly lower than that of 1995 it was still higher than that of the 1992–94 period. The rest of the ASEAN economies, Vietnam, the Philippines and Brunei, performed reasonably well, each recording an upward trend in its GDP growth.
Even these lower growth rates, by themselves, would be regarded as excellent if they took place in virtually any other country, whether developed or not. Yet, in ASEAN they have been received with trepidation. Some of the reasons for this reaction are the exceptional growth rates in the past eight years 1 and the growth targets and economic agendas set by ASEAN countries; only with high growth, sustained over a long period will they achieve the transformation into developed economies. Malaysia, for example, has a target to be an industrialized country by the year 2020 while the leaders of Thailand and Indonesia have also made similar pronouncements. What this implies for the Malaysian strategy, as stated by the government, is that high Gross Domestic Product (GDP) growth of at least 7% per annum has to be sustained for quite a long period of time.