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Sunday, September 6, 2009

ASEAN Economic Community (AEC) Thailand updated

ASEAN Economic Community (AEC) is facilitating ASEAN to become a single market and a

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single production base making the region much more dynamic and stronger in the global supply chain, Thailand Trade Representative (TTR) President H.E. Mr. Kiat Sittheeamorn has observed.
Mr. Kiat was delivering his keynote address on “Thailand Trade Policy and Implication to AEC” at a seminar organized recently by the ASEAN Federation of Textile Industries (AFTEX) in cooperation with the National Federation of Thai Textile Industries and the Department of Export Promotion as part of the Bangkok International Fashion Fair and Bangkok International Leather Fair 2009 (BIFF & BIL 2009).

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Attending the seminar were Mr. Dej Pathanasethpong, Chairman of the National Federation of Thai Textile Industries; ASEAN Competitiveness Enhancement Project Director Mr. R.J. Gurley; Chief of Fashion Fair Division of Thailand Department of Export Promotion Mrs. Kalayanee Sirikul and other functionaries of the department and entrepreneurs from the ASEAN textile industry.

The Thai Trade Chief said ASEAN (Association of South East Asian Nations) is one of the most aggressive organizations for regional cooperation among developing countries. In 2007 at the age of 40, ASEAN started thinking of ASEAN Charter that could serve as a road map to successful regional cooperation. The Charter eventually came into force in December 2008 changing ASEAN forever. By virtue of the new Charter and under the chairmanship of Thailand this year, ASEAN is now moving towards the ASEAN community fostering regional integration in all dimensions - political, economic, social and cultural.

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This forum provides the best opportunity for all business people in ASEAN countries to get together and discuss how to build the economic community for the first time. “We now have the mandate in the form of the Charter that the (ASEAN) governments would support. With the Charter, we will become more significant and will have larger role to play in the international arena. In the past, ASEAN nations would speak with 10 voices and possibly would take 10 different positions. Today, ASEAN is moving towards having one position and, I think, in the near future we will end up with one voice, vis-เ-vis the international community,” Mr. Kiat said.

By virtue of the ASEAN Economic Community (AEC), ASEAN is now becoming a single market and a single production base making the region much more dynamic and stronger in the global supply chain. Take a look at Latin Americans who have already set up their single market quite some time ago. They really managed to have their economic community set up within the region quite effectively and productively.
With the objective of elevating ASEAN into one single market and one single production base, the governments in ASEAN 10 have been providing for over 10 years various tools such as the ASEAN Comprehensive Investment Agreement (ACIA which allows businessmen to invest in ASEAN 10 with ease of doing business with less or no difficulties. We have AICO (ASEAN Industrial Cooperation) which allows you to exploit the value chain of the production within ASEAN 10 so that you can look at where to set up your business or production facility and where it should be a part of the supply chain. AICO actually is aimed at promoting resource sharing that allows businessmen to maximize complementarity and the value chain.
Business people make investments, while governments get you the tools to be competitive, to be a single market and a truly economic community. The latest tool provided by the government was Chiang Mai Initiative Multilateralisation (CMIM). Although its purview is much broader than day-to-day business, it provides a fund base of USD 120 billion to ensure regional financial stability and protect businesses from currency fluctuations. With industrial cooperation within the 10 countries in place, you can maximize the benefit by using such tools effectively, he suggested.

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With these new tools, new Charter and new environment, traditional way of doing business is no longer feasible. A new business model must be explored and developed among ourselves. We now need to think regional and act global. We have to shift from domestic market focus to regional market focus. We have to change from single location of excellence to multiple centres of excellence maximizing value chain and complementarity, thereby making competitive advantage in the industry in ASEAN more sustainable in the long run, he opined.

In the past 10 years, governments of ASEAN have worked hard to reduce tariff and non-tariff trade barriers. And they have accomplished that, although there are still a lot of challenges to be addressed. But at least we are getting there. The competition has dramatically increased because of reduced barriers and non-quota systems. This means that ASEAN businesses are open to more competition from all over the world. Those who cannot adapt themselves to the new business model may not be successful in the long run, Mr. Kiat felt.

As for the textile industry, it has its own challenges. You really need to work hard and come up with new ideas of approach in doing business. “The new ideas that I am talking about are not about designing or the quality of textiles but about the business model and the relationships that you need to build between the businesses of this country and the ASEAN 10,” he said.
ASEAN is not just a standstill block. It is reaching out to have agreements with the Plus Three. It already has lot of agreements with the Plus Six, including Australia, New Zealand and India. The size of the market alone is half of the world population and at least one-third of the world trade is within this group, which alone will continue to be the fastest growing group in the next so many years. This means that the market is there, the opportunities are there, the tools are provided. The rest is up to the business sector to exploit them and to make it happen.

For the business people in ASEAN, going abroad, identifying business opportunities and negotiating with potential partners has been very difficult in the past 10-20 years. “But after 40 years of flirting, let’s get married and have children! It is now time for us to adjust our business plans, get into some serious relationship with our counterparts in the region and start setting up joint ventures or business agreements. Otherwise, you will not be able to catch up with the market when the economy is back to growth,” Mr. Kiat concluded.

Speaking on the occasion, ASEAN Federation of Textile Industries (AFTEX) Chairman Mr. Van Sou Ieng said in line with the objective of the ASEAN chambers of commerce and industry, AFTEX has been actively playing its part in regional integration promoting intra ASEAN trade, particularly in respect of the textile and apparels sector.

ASEAN Economic Community (AEC) grouping has paved the way for the integration of the government and the textile sector enhancing ASEAN as the borderless marketplace. Since July 2008, AFTEX has been implementing ASEAN Competitiveness Enhancement Project with the aim to build a stronger textile and apparels industry capable of competing with major players such as China, India and Bangladesh. The project is providing technical assistance in fostering the competitiveness of ASEAN supply chain, Mr. Sou Ieng added. For more information please contact
Tel. 02-642-9620

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