ASE AN Busine ss a nd AE C 2015: F ive Obse rva tions Cie lito - - PowerPoint PPT Presentation

Cie lito F . Ha bito, Ph.D.

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

INT E GRAT ION INT O GL OBAL E CONOMY Cohe r e nt appr

• ac h

towar d e xte r nal e c onomic r e lations E nhanc e d partic ipation in global value c hains

AE C 2015: T he F

• ur

Pillar s

SINGL E MARKE T & PRODUCT ION BASE F r e e flow of goods F r e e flow of (pr

• fe ssional)

se r vic e s F r e e r flow of skille d la bor F r e e flow of inve stme nt F r e e r move me nt of c apital COMPE T IT IVE E CONOMIC RE GION Compe tition polic y Consume r pr

• te c tion

Inte lle c tual pr

• pe r

ty r ights Infr astr uc tur e de ve lopme nt T axation E

• c omme r

c e E QUIT ABL E E CONOMIC DE VE L OPME NT SME de ve lopme nt Initiative for ASE AN inte gr ation (IAI): Assistanc e to le ss- de ve lope d me mbe r 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

Sourc e : AmCham 2012/ 13 Busine ss Outlook Sur ve y

L a st 2 Ye a rs Ne xt 5 Ye a rs

Inve stme nt Opportunity Outlook in ASE AN

Sour c e : AmCham 2012/ 13 Busine ss Outlook Sur ve y

Pe r c e ntage of US Inve stor s Who Se e Positive Outlook

• 2. More c omple me nta tion, le ss

c ompe tition

Mo re trade within industrie s (intra-industry)

Dramatic growth in inte r me diate g oods tra de with the de ve lopme nt

• f g loba l va lue

c hains

Sourc e : She rry Ste phe nson (2013)

T he Cha ng ing Sha pe of Globa l T ra de

Cha ng ing T ra de Pa tte rns

F rom this (1995)… T

• this (2005)…

Value c hains 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 ”

Sourc e s: She rry Ste phe nson (2013); OE CD

Mor e intr a- r e gional tr ade within Asia e spe c ially South E ast Asia

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

T

• p impor

ts: Mo to r ve hic le s, e le c tro nic s, pe tro le um

and c he mic als

T

• p e xports: Mo to r ve hic le parts, e le c tro nic s &

e le c tric als, and mine rals

• Singapor

e

T

• p impor

ts: E

le c tro nic s, mac hine ry and pe tro le um

T

• p e xports: E

le c tro nic s & e le c tric als, mac hine ry, and pe tro le um

• Ma la ysia

T

• p impor

ts: E

le c tro nic s, pe tro le um and c he mic als

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
• 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)

Sourc e : Sujinda Che msripong (2011)

T

• p 10 Produc ts in T

ha ila nd’s Intra - Industry T rade with ASE AN

T hailand- ASE AN T r ade Patte r ns

T r ade in ASE AN/ AE C

F e a ture s

• L

arg e ly intr

a-industr y in nature (trade in pro duc ts

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

• duc tion ne twor

ks

• 3. Ove ra ll be ne fits of inte g ra tion
• utwe 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

• E

c o no mie s o f sc ale L

• we r unit c o sts
• Gre ate r e ffic ie nc y L
• 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
• the 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

• 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

• rwa 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 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

T hank You!