Malaysia’s ASEAN Chairmanship: Furthering Regional Economic Integration
An Interview with Ambassador Awang Adek Hussin
By Laura Schwartz
May 26, 2015
Malaysia’s 2015 chairmanship of the Association of Southeast Asian Nations (ASEAN) comes at a critical time for regional trade diplomacy. ASEAN has set the end of 2015 as its deadline for the establishment of the ASEAN Economic Community (AEC) and the conclusion of the Regional Comprehensive Economic Partnership (RCEP) agreement, an FTA between ASEAN and six dialogue partners including Australia, China, Japan, India, New Zealand, and South Korea. Negotiations on the Trans Pacific Partnership (TPP), an FTA between twelve Asia-Pacific economies, including Malaysia and the United States, are also nearing conclusion.
NBR interviewed Awang Adek Hussin, Malaysia’s ambassador to the United States, to learn more about Malaysia’s goals as ASEAN chair and vision for regional economic integration.
What are Malaysia’s priorities for its 2015 ASEAN
Malaysia is keen to create a greater sense of belonging among the people of ASEAN through the creation of a “people-centered ASEAN.” The theme for its ASEAN chairmanship is “Our People, Our Community, Our Vision.” In pursuit of this theme, Malaysia has identified eight priorities to be implemented:
1. Formally establish the ASEAN Community to present an ASEAN that is outward-looking, peaceful, stable, prosperous, and bound together in partnership for dynamic development.
2. Develop ASEAN’s post-2015 vision as guidance for the ASEAN Community to further prosper and grow with a stronger sense of belonging as one community.
3. Steer ASEAN closer to its people as part of the overarching theme of Malaysia’s chairmanship in creating a truly people-centered ASEAN.
4. Strengthen the development of small and medium enterprises (SME) in the region.
5. Expand intra-ASEAN trade and investment, particularly cross-border investments and trade and bring ASEAN to par with other regional arrangements like the European Union and North American Free Trade Agreement.
Strengthen ASEAN’s institutions by implementing the recommendations of the High-Level Task Force on Strengthening the ASEAN Secretariat and Reviewing the ASEAN Organs.
7. Promote regional peace and security through moderation as a core value in addressing conflict and finding solutions to issues concerning regional peace and security.
8. Enhance ASEAN’s role as a global player by developing a common platform on global issues of mutual interest and promoting enhanced ties with external parties.
2015 is not just a critical year for Malaysia but also for all other ASEAN member states. Of course, Malaysia has been put in the spotlight as there is growing expectation among the multitudes of stakeholders that the country will be able to steer the institution toward achieving greater heights and ensuring all promises made are delivered across the three pillars of the ASEAN Community (the Political-Security Community, Economic Community; and Socio-Cultural Community). Though accomplishing these deliverables will be challenging, we will endeavor to complete them during our chairmanship, as they are important for all countries in ASEAN.
ASEAN is committed to implementing the ASEAN Economic Community by the end of 2015. Looking past this year, what is the vision for ASEAN integration to 2025 and beyond?
The key objective of the AEC is to bring together all ten ASEAN member states into a single market, which will require all core integration measures outlined in the AEC Blueprint to be implemented. This is also the expectation of the stakeholders, especially investors and those in the business community.
Other priorities that we are working on include strengthening the development of SMEs in the region, expanding intra-ASEAN trade and investment, and enhancing ASEAN’s role as a global player. As chair, Malaysia also plans to advance the following initiatives in 2015: an ASEAN trade facilitation agreement, the ASEAN Business Travel Card, the 10th Package of Services Liberalization under the ASEAN Framework Agreement on Services, the self-certification scheme under the ASEAN Trade in Goods Agreement, the Post-2015 Strategic Action Plan for SME Development (2016–25), and the ASEAN Single Window.
Another important objective is to deliver the plan for the ASEAN Community 2025, which includes the ASEAN Community Vision 2025, the Kuala Lumpur Declaration on the ASEAN Community Vision 2025, and three attendant documents constituting the political-security, economic, and socio-cultural work plans. Malaysia is chairing the High-Level Task Force for the ASEAN Economic Integration Working Group on Post-2015 Economic Vision and hopes to launch the ASEAN Community 2025 plan in November 2015. Economic measures taken beyond 2015 will be premised on sustaining and promoting ASEAN’s economic growth and competitiveness by further removing barriers to trade and investment and by adopting an even more ambitious economic integration program. These efforts aim to address structural and regulatory barriers in the region through domestic regulatory and legal reforms; institute greater trade-facilitative measure to further strengthen and broaden ASEAN as an integrated production and supply chain; promote new and improve existing infrastructure facilities to create a highly integrated and connected region to meet the challenges of the rapidly changing global economic environment; enhance financial services liberalization, including the integration of capital markets; promote the adoption of new technologies to ensure sustainable development; and improve human resource development, including by enhancing mobility among skilled workers in the region to attract talent to meet the requirements of industries.
Our post-2015 work will require full cooperation and commitment from all member states and is not the sole responsibility of the chair. According to a well-known proverb, “if you want to walk fast, walk alone. If you want to go far, walk together.” As a grouping that has existed for 47 years, ASEAN represents the latter.
The Obama administration has expressed its commitment to the Trans-Pacific Partnership (TPP), a 21st-century trade agreement that aims to boost U.S. economic growth by setting ambitious standards within the global economy. What role does the TPP play in Malaysia’s overall trade strategy?
Malaysia is the fourth most trade-dependent nation in the world, and its belief in free trade can be seen by the thirteen free trade agreements (FTA) that the country has concluded and implemented. These FTAs have brought proven trade potential and opportunities and have strengthened Malaysia’s presence in key markets, providing Malaysian exporters with better market access for their products and increasing investment from partners.
Similarly, among the key considerations made when Malaysia decided to join the TPP negotiations is the potential for access to a large combined market that includes the United States, Canada, Mexico, and Peru, countries with which Malaysia has yet to establish an FTA. The successful conclusion of the TPP would form a huge duty-free market of 800 million people with a combined GDP of $27.5 trillion. In addition, the TPP is viewed by many as a vehicle toward the creation of the FTA of the Asia-Pacific (FTAAP), which if realized, would encompass a market of almost 2.8 billion people.
The minister for international trade and industry, Mustapa Mohamed, recently noted that Malaysia aims to conclude negotiations for the Regional Comprehensive Economic Partnership (RCEP) by the end of 2015. What is the outlook for this FTA between ASEAN members, and what are the next big milestones in the negotiations?
The RCEP is another major effort to integrate the Asia-Pacific economies and complements the implementation of the AEC. All RCEP-participating countries were represented at the recent 7th RCEP Trade Negotiating Committee and related meetings in Bangkok, and the progress made to date has been satisfactory. It is never an easy task to get concurrence from sixteen countries, particularly when the countries involved are so diverse, representing different levels of development and different sizes. Nevertheless, as the driver of the process, ASEAN is working tirelessly to ensure that the RCEP will be realized. The leaders of the sixteen countries have set the end of 2015 as the deadline for substantial conclusion of the negotiations, and Minister Mustapa Mohamed was only reiterating this set timeline.
What are Malaysia’s views on the relations between the AEC, TPP, and RCEP and their possible integration in the future?
The APEC Business Advisory Council first put forth the idea for an FTAAP in 2004, and recommendations for substantive progress toward realizing this vision have appeared in almost all of the its reports to leaders in the recent years. In 2006, APEC recognized the FTAAP as a long-term prospect and vehicle to achieve regional economic integration in order to attain the goal of free and open trade and investment in the Asia-Pacific no later than 2020, as stipulated in the Bogor Goals. Furthermore, in 2010, leaders expressed their commitment to pursue stronger and deeper regional economic integration by addressing barriers to trade and investment and by taking concrete steps toward the realization of an FTAAP. They concurred that the FTAAP could provide a vehicle to achieve APEC’s regional economic integration and Bogor Goals, and in Yokohama APEC leaders agreed that the FTAAP should be a comprehensive, high-quality FTA built on ongoing regional undertakings, such as ASEAN +3, ASEAN +6, and the TPP. They also agreed that APEC would act as an incubator of regional trading agreements and FTAs in the Asia-Pacific region and would further develop work on sectoral initiatives, such as services, e-commerce, rules of origin, standards and conformance, trade facilitation, and environmental goods and services.
In November 2014, APEC leaders endorsed the Beijing Roadmap for APEC’s Contribution to the Realization of the FTAAP, and early in 2015 they officially established a task force to undertake a collective strategic study. This study will provide the basis for further consideration toward the realization of the FTAAP. Malaysia is in this task force, as we believe our early involvement in the FTAAP process will allow us to advance our trade interests as well as safeguard our national policies. Malaysia believes that the FTAAP should be used as a vehicle to bridge capacity and development gaps among economies that will add value to the Bogor Goals. In order to achieve a comprehensive FTAAP, economies must be ready and prepared to engage and commit to the high standards envisaged.
While the FTAAP is being studied by APEC economies, efforts to integrate economies in the region have already begun with the commencement of the TTP negotiations in March 2010. The twelve countries participating in negotiations are all APEC economies. Additionally, the RCEP will further cement existing regional FTAs between ASEAN and its partners. With the AEC set to be formally established in November 2015, it is undeniable that the participant economies of the TPP, RCEP, and AEC will be presented with huge opportunities for economic integration.
As a small nation that is highly dependent on international trade, Malaysia has strong interests in the continued liberalization of the global market. Malaysia sees the TPP, RCEP, and AEC as complementary. Though the membership in these initiatives may overlap, ASEAN initiatives are focused more specifically on ASEAN and East Asian integration, whereas the TPP encompasses the broader Asia-Pacific region. In fact, these initiatives are critical building blocks toward the realization of the FTAAP discussed earlier. Once all FTA initiatives have been completed and enforced, and with APEC leaders’ continuous commitment to the eventual realization of an FTAAP, it is not impossible that we will see the creation of the largest FTA in the world. Such an outcome would contribute immensely to the multilateral trading system and to global trade and investment for the world’s overall prosperity.
Laura Schwartz is a Project Manager in the Trade, Economic, and Energy Affairs group at NBR.