Trade Harmonisation Crucial to ASEAN’s Competitiveness

Many ASEAN countries have made great strides in global competitiveness rankings indicating sound economic ability and performance. This success, however, has not been uniform across the region. FIA spoke to Mr Pushpanathan Sundram, Principal Advisor of the ASEAN Food and Beverage Alliance (AFBA) and former Deputy Secretary General of ASEAN for the ASEAN Economic Community, about what ASEAN economies can do to boost their competitiveness both individually and as a region, and how the food industry can support ASEAN in its strive to become more competitive.

What factors have helped ASEAN countries boost their competitiveness in recent years?

Mr Pushpanathan: ASEAN countries have been focusing on competitiveness as a key pillar in the development of the ASEAN Economic Community. There have been improvements as a direct result of this drive and focus, with several ASEAN economies including Singapore, the Philippines, and Indonesia advancing global rankings which include the Global Competitiveness Index (GCI)1  and IMD World Competitiveness Reports.

Active identification of areas in which ASEAN countries could increase their competitiveness has been key. We have noticed a particular emphasis on trade facilitation, with countries asking themselves how they can make the process of trade easier for businesses in terms of customs and the harmonisation of standards.

There has also been significant emphasis placed on increasing the efficiency in public institutions including regulatory agencies. Indonesia, for example, has allocated greater resources to improving the efficiency of its government agencies. Malaysia has implemented government transformation programmes, aimed at building an efficient and competitive market for goods and services.

GCI placed Malaysia 8th globally in terms of the lack of burden of government regulation last year. Do you think that this is a good example for ASEAN countries in order to increase competitiveness?

Mr Pushpanathan:
Malaysia has been identified as one of the ASEAN countries effective in keeping the burden of government regulations low. In the ranking of ASEAN countries, Malaysia now ranks second only to Singapore having put significant emphasis on this issue. Malaysia’s focus on reducing regulation is evidently paying off and other countries will likely consider following suit.

Malaysia’s private sector is highly sophisticated and innovative, which bodes well in the country’s aim to become a high-income, knowledge based economy by the end of the decade. This is one of the most critical factors that will help Malaysia in becoming more competitive in this region.

How can ASEAN as a region become more competitive?

Mr Pushpanathan: Easing the burden of regulation is key for ASEAN to increase its competiveness as a region. The simplifying of regulation and the harmonisation of currently differing regulations will help countries achieve the ‘single market’. Mutual recognition of each other’s regulations and standards would be a promising first step towards harmonisation and would facilitate an increased trade in goods.

The best way for the region to become more competitive is to ensure that the ASEAN Economic Community is developed successfully. The AEC will provide a platform and opportunity to boost the region as a whole. The ASEAN Economic Community will not only help countries meet the requirements of the single market, but will go further by helping to provide best practices that countries can implement to improve their competiveness. This process will be valuable to strengthening the competitiveness of growing economies such as Lao PDR and Myanmar, which are now being considered in global competiveness rankings.

What can the food industry do to support ASEAN countries in its goal to be more competitive?

Mr Pushpanathan: ASEAN has made the agri-food sector one of its priority areas for growth. The industry has vast knowledge of the food sector, in terms of technology, governance and regulation and it is in these areas that the industry can support ASEAN’s growth in competitiveness. At a regional level, there are global companies within the food industry who have a wealth of experience of regional integration efforts in other areas of the globe and can share best practices within ASEAN.

The food industry has the opportunity to be an asset to ASEAN countries in helping to address and solve some of the problems that it might face in its strive to be more competitive.

One area that the food industry could help to significantly improve ASEAN’s competiveness is trade harmonisation. With the help of the ASEAN Food and Beverage Alliance (AFBA), ASEAN will be able to look at some of these issues facing the private sector and the industry as a whole, particularly nutrition labelling and import/export certification. Currently the food industry is very active across ASEAN. By increasingly engaging ASEAN officials, AFBA seeks to build a strong partnership to help increase the region’s competitiveness.

Klaus Schwab, World Economic Forum, The Global Competitiveness Report, 2013–2014

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