Asean Ministers Gather to Discuss Trade, Economic Prospects

By Shamim Adam

Aug. 26 (Bloomberg) -- Southeast Asian trade ministers are meeting this week to find ways to boost linkages and advance talks with some of their biggest economic partners as they seek to form a European Union-styled community.

Officials from the Association of Southeast Asian Nations will hold discussions with their counterparts from Japan, China, South Korea, India, Australia and New Zealand in Singapore starting tomorrow. They will meet with business leaders today.

Southeast Asian nations last year agreed to open up their markets further in a bid to create an economic zone modeled after the EU, without a common currency, by 2015. The group has said that it needs to improve its competitiveness as China and India, the world's two fastest-growing major economies, attract an increasing chunk of global investment.

``To gain our share of investments and jobs, Asean needs to become a well-integrated community,'' Singapore Prime Minister Lee Hsien Loong said today. ``We have to continue strengthening our economic foundations, reducing tariff and non-tariff barriers and simplifying business regulations.''

The 10-member group attracted over $60 billion of foreign direct investment in 2007, Lee said. That's up from more than $40 billion the year before. Still, China alone attracted about $83 billion of foreign direct investment last year.

``Foreign investments are critical to all Asean countries because we rely on them to create jobs, to bring in new technology and to open up access to markets around the world,'' Lee said.

India Talks

The region's ministers will attempt to conclude free-trade talks with India's Kamal Nath this week, said former Asean secretary-general Ong Keng Yong, whose term ended last year.

An accord between India, the world's second-most populous country, and Asean has been delayed repeatedly because of disagreement over tariff cuts.

``All the big issues have been negotiated and agreed upon,'' Ong said in an interview with Bloomberg Television in Singapore yesterday. ``We have some loose nuts and bolts to tighten up and I believe this meeting here in Singapore between the Asean and Indian ministers will settle this last bit.''

The group is also pursuing agreements with Australia and New Zealand, China and South Korea to bring down barriers to trade as part of efforts to develop what it calls an Asean Economic Community.

``These agreements are important,'' Singapore's Lee said. ``They enhance market access for our products and services. Such agreements also lay the foundation for us to forge stronger links with the other Asian economies.''

China Trade

China signed a limited free-trade-zone agreement with Asean in July 2005, and Southeast Asian trade with China reached $203 billion last year. It will gradually eliminate levies on about 7,000 commodities from Asean by 2010, covering 93 percent of China's imports from the region.

Southeast Asia's leaders should find ways to help companies become more effective as the region faces rising costs and slowing economic growth, said Robert Yap, chairman of the Asean Business Advisory Council.

Crude oil reached a record $147.27 on July 11, and rice, wheat and palm oil surged to unprecedented levels earlier this year, leading to higher prices for consumers and companies. The U.S. housing recession that has roiled financial markets is hurting Asian exports and threatening expansion in a region the Asian Development Bank says will account for more than a fifth of global growth this year.

``The sentiment of businesses today isn't good,'' Yap told Bloomberg Television today. ``Cost is a pressure. That has created a lot of challenges for businesses operating in Asean.''

Asean includes Indonesia, Thailand, Malaysia, Singapore, Brunei, the Philippines, Cambodia, Laos, Myanmar and Vietnam. Formed in 1967, it has a combined gross domestic product of more than $1.1 trillion and a population of about 570 million.

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net