KUCHING: Improvement in trade facilitation is needed in intra-regional trade, particularly as developing economies of the region attempt to diversify away from ‘slumping’ traditional developed country markets that are unlikely to return to a ‘growth as usual’ or ‘trade as usual’ scenario in the near term.
Based on the Asia Pacific Trade and Investment Report by the Economic and Social Commission for Asia and the Pacific (ESCAP), the region had some of the world’s most dynamic economies, so there was enormous potential to promote intra-regional trade and investment in Asia and the Pacific.
However, the reality was that economies of the Asia-Pacific region were still better connected to Europe and North America than between themselves. With cumbersome border procedures, sometimes requiring literally hundreds of approval documents, for many countries in the region it was too often easier and cheaper to trade with far away developed countries than it was to do business with the country next door, it observed.
According to the latest ESCAP estimates, the cost of conducting intra-regional trade in goods in Asia and the Pacific remained very high. Taking EU as a benchmark, the non-tariff- related comprehensive cost of trading goods among the three largest EU economies was estimated to be equivalent to a 32 per cent average tariff on tradeable goods.
China, the Republic of Korea and Japan came closest to matching the low intra-EU trade costs, averaging trade costs among themselves of less than 50 per cent tariff-equivalent in 2007-2009.
Middle-income members of the Association of Southeast Asian Nations (Asean) Indonesia, Malaysia, the Philippines and Thailand, also had achieved a reasonable level of trade facilitation among themselves, with average intra-Asean-four trade costs only slightly more than twice those of the EU.
In contrast, intra-regional trade costs among North and Central Asian countries, at five times those among EU countries, were the highest in the region, followed by those among South Asian countries.
Importantly it was also revealed that trade costs between Asian sub-regions were often higher than those between Asian sub-regions and regions outside Asia.
“For example, the non-tariff-related costs of trade between Asean and SAARC are higher than the costs between Asean and all the other non-Asian countries or country groups. In fact, Asean-SAARC trade costs are nearly double those between Asean and the US,” stated the report.
“Asean is one of the most open economic regions in the world with a total merchandise exports more than US$1.1 trillion with Singapore and Malaysia leading the charge.
“On trade facilitation, the Asean Infrastructure Fund (AIF) established in Labuan, Malaysia address the critical need for infrastructure development in a number of countries of Asean,” stated Gary Krishnan, country specialist with the Southeast Asia Regional Cooperation division for Asian Development Bank.
This was a much-needed effort for the trade facilitation side but more effort was required from all parties as it very clear that more regional cooperation was needed in this area, he explained.
Many countries in Asia and the Pacific had developed automated customs or port systems, and many were now moving towards implementation of fully-fledged national single windows.
However, these systems could often handle electronic documents generated within the national territory only, as the electronic data and documents generated by them were often not recognised across borders. The full benefits from developing these e-trade systems were therefore not yet captured, and this issue might be addressed by enhanced regional cooperation, he opined.