Thursday, August 27, 2015

Common ASEAN Driving License vs. Mutual Recognition of Driving Licenses

Today's Jakarta Post reports on an ASEAN initiative to create an ASEAN driver's license:

The Transportation Ministry's director general for land transportation, Santosa Eddy Wibowo, said the common driving license was aimed at facilitating cross border transport between ASEAN member countries. "[The license] will be for all citizens of ASEAN countries. It will be an international standard license at the ASEAN level," Santosa said as quoted by
He further said that in Indonesia, the document will be bilingual, in Bahasa Indonesia and English. "It is our obligation now to translate [the existing Indonesian driving license forms] into English," he said, adding that the same would go for the KIR (vehicle road worthiness test) certificate. "But we should first consult the police."
I have noted earlier that ASEAN already has a mutual recognition agreement on driving licenses. It just doesn't seem to be implemented properly.  Hence creating a common driving license is a reasonable approach to what should be a mundane, yet important issue in cross-border movement of vehicles.

The real question is the infrastructure that ASEAN will establish to verify and keep track of driving licenses.  Sharing information among the ASEAN countries, particularly electronically, has proven difficult over the years, whether dealing with the ASEAN Single Window, self-certification of origin, common visas or even e-mail.  Full connectivity is dependent on improving both the physical and virtual infrastructures of ASEAN.

Wednesday, August 26, 2015

American Companies Upbeat on SE Asia and TPP, Not So Much on RCEP and AEC

Today the American Chamber of Commerce in Singapore and the US Chamber of Commerce released their annual ASEAN Business Outlook, a survey of top-level executives in American companies in the region.  Although the survey respondents were generally optimistic, the level of optimism has fallen in recent years, according to a Singapore Business Times article:

In a poll of 471 senior executives representing US companies in all 10 Asean countries, 72 per cent reported that their companies' level of trade and investment in the region has increased over the past two years, and 86 per cent of respondents expect it to increase over the next five years.

"The Asean region continues its solid growth despite regional and global economic headwinds, and this survey demonstrates that US businesses remain confident about prospects in Asean," said Tami Overby, US Chamber of Commerce senior vice-president, Asia, who added that this confidence cannot be taken for granted. "We have also seen a modest, but clear, downward drift over the past several years, in terms of some of overall indicators of optimism."

More than half of those surveyed said that Asean markets have become more important in terms of their companies' worldwide revenues over the past two years - this is 10 percentage points lower than reported two years earlier.  Two-thirds (66 per cent) of respondents this year expect Asean to become more important in terms of worldwide revenues over the next two years. While still high, this is seven percentage points lower than two years earlier.

For me, the survey continues to confirm the mixed sentiment of the US business community regarding the AEC.  Although 75% of respondents said that the AEC was important to their operations, 51% of all respondents indicated that they had not developed an AEC-specific strategy.  Moreover, when asked to cite a specific AEC agreement that was important to their companies’ operations, a much higher percentage of respondents cited AEC agreements dealing with investments and services than agreements dealing with goods:

            ASEAN Framework Agreement on Services                             70%
            ASEAN Comprehensive Investment Agreement                       63%
            Trade Facilitation Workplan and Customs Agreement              66%
            ASEAN Trade in Goods Agreement                                          58%

Again this reflects the American business community in Southeast Asia’s focus on services and distribution/marketing of goods, rather than the production of goods, as I have commented in earlier posts.  In other words, the American business community has much more at stake in the single market to be created by the AEC, rather than the single production base; with the single market taking that much more time and effort to develop, American companies are understandably more reserved about the AEC’s prospects.

For similar reasons, American companies are more optimistic about the Trans Pacific Partnership (TPP) than the Regional Comprehensive Economic Partnership (RCEP).   According to the survey, 46% of ASEAN respondents said that the TPP would have a positive impact on their operations (including 56% of respondents from ASEAN members who are part of the TPP talks).  On the other hand, only 34% of ASEAN respondents said that RCEP would benefit their operations.  These results are understandable, since the TPP will have much wider and deeper regulatory effects on services, investment and market access than the RCEP, which is focused mainly on harmonizing existing obligations under the ASEAN FTAs.

In any event, improving American business sentiments regarding the AEC will require improving governance at the national and regional levels in ASEAN.  That in turn will require improving the legal and institutional foundations of the ASEAN Economic Community.

Tuesday, August 25, 2015

Wrap-up of ASEAN Economic Ministers Meeting

This weekend the ASEAN Economic Ministers (AEM) was held in Kuala Lumpur.  I provide below some highlights from the AEM and related meetings:
  • RCEP – Malaysian minister of international trade and industry Mustapa Mohamed said that the RCEP parties had agreed to a tariff reduction modality for the agreement.  According to Dato Sri Mustapa, 65% of tariff lines would be zero-rated immediately upon the RCEP agreement taking effect, with 80% of tariff lines at zero rates within 10 years. Although ASEAN and its FTA partners already had tariff reduction commitments, this was not the case for all RCEP partners, such as China, Japan and India.  Dato Sri Mustapa said that details would be worked out at the next negotiating session in Korea in October, but that technical issues could lead to RCEP’s conclusion only in 2016.
  • ASEAN+ FTAs – Dato Sri Mustapa also said that ASEAN’s FTAs with Korea and Japan would be expanded to include services and investments, and the FTA with China would be upgraded.   This represents improved coverage for those FTAs, especially when compared with the ASEAN FTA with India, which does not cover investment (the ASEAN-FTA with Australia-New Zealand covers goods, services and investment). It also represents progress in RCEP, as that blanket agreement also includes services and investment.
  • ATIGAIndonesia said that it had the continued support of  the other ASEAN members to exclude alcoholic beverages from the 0% duty rate under the ATIGA.  Indonesia said that the exclusion was consistent with  Article 8 of ATIGA provides a general exception from trade liberalization commitments for measures “necessary to protect public morals.”
  • AEC -- The AEM noted that 91.5% of "prioritized" AEC goals had been met.  This refers to the items which should be completed by end of 2015, not the total AEC Blueprint items (of which the completion rate has not been updated). A new AEC Scorecard report should be released at the November ASEAN summit, along with the ASEAN Trade Repository.  A new AEC Blueprint 2025 will be issued at the November summit as well.