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ASEAN: Regional Trends in Economic Integration, Export Competitiveness, and Inbound Investment for Selected Industries

Investigation No. 332-511
USITC Publication 4176


A wide range of factors has supported the growth of ASEAN's manufacturing exports in recent years, but challenges for ASEAN's export competitiveness remain, according to the U.S. International Trade Commission in its latest general factfinding publication.

Produced at the request of the U.S. Trade Representative, the USITC reports that low wages, high productivity growth, diverse production conditions, proximity to large Asian markets, and the region's trade policy environment, including free trade agreements (FTAs), benefit ASEAN’s manufacturing exports, according to the report. A shortage of skilled labor and professionals, the lack of an efficient system for setting product standards and conformity assessment procedures, and inadequate physical and institutional infrastructure are challenges ASEAN still faces.

The report provides an overview of regional trends in Southeast Asia in the areas of economic integration, export competitiveness, and inbound investment for six of 12 priority sectors identified in the ASEAN Economic Community Blueprint adopted in November 2007 (agro-based products, automotives, electronics, healthcare, textiles and apparel, and wood-based products). The report also identifies and describes an industry within each of these priority sectors (palm oil, motor vehicle parts, computer components, healthcare services, cotton woven apparel, and hardwood plywood and flooring) that has undergone significant changes in regional economic integration with other ASEAN members, export competitiveness, or inbound investment in recent years. Information is provided about each industry's export competitiveness, trade flows, investment, and leading competitive factors, including trade facilitation, logistics services, and e-commerce. The USITC found:

  • China is a major competitor to ASEAN countries in attracting foreign investment and integrating regional production chains. However, ASEAN recently concluded an FTA with China. Because China has become an important hub in Asian supply chains, ASEAN countries hope the FTA will offer better opportunities to participate in these networks. ASEAN offers an alternative production location to China for multinational firms wanting to diversify their operations to reduce business and political risks.

  • The ASEAN Single Window is ASEAN's most visible effort to facilitate trade among members, enabling the rapid exchange of standardized data among countries' customs agencies. Currently, the ease of importing and exporting varies widely among ASEAN members; procedural requirements are relatively easy to complete in Singapore, Thailand, and Malaysia but very difficult in Laos and Cambodia.

  • ASEAN countries have committed to liberalize trade and investment in logistics services by 2013. While some members have made reforms, others (notably Indonesia) have introduced restrictive regulations that contradict their commitments. The quality of logistics services – such as customs brokerage, freight forwarding, and express delivery – varies substantially across members. Logistics services are world-class in Singapore but poor in Laos, Cambodia, and Burma.

  • Technical infrastructure (such as plentiful broadband connections), a sound legal framework for electronic transactions, and individuals' skills in using computers are prerequisites for the expansion of e-commerce. The ASEAN Secretariat is committed to supporting wider adoption of e-commerce in the region. It has helped members adopt new e-commerce laws but has contributed less significantly to infrastructure development.

  • While ASEAN Industry Roadmaps for Integration (Roadmaps) have promoted tariff reductions and streamlined certain administrative procedures, they have achieved mixed success in promoting regional integration. Economic factors and national government policies have more influence over regional industrial structures. ASEAN members often still view each other as competitors for inbound investment and jobs, and the six Roadmaps include no legally binding means to enforce member compliance with their objectives.

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