ASIAN ECONOMIC COMMUNITY

ASIAN ECONOMIC COMMUNITY

7.

Mdm Ho Geok Choo asked the Minister for Trade and Industry (a) if he will elaborate on the Prime Minister's recent mention that Free Trade Agreements will form the stepping stones for an Asian economic community; (b) what role does he envisage Singapore to be playing towards an Asian economic community; (c) what is the response of the Asian countries with regard to such a vision; and (d) what is the value-add to Singapore with the formation of an Asian economic community.

BG George Yong-Boon Yeo: The Asian economic community is a long term vision for an economically integrated Asia . It is a vision of a community with a small 'c'. At the same time, an Asian economic community should be open and well-connected with other world regions and plugged in to the multilateral trading system.

The Asian economic community can be seen as comprising three core regions: Northeast Asia , Southeast Asia and South Asia . Collectively, the region already constitutes the fast growing region in the world. Over the next four years, Asia (excluding Japan ) is expected to grow at a rate of 5.8%. China has averaged growth

Column: 283

rates of 9%. South Asia is expected to grow faster than the Asia average, at a rate of 6.9% over the next four years. Japan is growing at its fastest rate in 14 years.

Since the economies of Asia differ in levels of development, it would be difficult to realise the vision of an Asian economic community all at once. FTAs are needed as stepping stones. Countries and regions with complementary economic structures, and the political will to work together, can move ahead first to establish FTAs which would show the way for an Asian economic community.

This is already happening. Within Southeast Asia , the ASEAN Free Trade Area is already in place, and ASEAN is now working towards an ASEAN Economic Community by 2020. In Northeast Asia , the idea of an FTA involving Japan , Korea and China has been floated. In addition, these three countries are also exploring FTAs individually with ASEAN. In time to come, these initiatives could build an East Asia FTA. In South Asia , the South Asian Association for Regional Co-operation member countries have signed a Framework Agreement for the South Asia Free Trade Area. India , the largest economy in South Asia , is also exploring an FTA with ASEAN, and is engaged in a Joint Study on economic cooperation with China . Should all these FTA initiatives come to fruition, economic integration would become a reality.

Singapore plays an active role in this construction. Our FTA strategy has been a catalyst. We already have FTAs with Japan and ASEAN and are negotiating or will be negotiating with China , Korea , India , Sri Lanka and Pakistan . Many of our initiatives, such as our FTA with Japan , have led to our partner country's broader engagement with ASEAN. Other ASEAN countries are also beginning to follow suit, particularly Thailand , the Philippines , and Malaysia . At the same time, Singapore believes in promoting open regionalism. Hence, we have also negotiated free trade agreements with other countries, such as the United States , the European Free Trade Association, Australia and New Zealand , and are pursuing other initiatives with other trading partners outside of Asia .

An integrated Asian economic community will help to create peace and prosperity for over half the world's population in this century. It will not be easy and will take many years of effort. Even if we succeed only partially, the effort will be worthwhile. Singapore is well-positioned for this new Asia , not only economically but also culturally. We will benefit greatly from the growth around us.

Column: 283