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WORLD ECONOMIC FORUMíS

ASIA STRATEGIC INSIGHT ROUNDTABLE

 

SEOUL, REPUBLIC OF KOREA

13 Ė 14 JUNE 2004

 

PANEL ON

TRADING UP: WHAT NEXT FOR SOUTHEAST ASIA

 

ADDRESS BY

MINISTER OF AGRICULTURE AND

AGRO-BASED INDUSTRY

MALAYSIA

 

Hon. Chairman,

Distinguished participants,

Ladies and Gentlemen

 

I would like to take this opportunity to thank the organizer of this eventful meeting for inviting me to speak on an issue that means a lot to me, that is the issue of agriculture and its significant role in the integration and the furthering of trade relations between Southeast Asia and its trade partners.

2.     We are aware that the agriculture sector has always been a well-protected sector in most countries, with much emphasis given to the effort to attain self-sufficiency in food production.  In a region with abundant supply of land and water, two determinant factors for agriculture activities, Southeast Asian countries have always strived to ensure that this sector is not sidelined in their development efforts.  In fact, the governments of Southeast Asian countries today continue to give emphasis and priority to the agriculture sector to ensure that its global competitiveness will remain strong.

3.     In Malaysia, agriculture sector is being promoted as an important engine of growth and eventually to become the mainstay of the nationís economy.  We also know that Thailand is noted for its well-developed aquaculture industry, while Singapore, with her limited natural resources, has established herself as one of the leading trading partners in the region by offering her transhipment facilities. This has all shown that agriculture sector proves to be a dynamic sector which provides opportunities to all, regardless of location and resources.

Ladies and Gentlemen,

4.      We realized that most countries of Southeast Asia are now capable of exporting their agriculture produce to other countries.  At the same time we acknowledged that most trade in agricultural products occur among developed countries.  So how do developing countries reconcile to this scenario since agriculture exports still remain significant for developing countries? Within the Southeast Asian region, intra-trade agreements are currently being applied to facilitate trade among the member countries of ASEAN.  ASEAN Free Trade Area (AFTA) which came into full force last year has positively facilitated and increased the trading activities among member countries in ASEAN. The full implementation of AFTA means that by 2010, tariff rates for agriculture products will be below 5% or totally eliminated, with the exception of products that fall under the highly sensitive lists.  This will definitely pave the way for increased trade in food and agriculture products in the region.  It has been shown that the lowering of tariffs to minimal levels in ASEAN has resulted in a substantial expansion of intra-ASEAN trade. In fact, the intra-ASEAN trade for the Philippines, Singapore, Thailand and Malaysia alone showed a significant increase of 8.6 percent to US$153.7 billion in 2003 from US$141.5 billion in 2002, while the first six months of 2003 recorded US$81.7 billion. This means that in applying the concept of Ďprosper thy neighborí, ASEAN has proven its strong commitment in fostering close cooperation among its members.

5.     Growth rates among ASEAN countries are predicted to be between 5 to 8 percent for the year 2004. A steady GDP growth rate among ASEAN countries indicates ASEANís high potential in becoming a big trading area in future.  The past five years have seen a rise in exports to the United States alone.  Collectively, US imported about US$78.3 billion from ASEAN in 2002, but only fish, crustaceans and molluscs fall among the ten major export commodities. In addition, about sixty percent of agricultural imports into the EU come from developing countries, of which agricultural products from ASEAN countries totaled Euros 6.1 billion in 2002. While it is appropriate to say that the intra trade in agriculture within the region is relatively small, Southeast Asian countries must also do more to ensure that agriculture commodities contribute a bigger proportion to total exports.

6.      Even though the future for agriculture trade looks good for Southeast Asian countries, a lot more can and needs to be done to ensure its sustainability and the economic growth of the region.  From the initial ASEAN plan of integration, member countries are now focusing on their efforts to realize ASEAN Economic Community (AEC) by the year 2020.  The establishment of AEC is expected to provide a single market and production base with free flow of goods, services, investment and skilled labour, as well as a freer flow of capital in the region.  In pursuing this, efforts are being made to strengthen the implementation of AFTA, achieve free flow of trade in services earlier than 2020, and to accord priority towards integration of eleven priority sectors, which among others are the agro-based products and fisheries sector.

 

Ladies and Gentlemen,

7.     One of the biggest challenges among Southeast Asian countries is the similarity among them which is evident in so many ways, especially in their natural resources.  With the exception of Singapore and Brunei, the other countries are blessed with fertile lands for agriculture production. Basically, we are all producing almost the same products, and are all eyeing for overseas market.  In view of this, competition for market share is inevitable.  So, how do we address this issue?  One obvious answer is to compete with each other.  But then again, to ensure greater success, we know that we have to work together as a regional grouping. While we cannot deny individual efforts by each country to gain market access, it is imperative that Southeast Asian countries collaborate to gain market access, particularly the EU market.

8.     It is acknowledged that the ten Southeast Asian countries of ASEAN have moved forward in its aim to be one of the leading trading partners in the world.  The signing up of a number of agreements with other countries is an important step in achieving this.   ASEAN has signed agreements with the three economic tigers of Asia, namely China, Japan and Korea.  The agreement with ASEAN-China provides for the establishment of ASEAN-China Free Trade Area within ten years through progressive elimination of tariffs and non-tariff barriers in goods, and also for strengthening and promoting cooperation in areas of mutual interest, particularly in five priority sectors, which also covers agriculture sector.

9.    ASEAN countries recognized the need to be competitive, yet at the same time to promote ASEAN as one regional market.  It is with this intention that ASEAN views the surging Chinese market not as a threat but as an opportunity. We acknowledged that ASEANís trade with China is on the rise, and this has led to the establishment of the ASEAN-China Free Trade Area. In fact, most ASEAN countries now have a trade surplus with China.  However, animal and vegetable oils and fats are the main major export commodities in the agriculture trade between ASEAN and China. This situation certainly needs to be further improved. Therefore, it is logical to say that ASEAN countries should take advantage of the potentials that the Chinese market can offer for a wider range of agricultural products from ASEAN.    

10.    We are aware that penetrating the European market is as tough as it gets. With WTO and trade liberalization at a multilateral level, all products entering overseas market will have to comply with stringent sanitary and phytosanitary (SPS) regulations, EUREPGAP and other standards and quarantine measures to ensure food safety and quality.  It is because of the inability of developing countries to comply with these standards and procedures that the exports of their agricultural products are faced with difficult market access. It is certainly timely now for ASEAN to speed up the setting up of its own SPS regulatory body, and move together as a union if it wished to become a strong trading group in future.  As it is, each country is already strengthening its own SPS regulations to comply with othersí requirements. The relevant authorities should sit down together to consider this proposal and I would certainly like the ASEAN Secretariat to give this matter some thought.

 

Ladies and Gentlemen,

11.    There is no doubt that agriculture has helped to bond the countries of Southeast Asia.  Similarities in climatic factors and natural resources have enabled us to collaborate towards the betterment of the region.  And the establishment of ASEAN and the vision for ASEAN Economic Community has proven so.  Likewise, the shared concerns in trade in agriculture products have further strengthened the need to collaborate and also assist the other countries in the region.

12.    In conclusion I would like to reiterate that agriculture certainly has a significant role to play and will continue to contribute towards the furtherance of trade relations between countries of Southeast Asia and its trading partners.

Thank you.

 

Source: Ministry of Agriculture and Agro-Based Industry Malaysia  

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