THE Association of Southeast Asian Nations (Asean) region and China can strengthen economic cooperation by engaging in the manufacturing of high-value products, an official of Standard Chartered Bank (SCB) said.
Heidi Toribio, SCB Regional Co-Head for Client Coverage in Asia, said on Thursday that the two major economies can boost growth by focusing on the production of automotive, electronic vehicles and batteries, and consumer electronics.
She noted that Thailand, Indonesia and Malaysia—accounting for bulk of the car sales in the region—are leading the automotive sector.
In the Philippines, the Department of Trade and Industry launched the Comprehensive Automotive Resurgence Strategy program to boost local automotive production.
Toyota Motors Philippines Corp. and Mitsubishi Motors Philippines Corp. enrolled models Mirage and Vios, respectively, in the incentives program. They are tasked to produce at least 200,000 units in exchange for fiscal support. The Philippines currently has 45 players in the electric vehicle industry engaged in manufacturing, importing, dealing, trading and providing services. The sector has a registered capacity of 150,000 units per year.
Meanwhile, electronics comprises bulk or 62 percent of Manila’s total exports. Toribio noted that consumer electronics in the Asean region are even expected to grow 6.4 percent by 2025.
The SCB official said that energy and resources are also another field of economic cooperation for Asean and China, given that the regional bloc aims to make its renewable energy supply 23 percent of total primary energy by 2025.
In addition, Toribio pointed out that both economies can ink economic deals for information and communication technology.
She noted that the demand for cloud services, which amounts to $4 billion, is expected to increase by 26 percent between 2019 and 2024 with Vietnam at the forefront.
But for the partnership between China and Asean to work, there is a need to look into the regulations per member state, the Asia-Pacific Economic Cooperation (APEC) Secretariat said.
“What really needs to be done going forward is to look at regulatory coherence across Asean and China if this is to grow really. Right now, when it comes to technology and data, the regulation is far too much from economy to economy,” APEC Secretariat Executive Director Rebecca Fatima Sta. Maria explained.
When expanding in Asean market, Toribio also mentioned the need to adapt to certain business models.
Toribio stressed the importance of implementing a digital transformation program for the supply chain, highlighting sustainability initiatives and establishing partnerships to boost market presence.
Currently, Sta. Maria noted that policymakers in the Asean region are working to further improve the bloc as an investment destination.
“A lot of work is going into member states in looking at removing barriers for trade, looking for improvement in infrastructure so that you don’t have this asymmetrical development,” she said.
“We are not there yet, but I think there is a lot of effort being put in to ensure that through the various agreements that we have,” she added, citing the Regional Comprehensive Economic Partnership (RCEP).
RCEP was signed by 10 Asean member states and five Asean free trade agreement partners, including Australia, China, Japan, Korea and New Zealand in November last year. India did not sign, however, due to unresolved trade concerns but the FTA is still open for its accession.
One of the world’s biggest economic deals, RCEP covers roughly a third of the global gross domestic products and international trade.
Image credits: Muhammad Fadli/Bloomberg