ASEAN’s manufacturing exports have grown in recent years, due to increased productivity, proximity to large Asian markets, and recently implemented free trade agreements, according to a US International Trade Commission reportissued in August. But challenges remain for future growth, including a shortage of skilled labor, an inefficient system of standards and assessment, and inadequate infrastructure. The report offers a broad picture of ASEAN and regional trends and improvements, then assesses progress in six key areas: electronics, textiles and apparel, wood products, healthcare, auto parts, and agriculture products.
Key findings of the report include:
- China is a major competitor to ASEAN countries in attracting foreign investment and integrating regional production chains, although ASEAN has recently concluded a free trade agreement with China.
- The ASEAN Single Window is ASEAN’s most visible effort to facilitate trade among members.
- ASEAN countries have committed to liberalize trade and investment in logistics services by 2013; some have made reforms but others have contradicted their commitments.
- The ASEAN Secretariat has helped members adopt new e-commerce laws but has contributed less significantly to infrastructure development.
- The ASEAN Industry Roadmaps for Integration have promoted tariff reductions but have achieved mixed success in promoting regional integration.
The report includes a number of useful graphs, tables and data on ASEAN and the region. The following charts show ASEAN trade by partner:
From a US perspective, what is interesting and alarming about the above graphic is the reduced market share for US exports in ASEAN countries, from 13% of all ASEAN imports in 2005 to 10% four years later. China’s exports displaced most of the lost US exports, with China increasing its market share from 9% to 11% in the same time period. Korea and India also made slight gains in their market share.
Trade between ASEAN countries accounts for about one quarter of all ASEAN trade. The report notes that this is a smaller share than that of other regional groups, such as the European Union or the North American Free Trade Agreement (NAFTA). Much of this can be traced to ASEAN’s growing links with China and reliance on outside partners.
The graph above shows the changes in intra-ASEAN trade, though the vertical scale exaggerates the magnitude of the changes. A revised version, showing the relatively unchanged share of intra-ASEAN trade, is presented here:
Despite the small scale of changes, however, intra-ASEAN trade is up significantly since the ASEAN Free Trade Area (AFTA) entered into effect in 1993. At the time, intra-ASEAN trade comprised 19% of all ASEAN trade, compared with 24% today. The rate varies by country; Singapore’s 36% share is due to its important role as port and transshipment point.
Another measure of trade integration is intraregional trade intensity, which compares intra-region trade and trade with the globe. At 4.6% trade intensity, the report notes that ASEAN trade is strong:
ASEAN’s share of trade with itself is greater than would be expected given ASEAN’s importance in world trade.
ASEAN’s trade intensity is significantly higher than for other regional groups, including NAFTA and EU-15, and has grown slightly over the past five years.
Moving away from economics, the report also illustrates internet usage across the ASEAN countries:
Brunei, Malaysia and Singapore show strong internet usage on a per capita basis, with a majority of their populations who regularly use the internet. Thailand and Vietnam surf at about the world average, though Vietnam has shown remarkable growth since 2004. In the five remaining countries, fewer than 10% of the population used the internet in 2008, a rate that is less than half the world average.