Thank you very much to AmCham Singapore for inviting me to participate in this discussion with my illustrious co-panelists.
Parag and I crossed paths when we were on our first book tours a while ago. I haven’t met Atilla before but I’ve flown on Air Asia, so that makes us old pals, and am so thrilled about the ASEAN pass that Air Asia has introduced. I think it will do a lot to build awareness about ASEAN. Ambassador Ong has forgotten more about ASEAN than I will never know. So I am honored.
The ASEAN Economic Community is good news for the United States. We—by which I mean you—are deeply invested here. The stock value of U.S. direct investment in Southeast Asia is greater than any other country’s. In fact, American private sector investment, over $200 billion, is more than China’s, Korea’s, and Japan’s combined. As a whole, American business invests considerably more here than it does in China.
And I frequently make the point that the way you invest is different than others—you hire locally, you train employees, you bring technology, you invest in local communities, and you stay for the long haul.
America’s economic future is tied to Asia, and Southeast Asia has been a remarkable engine of economic growth. If ASEAN were a country, it would be our fourth largest trading partner, responsible for over half a million jobs back home.
Far into the future, this region will continue to play a significant role in promoting economic prosperity for the United States, the region and the global market. Its growing middle class and young workforce are two of the reasons for that and a third is ASEAN, the organization, which helps underwrite peace in the region and is charting the course for the ASEAN Economic Community.
Part of the appeal of the AEC is about profits, of course. The ASEAN community is making the flow of goods, services, capital and labor more free, improving your bottom lines and also the lives of the people here.
But there is another reason the U.S. government supports the AEC. And that is because a more prosperous, more integrated Southeast Asia will mean a more secure and stable Asia-Pacific region.
As I hope is accepted wisdom by now, 2015 is not the end for the AEC. It’s an important year, and many in the region are working furiously toward the December 31 deadline, but regional integration is a process that will continue well into the future.
2015 is a milestone not the end zone.
The good news is that in my meetings with ASEAN leaders and thinkers, I sense a palpable political commitment to seeing this process through to its end. There is a general consensus that ASEAN has to do this for its own good—that it cannot turn back.
And when we look at the agreements that implement the AEC vision, the foundation is strong. The ASEAN Trade in Goods Agreement, the ASEAN Framework Agreement on Services, and the ASEAN Comprehensive Investment Agreement are in place. They provide a road map. And they set ambitious goals.
The real question is: on what timetable. All along, this process has been gradual: step by step, and it continues that way. In 1992 when this process first began, nobody believed that ASEAN tariffs could go down to nearly zero, and yet here we are.
Tariffs are the AEC poster child, but a lot remains to be done in the other areas. There are numerous national level implementation hurdles for the regional commitments.
The regulatory infrastructure remains weak in some ASEAN Member States, and they lack the capacity to make progress on necessary reforms quickly even if the will is there. In some cases, countries want more time to phase in compliance with some of the targets.
And in other cases, short-sighted domestic interests are creating resistance to the reforms needed for greater integration. But we’ve seen this movie before, in many countries, including, I daresay, our own, and I believe this story will eventually have a happy ending.
And that includes for you because under the AEC, foreign firms operating in ASEAN countries can often get the benefits of ASEAN firms.
What is the U.S. government doing to help economic integration here? Our major contribution has been toward the ASEAN Single Window, a central trade facilitation project which will speed time, lessen paperwork and reduce “unexpected fees” for cross-border trade. Since 2008, the U.S. has invested over a million dollars per year in technical assistance, training, and other capacity-building events involving over 1,500 participants. We’ve helped seven Member States complete pilot testing of parts of their IT infrastructure in their own National Single Windows.
We have provided extensive legal and technical assistance that has directly contributed to the finalizing of the Protocol for the Legal Framework of the ASEAN Single Window, which will be on the table for signature at the ASEAN Finance Ministers meeting next week. We hope that a limited version of this system will be ready to go live this year.
In addition, in close cooperation with the private sector, including some of you, the United States continues to help ASEAN SMEs develop their business skills, and we are helping connect women entrepreneurs across the region. That is only some of what we are doing.
But let’s talk about you, because you have an important role to play. What I want to stress about 2015 is that now is not the time to sit back and wait to see what ASEAN will achieve or not achieve. The AEC would not be this far along without substantial support from the governments of the U.S. and other Dialogue Partners like Australia and Japan but also, importantly, without contributions to the process from businesses.
The ASEAN Deputy Secretary General whose mandate includes the ASEAN Economic Community has said that he welcomes more private sector engagement. The ASEAN Secretariat wants to hear from you—your successes and your challenges.
AmChams, business councils, and industry associations are essentialparticipants in the dialogue on regulatory reform. You know best how achieving or not achieving the AEC commitments will affect your bottom line, your customers, and your business relationships.
I encourage you to share your experience and the realities you face on the ground with your contacts in government – the ASEAN governments, the ASEAN Secretariat as well as with U.S. government officials. Consider partnering up with local business leaders to make your case. Let us know if we in the U.S. Government can help connect you.
There is a formal complaint process on the AEC that you can also use. Right now it goes through ASEAN Member State government channels, but that could change over time.
You are convincing advocates for speedy reform because you are the ones creating the jobs and opportunities. And the AEC should be a tool for you because, chances are if you are encountering a regulatory roadblock at the national level, there is a regional commitment to dismantle it.
Thank you again for the invitation, AmCham, and thanks to all of you for representing the U.S. in Asia so ably.