ASEAN

ASEAN’s E-Commerce Agreement

ASEAN’s E-Commerce Agreement

The Southeast Asian digital economy is already estimated to be worth US$72 billion.  The digital economy is on track to hit $240 billion by 2025, more than $40 billion higher than originally projected in a Google/Temasek study.  The region is increasingly home to important unicorns like Grab, GoJek, Lazada, Sea and Tokopedia.  Getting these firms and others that follow to flourish requires a nurturing policy framework.  So far, ASEAN member states have had limited experience in crafting complementary digital regulations.  At the domestic level, many ASEAN countries are headed in problematic directions—creating policies in various areas that could dramatically impede the ability of future unicorns to grow and thrive and strangling the prospects for smaller firms along the way. Hence the necessity for ASEAN to start to tackle e-commerce and digital trade in a regional manner.  The agreement reached in November puts in place some useful provisions to get going.  It urges member states to use paperless trading schemes and the use of information (other than financial services) via electronic means.  It encourages members to be transparent about consumer protection measures and urges online personal information protection.

Window of Hope Towards ASEAN Economic Integration

There is unfortunately no ‘stick’ to compel member states to meet deadlines. Nonetheless, the trade community in each member state can pressure trade policymakers. Reduced red tape in cross-border trade, especially eradicating the submission of repetitive information, will be of extra benefit to small and medium enterprises (SMEs), who are often resource strapped. Since SMEs account for more than 95% of business establishments in ASEAN, the opportunities brought about by the ASEAN Single Window (ASW) makes it a cause worth fighting. Given that ‘a chain is only as strong as its weakest link,’ the success of the ASW is dependent on the quality of NSWs of each member state. The ASW has only experienced incremental progress thus far. Member states should take advantage of digitalization and be relentless in accelerating the progress of the ASW. The grit needed to underpin the ASW will be worthwhile as success of this milestone will bring the region closer to the coveted goal of establishing an integrated market and regional platform.

Capturing the Digital Opportunities for MSMEs

Capturing the Digital Opportunities for MSMEs

Digital technologies have the potential to transform business in ASEAN. McKinsey Global Institute has estimated the total impact of technologies such as mobile internet, big data, cloud technology, and the Internet of Things, could unleash up to US$625 billion in annual economic impact in ASEAN by 2030. Micro, small and medium-sized enterprises (MSMEs) have the greatest potential to benefit from digital adoption given the ability of these technologies to overcome many of the typical barriers faced by MSMEs to exporting and growth, such as building a global business network and promoting their products overseas. However, a new report by the Asia Pacific MSME Trade Coalition (AMTC) warns that if certain key trade-related regulatory issues are not addressed, many MSMEs will not be able to capture this opportunity

RCEP: Nineteen Rounds and Counting…

While RCEP is not the TPP, as a Talking Trade post from last year detailed, these are still extremely complicated negotiations.  The 16 countries involved have very diverse interests and objectives.  All were drafted into this exercise by way of their involvement with ASEAN and each has varying levels of enthusiasm for the integration project. The negotiation agenda is also complicated.  This round saw the continuing expansion of the issues under discussion with the movement of both trade remedies and government procurement from “expert group meetings” to the creation of formal working groups tasked with negotiating potential chapter outcomes.  RCEP now includes roughly 15 substantive topics that have to be concluded simultaneously with 16 different and diverse parties.  Getting to “yes” is going to be tough.

Solving the Many Sides of RCEP

Since work is likely to continue towards solving the final row of the puzzle later, what matters is locking in progress in cracking most of the solution.  Getting the final row done feels very satisfying, but more critical is working out how to get the lion’s share of the rows into place. This is true, even if it turns out that the final rows can’t be slotted into place using the existing directions for solving the puzzle.  It will still push forward trade across Asia in ways that have not been tried in the region before and deliver economic benefits to companies and consumers.   Getting to the end, however, remains a challenging goal.  Solving a “normal” Rubik’s cube with four sides is hard enough.  Completing one with 16 sides is testing the patience and negotiating skills of everyone involved.