By DASHVEENJIT KAUR / Pic by MUHD AMIN NAHARUL
Asean has to maintain its momentum towards achieving the Asean Economic Community (AEC) which is still a work in progress, according to HSBC Bank Malaysia Bhd.
HSBC’s international subsidiary banking country head Ian McElwain said there was commitment among Asean members, but the momentum has to continue despite the hurdles.
“The AEC is a good way to establish a clear path to understand free trade and work on further improving transpa- rency,” McElwain told reporters during HSBC’s media briefing on Asean’s future prospects in conjunction with its 50th anniversary.
“Perhaps the biggest benefit of the upcoming AEC is the expected boost this will give to intra-Asean trade.
“Most Asean nations have previously put their efforts into developing external relationships with the major trading nations like the European Union, Japan and the US through bilateral and free trade agreements,” he said.
McElwain said the AEC provided an opportunity to refocus trade efforts within the region, especially countries that are rapidly developing.
Asean fell short of its target of realising the AEC by the end of 2015, deferring 105 of its 506 measures.
A successor blueprint called the “AEC Blueprint 2025”, which lays out the work for Asean economic integration in the next 10 years, was adopted at the 27th Asean Summit in November 2015.
“The AEC is headed in the right direction in terms of scope and ambition. Member states are committed — especially when there is increasing uncertainty and rising protectionist pressures in the global economy,” McElwain said.
According to HSBC, Asean marks its 50th anniversary with its biggest economies pledging to double infrastructure investments to more than US$700 billion (RM3 trillion) in a five-year span that could enhance trade, tourism and development to drive sustainable economic growth for decades to come.
“Transport initiatives are a key focus for budgeted spending between the years 2016-2020, with Indonesia and Thailand at the forefront of the infrastructure push.
“Malaysia’s infrastructure — which is largely mature as the country has heavily invested in road and rail infrastructure over the past few years — is seeing a push to improve internal safety and external connectivity,” it said.
McElwain added that with infrastructure as a crucial determinant of competitiveness, investment in this area is critical to long-term economic health. China’s Belt and Road Initiative (BRI) is a prime example of this reaching out policy, the bank highlighted.
He said under the initiative, China aims to trigger demand for materials and goods at home by investing in strategic infrastructure projects abroad, growing economic ties along its old Silk Road to Europe and along newer maritime links in and around Asia and Africa.
“China expects annual trade with these countries to be worth US$2.5 trillion within a decade, up from US$1 trillion in 2015.
“In fact, Malaysia continues to gain from China’s economic expansion,” McElwain said.
China has remained Malaysia’s largest trading partner for the seventh consecutive year since 2009. Malaysia’s trade with China for the first 11 months of 2016 registered a growth of 2.7% to RM216.27 billion.
HSBC forecast bilateral trade between Malaysia and China to surpass US$100 billion by the end of 2017, supported mainly by BRI.