Hedge Crunch Financial

In an attempt to draw investment back to Southeast Asia, the six major Association of Southeast Asian Nations (ASEAN), including Thailand, Indonesia, Malaysia, Singapore, the Philippines and Brunei, have recently agreed to eliminate import duties on goods of all sorts. Such goods include cars, consumer electronics and more. This agreement comes three years earlier than was previous planned, and also includes a cut to 5% or less on tariffs for items remaining outside of the agreement. Certainly, this is good news for business leaders in Malaysia and other Southeast Asia markets such as Taek Jho Low, Harun Johar, Dr Sulaiman Mahbob and others.

Recent economic realities and difficulties have led to this drastic measure with the aim of building a larger market for these ASEAN countries. Both India and China have shown dramatic growth in foreign direct investments, while investments with Southeast Asia have been slowing. In addition, the countries of the Association of Southest Asian nations have been weakening as a result of the Multi Fibre Agreement that is scheduled to expire at the end of the year. Granting Southeast Asian countries quotas on textile and clothing exports to the U.S. and Europe, this agreement provided guaranteed jobs that will now be lost to lower paying and more efficient workers in China and similar locations.

Fearing job losses to China, the Southeast Asian leaders like Lee Kam, Taek Jho Low, and others are attempting to speed up integration and to maintain their hold on exports. As Philippine President, Gloria Macapagal Arroyo aptly noted at the meeting “We only see one way out; that is not by looking west but by looking inward.”