A much publicized feature of ASEAN’s development is the so-called “AEC Deadline” which is due at 31st December 2015. The AEC (Asean Economic Community) deadline is rather a misnomer and has led to a great deal of misunderstanding about what it actually means.
As at these pre-deadline days, where we stand is that the entire ASEAN community – meaning all members – have agreed to reduce their tariffs as concern import-export across borders. Of these ten nations however, four of them – Cambodia, Laos, Myanmar and Vietnam asked for additional time to get prepared for this. That deadline is the one that expires at the end of 2015. All the other nations – Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand – are already in compliance and have reduced tariffs accordingly. As these include the biggest members of ASEAN, the AEC deadline is something of a moot point. Of the six nations above five are major trade and manufacturing players in their own right. Here is a brief snapshot:
By Chris Devonshire-Ellis
Partner, Dezan Shira & Associates
Part Five in our series comparing ASEAN nation business costs with China
Myanmar remains an enigmatic country – one of the largest and most populated in Asia but also one of its poorest and least understood. It remains a country that has largely stood still for seventy years – hardly any infrastructure of note was developed in the country since the end of WWII. However, its admission into ASEAN, as well as an emerging sense of liberalization is slowly projecting Myanmar back onto the world stage. Infrastructure issues remain problematic however; communications of any sort are practically non-existent outside of the main cities, and even electricity and access to clean water remains awkward. As a result, although the country does attract a great deal of political and romantic imagery that will no doubt stand it in good stead in future years, Myanmar essentially remains a country invested in either by large MNC’s with deep pockets, or entrepreneurial traders and light manufacturers.
By Charles Small
Myanmar’s Deputy Finance Minister, Maung Thein, has announced that the over-the-counter Myanmar Securities Exchange Centre (MSEC) will be replaced with the Yangon Stock Exchange in October 2015. So far, ten companies are expected to meet the criteria for initial listing on the exchange.
The Yangon Stock Exchange Joint Venture Co. is being developed in partnership with two Japanese firms, the Daiwa Institute of Research Ltd, which holds a 30.25 percent stake, and the Japan Exchange Group, with an 18.75 percent stake.
On December 9th, the Second ASEAN-OECD Investment Policy Conference was held in Jakarta, Indonesia, to discuss the continued facilitation and promotion of ASEAN investment for regional integration. The event brought together ASEAN investment policy makers, Organization for Economic Cooperation and Development (OECD) members, and industry leaders, to showcase ASEAN’s regional investment integration achievements since the first conference in 2010. Included at the conference was a discussion of the OECD’s Investment Policy Review of Myanmar, which marked the country as one to watch heading into 2015.
By Edward Barbour-Lacey
With a number of new pieces of legislation and other actions, the Myanmar government has expanded the list of business activities that require the formation of a joint venture (JV), cut import tax benefits for a variety of businesses, and announced that it is seeking investors for a new Special Economic Zone (SEZ).
Plans are currently underway to develop a new special economic zone (SEZ) in Myeik. Located in Myanmar’s southeastern Tanintharyi region, Myeik is home to one of Myanmar’s growing number of industrial zones. According to the Ministry of Electric Power and Industry, a proposal for the new economic zone has been submitted to the regional government for review.
Like many countries in Southeast Asia, Myanmar has been making efforts to transform its agro-based economy into an industrialized one, with the objective of becoming a modern and industrialized nation. Though decades of military rule and isolation have led to underdevelopment and the creation of economic sanctions, reforms in recent years are opening Myanmar to increasing amounts of trade and business with other countries around the globe.
Vietnam and Myanmar are building economic ties, primarily in the banking sector, after signing a memorandum of understanding on cooperation between a state-owned Vietnamese bank and a Myanmar industrial-related bank in Yangon earlier this month.
The two banks that signed the agreement are the Small and Medium Industrial Development Bank of Myanmar (SMIDB) and the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV).
The Manila Times reports, “The MoU is aimed at capacity building and transfer of technology in the banking sector as well as monetary and foreign exchange activities, said SMIDB, adding that Myanmar bank staff will be provided with further training in Vietnam to serve for Myanmar’s SME sector development.”
May 16 – The first round of negotiations on the Regional Comprehensive Economic Partnership (RCEP) wrapped up on Sunday after being launched by the Association of Southeast Asian Nations (ASEAN) and six free trade agreement (FTA) partners last week. The countries in attendance were Australia, China, India, Japan, South Korea and New Zealand in addition to ASEAN’s Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
The RCEP’s main purpose is to create a comprehensive and mutually beneficial economic partnership that has a deeper level of engagement compared to ASEAN’s already existing FTAs. Once fully established, the RCEP will be one of the world’s largest free trade areas, and it will create an integrated market of over 3 billion people with a combined gross domestic product of over US$20 trillion.
Apr. 25 – On Monday this week, the foreign ministers of the European Union (EU) permanently ended the majority of its sanctions against Myanmar. The sanctions have already been suspended for nearly a year, with support for removing them permanently growing in step with recent democratic, economic and human rights reforms in the country.
The move follows in the wake of the United States removing most of their sanctions against Myanmar over the past year, as leaders on both continents seek to reward and further facilitate reforms by Myanmar President Thein Sein. The EU’s arms embargo on Myanmar will continue to stay in place, however, and will not be reviewed for another year.
While the policies of President Thein Sein have largely been welcomed by the international community and businesses looking to invest in the country, several concerns have lingered, especially those regarding the government’s mistreatment and lack of protection of minority groups. This was also noted by EU foreign ministers, who cited “significant challenges” in this and other areas.
Mar. 18 – The first issue of Asia Briefing Magazine, titled Are You Ready For ASEAN 2015?, is out now and available as a PDF download on the Asia Briefing Bookstore. Although both China and India have recently signed free trade agreements with ASEAN, many businesses still seem blissfully unaware of the free trade agreements and economic partnerships that are dramatically changing Asia’s business opportunities. These are agreements that do away with customs duties and tariffs on thousands of products. In this first issue of the bi-monthly Asia Briefing magazine, we focus on the new dawn that ASEAN free trade brings to the entire region, as well as the dramatic added impact of pan-Asian free trade agreements such as the Regional Comprehensive Economic Partnership.
ASEAN – the Association of Southeast Asian Nations – comprises 10 Asian countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam) as an economic trade bloc. That means reduced or zero customs duties across a space that includes the 10 ASEAN nations, and includes additional agreements, still under negotiation, that are expected to link in China, India, Australia, New Zealand, Japan and South Korea with the same ASEAN bloc.