The first pillar of the ASEAN Economic Community involves two key aspects on the free flow of goods and free flow of investment in order to transform ASEAN into a single market and production base by 2015. An overview of key trends and patterns of these two fields are presented in ASEAN Community in Figures (ACIF) Special Edition 2014, launched this month by the ASEAN Secretariat.
Intra-ASEAN Trade Grows Faster than Extra-ASEAN Trade
Intra-ASEAN trade increased at a faster pace, with annual growth rate averaging 10.5%, as compared to either overall ASEAN trade (by 9.2%) or extra-ASEAN trade (by 8.9%) during the period 1993-2013. The share of intra-ASEAN trade in overall ASEAN trade has been on an increasing trend starting from 19.2% in 1993 to 22% in 2000 and 24.2% in 2013, and accounted for 25% of the region’s total GDP in 2013. ASEAN is a very important export market (with a share of 15% or higher) for most of the ASEAN Member States (AMSs), and a very important import supplier (with a share of 15% or higher) for all ten AMSs.
Trade Dependency with Major Trade Partners
Some major trade partners, although accounting for a small share of ASEAN total trade, played an important role in some commodities. On the one hand, most major trade partners have selected commodity items in which ASEAN was highly dependent on (with shares of above 75% of ASEAN trade in a particular commodity product). These include imports of meat and wool from Australia and New Zealand; cobalt ores and concentrates from Canada; peanut oilcake and other solid residues from India; and asbestos from Russia. On the other hand, in 2013, ASEAN secured its position as a net exporter of agricultural and manufacturing products, with a trade surplus of US$44 billion and US$7 billion, respectively. The region has also maintained its position as a net exporter of rice, with a trade surplus of US$6.5 billion.
Trade on Priority Integration Sectors (PIS)
Over the period 1993-2013, ASEAN trade in PIS expanded the most during 2002-2007, with exports recording either very high (15% or higher) or high (10-15%) annual growth rates. In particular, exports of automotive products grew appreciably by 34% per year. From 2007 to 2013, exports of wood-based, fisheries, and electronic products dropped significantly, resulting to negative growth rates. Similarly, exports of electronic products slightly declined after enjoying a buoyant growth of 17% per year during 2002-2007. Agro-based, rubber-based and automotive exports maintained high annual growth rates ranging from 9% to 11%, while growth rate of textile exports slowed down to around 7% per year.
Trend of Foreign Direct Investment (FDI)
Data on FDI inflows in ASEAN showed that from 2000 to 2013, intra-ASEAN FDI inflows grew at an average annual rate of around 25%, in tandem with extra-ASEAN FDI inflows, which posted an average annual growth of 13%. ASEAN total FDI inflows stood at US$122 billion in 2013, with extra-ASEAN countries providing US$101 billion. In 2013, major sources of FDI inflows comprised of EU-28 (with 22% share to total), Japan (18.7%), ASEAN Member States (17.4%), China (7.1%), and Hong Kong (3.7%). Economic activities under the Services sector accounted for the bulk of FDI inflows to ASEAN, with an average share of nearly 70% in the last four years, followed by FDI in Manufacturing.