ASEAN 2020 outlook: South East Asia Needs to be More Connected to Reach its Full Potential

Diep Nguyen

Southeast Asia can lift its economic growth if the region’s business barriers in trade, sustainable infrastructure development, and the digital economy are removed, according to HSBC.

ASEAN 2020 outlook: South East Asia Needs to be More Connected to Reach its Full Potential
Tim Evans, CEO of HSBC Vietnam, said: “South-east Asia has achieved incredible inroads in its economic development over the past 20 years; however, the region runs the risk of seeing growth begin to slow. The key will be how policymakers continue to build greater connectivity across the trade block.”
GDP growth in ASEAN nations averaged 5.5% a year between 2010 and 2018 . HSBC research suggests its contribution to global GDP could rise to 8% if reforms are made.
According to HSBC, there are 3 main areas to foster a more joined-up region: (i) further cutting of non-tariff trade barriers, (ii) developing sustainable infrastructure, and (iii) creating a seamless digital region.
Removal of non-tariff barriers
While most goods trade tariffs have been removed across South-east Asia, more than 6,000 non-tariff trade barriers across the region have emerged .  
Tim continued: “The region has been successful in removing virtually all formal tariffs; however, we’re seeing the emergence of ’below-the-line’ trade barriers instead. These can impact the region’s ability to attract further international investment, particularly in areas linked to the increasing shifts in supply chains, if left unaddressed.”
A significant offset to these barriers will be the ASEAN-led Regional Comprehensive Economic Partnership (RCEP), which makes up 30% of the world’s population and 29% of the world’s GDP . The RCEP is expected to be signed in early 2020.
Other areas to work on in 2020 include:
• Increasing the minimum threshold for goods that would require a Certificate of Origin (reducing the amount of administration)
• Automating customs clearance across all ASEAN member states
• Encouraging the last ASEAN nations, including the Philippines , to join the ASEAN Single Window.
Sustainable infrastructure and greening the region
The second vital element in positioning South-east Asia for its next phase of growth is ramping up investment in sustainable infrastructure that will both bring the region closer together and expand the opportunities for industry.