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Deepening services and investment integration in the region
SERVICES are a key engine of growth in ASEAN, accounting for slightly more than half of the region’s economy over the last decade. Travel, transport and other business services dominate ASEAN services trade.
Services sectors attract substantial foreign direct investment (FDI) flows into the region, reaching almost 50 per cent of total FDI flow in the 10 years till 2016, according to data from ASEANStats.
Intra-ASEAN trade in services is also showing robust growth. Since 2012, the volume of intra-ASEAN trade in services has exceeded US$50 billion, with the services sector set to become an increasingly important pillar of regional growth.
As part of its 2018 ASEAN chairmanship, Singapore is working to increase in-tra-ASEAN services trade and reduce impediments to investment, so as to boost ASEAN’s attractiveness as a business and investment destination.
These are some of the related initiatives.
The ASEAN Framework Agreement on Services (AFAS)
Singapore is working closely with ASEAN Member States to complete the 10th Package of Commitments under the ASEAN Framework Agreement on Services (AFAS), which was signed in 1995.
The AFAS is a longstanding commitment under the AEC Blueprint to substantially improvemarket accessfor ASEAN service providers and progressively reduce barriers to trade for service suppliers. The 10th Package is the final one and marks a significant milestone after 23 years of progressive liberalisation of services trade among AMS.
The ASEAN Trade in Services Agreement (ATISA)
The next step under ASEAN’s services integration journey involves negotiating and implementing the ASEAN Trade in Services Agreement(ATISA), tofurther integrate services sectors in the region, increase in-tra-ASEAN services trade, and improve the competitiveness of ASEAN’s services exports.
It will complement ongoingeffortstoattract foreign direct investment and exchange best practices across the region.
The ASEAN Comprehensive Investment Agreement (ACIA)
The ASEAN Comprehensive Investment Agreement was signed in 2009 and entered into force on March 29, 2012, with the aim of creating a free and open investment environment in the region.
The ACIA covers almost all forms of investment, with liberalisation provisions for key sectors: manufacturing, agriculture, fishery, mining and quarrying, as well as services related to these sectors.
The agreement protects investors by levelling the playing field and compensating those who become negatively affected if a country modifies their commitments.
The ACIA covers not just ASEAN investors but also investors based in ASEAN countries, to make the region more attractive to foreign investments.
Singapore will work to enhance the agreement as part of its 2018 chairmanshipbymaking improvementsin liberalisation and transparency.
ASEAN Declaration on Cruise Tourism
ASEAN has the potential to generate growth of up to 4.5 million passengers cruising in South-east Asia by 2035 – a ten-fold increase from 2016.
This growing demand for cruise tourism is expected to spur advancements in regional port infrastructure, catalyse ship deployments and create spin-off benefits for local tourism industries and stakeholders across the region.
As part of ASEAN’s ongoing efforts to transform South-east Asia into a vibrant cruising destination, the joint ASEAN Declaration on Cruise Tourism was officially endorsed in January 2018.
The Declaration outlines ASEAN’s commitment to further develop cruise tourism byimprovingtheclarityof policies and regulations, efficiency in administration processes, as well as refining business practices to be fairer and more responsible.
- Since 2012, the volume of intra-ASEAN trade in services has exceeded US$50 billion, with the services sector set to become an increasingly important pillar of regional growth.
- A HSBC study identified that ASEAN needs more than US$ 2.1 trillion of investments in infrastructural spending by 2030 with current projections only covering US$910 billion.
- The AFAS and ATISA will enable freer services trade in the region and create a more stable and predictable environment for service providers;
- The ACIA creates a more open investment environment in the region by improving transparency in ASEAN’s commitments;
- The ASEAN Declaration on Cruise Tourism outlines ASEAN’s commitment to further develop cruise tourism by improving the clarity of policies and regulations, efficiency in administration processes, as well as refining business practices to be fairer and more responsible.