Singapore Prime Minister Lee Hsien Loong (
"More needs to be done to liberalize economic sectors and remove internal barriers to business and investment in the region," Lee told a business forum on the sidelines of the annual Association of Southeast Asian Nations summit.
"One reason why ASEAN has not been more successful in attracting investments is the relatively high costs of operating in the region," he said.
PHOTO: EPA
"ASEAN currently still operates as 10 different economic entities with different rules and standards, all of which raise transaction costs," he said.
Lee said the bloc must put aside its squabbles and embrace foreign investment and competition.
"Even though there will be political sensitivities, ASEAN must find ways to open up more economic sectors, remove non-tariff barriers and reduce costs for business to operate seamlessly across individual economies," he said.
Lee cited a study commissioned by ASEAN which showed that an integrated market would boost the region's gross domestic product by 10 percent and cut operational costs by one-fifth.
ASEAN represents a market of some 550 million people with a combined GDP of US$1 trillion, but its members range from wealthy Singapore to impoverished Laos, and from democracies like the Philippines and Thailand to military-ruled Myanmar.
Lee said the Asian economic landscape was being shaped not only by the rapid rise of China and India but also by the resurgence of Japan and an aggressive push in South Korea to tap new growth areas like media, entertainment and information technology.
"We face a fundamental choice -- we can either move forward to seize the opportunities opening up in the region, or shrink back at the formidable competition that is emerging," he said.
With ASEAN fragmented, investors will think it is "too small to pay attention to," he said.
Lee cited studies showing that China drew US$60 billion in foreign investments last year, or about 2.5 times the amount that flowed into ASEAN.
"In order to stay in the game, ASEAN must therefore take decisive action. It must link up more closely to its partners. Amongst ourselves, we must integrate our economies more rapidly so that we can be more competitive as a whole region," he said.
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