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ASEAN ministers want EU-style group by 2020

Southeast Asian finance ministers met yesterday to discuss ambitious plans for an EU-style economic community by 2020 and free trade deals between the region and China and India.

However, as finance ministers from the 10-member ASEAN gathered behind closed doors, officials and economists acknowledged that targets for signing a free trade deal with China by 2010 and another with India by 2011 may not be realistic.

"Integrating our economies requires hard work, political will and often, tough decisions," Singaporean Finance Minister Lee Hsien Loong said at the meeting's opening ceremony.

"Governments will need to lead the way by implementing sound policies," Lee said.

ASEAN boasts a market of some 560 million people with a US$330 billion consumer market, according to a report by consultancy firm McKinsey & Co last month.

But investment in Southeast Asia has shrunk by 66 percent since the 1997 Asian economic crisis and its collective economic growth has dropped by 50 percent, the report said, underscoring the need for further regional economic integration.

The 37-year-old regional body has been working on an ASEAN Free Trade Area for a decade, but in reality the countries remain a chain of disparate markets.

A lack of political will, unified policies and enforcement means that in some countries officials demand higher tariffs than what has been agreed, goods can take up to five weeks to clear customs and prices on identical items vary on average 31 percent across the region, McKinsey said.

"They have taken too long -- three decades -- and I'm quite positive the free mobility of goods and capital may be another 10 years in the offing," Standard Chartered chief regional economist Joseph Tan said.

Although ASEAN has agreed on the overall framework that the free trade area should take, without a regional body to oversee it has become a "loosely strung together series of bilateral agreements," Tan said.
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