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Investment and Integration: The Case of AEC
Sufian Jusoh, Yangon
19.2.2015
AEC Workshop - Brisbane 19 May 2014 1
Investment promotes economic growth and development by building better…
Infrastructure Goods Services
2
The Challenge of Creating New and Better Jobs
3 3
Not All Investments Are the Same, Nor Do They Have the Same Impact on Economic Development
Natural resource -seeking
Market -seeking
Efficiency-seeking
Strategicasset
-seeking
4 4
Why Does the Type of Investment Matters?
• Because each type generates different kinds of jobs.
Small-scale
household based
work
Low-skilled,
labor-intensive
work
Moderate skilled,
varied labor
intensities work
High-skilled,
technology
intensive work
Knowledge-
intensive
Agriculture Apparel Automotive IT
Hardware
Business
Services
Economic upgrading
Type of Work
Source: Gereffi, Luo, 2014. April 1, 2014, World Bank Policy Research Working Paper No. 6847
Because each type of investment creates different types of jobs
5 5
6
Single Regional Market Regional Production Base
The Peaceful, Prosperous, and People-Centric ASEAN
ASEAN Security Community (ASC)
ASEAN Economic Community (AEC)
ASEAN Socio-
Cultural Community
(ASCC)
ASEAN COMMUNITY 2015
Towards ASEAN Community 2015
Dual Track Strategy
Production/Supply Consumption/Demand
7
AEC Blueprints
Single Market &
Production Base
A highly competitive economic
region
A Region of Equitable Economic
Development
A Region fully
integrated into the Global
Economy
6
21
63
23
67
6
35
40 40
60
2 0 1 0
4
0 1
14
7
2 3 3 3 3 3 3 3 3 3 3
0
7 7 7
4 4 5 4 6
8
0
10
20
30
40
50
60
70
80
Brunei Cambodia Indonesia Lao PDR Malaysia Myanmar ThePhilippines
Singapore Thailand Vietnam
BIT
FTA
ASEAN FTA
BIT with AMS
8
Intra-ASEAN Investment
(10,000.0)
-
10,000.0
20,000.0
30,000.0
40,000.0
50,000.0
60,000.0
70,000.0
BruneiDarussalam
Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam
2011 Intra-ASEAN
2011 Extra-ASEAN
2011 Total net inflow
20122/ Intra-ASEAN
20122/ Extra-ASEAN
20122/ Total net inflow
20133/ Intra-ASEAN
20133/ Extra-ASEAN
20133/ Total net inflow
FDI Inflow in Select Economies 2000-2013
-30000
-20000
-10000
0
10000
20000
30000
40000
50000
60000
70000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Australia
Brunei Darussalam
Cambodia
Indonesia
Lao People's Dem.Rep. Malaysia
Myanmar
New Zealand
Philippines
Singapore
Thailand
10
FDI Outflow from Select Economies 2000-2014
-40000
-30000
-20000
-10000
0
10000
20000
30000
40000
50000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Australia
Brunei Darussalam
Cambodia
Indonesia
Lao People's Dem. Rep.
Malaysia
New Zealand
Philippines
Singapore
Thailand
Viet Nam
11
ASEAN IGA
• Protection and Promotion
• Investor-State Dispute Settlement Mechanism
AIA Agreement
• Schedules (I. Facilitation, II. Promotion, III. Liberalisation), Temporary Exclusion List 5 Sectors; Sensitive List 5 Sectors
• Protocol: Temporary Exclusion List for 5 services; Sensitive Lists for services incidental to 5 sectors.
ACIA • Four Pillars, Liberalisation, 2 Annexes: Approval in writing, Expropriation and
compensation, ISDS
• Schedule: Reservation Lists; Came into force on 29 March 2012.
12
ACIA
Protection
Facilitation
Promotion
Liberalisation
13
3rd country national through
juridical person in AMS
Juridical person in
AMS
Natural person of
AMS
14
15
Manufacturing Agriculture Fishery Forestry Mining and Quarrying
16
National Treatment
Most -Favoured-Nation Treatment at pre and post-establishment
Senior Management and Boards of Directors
Freedom to operate without any performance requirement
More transparent,
consistent and predictable investment
rules, regulations, policies and procedures;
Harmonised investment
policies;
Streamlined and simplified procedures for
investment applications
and approvals; and
Dissemination of investment information,
rules, regulations, policies and procedures.
17
ASEAN Investment Website
Main Protections
19
Fair & Equitable Treatment
Full Protection
and Security
No Unlawful
Expropriation
Free Transfer of
Funds
20
Alternative Dispute
Resolutions
Mediation
Conciliation
Consultation & Negotiation
Domestic Courts
Domestic Courts
Domestic Tribunals
Arbitration
ICSID
UNCITRAL
Other Agreed Rules
Evolved Role of ACIA
ASEAN Wide Investment Agreement
Benchmarked for National Level
Investment Law
Major Policy Considerations in Negative List Approach
Standstill Roll Back
Ratchet
Promoted Sectors: Manufacturing
Automotive Philippines, Thailand,
Vietnam
Electrical and electronic Brunei, Malaysia, Thailand,
Vietnam
Iron and Steel Philippines
Machinery and equipment Malaysia, Vietnam
Petrochemicals Malaysia, Brunei
Pharmaceuticals and Life
Science
Brunei
Malaysia
Promoted Sectors: Agriculture and Mining
Agriculture Cambodia
Indonesia (including beef and fisheries)
Lao PDR
Myanmar (including fisheries)
Philippines (including fisheries)
Thailand
Mining Cambodia
Lao PDR
Myanmar
Singapore
Promoted Sectors: Services
Education Primary,
secondary, tertiary
Malaysia
Financial Services Banking Myanmar
Insurance Myanmar
Leisure and
Tourism
Tourism and
Leisure
Management
Cambodia
Lao PDR
Malaysia
Philippines
Singapore
Stakeholders’ Recommendations • Low awareness of AEC. • Business organisations seek support mechanism
for the Government to communicate AEC to business.
• Greater emphasis on trade in services. • Should promote transparency, access to
information and good governance. • Harmonisation of ASEAN investment laws and
procedures at a certain level will ensure the certainty and unity of the ASEAN investment regime and practices.
Major Policy Considerations in Negative List Approach
Standstill Roll Back
Ratchet
Juggling through the jungle: practical issues
Domestic Regulations v. Liberalisation
Facilitation v. Different Levels of Governance
Screening v. Open Policy
Transparency v. Access to
information
Access to Land/ IP Protections
Points For Research and Discussion
• Designing Optimum Investment Policies
• Encouraging Progressive Liberalisation without roll-back in policies;
• Regulatory Audit and Negative Listing;
• Making ACIA as the benchmark;
• Role of Domestic Legal System and Investment Attraction.
THANK YOU.