2 - ASEAN Transport Policy, Infrastructure Development and Trade Facilitation

Summary

INTRODUCTION

One of the driving forces behind the formation of the Association of Southeast Asian Nations (ASEAN) in 1967 was to accelerate the economic growth of the region through cooperation. Economic growth was to be achieved through joint agreements such as the ASEAN Free Trade Area (AFTA) and, in recent times, through the formation of the ASEAN Economic Community (AEC), which aims to accomplish a single integrated regional market, plugged into the international economy. A central element of regional economic integration is the presence of efficient logistics and the availability and efficient management of transport infrastructure. The traditional understanding of logistics as moving inputs and products in production and warehousing has been superseded by the dynamism of the modern global supply chain. Logistics today begins at the stage of procurement of factors of production and ends at the point of consumption. It includes the planning, design, and support of the business operations of procurement, purchasing, real time inventory, warehousing, distribution, deployment of information technology, transportation, customer support, insurance, financial services, and management of human resources. The vital link in this whole chain is the availability of infrastructure and its efficient transportation management. Added to this is the flexibility and nimbleness of production centres as they relocate when costs escalate.

ASEAN economic indicators on trade and foreign direct investment (FDI) have been impressive. ASEAN's total merchandise trade reached US$1.53 trillion (ASEAN Merchandise Trade Statistics Database 2010) and its share of total global FDI inflow increased from 2.8 per cent to 3.6 per cent (VNS 2010). Trade requires the transportation of goods via the various modes of transportation, and having an efficient transportation network attracts foreign investors to locate production plants and offices in the region. Since trade and FDI are important contributors to economic growth and transport infrastructure, ASEAN had been cooperating closely through regional transport agreements and region-wide projects to ensure that the transport network is enhanced and poised for further growth in the region. As the world recovers from the global financial crisis (GFC), the forces of globalization and international connectivity require economies to be nimble and respond quickly to the urgent needs of foreign investors.