Article Media. Info Print Print.
Table Of Contents. Submit Feedback. Thank you for your feedback. Written By: Ian J. Abu Jaber. See Article History.
Hummels found that a one-day border delay increases costs by about 0. In developing economies, retail prices must be kept low enough for consumers on modest budgets to afford products [ 23 ]. Even the most miniscule pruning of profit margins can pose existential threats to businesses. Intra-ASEAN connectivity and trade are key drivers of overall growth in the single market system [ 25 ]. As such, the Secretariat recommended focus on non-tariff barriers that impede movement of goods, services, vehicles, and people across borders within the group.
Among the specific elements of a plan to improve ASEAN connectivity, the group has adopted visions to improve shipping and transportation via land, air, and sea. The remaining five members cannot offer competitive means of transit, and therefore cannot take full advantage of opportunities in shipping economies.
The region boasts natural beauty, fertile lands, abundant natural resources, and diverse demography. After a bill is proposed by the government, it must be approved by the House of Representatives then the Senate, and becomes law after being ratified by the king. This growth is occurring across multiple industries, including information and communications technology ICT and nuclear technology. Stephen Moss, But the Beats brand never felt like a natural fit for Apple.
Further analysis revealed that transportation and shipping infrastructures in ASEAN economies ranked lower than overall competitiveness, thus indicating that infrastructure is a strategic economic weakness in the group. Most concerning is the fact that, between and , all ASEAN members except for Myanmar fell in logistics infrastructure rankings on the World Bank index. For cross-border trade to flourish, road and rail networks in the mainland GMS region need to be robust while seaports in the Filipino and Indonesian archipelagos must be expansive.
UNDP considered transportation infrastructure as an essential factor in human development, particularly in rural areas [ 28 ]. A simple lack of paved roads in areas of Myanmar, Philippines, Cambodia, and Vietnam seriously limits the extent to which farming villages can participate in national economies, the aggregate effects of which can stall macroeconomic growth and development.
In a similar way, import and export delays block many SMEs from trade opportunities. In contrast, SMEs accounted for about 70 percent of Japanese employment in , contributing to half of the GDP and more than half of total exports. In the United States, SMEs contributed to roughly half of all employment in , generating 46 percent of the GDP and over one-third of exports [ 30 ].
Although there are a host of other factors that constrain SME involvement in export economies, border procedures and delays remain a significant threat to businesses that cannot afford to carry costs for a week or longer while in wait at the border. Aside from Singapore, Malaysia, and Thailand, the group fails to offer timely services.
Throughout the region, importers and exporters usually wait more for five or more days to complete their processes, which undoubtedly carries economic costs. If all ASEAN members could reduce cross-border times to less than 48 hours, like Malaysia and Singapore, the region would likely witness a dramatic rise in trade volumes and corresponding reduction in costs.
Accomplishing such an ambitious goal would require implementation of electronic platforms for customs declarations and fees, and expansive transportation infrastructure development and enhancements. Import and export costs should be virtually equivalent in a major trade union like ASEAN, although recent reports suggest disparity throughout the region where import costs are typically higher.
The most notable difference is in Cambodia where domestic land transport is a tremendous financial burden. Producers, distributors, and consumers should all benefit from lower costs with single window and online documentary compliance platforms, uniform customs declaration rules, and expedited customs clearance within the single market system. Significant progress in reducing administrative overhead and time to delivery throughout ASEAN hinges on an overhaul of customs regulatory systems in each member state. Most members require five or more documents for either procedure, which causes delay, frustration, and economic losses.
WORLD infopaedia: JORDANPragun Publication WORLD infopaediaJORDANPragun Publication (D.K. Publishers Distributor. Online shopping from a great selection at Books Store.
If ASEAN members were to reduce the burdens of border and documentary compliance for importers and exporters to three pieces which could be filed electronically, AEC governments would simultaneously support businesses and preserve government resources for more intensive undertakings. Streamlining customs procedures only guarantees swift border crossings; delays and complications relating to transit within domestic territories remain an obstacle to strong, efficacious commerce.
Domestic transportation times and costs are frequently higher in countries with less-developed road and rail networks.
In Cambodia and Philippines, government or joint investment in transportation infrastructure is likely to result in decreased import and export costs. That savings would be passed on to businesses and consumers rather than wasted. The resulting economic value added would likely be greater than the nominal value of the costs saved.
Although two and three-wheel vehicle accidents account for more than half of regional traffic fatalities, road safety significantly impacts business productivity. A combination of lack of commercial highways and SME domination in regional commerce results in relatively low utilization of heavy trucks for road shipments. Instead, vans and pickup trucks are commonly used for transport [ 16 , 34 , 35 ]. Including buses that act as human-logistics transport vehicles, business vehicle fatalities sum to thousands per year. Modest law enforcement efforts would prevent thousands of deaths, but to really solve the problem, land transport infrastructure also needs to be upgraded and expanded.
Traffic congestion is ubiquitous in ASEAN cities due in large part to urbanization and growth in middle class car ownership outpacing road construction, but transnational and international highway networks are also to blame. Highway border links are few and far between in the GMS, which forces traffic through cities on their its to other destinations. Cambodia shares only one highway border crossing with Vietnam, one with Laos, and two with Thailand. All highway traffic en route from Vietnam to Thailand or beyond through Cambodia must pass through Phnom Penh.
Various projects have commenced and completed since , but the lack of throughways in the region continues to make long distance road travel inefficient and inconvenient. One possible solution that has garnered much media attention in recent years has been the addition of a high-speed rail line connecting Kunming, China with Singapore.
Though the north-south line would not alleviate traffic woes for the entire region, it would undoubtedly relieve some or much of the passenger car congestion in and around Bangkok. Ingenuity and endurance will be required to patch up the 4, kilometers of missing or out of commission links in Cambodia, Laos, Malaysia, Myanmar, Thailand, and Vietnam. There are currently no active train lines in Laos or Cambodia and no connections between Thailand and Myanmar, leaving the entire GMS utterly unconnected by rail in an era when total connectivity is the vision [ 38 ].
Given its central location, Thailand could serve as a hub for land transportation, but not without spokes extending into Laos, Myanmar, Malaysia, and Cambodia [ 39 ]. In the absence of high speed international rail lines, there is no competition for the air travel industry, which has its own unique set of weaknesses and threats to overcome.
The precise level of GDP growth that air services liberalization will bring is yet unknown, but it is expected to contribute billions of dollars annually [ 42 ]. Air services facilitate movement of human and investment capital into and around the region. Through , ASEAN arrivals are expected to grow at a rate greater than elsewhere in the Asia-Pacific region, and nearly one and one-half times greater than global rates. Hence, airport infrastructure, competitive service markets, liberal transportation policies, and safety are major concerns for the health of regional economies.
Sharp increases in air traffic within the region coupled with lack of state-of-the-art air traffic flow management systems and procedures may be partly to blame for recent fatal accidents that occurred in Malaysia and Indonesia [ 45 ].
After the AirAsia flight crash in Indonesia, pilots complained of outdated equipment and delayed responses from air traffic controllers on congested routes, which cause captains to unilaterally change course to avoid weather [ 49 ]. Notwithstanding international scrutiny following Malaysian Airlines flight and AirAsia flight accidents, ASEAN does not seem any less safe than Europe or North America by looking at statistics over several years [ 50 ].
Strong and increasing inflows of international visitors throughout ASEAN is a testament to the safety and reliability of its air services. In the process of improving overall quality of air services, ASEAN members will have to invest in the same training and technologies that the FAA and other organizations recommend. AEC connectivity relies upon more than bare-minimum functionality and as such, the group has committed to a pan-Asia seamless air traffic management plan [ 52 ].
Now that the groundwork has been laid, ASEAN members need to focus on harmonized implementation; this final stage has been the most difficult step for the group, which relies upon consensus building rather than penalties for noncompliance with agreements. Industrial economies rely upon maritime transport services to deliver raw materials like iron, oil, and grain. Billions of tons of cargo pass through ports and travel across seas each year. More than fifteen million barrels of oil pass through the Strait of Malacca every day; only the Strait of Hormuz carries more oil [ 53 ].
More than eighty thousand bulk carrier ships; one third of global shipping traffic; transited the Straits of Malacca, making Singapore, Malaysia, and Indonesia key participants in the global economy by virtue of geographic location alone [ 54 ]. Given the importance of trans-ASEAN maritime shipping to both regional and global economies, safety and security are of crucial importance. Despite the obvious importance of the treaty, however, Malaysia was the first to join only after the ,barrel spill in ; Singapore, Thailand, and Philippines followed [ 57 , 58 ].
All nine ASEAN members that have coastlines are contracting parties of the three key International Maritime Organization conventions on safety, pollution prevention, and standards of training [ 59 ]. The relatively developed and unified maritime legal framework in ASEAN ensures states have similar visions regarding standards and practice, but as noticed in other areas of ASEAN cooperation and connectivity, treaty membership does not guarantee compliance or optimal implementation.
In , more than half of all piracy incidents reported in Asia occurred in the Straits of Malacca and Singapore [ 60 ]. Incidents involving Somali pirates have attracted the most media attention in recent years, but the number of attacks in the Somali region started on a steep decline following In alone, there were hostages taken at sea in Indonesia, Malaysia, and Malacca Straits [ 61 ]. Economic losses and insurance costs choke the profitability of ASEAN shipping companies without increased naval involvement in securing the waters around Singapore, Borneo, Sumatra, and Java.
Ideally, most directly affected countries; Malaysia, Singapore, Indonesia, Thailand, and Vietnam; will be able to resolve the scourge of local piracy, but it may be in the best interest of economics to bring in third parties such as the United States, China, and Australia, whose interests are threatened by ongoing incidents. As an alternative or supplemental measure, governments or the insurance industry could incentivize ship owners to employ additional security personnel onboard [ 62 ].
Private security firms have succeeded in abating Somali piracy with floating armories [ 63 ], although such a strategy could be difficult to manage due to the relative absence of international waters in and around the Straits of Malacca compared to the Horn of Africa region.
Regardless of the method, ASEAN members need to act swiftly and resolutely to combat terror on the seas. While security forces are working toward eliminating piracy, private firms and individuals need to take steps to reduce the number of accidents at sea. Allianz found that the South China Sea, Philippines, and Indonesian region had the most accidents of any region in the ten years prior [ 64 ].
Overreliance on electronic navigation equipment was a key safety concern in the South China Sea, where cargo ships frequently encounter small fishing boats with poorly trained crews. Port calls, shifting sandbars, and submerged rocks and reefs pose significant threats in the congested shipping lanes in ASEAN.