December 09, 2006	Saturday	Ziqa'ad 17, 1427

CEBU (Philippines), Dec 8: China has now outstripped Asean's top economies in exports and the bloc needs to re-think its economic model or risk being marginalised, experts and industry leaders said here on Friday.

While the planned creation of a regional single market would help, the 10-country group faces obstacles including a traditional unwillingness to be seen interfering in each other's affairs, they said.

The warnings came ahead of the Association of Southeast Asian Nations (Asean) annual summit next week, where the bloc is set to move its target date for a single market to 2015, five years earlier than planned.

Experts said the 10-nation group had to act decisively to avoid falling behind India, which is increasingly challenging China as the other regional economic powerhouse.

"India over the next several years has the ability to replace Asean as number two" behind China in terms of high-value output, said Scott Price, Asia-Pacific chief executive for express delivery firm DHL.

As part of a regional business forum on the sidelines of the summit, the Economist Intelligence Unit (EIU) think-tank released a report showing that Chinese exports had overtaken those of the seven leading Asean economies.

"Given the importance of exports to Asean, the challenge for member governments is to work out how to sustain and grow their export industries in the face of this rising competition," it said.

China in 2004 overtook Indonesia, Thailand, Malaysia, Singapore, the Philippines, Vietnam and Myanmar, the so-called Asean-7, in the total value of all exports, the EIU study said.

It also outstripped the group over the past five years in annual export growth — 25 per cent compared to eight per cent -- and outpaced the Asean-7 in high-value exports starting in 2003.

The situation "carries a risk that Southeast Asia will be marginalized," said Graeme Maxton, a senior EIU official. "(Asean) has to find a different path."

Singapore and Malaysia dominate Asean's high-value exports, with only those two and Thailand showing growth in the sector in recent years, the study found.

It said Asean "needs to create a genuinely integrated single market," noting that member nations still depended heavily on demand from outside the bloc to fuel both its manufacturing and exports.

"Our focus right now is to sell Asean not as the factory of the world," said Donald Dee, president of the Philippine Chamber of Commerce and Industry.

"We will seriously focus on converting Asean not only as a factory but also as the market for other manufacturers and traders in the region to come to us," Dee said.

Asean, which also includes Brunei, Cambodia and Laos, launched a 10-year Asean Free Trade Area (AFTA) initiative in 2002, lowering average tariffs on intra-regional trade to three per cent from 12 per cent.

But the EIU study noted that Asean members used permitted exemptions and non-tariff measures to protect "sensitive" sectors, even though removing them would have little impact on tax revenue.—AFP