New connections serve trade interests for all countries in Southeast Asia

Source:Xinhua Published: 2015/11/25 21:53:02

The Association of Southeast Asian Nations (ASEAN) will embrace a new starting point in its ambitious integration as the leaders from the 10-member bloc have pledged their unwavering commitment to the realization of the economic community by the end of 2015.

The China-proposed Belt and Road initiative, or the Silk Road Economic Belt and the 21st Century Maritime Silk Road, has been a hot topic during the ongoing 27th ASEAN Summit and Related Summits, as hopes are pinned on the initiative to contribute to ASEAN's economic takeoff.

The ASEAN Economic Community (AEC) and the Belt and Road initiative are complimentary in each other. They will create vast opportunities for ASEAN and China to cooperate and serve as twin engines for the bloc's future development and prosperity.

The establishment of the AEC will open up more regional cooperation and improve efficiencies, dynamism and competitiveness of all ASEAN members by enabling free movement of goods, services, investment, capital and skilled labor forces, thus offering new ways of coordinating supply chains and access to market.

Rather than fragmented economies, the AEC envisions ASEAN as a single market and production base. As a single market, the AEC will allow investors to seek and increase their market reach to the region with a total of 600 million people. As a single production base, the AEC will allow businesses to tap product and services complementation in the region, establish a network across ASEAN and participate in the global supply chain.

The AEC will also enable the bloc to look beyond its borders as the region presents opportunities for investors to access not only ASEAN markets but also some of the world's largest economies, including ASEAN's top trade partners such as China, Japan, South Korea, India, Australia, New Zealand, the EU and the US.

In a recent interview with Xinhua, Cambodian scholar Pou Sothirak, executive director of the Cambodian Institute for Cooperation and Peace, said the AEC has huge potential as a single economic bloc and when it comes to fruition, will have an economy worth $2.5 trillion.

Among the ASEAN member states, construction and upgrade of infrastructure such as roads, ports and airports is a must. Improved infrastructure is essential for sustaining economic growth in ASEAN as it enhances logistical efficiency, reduces transaction costs and supports greater flow of trade and investment.

Huge national infrastructure plans for the region have been announced to meet demand of the rapidly growing economy. At least $110 billion a year will be needed in the region until 2025 for transport, power, ICT, and water and sanitation developments, according to ASEAN Investment Report 2015: Infrastructure Investment and Connectivity.

The China-proposed Asia infrastructure Investment Bank is also expected to play a key role in bridging the huge investment gap in funding ASEAN's major cross-border infrastructure projects, such as the ASEAN Highway Network and Singapore-Kunming Rail Link.

China and other ASEAN countries are also actively investing in their maritime infrastructure. China has carried out ocean-related cooperation with Indonesia, Thailand and Malaysia.

To further boost connectivity in the region, visiting Chinese Premier Li Keqiang, while addressing a meeting between China and ASEAN here on Saturday, pledged infrastructure loans totaling $10 billion for Southeast Asian countries and proposed railway and production capacity cooperation.

China's Belt and Road initiative strikingly resembles the ASEAN Master Plan for Connectivity as both initiatives encompass transport connectivity to scale up their economic exchange, social and cultural exchanges through a system of roads and railway links as well as a system of ports, Sothirak commented.

The article is a commentary from the Xinhua News Agency. The article first appeared in Xinhua.

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