China-ASEAN Integration & Trade Journal

中国东盟整合与贸易学刊 Volume 1

December 2011

ISSN 2231-9174

How Will the ASEAN Charter Affect the China-ASEAN FTA? A View from Singapore Harold Siow Song Teng

1

17

Regionalized Corporate Social Responsibility? Making CAFTA Work Sabrina Chong Yee Ching

43

A Study on Sino-Indonesia Economic Relations and Policy Suggestions Wu Chongbo

61

The Application of General Theory of Trade Relativity on China, ASEAN, Japan, E.U. and U.S.A. Mario Arturo Ruiz Estrada

83

东南亚华商在广西北部湾经济区建设中的角色作用 / The Role and Function of Southeast Asian Chinese Businesses in the Construction of the Guangxi Beibu Gulf Economic Zone 黄耀东 / Huang Yaodong

91

China-ASEAN Integration & Trade Journal Volume 1 December 2011 ISSN 2231-9174

Inaugural Issue

Volume 1

Different Voices under China-ASEAN Free Trade Area: An Exploration Shen Hongfang

China-ASEAN Integration & Trade Journal


中国东盟整合与贸易学刊

The China-ASEAN Integration & Trade Journal 中国东盟整合与贸易学刊 is an academic journal of the Institute of China Studies, University of Malaya, Malaysia, focusing on China-ASEAN regional integration in terms of economic and financial cooperation, trade, investment and cultural linkages, and the role of the Chinese Overseas.

Institute of China Studies

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9 772231 917006

December 2011

I SSN 2231 - 9174

Editors Emile Kok-Kheng Yeoh

Mario Arturo Ruiz Estrada

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中国东盟整合与贸易学刊稿约（中文版）

Notes for Contributors 1. Manuscripts submitted for publication in the China-ASEAN Integration & Trade Journal should focus on China-ASEAN regional integration in terms of economic and financial cooperation, trade, investment and cultural linkages, as well as the role of the Chinese Overseas. 2. A manuscript submitted should be an original, unpublished work not under consideration for publication elsewhere. 3. Papers will be accepted in English or Chinese. 4. Manuscripts submitted should be written with Microsoft Word in Times New Roman font, size 12 and with 1.5 line spacing, and should not exceed forty pages (or in the case of a book review, not exceeding three pages) inclusive of tables, charts and diagrams, notes, list of references, and appendices. A short note on the author, including name, academic title and highest qualification, institutional affiliation, full postal address and institutional e-mail address, should be included. An abstract of 100 to 250 words and a list of three to five keywords should also be given. 5. Use the APA/ACS style for in-text citation with a list of references at the end of text. 6. All manuscripts under consideration for publication will be refereed via a double blind reviewing process. 7. The contents of a published article in the China-ASEAN Integration & Trade Journal reflect the view of the author or authors and not that of the editors of the journal or the Institute of China Studies, University of Malaya. 8. Copyrights of accepted manuscripts will be transferred to the China-ASEAN Integration & Trade Journal. 9. Authors must obtain permission to reproduce all materials of which the copyright is owned by others, including tables, charts, diagrams and maps, and extensive quoting should be avoided. 10. Book review submitted should focus on new or recent publications, and the book title, author, city/publisher, year of publication and total number of pages should be shown above the review. 11. Manuscripts and book reviews should be sent by e-mail to caitjics@gmail. com, addressed to the Editor, China-ASEAN Integration & Trade Journal, Institute of China Studies, University of Malaya, 50603 Kuala Lumpur, Malaysia.

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“China-ASEAN Integration & Trade Journal” (《中国东盟整合与贸易学刊》) 为马来亚大学中国研究所主办的综合性学术期刊。本刊创办宗旨是提供探讨中国与东盟之间经济、金融、贸易、投资、文化包括海外华人的角色等各个层面整合议题进行交流的平台，展示学界的研究成果，促进国内外于此领域学术交流。来稿要求 (1) 文体设计：论著、综述、书评等不超过 5 000 字。 (2) 文稿（须附电子邮件）依次包括以下内容：题名、作者姓名、摘要、关键词、作者简介、正文、参考文献。题名、摘要和关键词须附英文翻译。 (3) 题名：简明、确却，不超过 20 字，尽量不适用副标题。 (4) 摘要与关键词：主要描述论文所研究的主要问题、提出主要的观点和结论，不超过 300 字；关键词一般 3-5 个。各关键词之间用分号隔开。 “关键词” 三字用方括号 “［］” 括起。 (5) 标题序号：一级标题采用 “一、” ，二级标题采用 “(一)” ，三级标题采用 “1.” ，四级标题采用 “(1)” ，如果标题少于四级，二级标题可直接用 “1.” (6) 图表：图 (表) 应冠有图 (表) 题，照片要求清晰度和对比度良好，每幅图片的背面应贴上标签，注明图号、作者姓名及图的上下方向。 (7) 缩略语：题名尽量不用缩略语。文中首次出现时，须先注明中文全称。括号内注明英文全称和缩略语。 (8) 数字：公历世纪、年代、年、月、日、时刻和计数、计量均用阿拉伯数字。 (9) 注释：是作者对正文中某一特定内容的进一步解释或补充说明，放置于该页地脚。注释序号与文中指示序号相一致，左空两格，一律用阿拉伯数字加圆圈标注：①、② …… 。 (10) 参考文献：是文中引用的文献。依照文中出现先后顺序以阿拉伯数字加方括号标注，必须注明作者、书名、出版地、出版社、出版年份、引用页码范围，缺一不可。期刊则须注明作者、文章标题、出版地、刊期（年、期）用启止页，缺一不可。参考文献中的作者 1 至 3 名全部列出， 3 名以上只列前 3 名，后加 “，等” 文字。作者须自行核对参考文献原文，确认无误后列排于文末。 (11) 保存形式：论文题名黑体 3 号字、副标题楷体 5 号字；正文宋体 5 号字；一级标题 5 号黑体，二级以上楷体 5 号字；图标标题楷体 5 号字。来稿须以视窗 Word 档案形式存档，并以 “作者姓名” 为文件名保存。 (12) 来稿采审查制。来稿一律不退，三月内未收到用稿通知方可自行处理稿件。 (13) 来稿一律文责自负。本刊编辑对稿件有最终删改权，唯涉及原意修改将提示作者考虑。 (14) 来稿联系人：Editor, China-ASEAN Integration & Trade Journal, Institute of China Studies, University of Malaya, 50603 Kuala Lumpur, Malaysia. 邮箱为： [email protected] Typeset by Ivan Foo Ah Hiang Printed by University of Malaya Press University of Malaya, Lembah Pantai 50603 Kuala Lumpur, Malaysia

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China-ASEAN Integration & Trade Journal 中国东盟整合与贸易学刊

Editor Emile Kok-Kheng Yeoh Deputy Editor Mario Arturo Ruiz Estrada Editorial Manager Susie Yieng-Ping Ling Editorial Board Emile Kok-Kheng Yeoh Lee Kam Hing Lionel Wei-Li Liong

Mario Arturo Ruiz Estrada Yusuf Liu Baojun Joanne Hoi-Lee Loh

Associate Editorial and Advisory Board Nicholas Apergis, University of Piraeus Anthony T.H. Chin, National University of Singapore Sabrina Chong Yee Ching, Open University of Malaysia Solomon Cohen, Erasmus University Rotterdam Antonio Maria Costa, United Nations Soo Khoon Goh, Universiti Sains Malaysia Cassey Lee Hong Kim, University of Wollongong Uziel Nogueira, IDB-INTAL (Rtd) Donghyun Park, Asian Development Bank Phang Siew Nooi, Sunway University Dominick Salvatore, Fordham University Luk van Langenhove, CRIS-UNU

CAITJ vol1 combined text 04-12-11 1

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China-ASEAN Integration & Trade Journal, Vol. 1, December 2011 中国东盟整合与贸易学刊, 第一期, 2011年12月

© Institute of China Studies First published in 2011

COPYRIGHT All rights reserved. No part of this publication may be reproduced, copied or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without written permission from the publisher. Under the Copyright Act 1987, any person who does any unauthorized act in relation to this publication shall be liable to prosecution and claims for damages.

The China-ASEAN Integration & Trade Journal 中国东盟整合与贸易学刊 is an academic journal of the Institute of China Studies, University of Malaya, Malaysia, focusing on China-ASEAN regional integration in terms of economic and financial cooperation, trade, investment and cultural linkages, and the role of the Chinese Overseas. Manuscripts for consideration and editorial communication should be sent to: Editor, China-ASEAN Integration & Trade Journal Institute of China Studies, University of Malaya 50603 Kuala Lumpur, Malaysia Tel: +(603) 79565663 Fax: +(603) 79565114 E-mail: [email protected]


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China-ASEAN Integration & Trade Journal Vol. 1, December 2011

Contents

中国东盟整合与贸易学刊第一期, 2011年12月

目录

How Will the ASEAN Charter Affect the China-ASEAN FTA? A View from Singapore Harold Siow Song Teng

1

Different Voices under China-ASEAN Free Trade Area: An Exploration Shen Hongfang

17

Regionalized Corporate Social Responsibility? Making CAFTA Work Sabrina Chong Yee Ching

43

A Study on Sino-Indonesia Economic Relations and Policy Suggestions Wu Chongbo

61

The Application of General Theory of Trade Relativity on China, ASEAN, Japan, E.U. and U.S.A. Mario Arturo Ruiz Estrada

83

东南亚华商在广西北部湾经济区建设中的角色作用 / The Role and Function of Southeast Asian Chinese Businesses in the Construction of the Guangxi Beibu Gulf Economic Zone 黄耀东 / Huang Yaodong

91


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China-ASEAN Integration & Trade 中国东盟整合与贸易学刊 How Will the ASEAN Charter Affect the Journal China-ASEAN FTA? Vol. 1, December 2011, pp. 1-16 第一期, 2011年12月

How Will the ASEAN Charter Affect the China-ASEAN FTA? A View from Singapore Harold Siow Song Teng* National University of Singapore

Abstract The long awaited China-ASEAN Free Trade Agreement (CAFTA) came into force on 1st January 2010. For the six ASEAN members of Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, the average tariff on Chinese goods was reduced from 12.8 per cent to 0.6 per cent. Come 2015, the policy of zero-tariff rate for 90 per cent of Chinese goods is expected to be extended to Cambodia, Laos, Myanmar and Vietnam. In order for real effective and meaningful cooperation between China and ASEAN to take place, within the context of the CAFTA, ASEAN has to pull up its socks and ASEAN members have to speed up its economic integration process and also abide by the ASEAN Charter in the literal sense of the word. Keywords: ASEAN, China, ASEAN Charter, CAFTA 1. Background The world’s largest Free trade agreement (FTA) embracing China and the ten ASEAN countries covers a population of 1.9 billion and involves about US$4.5 trillion of trade volume officially came into force on 1st January 2010. The average tariff on goods from ASEAN countries to China is being cut down to 0.1 per cent from 9.8 per cent. For the six original ASEAN members, Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, the average tariff on Chinese goods was reduced from 12.8 per cent to 0.6 per cent. By 2015, the policy of zero-tariff rate for 90 per cent of Chinese goods is expected to be extended to the four remaining ASEAN members, Cambodia, Laos, Myanmar and Vietnam; high-tariff items that include automobiles, rice and some petrochemical products are listed as “highly sensitive,” thereby allowing both sides to reduce their tariffs slightly later.


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Harold Siow Song Teng

Within ASEAN itself, the region’s combined GDP was US$1,504 billion in 2008, a level almost double that of the 2003 level of US$718 billion. ASEAN trade was on a similar upward trend: US$1,710 billion in 2008 compared to US$824 billion in 2003. Foreign direct investment into ASEAN grew from US$24 billion in 2003 to US$60 billion in 2008.1 China and ASEAN’s efforts to quickly helped establish the CAFTA not only showed that both sides are keen at expanding overseas markets, but also shows that they are serious in promoting trade and investment liberalization, especially amid the current global trade protectionism sentiment. However, in order for real effective and meaningful cooperation between China and ASEAN to take place, within the context of the CAFTA, ASEAN has to pull up its socks. ASEAN members have to speed up its economic integration process and also abide by the ASEAN Charter sincerely and in its entirety. ASEAN members could then cooperate with China in wider fields, from natural resources to high technologies in due course. China has in a recent international forum in Singapore, once again reiterated her wish to have more trade and collaborations with ASEAN, including in green and environmentally sustainable cooperation.2 The further economic integration between the two sides could be very competitive in the global economy, even more so as compared to the European Union (EU). Figure 1 Total ASEAN Exports to China from 2004-2008 (US$ millions) USD 90,000 USD 80,000 USD 70,000 USD 60,000 USD 50,000 USD 40,000 USD 30,000 USD 20,000 USD 10,000 USD 0

2004

2005

2006

2007

2008

Source: ASEAN Secretariat.


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How Will the ASEAN Charter Affect the China-ASEAN FTA?

As we can see from Figure 1, from 2004 to 2008, generally speaking ASEAN countries’ total exports to China have been on the rise (doubled in fact) from about US$41 billion to US$86 billion during this time period. Singapore’s exports grew from about US$15 billion in 2004, to about US$29 billion in 2008. Malaysia’s exports also grew from US$8 billion to US$18 billion. Figure 2 below shows that from 2004 to 2008, generally speaking ASEAN countries’ imports from China have too been on the rise from US$48 billion to US$107 billion. This demonstrates that on the whole China-ASEAN trade and economic relations is a win-win situation for both sides. From Figure 2, we can see Singapore’s imports from China grew from about US$16 billion in 2004, to about US$31 billion in 2008. Malaysia’s imports also grew from US$11 billion to US$18 billion. As can be seen from Table 1, collectively ASEAN is now China’s fourth largest trading partner.

Figure 2 Total ASEAN Imports from China from 2004-2008 (US$ millions)

USD 120,000 USD 100,000 USD 80,000 USD 60,000 USD 40,000 USD 20,000 USD 0

2004

2005

2006

2007

2008

Source: ASEAN Secretariat.


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Table 1 China’s Trade with Major Trading Partners in 2009 (US$ billion)

Ranking

1

2

3

4

5

Japan ASEAN HK

6

7

Trade Partner EU

US

Korea Taiwan Total

Bilateral Trade

364

298

229

213

175

156

106

2207.2

Share of China total trade (%)

16.5

13.5

10.4

9.7

7.9

7.1

4.8

100

Note: Total figures do not add up to US$2207 billion due to omission of all other countries. Source: Ministry of Commerce, .

2. China-Singapore Trade China and Singapore enjoy a multi-faceted relationship with collaborations and interactions on many fronts. In 2009, China was Singapore’s 3rd largest trading partner with a total trade of S$76 billion (US$56 billion); since 2001 after China’s entry into the WTO, Sino-Singapore trade has grown from S$22 billion (US$16 billion) to S$76 billion last year. Malaysia is Singapore’s top trading partner with a total trade volume of S$86 billion (US$63 billion). Figure 3 Sino-Singapore Trade from 1990-2009 (S$ billions)

Source: Yearbook of Singapore Statistics 2010 and various issues.


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Figure 4 Singapore’s Total FDI into China 1985-2008 (S$ billions)

Source: Yearbook of Singapore Statistics 2010 and various issues.

Since 1997, China has overtaken Malaysia as Singapore’s most important destination for FDI. In 2008, Singapore’s cumulative FDI into China was S$48.3 billion (US$36 billion); the 2007 figure was S$47.8 billion (US$35 billion). 3. Some Updates About the CSFTA Exactly one year before the CAFTA, on 1st January 2009 the ChinaSingapore Free Trade Agreement (CSFTA) came into force and it was signed after eight rounds of negotiations held over two years in both Singapore and Beijing. The CSFTA negotiations were concluded on September 2008 in Beijing. The CSFTA was signed on 23 October 2008 in Beijing. The CSFTA is the first comprehensive bilateral FTA that China has signed with another individual Asian country, covering trade in goods, trade in services, rules of origin, trade remedies, and sanitary measures, technical barriers to trade, customs procedures, economic cooperation and dispute settlement, among others. The agreement marked a major milestone in Singapore-China bilateral relations. Underscoring the strong bilateral relations between China and Singapore, the CSFTA has brought significant benefits to both countries. The CAFTA will most certainly bring about great benefits to the whole of ASEAN as subsequent trade data will show.


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A review of the CSFTA was undertaken in April 2010. The review reaffirmed Singapore and China’s commitment to improve the quality and smoothen the implementation of our bilateral trade agreement. A similar type of review could also be conducted between China and ASEAN on the CAFTA next year in 2012, on the effectiveness and challenges faced from 2010-2011 by both China and ASEAN, on the CAFTA. During the CSFTA review meeting, officials from both sides welcomed the CSFTA’s continued progress in boosting flows of goods, services and investments in both directions. A detailed review of the implementation of the commitments made under the FTA was undertaken with both parties exploring ways to continue building on the FTA to expand trade and investment linkages. Proposals to further improve access to each other’s market were also examined. As the world economy continues to improve, both countries note that the CSFTA would need to continually evolve to maintain its relevance to meet the needs of the Singapore and China’s business communities. Once again, a similar kind of flexibility could be applied to the CAFTA in due course, to improve upon the various concerns that may arise overtime faced by all 11 nations. 4. CSFTA/CAFTA: What are the Benefits for ASEAN Exporters to China? As the CSFTA is already in force since January 2009, China and ‘Made in Singapore’ Singaporean trade is already largely free. In 2010, SinoSingapore trade rose by more than 25 per cent to S$95.3 billion.3 As for trade between China and ASEAN in 2010, trade between the two sides surged 37.5 per cent year-on-year to US$292.8 billion. Trade value between China and the ASEAN member countries is expected to exceed US$300 billion in 2011.4 Since January 2009, the CSFTA helped enhanced Singapore companies’ access to the vast Chinese market and further boost our excellent bilateral trade and investment relations. Currently, China is Singapore’s third largest trading partner and largest investment destination. So far, the CAFTA really has not appear to have added much significant difference to the existing trade arrangements between China and Singapore; however, additional intra-ASEAN trade that passes through Singapore, going to China and vice versa may benefit. The CAFTA looks set to continue to boost the trade and economic exchanges between China and ASEAN as a whole. Building on the Trade in Goods Chapter commitments of China and Singapore under the Framework Agreement on Trade in Goods


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between ASEAN and China, the CSFTA will provide for accelerated tariff concessions that will enhance the competitiveness of Singapore goods visà-vis other foreign imports into China. The CSFTA provides preferential coverage for about 95 per cent of Singapore’s exports to China, with an estimated trade value of more than S$18 billion (US$13.3 billion). More than 85 per cent of Singapore’s exports to China are at zero-tariff upon the CSFTA’s entry into force on 1 January 2009. An additional 10 per cent became duty-free on 1 January 2010, making the total zero-tariff free export products to 95 per cent today. Key Singaporean exports that benefited include petrochemicals, processed foods, and electronics and electrical products. Singapore and China have agreed to simplify both our customs procedures to facilitate Goods trade. The key facilitative commitments include Third Party Invoicing, Advance Ruling to provide traders with more certainty and enhancement of the application of risk management to facilitate the clearance of low risk consignments. The above will assist Singapore companies to strengthen their competitive position in the Chinese market. 5. Trade in Goods Singapore and China undertake not to maintain any quantitative restrictions at any time unless otherwise permitted under the WTO disciplines; in time by 2015, hopefully the whole of ASEAN will too be able to achieve this. They shall also not adopt or maintain any non-tariff measure on the importation of any good of the other market or on the exportation of any good destined for the territory of the other market. Furthermore, each market agrees to ensure the transparency of its nontariff measures. 6. Rules of Origin Under the CSFTA, products imported by a Party shall be deemed to be originating and eligible for preferential concessions if they conform to the origin requirements under any one of the following: (a) products which are wholly obtained; (b) products not wholly obtained or produced in the territory of the exporting Party, provided that said products are eligible under Regional Value Content, Cumulative Rule of Origin and Product Specific Rules. The percentage of regional value content shall not be less than 40 per cent.


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The regional value content of a good shall be calculated on the basis of the following method: Re gional Value Content =

Value − Value of Net Materials x 100 Value

where: RVC means the regional value content expressed as a percentage; V means the value of the good, adjusted on an FOB basis; and VNM shall be:

(i) the CIF value at the time of importation of the materials; or (ii) the earliest ascertained price paid for the materials of undetermined origin in the territory of the Party where the working or processing takes place.

7. Investment Negotiations Negotiations on the investment chapter are currently ongoing. CAFTA aims to obtain commitments on liberalizing the investment regime, increasing market access as well as commitments on protection of investments in the China market. It has been agreed that the ASEAN Investment Agreement (AIA) would be used as a template for investment negotiations. 8. CAFTA and ASEAN Economic Agreements: Implications Before the CAFTA could really work well for ASEAN (as well as for China effectively), ASEAN members really have to speed up and get their act together. Internally, our ten countries are still facing numerous problems be it due to domestic politicking or internal political, social and/or economic inefficiencies, etc. The following discusses some of the main isssues to be resolved, if ASEAN members really want to benefit from the CAFTA and benefit from the world at large, as soon as possible. The ASEAN Charter is nothing, but a much generalized piece of paper document as of now. The following concerns need to be addressed. The real potential of the CAFTA would be best maximized by the ten ASEAN members, if they are able to work closer together as one, within the context of the agreed ASEAN Charter as well as the ASEAN Economic Community (AEC) 2015 framework Master Plan. Once the AEC 2015 Master Plan targets are met, ASEAN members will be able to properly and more systematically reap the benefits of the CAFTA, in their collective trade with China.


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8.1. ATIGA The ASEAN Trade in Goods Agreement (ATIGA) is supposed to consolidate and streamline all existing instruments and provisions on trade in goods and incorporates Ministerial decisions to provide them with legal standing. The principle is to make the ATIGA more user-friendly. The ATIGA aims to provide the full tariff reduction schedule of each Member State and spells out the tariff rates to be applied for each year on each product up to 2015. Another new initiative aimed at enhancing transparency is the ASEAN Trade Repository, an online database of trade and customs legislation and procedures. So far, the ATIGA is not firmed up yet and remains very vague. The provisions on non-tariff measures (NTMs) in the ATIGA will supposingly provide the relevant provisions and establish a mechanism to monitor the application of NTMs. A future guidebook on ASEAN trade facilitation will also be developed. An ASEAN Trade Facilitation Joint Consultative Committee will be established, with an open session for the private sector. As of June 2010, the ATIGA has been ratified by all the respective parliaments of ASEAN members, with the exception of Thailand. Since its entry into force in May 2010, the ATIGA superseded existing ASEAN economic agreements related to goods, such as the Common Effective Preferential Tariff (CEPT) agreement. In the case of inconsistency between the ATIGA and an ASEAN economic agreement, the ATIGA shall prevail. There would also be no further flexibility accorded to member states beyond the pre-agreed flexibility already captured in the ATIGA provisions. The ATIGA implementation would be reviewed after its first year, and thereafter every two years. However, this NTM in the ATIGA, too has not been firmed up yet. 8.2. ACIA The ASEAN Comprehensive Investment Agreement (ACIA) resulted from a decision of the ASEAN Economic Ministers Meeting (AEM) in 2007, to review the 1998 Framework Agreement on the ASEAN Investment Area (AIA) and the 1987 ASEAN Agreement for the Promotion and Protection of Investments (ASEAN IGA), and develop a comprehensive ASEAN investment agreement. ACIA aims to create a free and open investment regime to attract investments; and to achieve ASEAN economic integration (i.e. the ASEAN Economic Community or AEC 2015). The ACIA was signed in February 2009. ACIA’s adoption involves drafting the Reservation Lists of ASEAN member states, supposed to be finalised by August 2009 and ratified by the


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10


ASEAN member states; and phasing out reservations based on the AEC Strategic Schedule. The benefits of the ACIA for the ASEAN investment environment are that it would facilitate a free and open investment regime by 2015; improve the investment climate and investors’ confidence to invest in ASEAN; and encourage further development of intra-ASEAN investments, especially among multinational corporations (MNCs) based in ASEAN, through regional production networks, industrial complementation or specialization. For the business sector, the ACIA would allow ASEAN-based investors to enjoy the benefits of non-discriminatory treatment when they invest in other ASEAN countries. They would also be granted the same treatment as domestic (host country) investors. In case of investment disputes with host governments, investors have the choice of bringing a claim to domestic courts or to international arbitration. Investors could expect a minimum standard of treatment for their investments, including fair and equitable treatment and full protection and security. From a skeptical outsider’s view of the two ASEAN agreements in the context of the ASEAN Charter held that it would be utopian for ASEAN to push for liberalization with a weak Charter. ASEAN should build more transparency in its processes, thus building the foundation for regional economic integration. Current gaps in the ASEAN Charter (e.g., the non-binding dispute settlement) and the emphasis on the “ASEAN Way” had led many to view ASEAN as a paper tiger. More real value could be created from the ASEAN process if modest, realistic goals were set, with less rhetoric that would be difficult to reconcile with reality. ASEAN’s economic record showed modest gains on tariff liberalization (the Common Effective Preferential Tariffs or CEPT), but hardly any progress on Non-Tariff Barriers or NTBs (goods, services, investment, regulatory barriers), which are where the obstacles to economic liberalization lay. The WTO advocated advantages of economic agreements are, far from reality. WTO disciplines are far from reality. ASEAN member states’ track records also showed that since the 1997-98 economic crisis, trade and FDI liberalization and structural reforms had stalled within ASEAN, with the backsliders being Malaysia, Thailand, Indonesia and the Philippines; and Singapore and Vietnam as the exceptions.5 Protectionism was emerging in the wake of the global economic crisis. In this view, AEC would not be achieved in the true sense by 2015. Rules of origin and other discriminatory complications limit intra-ASEAN integration. If ASEAN integration does occur, it would not be top-down ASEAN-driven; rather it would depend on bottom-up unilateral measures carried out by the member states. The EU model of economic integration is not quite relevant for ASEAN.


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The ATIGA is being seen as a “paper exercise” with no real changes. The key issue is to tackle the NTBs, but this is not evident. The ASEAN Secretariat had sought feedback from the business sector on NTB removal, but this request was met with silence, largely out of fear that corrupt officials would “retaliate”. A hopeful development is the ASEAN Trade Repository, which is viewed as good for transparency. The ACIA is more interesting but seemed to be less advertised than the ATIGA. The potential advantages of the ACIA lay in: non-discriminatory nature for ASEANbased multinational enterprises; the scope of the agreement; the singlereservations list; and the investor-state dispute settlement mechanism. Also, how will the ACIA link to the ASEAN Framework Agreement on Services (AFAS)? The ATIGA and ACIA are both useful agreements, but need to address the real issues mentioned above etc and look at the implications of the single platform concept and the connections with non-ASEAN economic entities, such as the Asia Pacific Economic Cooperation (APEC) and the ASEAN Plus arrangements. A suggested balance scorecard system and the ASEAN Trade Repository are seen as the key processes to ensure and enhance transparency in ASEAN economic integration. It should be noted, however, that the scorecard itself would not provide a complete picture of developments and progress. Even so, individual governments should still release their scorecard information. Member states would be motivated to share less than positive scorecard results. The business sector should encourage governments to share relevant parts of the information provided in the scorecards. This in turn would assist internal coordination among government agencies involved in implementation. There are 3 other main challenges blocking the way to achieving the AEC. These are: a) Information: There is as yet not enough knowledge in the business sector to act on initiatives for economic integration. Issues pertain to access, understanding and socialization. The ASEAN Secretariat is requested to provide a user-friendly, up-to-date and navigable website. A business portal on the website, with language and format useful for businesses, is also recommended. Studies undertaken by the ASEAN Secretariat on various topics of regional economic integration should also be provided on the website. b) Implementation: This is linked to the information challenges, as businesses cannot make decisions without the necessary and sufficient information to act upon. Additionally, businesses need to have a stronger role in the process, so as to prevent slippages in


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implementation. Making the scorecard available (even in partial form) to business stakeholders would be useful. To assist businesses assess implementation issues, an ASEAN Business Policy Implementation Centre – independent of governmental processes – should be established. c) Competition: Currently the ASEAN member states are in competition with one another for a share of the global market. This has implications for how ASEAN sequences its investment and trade liberalization schedules. ASEAN will need to clarify how integration of the 12 priority sectors are being undertaken.6 ASEAN members need to think ‘ASEAN’! ACIA and ATIGA are not solutions in themselves, as their implementation also requires many behind-the-border measures. For MNC businesses in ASEAN, implementation, communication and transparency are important. Most MNC businessmen in the region do not yet see ASEAN as a single market. Therefore, ASEAN’s main challenge is to convince the private sector that it is serious about regional economic integration. 9. Policy Recommendations 9.1. Legal Personality and Charter Implementation The ASEAN Charter establishes ASEAN as a rules-based organization. The conferment of legal personality is important in this context, as rules are best enforced with such a capacity. The more important question is what ASEAN can or cannot do legally speaking, when dealing with China within the context of the CAFTA? ASEAN needs to work on this question and take a position on it so as to enable the conferment of legal personality to be used in a meaningful way. The domestic implementation of the ASEAN Charter will continue to occupy ASEAN for some time. Article 5(2) of the Charter requires that ASEAN countries “take all necessary measures, including the enactment of appropriate domestic legislation, to effectively implement the provisions of the Charter and to comply with all obligations of membership.” What does that really mean? Till date, there is a lack of political will at the domestic governmental level to implement the ASEAN Charter due to internal disagreements or other reasons; domestic courts purportedly applying laws implementing the Charter may not enforce the obligations of the Charter if the domestic laws being applied by the courts are not in conformity with it or are silent


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with regard to treaty norms or obligations; and administrative structural problems preventing the obligations of the Charter from being applied at the ground level. 9.2. The Issue of Perception ASEAN also needs to address a serious perception problem. A recent survey with the general ASEAN public shows in their perception, only about 30 per cent of ASEAN agreements have been implemented; the business sector is also concerned on the type of mechanisms in place for areas for which there are no existing dispute settlement mechanisms; and how the ASEAN would resolve unresolved disputes.7 More public outreach initiatives could be pursued to help ASEAN citizens become more aware and familiar with the ASEAN AEC and ASEAN in general. 9.3. ASEAN Needs to Do More – to tackle non-tariff barriers at and behind the borders, ASEAN having made little progress on such barriers and on trade facilitation; – to tackle the regulation barriers behind the borders so as to make real progress on market access; – to handle the listing of reservations under ACIA 2009 in a manner which would ensure that ASEAN would be an attractive investor destination. In Malaysia and Indonesia, protectionist measures in the form of subsidies and import restrictions to sensitive industries are preventing these industries from facing market competition, upgrading themselves and achieving efficiency. Malaysia faces for example, a shortage of skilled labour in the electronics sector; this has caused the sector to hollow out. This not only impedes the country from attracting new investments, but also discourages the manufacturing sector from moving up the value chain in the regional production network. In the Philippines, higher technical barriers to trade exist as businesses believe that the reduction in tariff and NTBs could provide some protection to local industries and manage the competition from imports. Trade in Laos and Cambodia is also ineffective, from the border, due to the existence of various government agencies, customs practices and numerous standards and procedures. In Thailand, regulation on the free movement of labour is holding back Thailand’s fulfillment of the full ASEAN integration criteria; in Thailand, the Alien Employment Act prohibits foreigners in certain professions


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(e.g. engineers, legal services) and other professions regulated by the professional associations. Liberalization of the services sector is a major challenge in ASEAN; the overall commitment in the liberalization of the services sector is very poor in ASEAN. The commitment for ASEAN members under the ASEAN Framework Agreement on Services (AFAS) is not serious enough, mainly because the sector accounts for a large proportion in most countries (e.g. about 52 per cent in Indonesia; 49 per cent in Thailand; 54 per cent in the Philippines). 9.4. ASEAN Trade Repository The ASEAN Trade Repository envisaged in ATIGA 2009 was a good idea, containing trade and customs laws and procedures and a variety of traderelated information. The mechanism would increase transparency. ASEAN may find it useful to study the model of the Australian Tariff Board (now called the Productivity Commission). It could be useful as a tool to create in-country independent transparency boards, leading towards an ASEAN Economic Transparency Board. 9.5. Other Suggestions – information access (scorecards be shared with the public) ASEANSEC website should also provide a business portal and e-calculator; – awareness about ASEAN in its member states is not widespread. One of the aims of the ASEAN Charter is to continue to promote a common ASEAN identity and a sense of belonging among its peoples. 10. Conclusion: Further Cooperation As of today, the world is still recovering from the global economic downturn of yester years. China’s real economic growth rate in 2009 was still a solid 8.7 per cent.8 According to the IMF, ASEAN-59 grew about 6.9 per cent; China’s growth was 10.3 per cent, while those of the developed economies grew an average of only 3.0 per cent for 2010.10 ASEAN and China have also agreed to cooperation focusing on 5 priority sectors namely: agriculture, information and communications technology (ICT), human resources development, investment and the Mekong River Basin development, and 11 other activities including the acceleration of the Singapore-Kunming Railway Project.


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In 2009, Chinese Premier Wen Jiabao announced a comprehensive package of proposals to strengthen China-ASEAN cooperation. China would set up a US$10 billion China-ASEAN Fund on Investment Cooperation to finance major 10+1 investment cooperation projects in infrastructure, energy and resources, information and communication technology and other fields. In the next three to five years, China would provide ASEAN countries with US$15 billion credit, including US$1.7 billion in concessional loans, which was later increased to US$6.7 billion. China would also start to provide a total of RMB270 million (US$40 million) from 2010 in 10 special aid packages to the less developed ASEAN countries, including Cambodia, Laos and Myanmar to help them meet pressing needs and get through this difficult time. Apart from continued support for sub-regional cooperation programs, such as Greater Mekong Sub-region (GMS), Brunei, Indonesia, Malaysia and the Philippines-East ASEAN Growth Area (BIMP-EAGA) and IndonesiaMalaysia-Thailand Growth Triangle, China proposed to launch a number of programs and training courses to enhance food productivity and agricultural capacity of ASEAN countries. Some of the programs are already under way.11 The ASEAN region awaits further leadership from China and from ASEAN’s Top leaders in time to come, especially in the trade and economic developmental arenas. The two sides should continue to establish more common ground in the areas of legal and commercial practices. Smaller ASEAN members such as Brunei, Laos, Malaysia and Singapore are very dependent on China for their external trade and though this dependence will no doubt be increasing over time, ASEAN members ought to also diversify and increase their intra ASEAN trade which will be another important source of growth in the future. Notes * Dr Harold Siow Song Teng is Research Fellow and Administrative Manager at the Centre on Asia and Globalisation (CAG) at the Lee Kuan Yew School of Public Policy, National University of Singapore. He was Visiting Scholar at the East Asian Institute, National University of Singapore from 20102011. Before embarking on an academic career, he has been an entrepreneur and a small business owner and has worked both in the private as well as public sectors. He was formerly a Civil Servant in the Singaporean external trade promotion body International Enterprise Singapore, a statutory board under the Ministry of Trade and Industry and also served in the Ministry of Information, Communications and the Arts, Singapore. Dr Teng’s research interests focus on ASEAN-China, Sino-Singapore, Singapore-Vietnam, Sino-


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1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Vietnam international political economy, economic and trade related issues. He holds a PhD in Business and Management and Graduate Diploma in Management Research from the International Graduate School of Business, University of South Australia; a Master in Economics and Bachelor in Economics and Finance from the University of Sydney and Murdoch University, Australia respectively. For more details, see ASEAN Trade Statistics, ASEAN Secretariat , accessed on 15 September 2010. Speech by Ambassador Yang Wenchang, 5th China-Singapore Forum, 16-17 September 2010, Singapore. For more details, see “Singapore-China Trade Up 25 per cent to S$95 billion” 5 February 2011 available at , accessed on 7 February 2011. For more details, see “ASEAN China trade to hit US$300 billion” available at , accessed on 1 August 2011. For more details, see Life After the Charter published by the ASEAN Studies Centre, Institute of Southeast Asian Studies, 2009. The 12 priority sectors are electronics, e-ASEAN, healthcare, wood-based products, automobiles, rubber-based products, textiles and apparels, agrobased products, fisheries, air travel, tourism and logistics. As in endnote 5. “China’s economy shows strong growth in 2009”, BBC News, 21 January 2010 available at , accessed on 14 September 2010. The countries are Indonesia, Malaysia, Philippines, Thailand, and Vietnam. For more details, see IMF World Economic Outlook available at , accessed on 5 August 2011. For more details, see “China-ASEAN Cooperation: A Model of GoodNeighbourliness and Friendly Cooperation”, speech by HE Mdm Xue Hanqin Chinese Ambassador to ASEAN, 19 November 2009, ASEAN Studies Center, Institute of Southeast Asian Studies, Singapore.

References ISEAS (2008), The ASEAN Community: Unblocking the Roadblocks. ASEAN Studies Centre Report Number 1, Singapore: ISEAS. Thomson, E.C. and C. Thianthai (eds) (2008), Attitudes and Awareness towards ASEAN: Findings of a Ten-Nation Survey. ASEAN Studies Centre Report Number 2, Singapore: ISEAS. ASEAN Secretariat (2008), The ASEAN Charter, Jakarta: ASEAN Secretariat. Chachavalpongpun, P. (2009), The Road to Ratification and Implementation of the ASEAN Charter, ASEAN Studies Centre Report Number 3, Singapore: ISEAS. Tiwari, S. (2009), Life After the Charter, Singapore: ISEAS.


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China-ASEAN Integration & Trade Journal Different Voices under China-ASEAN Free Trade Area 中国东盟整合与贸易学刊 17 Vol. 1, December 2011, pp. 17-42 第一期, 2011年12月

Different Voices under China-ASEAN Free Trade Area: An Exploration+ Shen Hongfang* Xiamen University

Abstract From a realist perspective, this paper introduces the different voices and viewpoints toward the full implementation of China-ASEAN Free Trade Area (CAFTA) from officials on the one aspect, and non-official sectors on the other. It tries to make an exploration of the rationale of the phenomena from the aspects of “one voice” principle and non-conditional Chinese loans and assistance to elaborate the welcoming attitude of Southeast Asian governments toward this issue and the cooling of mass protests in Indonesia. At paramount important, it explores the reasons that why many of the non-official sectors of ASEAN member states are rejecting CAFTA from the perspectives of threat, competitiveness, uncertainty that might be brought forth by the free trade and investment among China and ASEAN member countries, since not all are winners in CAFTA, technological upgrading is not easy, and four kind of the wide gaps are among the ASEAN member states and global economy is not jet resumed. The paper makes a production for the short term prospect and long term challenges of CAFTA. Keywords: different voices, CAFTA, rationality, prospect and challenges 1. Introduction The building process of the China-ASEAN Free Trade Area has lasted for almost ten years back to the proposal raised by former Chinese Premier Zhu Rongji at the November 2000 China-ASEAN summit. A Framework Agreement on Comprehensive Economic Co-operation between ASEAN and the People’s Republic of China was signed in Phnom Penh, 4 November 2002. Since than, through numerous rounds of negotiation between China and ASEAN member countries, the ASEAN-China negotiation processes on Free Trade Area (FTA) had


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been completed as set in the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China, (i) The Agreements on Trade in Goods and Dispute Settlement Mechanism between ASEAN and China were signed in November 2004 in Vientiane of Lao PDR and were implemented since July 2005; (ii) The Agreement on Trade in Services was signed at the sidelines of the 10th ASEAN-China Summit in January 2007 in Cebu, Philippines and entered into force on 1 July 2007; (iii) In November 2008, the ASEAN-China Trade Negotiating Committee (AC-TNC) concluded the negotiations on the ASEAN-China Investment Agreement and the agreement was signed during the 41st ASEAN Economic Ministers Meeting in August 2009 in Bangkok, Thailand, and thus finalized the complete process of negotiation of ACFTA. Based on the above agreement, the ASEAN-China Free Trade Area has been gradually phased in and became fully effective on January 1, 2010. A zero-tariff rate is applied to 91.5 per cent of goods from 10 ASEAN member countries and the average tariff was reduced by China from 9.8 per cent to 0.1 per cent. The six original ASEAN members have also imposed a zero tariff on 90 per cent of Chinese products. The four newer ASEAN members (Cambodia, Laos, Burma and Vietnam) will not have to reduce tariffs on Chinese goods to the same levels until 2015 given their current stage of economic development, though they can still enjoy the benefits of a zerotariff policy with China for the five years before that. While disagreements remain as to what to call the new organization: ACFTA or CAFTA (10+1 or 1+10), there are controversies that go deeper than the title of the new free trade pact.1 Section I is the introduction. Section II describes the welcoming stands of China’s government as well as ASEAN governments toward the full implementation of FTA in spite of the mass protests and various kinds of discontent from business circles in some countries. Section III elaborates the views from below, the non-official sectors toward CAFTA. With the exceptions of Singapore and Brunei, the non-official sectors in Indonesia, the Philippines, Malaysia and Vietnam are worried that their business will be hurt by economic integration with China, the giant. Section IV analyzes official voices endorsing CAFTA from the perspectives of the “one voice” principle and non-conditional Chinese loans and assistance. Meanwhile, this section also discusses the reasons for non-official sectors rejecting CAFTA, such as the logic of market economy under the context of “newtype” regionalization between China and ASEAN, the difficulties for SMEs in ASEAN countries in upgrading technology, gaps and barriers in promoting regional free trade and investment, as well as uncertain global economic environment. The final part of the paper makes the prediction that the short-term prospect of CAFTA is bright due to the large scale of


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investment in the infrastructural construction led by Chinese government, whereas, in the long-term, CAFTA is facing severe challenges with an uncertain future. 2. Official Promotion of Free Trade Agreement For various reasons, the responses, actions and voices were quite different on this first fully implementing free trade area, the ASEAN-China Free Trade Area (or China-ASEAN Free Trade Area). Different arguments in support of the free trade agreement have appeared along with the evolution of this free trade agreement in this decade. 2.1. The Chinese Government’s Push to Hail ACFTA As a proponent, the Chinese official propaganda machines have been conducting an impressive job in pursuing the people to accept that free trade and investment will bring benefits to rapid economic growth and improvement the people’s welfare as well as poverty alleviation. Yunnan, Guizhou, and Guangxi, the three provinces geographically close to ASEAN countries, are staunch advocates of the free trade agenda. Guangxi (officially a Zhuang-nationality autonomous region), a coastal southern province bordering Vietnam, won the race against Yunnan and Guizhou to be selected by the Central government to play the key role in China-ASEAN FTA. Guangxi has advocated vigorously the “winwin” status of this FTA deal under the guidance of China Ministry of Commerce and through China-ASEAN Expo as well as Business and Investment Summit that is held simultaneously with the Expo every year starting in 2004. Numerous academic activities in support of this agreement have also been organized.2 In addition, many websites have been set up and instructed to promote the deal, such as the People’s website in Guangxi.3 In answering the call by the central party leadership to attract more investment to develop the western part of China, Yunnan and Guizhou are also active in all kinds of activities with the aim to expand the economic relations with ASEAN. Other provinces are eager to increase trade and investment with ASEAN countries, as one of the bases of evaluating the provinces’ yearly economic achievement is trade openness and amount of foreign investment. In addition, the central government has been pushing for the implementation of “good neighbour policy” toward Southeast Asian countries and the “go out strategy” for expanding economic influence of China. All levels of administration in China are to take initiatives


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to respond to this call. The frequent official visits to ASEAN countries and numerous conferences and academic activities are testimonial to the strong focus on strengthening China’s foreign economic relations. The strong official promotion however could not generate enthusiasm among the private sectors, as initiatives from the private sectors are falling behind expectations. The Chinese government responded to the concerns of the private sectors by organizing some conferences with the aim to set up a network to help small and medium-sized enterprises (SMEs) to trade and invest in ASEAN. The China-ASEAN trade channel, or called the e-commercial website, was established in January 2010 to facilitate businesses among the SMEs and thus lower the business costs.4 China also works hard to persuade its ASEAN counterparts that the free trade agreement will benefit both China and ASEAN in making all economies more prosperous. Responding to the shortage of international goods in the region, Premier Wen Jiabao announced officially the creation of “China-ASEAN Investment Fund” with a total of 10 billion US dollars. After the signing of a series of agreements between China’s Export-Import Bank and domestic and foreign financial institutions on March 29, 2010, China-ASEAN Fund was formally established and put into operation. In addition to that, the head of Chinese Export-Import Bank also met with the Lao Ministry of Finance, Vietnam Ministry of Industry and Trade, China Huadian Corporation, and other relevant parties on January 8, 2010, to sign a loan agreement that would provide a total amount of 1.4 billion US dollars, mainly for promoting the China-ASEAN infrastructure and network construction.5 2.2. ASEAN Secretary and Leaders of ASEAN Member Countries Welcome the Full Implementation of CAFTA As a participant of this FTA, ASEAN also has very optimistic attitude toward the full implementation of CAFTA. In its news release on 7 January 2010, ASEAN Secretary-general Dr Surin Pitsuwan said, “It (ACFTA) signifies the beginning of a deeper dimension in ASEAN-China trade relations…”, “The establishment of the full ASEAN-China FTA also comes at an opportune time to boost regional recovery from the global economic crisis. China’s phenomenal growth has positive effects on ASEAN’s own expansion. China’s economic growth and strong investment expansion is energising the region and is providing ASEAN with an expanding diversified market in an environment of slowing growth”.6 In responding to the claims that the FTA would be detrimental to ASEAN, Dr Surin considered ASEAN has the capacity to be the supply chain for China’s booming economy. On his first official visit


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to China, Dr Surin said that “when China grows, ASEAN grows with it and when ASEAN prospers, China also benefits.”7 ASEAN as a whole, adhering to the “one-voice” principle and collective action, has been praising the free trade deal in generally positive terms. On the other hand, the diversity of the ASEAN member countries means that the opportunities and challenges brought about by this biggest FTA in the world are going to be different for each member country. Within each member country, opposition to the trade deal takes various forms. In Indonesia, there had been mass protest movements against the trade deal. Many legislators also expressed their opposition to the agreement.8 Nevertheless, Indonesian president Susilo Bambang Yudhoyono assured the public that the “free trade agreement would not threaten Indonesia’s industries; instead it would create opportunities for local business to export more goods.” He also said that “the government should strengthen the competitiveness of local industries against cheaper Chinese products flooding the local market, while pursuing renegotiation of some tariffs with China.”9 The Indonesia Ministry of Trade also emphasized that the implementation of CAFTA will strengthen bilateral trade and investment across the region, which is an “important element in the context of the strategic partnership between Indonesia and China.” Meanwhile, the Minister of State-owned Enterprises (SOEs) explained that CAFTA would create greater opportunities for “three industrial sectors for exports, namely, maritime, food and beverage, and forestry and agriculture products.”10 The leaders of Singapore, Malaysia and Thailand are all indorsing the free trade agreement. Expanding on the basis of the Suzhou Industrial Park project and the Sino-Singapore Tianjin Eco-City project, Singapore signed the bilateral free trade agreement with China (CSFTA) in October 2008, which is the first comprehensive bilateral FTA concluded by China with an Asian country.11 Thus, Singaporean merchants can enjoin the preferential policies ascertained in both ACFTA and in CSFTA. Malaysia, a country relatively open to the outside world in comparison with her neighbors, is committed officially to the regional free trade agreement with China that came into force on January 1, 2010, although some parties have expressed concerns that the trade liberalization agreement would hurt local manufacturers. Malaysian International Trade and Industry Minister Datuk Seri Mustapa Mohamed and Deputy International Trade and Industry Minister Datuk Mukhriz Mahathir, as well as Tourism Minister Ng Yen Yen all expressed their optimism on the free trade and bilateral relations with China. He also said that the FTAs “are just getting into gear and there will be some period of adjustment that needs to take place.” At the same time, he “encouraged Malaysian businesses to exploit some areas for cooperation such as ‘value-add’


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on imports from China and re-export the products to other countries.”12 He took note that China has become Malaysia’s biggest trading partner since 2009, amounting to RM127.9 billion or 12.9 per cent of Malaysia’s cumulative external trade, and among which was the RM6.58 billion balance of trade in Malaysia’s favor. Until today, the ministry has yet to receive significant complaints from domestic business over the implementation of ACFTA, with the exception of the iron and steel sector, which was concerned with the strong competition coming from China. The Trade and Industry Minister Mustapa also assured Malaysian business sectors that the government would be pro-active in assisting the domestic businesses to compete with China.13 The Thai government has taken an active part in the building of the CAFTA consistently even though the country has been undergoing political instability since Thaksin was overthrown by coup in September 2006. The incumbent Prime Minister Abhisit Vejjajiva visited China in 2009 and expressed his wish to deepen the economic relations with China through the FTA, particularly through investment and tourism.14 The Bangkok Post reported that increased Thai’s export to China under the free trade agreement framework and through the World Expo 2010 in Shanghai. Many joint meetings of high-ranking trade representatives of the two countries have been held and will continue to be organized in the future, while trade exhibitions for Thai products have also been held in Xishuangbanna, Xiamen, Guangzhou, and Qingdao.15 Although “earlier harvest” of CAFTA has caused some problems to the farmers of both sides, the Thai government is still firmly committed to the deal. It has formed a joint working group with China to survey the problems and obstacles in importing and exporting agro-products of the two countries. Although CAFTA was opposed by many sectors in the Philippines, the Philippine government nonetheless has been firm to follow the ASEAN’s position in the free trade deal with China. Before stepping down from office, the ex-president Arroyo signed the Presidential Executive order No. 814 on June 30, 2009, facilitating the reduction of import duties under the free trade framework.16 Government officials in general are all holding positive views on the implementation of CAFTA, especially the benefits brought by export of Philippine agro-products, such as coconut oil, banana, and pineapple.17 The attitude of Vietnamese government on ACFTA has undergone a change from skepticism to support. Le Quang Lan, the Deputy Director of the Multilateral Trade Policy Department under the Ministry of Industry and Trade (MOIT), was not optimistic about the benefits of ACFTA to Vietnam. He recognized that participation in the free trade deal with China could bring benefits to Vietnam, but it could hurt Vietnam too.


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However, the government eventually decided to endorse the FTA formally. Speaking at the opening ceremony of forum held in Nanning, in January 2010, Nguyen Cam Tu, the Deputy Minister of Industry and Trade of Vietnam, said that implementation of ACFTA has demonstrated strong commitment among the participating countries against protectionism amid the global economic recovery. He said that “as the chairman of ASEAN in 2010, Vietnam will further push for cooperation among members of the Association as well as between ASEAN and its partners including China.”18 3. Reflections from the Below: Private Sectors The private sectors, including the NGOs and business circles, have a more varied view on the free trade agreement between China and ASEAN. Many of them have expressed their wariness economic integration with China under the free trade agreement will actually hurt them more than benefit them. Among the ASEAN countries, the Indonesians appeared to react most fiercely against the free trade agreement. Employers and employees unusually allied with each other to take the same position against the deal. Early 2010 were marked by two big rallies and protests against implementing free trade agreement, calling on the government to renegotiate with China.19 About twenty unions and trade organizations joined together to express their concerns of the agreement on employment. They contended that such trade agreements would cause massive layoffs particularly in the labour-intensive leather and garment factories and agribusiness industries. Meanwhile, the companies would have to prepare massive funds for employee termination claims. The common perception of business leaders on CAFTA is that it would present significant threats to the local businesses. Thus, they were calling for the re-negotiation of the agreement. They demanded the delay of the reduction of tariffs on 228 categories of goods for the next two years to avoid damage on domestic industrialization and increase in unemployment. The FTA between China and ASEAN has long been criticized in the Philippines among the business circles and various NGOs since the proposal was raised in 2000. However, according to one survey undertaken by the Federation of Filipino-Chinese Chambers of Commerce and Industry Inc. (FFCCCII), the general attitude toward the agreement has shifted from opposition to support of the deal.20 Dr Alfonso Uy, the president of FFCCCII, emphasized the importance of China’s market to the Philippine economy and encouraged Philippine businesses to export to China. He pointed out products which the Philippine is able to supply, such


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as seafood, canned sardines, processed tropical fruits like dried mango, papaya and pineapple, and fresh fruits as well as non-food items like decorations, gift items and Christmas decors. He cited the strong buying power of the Chinese middle-class consumers and their eagerness to try foreign products, and expressed his confidence of the ability of Filipino products to penetrate the China market.21 On the other hand, Filipino SMEs and farmers in certain sectors will be confronting serious challenges under the trade deal. Philippine hog producers have expressed concerns that Chinese pork imports would jeopardize the still-recuperating hog industry. Filipino corn and vegetable farmers feel that ACFTA could drive them out of farms due to cheaper corn and vegetable imports. IBON, one of the most influential and active NGOs in the Philippines, has been campaigning against the trade agreement, arguing that the cheap imports from China would be disastrous rather than beneficial for Philippine agriculture and industries, which were already beleaguered by undue foreign competition. Dr Walden Bello, a well-known Filipino academic,22 in an article published in the Inquirer, a Philippine popular English newspaper, contended that “…CAFTA will add to the erosion of manufacturing and agriculture triggered by its hasty incorporation into the ASEAN’s free trade scheme, AFTA-CEPT (ASEAN Free Trade Area Common Effective Preferential Tariffs Arrangement) for the Philippines in particular…,” “…being one of ASEAN’s weaker economies, the Philippines has already seen itself driven into a massive deficit in its relations with other ASEAN countries under the ASEAN-CEPT free trade scheme, CAFTA is likely to accelerate this negative trend…” In Malaysia, while the government is committed to the CAFTA, there are worries and some concerns expressed by various parties on the side effects of the zero tariffs that might harm the local manufactures. In the view of the president of the Associated Chinese Chambers of Commerce and Industry of Malaysia, except for the motor industry, which is protected by the government, all other industries will be affected by zero tariffs under the trade deal. The Malaysian economic structure, it is argued, need more time and preparation to adjust to the free trade agreement. CAFTA presents both opportunities and challenges to Malaysian businesses. If not handled carefully, it might have done damages to the local industry before the latter can gain benefit. Pham Chi Lan, an economist who has done research on Vietnam’s integration process, offered her observations on the impacts of CAFTA on Vietnam. She reckoned that the Vietnamese economy still needs time for economic adjustment as the recent economic downturn has narrowed export gaps, which contributed to businesses’ burdens. Now the “cake” of


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the domestic market is also becoming smaller, imports from China will make businesses of the domestic producers more difficult.23 According to Nguyen Tien Nghi, Deputy Chairman of the Vietnam Steel Association (VSA), the coil steel market share held by domestic manufacturers decreased in 2009 to 20 per cent, due to the flooding of products from ASEAN countries like Thailand, Malaysia and, most especially, China. Nghi contended that domestic steel producers their share to the Chinese producers in April 2009, when the Government imposed high import tariffs of 15 per cent instead of 12 per cent on finished products and eight per cent instead of five per cent on billet steel. Vietnam paper producers anticipate big difficulties in competing with imports. Cao Tien Vi, Chairman of the Saigon Paper Company, noted that in 2008-2009, packaging paper imported from Indonesia and Taiwan had prices lower than production costs of domestically made products. According to Vi’s assertion, Only some joint paper ventures with foreign partners still can compete with imports.”24 4. Explaining Different Voices on CAFTA Why are the perspectives toward the full operation of CAFTA quite different between official and private sectors? The following are the explorations from the author. 4.1. Main Factors of ASEAN’s Official Endorsement of CAFTA (1) “One Voice” Principle When Chinese government proposed to set up FTA with ASEAN, the ASEAN member countries felt amazed. Although ASEAN is very diverse with different levels of economic development, political systems, cultures and religions, it nevertheless adopts the collective stand in international arena under the principle of “one voice”, including dealing with FTA matters.25 Before the negotiation on the ASEAN-China FTA, many bilateral FTAs in the ASEAN regions had already been signed. From the consideration of diplomatic strategy, China triggers a domino effect to produce some other ASEAN plus X arrangements. Many bilateral FTAs have appeared with Singapore and US in taking the lead. The competitive scene in the region has brought a golden chance for ASEAN for a good bargain politically and economically. As the CAFTA has existed on several years and concessions have already been reached in numerous minister conferences and summits,


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when some anti-CAFTA voices and pretests appeared, while the leaders of the ASEAN member countries could not but obey the principle of keeping “one voice” in collectivity through the agreement of tax deductions negotiated with China and the individual countries of ASEAN in the CAFTA. As a matter of fact, the conditions coming from the negotiation between China and individual ASEAN country are not necessarily protected by the WTO, and CAFTA, which sounds spectacularly soft.26 The recent Indonesian case has given a good explanation for this principle. When the representatives of various NGOs and the Indonesian House of Representatives have demanded to renegotiate about 300 tariff posts with China, the Indonesian president had made clear that he was not willing to break an agreement at this stage that has already been designed and signed by all the ASEAN members and China years ago. Nevertheless, he was aware that it was essential to protect public interest and to prepare the relevant elements by working together with the different Ministers, and seek for a breakthrough. While the attitude of Dr Surin Pitsuwan, General-Secretary of ASEAN, was also steadfast at that time, he said that renegotiation was impossible; it was considered much more costly because in addition to compensation, Indonesia will have to renegotiate with China and with other ASEAN countries. Only when China expressed that it was ready to work with ASEAN in the adjustment that ASEAN member states need to make in implementing the CAFTA, the political lock-in was broken.27 (2) Non-conditional Chinese Loans and Assistance The alluring public goods provided by Chinese government for the launching of the large-scale regional infrastructures including the road to the market, and the other key elements supporting the evidence of officially endorsement in a concord of ASEAN for this first full operation of the FTA. The recent Indonesian case has illustrated vividly the fact. Mr. Mari Elka Pangestu, Indonesian Trade Minister told the story: while he expected to finalize talks with its China counterpart over a possible renegotiation of CAFTA on April 4, 2010, Indonesia’s state-run Antara news agency reported that the Indonesian government had agreed on Saturday (April 3) to implement the CAFTA without delay. The reason was very simple. China had promised to provide more than US$2 billion in loans to Indonesia to help finance infrastructure development as part of implementation of the CAFTA. In addition to that, the Export-Import Bank of China will provide a US$100 million on loan, and Industrial and Commercial Bank of China may lend US$250 million to companies investing in both countries.


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Meanwhile, the Chinese government has approved a request by PT Bank Mandiri to open a branch in China to further boost trade and China has agreed to facilitate greater market access for Indonesian tropical fruits such as bananas, rambutans and pineapples. China promised also to offer technical assistance in improving competitiveness of Indonesia’s smalland medium-enterprises in term of machinery, logistics, and promotion.28 So the negotiation has become useless when the Indonesian government considered it to be a good deal. So far, the Philippines has become China’s largest foreign recipient of long-term, low-interest loans. The total amount reached US$8.4 billion, being equal to 1/3 of Chinese aid and assistance to ASEAN.29 Despite a flurry of controversies involving contracts between the two nations, a total of US$1.8 billion concessionary loans have been received by the Philippines, payable in 15 years with a five-year grace period. The Philippines in turn, as one of the most influential members of the ASEAN, has put out a good word about China to the rest of its neighbours. According to Mr. Lin Jianchao, the Chinese ambassador to the Philippines: “In addition to US$10 billion Chinese Investment Fund to ASEAN, China has allotted US$15-billion loans to the ASEAN; US$1.7-billion are concessionary loans, Philippine can make a good use to it”30 To the less-developed ASEAN new member countries, China has been consistently providing concessional loans and assistance without any conditions, that are mostly devoted to the building of infrastructures such as railroads, highways and the facilities for market access, etc. Chinese loans and assistance are now becoming the driving as well as decisive factors for pushing forward the building of the CAFTA. 4.2. Reasons of Rejection of CAFTA by Non-official Sectors 4.2.1. Not all are winners in CAFTA Although the propaganda machines are advocating a “win-win” result from CAFTA, theoretically speaking and according to the economic logic, market economy under the context of East Asian “new-type” regionalization (WTO-plus) will follow the wheel of economic globalization, that is destined to benefit those who are strong, and weaken or even wipe out those who are weak. Like the other FTAs in this region, CAFTA belongs to the “modern type” of FTA that displays the feature of surpassing the speed of trade liberalization driven by WTO while sticking to the commitments under the WTO. In addition, It not only eliminates trade barriers with an aim to create trade and trade diversion, but goes far away to span “deep” issues


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and concessions affecting all the agenda in WTO, some of which have actually come to a standstill in the WTO. Hence, opportunities for the gaining might only belong to those mega corporations with strong market competitiveness and extensive business network. While the small- and medium-sized companies and enterprises are facing challenges, they might either lose their market share or go bankrupt. The changing of trade policies will affect deeply the weak and affect very much welfare transfer too. The erosion of state power and decrease of sovereignty in the economic decision-making will also benefit those strong powers in the region in general, but weaken the weak ones if they have not adopted proper measures. 4.2.2. Technology upgrading is easier to say than do for SMEs of ASEAN member countries The key to improve competitiveness of export goods in the international market is to enhance the quality of the commodities while reducing the price. This requires technological innovation to upgrade the quality of the product as well as to even improve its design. All these need funding as a prerequisite. The multinational corporations can do it, but it is difficult for the SMEs due to the shortage of capital, technologic personnel and some other deep problems. The Southeast Asian governments have paid much attention to the development of SMEs since the later comprise the bulk of business enterprises. They also employ a large segment of a country’s total workforce and contribute significantly to national output. Government support for the technological upgrading of SMEs has taken many forms, including skills training, productivity improvement programs, and even the setting up of business incubators and technology parks. Some governments also offer a long list of grants, loans, and other forms of financial assistance meant to address various SME requirements. In spite of all these support mechanisms, however, overall results have fallen short of expectations. Some field studies show that few SMEs are able to upgrade their capabilities to qualify as suppliers for large enterprises, especially multinational corporations (MNCs). Many SMEs fold up due to competition posed by imported goods and large foreign investors, while limited number of SMEs, especially in far-flung areas, has availed of government support programs, many loans and grants meant for SMEs are underutilized. Why is it difficult to encourage SMEs in the Southeast Asian countries like Malaysia, Thailand, Indonesia and the Philippines to innovate and


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to upgrade their technological capabilities in spite of the availability of various financing schemes and other support activities? The following are the answers: (a) too long a gestation period required for innovative activity, (b) legal restrictions and restrictive government policies, (c) long drawn-out processes for obtaining government approval for a new product, (d) shortage of financial capital, (e) lack of competent employees, and (f) very high levels of risk. Also worth mentioning is the study done by other group of scholars, which identified several obstacles to SME innovation, sited as: (a) high innovation costs, (b) high risks related to innovation activities, (c) absence of financial resources, (d) absence of skilled workers, (e) organizational constraints, (f) regulations and technical standards, (g) low customer interest in product innovation, (h) absence of information on technology, and (i) absence of market information. In summary, the obstacles or barriers to innovation could be classified in terms of the nature of innovation, internal constraints, and external conditions. 4.2.3. Four kinds of wide gap among ASEAN member states are the obstacles for free trade and investment in the region The region of Southeast Asia possesses the most developed as well as the poorest countries in the world according to the GDP per capita. Some studies have shown the desperate disparities in regional economic growth and development, openness, as well as the diversities of economic infrastructures. Generally speaking, there are four kinds of wide gap among the member countries: (1) Income gap from the richest Singapore (in PPP) to poorest Myanmar. In term of GDP of per capita, Singapore is numbered four, but if it is valued in PPP, Singapore will be ranked first; whereas, GDP per capita in Myanmar was only about US$300, making it the poorest less developed country according to the World Bank’s data. (2) Infrastructure gap, especially in terms of the different levels of transportation system, most importantly the road to the market, utilities, and ICT. The conditions of newer ASEAN countries of CLMV (Cambodia, Laos, Myanmar and Vietnam) could not be compared with that of Singapore, Malaysia and Thailand. (3) Integration gap is also tremendous if one uses the belt mark of trade per capita, degree of openness, commitments to integration and the capability to realize the commitments. (4) Institutional gap which includes more factors such as the single component of the economic and political institutional system of a


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country, its public sector indicators, financial and banking system, national system of innovation, etc. Many reasons would be ascribed to the resistance of Indonesian merchants to the full implementation of CAFTA, but the actual ones are only domestic barriers of trade and complicated procedures for getting final permission to trade within the country will cost a lot, and even already weakened competitiveness of Indonesian products, and the complicated procedures has even caused the country to miss the opportunity.31 As Palmira Permata Bachtiar pointed out “the government liberalizes trade with other countries at the national level, yet the opposite happens at the regional level where trade barriers are still imposed to our local products”, “… although Indonesian regional government has not deny the importance of trade and investment on employment generation and poverty reduction, very few would set aside the distraction of local revenue at the cost of long-term business climate”. In theory, exchange of agricultural and forestry commodities inside Indonesia cost zero, but in reality nothing seems to be a free lunch when one has to proceed hastily.32 4.2.4. Global economic recession and recurrence of protectionism Neo-liberalism has received wide criticisms since the 1997 East Asian financial crisis. The eruption of the American financial Crisis in summer of 2007 and the global economic recession afterward have raised more severe challenges to the doctrine of new liberalism, and could be viewed as a kind of negation to the liberalization of trade, investment and finance. In practice, various actions and movements of anti-globalization were initiated since 1995, the year of establishment of WTO under the banner of stopping the agenda of Doha Round. Especially, the Obama government has also changed the policies that from “trumpeter” of free trade to the leader of trade protectionism in order to increase export, to create employment opportunities, and to promote economic recovery. Due to the US-led developed countries having taken measures to protect trade, the Doha agenda which was scheduled in the end of 2010 has once more been shelved. Hence, the fact that China has launched a highly publicized CAFTA comprehensive at this stage seems somewhat ridiculous. Under some ferment agitation in the Western media’s propaganda, the higher competitiveness of China’s merchandise exports has become a scapegoat of the Western developed country’s high rate of unemployment. There were 118 anti-Chinese dumping only in the one year of 2009, involving US$13 billion. As global economy is still in the depression, almost all the countries in the world are adopting policies of trade


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protectionism while promoting export through various measures including investment-led export. The degree and process of liberalization and facilitation of bilateral trade in FTA signed between China and ASEAN are much deeper and quicker than WTO and APEC. However, the Chinese government’s propagandizing on a large scale the full implementation of CAFTA, and advocating energetically the benefit of free trade and investment, herein, cannot but meet with doubts and suspicions. 5. The Prospect of CAFTA and Future Challenges According to the agenda, the building of CAFTA has to undergo three stages, taking about another one decade. The first stage is from 2002 to 2010; the second stage is from 2011 to 2015, when the other four ASEAN new member states starting the zero tariffs, and the focus of CAFTA will expand to trade of service and market of investment. The third stage is after 2016, and FTA will continue to be more consolidated and perfect. 5.1. With the Beginning of Many New Projects of Cooperation, CAFTA Will Be Going Well in Coming Years The second stage now is witnessing different kinds of conferences, seminars, forums and even training courses be held every where in China, most frequently in the southern and eastern part of China with the objectives of strengthening the competitiveness of the SMEs, enriching Chinese officials and merchants with the knowledge of the laws and policies of CAFTA, etc. At the same time, numerous new proposals and projects are emerging which are led and financed by the municipal, provincial and the Central government. To list those important as follows: * Guangxi Province at the moment is enthusiastic at the Pan-Beibu Gulf (PBG) Economic Zone though it has already established the Beibu Gulf ASEAN Economic Area.33 The PBG Economic Zone comprises China’s Guangxi Zhuang Autonomous Region, Guangdong and Hainan provinces, Vietnam, Malaysia, Singapore, Indonesia, the Philippines and Brunei as part of the effort to enhance economic cooperation between China and the Southeast Asian nations. The most eye-catching is that the attendees reached an agreement on the construction of the Nanning-Singapore Economic Corridor at the fifth PBG Economic Cooperation Forum which was held during 12-13 August 2010 in Nanning, the capital city of southwest China’s Guangxi Zhuang Autonomous Region.34 The Beibu Gulf Economic Zone in Guangxi is an important link in the corridor. In addition to


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that, a Consulting project undertaken by the Research Institute of Economic Planning under the ministry of railways has been approved that a China-ASEAN speed rail from Nanning-Pingxiang-Hanoi will be built.35 * Guangdong Province also wishes to be the “vanguard” of CAFTA. It puts forward vigorously the strategy of “going out”, and encourages its enterprises to do business in Southeast Asia. So far, there are two important projects that would lead to deepening economic cooperation between Guangdong and ASEAN. One is the ChinaVietnam (Shenzhen-Haiphong) economic and trade cooperation zone that started in the first quarter of 2010. It is situated in Hai Phong City, Anyang County, Vietnam, covering an area of 800 hectares. It has already completed the first phase of infrastructure construction and attracted the first batch of companies to the zone in the first quarter of 2010.36 The other important project is to promote the building of Guangdong as a knowledge city characterized as “Three Centers” and “Four advanced Strategies” in order to accelerate the forming of the PBG Economic Zone.37 * Yunnan Province, as a pioneer of economic cooperation with the ASEAN countries in participating in the Greater Mekong Sub-region Economic Cooperation, has already contributed a lot to the relations between China and Southeast Asia, and is focusing on building the grand project of the Pan-Asian railroad to further improve the infrastructure and environment for economic contacts of China and its neighboring countries. Besides, Yunnan province pledges to play a big role in trade, cultural and tourism exchange, as well as to improve further the existed regional cooperation mechanisms between Yunnan and Laos, Yunnan and Northern Thailand, and Yunnan and Northern Vietnam.38 * Guizhou Province is originally rather isolated and closed due to the geographical location which has the three disadvantages of “no border with any ASEAN country, no sea and no river”. However, taking advantage of the building of CAFTA, Guizhou province is going to build at least more than two expressways in order to mingle itself with CAFTA. Taking advantage of its minority cultural features, Guizhou hopes to create a Miao’s “Jerusalem”. In addition, Guizhou hosted for three years the China-ASEAN Education Cooperation Week which is jointly sponsored by the Ministry of Foreign Affairs of the People’s Republic of China, Ministry of Education of the People’s Republic of China, and the People’s Government of Guizhou Province that aims to further strengthen the friendship, mutual understanding and collaboration between China and the ASEAN countries, to promote


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partnerships among the universities in the region, to provide more opportunities for students’ communications, and to push forward China-ASEAN economic and cultural exchange and development. The first China-ASEAN Education Minister Roundtable Conference was also convened in 2010 in Guiyang, Guizhou Province’s capital. * Hainan Province is ready to be a base for the agro-products of CAFTA. Taking advantage of its location, environment, and making full use of its brand of ecological, healthy islands, and “no epidemic disease” area, Hainan Province is striving very hard in building itself as the China-ASEAN free trade area of tropical agricultural products, aquaculture, and processing base. Moreover, Hainan will also give full play to Myanmar, Cambodia, Laos and other countries of tropical agricultural resources, to jointly build a comprehensive development zone of rubber, excellent base for rice, banana and sugar. Hainan is making full use of the air routes which have been opened to Guangzhou, Shanghai and Tianjin.39 5.2. CAFTA Is Facing Severe Challenges in the Long Term and the Future Is Unclear The expansion of investments and trade led by the Chinese state companies in the field of infrastructures in particular, will promote manufacturing growing in the upper and lower chains, and thus push the regional economy upward in the short term. Nevertheless, the long-term prospect in five to ten years as forecast is blurred, being constrained by the following complicated factors. Firstly, there are 304 FTAs (include RTAs and bilateral FTA) in the region of East Asia according to the calculation of the Asia Regional Integration Center of ADB in earlier 2010. About half of them have been concluded, and 159 were signed by ASEAN member countries. Following the full implementation of CAFTA, all those RTAs and FTAs will operate also one after another by the schedule. Since almost all these business deals are the kind of building blocks of WTO, and provide even better preferential treatments mutually, therefore, such situation will no doubt reduce the attraction of CAFTA. Secondly, the blurred future of CAFTA is also due to the very severe “noodle bowl syndrome” of this region’s regionalization. Different rules of origin (RoO) contain in various FTAs, and the existence of overlapping systems owing to the fact that China and the Southeast Asian countries have signed various types of FTAs/RTAs within and outside the region has added difficulties for companies and enterprises to conduct business. Before the companies and firms have the right to enjoy the preferential


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Table 1 FTA by Country in East Asia (as of January 2010)

Under Negotiation2

Concluded3

Total

Country Proposed1 Signed/Under Under Signeda In effectb Negotiationa Negotiationb Brunei Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam China PRC Hongkong C Taipei C India Japan Korea R New Zealand Australia

4 2 6 2 3 2 4 5 6 2 8 0 1 12 4 8 4 6

0 0 1 0 1 1 0 0 4 0 2 0 1 4 0 1 0 1

1 1 1 1 5 1 1 8 3 2 4 0 1 6 5 8 2 5

0 0 1 0 2 0 0 3 0 0 1 1 0 1 0 1 2 0

8 6 7 8 8 6 7 18 11 7 9 1 4 10 11 6 7 8

13 9 16 11 19 10 12 34 24 11 24 2 7 33 20 24 15 20

Total

79

16

55

12

142

304

Total of ASEAN in 2010

36

7

24

6

86

159

Total of ASEAN in 2007

37

17

37

15

51

157

Notes: 1. Proposed – parties are considering a free trade agreement, establishing joint study groups or joint task force, and conducting feasibility studies to determine the desirability of entering into an FTA. 2a. Framework Agreement Signed/Under Negotiation – parties initially negotiate the contents of a framework agreement (FA), which serves as a framework for future negotiations. 2b. Under Negotiation – parties begin negotiations without a framework agreement (FA). 3a. Signed – parties sign the agreement after negotiations have been completed. Some FTAs would require legislative or executive ratification. 3b. In Effect – when the provisions of an FTA becomes effective, e.g., when tariff cuts begin. Sources: This table is constructed by the author based on the figures provided by the Asia Regional Integration Center of ADB in 2007 and 2010 .


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treatment for their exports, they have to fill the forms to ensure their export commodities meet with the requirements of RoO of the various FTAs. This not only adds to the cost of a firm for paying the fee, but also takes time. As a result, the companies might lose the chance for market access. Thirdly, the direct interference of the Chinese government through investing in large-scale infrastructure including a vast network of railways, highways that link the western part of China with ASEAN countries also meets with a lot of difficulties and challenges. Taking the “Nan-Sin corridor” as an example, some experts and scholars from China, Vietnam and ADB pointed out many difficulties and challenges facing the building the “Nan-Sin corridor” at the Fifth Pan-Beibu Gulf (PBG) Economic Zone Forum held in Nanning from 11 August to 13 August 2010. Some of the options and suggestions are cited here: “…in addition to the relevant social and environmental concerns, also need to be fully addressed are the issues including the fact that the local people are forced to be relocated, ecological destruction, and other issues”.40 Fourthly, before the advent of economic regionalization of China and Southeast Asian, the region has already confronted economic globalization. Under the influence of the mainstream doctrine which has been promoted by WTO, IMF and World Bank, China and Southeast Asian economies are open even more widely to FDI and MNCs in the post-Crisis period. Specifically, the region’s international trade has been increasingly characterized by “intraproduct specialization”, plus accelerating of offshore sourcing and cross-border production networks that have contributed to the rapid rise of trade in parts, components, and intermediate products with the characteristics of fragmentation although versus agglomeration brought about by FDI. MNCs and TNEs in the region have increased both the value of trade and investment-related trade. In other words, a large part of trade in PCAs (parts, components and accessories) is of the intra-firm variety that constitutes most of the foreign trade of the region. The sources of FDI are from not only Japanese and NIEs, but also the U.S. and EU. Taking the Philippines as an example, 50 world biggest IT corporations are all investing in the Philippines and setting up their branches or even headquarters there within one decade since the end of the 1990s. Therefore, before raising the regionalization of this region, MNCs and TNEs have already been playing an important role in regional economic growth and development. Since there are no all winners in the market competitions according to the logic of economics, China and Southeast Asian regionalization, which is under the context of globalization, will certainly not go on smoothly. How do these two trends of regionalization and globalization meet and can they mingle? Are they opposed to each


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other? All these point to further research projects that badly need to be carried out. Last but not least, the expansion of China’s influence in the region gives rise to a new round of competition between the interests of the big powers in the region not only economically, but also politically, and even militarily. Hillary Clinton’s declaration “We’re back” to her audience at the ASEAN Summit in Thailand in 2009 disclosed US’s concern regarding its interests in the region. China’s behaviour is also arousing the suspicion and worries of Japan, Australia, South Korea and even India who are losing their impacts on Southeast Asian countries. Even worse, many people from Southeast Asia think that the benefits of China as a neighbour are tempered with an uneasy sense of foreboding that as its gravitational pull increases, it might ultimately suck in their economies and societies. One of the fears is that China will take over the regional production chain and that it will swallow Southeast Asia’s lunch.41 Notes +

This is the revised version of a paper presented at the international conference “China-ASEAN Free Trade Agreement: Regional Implications”, jointly organized by the Institute of China Studies, University of Malaya and the Research School of Southeast Asian Studies, Xiamen University, 27-28 September 2010 at the Institute of Postgraduate Studies, University of Malaya. The author would like to take this opportunity to extend her deepest appreciation to the director of the Institute of China Studies, Associate Professor Dr Emile Kok-Kheng Yeoh, for his kind invitation for my academic visit as a Senior Research Fellow at the Institute of China Studies, University of Malaya, from 28 June to 30 September 2010. * Dr Shen Hongfang, Professor, Faculty of International Relations and Research School of Southeast Asian Studies, Xiamen University, Fujian Province, China. Shen also holds a full position of Senior Research Fellow at the Center of Southeast Asian Studies, joint directory by the State Ministry of Education and Xiamen University, China. She was Visiting Senior Research Fellow at the Institute of China Studies, University of Malaya, from June to September 2010. 1. In the English-language press, acronym of the ASEAN–China Free Trade Area is ACFTA, whereas, the Chinese newspapers more often call it CAFTA. “CAFTA” is a potentially misleading term, as the same acronym was also used for the Central American Free Trade Agreement, and academically it is also very controversial, implying the “Hubs and Spoke” structure. Therefore, the two different usages even mean different relations in the FTA. 2. See the websites (中国东盟博览会官方网站) and (广西中国-东盟在线网站) 3. (中国东盟自由贸易区—人民网广西视窗)


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4. (中国东盟专业网上贸易市场) 5. “China-ASEAN Fund Initiated a Memorandum of Understanding Signed”, China Economic Times , 2010-01-08. 6. “ASEAN-China Free Trade Area: Not a Zero-Sum Game”, ASEAN Secretariat, 7 January 2010. 7. “ASEAN-China Free Trade Area a Win-Win”, report by Xinhua in Jakarta, 26 March 2010. 8. As earlier as on 18 December 2009, Chairman of the House of Representatives’ Commission VI Airlangga Hartarto held a press conference, saying that the 11 industrial sectors of Indonesia that included textiles, food and beverages, petrochemicals, synthetic fiber, electronic cable and electricity instruments, machinery, engineering services, and iron and steel were, or are under the threat of the agreement according to the study done by the House starting from 2005. Earlier on December 15, 2009, the House wrote to President Susilo Bambang Yudhoyono calling for a postponement of the ACFTA agreement, and asked the government to protect local products by imposing non-tariff barriers before the ACFTA agreement was put into force. At the same time, the House called the press conference to convey its stand on the planned implementation of the ACFTA agreement. (Julie, “House: ACFTA Agreement Threatens RI’s 11 Industrial Sectors”, Friday, 18 December 2009 .) 9. “ACFTA Creates Export Opportunities, Says President”, The Jakarta Post, 2010-01-26 . 10. Lvan Lim et al., “Facing a Political Lock-in Situation with the ACFTA: Which Option for Indonesia?”, Reports from Friedrich-Ebert-Stiftung Indonesia . 11. The CSFTA is a comprehensive and broad-based agreement covering areas including trade in goods, rules of origin, trade remedies, trade in services, movement of natural persons, investment, customs procedures, technical barriers to trade, sanitary and phytosanitary measures and economic cooperation. Both sides also concluded negotiations for a Memorandum of Understanding (MOU) on Labor Cooperation. 12. “Malaysia Committed to Asean-China FTA”, 19 January 2010 . 13. “ACFTA Impacting Local Industries: Mustapa”, 1 April 2010 . 14. “Editorial: Sino-Thai Relations Have Come a Long Way”, The Nation, 30 June 2009 . 15. “Thailand Looks to China for Growth”, Bangkok Post, 12 September 2010 .


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16. Malacanang, Manila, by the president of the Philippines Executive Order No. 814, June 30, 2009; also see Emiko Purdy and Pia A. Ang, “Philippine Comprehensive Tariff Review”, post by Manila, 11 February 2010, from USDA Foreign Agricultural Service, Global Agricultural Information Network. 17. Cited from the news release of Economic and Commercial Counselor’s office of the Embassy of the People’s Republic of China in the republic of the Philippines, 20-21 January 2010. http://wwwph.mofcom.gov.cn 18. The ASEAN secretariat board jointly organized this forum with the Chinese Ministry of Commerce and the economic administrative agencies of the 10 ASEAN member countries on ASEAN-China Free Trade Area (ACFTA) under the theme of “Mutual Beneficial, Win-Win Cooperation”, held in Nanning city, Guangxi province, China on 7 January 2010. This forum is the first international event after the ACFTA started operation in 1st January to evaluate the progress in creating ACFTA and propose solutions for economic cooperation, investment and commercial exchange between the host and the ASEAN members. 19. On 7 January, thousands of workers took to the streets of the Indonesian city of Bandung to demand a delay in the implementation of the agreement. The protestors, The Jakarta Post reported, “expressed fears that once the FTA came into effect it would trigger mass layoffs, as well as Indonesian products’ inability to compete on international markets.” Again, on 28 January 2010, while some 10,000 people from a cross-section of civil society and labor groups gathered peacefully at the palace, waving banners and shouting slogans protesting the government’s first 100 days against corruption and perceived mismanagement in implementing The ASEAN-China free trade agreement, which would result in factory closures and job losses. Rally coordinator Agus Supriyanto said that “even though the agreement was initially signed back in 2002, what you get from a government is neo-liberal and capitalistic, we’ll lose our jobs; we can’t compete with cheap Chinese products. Today we’re here to tell the parliament to reject ACFTA.” (“Jakarta: Indonesians protest government’s First 100 Days”, 28 January 2010 . 20. Earlier in November 2001, FFCCCII initiated a “Buy Pinoy movement” (购买菲律宾国货) and convened a convention to gained local support, as well as lobbied the Philippine government not to take any substantial action on CAFTA based on the fact that Philippine goods are less competitive in the markets of both China and the Philippines. 21. 22. Walden Bello was a retired professor of the University of Philippines, and former co-director of Focus on the Global South, a NGO based in Thailand, currently a member of the House of Representatives of the Philippines representing Akbayan (Citizens’ Action Party), president of the Freedom from Debt Coalition.


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23. “Economist Pham Chia Lan Shared Her Views on ACFTA and Its Possible Effects in Vietnam”, Vietnam Net Bridge, 21 February 2010 24. “Businesses Concerned about ACFTA”, 8 February 2010 . 25. In recognition of sharp differences among East Asian economies, ASEAN upon its setting up established the “ASEAN way” as a code of conduct that stresses patience, evolution, informality, pragmatism, and consensus that also plays an important role in regional economic cooperation to take good care of particularities among the countries. Therefore, the regional economic cooperation as well as regional economic relations are reflecting the features of flexibility, preference and informality and inclusivity. 26. The disciplines of the CAFTA are in accord with that of the WTO, the Article XXIV of the General Agreement on Tariffs and Trade (GATT) for trade in goods, and Article V of the General Agreement on Trade in Services (GATS) for Trade in Services. However, the tariff cutting was negotiated unilaterally by the individual ASEAN member countries and China, which was not “bound” in the WTO, called “bindings overhang”, which are not subject to WTO discipline which means that East Asian tariffs could go back up overnight without violating any WTO rules. 27. ASEAN General Secretary Dr. Surin Pitsuwan had done a lot of work between Indonesia and China. During the talk between China State Councilor of Dai Bingguo and the ASEAN General Secretary on 22 January 2010, Dr. Surin informed that the Indonesian Government has been handling the issues raised under the ACFTA with responsibility and grace…, all FTA agreements, including the ACFTA, provide for measures that will protect, assist and facilitate industry adjustment. These include safeguards, antidumping measures or modifications of concessions. Upon his return from his first official visit to China, Dr. Surin remarked that “When China grows, ASEAN grows with it and when ASEAN prospers, China also benefits.” He also expressed appreciation for China’s understanding and willingness to work with ASEAN in the adjustments that the ASEAN member States need to make in implementing ACFTA. (“ASEAN-China Free Trade Area a Win-Win: Official”, March 25, 2010 . 28. “China Promises Indonesia US$2b in Loans for Infrastructure Projects as a Part of ACFTA”, Reuters and Jakarta Globe, 4 April 2010 29. “China-ASEAN Free Trade Area Brings New Opportunities”, Commercial News (Philippine Chinese newspaper), 13 January 2010. 30. China Financial assistance to the Philippines, actually a by-product of the ACFTA, is helping to fund infrastructure development. Two China-funded railway projects are already underway. There are also plans to modernize the Laoag International Airport in Ilocos Norte. The Metro Manila Skyway project, still unfinished 14 years after breaking ground, has been revived with Chinese funding. Development assistance from China has


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also facilitated the modernization of Philippine seaports. The Laiban Dam project in Rizal province, projected to provide 1,900 million litres of water per day and generate 30 megawatts of power, is also partially Chinesefunded. These projects could raise Philippine competitiveness by making the transport of goods faster and cheaper. (Joseph Holandes Ubalde, “RP remains China’s largest donor loan beneficiary”, GMA News, 8 June 2009 . 31. Though Indonesian regional regulations on trade (and investment) barriers have been eliminated through law No. 18/1999 as the implementation of the Letter of Intent with IMF in 1998, its amendment (Law No. 34/2000), however, terminated the deregulation process allowing the barriers to reappear. 32. Palmira Permata Bachtiar, “ACFTA and the Threat of Internal Trade Barriers”, The Jakarta Post, 28 April 2010. 33. Beibu Gulf ASEAN Economic Area includes 13 cities around the Beibu Gulf: Nanning (南宁市), Chongzuo (崇左市), Beihai (北海市), Qinzhou (钦州市), Fangcheng (防城港市), Yulin (玉林市), Zhanjiang (湛江市), Maoming (茂名市), Yangjiang (阳江市), Haikou (海口市), Sanya (三亚市), Danzhou (儋州市), Dongfang (东方市), and ASEAN-10, Brunei, Thailand, Indonesia, Laos, Myanma, Philippines, Malaysia, Singapore, Vietnam, Cambodia. And another eight cities of Guanxi around: Liuzhou (柳州市), Laibin (来宾市), Guilin (桂林市), Baise (百色市), Hechi (河池市), Guigang (贵港市), Wuzhou (梧州市), Hezhou (贺州市). 34. The proposed corridor will start in Nanning of China and run through Hanoi in Viet Nam, Vien Chang in Laos, Phnom Penh in Cambodia, Bangkok in Thailand, Kuala Lumpur in Malaysia, and Singapore by railways, expressways, waterways and air routes. Relevant countries should cooperate to take advantage of each member’s strengths and form a transnational economic corridor. The corridor, affecting an Asian population of 1.5 billion, was initiated in 2006 after a consensus was reached by China and ASEAN members. (Lan Xinzhen, “Nanning-Singapore Economic Corridor”, Beijing Review, 24 August 2010, No. 34, August 26, 2010 .) 35. 36. This economic and trade cooperation zone feature set is divided into industrial park and integrated support services, parks, industrial parks program assigned to enterprises to electronics, garments mainly light industry leading provider of comprehensive park financing, research and development, quality control, legal advice, customs, logistics and other supporting services . 37. “Three Center” are: knowledge innovation center, knowledge industry development center, and intellectual property trading center, and “Four advanced Strategies” stand for attracting high-end talent, gathering high-end industry providing high-quality services and building living and working environment.


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38. 39. 40. “New Challenges Facing in the Building of Nanning-Singapore Corridor”, China Economy website, 13 August 2010 . 41. Tim Johnston, “South-east Asia: A Wider Radius”, 27 January 2010 .

References Bello, Walden (2010), “Propaganda and reality: The China-ASEAN Free-Trade”, 17th January. Baldwin, Richard (2007), “Managing the Noodle Bowl: The Fragility of East Asian Regionalism”, Asian Development Bank Institute. Calleja, Danny (2010), “Hog Farmers Fear ACFTA-covered Pork Importation Due to Low Supply”, 28th June, Philippines News Agency. Caputo, A., F. Cucchiella, L. Fratocchi, P. Pelagagge and F. Scacchia (2002), “A Methodological Framework for Innovation Transfer to SMEs”, Industrial Management, 102 (5/6), pp. 271-283. Habaradas, R. (2008), “Why Don’t These SMEs Innovate? – SME Development and Technological Upgrading in Developing Countries: Lessons from Malaysia, Thailand, and the Philippines”, paper presented at the 7th Asian Public Intellectuals (API) Fellows Workshop, 22-23 November, Yogyakarta, Indonesia. Intarakumnerd, P. and T. Virasa (2004), “Government Policies and Measures in Supporting Technological Capability Development of Latecomer Firms: A Tentative Taxonomy”, Journal of Technology Innovation, 12 (2). Intarakumnerd, P., T. Virasa and E. Alabastro (2004), “Science and Technology: Building Blocks of a Realistic National Innovation System for the Philippines”, paper presented at the 3rd U.P. Public Lectures on the Philippine Presidency and Administration, 27 February, at the Marine Science Institute, U.P. Diliman, Quezon City. Katada, Saori (2009), “Political Economy of East Asian Regional Integration and Cooperation”, No. 170, November, Asian Development Bank Institute. Kawai, Masahiro and Gabeshan Wignaraja (2010), “Free Trade Agreements in East Asia: A Way toward Trade Liberalization?”, ADB Briefs, No. 1, June. Lim, Lvan and Philipp Kauppert (2010), “Facing a Political Lock-in Situation with the ACFTA: Which Options for Indonesia?”, Reports from FriedrichEbert-Stiftung Indonesia, March 2010.


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Park, Innwon (2008), “Regional Trade Agreements in East Asia: Will They Be Sustainable?”, MPRA Paper No. 5068, Korea University, 1 March. Shen, Hongfang (2006), “The Building of the China-ASEAN Free Trade Area: A Case Study of the Philippine Perspectives”, China Report, Vol. 42, No. 3, New Delhi/London: Thousand Oaks: Sage Publications.


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China-ASEAN Integration Trade Journal Regionalized Corporate Social&Responsibility? Vol. 1, December 2011, pp. 43-60

中国东盟整合与贸易学刊 43 第一期, 2011年12月

Regionalized Corporate Social Responsibility? Making CAFTA Work Sabrina Chong Yee Ching* Open University Malaysia

Abstract Traditionally corporations are expected to be socially responsible to the communities in which they are located. However, trade liberalization has blurred the corporations’ institutional and national boundaries and made it difficult for them to discern exactly which communities to include. With offshoring of jobs on massive scales, disclosure of financial scandals and breach of international product, labour and environmental standards, more stakeholders than ever are calling for corporate accountability. Corporations, however, do not have a clear understanding on what exactly their obligations are. In order for China-ASEAN Free Trade Agreement to work, the paper proposes that an updated version of corporate social responsibility (CSR) – regionalized CSR – that reflects the fact that firms would be held responsible for action far beyond their boundaries, and to include the actions of all their stakeholders. This standardized framework has to be harmonized with the socio-economic environment of these countries and should aim to instill closer cooperation between the member countries’ government agencies, non-government organizations, the media, businesses, professional bodies, research institutions and the public. It is recommended that the member countries of CAFTA adopt the four-pronged agenda: (1) establish China-ASEAN own CSR standard; (2) increase corporate accountability; (3) reduce the scope for corruption; and (4) establish an independent corporate monitoring body. Keywords: corporate social responsibility, corporation, trade liberalization 1. Introduction Trade liberalization has been among the most controversial aspects of globalization. Advocates of trade liberalization believe that it will bring greater efficiency and increased growth (Friedman & Friedman, 1980).


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However, many see the alleged costs such as lower wages, growing unemployment and loss of national sovereignty as outweighing the purported benefits (Row, 2005; World Bank, 2005, pp. 56-57). Specifically, free trade agreements of the past such as the North America Free Trade Agreement (NAFTA) have neither been free nor fair. They have been opening up markets in the developing countries to goods and services from the developed countries without full reciprocation. Even if the trade agreements had been truly free and fair, not all countries would share in the gains. This is because, unlike developed countries that have the technology and infrastructure to take advantage of the new opportunities, the developing countries often face the lack of infrastructure to bring their goods to markets, and it may take years for their goods to meet the standards demanded by the developed countries. As a result, this asymmetric globalization has left the developing countries worse off than they would be (Stiglitz, 2006, p. 62). The China-ASEAN Free Trade Agreement (CAFTA) was launched on January 1, 2010 with the objective to promote intra-regional trade and to enhance market integration (Sheng, 2003). Its implications are enormous and are expected to significantly affect all corporations especially the small and medium enterprises (SMEs). The SMEs are the backbone of the economies in this region. Despite initial enthusiasm, concerns by certain ASEAN countries such as Indonesia and the Philippines about cheap goods flooding in from China have spurred a last-minute attempt to postpone their country’s full participation in the CAFTA (Sutanthavibul, 2010; Yeoh, Yoo & Liong, 2010, p. 55). Thus, it is crucial that CAFTA be managed fairly, in order to achieve sustainable development within the China-ASEAN Free Trade Area. One way of doing so is by building a social and environmental agenda that embraces the vulnerable group of society (such as the poor, workers who are facing occupational health and safety issues, and employees who are subjected to discriminative labour and social practices), and to prevent further environmental decline. Businesses, through corporate social responsibility (CSR) practices, have an important role to play in managing these challenges. Traditionally, corporations are expected to be socially responsible to the communities in which they are located. However, globalization has blurred the corporations’ institutional and national boundaries and made it difficult for them to discern exactly which communities to include. With offshoring of jobs on massive scales, disclosure of financial scandals and breach of international product, labour and environmental standards, more stakeholders than ever are calling for corporate accountability. In fact, Porter and Kramer (2006, p. 1) opined that “CSR has emerged as an inescapable priority for business leaders in every country”. Corporations,


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however, do not have a clear understanding what exactly their obligations are, and the scope and limit of their responsibility. In order for CAFTA to work, the paper proposes an updated version of corporate social responsibility (CSR) – regionalized CSR – that reflects the fact that corporations’ CSR transcends far beyond their national boundaries, to include the actions of their suppliers, distributors, alliance partners and even sovereign nations. It is essential for China and ASEAN to agree upon a standardized CSR framework to follow and perhaps to exceed. This framework has to be harmonized with the socio-economic environment of these member countries. The proposed four-pronged agenda to commence the structuring of the regionalized CSR framework are, firstly, to establish China-ASEAN own CSR standard; secondly, to increase corporate accountability; thirdly, to reduce the scope for corruption; and, fourthly, to establish an independent corporate monitoring body. Moving ahead, China and ASEAN need more cooperation and synergies in the areas of mutual and shared interest among the governments, businesses and civil society actors, in order for the governments to implement CSR policies more successfully, and also for each of the actors to overcome their limitations if they are acting on their own. 2. CSR The key role of business is producing goods and services to satisfy the needs of the society. Besides that, business also plays the role of creating and distributing wealth to its owners or shareholders, to its employees through wages and salaries, to its suppliers through purchases, to its customers through its product pricing policy, to society through taxes and other payments to the government, and through philanthropic activities (Lankoski, 2009, p. 58). However, in the process of playing the positive roles, business has also created a negative role for itself in the sense that it often generates harmful environmental impacts, such as its inputs of materials and energy and its output of waste and pollution. In addition, business has also brought about harmful social impacts through unfair labour practices, failure to respect human rights in its activities, irresponsibly producing products that contain harmful substances and carrying out unethical practices that negatively affect customers and society. Therefore, in order for business to promote the positive roles and minimize the negative ones, CSR practices have been viewed as the best personally regulating instrument for business to monitor its relationship with society and the natural environment (Stroup & Newbert, 1987; Drumwright, 1994; Levy, 1999; Maignan & Ferrell, 2001; Baron, 2003; Falck & Heblich, 2007).


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CSR refers to a set of policies and strategies that is said to occur when companies voluntarily integrate social and environmental concerns in their business operations and in their interaction with stakeholders. The World Business Council for Sustainable Development (2000, p. 8) defined CSR as “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”. From a broader perspective, CSR was described by the Commission of the European Communities (2001, p. 2) as “being socially responsible means not only fulfilling legal expectation, but also going beyond compliance and investing more into human capital, the environment and relations with stakeholders”. Therefore, CSR encourages companies to broaden their practices from the traditional view of profit maximization to incorporate the triple bottom line concept, which encompasses economic viability, environmental responsibility and social accountability (see Elkington, 1999). In other words, CSR is about making economic returns without jeopardizing environmental stability and social development. In recent times Friedman (1970)’s controversial prescription of “the business of business is business” has been under fierce attack from various stakeholders. He argued that an organization’s one and only social responsibility was to maximize profits for its shareholders. The advocates of legitimacy and social theories, however, believe that business and society are linked, and that the firm’s legitimacy is sustained only if their activities are congruent with the expectations of the society in which it exists. A breach of the “social contract”, that is the failure to comply with society’s expectation may eventually cause the firm to cease operation (Deegan & Rankin, 1996). Porter and Kramer (2006, pp. 2-4) stated four justifications for CSR. The first related to moral obligation. The moral obligation of a company was to be a good citizen and to “do the right thing”. Wartick and Cochran (1985) opined that similar to government and churches, corporations acted like a moral agent within the society, thus, they must reflect and reinforce values that were consistent with that of the society. However, in practices, most corporate social choices involve balancing competing values, interests and costs. For example, in the case of Ford Pinto, Ford Motor Company introduced the subcompact Pinto in 1971, to compete with fuelefficient Volkswagen and Japanese importers. The Pinto had a major design flaw – the fuel tank was prone to rupture with moderate speed rear-end collision. However, the management decided to go ahead with the launch as the design met all legal, government and safety standards at that time. Furthermore, its internal cost-benefit analysis showed that it was cheaper


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for Ford to pay off possible lawsuit for resulting deaths than to pay the minimal expense of a redesign. As a result of Ford’s gross disregard for human lives in favour of profits led to major lawsuits, criminal charges and eventually a costly recalled of all affected Pinto. Although it was acquitted of criminal charges, Ford lost millions of dollars and earned a reputation for manufacturing unsafe cars (Weiss, 2006). The second addressed sustainability. Sustainability emphasized environmental and community stewardship. The World Commission on Environment and Development (1987, p. 43), defined “sustainability” as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” In other words, companies should avoid short term behaviour that is socially detrimental or environmentally wasteful, and should operate in ways that secure long term economic performance. However, the notion of sustainability can be vague and subjective, as it may not be easy to balance long term objectives against short term costs incurred. For example, the trade-off is difficult to measure between ethical labour practices which are believed to be more “sustainable” and sweatshops; other examples are purchasing timber supply from sustainable forests which is believed to contribute to the “sustainability” of the forest but at a comparatively higher cost than purchasing the supply from “non-sustainable” forests, philanthropic contributions are said to provide “sustainability” to the society but the social benefits is difficult to be measured objectively. As a result, managers without strategic understanding of CSR are prone to postpone these costs, which may lead to far greater costs when the company is later judged to have violated its social obligation (Porter & Kramer, 2006, p. 4). The third touched on the license to operate. CSR is viewed by some as maintaining a company’s “license to operate”. “License to operate” is defined as “a social contract between the company and its stakeholders that requires the company to preserve the environment and to make the community a better place to live in by reducing its operational footprints through social responsibility practices.” (Anwar, 2005, para. 2) Porter and Kramer (2006) argued that the notion of license to operate derived from the fact that every company needed tacit or explicit permission from governments, communities and other stakeholders to do business. This is in line with Wartick and Cochran (1985)’s argument that business existed at the pleasure of the society; and that its behaviour and methods of operation must confirm with the guidelines set by the society. Thus, if the companies merely sought to comply with the minimum requirements of the law and ignored the dynamics of societal change, they might put their license to operate at risk. However, Porter and Kramer (2006) argued that the stakeholders might never fully understand a corporation’s capabilities,


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competitive position, or the trade-offs it must make; thus, in their effort to satisfy these stakeholders, the companies might cede primary control of their CSR agenda to these groups. It would be worse if the company viewed CSR as a way to pacify pressure group, as these were short term defensive reactions, which had minimal value to society and no strategic benefits for the business. The fourth could be subsumed under reputation. Good CSR practices allow companies to add value to their brand and thus able to distinguish themselves from competitors. This in turn influence customer loyalty, lenders’ and investors’ scrutiny, and ultimately reduce the cost of capital. Socially and environmentally responsible policies provide investors with a good indication of sound internal and external management as well. The Body Shop, for example, combined its campaign against animal cruelty and marketing in its “Against Animal Testing” initiative (The Body Shop, n.d.). On the other hand, irresponsible behaviour can destroy the company’s reputation overnight. Nike, for example, suffered severe setbacks in 1990s after the news of poor working conditions in its supply chain were exposed (Weiss, 2006, pp. 272-273). In addition, a company may pursue social responsibility initiatives as a form of insurance, in the hope that its reputation for social consciousness will moderate public criticisms in the event of a crisis. For example, in the Tylenol Crisis in 1982, Johnson & Johnson (J&J) was faced with a crisis when several people died after consuming the Extra Strength Tylenol capsules laced with cyanide. Authority later found out that Tylenol bottles were tempered with and then placed back on the shelves of five different stores in the Chicago area. J&J immediately alerted consumer across the nation, not to consume any type of Tylenol product until the extent of the tempering could be determined. The company also stopped the production and advertising of Tylenol and recalled all the 31 million bottles of Tylenol capsules from the market. The retail value of the recall amounted to a staggering US$100 million (Broom, Center & Cutlip, 1994, p. 1). J&J was praised by the media for their socially responsible actions and having responsibilities to society that went beyond the usual sales and profit incentives. As a result, J&J was able to recover quickly and painlessly from the crisis, and was able to save the integrity of both its product and the reputation of the company (Weiss, 2006, p. 95). However, Porter and Kramer (2006) argued that the connection of a company’s social reputation to its performance was so indirect that it was impossible to be measured. Therefore, having no way to quantify the benefits of these investments put such CSR programmes on shaky ground, easily to be dislodged by a change of management or a swing in the business cycle. Commonly, companies with customer-oriented products


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will resort to extensive, high-profile marketing campaign, in hope of building up their image as a socially conscious corporate citizen, and thus avoid public scrutiny in case of a crisis. This rationale will face the risk of confusing public relations with social and business performance. 3. The Evolving Corporations and CSR Practices and Policies In the developed countries, CSR has been conceived as a voluntary and corporate-driven agenda. The CSR agenda is created to fill the vacuum in international business regulation, brought about by the globalization of economic activities and the deregulation of economies in favour of the liberal market mechanisms (Pedersen, 2006). Yet, the business community has not been the sole agent in the “market of virtue” (Vogel, 2005). Civil society organizations have played a prominent role in consumer activism, environmental movements, anti-sweatshop campaigns and fair trade initiatives. Instead of CSR, the non government organizations (NGOs) agenda has been articulated as “corporate social accountability” emphasizing the rights of consumers, employees and citizens around the world and the duty of transnational corporations (TNCs) to comply with these rights. However, the CSR agenda in developing countries is different from that of the developed countries. This is because the CSR challenge in the developed countries is to move beyond the existing legislation, while the CSR challenge in the developing countries is to make firm complying with the legislation (Wad & Chong, 2007, p. 3). In fact, in developing countries, the state agencies seem to play a crucial role in adopting and transforming the CSR discourse in line with the development strategy of the state and the interests of the government. Neither local firms, nor local civil society groups may have the interests, courage or capabilities to further the CSR agenda beyond the policies of the government. The potential role of public institutions in furthering CSR in developing countries had also recently been acknowledged by the World Bank (Fox, Ward & Howard, 2002; Ward, 2004; World Bank & IFC, 2004). According to Makower (1994), social responsibility shifted from the church to the state four hundred years ago, as government replaced religious institutions as society’s predominant force. During the early 20th century, the transnational corporations (TNCs) were a symbol of American economic power (Gilpin, 1975). The CSR debate had arisen amid growing concerns about TNCs and their power. In fact, CSR activities appeared to have emerged essentially to solve problems caused by TNCs (Rasiah, 2008, p. 19). Specifically, from the late 60s to 70s, there was mounting unemployment due to “capital flight”, whereby many American plants and


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factories were closed and jobs were shifted to the developing countries (Rowe, 2005). These firms began outsourcing and downsizing in order to cut costs; for example, Sara Lee became, in essence, a “virtual” manufacturer after they sold off nearly all their manufacturing plants, taking charge of design, marketing and distribution but outsourcing the actual manufacturing to suppliers (Davies, Whitman & Zald, 2008). Meanwhile, the actual manufacturers began handling production for many difference companies; for example, Menu Food Inc., a Canadian company manufactures pet foods for more than 100 brands, which include Procter & Gamble, Colgate-Palmolive and Wal-Mart. In addition, corporate scandals during the mid-70s greatly tarnished the image of the TNCs. According to Kline (1985), nearly 500 of America’s top corporations were called up for improper conduct on the disclosure of payments abroad, relating to scandals such as bribery of foreign officials, laundered money used for illegal political payments, and secret off-thebook accounts. Carroll (1999) stated that the late 60s and early 70s was a period during which social movements with respect to the environment, worker safety, consumers and employees were poised for transition from special interest status to government regulations. Epstein (1998, p. 6) described this period as “a new era in the interaction between business and other sector of society…” History shows that corporations have practiced CSR since the beginning of the industrial revolution. For example, factory owners provided from roads, canals and housing to workers education and health care to support large-scale manufacturing. In fact, in some developing countries, company towns are still prominently featured, such as the Tata conglomerate in India has been operating the town of Jamshedpur on behalf of its steel manufacturing facility (Davies, Whitman & Zald, 2008). In China, under the planned economic system since 1949, the state-owned enterprises (SOEs) were responsible for the living arrangements and social welfare of all the workers and their families, whereby self-contained, fully functional “small society” was set up. In this “small society”, there were schools, hospitals, shops, nurseries and public security institutions to provide to the employees the so-called “from cradle to grave” social welfare packages (Xinhua Economic Information Editorial Office, 2009). Overall, the government tends to hold the main responsibility for ensuring that companies comply with internationally agreed standards. Almost all international conventions contain obligations for states, with very few legally binding obligations for TNCs (UNCTAD, 2006). Thus, both the host and home states are obliged to create and implement a legal framework, which complies with the standards of international law and gives clear guidance to TNCs on various social and environmental issues


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(ibid, p. 232). In the case where the legal framework in the host country is inadequate – either falling below internationally agreed minimum standards or is completely absent – TNCs are expected to adhere to standards higher than those stipulated by the host country (Porter & Kramer, 2006). However, it is interesting to note that the heightened CSR awareness amongst the corporations has not been completely voluntary. Many of them have been involved in CSR issues, which they have not previously thought are their business responsibilities. For example, Shell Oil’s decision to sink the Brent Spar, an obsolete oil rig, in the North Sea led to Greenpeace protests in 1995 and to international headlines (Porter & Kramer, 2006, p. 2). Thus, business practices, even those conducted very far away from their home markets, are subject to intense scrutiny by customers, employees, suppliers, shareholders, governments, NGOs and activist groups upon whose support the business relies (Knox & Maklan, 2004). In addition, activists may target the most visible corporations merely to draw attention to an issue, even if those corporations have very little impact on the problem at hand. For example, Nestlé, the world largest purveyor of bottled water, had become a major target in the global debate about access to fresh water, despite the fact that its bottled water sales consumed just 0.0008 per cent of the world’s fresh water supply (Lohan, 2007). In summary, external stakeholders are increasingly seeking to hold corporations accountable for social issues. The potential financial risks are becoming higher for any firm whose conduct is deemed unacceptable. Thus, in the increasingly globalized business environment, cost savings in the short run (for example, the foreign firms forcing a race to the bottom in offshore outsourcing arrangement) need to be balanced against the potential risk (for example, civil society’s hostile reaction to such behaviour) to the company’s goodwill in the long run. 4. Trade Liberalization and the Changing Notion of CSR The environment of business in the new millennium has become extremely complicated, competitive and turbulent. Firms are less likely to simply make products and export them. They increasingly participate in highly complex cross border arrangement that involves a wide array of partners, customers and suppliers. Traditional notions of CSR say that companies are responsible to the communities in which they are located. However, this blurring of corporations’ institutional and national boundaries due to trade liberalization has complicated the question of what their responsibilities are. Is the corporation simply a nexus of contracts and is therefore responsible only to its shareholders? Or is the corporation a social being


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responsible to all its stakeholders – employees, customers, shareholders, creditors, suppliers, community and society as a whole? And if so, what are the scope and limits of these responsibilities? Commonly, corporations survive by pursuing profits and getting costs down in anyway they can within the law. They avoid paying taxes when possible, some skimp on health insurance for their workers, while others try to limit spending on cleaning up the pollution they create. Often the cleaning up costs will be borne by the government in the countries where they operate. The environment provides a good example in which private and social costs differ. It costs more money to refine oil or generate electricity in ways that do not pollute the air. It is more costly to dispose of waste or to mine in ways that do not pollute the water supply. These are real environmental costs to society, but they are not costs to the corporations involved. Without strong government regulations and pressure from civil society, generally corporations lack the incentives to protect the environment; in fact, they might even have an incentive to pollute or destroy it if doing so saves them money. Bribery and corruption is another area where social and private interest clash. For example, it is cheaper to bribe government official with a large sum of money than to pay market price for oil or some other natural resources. Many corporations also pay bribes to get favours, such as protection from outside competition, which allows them to raise prices, or for violation of environmental or safety regulations. Furthermore, it is often too easy for corporate managers to hide behind the corporate veil. For example, in the 1989 Exxon Valdez oil spill disaster, Joseph Hazelwood, the captain of the ship had admitted to be drinking prior to boarding the ship. Despite causing the oil spill that did environmental damage valued in billions, Captain Hazelwood was only fined US$15,000 and 1,000 hours picking up garbage along the highways in Anchorage, Alaska (Bluemink, 2010, June 10). Another example would be the explosion at the chemical plants in Bhopal in 1984, owned by Union Carbide, an American firm, where more than 20,000 people were killed and some 100,000 more bear lifelong heath damage. The Indian government tried to prosecute Union Carbide’s executives, but the United States refused to cooperate. In 1991, charges against the executives were brought before the Indian court, and when they did not appear to face charges, India pressed for their extradition. The U.S. State Department finally refused the extradition request in September 2004 without explanation (Stiglitz, 2006, p. 194). Meanwhile, trade liberalization has compounded the problems arising from the misalignment of incentives in corporations. Competition among the developing countries to attract investment result in a race to the bottom,


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as companies seek a home with the weakest labour and environmental laws. According to Rasiah (1995), the growing power of TNCs is increasingly uncontested by workers and unregulated by government. These companies might see overseas regulations as lax, and that workers are lucky to have jobs, or that overall the country benefits from their investment. Furthermore, destroying the environment or ignoring basic working conditions is easier thousand of miles away from the head office, and because the local people are poor, it is easy to consider their lives and land as being worth less than life and land at home. To make matters worse, many corporations, even the worst polluters and those with worst labour record, have engaged public relation firms to laud their concern for the environment and workers’ rights as well as their sense of corporate responsibility. These image manipulation initiatives have actually enabled these corporations to continue to evade their social responsibility. Therefore, it is crucial for the corporations to take into account the impact of their actions on their employees, on the environment, and on the communities in which they operate. The present business social responsibility movements have helped to bring about a change in the mindset of many corporations. These movements have also developed accounting frameworks that track contributions to the community and environmental impact. In addition, there are several international organizations, such as the United Nation’s Global Compact, United Nations Conference on Trade and Development (UNCTAD) and OECD Guidelines for Multinational Enterprises that facilitate consensus-building and promote universally accepted CSR principles that serve as guidelines for TNCs investing in other developing countries. However, these initiatives are not enough. It must be supplemented with stronger regulations and more effective implementation. 5. Regionalized CSR In view that CAFTA has great potential to enhance economic development through expanding market size and improving investment environment (Yeoh & Ooi, 2007), it is crucial to make CAFTA work, by ensuring that the benefits and costs are more evenly shares among the member countries to the trade agreement. Particularly, more attention should be given to the less developed countries. Although it might be impossible to eliminate all instances of corporate abuse, it is possible to lessen them by attempting to align private incentives with social costs and benefits. The paper proposes a “regionalized” CSR framework whereby corporations’ social responsibility transcends far beyond their national


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boundaries, to include their suppliers, distributors, alliance partners and even sovereign nations. Thus, it is essential for China and ASEAN to agree upon a standardized CSR framework to follow and perhaps to exceed. This framework has to be harmonized with the socio-economic environment of the member countries. In addition, this framework should aim to instill closer cooperation among the member countries’ government agencies, non-government organizations, the media, businesses, professional bodies, research institutions and the public for the implementation of CSR standards, dissemination of information and the inculcation of CSR attitudes throughout the society. Therefore the paper would like to put forward a four-pronged agenda. a) Establish China-ASEAN own CSR standard For the labour-intensive manufacturing firms that rely on cheap labour to produce products for international markets, compliance with SA8000, the present internationally recognized labour-related CSR standard, has become a challenge. Although the standard is set up to protect labour rights, and to avoid subjecting workers to inhumane treatment, it does not comply with China’s as well as the ASEAN countries’ national conditions. This is because firstly, the relatively inexpensive labour force in China and ASEAN countries has been the main driving force of the inflow of foreign capital, and the adoption of SA8000 will reduce their attractiveness to the investors. Secondly, labour-intensive industrial development is crucial to the economic growth and to resolve the employment issue. If the companies fully comply with the SA8000 certification, the surplus labour will have a negative effect on these countries both economically and socially (Xinhua Economic Information Editorial Office, 2009). The present challenge in formulating the China-ASEAN CSR standard lies in what is CSR standard and who to develop the standard. It is recommended that the research institutions should be the one developing the standard, and the proposed standard should consider a number of universal principles, such as environmental protection, product safety, taxation, employees benefits and credit management, and based on the different characteristics of various industries for different CSR of industry standards, as well as the varying socio-economic conditions of the member countries. In addition, it is essential for the China-ASEAN CSR standard to be recognized internationally. Finally, the various government agencies need to provide incentives to private corporations in order to promote gradual certification and improve the regularity of publishing CSR reports.


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b) Increase corporate accountability It is crucial to make the corporations, and its officers act in ways that are consistent with the broader public interest. The way to do so is to have corporate officers individually responsible for their actions, making it more difficult for them to hide behind the veil of their corporations. For example, when a company violated another country’s environmental laws, the CEO and others who made the decisions and took the actions should be held criminally liable. Another way to achieve congruence between private and social interests is to make it easier for compensation to be obtained when damages has been done. This is because by making firms pay for the damage they inflict, such as injury to workers and polluting the environment, the firms would have more incentives to act more responsibly. c) Reducing the scope for corruption In view that transparency has always been known to discourage corruption, it is necessary to establish the citizens’ right-to-know laws to promote accountability. Every member country of CAFTA must provide full disclosure of how much the country is selling and what it is receiving for its natural resources, so that its citizens can assess whether the country is getting full value for its natural resources, or whether it is being short changed. The citizens’ right to know laws should also supersede any claims by the government of business confidentiality. This is because such claims are often excuses for government officials to continue in their corrupt practices. In order to effectively enforce such transparency initiative and anti-bribery measures, trade sanctions can be used against companies and countries that fail to subscribe to these transparency and anti-bribery practices. d) Establish an independent corporate monitoring body It is often not easy to resolve ethical dilemma that involve global, crosscultural dimensions. Where other laws, business practices, and local norms conflict, the decision makers must decide, using their own business and value judgment. Ethics code help, but decision makers must also take local and their own company’s interest into consideration. In short, there is no one best method to resolve international business ethical dilemma. As a result, these gray areas and the lack of universal laws and norms leave loopholes that companies might use as competitive, but harmful, cost-saving advantage. Therefore, it would be useful to establish an independent corporate monitoring body that inform, monitor, and assist


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corporation with ethical business practices and other CSR related issues. This establishment should be represented by the governments, legislators, corporate executives, NGOs, local citizenry, and other stakeholders from all the member countries of CAFTA. In order to enhance the process of structuring the regionalized CSR framework, the paper strongly recommends that the government of each member country should lead by example by developing internal initiatives on issues such as the integration of sustainable development into government action and the accountability of public administration. It is also recommended that the government should: * promote the CSR culture and best practice exchange among business; * support the small and medium size enterprises (SMEs), civil society and NGOs, both financially and non-financially; * formulate more comprehensive incentive programs to attract the firms to set aside funds for CSR initiatives. * collaborate and support social programs and sustainability-oriented innovation initiatives among the government, business and civil society. Perhaps, China and ASEAN countries could jointly create an administrative figure of Chief of Corporate Social Responsibility within CAFTA. It makes good sense to have a centralized figure that would be solely responsible for the development of regionalized CSR agenda. 6. Conclusion Corporations of the twenty first century are vastly different from their predecessors, and so are the social responsibility that they are expected to practice. Intensified competition amid globalization, international economic deregulation, and new information and communications technologies have caused corporations to continue adding more links to their supply chain, stretching ever farther across the globe for cheaper materials and labor. Trade liberalization has blurred the corporations’ institutional and national boundaries. As a result, identifying the stakeholders to whom they are socially responsible for has become a big challenge for these corporations. Furthermore the corporations’ understanding of CSR has not kept pace with the drastic changes brought about by globalization. To make CAFTA work, whereby the benefits and costs of trade are more evenly shared among the member countries to the trade agreement, the paper proposes that an updated version of CSR – regionalized CSR – be adopted that reflects the fact that firms would be held responsible for action far beyond their boundaries, and to include the actions of all its


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stakeholder. This standardized framework has to be harmonized with the socio-economic environment of these countries and should aim to instill closer cooperation between the member countries’ government agencies, non-government organizations, the media, businesses, professional bodies, research institutions and the public. It is recommended that the member countries of CAFTA adopt the four-pronged agenda: (1) establish ChinaASEAN own CSR standard; (2) increase corporate accountability; (3) reduce the scope for corruption; and (4) establish an independent corporate monitoring body. Trade liberalization is not a zero-sum game, in which those who win do so at the cost of others; it is, or at least it can be, a positive-sum game, in which everyone can be a winner. An example stated by Weiss (2006, p. 468) clearly shows this fact: Levi-Strauss (LEVIS) discovered in early 1990s that two of its suppliers in Bangladesh were employing children under the age of fourteen – a practice that violated the company’s principle but was tolerated in Bangladesh. The management of LEVIS was also aware that forcing the suppliers to fire the children would not have insured that the children received an education, and it would have caused serious hardship for the families depending on the children’s wages. Subsequently, in a creative arrangement, the suppliers agreed to pay the children’s regular wages while they attend school and to offer each child a job at age fifteen. LEVIS, in turn, agreed to pay the children’s tuition and provide books and uniforms. This arrangement has allowed LEVIS to uphold its principles and provide long-term benefits to the host country.

The above example of Levi-Strauss illustrates that finding creative solutions to international moral dilemmas involves balancing and combining business pressures, legal enforcement and political will. It also shows that it is possible to work out a “win-win” situation for all parties involved – and an arrangement that brought no harm to any party. The task of creating a fair and pro-development China-ASEAN trade regime might be arduous and challenging, but we can make CAFTA work, not just for the richer and more powerful countries but for all countries, including those poorer ones. A “regionalized” CSR framework would ensure the incentives facing corporations are better aligned with those they touch, and that corporate management that ignores its social responsibility will always be behind the curve. Note * Dr Sabrina Chong Yee Ching 张毅卿, Faculty of Business & Management, Open University Malaysia.


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References Anwar, Z. (2005), “Corporate Social Responsibility in Asia Pacific: Malaysia’s Role in Promoting CSR”, in Securities Commission (ed.), Lex Mundi Asia Pacific Regional Conference, 12 November 2005, Kuala Lumpur. Baron, D. (2003), Business and Its Environment, Upper Saddle River, NJ: Prentice Hall. Bluemink, E. (10 June 2010). “Size of Exxon Spill Remains Disputed”, Anchorage Daily News. Retrieved 27 September 2010 at Broom, G., A. Center and S. Cutlip (1994). Effective Public Relation (7th ed.), Englewood Cliffs: Prentice Hall. Carroll, A.B. (1999), “Corporate Social Responsibility”, Business and Society, Vol. 38, No. 3, p. 6. Commission of the European Communities (2001), “Promoting a European Framework for Corporate Social Responsibility”, EUGreen Paper. Retrieved 10 November 2006 at Davis, G.F., M.V.N. Whitman and M.N. Zald (2008), “The Responsibility Paradox”. Retrieved 3 August 2010 at Deegan, C. and M. Rankin (1996), “Do Australian Companies Report Environmental News Objectively? An Analysis of Environmental Protection Authority”, Accounting, Auditing and Accountability Journal, Vol. 9, No. 2. Drumwright, M. (1994), “Socially Responsible Organizational Buying: Environmental Concern as a Non-economic Buying Criteria”, Journal of Marketing, Vol. 58, No. 3, pp. 1-19. Elkington. J. (1999), “Triple Bottom Line Revolution – Reporting for the Third Millennium”, Australian CPA, 11-12 December. Epstein, E.M. (1998), Business Ethics and Corporate Social Policy: Reflection on an Intellectual Journey, 1964-1996, and Beyond”, Business and Society, Vol. 37, No. 1, p. 6. Falck, O. and S. Heblich (2007), “Corporate Social Responsibility: Doing Well by Doing Good”, Business Horizons, Vol. 50, pp. 247-254. Fox, T., H. Ward and B. Howard (2002), Public Sector Roles in Strengthening Corporate Social Responsibility: A Baseline Study, Washington: The World Bank. Friedman, M. (1970, September 13), “The Social Responsibility of Business is to Increase Its Profits”, New York Times, pp. 122-126. Friedman, M. and R. Friedman (1980), Free to Choose: A Personal Statement, New York: Harcourt. Gilpin, R. (1975), US Power and the Multinational Corporation, New York: Free Press. Kline, J. (1985), International Codes and Multinational Business: Setting Guidelines for International Business Operations, London: Quorum Books. Knox, S. and S. Maklan (2004), “Corporate Social Responsibility: Moving Beyond Investment Towards Measuring Outcomes”, European Management Journal, Vol. 22, No. 5, pp. 508-516.


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Lankoski, L. (2009), “Cost and Revenue Impacts of Corporate Responsibility: Comparisons Across Sustainability Dimensions and Product Chain Stages”, Scandinavian Journal of Management, Vol. 25, pp. 57-67. Levy, R. (1999), Give and Take: A Candid Account of Corporate Philanthropy, Cambridge, MA: Harvard Business School Press. Lohan, L. (2007), “Rural Communities Exploited by Nestle for Your Bottle”, Retrieved 4 October 2007 at Maignan, I. and O.C. Ferrell (2001), “Antecedents and Benefits of Corporate Citizenship: An Investigation of French Business”, Journal of Business Research, Vol. 51, No. 1, pp. 37-51. Makower, J. (1994), Beyond the Bottom Line: Putting Social Responsibility to Work for Your Business and the World, New York: Simon & Schuster. Pedersen, E.R. (2006), “Introduction”, in E.R. Pedersen and M. Huniche (eds), Corporate Citizenship in Developing Countries – New Partnership Perspectives, Frederiksberg: Copenhagen Business School Press. Porter, M.E. and M.R. Kramer (2006), “Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility”, Harvard Business Review, December, pp. 1-4. Rasiah, R. (1995), Foreign Capital and Industrialisation in Malaysia, Basingstoke: Macmillan. Rasiah, R. (2008), “Outward Foreign Direct Investment from Emerging Economies: Trends, Drivers and Firm-driven Home Government Policies”, paper presented at a conference on “Emerging Multinationals: Outward FDI from Emerging and Developing Economies”, 9-10 October 2008, Copenhagen Business School, Copenhagen. Rowe, J.K. (2005), “Corporate Social Responsibility as Business Strategy”. Retrieved 27 August 2007 at Sheng, L. (2003), “China-ASEAN Free Trade Area: Origins, Development and Strategic Motivations”, ISEAS Working Paper Series No. 1, Singapore: Institute of Southeast Asian Studies. Stiglitz, J.E. (2006), Making Globalization Work, New York: W.W. Norton & Inc. Stroup, M. and R.L. Newbert (1987), “The Evolution of Social Responsibility”, Business Horizons, Vol. 30, pp. 22-4. Sutanthavibul, V. (2010), “New Era Dawns for SMEs with China ASEAN Free Trade Zone”. Retrieved on 4 August 2010 at The Body Shop, (n.d.). “Against Animal Testing”. Retrieved 9 August 2007 at UNCTAD (2006), “FDI from Developing and Transition Economies: Implication for Development”, World Investment Report 2006, Geneva: UN, Ch. VI, Section D. Vogel, D. (2005), The Market for Virtue: The Potential and Limits of Corporate Social Responsibility, Washington DC: Brookings Institution. Wad, P. and S. Chong (2007), “Offshore Outsourcing and CSR in a Developing Country Vendor Perspective: Malaysian Experiences”, paper presented at


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the “Nordic Workshop on Outsourcing”, 14-15 March 2007, TEM/DTU, Denmark. Ward, H. (2004), Public Sector Roles in Strengthening Corporate Social Responsibility: Taking Stock, Washington: WB and IFC. Wartick S.L. and P.L. Cochran (1985), “The Evolution of the Corporate Social Performance Model”, The Academy of Management Review, October, Vol. 10 No. 4, pp. 758-769. Weiss, J.W. (2006). Business Ethics – A Stakeholder and Issues Management Approach (4th ed.), Mason: Thomson Learning Academic. World Bank & IFC (2004), Public Sector Support for the Implementation of Corporate Social Responsibility (CSR) in Global Supply Chains: Conclusions from Practical Experience, Washington DC: WB & IFC. World Bank (2005), “A Better Investment Climate for Everyone”, World Development Report. Retrieved 4 October 2007 at World Business Council for Sustainable Development (2000), “Corporate Social Responsibility: Making Good Business Sense”. Retrieved on 4 February 2007, at World Commission on Environment and Development (1987), Our Common Future, Oxford: Oxford University Press, ch. 2, p. 43. Xinhua Economic Information Editorial Office (2009), China’s 60 Years of Corporate Social Responsibility, Beijing: Xinhua News Agency. Yeoh, E.K.K., I.S. Yoo and W.L. Liong (2010), “China and East Asian Regional Integration: Inception of ACFTA and APEC at 20”, International Journal of China Studies, January, Vol. 1, No. 1, pp. 46-88.


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China-ASEANEconomic Integration & Trade 中国东盟整合与贸易学刊 Sino-Indonesia Relations and Journal Policy Suggestions 61 Vol. 1, December 2011, pp. 61-81 第一期, 2011年12月

A Study on Sino-Indonesia Economic Relations and Policy Suggestions Wu Chongbo* Xiamen University

Abstract During the passing years, the bilateral relations between China and Indonesia have witnessed great progress. China has become Indonesia’s fourth biggest trading partner. Indonesia and China need to continue to work together to increase their bilateral trade and investment partnerships. The two countries can further strengthen their cooperation in various fields, such as tourism, agriculture, fisheries, textile and garment industry, information and communication technology, infrastructure, energy, as well as population-family planning program. These sectors are among the possible cooperation opportunities between China and Indonesia in the near future. Keywords: Sino-Indonesia economic relations; policy suggestions 1. Introduction Indonesia has the largest economy in ASEAN, as well as one of the important partners of China among the ASEAN countries. Over the years, the bilateral relations between China and Indonesia have witnessed great progress. China has become Indonesia’s fourth biggest trading partner. Both China and Indonesia are big countries with large population and rich in resources. The two economies are highly complimentary, with Indonesia having advantages in raw materials, agriculture, and services, while China has the upper hand in manufacturing, human resources, and a huge market. Indonesia’s economic and trade relations with China have improved tremendously since 1998. A closer and more productive trade and investment relationship between China and Indonesia are not a zerosum game favouring China, but a win-win cooperation which could benefit both sides.


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2. Literature Review China and ASEAN countries, whether linked by mountains and rivers, or across the ocean, are well-communicated with one another and have been sharing a longstanding tradition of friendly exchanges and contacts. There are many literatures about the economic relations between China and ASEAN, including Sino-Indonesian economic ties. Some of the major ones are as follows: “Forging Closer ASEAN-China Economic Relations in the Twenty-First Century” (ASEAN-China Expert Group on Economic Cooperation 2001), “China-Southeast Asia Relations: Trends, Issues, and Implications for the United States” (Bruce Vaughn and Wayne M. Morrison 2006), “China-ASEAN economic relations: development in China and ASEAN and their implications for China–ASEAN economic relations” (Cheng Bifan and Chia Siow-Yun 1989), “China–ASEAN economic relations: in the context of Pacific economic development and cooperation” (Cheng Bifan and Chia Siow-Yun 1991), “China-Asia Free Trade Agreement Shaping Future Economic Relation” (John Wong and Sarah Chan 2003), “China-ASEAN Free Trade Area: China’s Peaceful Rising in Terms of Geo-economics” (Qiu Danyang 2005) “China-ASEAN Free Trade Area: Origins, Developments and Strategic Motivations” (Sheng Lijun 2003), “ASEAN-China Economic Relations” (Saw SweeHock 2006), “New Development and Problems in China-ASEAN Regional Economic Cooperation” (Zhang Haibing 2006), “Recent Development of China-ASEAN Trade and Economic Relations: From Regional Perspective” (Zhao Jianglin 2007). Changes in Sino-ASEAN trade and economic relations have been noted and discussed from the viewpoint of both sides in many occasions and papers. However, there is little discussion on economic relations between China and Indonesia. In recent years, Sino-Indonesian trade and commercial relations has become a new field attracting many scholars’ attention, particularly since China and Indonesia signed the agreement to establish a strategic partnership in 2005. The main literatures include “China-Indonesia Relations and the Implications for the United States” (Hadi Soesastro 2003), “Indonesia-China economic relations: an Indonesian perspective” (Raymond Atje and Arya B. Gaduh 1999), “Indonesia’s Response to the Rise of China: Growing Comfort amid Uncertainties” (Rizal Sukma 2003); and so on. The economic relations between China and Indonesia have been changing, with changes in politic and economy in these two countries and the changes in regional and global relationship. It is always imperative to study the economic relation between China and Indonesia in response to the changes of their respective economy and international relationships, especially in the face


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of the current grim and the escalating global financial crisis. The two sides are working together again to overcome current difficulties. Owing to the joint, unremitting efforts of both sides, people have ample reasons to believe that the Sino-Indonesian strategic partnership is sure to have a splendid tomorrow. This paper is organized as follows: It begins with an overview of the key trends and characteristics of Sino-Indonesian Economic Relations, including bilateral trade, mutual investment, Chinese economic aid and export credit, as well as other areas of cooperation and exchanges are under way, and then touches on main reasons contributing to rapid SinoIndonesian economic relations. It finally discusses the prospect for SinoIndonesian economic and trade ties 3. Profile of Sino-Indonesian Economic Relations After the establishment the People’s Republic of China on 1 October 1949, Indonesia became the 11th country in the world and the first among ASEAN members to establish diplomatic relations with China. Indonesia first signed a bilateral trade agreement with China in 1953, after officially establishing diplomatic ties on 13 April 1950. Initial two-way trade value was only US$7.4 million in 1954, but it steadily grew to US$129 million over the next five years. The economic ties between Indonesia and China were saved when Jakarta severed its diplomatic relations with Beijing in 1965. However, direct trade between the two countries ceased soon after, but continued indirectly by proxy through Hong Kong and Singapore, averaging some US$200 million a year. Due to the Cold War, the bilateral relation was suspended for 23 years. Relations between Indonesia and China began to improve in 1985 when the Indonesian government gave the go ahead to the business community to re-open direct trade relations between the two countries. That became an important first step toward normalization as bilateral trade immediately flourished with the outcome always in Indonesia’s favour. With the development of exchanges, understanding, and trust, the diplomatic relations was resumed in 1990. For ten years, the bilateral relations have achieved enormous development. The two governments and their citizens are making efforts jointly to establish comprehensive cooperative relations toward a new century. After the restoration of diplomatic relations, the two countries have signed the “Air Transport Agreement”, “Investment Protection Agreement”, “Sea Transportation Agreement”, “Agreement on Avoiding Dual Taxation”, and also signed the memorandum of understanding for cooperation in the fields of mining, forestry, tourism, fishery, transportation, agriculture and


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finance. In 1990, the two countries set up a joint committee for economic, trade, and technological cooperation and Indonesia and China held their ninth Joint Commission meeting on 24 September to 25 September 2007 in Shanghai to discuss efforts to enhance economic relations between the two countries. In March 2002, an energy forum was established and the first meeting was held in September of that year. The Trade Ministry of Indonesia was planning to open an Indonesian Trade Promotion Center (ITPC) in Shanghai in 2008 to benefit from the increasing trade opportunities between the two countries. 3.1. Bilateral Trade between China and Indonesia Bilateral trade volume has risen very quickly since the two countries resumed diplomatic ties. The trade volume increased from US$1.48 billion in 1990 to US$3.75 billion in 1997; an increased by two fold. During the period of 1997 to 2001, it can be seen that the trade relations between the two countries showed a fluctuating trend as the trade volume dropped to US$2.74 billion in 1998 due to the impact of the Asian Financial Crisis, though the amount of bilateral trade reached US$3.27 billion in 1999. Sino-Indonesian trade volume reached to US$4.79 billion in 2000. In 2001, the value of Indonesia-China trade stood at US$4.04 billion comprising of US$1.84 billion of imports and US$2.20 billion of exports, which showed a decrease of 8.87 per cent compared to that of 2000 due to the global economic slowdown but China has become the 5th trading partner of Indonesia while Indonesia, the 17th trading partner of China. The balance of trade between the two countries from 1996 to 2001 consistently showed a surplus for Indonesia. The largest trade surplus was recorded in 1998 and amounted to US$925 million, but the trend of trade surplus with China decreased since then. In 1999, trade surplus with China was US$766 million, while in 2000 it was US$745 million and in 2001 it was only US$357 million, a decrease of 52 per cent compared to the previous year. While strengthening the friendship between China and Indonesia, and enhancing their cooperation, some restrictions limiting the development of bilateral relations have also been lifted. At the turn of the century, ChinaIndonesia bilateral trade continues to grow. It has reached US$5.3 billion in 2002, from about US$2 billion a decade earlier, although Indonesia’s trade with China remains below the level achieved by Thailand, Malaysia, and Singapore. Official data shows that trade between Indonesia and China increased by an average of 20 per cent per year since entering the new century. China is Indonesia’s fourth biggest export destination, and China’s share


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of Indonesia’s exports and imports rose from less than 3 per cent in the late 1980s to 8-10 per cent in the past few years. Meanwhile, Indonesia is one of the important partners of China in the ASEAN countries. In 2004, the total bilateral trade amounted to US$8.71 billion, an increase of 31 per cent from 2003’s total amount of US$6.76 billion.1 In 2005, the total volume of trade surged to US$12.5 billion, 20 per cent higher than in 2004.2 In 2005, Indonesia was China’s 19th biggest export destination with a total value of US$5.84 billion, amounting to 1.11 per cent of its total exports. Meanwhile, China’s imports from Indonesia in 2005 were valued at US$6.67 billion, 1.28 per cent of its total imports, making Indonesia the 18th biggest supplier of goods to China. Total trade between the two countries in 2006 reached US$14.98 billion, an increase of 13.5 per cent from 2005. From 2002 to 2006, Indonesia continues to record a surplus in its trade with China since Indonesia’s export is always higher than its import. Indonesia enjoys a surplus of US$503 million, US$819 million, and US$1.70 billion in 2004, 2005 and 2006 respectively. In 2007, trade between the two countries reached US$20.51, up by 31.2 per cent compared to the previous year.3 Up to July 2008, the trade value between the two countries has reached US$19 billion. The basis for bilateral cooperation received a stronger impetus when, on 25 April 2005, Yudhoyono and Chinese President Hu Jintao signed an agreement to establish a “strategic partnership” between the two countries, laying the ground for a comprehensive cooperation on a wide range of issues, including energy, security, and defense. The two countries intended to increase their two-way trade to US$30 billion by 2010 under the strategic partnership frame. The target has been reached even before 2010 because the two countries’ trade value stood at US$31.5 billion in 2008, up 25.9 per cent year-on-year, which was a new record and two years in advance to reach the goal of US$30 billion when the planned year is 2010. Both nations are now set to have a bilateral trade target of US$50 billion in 2014. In terms of the commodities being traded, data shows that China’s exports to Indonesia include electrical machinery and equipment, electronic goods and home appliances, textiles and motorcycles. China’s principal import commodities, meanwhile, are mostly resource-intensive goods like crude oil, natural gas, palm oil, paper, pulp, and timber. Compared with other ASEAN nations, Indonesia’s trade volume with China was relatively growing slowly. In 1996, Indonesia’s trade volume with China was the second highest after Singapore, but now among the 10 ASEAN countries trading with China, Indonesia is in fifth position in terms of trade volumes, after Singapore, Malaysia, Thailand and the Philippines. Some ASEAN member countries like Laos and Cambodia


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Table 1 Indonesia-China Trade Balance, 1981-2007 (US$ million) Year

Export

Import

Balance

Total

1981

8

254

-246

262

1985

84

249

-165

333.1

1986

139.0

337.1

-198.1

476.1

1987

343.0

408.0

-65

751.0

1988

491.8

438.7

53.1

930.5

1989

568.5

527.4

41.1

1,095.9

1990

834

653

181

1,486.8

1991

1,190.9

835.0

355.9

2,025.9

1992

1,396.4

751.5

644.9

2,147.9

1993

1,250.0

864.0

386

2,114.0

1994

1,321.7

1,369.0

-47.3

2,690.7

1995

1,742

1,495

247

3,137.0

1996

2,057

1,598

459

3,655

1997

2,229

1,518

711

3,747

1998

1,832

906

926

2,738

1999

2,009

1,242

767

3,251

2000

2,768

2,022

746

4,790

2001

2,200

1,843

357

4,043

2002

2,920

2,427

493

5,347

2003

3,803

2,957

846

6,759

2004

4,605

4,101

504

8,706

2005

6,662

5,842

819

12,504

2006

8,343

6,636

1,706

14,980

2007

9,670

8,560

1,110

18,239

2008

11,630

15,250

-3,620

26,880

2009*

5,040

6,000

-960

11,040

Note: * From January to June. Sources: Direction of Trade Statistics, IMF Yearbook, 1987, 1991, 2001, 2005, 2008; Central Board of Statistics of Indonesia; Ary Hermawan and Veeramalla Anjaiah, “RI, China Relations Take a New Turn”, The Jakarta Post, 1 October 2009.


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are currently boosting their economic ties with China. Indonesia’s bilateral trade growth with China is among the slowest in the region, which means that the two countries’ potential to increase trade relations are very great and can still be stepped up. To further intensify their bilateral trade, the two countries had set up a “Working Group on Bilateral Trade Resolution” which was tasked with identifying trade potentials that can be further developed and resolve existing impediments. The working group meets at least once a year in Indonesia or China. In addition, Indonesian businessmen’s attention, has so far, still focused on traditional markets in China such as Beijing, Shanghai and Guangdong province. But other provinces in China also badly need products from Indonesia. Therefore, Indonesia is now trying to find opportunities and make breakthroughs in getting access to the Chinese market in these provinces that Indonesia has so far not yet entered such as Lioning, Hubei, and Hunan. 3.2. Mutual Investment The economic crisis that hit Indonesia in 1997, followed by political crisis in the following years had a very bad impact on the investment climate. However, as the stability of politics got better Indonesia recently has managed to bring back the interests of foreign investors, including Chinese investors to make investments in Indonesia. Investments from China to Indonesia are similarly on the rise. Data from the Indonesia’s Investment Coordinating Board (BKPM) shows that from 1997 to February 2008, there are 360 China PMA projects in Indonesia, with a total investment of US$7.0 billion absorbing thousands of Indonesian workers,4 and the investments in the energy sector alone reaching US$1.2 billion. Chinese investments in Indonesia, excluding those in the gas and oil sectors, reached US$170 million (38 projects) in 2003, and it rose to US$205 million (80 projects) in 2005. The value of Chinese investments in Indonesia in 2001-2006 recorded an amount of US$600 million with 310 projects.5 Since dual directional investment has been gradually developing, China is now the fifth biggest investor country in Indonesia with an investment worth US$7.4 billion. On the other hand, data from the Chinese government shows that Indonesian investments in China have reached at least US$2 billion as of 2003. Indonesia’s investment in China was recorded at US$100.8 million with 115 projects in 2006.6 According to a report published by Guo Ji Ri Bao, China’s cumulative investments in Indonesia, including those in the gas and oil sectors, have boomed from US$282 million (on an approval basis) at the end of 1999 to about US$6.8 billion by the end of 2003. This represents a twenty-five-


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fold increase in four years. By the end of 2005, total Chinese investment in Indonesia has reached over US$6 billion; mostly in the infrastructure, energy, agriculture, and food sectors. The figure represented an over 21-fold increase compared to six years ago. By the end of 2006, total Indonesian cumulative investments in China came to 1,435 items with an agreed investment valued at US$3.808 billion, and the actual investment stood at US$1.552 billion. China set up 402 non-trade joint ventures and joint-operated enterprises in Indonesia with a total agreed investment of US$6.937 billion, and the actual investment exceeded US$3 billion.7 In recent years, Chinese companies have shown particular interest in Indonesia’s oil and gas sector. Current investors from China include the country’s two largest oil companies, PetroChina and Chinese National Overseas Oil Company (CNOOC). Many of China’s well-known electronic appliance manufacturers, such as Cang Hung, Kang Cia and TCL, are also investing and marketing their products in Indonesia. Likewise, motorcycle manufacturer, Jia Ling, have also set up an assembly and spare parts plant. In addition, automotive sectors are also invested in Indonesia. An automotive producer from China with Chery and Geely of Indonesia, have built factories to make components. Chinese automotive manufacturing company, Foton, has established a joint venture with an Indonesian firm to set up a truck assembling plant in Indonesia. Bank of China, meanwhile, resumed its operations in Indonesia in 2003 to help facilitate the fast growing trade and investment between the two countries. China has a lot of opportunities to increase its investment in Indonesia as both nations’ economic relations are now increasing and China is moving into Indonesia in a big new way in infrastructure. Indonesian state electricity utility PLN announced in August 2007 that it has signed deals for new power plant worth about US$2 billion with China’s Dongfang Electric and Shanghai Electric. PLN said that the Export Import Bank of China would shoulder 85 per cent of the projects’ financing and that the new plants are scheduled to become operational by either 2009 or 2010. Shanghai Electric, meanwhile, plans to build three new 350-megawatt coal-fired plants in West Java for a total investment of US$800 million. China has made a loan commitment worth US$800 million for different projects in Indonesia, of which US$250 million are designed for construction of the Jatigede dam in Cirebon, West Java. The rest of the loan would be used for double-track railway projects, thermal power plants, and road construction. Indonesia and Sino-Hydro signed a work contract on 30 April 2007, for the construction of the Jatigede dam project in West Java. Work on the dam was expected to begin on 30 June 2007. China’s Chengda Engineering and Indonesian energy company PT Bosowa Energi, plan to build jointly a US$200 million 200MW coal-fired


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power plant in province of South Sulawesi. Bosowa will sell electricity to PLN for 3.18 US cents per kilowatt-hour for 30 years under an independent-power-producer mechanism.8 3.3. Chinese Economic Aid and Export Credit Within the framework of escalating bilateral trade, the Chinese government has offered aid to Indonesia in the form of: – Economic Aid: China will provide 30 million Yuan (US$3.63 million) worth of assistance to Indonesia, and another US$300 million in preferential loans for infrastructure construction and the reconstruction of its disaster-hit areas. Previously China had pledged US$400 million worth of preferential loans to Indonesia. In addition, the Chinese Government has decided to provide another US$2 million worth of rescue relief, including US$1.5 million in cash to the earthquake-hit areas. – Soft Loan: Indonesia and China signed two agreements on soft loan cooperation as one of the results of the RI-China Joint Commission’s 9th meeting held in Shanghai. The two deals were about a preference for purchasing credit assistance for the Jatigede Dam project and on an application for the use of Chinese Government facilities by Indonesia worth US$200 million. The soft loan for the construction of the Jatigede dam project amounted to US$239.7 million and an additional loan of US$200 million. It was also the realization of a Chinese commitment to Indonesia made during Vice President Jusuf Kalla’s visit to Beijing in 2007. The soft loan is expected to smoothen the construction of the Jatigede dam and expected to be completed on time. 3.4. Other Areas of Cooperation and Exchanges Are Under Way China and Indonesia also carried out fruitful cooperation in fields such as infrastructure construction, energy and resource exploitation, agriculture, and fishing in recent years. Besides Indonesia’s central government, the country’s regional administrations also showed goring interest in cooperation with China as cooperation between local governments came to be vigorous. Beijing built up ties of friendship cities with Jakarta, the Indonesian capital city, and letters of intent have been reached for establishing friendship relation at provincial level between East Java and Shanghai, Guangdong Province and North Sumatra, Fujian Province with Central Java and Hunan Province with West Nusatenggara.


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In 2007, Indonesia and China had signed a number of documents on bilateral cooperation. In the military field, Indonesia and China had established cooperation in training military personnel, while in defense, joint exercises, joint production, and technology transfer as well as exchange of visits have been established. The bilateral cooperation also covers intelligence exchange, technology, and science. 4. The Main Reasons Contributing to Rapid Sino-Indonesian Economic Relations It is commonly noted that trade and investment relations between China and Indonesia has been deepening and expanding over recent years. There are a couple of reasons contributing to that. China holds more than US$1.9 trillion foreign exchange reserve and the Chinese Government has promoted the strategy of “going out”, encouraging its enterprises to go international, especially to invest in ASEAN countries, including Indonesia, which is one of the most prominent members of ASEAN. Now China’s capital controls have been reduced and domestic companies can now own foreign assets. In the past five years, China received US$50-60 billion in foreign direct investment annually and has plenty of cash to spend. Next, China needs to look for a secure and stable base for energy resources outside. China’s massive population and blistering hot economy make it the world’s second biggest consumer of petroleum products. The US Energy Information Administration predicts China’s huge demand for oil will increase by 130 per cent, reaching 12.8 million barrels a day by 2025. China also uses up nearly half of the worlds cement production and consumes two thirds of its coal production. This has forced China to look for a secure and stable source of basic energy needs, as well as raw materials and commodities. Indonesia has vast resources, with an estimated 9 billion barrels in oil reserves, well over 9.3 billion tons of coal and 188 trillion cubic feet of gas. Its 230 million population, endless consumer boom, and substantial energy sources offer great potential for Chinese enterprises. Indonesia may provide investment opportunities in its vast energy resources, infrastructure projects, and other commodities such as palm oil and rubber. Thirdly, Indonesia’s position as the largest country and economy in Southeast Asia makes it a key focus for major powers. China, Japan, and the US aspire to strengthen their influence in Indonesia. Indonesia is the largest ASEAN member and has played a leading role in the region. Indonesia’s economy grew by 5.6 per cent in 2005, and performed slightly worse the year of 2006, reaching only 5.5 per cent, and in 2007,


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the economy grew by 6.4 per cent, which was at its highest point since the 1997 financial crisis. Growth in 2008 stood at 6.3 per cent, and the total GDP amounted to US$385.9 billion, which occupied two-thirds of ASEAN-5. Indonesia has the biggest market opportunity among ASEAN countries. There are many opportunities for investment in various sectors, especially in infrastructure projects. Indonesia could expect between US$80 billion and US$200 billion in investments from China within the next 5 to 10 years. Fourthly, Indonesia welcomes investment from China; especially the manufacturing capital flows into Indonesia. Chinese manufacturers are facing a lot of pressure from developed countries because of the surge of Chinese imports in light industrial products. So, Chinese companies, as well as foreign companies based in China, are planning to diversify their production outside China. Shortly after entering the new century, Chinese businessmen began to explore the possibility to relocate production to Indonesia, Vietnam, Thailand and other Southeast Asian nations. In this aspect, Indonesia has the advantage because Indonesia has a larger pool of resources, including labour and a large domestic market. Meanwhile, Indonesia extremely welcomes investment from China; especially the manufacturing capital flows into Indonesia. The Indonesian Government offered China to invest in manufacturing. This is a step of diversification of China’s investment in Indonesia, which was previously in natural resources and infrastructure. The investment now is in the automotive, electronic and textiles sectors. Jakarta is now working out a list of some of the country’s 145 state-owned enterprises to be sold to investors, although many are not in good shape. Foreign investors are now allowed major and management control when they contribute to Indonesian’s enterprises. China’s investment can help increase the local tax revenue and create more job opportunities for Indonesians, as well as drive the real sector, while economic growth will continue to rise. Thus Indonesia can also improve the education sector, health services, and increase its people’s purchasing power. In the face of the global economic crisis, the Capital Investment Coordinating Board of Indonesia (BKPM) has and will continue to attract FDIs by continuing to reducing bureaucratic constraints, while modernizing and simplifying investment processes. In the year of 2008, FDI growth was around 40 per cent, but in 2009, it may drop to around 20 per cent, while domestic growth will be higher than FDI in the full-year. BKPM will focus on investments in three sectors, such as agriculture, infrastructure, and energy, to address the issue of a potential slowdown in investments this year. This created new opportunities for FDI flow into Indonesia from other nations, including China.


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The ethnic Chinese in Indonesia also play a key role in promoting the China-Indonesia relationship because they often serve as a bridge in the bilateral economic relations. Over 60 per cent of FDI in China comes from overseas Chinese, as most overseas Chinese enterprises have channels of their own, and they are prone to exportation. What’s more, about 80 per cent of joint-venture manufacturers in China are invested by overseas Chinese, which contributes to China’s great trade surplus. Last but not least, China and the 10 ASEAN members, including Indonesia, are speeding up tariff reduction, a move to facilitate the CAFTA’s establishment. The average tariff imposed by China on imported ASEAN goods is expected to drop to 2.4 per cent in 2009 from the current value of 5.8 per cent. Under the CAFTA, China and the older ASEAN members: Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand will impose zero tariffs on most goods in 2010, while Cambodia, Laos, Myanmar, and Vietnam will follow suit in 2015. The CAFTA will bring about great opportunities to both China and Indonesia. China-ASEAN trade fairs have been organized annually in China since 2004, contributing to fostering the bilateral trade and investment cooperation between China and Indonesia. The two sides are actively negotiating for an investment agreement, facilitating their cooperation in the field. 5. The Prospect for Sino-Indonesian Economic and Trade Relations In April 2005, Chinese President Hu Jintao paid a visit to Indonesia. During his visit, China and Indonesia signed a joint declaration for a “strategic partnership”. The action plan of the partnership, which includes economics, politics and defense, was signed in January of 2010 in Jakarta. This demonstrated that Sino-Indonesian relations have entered a new development stage and will boost “comprehensive cooperation” between the two countries. Indonesia and China need continue to work together in increasing their bilateral trade and investment, and continue to build a closer relation in various fields, such as trade and energy. The following areas are among the possible cooperation opportunities between China and Indonesia. 5.1. Tourism As the fastest growing economy in the world, the total number of Chinese going abroad for leisure reached about 34 million in 2006, an increase from 31 million in 2005. Data disclosed by China’s National Tourism Administration indicated that nearly 30 million Chinese traveled abroad


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in the first nine months of 2007, up by 17 per cent from the same period in 2006. That figure is expected to grow to 50 million by 2010, which can only mean that China remains Asia’s largest source of tourism. According to the World Trade Organization, despite the fact that China’s numerous award-winning travel destinations, including Resort Island Bali, Indonesia, will miss out on China’s growing outbound tourism market. According to the preliminary results of a survey by the Nielsen Company on China’s outbound market, Indonesia is not in the top-10 planned destinations for Chinese travelers, simply because of the perception of safety. Data from the Bali tourism authority showed that Chinese tourist arrivals to the island, the top tourist destination in Indonesia, reached 22,743 in 2006, that figure has already more than doubled to 53,113 as of the end of August in 2007. Indonesia has failed to capitalize on the huge potential of the Chinese outbound market. For this reason, Both China and Indonesia have already made efforts to increase the tourist flows between the two countries, which through the granting of visa on arrival and increasing the frequency of direct flights from China to Indonesia and vice versa, to 16 times a week, especially, Indonesian government is trying every possible measure to attract more Chinese people to visit Indonesia. Now, China and Indonesia are negotiating on a plan to open direct flights from Guilin in China to Denpasar in Bali so that Chinese tourists’ arrivals in Bali could continue to increase. Given that, China has more than one billion people, and Indonesia tourism sector has bounced back and is now expanding again after several lean years due to natural disasters, security problems, and the bird-flu scare. So, the potential of tourists from China to go to Indonesia is extraordinary. There has been a significant increase in the number of Chinese tourists to Indonesia in the past years. Data collected by the Indonesian Culture and Tourism Ministry showed about 200,000 Indonesian tourists visited China and it was recorded at 182,341 Chinese tourists traveled to Indonesia in 2006. Indonesia has targeted to increase the tourist arrival from China from less than 200,000 in 2006 to about 300,000 in the year of 2007.9 “China has 1.2 billion people. Indonesian foreign exchange income may increase if one percent of them visit Indonesia,” Indonesian Culture and Tourism Minister Jero Wacik once said.10 It is necessary for Indonesia to smooth the access for Chinese who want to go to Indonesia as a tourist. At the same time, Indonesia should improve the services for the tourists by providing a comfortable environment, making improvement so that people will feel comfortable to stay in Indonesia, such as it will be easy to find Chinese food and shops. So they will feel like being at home in Indonesia. Meanwhile, it is necessary to maintain the sustainability of security in


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Indonesia. If the security is good, all tourists from the world will come to Indonesia. In addition, more flights should be opened between the two countries. 5.2. Agriculture Indonesia is an agriculture-based country. However, the domestic production of rice is not sufficient enough to meet the domestic demands. Indonesia still needs to import rice to meet growing rice needs at home. Though Indonesia’s rice imports fell from 6 million tons in 1998 to less than 1 million in 2004, The Republic has to import 1.5 million tons of rice in 2007 to secure supply and stabilize prices. The staple food is very important to the country’s economy and household food security, especially among the poor, who allocated about 30 per cent of their total expenditure to rice. Increases in farming costs and low rice prices have caused many farmers to turn to other crops in the hope of improving their incomes. This has become the main obstacle to increasing Indonesian rice production. With a further decline in world rice production, Indonesia, a major rice importer, could suffer food shortages in the coming years if it fails to boost rice production.11 Indonesia is one of the biggest textiles producers in ASEAN, with a complete structure of industry, starting from fiber to garment and other textile articles industry. Although Indonesia has produced various kinds of textile products, this country and other ASEAN countries need sufficient supplies of raw materials, especially cotton, from the agriculture sector, which can be seen from the import figure showing that Indonesia’s third biggest import in 2000 was cocoon accounting for US$999.4 million. Recently silk industry in Indonesia has shown a prospective growth with the growing demand of silk products both from domestic and foreign markets. Due to limited supplies of silk cocoon as a raw material for silk yarn, Indonesia needs more imports of silk cocoon. In this respect, Indonesia hopes China is able to offer technological assistance to help the Indonesian Government to achieve food selfsufficiency, including the development of hybrid rice. Indonesia also expects the cooperation from China to assist Indonesia in meeting the domestic demands of those above-mentioned commodities by giving special preference on exports to Indonesia. Another cooperation that can be developed is the provision of technical assistance by China to Indonesia on the development of those above agricultural sub-sectors. Other areas of cooperation that are needed include the technological transfer programs such as food processing, functional food production, resources conservation, high-yield crops and product development.


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The Indonesian and Chinese Governments have confirmed cooperation in agriculture, especially in the development hybrid rice, horticultural products, and in research and development of farm produce. 5.3. Fish Sector Indonesia is among the top ten countries of fish producer and exporter in the world. The maritime and fishery sectors have great potential to contribute to the country’s economy. GDP from the fishery sector increased by 18 per cent in 2006, and generated US$2.08 billion in foreign exchange revenue, with exports reaching 1.02 million tons in 2006. The Sino-Indonesian economic relations in the marine and fishery sectors have been improving well, especially following the signing of a Memorandum of Understanding on marine and fishery for the 20042009 program. China is the second largest importer of Indonesian aquatic products in Asia, after Japan. Over the past five years (2001-2006), the volume of Indonesian seafood exports to China tended to increase significantly, namely around 52 per cent at the average. In 2006, China imported Indonesian marine products worth a total of US$55.8 million with a total volume of 109,337.7 tons.12 In 2007, Indonesian Government began to cease cooperative ventures with foreign parties in the fisheries field, and instead encourage the latter to invest in the fishery industry in the country. The foreign fishing vessels could either establish their own industrial bases or cooperate with Indonesian companies in the form of a joint venture; otherwise, the foreign fishing vessels will prohibit foreigners operating in Indonesian waters if they do not have an industrial processing base in Indonesia. Chinese businessmen have expressed their readiness to invest capital in the marine and fisheries sector in Indonesia to set up the fish processing industries, thus increase the added-value and create new job opportunities for the local people. The Chinese investors would sink capital to the tune of US$800 million in the marine and fisheries sector in Indonesia. Among them, US$300 million of the projected value of US$800 million would be used to develop the fisheries industry in Tual, Maluku, and US$300 million in Timika, Papua, and US$200 million in Bitung, North Sulawesi. 5.4. Manufacturing Industry Indonesia and China could develop synergy in various economic sectors, particularly in manufacturing, to win the global competition. In a number of manufactured products, Indonesia could not compete directly with China in domestic and global markets because production costs in China


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are low. But Indonesia can develop synergy with China in the procurement of cheap raw materials and compromise on what components Indonesia and China should produce. Textile and garment industry: The textile industry was one of Indonesian Government’s priorities; the sector has been contributing significantly to the country’s foreign exchange revenues every year. In the year 2007, textile exports generated US$10.03 billion in foreign exchange income, up 6.13 per cent from US$9.445 billion in 2006, and it is estimated that textile exports will reach to US$11 billion in 2008, and the Indonesian Government has set a record textile exports target for 2009 of US$11.8 billion. Over the last 10 years, the industry has consistently added an average US$5 billion surplus to Indonesian export earnings, and this industry could employ 1.62 million people in the next two years, so it is a very important sector. The leading problems for Indonesian textile and garment industry are such that the equipment and machinery are obsolete. About 60 per cent of the machines used in Indonesian industry are between 10 and 20 years old, while 35 per cent are more than 20 years old. This means that industry restructuring is inevitable to boost the efficiencies in the face of stiff global and domestic competition. At the same time, despite healthy growth in bank lending in the past few years, Indonesian banks showed little interest in disbursing loans to textile companies. The commercial banks in Indonesia consider the textile industry unable to produce garments that could compete with Chinese products, making them potential contributors to a rise in non-performing loans (NPLs). Indonesian government is seeking the help of China in restructuring its textile industry. Chinese government may provide export credit to help Indonesian update machinery. China is the largest textile exporting country in the world, holding 17 per cent and 24 per cent of the global textile and garment markets respectively. Meanwhile, China can increase its investment in Indonesia’s textile and garment sector. 5.5. Information and Communication Technology In line with the rapid development of the world ICT, Indonesia has been developing this sector in recent years to catch up with the advancement of the technology. In Batam Island, Indonesia develop facilities for electronic components industry producing hardware of ICT products. Software development centres also start growing in some areas, especially in Bali Island and Yogyakarta-Central Java. China, as a country with a more advanced technology, is expected to participate in the development of ICT industry, both for hardware and software in Indonesia and other ASEAN


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countries. More investments from China in ICT products are welcomed in Indonesia. 5.6. Infrastructure China’s state-owned companies have shown keen interest in participating in Indonesia’s ambitious program to rebuild the country’s infrastructure. Indonesia has a long wish list of infrastructure projects that it wants to build over the next five years, costing US$145 billion. The private sector is expected to fund 60 per cent of the cost. China has now offered concessional loans totaling US$800 million to Indonesia. Half of that amount was offered during the presidency of Megawati Sukarnoputri. However, it took a long time to identify projects for funding. During his visit to Indonesia in April 2005, China’s President, Hu Jintao, offered another US$300 million towards Indonesia’s infrastructure program, and China offered a further US$100 million during Yudhoyono’s visit Beijing in 2006. A number of projects have been earmarked for the loans, which will fund building of bridges, power plants, and railway tracks in West Java.13 A number of government-to-government memoranda of understanding (MoUs) were signed in October 2005, particularly in the energy sector. One of the projects is a US$2.1 billion coal-fueled power plant in Muara Enim, South Sumatra, which will have a total capacity of 2,400 megawatts. Another is the development of the 1,320-megawatt, coal-fueled Tanjung Jati, a power plant in central Java, expected to cost US$1.1 billion. Still another agreement covered construction of a 150,000200,000 barrel-a-day oil refinery in Indonesia’s East Java province; a venture between the Indonesian state-run oil and gas company, Pertamina, and the Chinese Petroleum & Chemical Corporation (Sinopec). The production from the refinery will be primarily for Indonesian domestic consumption. 5.7. Population-Family Planning Program China and Indonesia are so far known as pioneers of the world’s family planning program. So, they may establish cooperation in population field. Chairman of the Indonesian National Family Planning Coordinating Board (BKKBN) and Chinese Minister of National Population signed a memorandum of understanding (MoU) in 2005 to that effect. Under the MoU, the two nations agreed to encourage each other to develop cooperation in the population and family planning/reproduction health fields, the cooperation covered family planning training, family planning/ reproduction health officer and ranking official exchanges. In addition,


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the two countries also agreed to conduct joint scientific and technological research work on contraceptives. Both Indonesia and China are also well-known for their efforts to pioneer the invention of a number of contraceptives and to give family planning training to other countries. 5.8. Energy Industry China is preoccupied with its need for energy and is looking for energy security through investment overseas. China’s initial investments in Indonesia have been in energy as it realizes Indonesia is an important future energy source. Cooperation in the energy sector has become the major focus in the relationship. In April 2002, PetroChina acquired six oil fields from Devon Energy, a US-based independent oil and gas producer for US$216 million. This was PetroChina’s first foreign venture. China National Offshore Oil Corporation (CNOOC) also acquired assets in Indonesia’s oil and gas sector. Indonesia made a big effort to obtain a US$10 billion contract to supply three million tons of liquefied natural gas to Guangdong province annually for 20 years. In return, Indonesia was ready to buy 20 Chinese oil tankers. If Indonesia could secure the contract, it could begin to develop the Tangguh gas field in Papua, an undertaking led by British Petroleum that included a number of Japanese companies. In the end Australia won the LNG contract. China had invited six countries to bid, and based its decision on price, risk and flexibility. Australia was seen as the most stable supplier. But Indonesia received a “consolation prize” of a US$8.4 billion contract to supply 2.5 million tons of LNG annually to Fujian province for 20 years. This deal was signed in September 2002 at the First Indonesia-China Energy Forum held in Bali. In addition, six MoUs were signed which included the development of a 65 megawatt combined cycle power plant in Palembang, South Sumatra, a 220 megawatt coal-fired power plant on Labuhan Angin, North Sumatra, and the development of the gas pipeline linking East Kalimantan and East Java. On another occasion, Jiangshu province has stated an interest in the development of and a supply contract with the LNG project in Bontang, East Kalimantan. 6. Conclusion In conclusion, China and Indonesia are friendly neighbours and both of them are large developing countries with great influence. Over the past half century, China-Indonesia relations have, on the whole, enjoyed continuous development, despite some twists and turns. In recent years, the two sides have jointly added a new chapter to the friendship, deepening mutual


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understanding, enhancing trust, and expanding cooperation in bilateral relations. China is becoming a more important trading partner for Indonesia and in the next few years China’s investment in Indonesia will continue to growing. China’s investment will be crucial for Indonesia’s plan to optimize infrastructure development, primarily in power sector. China offers huge export credits that Indonesia can use for infrastructure development, for instance the construction of below 100 megawatt power plants, and China’s export credit helped finance the construction of the cross-sea Suramadu Bridge linking Java and the island of Madura. Sino-Indonesian bilateral cooperation in various fields have continued to increase since both countries restored diplomatic ties in 1990 and signed a strategic partnership agreement in April 2005. Especially over the past three years, the partnership agreement had allowed bilateral relations in various fields to grow rapidly; China has become Indonesia’s fourth biggest trading partner. Dual directional investment has been gradually developing. Although Chinese investment value in Indonesia is below that of the United States, Japan, and South Korea, China is now the fifth biggest investor country in Indonesia. Cooperation in areas of infrastructure construction, energy and resource exploitation, agriculture and fishing are also to be enhanced in recent years. Compared with other nations, Indonesia’s bilateral trade growth with China is among the slowest in Southeast Asia. Among the 10 ASEAN countries trading with China, Indonesia is now in fifth position in terms of trade volumes, after the Philippines, Thailand, Malaysia and Singapore. So, there exist great potentials for further developing the two countries bilateral trade. Both China and Indonesia governments should take more actions to expand the two-way trade, in particular, to stimulate Indonesia to increase export to China. In the near future, Indonesia should invite investors from China to invest their money in the sectors of electricity, agriculture, food, infrastructures and trade in Indonesia, and the areas, such as tourism, agriculture, fish sector, textile and garment industry, information and communication technology, infrastructure, energy industry, as well as population-family planning program, being among the possible cooperation opportunities between China and Indonesia. China and Indonesia governments should make joint efforts to uplift the cooperation in those cooperation areas, so as to deepen the Sino-Indonesian commercial and trade ties. Notes * Dr Wu Chongbo, Professor at Research School for Southeast Asian Studies, Xiamen University, Fujian Province, China.


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1. Rendi A. Witular, “Chinese investment may reach US$3b this year”, The Jakarta Post, 17 August 2005. 2. “RI-China trade growing slowly”, The Jakarta Post, 6 July 2006. 3. “RI, China to hold joint commission meeting” . 4. “Bilateral Trade between Indonesia and China”, Jakarta, Business News, 18 April 2008, pp. 11-12. 5. “Leading Chinese firms to stage exhibition in Jakarta” . 6. Andi Abdussalam, “Indonesia, China forging closer economic ties” . 7. “Work together to enhance RI-China economic cooperation”, guo Ji Ri Bao (JAWAPOS GROUP), 27 July 2007. 8. Bill Guerin, “Japan, China power Indonesian growth”, Asia Times, 29 August 2007. 9. “RI, China agree to promote cultural ties” . 10. “RI, China agree to promote cultural ties” . 11. “Indonesia may face food crisis in next 10 years: Minister”, The Jakarta Post, 11 December 2007. 12. “RI might suffer loss of US$5 million due to Chinese ban on seafood imports” website: . 13. “Quotas send China’s ragmen southeast” .

References ASEAN-China Expert Group on Economic Cooperation (2001), “Forging Closer ASEAN-China Economic Relations in the Twenty-First Century”, October, Bruce Vaughn and Wayne M. Morrison (2006), “China-Southeast Asia Relations: Trends, Issues, and Implications for the United States”, CRS Report for Congress Order Code RL32688, updated 4 April. Erwida Maulia and Aditya Suharmoko (2009), “RI Resolves Rifts with China, Mends Ties”, The Jakarta Post, 24 March. John Wong and Sarah Chan (2003), “China-Asia Free Trade Agreement Shaping Future Economic Relations”, Asian Survey, Vol. 53, No. 3, May/June. Jusuf Wanandi (2001), “China-RI Ties: Challenges and Opportunities”, The Jakarta Post, 7 November. Oei Eng Goan (2001), “Sino-RI Ties Should Include Defense, Security Cooperation”, The Jakarta Post, 29 December. Qiu Danyang (2005), China-ASEAN Free Trade Area: China’s Peaceful Rising in Terms of Geo-economics, Contemporary Asia Pacific, No. 1. Raymond Atje and Arya B. Gaduh (1999), “Indonesia-China Economic Relations: An Indonesian Perspective”, CSIS Working Paper Series, WPE 052, 1999.


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Saw Swee-Hock (2007), ASEAN-China Economic Relations, ISEAS Publishing. Sheng Lijun (2003), “China-ASEAN Free Trade Area: Origins, Developments and Strategic Motivations”, ISEAS Working Paper on International Politics and Security Issues Series No. 1. Zhang Haibing (2006), “New Development and Problems in China-ASEAN Regional Economic Cooperation”, December . Zhao Jianglin (2007), “Recent Development of China-ASEAN Trade and Economic Relations: From Regional Perspective”, Asean-China Trade Relations: 15 Years of Development and Prospects, The Gioi Publishers.


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China-ASEAN Integration Application of General Theory& of Trade Trade Journal Relativity Vol. 1, December 2011, pp. 83-89

中国东盟整合与贸易学刊 83 第一期, 2011年12月

The Application of General Theory of Trade Relativity on China, ASEAN, Japan, E.U. and U.S.A. Mario Arturo Ruiz Estrada* University of Malaya

Abstract This paper is interested to apply the general theory of relativity develop by Albert Einstein (1916) into the analysis of international trade. We like to use this great theory of physics to explain the behavior of international trade among nations, at the same time, how a large country with a constant expansion of its economic mass (Ð) can generate a strong trade gravity attraction with the traditional trade partners and possible new trade partners. It is possible to be observed in the case of U.S. and China economy. Finally, we like to probe if the success of any trade bloc request at less one of its members keep a large economic mass (Ð) then this country with a large economic mass (Ð) can generate a strong trade gravity to attract the rest of members into the same trade bloc, we suggest the uses of two trade blocs follow by NAFTA and ASEAN. Keywords: econographicology, macroeconomic policy, economic teaching, multi-dimensional graphs, Cartesian Spaces

1. Introduction Initially, our basic argument in this paper is that the reduction or expansion of the economic mass (Ð)1 by any country can generate outflow or attraction of traditional or new international trade partners. Hence, the expansion of the economic mass (Ð) by any country can generate a positive effect to encourage more trade with the traditional trade partners and the attraction of new trade partners. On the other hand, the contraction of the economic mass (Ð) by any country can generate a possible outflow of its trade partners to another large economic mass (Ð) (See Figure 1).


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Figure 1 The Transition of Orbit

Our analysis for the general theory of trade relativity is based on the uses of the space-time continuum. It can be considered as a geometrical space under the uses of a formal co-ordinates system (See Figure 2). This geometrical space is represented by a manifold or plane surface by combining the space and time together. Our first assumption is that the world trade is a large space-time continuum based on the intersection between space and time. Hence, the world trade is represented by the space-time continuum. It is the place that all the economic mass (Ð) from Figure 2 The Space-Time Continuum


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different countries are displayed in different places (or orbits). In fact, all countries depend on its economic mass (Ð) expansion to generate a strong attraction of new trade partners. We assume also that the world trade exist two types of countries divided by the large economic mass (Ð) country and small economic mass (Ð) country. Therefore, always the small economic mass (Ð) of any country is attached to a large economic mass (Ð) country (See Figure 3). Hence, the small economic mass (Ð) country is moving around the large economic mass (Ð) country. It is means that the small economic mass (Ð) country generates a strong trade gravity attraction to the large economic mass (Ð) country. Therefore, the attraction from the small economic mass (Ð) country to the large economic mass (Ð) country always exist is strong until exist the possibility of a reduction into the mass of the large economic mass (Ð) country. It can force to the small economic mass (Ð) change to another orbit with a country that experience more high economic mass (Ð) expansion. This reduction of the mass on any large economic mass (Ð) country can be unexpected and fleeted (See Figure 1). Figure 3 Large Economic Mass (Ð) and Small Economic Mass (Ð)

Additionally, the general theory of trade relativity also assumes that the economic mass (Ð) by a large country always keep in a constant transformation or evolution across the time and space. It is means that someday the closed trade members can unfold to another country with more high economic mass (Ð) expansion. The process of transition cannot be determinate WHEN exactly a country can change its orbit to another country with high economic mass (Ð) expansion (See Figure 1 and Figure 3).


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2. The Application of the General Theory of Trade Relativity The application of the general theory of trade relativity on the analysis of the world trade to find how a large economic mass (Ð) of any country can generate a strong trade gravity attraction from far regions and countries to trading is possible to be probed. It is the case of Japan, China and Europe Union with U.S. We can observe into three different decades that Japan shows a strong trade gravity attraction to U.S. especially in 1980’s and 1990’s. However, we can also observe that from the year 2000 until today the trade gravity attraction reduce considerably between Japan and U.S. Hence, the reduction of the economic mass (Ð) of U.S. force to Japan leave its orbit and move to another orbit more far or change to another orbit with a country that experience a fast and large economic mass (Ð) such as China. But in the case of China by its fast economic mass (Ð) expansion is generating a strong trade gravity attraction to the economic mass (Ð) of U.S. in recently years. In the case of Europe, it was pushed out to another orbit between 1980’s and 1990’s, but also exist the high possibility that E.U. is moving to a more far orbit, it is originated by weakening of the economic mass (Ð) of U.S. (See Figure 4). Figure 4 NAFTA


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Figure 5 U.S. in the World Economy Context

In the case of regional integration, we can observe that the successful trade blocks suggest that minimum one of the members of the same trade block need to have a large economic mass (Ð). It can help to sustain a strong trade gravity attraction among the members from the same trade bloc. We like to mention the case of Singapore. The economic regional integration of ASEAN members where Singapore is the large trade member of this trade bloc, we can observe in Figure 5 that the economic mass (Ð) of Singapore is not enough to generate a strong trade regional integration gravity attraction among the rest of members of ASEAN such as Thailand, Philippines and Indonesia. But Singapore shows clearly a strong international trade gravity attraction by the American economy, it is originated by the large economic mass (Ð) of U.S. is generating on the world international trade. The second case in our study to probe that minimum any trade bloc request a large economic mass (Ð) country, it is possible to be observed in the case of NAFTA integrated by U.S., Canada and Mexico. Where the U.S. shows a large economic mass (Ð) that is enough to attracts its trade bloc members such as Canada and Mexico (See Figure 6). 3. Conclusion We conclude that large country with a constant expansion of its economic mass (Ð) can generate a strong trade gravity attraction around it by generate more trade among the traditional trade partners and the possibility


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Figure 6 ASEAN

to attract a new trade partners. It is the case to participate into the world economy alone or by the formation of strong trade blocs. Notes * Dr Mario Arturo Ruiz Estrada, Faculty of Economics and Administration, Department of Economics, University of Malaya. 1. In the construction of the economic mass (Ð) (See Expression 2) the π is also a constant equal to 3.1416 and the radius is fixed by the G.D.P. growth rate (∆G) between two periods of time, in our case the last year G.D.P. output (GDPt-1) in real terms and the present year G.D.P. output (GDPt+1) in real terms (See Expression 1).

∆G = GDPt+1 – GDPt-1 / GDPt-1

(1)

Ð = (4/3)π∆G2

(2)

Finally, the analysis of the economic mass (Ð) is based on the size of the volume of different spheres across different periods of time and spaces. The main variable who establishes the size of the sphere volume is the G.D.P. growth rates. We find that the different sizes of spheres can help us to observe if exist expansion, contraction or stagnation of the GDP growth rates across different periods of time and space. However, we suggest the uses of different


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colors for different spheres. It can help to visualize easily the behaviour of the economic mass (Ð) into the same graphical space.

References ASEAN (2009), ASEAN secretariat . Einstein, A. (1952), Relativity: The Special and the General Theory, New York: Three Rivers Press. International Monetary Found (2007), General Information and Database Statistics . NAFTA (2009), NAFTA Secretariat . NBER (2009), National Bureau Economic Research . World Bank (2007), General Information and Database Statistics .


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China-ASEAN Integration & Trade 中国东盟整合与贸易学刊 Southeast Asian Chinese Businesses andJournal the Guangxi Beibu Gulf Economic Zone 91 Vol. 1, December 2011, pp. 91-100 第一期, 2011年12月

The Role and Function of Southeast Asian Chinese Businesses in the Construction of the Guangxi Beibu Gulf Economic Zone Huang Yaodong Guangxi Academy of Social Sciences

Abstract Chinese businesses have been playing a very important role in the economy of Southeast Asian countries, contributing greatly to the economic development and prosperity of these countries. Chinese businesses also play an active role in world economy, given their high degree of internationalization and early involvement in globalization and regionalization. Hence, Chinese businesses are also active important in promoting economic integration of the Asian, especially East Asian, region. The launching of the China-ASEAN Free Trade Area and its henceforth development equally cannot be without Chinese businesses. A main force in the construction of CAFTA is thus the Chinese businesses, among whom Southeast Asian Chinese businesses are the most important component, given their familiarity with the situations in both Southeast Asia and China. This paper looks at the issue of how to further enhance their role in the particular case of accelerating the construction of the Guangxi Beibu Gulf Economic Zone. Keywords: Southeast Asian Chinese businesses, Guangxi Beibu Gulf Economic Zone, economic development, China-ASEAN relations


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东南亚华商在广西北部湾经济区建设中的角色作用黄耀东* 中国广西社会科学院

华商在东南亚的经济生活中一直扮演着重要的角色，他们是东南亚各国经济建设的一支重要方面军，为东南亚各国的经济发展与繁荣做出了重大贡献。华商是世界经济中的一支活跃力量，华商的国际化程度很高，最早卷入全球化和区域化的潮流，因此，华商也是促进亚洲，尤其是东亚区域经济一体化的重要力量。中国-东盟自由贸易区的启动与今后的发展，同样也离不开华商，华商是中国-东盟自由贸易区建设中的一支生力军。东南亚华商是华商大家庭中的最重要组成部分，他们既熟悉了解东南亚的情况，也熟悉了解中国的情况，是改革开放以来活跃于祖籍国的海外力量。如何进一步发挥他们的作用，加快广西北部湾经济区建设的步伐，是摆在我们面前的一个现实课题。

一、东南亚华商的特点要引进东南亚华商，借力他们进行北部湾经济区的建设，就得先深入研究他们，熟悉他们的特点。一般认为，当今的东南亚华商具有以下几个特点：一是本土化。东南亚华商是东南亚各国经济的一个重要组成部分。从战后初期至上世纪 70 年代，东南亚华侨华人与居住国的关系发生了质的变化，他们加入了当地国家的国籍，成为居住国的合法公民，因此，华人经济也自然而然地成为当地民族经济的一个重要组织部分。东南亚华商为促进和繁荣东南亚各国的经济做出了重大的贡献，是东南亚各国经济建设的一支重要方面军，东南亚各国经济的起飞，与华商的辛勤劳动是密不可分的，没有华商，就没有这些国家的经济起飞和现代化。二是现代化。一方面，东南亚华商所从事的产业领域已经从传统的商业领域向现代工业和服务业的转移。战后初期至上世纪70年

*

*

黄耀东：中国广西社会科学院副研究员、中共河池市委宣传部副部长、厦门大学南洋研究院博士生

黄耀东：中国广西社会科学院副研究员、中共河池市委宣传部副部长、厦门大学南洋研究院博士生


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代，东南亚各国政府大力推行经济民族主义政策，迫使华商从传统的商业领域退出，包括商业零售业、食品加工业 (如碾米业) 等领域。为了生存，华人必须在居住国政府的政策许可的范围内寻找新的生存空间。于是，那些有一定资本的华人便转向新的产业，包括现代工业和现代服务业，尤其是像金融业和商业服务业领域。上世纪 80 年代之后，新加坡、泰国、马来西亚、菲律宾和印尼的经济自由化也给华商提供了新的机遇，使他们能够在现代产业领域迅速扩张。另一方面，东南亚华商经营模式和经营手段已从家族式向现代管理方式的转变。在上世纪 70 年代以前，东南亚华商所经营的企业管理模式和手段大都是家族式，80 年代之后，许多华人企业引进现代企业制度，运用现代管理方式管理企业，使华人企业发生了革命性的变化，华人现代跨国企业像雨后春笋般地涌现出来。三是国际化。主要是指华商跨国经营，企业的业务向区域及至全球扩展，因此，从这个意义上说，东南亚华商的国际化也就是全球化和区域化。除了西方的跨国公司之外，东南亚华商可能是发展中国家最早从事跨国经营的企业家群体，一般而言，与东南亚当地民族企业家相比，华商的国际化程度较高，这可能是由以下几个原因决定的：华商都是移民，移民的文化性格决定了华商愿意将自己的业务向外拓展，而不会把企业的经营活动局限在一个国家内；资本都是逐利的，那里有利润就往那里跑，上世纪 80 年代之后，东亚各国进行经济自由化改革，纷纷向外资开放各个行业，于是，东南亚华商利用这个机会进行跨国扩张：中华文化圈为东南亚华商向外拓展提供了很好的人文条件，东南亚华商先是向东南亚地区，然后又向东亚地区发展，而向欧美拓展的则比较少，这应该与文化有关，在东亚地区，华商走到那里都比较容易适应，而不至于“水土不服”，许多东南亚华商也曾经向欧美拓展业务，但大都铩羽而归，主要原因也是文化与价值观的差别。

二、东南亚华商的经济优势华侨移居海外至少可追溯到 1000 多年以前。目前，海外华商主要分布在世界 168 个国家和地区。有关权威专家统计：到 2008 年，世界华侨华人总数是 4543 万人，其中东南亚有 3348 万，包括约 250 多万的新移民及其眷属，约占全球 4543 万华侨华人总数的 73.5%。其中印尼有 1000 万，泰国有 700 万，马来西亚有 645 万，新加坡有 360 万 (占全国人口的 77%)，最少是文莱为 5.6 万。《2009 年世界华商发展态势》统计表明，2009 年，世界华商企业的总资产约达到


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3.9 万亿美元，较 2008 年的 2.5 万亿美元增长了 56％，较之 2007 年的 3.7 万亿美元微涨 5％。这其中，东南亚华商经济总量估计为 1.1 万亿 -1.2 万亿美元。《亚洲周刊》发布的资料显示，在 2000 年全球最大的 500 家华人企业中，除港台两地的华商企业外，绝大多数依然是新、马、泰、菲、印尼五国的华人企业。这五国也被公认为华人经济发展较好、实力最强的区域。香港 2007 年《亚洲周刊》报道，从华商企业集团首脑拥有的个人和家族财富来看，2007 年全球华商富豪 500 强财富总量达 3.95 万亿元人民币，约折合 5076 亿美元，其中拥有 12 亿元人民币资产以上的东盟华商富豪 46 人，总资产为 5.4 万亿元人民币，占 71.32%。这些分析虽然只是一种推断的结果，但也在一定程度上显示东南亚华商具有相当可观的经济实力。另据《 2007 年世界华商发展报告》披露，在东南亚股票市场上，华人上市公司约占 70%。在北京举行的第四届杰出华商大会发布的《2008 全球华商发展报告》显示，随着中国经济的迅速崛起, 海外华商的实力不断增强。从区域分布来看，亚洲是海外华商实力最强的地区, 占海外华商经济的 70% 以上。在东南亚地区，华商已成为当地经济的重要组成部分。

21世纪初东盟五国华商现状评估国华商现状评估别马 2009 年华人公民为 643.77 万，约占总人口的 24.52%。2008 来年华人有限公司股权市价为 2030.92 亿马元，所占比重为西 34.9%。 2010 年，马来西亚最大 20 家上市公司（以市值计亚算）有 9 家是华人企业。 2008 年华人中小企业大约有 47.8 万家，大约占所有中小企业总数的 80%；对马来西亚国内生产总值的贡献达到 25%。 2010 年 40 大富豪中，华人富 25 个，财富高达 382.6 亿美元，约 40 大富豪总资产的 75%。排名前十的富豪中，有八位是华商。种植业、房地产、建筑、矿业、服务业、运输业、批发零售业、贸易等。菲 2007 年华人约为 150 万，占总人口的 1.6%。华商拥有全菲律 1000 家最大公司的半数左右。截至 2009 年底菲律宾证券交宾易所的上市公司共有 248 家，其中属于华商上市公司有 73 家，大约占菲律宾上市企业的三分之一左右。总市值 421.18 亿美元，比重 32%。20 万家华人中小企业，约占全国中小企业总数四分之一，对菲律宾经济增加值的贡献大约在


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8% 左右。 (2006 年数据 ) 2010 年菲律宾的十大富豪中有七位是华商，施至成、陈永栽、吴奕辉分列排行榜的前三名。九大华商的资产大约为 136。金融、房地产、建筑、贸易、百货零售、电信、航空运输、部分制造业。

印 2007 年华人约为 1000 万，占总人口 4.1%。目前在印尼大约有 170 度家华人大财团或集团企业。根据 2008 年度营业业绩报告进行统尼计排名，印尼 8 家最的私人企业中，有 5 家是华人企业。华人经西营的中型企业有 5000 多家，小型业和家庭式手工业小作坊难以亚计数。一般认为华人中小企业产值约占印尼所有中小企业产值的三成左右。2009 年印尼十大富豪中，有 8 位是华商；排名前 40 位富豪中有一半以上是华人。20 大人富豪家族总资产高 300 亿美元，人均资产 15 亿美元。农业 (棕榈种植、木材)、房地产、百货零售、贸易、金融、制造业 (香烟、造纸、化工、食品、建材、纺织等)。新加坡

2010 年华人公民和永久居民人口为 279.4 万，约占总数的 74.1%。 2009 年该国最大的 28 家华人上市公司资产总值高达 3864.96 亿美元，股票市值 1164.79 亿美元，销售额 609.41 亿美元。东南亚最大 40 家的华人上市公司中，有 14 家是新加坡的华人企业。 2007 年新加坡大约有 16 万家企业，其中 99.2% 属于中小企业，华人中小企业约占所有中小企业数的 90% 。华人企业对该国经济贡献约占三成。2009 年新加坡 40 大富豪中，只有排名第 36、38 的两位不是华人，其他皆为华人富豪。十大华人富豪 295 亿美元，人均资产接近 30 亿美元。银行、房地产、贸易、物流、批发、零售、食品加工、餐饮、酒店、其他服务业

泰 2007 年华人约为 700 万，占总人口的 11%。2009 年泰国 100 家国最大上市公司中，有 46 家是华人企业。这 46 家华人企业总市值高达 15417 亿泰铢，约合 441.42 亿美元。2010 福布斯全球 2000 强企业， 14 家泰国企业上榜，五家来自华族。2008 年华人中小企业有 113.46 万家，大约占中小企业总数的 40% 。对该国 GDP 贡献为 1 万 3786 亿泰铢，大约占整个国家 GDP 比重的 15.12%。 2010 排名前五位的富豪全部为华商，排名前 10 位的富豪有 7 位属于华族，排名前 25 名的富豪有 15 人为华人富商（资产 258.2 亿美元）。金融、房地产、建筑、百货零售、媒体、贸易、部分制造业。注：菲律宾、泰国、印尼人口数量来自厦门大学庄国土教授的估算，马来西亚和新加坡华人人口数据则来自两国的国家统计局。


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三、东南亚华商在中国-东盟关系中的地位及作用中国-东盟自由贸易建设的不同阶段，东南亚华商所起到的作用也是不同的。自从 1978 年中国实行改革开放政策以来，东南亚华商最早来到中国投资设厂，为中国的改革开放和现代化建设立下了汗马功劳，与此同时，也为中国与东南亚的经济整合作出了重大的贡献，为中国-东盟自由贸易区构想的提出和组建提供了物质准备和理论准备。中国-东盟自由贸易区的建设可以分为组建和正式启动两个阶段，在这两个不同的阶段，东南亚华商可以扮演不同的角色。在第一个阶段，由各国政府扮演主要角色，包括计划的制定，减免税政策的出台和减免税的谈判等，都必须由政府出面，由政府唱主角，而各国华商则扮演从旁推动的角色。在这个阶段，华商的主要角色，是努力推动政府加快经济开放和自由化的步伐，促使政府增强对中国的信任，减少对中国的猜疑，决心与中国全面开展经济合作。在第二阶段，自由贸易区一旦建成，政府将由前台退居二线，由各国民间和企业扮演主要角色，这时正是东南亚华商可以大显身手的时候。传统上，东盟国家在华投资的产业主要集中在加工业和不动产业（包括饭店、酒店和住宅等房地产开发项目）。在地域方面则主要集中东南沿海和长江中下游。因此，随着中国内地进一步改革开放和西部开发战略的实施，东南亚华商可以在两个方面拓展，在产业领域，可以向金融业、零售业、钢铁、石化产品等多个行业进军；在地域方面，可以向中国的广大内陆腹地和西部、东北地区进军。众所周知，东南亚华商大多成长于居住国，熟悉当地的政治、经济环境，凭借着对市场需求的准确把握，在商业上获得巨大成功，具有在当地从事经济活动的成功经验。1978 年中国改革开放以来，东南亚华商作为最早进入中国市场的外商之一，对中国进行了大量投资，经过 20 多年的发展，许多东南亚华商已经在中国建立起成功的事业，获得丰厚的回报。与其他外商相比，他们对中国的政府运作以及市场环境更为熟悉，在长期的经济活动中，积累了丰富人脉资源，拥有许多成功的贸易投资经验，总结出许多新的企业发展模式。在协助中国企业 “走出去” 方面，东南亚华商也是可以大有作为的。中国企业国际化程度不高，对国际市场的认知和了解远远不如东南亚华商，因此，东南亚华商在这方面可以扮演引路人和中介的角色。一方面，东南亚华商可以协助中国企业到东南亚去投资设厂，在这方面，东南亚华商是 “地主” ，他们应该尽地主之谊，协助前来投资设厂的中国企业尽快熟悉和了解当地的环境，甚至还可以采取合资


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和合作经营的方式；另一方面，东南亚华商也可以帮助中国企业向欧美市场拓展，他们可以向中国企业传授进军欧美市场的经验与教训，提供咨询、情报信息、技术和销售网络等。前新加坡总理、现内阁资政的李光耀在其《华商日益凸显的世界影响力》一文中称：今天，在世界各地的每一个大城市里，都有一个朝气蓬勃的华人社群。这些华人社群不再集中在唐人街，他们已散布到郊区，并且在商场、专业领域、大学，同时也逐渐在州和联邦政治中。以泰国为例，今天的泰国，大半的国会议员是华裔泰国人。在泰国和菲律宾，华裔和当地人在公共和私人部门，在社会各层面都不分彼此地打成一片。在澳大利亚、北美洲和拉丁美洲，有越来越多的华人参与地方和国家政治。总之，东南亚华商是参与中国-东盟自由贸易区建设的一支生力军。一方面，中国-东盟自由贸易区为这支生力军提供了更加广阔和纵深的战场 (商业语言：商场如战场) ，他们可以在这个战场上如鱼得水，纵横驰骋，不断地壮大自己。另一方面，中国和东盟双方都要感谢这支生力军，他们在中国与东盟之间架起了一座桥梁，增进了双方的理解与认识，促进了双方的合作。东南亚华商，可以为今后中国-东盟经济贸易关系的发展与深化作出更大的贡献。

四、吸引东南亚华商参与广西北部湾经济区建设的建议为促进东南亚华商参与广西北部湾经济区建设，广西必须改进现存的各种不足与弊端，清除一切影响外商投资的障碍，使外商能够进得来、做得稳、发展的下去。因此，广西还有很多工作要去做。

（一）优化投资环境为了营造一个和谐的投资环境，广西北部湾经济区各级政府应该充分利用地理位置的优势，发挥区域经济特色；加强环境保护，合理利用资源，促进经济投资环境与生态环境协调发展；塑造良好的政策环境，通过各种优惠措施在税收减免、利润汇出、外汇平衡、外资企业注册审批及投资的规模、期限、方向、比例和土地使用费等方面形成强大的吸引力，完善利用外资产业政策，积极引导外资投向高技术产业；本着 “超前发展、效益综合、结构优化、布局合理、内外资并用” 的原则，大力建设基础设施，形成一个高效率、高功能、便利快捷、配套完善的现代化基础设施环境。


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（二）构筑东南亚华商投资平台投资平台由很多平台构成，如交流平台、市场平台、服务平台等。中国－东盟博览会和中国—东盟商务与投资峰会以及中国与东南亚国家召开的各种会展活动，邀请东南亚华商参加大湄公河次区域合作、南宁-新加坡经济走廊建设、中越 “两廊一圈” 建设合作和泛珠三角经济区等活动，都能增加东南亚华商对广西北部湾经济区的深入了解，这些都是广西与东南亚华商交流合作平台。

（三）加强对华商投资企业的保护随着国家对内资、外资企业实行国民待遇之后，政府想通过采取优惠政策来吸引外来投资已经难以实行。要吸引华商投资，应改变思路，从原来给企业让利的思路改为给企业服务增利创利的思路，努力为企业创造良好的投资环境、生产环境、销售环境、人才环境，使外来企业能够高效率运转得以降低成本。总之，必须对华商实行国民待遇政策。即使达不到优惠政策，也不能实行对外商企业与本地企业不一样的政策，如对外商企业税收政策即使不能比本地企业优惠，也不能让外商企业税负重于本地企业，而应该使外商企业和本地企业处于同一起跑线上，以保护华商的投资利益和积极性。

（四）建立与东南亚华商沟通、交流合作机制政府有关部门如商务厅、招商局、侨办、贸促会等要与东南亚华商特别是华人商会和一些重量级的东南亚华商建立起固定的沟通管道，定期或不定期开展联谊会，以增进了解和友谊。利用在广西南宁举办的中国-东盟博览会、中国-东盟商务与投资峰会、泛北部湾经济合作论坛等重要国际展会平台，推动东南亚华商参与广西北部湾经济区建设合作。在举办这些重要展会期间，组织东南亚华商举办各种形式的广西北部湾经济区合作与发展专题讨论、推介会，举办各种商品展销会和投资合作论坛。这些都是行之有效的交流合作机制。

（五）突出工作重点，明确工作目标，狠抓落实东南亚华商数量千千万万，有实力的、有意原到中国投资的华商才是我们的工作重点，也即广西北部湾经济区期待的投资者和合作者。做好对这些东南亚华商的调研、筛选、沟通交流和争取工作是有关


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经贸促进部门如侨办、招商局、贸促会等部门的工作重点。找准了招商引资的对象，就要寻找机会与之接触、沟通交流，落实他们到广西北部湾经济区来考察洽谈，力争将吸引东南亚华商投资落实到实处、细致。

（六）利用区位优势，将广西北部湾经济区建设成为东南亚华商的家园

要充分优化、绿化、美化广西北部湾各城市发展的规划与建设，掌握东盟 10＋1 自由贸易区的发展契机，在北部湾的发展计划中，重点规划筹建具宏观发展规模的 “东盟中心” ，使其成为中国与东南亚各国之间的经济、贸易、文化、旅游各方面的信息与实质交流的中心区域。东南亚华商经济实力雄厚，在当地握有经济大权，对当地社会繁荣具有举足轻重的影响力。同时，华商在东南亚各国普遍享有优越的社会地位，在政治上的影响力也有逐渐增强的趋势。未来中国与东盟自由贸易区的发展，是全面结合各地华商力量，促进广西北部湾经济发展的最好契机。应在北部湾为华商建立服务平台，完善华商交流的服务机制及设施，使华商安心在北部湾工作、生活，成为他们的家园。

（七）加强人才引进与培养人才是一个地区在国际和地区竞争中赢得先机和主动、实现加快发展的关键因素，广西北部湾经济区的崛起和腾飞最终要靠人才，为此，必须采取措施，加强人才引进与培养，消除人才 “瓶颈” 。一要扩大人才增量，集聚高层次人才。依托国家重大产业项目布局，打造产业人才 “小高地” 。北部湾经济区开放开发上升为国家战略后，意味着越来越多的国家重大产业项目将在这里布局。根据《规划》，经济区将重点发展石化等九大支柱产业。要抢抓机遇，以重大项目为载体，根据产业布局，集中力量在九大支柱产业中培育建设一批各种层次的人才 “小高地” ，大力引进高层次的人才。二要依托大专院校，加强本地基础性人才培养。三要依托职业教育，加强与劳动密集型和技术密集型产业相适应的技能型实用人才的培养。北部湾经济区重点发展的九大支柱产业中，大多是劳动密集型与技术密集型相结合的产业，对实用技能型人才的需求量很大。要加强实用技能型人才的培训，大力发展职业教育，建设一批适应重点产业发展需要的职业教育培训基地，以使东南亚华商能够很方便地招聘到合适的人才。


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参考文献沈北海主编，《泛北部湾区域合作研究—中国—东盟 “一轴两翼” 新格局》广西人民出版社，2007 古小松主编，《泛北部湾合作发展报告》（2007年），社会科学文献出版社，2007 吴明华，泛北部湾合作风生水起，中国远洋航务，2007（12）莫仲宁，抓住泛北部湾经济合作区建设机遇加快广西经济发展，桂海论丛，2007（06）周英虎，泛北部湾合作有关问题研究，广西财经学院学报，2007（05）黄艳梅，第八届中国―东盟博览会海外华商广西寻商机_北部湾东盟经济网 2011-10-25 李建超，11 个项目落户北部湾投资规模 24.89 亿元人民币，广西新闻网 2009 年 11 月 11 日方慧玲，特别报道：让东南亚华商成为北部湾建设的生力军，广西日报 2008 年 6 月 27 日刘万强，广西广邀华商投资北部湾共享中国东盟自贸区商机，中国新闻网 2010 年 2 月 3


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