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Way forward for ASEAN+3

Released at: 15:28, 02/05/2019

Way forward for ASEAN+3

Photo: AMRO

"Building Connectivity and Capacity for the New Economy in East Asia" seminar held recently by ASEAN+3 Macroeconomic Research Office (AMRO).

by Doanh Doanh

ASEAN+3 economies, after two decades of prospering with a “manufacturing-for-export” strategy, should now focus on building capacity and connectivity to leverage Industry 4.0 in order to sustain growth in the new economy, a matter underscored by participants at a seminar on “Building Connectivity and Capacity for the New Economy in East Asia” organized by the ASEAN+3 Macroeconomic Research Office (AMRO).

The key findings of the thematic study in the ASEAN+3 Regional Economic Outlook (AREO) 2019 was presented to the seminar to set the context for discussion. Speakers and participants, including high-level policymakers and senior officials of international organizations, shared their insights and perspectives on how the region could prepare itself for the new economy, sustain robust growth, and continue to embrace and benefit from globalization, at a time when protectionist tendencies in the trade and technology space are rising.

“ASEAN+3 economies have come a long way since the 1997 Asian Financial Crisis,” AMRO Director Dr. Junhong Chang said in her opening remarks. “They have collectively transformed from being a crisis-shaken region in the late 1990s to one that stood resilient against the Global Financial Crisis in the late 2000s and which is now positioning itself for many more years of rapid growth. For the next phase of economic development, the region needs to redouble its efforts to enhance capacity and cross-border connectivity in order to successfully transition to the new economy.”

In his presentation, AMRO Chief Economist Dr Hoe Ee Khor noted that while the move up the technological frontier has been and will continue to be uneven, the transformation to services is inevitable. Consequently, this will require a rethink of what capacity means and what connectivity is needed in the new economy.

The panel discussed three key drivers that will shape capacity and connectivity priorities in the region over the short to medium term. These include Industry 4.0 and the new economy, involving rapid technological advancement and a much bigger role for the services sector; maturing populations, and a rapidly growing middle class driving demand for goods and services and propelling innovation and a shift to more customized services; and deepening regional integration spurred by market forces and rising protectionist tendencies elsewhere.

The panel also noted that developing economies in the region continue to face three key challenges to growth: gaps in funding, foreign exchange, and factors.

To bridge the funding and foreign exchange gaps, the region should continue to leverage its savings and investments and strengthen the regional financial safety net to safeguard financial stability and economic resilience.

To meet the factors gap, the region should continue developing professional expertise, technology, and institutions, and leverage various initiatives to build regional capacity and connectivity, such as the Belt and Road Initiative, the Master Plan for ASEAN Connectivity, and the ASEAN Framework Agreement on Services.

AMRO is an international organization established to contribute towards securing macroeconomic and financial stability of the ASEAN+3 region, which includes the ten members of ASEAN (Indonesia, Thailand, Singapore, Malaysia, the Philippines, Vietnam, Brunei, Cambodia, Myanmar, and Laos) and China and Hong Kong (China), Japan, and South Korea.

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