ASEAN: Regional Trends in Economic Integration, Export ... - USITC

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BOX 1.1 Definitions of foreign direct investment (FDI) and portfolio investment The Organisation for Economic Co-operation and Development (OECD) has developed the globally recognized definition of FDI. This definition is used by both the OECD and the International Monetary Fund (IMF) as part of their guidance for national statistical offices in the preparation of FDI statistics. Direct investment refers to cross-border investment made by a resident in one economy (the direct investor) with the objective of establishing a lasting interest in an enterprise (the direct investment enterprise) that is resident in an economy other than that of the direct investor. The motivation of the direct investor is a strategic long-term relationship with the direct investment enterprise to ensure a significant degree of influence by the direct investor in the management of the direct investment enterprise. The lasting interest is evidenced when the direct investor owns at least 10% of the voting power of the direct investment enterprise. (OECD, 17) Total direct investment in a given company consists of the sum of equity investment, reinvested earnings, and inter-company debt. Investment in a foreign enterprise that falls below the threshold of 10 percent voting power is defined as portfolio investment. The underlying difference between direct and portfolio investment is the investor’s motivation to significantly influence or control an enterprise. Portfolio investors “do not generally expect to influence the management of the enterprise” and are assumed to be focused on earnings resulting from the acquisition and sales of securities, rather than on long-term management control of the enterprise (OECD, 53). Source: OECD, Benchmark Definition of Foreign Direct Investment, 2008, 17, 22–23, 48–49, 53. Official government FDI statistics are commonly reported as FDI position (cumulative investment over time) or FDI flows (new investment recorded during a specific time period, generally annually or quarterly). Many ASEAN governments report FDI position and flows by country and by industry, but none, unfortunately, report FDI statistics at the level of the specific industries needed for the industry profiles discussed in chapters 3–8. Therefore, FDI data throughout this report are reported at a higher level of aggregation. Direct investment can take place through either “greenfield” FDI projects (new investment, such as construction of a new factory) or through M&A (merger with, or acquisition of, an existing company). Official data include both types of investment. In an effort to estimate FDI in certain specific industries within ASEAN, the USITC relies on databases that show particular FDI transactions, either greenfield or M&A investment projects. 14 These databases compile available information on particular investment transactions. The information can provide insight into the companies and countries involved in FDI in particular industries, but it cannot substitute for official FDI data, since the transaction values are not compiled in the same way as official FDI statistics. 15 In particular, FDI position and flows data include three components: equity 14 For greenfield FDI projects, the Commission uses the FDIMarkets database provided by the Financial Times company. For M&A transactions, the Commission uses the Zephyr database provided by Bureau van Dijk. 15 Official FDI statistics are compiled from individual country balance of payments (BOP) data and reported by each country to international organizations that report global FDI statistics, including the IMF, the OECD, and UNCTAD. IMF guidance for compiling BOP statistics can be found at http://www.imf.org/external/np/sta/bop/bop.htm (accessed April 22, 2010), and guidance on compiling international investment position statistics can be found at http://www.imf.org/external/np/sta/iip/iip.htm (accessed April 22, 2010). 1-6
transactions, reinvested earnings, and inter-company debt. In general, the available commercial databases only reflect the equity transactions component of the total. 16 Trade Facilitation, Logistics Services, and E-Commerce Trade facilitation, logistics services, and e-commerce are specific work plan elements in the ASEAN economic integration agenda. Improvements in these activities contribute to increased export competitiveness by raising firm productivity and by reducing the cost and time to export, as well as communication and information costs (table 1.3). Enhancements in these areas involve legal and regulatory reforms; customs modernization; improvements to roads, ports, and other infrastructure; and increased access to the Internet. These activities are discussed in more detail in chapter 2. TABLE 1.3 Trade facilitation, logistics services, e-commerce, and competitiveness Factor Effect on export competitiveness Trade facilitation: "The simplification, standardization, and harmonization of procedures and associated information flows required to move goods from seller to buyer and to make payments." a Logistics services: “A range of related activities intended to ensure the efficient movement of production inputs and finished products.” b E-commerce: “The buying, selling, or exchanging of goods, services, and information through electronic networks.” c Enhances productivity and efficiency, lowering trade costs. Reduces risks associated with undue delay and loss of goods during shipment. More efficient transportation and freight services reduce the cost of getting goods to markets. High-speed connectivity and the ability to complete transactions electronically facilitate communication and reduce information costs. Sources: a United Nations Centre for Trade Facilitation and Electronic Business, cited in Asian Development Bank (ADB), Designing and Implementing Trade Facilitation, 2009, 3. b USITC, Logistic Services, 2005, vii. c Acoca, Empowering E-Consumers: Strengthening Consumer Protection in the Internet Economy, 2009, 6. Information Sources Information on ASEAN for this report was obtained from a number of sources, including written submissions received in response to the Commission’s Federal Register notice announcing the investigation; 17 testimony at the public hearing held by the Commission in connection with this investigation on February 3, 2010; 18 and interviews during factfinding travel to certain ASEAN member countries, including Indonesia, Malaysia, Singapore, Thailand, and Vietnam. Key sources of published information on ASEAN were international organizations, including the OECD, International Monetary Fund (IMF), and the World Trade Organization (WTO); numerous scholarly and peer-reviewed academic publications; 16 As described by the OECD, “Users should be cautious when using the FDI data distinguishing M&A type transactions, described in this Benchmark Definition, which are different to what is generally referred to as M&A statistics produced by commercial and other sources. The former corresponds only to equity transactions that qualify as FDI (covering 10 percent–100 percent of ownership of voting power), while the latter represents the total capital of companies.” OECD, Benchmark Definition of Foreign Direct Investment, 2008, 32 and Annex 9. 17 A copy of the Federal Register notice is provided in app. B of this report. 18 A list of hearing participants is provided in app. C of this report. A summary of the positions of interested parties can be found in app. D. 1-7
Page 1 and 2: United States International Trade C
Page 3 and 4: U.S. International Trade Commission
Page 5: Abstract This report describes tren
Page 8 and 9: CONTENTS―Continued Chapter 5 Wood
Page 10 and 11: CONTENTS―Continued Tables—Conti
Page 13 and 14: Acronyms 3PL ACCSQ ACDD ACE ACIA AD
Page 15 and 16: LPI MDF MFN MOU MRA MTCC NAFTA NAP
Page 17 and 18: Executive Summary The Association o
Page 19 and 20: Infrastructure and the legal framew
Page 21 and 22: Despite tariff reductions, the regi
Page 23 and 24: CHAPTER 1 Introduction Purpose, Sco
Page 25 and 26: Participating countries also gain a
Page 27: TABLE 1.2 Export Competitiveness Fa
Page 31 and 32: Bibliography Acoca, Brigitte. Empow
Page 33 and 34: CHAPTER 2 ASEAN and Selected Region
Page 35 and 36: BOX 2.1 Timeline of important miles
Page 37 and 38: BOX 2.2 AEC Blueprint: Goals and me
Page 39 and 40: BOX 2.3 ASEAN-wide free trade agree
Page 41 and 42: progress has been only achieved in
Page 43 and 44: BOX 2.4 What is ATIGA? ATIGA builds
Page 45 and 46: TABLE 2.2 Intra-ASEAN imports and e
Page 47 and 48: TABLE 2.4 Total imports, exports, a
Page 49 and 50: China is often viewed as a major co
Page 51 and 52: cases of dispute, but does not prov
Page 53 and 54: TABLE 2.6 Minimum permitted equity
Page 55 and 56: TABLE 2.8 Ease of trading across bo
Page 57 and 58: it maximally useful, such as the ab
Page 59 and 60: TABLE 2.9 ASEAN in the World Bank
Page 61 and 62: foreign ownership of express delive
Page 63 and 64: population that regularly uses the
Page 65 and 66: Bibliography Acoca, Brigitte. Empow
Page 67 and 68: ASEAN Economic Ministers. “Joint
Page 69 and 70: Malaysian Institute of Economic Res
Page 71 and 72: CHAPTER 3 Electronics: Computer Com
Page 73 and 74: competition between ASEAN countries
Page 75 and 76: Regional Integration, Export Compet
Page 77 and 78: Supporting industries Another impor
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The AEF is unique within the region
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TABLE 3.3 Computer components: ASEA
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joint R&D. 71 These advantages of l
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order to compete for investment (bo
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efficient service to tenants. Despi
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Bibliography Asian Productivity Org
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World Trade Organization (WTO). Inf
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Project to stimulate intra-ASEAN pr
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TABLE 4.2 Certain cotton woven fabr
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includes the production of cotton y
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BOX 4.1 Cotton woven apparel: Profi
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national government source stated t
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strengthen supplier relationships.
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Indonesia has limited potential as
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investment, 67 with much of the inv
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Bibliography Association of Southea
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CHAPTER 5 Wood-based Products: Hard
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some cases, on the export of sawnwo
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TABLE 5.1 Hardwood plywood and floo
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industry are limited, particularly
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important factors continue to hampe
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TABLE 5.3 Major intergovernmental p
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Export Competitiveness In 2008, ASE
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TABLE 5.6 Hardwood plywood and floo
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FDI in hardwood plywood and floorin
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Trade across land routes has been a
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Azarcon, Chulia J. “Comparative T
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Malaysia Timber Industry Board (MTI
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CHAPTER 6 Healthcare: Healthcare Se
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In recent years, the traditional in
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services industry by developing the
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Only a few countries export large v
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growing populations, and increasing
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has a healthcare MOU with Cambodia.
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BOX 6.1 Healthcare services: Profil
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competition for foreign patients in
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Singaporean provider provides train
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Giusti, Daniele, Bart Criel, and Xa
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Socio-economic and Environmental Re
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Within the broad priority sector, t
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Japanese automakers. Their supplier
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suppliers must be able to meet QCD
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BOX 7.2 Automotive: Profile of ASEA
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Thailand is considered to be the mo
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Despite the continued implementatio
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TABLE 7.2 Certain motor vehicle par
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Inbound Investment The investment e
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Trade Facilitation The timely movem
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Bibliography Aldaba, Rafaelita M.
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Thailand in the 2000’s. “Indust
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(2) the development of ASEAN cooper
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productive in climates further from
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ASEAN members Thailand and the Phil
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Tariff, import tariffs on palm oil
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BOX 8.1 Palm oil: Profile of ASEAN
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chain, from plantations to retailer
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TABLE 8.6 Palm oil: Intra-ASEAN inv
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Brunei Burma Cambodia Indonesia Lao
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Hickman, Martin. “Online Protest
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APPENDIX A USTR Request Letter
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A-4
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E Federal Register /Vol. 74, No. 23
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APPENDIX C Calendar of Hearing Part
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APPENDIX D Positions of Interested
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Mr. Aquino noted that the Philippin
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FTA (AANZFTA), Australian and New Z
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cumbersome rules of origin, customs
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APPENDIX E Country Profiles
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BURMA ECONOMIC PROFILE Economic Ind
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INDONESIA ECONOMIC PROFILE Economic
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MALAYSIA ECONOMIC PROFILE Economic
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SINGAPORE ECONOMIC PROFILE Economic
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VIETNAM ECONOMIC PROFILE Economic I
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TABLE F.1 Agro-based products: Prio
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TABLE F.3 Electronics: Priority sec
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TABLE F.4 Healthcare: Priority sect
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TABLE F.5 Textiles and apparel: Pri
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