ASEAN STUDIES CENTRE SEMINAR
Wednesday, 27 November 2019 – A seminar on “Facilitation of Investment for ASEAN Participation in Global Value Chains (GVCs)” was organised by the ASEAN Studies Centre at ISEAS - Yusof Ishak Institute. The seminar was delivered by Dr. Mia Mikic, Director of the Trade, Investment and Innovation Division in United Nations ESCAP. Dr. Mikic also coordinates the Asia-Pacific Research and Training Network (ARTNeT), a network that has expanded from trade and investment issues to include the implementation of the Sustainable Development Goals (SDGs). She oversees the publication of Asia Pacific Trade and Investment Report, a flagship publication of UNESCAP.
Dr. Mia Mikic (right) talks about the integration of ASEAN member states into GVCs and establishment of regional production networks for the future. Dr Tham Siew Yean moderated the session. (Credit: ISEAS - Yusof Ishak Institute)
Dr. Mikic began her presentation with an overview of the increasing integration into global production networks of emerging economies, including ASEAN member states (AMS), based on their respective comparative advantage. While the integration into GVCs and establishment of regional production networks has contributed to economic prosperity of participating economies, several ongoing developments may affect the future development of GVCs. The GVCs’ stagnant growth rates over the past decade may indicate that they have reached a mature stage of their development while the fall in trade costs may limit the further use of GVCs for development. Given the decline in labour intensity across all sectors, advances in technology such as robotics can also undermine the use of comparative advantage which is based on relative labour costs in the AMS. Dr. Mikic shed light on the third wave of unbundling, which may lead to an increase of value chains that are based around services, rather than goods. Policy uncertainty due to the on-going US-China trade tensions and the increasing use of non-tariff measures (NTMs) may also hinder the future development of GVCs in ASEAN.
On the FDI and GVCs relationship, Dr. Mikic shared that there is a correlation between increases of the bilateral FDI inward stocks and the participation of host economies in GVCs. She further highlighted the importance of investment facilitation and the establishment of the SDGs and the global drive to attain them as a support for increasing participation in GVCs. As for the AMS, investment facilitation policies need to be prioritised besides traditional measures such as investment promotion and the use of investment incentives to attract investments into host economies. ASEAN centrality and its role in global trade and investment governance can also play an important role in ensuring a smooth transition of AMS into their next phase of sustainable development.
The Q&A discussions touched on several related issues such as the role of services liberalization in ASEAN, the importance of the ASEAN digital economy, ASEAN+1FTAs and the enlarged intra-block trade such as the RCEP and CPTPP that can potentially be used to attract more FDI into the AMS for enhancing their participation in GVCs.
Around 40 participants from the policy, business and research communities in Singapore attended the seminar.
The seminar was well-attended. (Credit: ISEAS - Yusof Ishak Institute)