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Talking Trade blog

Window of hope towards ASEAN economic integration

Published 02 August 2018

All this week, foreign ministers from ASEAN and various dialogue partners, including China, Japan, Korea and the European Union are gathering in Singapore. A key element of the ASEAN Foreign Ministers (AMM) meetings is an opportunity to take stock of where the regional grouping stands relative to its ambitious plans for integration.

While foreign ministers do not typically delve deeply into trade matters, given the challenges in the global environment, trade and economic issues are on the agenda this year.

Singapore’s Ministry of Foreign Affairs, as host, has promised to “take stock of progress in regional cooperation and chart the way forward towards implementing the ASEAN Leaders' Vision for a Resilient and Innovative ASEAN.  They will also discuss how to further strengthen ASEAN centrality and unity..."

Moving ahead with more urgency on one issue that has been on the ASEAN agenda since 2003, could go a long way towards improving ASEAN’s ability to connect.   

The ASEAN Single Window (ASW) is a digital platform meant to connect and integrate customs authorities using national single windows across ASEAN. Through the exchange of documents digitally, goods should move faster and quicker with fewer costs.

While not sounding terribly sexy, a streamlined electronic submission process for cargo clearance enabled by a single window programme could lower costs by an average of eight percent.

Despite these significant savings, little headway has been made.  Today, only five of the ten ASEAN countries (Singapore, Malaysia, Thailand, Vietnam and Indonesia) use the ASW to exchange e-ATIGA Form D (basically an ASEAN Certificate of Origin) in the ASW.

All other documents that are needed for a shipment are still transmitted electronically or manually—outside of the ASW process entirely. If ASEAN wants to realize this ambitious but extremely relevant and necessary initiative, ASEAN would have to adopt an approach that combines practicality with political willpower.

Benefits of ASW for Businesses

  • Streamlined process for transporting goods within ASEAN
  • Paperless clearance at customs, leading to efficiency and predictability of supply chains
  • Real-time updates in government-to-government, government-to-business or business-to-business communications which would help minimize disruption in supply chains
  • Easier for industries to comply with government regulations (especially in different jurisdictions)
  • Reduced cost of doing business - One-time submission of digital documents can help traders avoid duplicative administrative processes and re-use data like export declarations easily

The current dwell time when cargo arrives at an ASEAN port is unacceptably lengthy. For example, the clearance process in Indonesia takes more than three days. With the ASW, cargo should ideally be pre-cleared when it leaves the port of origin of an ASEAN member state’s port and be pre-cleared before it arrives at the port of destination.

ASW Integration with National Single Windows (NSW)

Many countries have or are implementing NSWs. TradeNet, first launched in 1989, was Singapore’s National Single Window for trade declaration.  The latest iteration, due for 2019, is called the National Trade Platform (NTP).

The United States has an Automated Commercial Environment (ACE) Single Window. ACE brings together more than 47 government agencies and has automated 269 forms required for imports and exports. This digital platform has enabled near real-time decision making by the relevant government agencies.  As a result, the waiting time at land border stations for trucks has been reduced by 44%.

It is perhaps too ambitious to expect all ASEAN members to use same NSW platform, even if this would make integration at the ASEAN level much easier.  Instead, policymakers need to work harder to create interoperability between individual NSW platforms.

Private sector involvement is integral to ensure that NSW platforms function well.  In a digital age, businesses should be able to conduct electronic communications with government agencies effortlessly.      

Political Will Needed to Open the Window

Decision-making based on consensus has served the region well. However, the search for unanimity seems to have slowed down the effectiveness of realizing the ASW. Furthermore, capitalizing on opportunities in the digital age requires agile governance.

Member states should set realistic but aggressive timelines for implementing the ASW. More importantly, member states should be resolute in adhering to the agreed deadlines. A practical work plan needs to be matched with an appropriate dedication of human and financial resources.  So far, USAID has been providing key funding the ASW since 2008.      

With the persistence of the status-quo in decision-making, the best hope for the ASW to become fully-fledged lies in the political will of member states’ leaders. The prevalence of graft is likely to impede political support for the ASW. Automating border clearance will demand increased transparency. Cracking down on rampant corruption is undoubtedly a tall, but necessary, order for ASEAN to achieve greater economic integration and growth.     

How Other Stakeholders Can Push For ASW

There is unfortunately no ‘stick’ to compel member states to meet deadlines. Nonetheless, the trade community in each member state can pressure trade policymakers. Reduced red tape in cross-border trade, especially eradicating the submission of repetitive information, will be of extra benefit to small and medium enterprises (SMEs), who are often resource strapped. Since SMEs account for more than 95% of business establishments in ASEAN, the opportunities brought about by the ASW makes it a cause worth fighting.

Towards Greater Economic Integration

Given that ‘a chain is only as strong as its weakest link,’ the success of the ASW is dependent on the quality of NSWs of each member state. The ASW has only experienced incremental progress thus far. Member states should take advantage of digitalization and be relentless in accelerating the progress of the ASW. The grit needed to underpin the ASW will be worthwhile as success of this milestone will bring the region closer to the coveted goal of establishing an integrated market and regional platform.

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Dr. Elms is Head of Trade Policy at the Hinrich Foundation in Singapore.  Prior to joining the Foundation, she was the Executive Director and Founder of the Asian Trade Centre (ATC). She was also President of the Asia Business Trade Association (ABTA) and the Board Director of the Asian Trade Centre Foundation (ATCF).

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