Study Stresses Asean’s Production Capacity

Asean needs to work toward bolstering its capacity to produce both consumer goods and electronics, according to a study presented to the region’s foreign ministers Monday.

“The Asean Competitiveness Study,” conducted by consultant Mc­­Kinsey and Co, found that “mar­ket fragmentation among the 10 Southeast Asian countries lies at the heart of Asean’s competitiveness challenge,” Min­is­try of Foreign Affairs spokes­man Sieng Lapresse said Mon­day.

“McKinsey is recommending that Asean fast-track economic integration in priority sectors, such as consumer goods and electronics,” Sieng Lapresse told reporters at a briefing following the first day of the Asean Min­isteri­al Meeting.

Consumer goods are the most heavily traded sector in Asean, accounting for about 58 percent of household spending, Sieng La­presse said. Electronics production, he said, is the most important in the region, representing about 50 percent of Asean exports.

For Cambodia, electronics and con­sumer goods will become more important and relevant as the country improves its industrial capacity and promotes the country’s competitive advantages, Min­ister of Commerce Cham Prasidh said Monday.

Cambodia’s industrial sector con­sists almost solely of garments, textiles and shoes, and has been plagued in recent years by labor unrest on the one hand, and in­vest­ors’ complaints of corruption, high transportation costs and poor infrastructure on the other.

Cham Prasidh said Monday that a scheme to develop production zones along the Thai border will help increase the diversity of the industrial sector toward electronics and consumer goods.

The so-called export processing zones aim at taking advantage of the tariff bonuses allowed Cam­bo­dia as a developing country while at the same time using the ad­vanced infrastructure, equipment and know-how of Thai investors.

Talks over the production zones and other Cambodian-Thai economic cooperation were temporarily halted after the Jan 29 anti-Thai riots in Phnom Penh, which left the Thai Embassy and numerous Thai businesses sacked. Thailand and Cambodia have since normalized their relations.

The border production zones will see more attention once the July 27 national elections have passed, Cham Prasidh said.

He also emphasized the importance of tourism for Cambodia’s economic growth. Tourism is the country’s second-largest revenue generator, but it has been hit hard by the terror attacks in the US and in Bali, Indonesia, and then by the onset of severe acute respiratory syndrome earlier this year.

Asean has declared itself SARS-free, and ministers urged Western countries to cease issuing travel warnings to their citizens that keep tourists and their money away from the region.

In a joint statement issued Monday, Asean ministers urged those countries “to refrain from issuing indiscriminate travel advisories on account of SARS.”

Minister of Tourism Veng Serey­vuth said Monday that he hoped Asean foreign ministers would discuss seriously the Asean Tourism Agreement, signed by Asean leaders at last year’s Asean Summit. The agreement included vows to ease travel restrictions between countries, which, Veng Sereyvuth said, would go a long way toward improving the economy of the whole region.

The agreement also included a deadline “to bring Asean into a visa-free zone by 2005,” Veng Sereyvuth said. “I want to see some movement on that front.”