By Azlan Othman
An economic bonanza awaits consumers in Brunei following the Chinese-Asean Free Trade Area (CAFTA) Agreement that came into effect yesterday.
Foremost among the beneficiaries will be motorcar owners in this country where vehicle ownership is relatively high.
For instance, the tariff for tyres and vehicle accessories that earlier stood at 20 per cent will now be a mere 5 per cent under the new FTA.
That aside, the agreement provides for a number of consumer products from China to be imported here on a zero-tariff basis.
At the same time Brunei could reap the advantage of CAFTA by enhancing its exports of seafood and halal products as well as other commodities to China.
These are some of the salient points highlighted during an interview the Weekend Bulletin had with the Ambassador of the People's Republic of China Madam Tong Xiaoling on CAFTA and how it would impact the people in general.
The CAFTA which came into force on January 1, 2010 marks a significant progress of the economic integration between China and Asean countries.
Asked how she sees China-Brunei relations under the larger context of CAFTA, the Ambassador said Brunei Darussalam is blessed with good social order, ever-growing business and consumers with high purchasing power.
His Majesty's government has managed to diversify Brunei's economy to relieve its heavy dependence on oil and gas. Under the CAFTA, the free flow of capitals, technologies, products, services and labour resources will provide Brunei with unprecedented opportunities.
Since the establishment of diplomatic ties, China-Brunei relations have seen fast, smooth and healthy development. Besides traditional cooperation in oil and gas, new achievements have been registered in agriculture, fisheries, Halal products, infrastructure construction, touris, etc.
The CAFTA Forum will be held in early January 2010 in Nanning, China's Guangxi Zhuang Autonomous Region. Dato Paduka Lim Jock Hoi, Permanent Secretary at the Ministry of Foreign Affairs and Trade of Brunei Darussalam, will lead a delegation to attend the Forum.
"We firmly believe with the introduction of the CAFTA and with the concerted efforts of all parties, China-Asean cooperation will reap more tangible fruits while China-Brunei relations will be further enriched and elevated".
She said that CAFTA covers a population of 1.9 billion and a combined gross domestic product of US$6 trillion. It is the world's largest trading bloc in terms of population and the third largest in terms of trading volume.
Trade between China and Asean countries has picked up rapidly in the past decade, expanding from US$19.5 billion in 1995 to a total worth of US$231 billion in 2008. More notably in the past four years, trade has doubled between China and Asean. It is predictable that the CAFTA will exert great influences upon China-Asean economic and trade cooperation in the following aspects.
First, as emerging economies, China and Asean have been attracting global attention for their commendable economic achievements and have been considered as the locomotive of the world's economic growth. The CAFTA's establishment will bring tangible benefits to the region and the whole world, and will also contribute to global efforts to combat the international financial crisis.
Second, starting from January 1, 2010, the tariff of about 90 per cent of the commodities traded in China and Asean's six founding countries, namely Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, will be reduced to zero, while for Asean's other four countries, the zero-tariff provision will be effectuated as of 2015.
Generally speaking, the trades of China and Asean complement each other despite some similar products between them. Under the zero-tariff arrangement, China and Asean will enjoy different economic benefits. The intra-regional trade volume will soar up even further.
Third, China and Asean remain the world's major manufacturing bases, and this advantage hasn't changed although the global economy is in a process of readjustment due to the international financial crisis.
The CAFTA will help major economies to upgrade their economic and trade structure, by way of which to develop a new competitive advantage for the whole region.
Last, not only will more Chinese and Asean companies prefer to invest within the integrated market, since market risk and uncertainty are lowered, but also US, European and Japanese companies, which are interested in making inroads into Asia, will also be attracted to invest in this huge market.
China has been relatively successful in this regard as it has in place the essential determinants to attract investments. As such, the integration of Asean with China can attract more foreign corporations, which each single market cannot attract otherwise.
Borneo Bulletin
