Asia urged not to risk SMEs' survival in push for free trade

Mr Muhammad Lutfi
Mr Muhammad Lutfi

Asia should embrace greater integration to promote trade for economic growth, experts and former policymakers said, but this must not be at the expense of the survival of small and medium-sized enterprises (SMEs).

"It is not the 'free' of trade but the 'fair' of trade that we're seeking," said Indonesia's former trade minister Muhammad Lutfi at the Singapore Forum yesterday. Free trade should mean fair trade, he said.

CIMB Asean Research Institute chairman Munir Abdul Majid said SMEs must not be "left to die in an open environment". They are the backbone of the Asean economy and if they were to falter, unemployment will rise, said Dr Munir.

This may result in protectionism and the Asean integration process will be reversed, he cautioned.

The two experts were speaking at a panel discussion with several others on opening markets within and beyond the region. "Opening markets" usually refers to having free trade agreements, be it in the form of the Asean Economic Community, the Regional Comprehensive Economic Partnership (RCEP) or the Trans-Pacific Partnership (TPP), to name a few.

Mr Muhammad Lutfi welcomed OBOR, saying it could help Indonesia tweak the supply side of the economy. With more investments and industrial development, it could then embrace more free trade deals.

Economic integration in the region has been difficult as countries balance national policies with the common good, experts have said.

But Mr Kamal Nath, India's former commerce and industry minister, said the strong momentum for trade will continue regardless of any further regional integration. He said the demographics of the region, characterised by a vast number of young millenials, will be the key driver of trade.

But the importance of trade in driving growth in Asean could be dwindling, given the slowdown of exports from it in recent years, said Mr Long Yongtu, China's chief negotiator for its World Trade Organisation accession. He suggested that infrastructure and manufacturing investments under the One Belt, One Road (OBOR) initiative is the new trend of globalisation.

Its aim is to bring the "poorest, most closed and marginalised" into the mainstream through better connectivity brought about by investments in roads, railways and other infrastructure.

Mr Lutfi welcomed OBOR, saying it could help Indonesia tweak the supply side of the economy.

With more investments and industrial development, it could then embrace more free trade deals.

Dr Masahiro Kawai of the University of Tokyo said countries in the region could aim for an extensive Asia-Pacific free trade area with a multi-track approach, with developing countries achieving RCEP and developed ones TPP by 2020 or 2025, and all countries achieve TPP by 2030 or 2035.

A version of this article appeared in the print edition of The Sunday Times on April 03, 2016, with the headline 'Asia urged not to risk SMEs' survival in push for free trade'. Print Edition | Subscribe