Oudet Souvannavong Executive Vice-President, Lao National Chamber of Commerce and Industry (LNCCI) East Asia Business and Investment Forum 24 August 2015, Kuala Lumpur, Malaysia

* Since the financial crisis and economic turn down in the USA and Europe has enhanced regional economic integration in East Asia * The ASEAN launched the ASEAN Economic Community (AEC) * ASEAN-FTAs has increased its scope through Regional Comprehensible Economic Partnership (RCEP / ASEAN + 6) * Intra ASEAN trade and investment has grown drastically following the expansion of Global Value Chains (GVC) industry networks driven by Trans-National Companies. * Intra ASEAN and East Asia FDIs increased following the of capital flow to East Asia * The expansion of GVC in ASEAN and East Asia was facilitated by the ASEAN FTAs and is anticipated to be further expanded under the RCEP

Population (millions) Brunei0.408 Cambodia Indonesia Lao PDR6.828 Malaysia Myanmar Philippines Singapore5.408 Thailand Vietnam ASEAN China1, Japan S. Korea ASEAN+32, India1, Australia N. Zealand4.512 ASEAN+63, % of World Population in 2013 ASEAN RCEP (ASEAN+6)

East Asia Regional Economic Integration Anticipated Impacts Economic Impacts Deepen the liberalization commitments (goods, services and ROO); Ease the “noodle-bowl” situation (not only in ROO but huge number of tariff schedules, and different rules) and thus enhance the utilization of FTA; Further ease the use of FTAs via its “accumulation”; Deepen economic cooperation for facilitation measures; and, Prevent the potential loss from competing initiatives (e.g., CJK FTA). + Political Impact for ASEAN and East Asia Maintain and strengthen the “ASEAN Centrality” (politically) under the pressure from TPP and CJK. 4

How Economic Gains Can be Maximized Under East Asia regional Economic Integration? * Trade in Goods * “Common concession” in tariff schedules: common in A+1 FTA * Consolidated ROOs with “co-equal” rules * Cumulation rules: common in A+1 FTA * Higher level of tariff elimination, e.g., 95% * Trade in Services * Substantive “WTO Plus” components (more than A+1 FTAs) * Trade Facilitation * Meaningful programs (many in ASEAN; but rare in A+1 FTAs) * Speed * Speedy conclusion the key for “ASEAN Centrality” 5

* Connectivity between the regions to facilitate the flow of goods and intra-regional trade and investment * Infrastructure (road, bridge, ports, logistics facilities, etc.) linking need to be put into place, this requires large investment to be made under PPP. * Trade in Goods facilitation: WTO agreements bind all members to decreasing the barriers in trade in goods * Reduction and Elimination of tariffs, Harmonize ROO, Elimination of NTM and NTBs, Facilitate Cross Border Transportation * Trade in Services: ASEAN FTAs need to focus more on the liberalization of trade in services and investment. * MRAs guaranteeing the standard of professional workers allowed to move across borders * SME Promotions * Young entrepreneurs promotions, SME information discrimination, SME finance schemes

* Further Improve Policy Environment and Public Service System * Harmonize and ensure the continuity and stability of fiscal system, financial and trade incentives * Establish joint public investment promotion service systems with bilateral or multilateral information service institutions for mutual investment. * Further Improve Investment Cooperation Mechanisms and Substances * Add, improve and sign the related legal agreements * Establish a multilevel standing institution to promote trade and investment cooperation * Establish a dispute settlement mechanism and a standing arbitration institution modeled NAFTA * Establish a security cooperation mechanism * Improve the standards for product tests, certification and traceability. * Sign relevant Mutual Recognition Agreements (MRA) * Strengthen cooperation in human resources development

* Strengthen Public Guidance for Investment Cooperation * Formulate a master blueprint for the development of related industries and a basic plan for development and construction in ASEAN * Jointly identify priority sectors for investment in ASEAN for promoting industrial development and use key and priority projects as the leverage and use cross-border economic cooperation zones and other important nodes as the platform to promote industrial investment * Develop competitive and special projects to enrich investment substances. * Establish Efficient Logistics Systems * In ASEAN Government should quickly harmonize freight transport and logistics standards * In the GMS Region it is the implementation of the CBTA

* Success Factors * The Progress of ASEAN Economic Integration – ASEAN Centrality – economy of scale with one single market * ASEAN FTAs with China, Korea and the Comprehensible Economic Relation with Japan * Improved conducive business environment and cost of “doing business” in CMLV countries * Improved cross-border trade and transport facilitation in ASEAN * Challenges * Increased NTBs and NTMs – “protectionism attitude” * Slow implementation of ASEAN Single Window, Cross Border Transport Agreement * MSMEs capacity to access East Asia Supply Chains, Finance and innovation technology.

* Shaping the East Asia Tourism Value Chains * Tourism in all East Asian countries covers more than 5% of GDP * Tourism creates jobs, farm production, SMEs and MSMEs creations in handicraft, retails and other services * Intra East Asia tourism increased and could be enhanced – benefit all countries * Challenges and what should be done * Open air policy – to reduce the cost of air fares and travelling * Ease the VISA procedures for tourism groups, one single VISA, implement the special immigration lane for East Asia – ASEAN Travel Cards -GMS Travel Cards * Promote investment in tourism infrastructure: airports, road access, hotels and other service facilities * Create join program within East Asia, ASEAN for Europe, USA, and the Rest of the World markets.