MINUTES OF EVIDENCE TAKEN BEFORE
THE INDUSTRY AND TRADE COMMITTEE
Mr Eric Cockeram Mr Stan Crowther Sir Peter Emery Mr Derek Foster
WEDNESDAY 7 JULY 1982
Members present:
Sir Donald Kaberry, in the Chair
Mr James Hill
Mr Thomas McNally
Mr Robin Maxwell-Hyslop
Mr Martin Stevens
1
UK Trade with Association of South East Asian Nations (ASEAN) Countries
Note by the Department of Trade
Together with Annex D by the Foreign and Commonwealth Office (ASI)
(A) THE ASEAN MARKET
ASEAN, which was founded in 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand to promote their economic growth, social progress and cultural development, has become increasingly important both politically and economically. The formal links with ASEAN at Governmental level are maintained through the European Commission but this, of course, does not affect the UK's direct economic, trade and diplomatic links with the individual countries of the Association. A note on ASEAN is attached at Annex A.
2. South East Asia generally, and the ASEAN countries in particular, have a very large potential for economic growth over the next decade. The area is rich in natural resources, including many non-ferrous metals, oil and natural gas, with some deposits recently discovered. It is also among the world's largest producers of rubber, spices, timber, vegetable oils, and rice: the potential for further agricultural development in 4 of the 5 countries the exception is Singapore is considerable. In recent years the ASEAN countries have recorded some of the highest increases of income per capita and foreign exchange earnings in the developing world.
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3. They are, however, starting from a fairly low base; in 1980 they accounted for just under 1 per cent of the world's GNP and slightly less than 3 per cent of world trade (excluding intra-ASEAN trade). They are now being affected by the recession but still present considerable opportunities. The larger members of ASEAN — Indonesia, Malay- sia, the Philippines and Thailand - are developing countries with economies based primarily on agriculture; their populations range from nearly 14 million in Malaysia to 155 million in Indonesia; and they have extensive land area. All of them are seeking to expand their manufacturing and processing industries by establishing significant projects fre- quently, but not invariably, exploiting their own natural resources. They are also encouraging joint ventures, particularly those which involve transfer of technology. The intention is to add value in their own countries and thus reduce the proportion of relatively unprocessed raw materials which is exported. In developing their manufacturing bases they are looking towards export-orientated industries as well as import substitution. The UK has a great deal to offer in support of such developments, particularly in the supply of capital equipment and services for projects including power generation and transmission; oil, gas and coal extraction and processing and in the associated downstream industries; ferrous and non-ferrous metal processing; and construction work ranging from ports, harbours and airfields to the inland infra-structure needed for agricultural development. To finance much of this work, ASEAN depends heavily on aid assistance chiefly from the World Bank and the Asian Development Bank.
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Opportunities are more limited for the supply of consumer goods, some of which are subject to high tariffs. Import duties, applied as a matter of policy to some manufactured articles in order to protect newly established manufacturing industries, can also limit the opportunities for British exporters.
5 The exception in every respect is Singapore which has no mineral or agricultural resources, a small population and, in South East Asian terms, a minute land area. Its
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