Cover

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Title Page, Copyright

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pp. i-iv

Contents

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pp. v-vi

List of Tables

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pp. vii-x

List of Figures

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pp. xi-xii

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Foreword

Tan Sri Rebecca Fatima Sta Maria

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pp. xiii-xv

ASEAN turns fifty this year. And there is cause for celebration. For a group of countries that are so economically, politically and culturally varied, it has achieved much over the five decades. To appreciate the strides made by this regional grouping one has to explore ASEAN’s economic journey from modest goals of a preferential trade agreement (PTA) in the 1970s through the establishment of the ASEAN Free Trade Area (AFTA) in the 1990s, the AEC Blueprint 2015 (AEC 2015) and AEC Blueprint 2025 (AEC 2025).

The ASEAN story reflects the grouping’s step-by-step confidence building...

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Preface

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pp. xvi-xvii

A frequent question raised in discussions on Free Trade Agreements (FTAs) is the impact of liberalization in services on inflows of Foreign Direct Investment (FDI). Policymakers are concerned if liberalization has encouraged FDI inflows while researchers are keen to test the same relationship. Likewise, the public is curious as to whether FTAs are as useful as touted. Yet the relationship between liberalization and inflows of FDI is not as straightforward for services as in the case of manufacturing. This is because the services sector is frequently highly regulated due to information...

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Acknowledgements

Tham Siew Yean and Sanchita Basu Das

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pp. xviii-xix

This book would not have made it without the kind support from many within the ISEAS – Yusof Ishak Institute, Singapore. We sincerely thank ISEAS Director, Mr Tan Chin Tiong, for his unwavering support from the start to the completion of this book project. His trust in us, as coordinators of the project and subsequently as the editors of the book, has spurred us to do our very best. We also thank Dr Ooi Kee Beng, former Deputy Director of ISEAS, for his kind suggestions and advice over the course of the project....

Abbreviations

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pp. xx-xxiv

About the Contributors

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pp. xxv-xxviii

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1. Introduction

Tham Siew Yean and Sanchita Basu Das

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pp. 1-41

In the last two decades, the services sector has gained increasing importance in terms of its contribution to a country’s Gross Domestic Product (GDP) and employment. Its share in total GDP for the Organisation for Economic Co-operation and Development (OECD) countries has grown from 70 per cent in mid-1990s to 75 per cent more recently, while its share for the countries in East Asia and Pacific has moved up from 37 per cent to 48 per cent over the same period. It further accounts for about 70 and 47 per cent respectively of total...

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2. Reforming Indonesia's Logistics Sector

Titik Anas and Nur Afni Panjaitan

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pp. 42-76

Indonesia’s services sector is relatively small at 42 per cent of Gross Domestic Product (GDP), compared to an ASEAN average of 47.3 per cent and a world average of 68.3 per cent in 2014. The share of services to GDP increased marginally from 40.6 per cent in 2011 to 42 per cent in 2014. Services trade as a share of total trade is also relatively low at about 6.4 per cent in 2014 compared to the world average of 13 per cent. Furthermore, compared to the manufacturing sector, policies governing the services sector are relatively more restrictive, as for example...

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3. FDI Liberalization in Malaysia's Logistics Services

Tham Siew Yean

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pp. 77-109

The use of a foreign direct investment (FDI)-led development strategy in Malaysia started in the early 1970s when the first Free Trade Zone was established to attract FDI for manufacturing development. With this early mover advantage, FDI flowed into labour-intensive manufacturing based on Malaysia’s host country advantages at that time such as cheap labour, economic and political stability, relatively good infrastructure and supportive government policies. Malaysia became one of the top ten developing host economies by the early 1990s but its rapid manufacturing...

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4. Logistics Services Liberalization in the Philippines

Gilberto M. Llanto

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pp. 110-147

Services now account for a significant share of output and employment in the Philippines. It has become a major growth driver for the Philippine economy with rising growth rates in transportation, communication, storage, finance and IT-business process management. Together with a resurgent domestic manufacturing it is expected to continue to propel growth in the immediate term. The liberalization of the services sector will be important in order to bring in foreign direct investment (FDI) that will further strengthen its growth prospects. The logistics services...

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5. Services Sector Liberalization in Singapore: Case of the Logistics Sector

Sanchita Basu Das and Evelyn Peiqi Ooi Widjaja

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pp. 148-180

Singapore’s economy has been growing at a tepid pace since 2012 due to a modest performance of the US economy, uncertainties surrounding the European Union (EU), weak growth in the East Asian region, particularly with China’s structural economic slowdown and, a general slowdown in global trade. During 2011–16, Singapore’s real Gross Domestic Product (GDP) grew at an average rate of 3.8 per cent per annum, compared to an average of 7.3 per cent during 2002–7 (Singapore Department of Statistics 2017a). The lackluster output is matched by an...

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6. Logistics Services Liberalization in Thailand

Ruth Banomyong

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pp. 181-211

Trade in services plays an important role in the economic development of a country. The Asian Development Bank (ADB) in 2012 reported that the services sector of ASEAN member countries contributed around 28.1 per cent to 70.1 per cent to their Gross Domestic Product (GDP) from 2000 to 2007 respectively (Park and Shin 2012, p. 35). Among ASEAN countries, Singapore’s services sector accounts for around 70.1 per cent of its GDP — highest in the region, followed by the Philippines (50.3 per cent), Malaysia (50 per cent), Thailand (47.7 per cent), and...

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7. Services Liberalization in Vietnam: The Case of FDI in Logistics Sector

Nguyen Anh Thu, Vu Thanh Huong and Nguyen Thi Minh Phuong

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pp. 212-241

Since the Doi Moi in 1986, Vietnam has been progressively opening up its services sector. In recent years, it has made significant efforts to liberalize the sector by participating in various trade agreements, including bilateral, and multilateral agreements related to trade in service, namely GATS (General Agreement on Trade in Services), AFAS (ASEAN Framework Agreement on Services), different ASEAN+1 FTAs and recently the EU–Vietnam FTA (EVFTA) and Trans-Pacific Partnership (TPP) agreement. In line with its commitments, Vietnam has reviewed, revised...

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8. Services Liberalization: Case of Logistics in Brunei

Tham Siew Yean

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pp. 242-267

Brunei’s economy is in the middle of a critical transition from an oil-rich and oil-dependent state to a diversified economy that is dynamic and sustainable. The rich natural endowment of oil resources has enabled Brunei to become one of the richest state in ASEAN and the world. According to IMF (2016a), based on Gross Domestic Product (GDP) (in PPP terms) per capita, Brunei is the fifth wealthiest state in the world and the second wealthiest in ASEAN in 2016, after Singapore which is ranked at number four in the world. The oil wealth, in turn, has enabled...

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9. FDI, Services Liberalization and Logistics Development in Cambodia

Vannarith Chheang

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pp. 268-296

Over the last two decades, inflows of foreign direct investment (FDI) to Cambodia has increased significantly, due to its relatively liberal investment law and pace of services liberalization, including the logistics sector. Liberalization of the services sector started soon after the country’s accession to the World Trade Organization (WTO) in 2004 through the General Agreement on Trade in Services (GATS) and later in 2007 through the ASEAN Framework Agreement on Services (AFAS). The services sector, accounting for 42.3 per cent of Gross Domestic Product...

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10. Services Liberalization in Lao PDR: FDI in Logistics Sector of a Land-linked Country

Phanhpakit Onphanhdala and Vanvisa Philavong

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pp. 297-329

Lao PDR is known as one of the poorest countries in ASEAN. In recent years, the economy has performed well. In 2015, its Gross Domestic Product (GDP) has increased by about 6.7 per cent, implying that Lao PDR is one of the top ten world’s fastest growing economy (ADB 2016). This growth is a result of exports in energy, mostly in mining and electricity, which is due to an increase in Foreign Direct Investment (FDI) in these sectors, given its high return. FDI inflows to Laos rose remarkably, with more than 80 per cent in 2012–15...

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11. Facilitating FDI for the Logistics Sector in Myanmar: Agency, Incentives, and Institutions

Min Ye Paing Hein and Ruth Banomyong

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pp. 330-360

After a few decades of self-imposed economic isolation under the Burmese Socialist Programme Party, Myanmar began to embark upon a gradual and staggered journey to reintegrate with the global economy in the 1990s. In 2011, the government under President U Thein Sein introduced a series of liberalization measures in selected sectors. The recent transition from semi-military to democratic government and the concomitant removal of the US sanctions presented a strategic window to further facilitate Myanmar’s integration into the regional and global economy. Myanmar...

Index

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pp. 361-375