Southeast Asian trade ministers endorsed a plan on Tuesday to speed up the timetable for economic union by five years to 2015. Ministers from the 10-member Association of South East Asian Nations (Asean) said the region had to move faster or risk falling further behind in the race against China and India for foreign capital.
"We all agreed we should move in that direction," Asean Secretary-General Ong Keng Yong said at an annual meeting of trade ministers. Their decision is still pending the approval of Asean leaders, who are due to meet later this year.
Malaysia's prime minister set the tone of the week-long trade ministers' meeting on Tuesday when he warned Asean that any hesitation on forming the union could set the region back.
"If we do not hasten the creation of that regional single market, Asean may run the risk of losing its position as an important investment destination," Abdullah Badawi said. "We must take the necessary steps to protect our position as a competitive production base and as an important economic entity in the global trading environment," he said in a speech.
But the trade ministers' meeting was overshadowed by a row between Malaysia and Thailand over auto import tariffs. Thailand refuses to drop import tariffs for Malaysian car-makers, accusing its neighbour of protecting them with non-tariff barriers.
Ong said there were two main reasons for accelerating an Asean: meeting competition from other Asian economies and making Asean economies more efficient and more nimble. Asean, with external trade totalling more than $1 trillion, is home to more than 560 million people and has a collective economy bigger than India's.
Under the Asean plan for a single market, goods would flow freely across borders and curbs on flows of capital and labour would ease, making the region a cheaper place to do business and allowing home-grown businesses to expand and compete globally.
But it faces a challenging task, given its member states span the development spectrum, from a modern economy such as Singapore to two of the world's poorest nations, Myanmar and Laos.
Asean is also under pressure to cut the cost of doing business and streamline the region's web of different national customs and inspections procedures and product standards. Asean groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.