SEACO Introduction Speech
Sponsored by: SEACO Task Force, Bangladesh, Bangladesh Malaysia Chamber of Commerce & Industry (BMCCI)
Supported By: Wahed Centre, Jakarta, Indonesia
Date: 8th January, 2010
Venue:Kuala Lumpur, Seri Pan Pacific Hotel, PWTC
Regional Cooperation between OIC countries in South-South East Asia
Towards a SEACO - FTA
Introduction: The need for strengthening regional socio-economic cooperation has never been greater. Against the global backdrop of the World's Financial Crisis and recession, the breakdown in WTO Talks, Climate Change; coupled with an EU-style East-Asian Economic Community, the OIC countries in South and Southeast Asia need to take steps to enhance regional trade, investment and overall cooperation.However, no framework for similar institutional cooperation for social-economic cooperation exists among OIC countries In South and South Asian Region. It has therefore, been proposed that the creation of the South East Asian Cooperation (SEACO) will bring about the desired integration among the participating states If SEACO is established, it will comprise Bangladesh, Brunei, Indonesia, Malaysia and Maldives.
So what are the first steps towards this goal of regional cooperation?
If you recall the EU began with just 6 European countries in the late 1950s, entering into an FTA and now it has become a 27-country economic union within just 50 years and has emerged into an economic superpower. We believe we have to follow the same strategy, so how do we undertake this?
At the end of the 10th Islamic Summit Conference 17th October 2003 at Putrajaya Press Conference held by Dr. Mahathir Mohamad, then Prime Minister of Malaysia, in response to the OIC Business Forum proposal of an Islamic Free Trade Area (IFTA), whether it was realizable, Dr. Mahathir Mohamad's response was 'it should be seriously considered by the OIC countries ... FTA's may be implemented by 3 - 4 OIC Countries having similar levels of economic development. This FTA's may be gradually expanded.
'The collapse of the CANCUN talks has led to the surge of FTA Agreements; these are promoting links between Asian countries to pursue their own regional blocs. The WTO recognizes more than 200 FTA's, with more than 140 already in force.
The volume of trade under preferential agreement has increased to more than half of the World total; FTA's are now seen as an essential vehicle of international trade policy complementary to the Multilateral Trading system. FTA's can therefore, provide positive complementary pressure to negotiate new WTO Agreements.
We, therefore, believe a bilateral FTA between Bangladesh and Malaysia should be pursued seriously as the necessary first step towards SEACO regional cooperation.
This FTA will then create the foundation for the regional SEACO FTA with the inclusion of the other OIC countries in South and South East Asia- Brunei, Indonesia and Maldives – to create a sub regional market through a SEACO – FTA of over 423 million consumers – nearly one third of the Ummah. This is the SEACO vision.
A SEACO Regional Economic Cooperation Arrangement would go a long way in removing the impediments to trade and investment within the South and South East Asian region and providing a viable framework leading to greater interaction between the private sectors, thereby encourage OIC countries in the region to fully explore their complementarities in, trade, tourism, FDI and manpower exchanges.
OIC Plan of Action:
Regional Cooperation is deemed a priority area for joint action for achieving intra-Islamic Commercial and Economic integration. The Plan of Action, the Dakar Declaration and the 10 year Plan of Action of the Extra Ordinary Session of the Makkah Mukkaramah Summit had resolved to strengthen measure in this regard.
Intra-OIC Regional and Sub Regional Cooperation:
A number of OIC Member States have already developed various structured co-operation arrangement such as the-
Gulf Cooperation Council (GCC)
Arab Common Market (ACM)
Arab Maghreb Union (UMA)
Economic Community of East African States (ECOWAS)
West African economic Council (CEAO)
Arab Cooperation Council (ACC)
Economic Cooperation Organization (ECO)
So what does SEACO market look like? I would like to present some of the key economic indicators showing SEACO's economic potential.
A Consumer market of 423 million.
> An area of 2.3 million square km.
> A Combined GDP (PPP basis) of $1.5 trillion.
> Total Trade volume of $770 Billion.
> GDP growth ranging from 4.6% - 6% per annum.
> A workforce of 194million
A Regional FTA between these countries can focus on priority need-based, investment and development sectors, critical to each country's sustainable growth and boosting mutual trade. These should include:
> Capital Markets
> Climate Change
> Food Security
> Manufacturing Relocation
> Education & Skills Development
In the wake of the global recession, countries have been compelled to re-evaluate their trade and investment policies to reduce their exposure while diversifying and "hedging" their domestic and international market opportunities and risks. China and India have weathered the financial storm commendably due to their domestic markets, however most countries' comparatively small populations will not fare as well.
A Regional FTA can offer a "3rd market" to complement countries' domestic and international markets for their goods & services. South Asia's regional market dynamism is still nascent and therefore an ideal investment destination.
It can also enable countries that have proven resilient in the global recession, such as Indonesia and Bangladesh, to provide assistance and trade links to more affected nations such as Malaysia and Maldives, who have a strong western trade dependency.
SEACO also has the potential to develop as an economic inkage between the ASEAN under 1.5 billion consumer market of the SAARC region- a region larger than China. It would create new synergies and lead to institutional linkages between the two dynamic economic growth areas in South and South East Asia.
Former PM of Malaysia and Founder of IAIS, His Excellency, Datuk Abdullah Badawi stated:
"We should actively promote and integrate markets and reduce tariffs and non tariff barriers. This can be done by promoting FTA among Member Countries while working towards and Islamic Common Market.
The Prime Minister said Intra OIC trade was only 12% of the total trade of the OIC countries intra OIC trade amounted to US$ 151 billion. Combined they represented 7% of Global trade despite the fact they posses 60% of the World's Natural Resources.
Intra OIC 12% / 13% US$ 151 billion
Intra ASEAN trade - 23% of ASEAN global trade
Intra EU trade - 70% of EU world trade.
The President of the IDB Group, Dr. Ahmed Mohammad Ali, Addressing the OIC Trade Forum, 2005:
Another avenue for enhancing intra-OIC Trade is to make effective the existing regional or bilateral trade arrangements involving OIC countries.
There are six regional trade Arrangements whose composition mainly consists of the OIC countries. ''The recent development in trade liberalization initiatives among Member Countries- either at the OIC Trade Preferential system or the regional trade arrangements or the bilateral FTA's, appear to indicate a pattern i.e. intra trade liberalization initiatives are broadly being forged either amongst the relatively developed or at the level of least developed OIC countries. In this context forging intra trade on the basis of comparative advantage type of intra trade liberalization between the relatively developed OIC Countries and the LDC's OIC Countries would lead to greater trade creation.
''The President of the IDB having welcomed the SEACO initiative has committed vide his letter dated 10th June, 2009, to adviser of SEACO Task Force Bangladesh.
"I also appreciate your proposal for formation of some Regional Economic & Trade Cooperation Arrangements among the 5 OIC Member States, namely Indonesia, Malaysia, Brunei, Bangladesh and Maldives located in the South and South East Asia. I would like to suggest that such a subject to be initiated from the concerned OIC Member States. If this initiative materialises, the Islamic Development Bank will be happy to extend its support "IDB would seriously consider extending technical support to the intended regional meeting when the concerned Members States decide to hold this meeting''.
On behalf of the SEACO Task force Bangladesh, we would like to present this SEACO Action Plan for the endorsement of this Forum:
1. FORMATION of National SEACO Task Forces
-> Bangladesh Task Force - formed
-> Malaysia SEACO Task Force - (to be formed) - we request IIAIS to take the initiative to form Task Force, with WIEF-UiTM International Centre's participation -> Indonesia SEACO Task Force - (to be formed) - We invite B.J. Habibie Centre to take initiatitive with the Wahed Centre
-> Consult Maldives & Brunei on formation of National Task Forces.
2. In conclusion, we believe that to achieve this objective it is imperative to accelerate a step-by-step OIC regional FTA approach and we therefore strongly propose the creation of the SEACO-FTA to be ultimately linked to the GCC- FTA and other OIC regional FTA's - towards a Global Islamic FTA, leading ultimately to the formation of an Islamic Common Market, which is the ultimate economic objective of the Organization of the Islamic Conference.
Chairman, SEACO Committee (BMCCI)
Bangladesh Malaysia Chamber of Commerce & Industry
Resolutions on SEACO:
1. A resolution on South East Asian Cooperation (SEACO) moved by Bangladesh was unanimously endorsed by the OIC countries and the private sectors at the INDO- IDB Seminar organized by the Govt. of Indonesia and the IDB, Chaired by H.E. Habibie and co-chaired by the President of IDB, was held in the historic City of Bandung (11-18 December, 1992).2. Subsequently recommended by the 11th general Assembly of the Islamic Chamber of Commerce & Industry in Kuala Lumpur (6th-7th December, 1993).3. Endorsed by the International Seminar on the Islamic Common Market held in Dhaka (18-20th December, 1993)4. The Foreign Minister of Bangladesh in a letter dated 12th May 1994 to his counterparts in Brunei, Indonesia, Malaysia and Maldives, forwarded the SEACO proposal to ascertain the reaction of their respective Governments towards holding informal consultations on the idea of forming SEACO and convey the same to the Government of Bangladesh.5. It is important to note that SEACO was in agenda of the official talks between the Prime Minister of Bangladesh and Malaysia, H.E. Sheikh Hasina and H.E. Tun Dr. Mahathir Mohammad, in Kuala Lumpur in 1996.6. SEACO was endorsed by the 24th , ICFM in Khartoum, 1998, 25th ICFM in Mali in 1999 and 29th ICFM in Kuala Lumpur , 20007. SEACO was endorsed by a Resolution of the 9th Islamic Summit in Doha, Qatar, 2000 under the leadership of Prime Minister of Bangladesh, Hon'ble Sheikh Hasina, MP.
|Area||144,000 Sq. Km.||329,847 Sq. Km.||1,904,569 Sq. Km.||5,765 Sq. Km.||298 Sq. Km.||2,384,479 Sq. Km.|
|Population||156 Million||25.72 Million||240.27 Million||0.40 million||0.40 million||423 million|
|GDP (PPP) Basis||$ 226.4 Billion||$ 385.2 Billion||916.7 Billion||19.58 Billion||$ 1.723 Billion||1550 billion|
|GDP per capita||$ 1,500 (PPP)||$ 15,200 (PPP)||$ 3,900||$ 51,300||$ 4,500||-----|
|Imports||$ 21.51 Billion||$ 154.7 Billion||$ 116 Billion||$ 2 Billion||$ 1.27 Billion||295 billion|
|Exports||$ 15.44 Billion||$ 198.7 Billion||$ 139.36Billion||$ 8.25 Billion||$ 113 Million||475 billion|
|Average percent of GDP growth||5.80%||4.60%||6.10%||-1.90%||5.80%||4.08%|
|Work Force||70.86 Million||11.09 Million||112 million||0.188 million||0.14 million||194 million|