The benefits of boosting trade in services within ASEAN is a no-brainer. “Apart from the fact that tariffs are not applied to services, opening up the sector offers a huge potential for the region,” said a spokesperson for HSBC Global Investment Research.
But the ambition will have to be matched by real-life action and commitment from ASEAN members, said experts.
WHAT’S HOLDING ASEAN BACK?
There is much to be done to remove deep-rooted barriers such as cultural differences that affect how business is done, regulatory frameworks that vary country by country, and issues such as uneven infrastructure, legal systems and workforce skills, the experts said.
Regulatory fragmentation remains the biggest hurdle, with each country in the region having its own tax regimes, business policies, ownership rules and data management regulations, they said.
“Each of the ASEAN member states operates very differently with their own sets of regulatory frameworks … It’s not easy for foreign businesses to understand and navigate,” said Winnie Seow, international markets lead at corporate services consultancy Hawksford.
There is also a lack of recognition among some ASEAN countries of professional qualifications and corporate certifications issued overseas.
“Sometimes, clients from Singapore or Thailand want to see whether we are certified to do certain tasks or if our company meets certain data security requirements and standards,” Jansen Gunawan, a Jakarta-based freelance computer engineer, told CNA.
Jansen said there have been many occasions where these clients did not accept certificates issued by an Indonesian firm or organisation. Sometimes, they even refused to accept those issued by the Jakarta branch of a well-known international tech company.
“In the beginning, I tried to argue that my certificates were as good as those issued elsewhere. But eventually I thought, ‘Why bother? Why work with this person when the trust is just not there?’,” he said.
Even if service providers manage to overcome these hurdles and secure contracts from overseas clients, they still need to navigate differences in business culture, consumer behaviour, language barriers and bureaucratic red tape.
https://www.channelnewsasia.com/asia/focus-southeast-asia-asean-trade-services-boost-challenges-tariffs-5308946
