KUALA LUMPUR: ASIA Pacific Economic Cooperation (Apec) leaders are likely to focus more on bolstering the services sector as a vital growth engine as they shape the trade and globalisation policy for the group at its annual summit in Peru this week.
This is besides a potential key sideshow: high-level talks on the fate of the Trans-Pacific Partnership (TPP) following the pending United States leadership change from President Barrack Obama to Donald Trump, who had made opposing the TPP a key part of his presidential campaign.
The 21 member economies are also expected to review all efforts on small businesses, employment, women and youth, according to Apec secretariat executive director Dr Allan Bollard.
Apec, he said, used to be confident that it was going to grow faster than the rest of the world, but that was not the case. Much of that was due to the slowdown in traditional merchandise trade.
“So, over the last two years, chaired by China and then last year by the Philippines, we analysed the issue and decided to focus much more on what has now become by far the biggest part of the economy around the region, which is services.
“We sort of lead the world in some aspects of integrated merchandise trade. (But) we don’t lead the world in services trade. We’re trying to do that... to be in a position to do much more. So, a lot of focus will be onservices trade,” said the former Reserve Bank of New Zealand governor in a telephone interview with the NSTP group newspapers last week.
“I’m talking about how supply chain can help (companies in the region) and how electronic commerce can help them as well. Really, it is something that Malaysia has quite put on... the services competitiveness roadmap.
“We generally spend a lot of time looking at manufacturing sector but actually, most economic sectors these days are services-based sectors, and services trade is something that is growing considerably,” Bollard added.
Prime Minister Datuk Seri Najib Razak will join the likes of Russian President Vladimir Putin, Chinese President Xi Jinping, Japanese Prime Minister Shinzo Abe and Peruvian President Pedro Pablo Kuczynski at the leaders’ summit on November 19-20.
It will also mark the last appearance by Obama as the US president.
Growth among the Apec member economies softened to 3.1 per cent in the second quarter of last year, down from 3.2 per cent in first quarter and from 3.4 per cent the previous year, according to the Apec Economic Trends Analysis.
Apec groups Australia, Brunei, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, Canada, United States, Taiwan, China, Hong Kong, Mexico, Papua New Guinea, Chile, Peru, Russia and Vietnam.
Bollard said besides services sector, the forum would also focus on digital world, communications and data flows across the borders.
“Nowadays, they don’t take you into that world where people talk about tariff, Customs and so on.
They take you into the world where people talk about communication regimes, roaming, getting data across borders and so on.
“While we hear a lot about globalisation slowing down, the movement of data has been quite fast over the last 10 years. Data flows within Apec have increased about 50 times. It is a huge increase.
“For us, it is very interesting because it brings into place all businesses, which, of course, by far the biggest part of all our economies rather than just large business or state enterprises.”
Bollard said the region was no longer what it used to be, which was a poor one.
Now it has become a middle-income region with pockets of affluence, he said, citing Malaysia as an example of middle-income economy that was looked up by many in Apec.
“We are trying to look at how we
can avoid getting in the middle income trap and to keep getting growth beyond that. Middle-income economies grow differently, they grow slower, but they are more driven by consumer growth. There’s quite a focus on things like demand management, as opposed to just growth being driven by investment, although investment in infrastructure is also going to be a big driver.”
On the possible outcome from the summit, Bollard said it expected to receive a strategic study on a freetrade area for Asia Pacific, co-chaired by the US and China.
“Malaysia has been contributing to (the study). It was originally something to ensure that the TPP works. Now we’ve seen that TPP is waiting ratification and so I think they might be looking at this as a way of how to address soft globalisation going forward.”
On whether the TPP will take a backseat following Trump’s win, Bollard said Obama had made a point that the TPP ratification remained possible.
He added that Obama and other TPP leaders might meet on the sidelines of the summit.
TPP has been signed by all the member countries — Australia, the US, Japan, Canada, New Zealand, Malaysia, Brunei, Singapore, Chile, Mexico, Peru and Vietnam — but ratified by none.
Bollard said 2020 was a deadline for some big Apec projects and the biggest of them was to achieve a free and open trade in the region.
Hence Malaysia — which will be the host that year after Vietnam (2017), Papua New Guinea (2018) and Chile (2019) — will be the one “to pick up on where we are at and what comes next”, Bollard added.