Strengthening the Regional Investment Agreements for Promoting International Trade in ASEAN Economic Community

• Main Authors: Muchammad Zaidun, Mas Rahmah
• Format: Book Section PeerReviewed
• Language: English; Indonesian; English
• Published: AIS, MITI Malaysia KPT dan Pusat Pengajian Antarbangsa Universiti Utara Malaysia 2012
• Subjects: K Law; K1112-1116 Investments
• Online Access: http://repository.unair.ac.id/98930/1/6%20STRENGTHENING%20THE%20REGIONAL%20INVESTMENT%20AGREEMENTS%20FOR.pdf; http://repository.unair.ac.id/98930/2/6%20PG%20kadep.pdf; http://repository.unair.ac.id/98930/3/6t%20STRENGTHENING%20THE%20REGIONAL%20INVESTMENT%20AGREEMENTS%20FOR%20PROMOTING%20INTERNATIONAL%20TRADE%20IN%20ASEAN%20ECONOMIC%20COMMUNITY.pdf; http://repository.unair.ac.id/98930/
• Institution: Universitas Airlangga

This paper analyses the important of regional investment agreements for promoting international trade in ASEAN countries. To visualize the above idea, this work will explain the roles of regional investment agreements to serve investment, trade facilitation and to protect regional investment interests. It is argued that regional investment agreements can serve as a vehicle for dialogue, coordination on and to response regional issues including regulatory harmonization, infrastructure development, and collaboration among members to facilitate investment. The paper shows how regional agreements will commit to eliminate barriers on substantially trade and investment, create positive welfare gains, the productivity and stimulus to growth in the region. This paper also analyses the effect of the establishment of an ASEAN Economic Community (AEC) by 2015 to the regional investment policies. AEC aiming at transforming ASEAN into a single market and production base with a highly competitive economic region, equitable economic development, free movement of goods, services, investment, skilled labor, and freer flow of capital, will likely accelerate regional integration and cooperation in the investment sectors fully integrated into the international trade. Then, this work demonstrates the implementation of regional investment cooperation into the formal instruments/agreements of investment policy architecture promoting and protecting cross border investment among nationals of ASEAN member states, such as ASEAN Investment Guarantee Agreement (IGA), the ASEAN Investment Area (AIA) and ASEAN Comprehensive Investment Agreement (ACIA). However, it is realized that the ASEAN members may resist and protest against the regional investment agreements because of conflicting their national interest. The paper proposed that the regional inv stment agreements need to be strengthened by harmonization and structural adjustment due to the member’s resistance and protest. This idea may spark challenge because each member has fundamental differences on the nature and character of legal and economic systems reflecting different political systems, economic and social cultures in accordance with the philosophy of life values and national interests of each country. To overcome the challenge, this paper argues that ASEAN member countries need to unilaterally and collectively come up with structuring trade and investment policy harmonization to move ahead and reap the benefits from regional investment agreement as a common tool for contesting their interest in international trade. In addition, pre agreed flexibilities to accommodate the interests of all ASEAN countries may eliminate the problem.