Malaysian Prime Minister Anwar Ibrahim has proposed a free trade agreement between the Association of Southeast Asian Nations (ASEAN) and Gulf Cooperation Council (GCC).
The premier’s comments came at the ASEAN-GCC summit held in Riyadh last week. He added that such an agreement would be the first of its kind between ASEAN and the Middle East.
“We need to transform ASEAN-GCC relations to maximise economic potentials of our combined regions,” said Ibrahim, who is also the country’s finance minister.
Challenged posed by the current geopolitical climate require ASEAN and the Middle East to reimagine economic cooperation between them, he added.
ASEAN, a 10-member trade bloc comprising Brunei, Cambodia, Indonesia, Lao, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam, has a combined population of more than 660 million.
Its collective GDP stood at almost $3.2 trillion in 2019, ranking it as the third largest regional economy in Asia and the fifth largest worldwide.
Meanwhile, the GCC comprises six countries, namely UAE, Saudi Arabia, Qatar, Bahrain, Kuwait and Oman. Its combined GDP, according to World Bank estimates, is expected to increase to $6 trillion by the year 2050.
Chairing this year’s summit, Saudi Crown Prince Mohammed bin Salman said the volume of trade between GCC and ASEAN countries reached $137 billion, equivalent to 8% of GCC’s global trade.
GCC exports to ASEAN countries constitute 9% of total exports, while imports from ASEAN states equal 6% of total GCC imports, he added.
The GCC has plowed 4% of its foreign investments – equalling $75 billion - into ASEAN member states during the past two decades. ASEAN investment in the GCC, meanwhile, accounts for 3.4% of the incoming FDI, amounting to $24.7 billion, the Crown Prince noted.
The joint statement issued on Friday following the Riyadh summit stated that all leaders declared to enhance trade and investment flows, with special emphasis on sustainable infrastructure, renewables, petrochemicals, agriculture, manufacturing, healthcare, tourism, logistics, smart cities, connectivity and digitalization.
According to think tank and advisory service Asia House, the UAE’s trade with ASEAN countries stood at 48.34% in 2021, accounting for the highest proportion across GCC countries. Saudi Arabia was a distant second, at 33%.
Vietnam and Indonesia enjoyed ‘particularly strong trade growth with the GCC’, increasing by 235 per cent and 69 per cent respectively between 2010 and 2021, Asia House added.
Leaders agreed to hold the summit every two years, with the next one to be held in Malaysia in 2025.
Norhariti Jalil, partner at US-based growth strategy research firm DinarStandard, notes that it is part of Malaysia’s halal masterplan to connect the country's halal ecosystem with the rest of the world, especially OIC countries.
“Work on ASEAN ecosystem has been [ongoing for] more than 10 years, starting with agriculture, mainly halal food. Such a move will ease cross-border movement of halal products. Maybe for the Gulf [region], there will be more discussions needed to understand which component(s) of the ecosystem can be integrated earlier as quick wins,” Jalil added.