Public enterprises (PEs) are one of the major factors in the world economy. Their share of the national product in industrialized and developing countries is estimated at half that of multinational enterprises (Ramamurti 1985). In most developing countries, PEs share in the gross domestic product (GDP) ranges between 7 and 15 per cent (Hafsi et al. 1987). Public enterprises are set up and used as one of the instruments by government to achieve multiple socio-economic and political goals (Priebjrivat 1986). For example, PEs may, among other things, be expected to promote industrialization, to advance technology, to create jobs, to defend national interests, to reduce regional disparities, and to save declining industries (Vernon 1984). The 1980s, however, have witnessed a market reversal of the roles played by the public and private sectors in the industrialized economy. Instead of government control and centralized planning, there has been a renewed emphasis on markets and competition. Privatization then came into fashion. “Markctization”, as used here, refers to making the market more efficient through various forms such as changes in ownership, policy, governance, and management of the PE sector. Thus, it does not mean privatization in the narrow sense, although it does involve inviting greater participation by the private sector in providing competition or performing functions including investment and management which were previously the government's domain. Here, if the autonomy of management is extended or if methods of business and profit orientation are introduced into the operation of specific PE, it is regarded as marketization (Konig 1989).

Likewise in Asia, a remarkable economic growth has been experienced recently especially in ASEAN member countries. The private sector is becoming more efficient and its role as the engine of growth is notably increasing. The public sector meanwhile begins to reconsider its role in the economy. Together with the deficit problems, the governments of ASEAN countries are now considering the restructuring of various economic sectors (Ng and Wagner 1989). Yet, some empirical evidence both in Europe and in some Asian countries have led to the question whether privatization is the only means to improve public sector efficiency and profitability (Bishop and Kay 1989; and Ng 1989).

Non-governmental organizations (NGOs) are generally non-profit-making associations of ASEAN persons, natural or juridical, organized to promote, strengthen and realize the aims and objectives of ASEAN co-operation specifically in the social, cultural, economic and scientific fields. However, other groupings or associations which perform functions and activities that are governmental or quasi-governmental in nature, such as those of the legislature and judiciary, but are not part of the formal structure of ASEAN, can apply for a special relationship with ASEAN through the ASEAN Secretariat. Normally, NGOs establish working links with ASEAN Committees or other ASEAN bodies through the ASEAN Secretariat. Applications for ASEAN affiliation are considered by the ASEAN Standing Committee upon the recommendation of the ASEAN Secretariat.

The main objectives of ASEAN affiliation are to draw the NGOs into the mainstream of ASEAN activities so that they are kept informed of major policies, directives and decisions of ASEAN and are given the opportunity and the privilege of participating in ASEAN activities. Furthermore, affiliation is intended to ensure interaction between the existing ASEAN bodies and the NGOs. The privileges of ASEAN affiliation include the permission to use the name “ASEAN” and to display the official ASEAN emblem in correspondence and other forms of communication at its official meetings and to have access to ASEAN documents on a selective basis for research purposes. Affiliated NGOs may also be allowed the use of facilities of the ASEAN Secretariat for their official meetings in Jakarta.

ASEAN-CCI

(affiliated since 5 December 1981)

The most important ASEAN NGO is the ASEAN Chambers of Commerce and Industry (ASEAN-CCI). Over the years it has assumed a semi-official status, operating between the ASEAN Committees and the various private sector groups in the ASEAN countries. The national bodies comprising the ASEAN-CCI are the

The year 1989 probably marked the culmination of a period of significant changes in perceptions of the role of the state. The revolutionary changes and upheavals in the Communist world and the concomitant crumbling of many (communist or non-communist) dictatorial regimes in Europe and in Asia are unmistakable indications that these states have simply not delivered the goods, material and immaterial, which were promised. The romantic idea of creating a “new” or “socialist” man has proved to be a complete failure. After decades of experimentation and repeated promises, disillusionment is spreading.

It is not only in (formerly) socialist countries with their strong tradition of centralized decision making, and government interference and involvement in the economy that the role of the state in general, and of the government in particular, as an agent of political and economic development is being increasingly questioned and disputed. In fact, it can be argued that the movement for less government interference and more individual decision making originated in the late 1970s and early 1980s within the industrialized countries with already more or less open societies and economies.

Interventionist policies, restrictive regulations, and state involvement in economic activity in the industrialized countries failed to achieve low unemployment, low inflation and high economic growth when external shocks were felt in the 1970s and 1980s. Quite to the contrary, interventionism and state involvement hampered structural adjustment and, thus, made the unavoidable changes even more painful in the long run.

Whilst these observations and interpretations are valid generally and few would arguably dispute them, there must, however, be some logic and reasons behind the state's greater involvement in the production of goods and services in particular, and its interference in the economy in general earlier on.

Traditionally there have been various rationale and objectives for the state's involvement in the economy: one rationale and objective is related to macroeconomic stabilization and the realization of a certain level of economic growth. Another important rationale and objective is to achieve a, by whatever definition, “fair and just” distribution of income and/or wealth among the various socio-economic groups of society. The third major objective of economic policy making is to secure the efficient use and allocation of scarce resources. In addition, the state is often expected to play an important role as an agent of development.

Most of the recently published empirical studies on the international trade in services in general (e.g., Stern & Hoekman 1986a and 1986b; Nusbaumer 1987, Arndt 1986; Langhammer 1989) and ASEAN trade in services in particular (Pang & Sundberg 1985; Praet 1985; Lee [Tsao] Yuan 1988; Lee & Naya 1988; Arndt 1989) have ended with two important qualifications: first, they deplored a significant lack of conceptual clarity in the sense that services as “invisibles” often escape from precise definitions and that the transborder movement of a service is unsatisfactorily determined by ownership of goods and residence of persons. Secondly, they dismissed the empirical basis as weak and sometimes even non-existent as many Central Banks do not keep detailed records on financial transactions between service-receiving and service-exporting countries handled by the commercial banks (e.g., in the case of the U.K. as the third largest exporter of services in the world). Sector-specific datasets such as transport or tourist statistics would offer no better alternative as they document volumes rather than income flows. While the first caveat cannot be avoided, more can be done with the second if endeavours are made to expand the empirical basis beyond the IMF Balance of Payments Statistics which do not disaggregate transborder payments for services by regions or partner countries.

This paper contributes to the existing sources by analysing data released by three EC member countries' Central Banks (Deutsche Bundesbank, Banque de France, De Nederlandsche Bank) on payments and receipts for services traded between West Germany, France, and the Netherlands on the one hand and the five founding member states of ASEAN on the other. Overall trade between the two groups of countries is expected to account for a non-neglible share in North-South trade in services as both groups hold leading positions as suppliers and purchasers of services.

This book was prepared under the auspices of the Joint Energy Programme of the Institute of Southeast Asian Studies (ISEAS) and the East-West Center. The goals of the Joint Energy Programme, which was initiated in 1988, are to develop a data base and conduct analyses on key aspects of the energy economies of the Asian-Pacific region and its major constituent nations. A further purpose of the Programme is to utilize the expertise at the East-West Center for the development of a research capability within ISEAS with respect to major aspects of energy supply and demand of the region. A number of monographs and papers have already been completed and published under the Joint Programme.

The main objectives of this book are to assess the energy situation in ASEAN (Association of Southeast Asian Nations) and to analyse the key aspects of the energy policies of the member countries, viz. Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, in broader regional and international perspectives. The book provides a comparative analysis of the energy situation and policies in the region as well as detailed country studies of all the ASEAN countries except Brunei. (A country study on Brunei has not been included due to lack of data.)

There are primarily three reasons for focusing this study on ASEAN. First, ASEAN countries have been economically dynamic. They have all adopted export-oriented policies and have had rapid economic growth making their economies highly interdependent with the rest of the world. Second, the energy demand, especially demand for oil and gas in this region, has been spectacular – in fact, one of the highest in the world. Third, the region provides a unique combination of countries in terms of energy resources and activities. Indonesia, Malaysia, and Brunei are three major producers of oil and gas and depend heavily on these resources for foreign exchange earnings and government revenues. Singapore, the largest oil-refining and trading centre in the Asian-Pacific region, is a major exporter of petroleum products. On the other hand, the Philippines and Thailand depend overwhelmingly on imported oil. These factors make ASEAN an interesting region for energy study.

Methodology

A revised version of the Armington (1969 and 1970) approach developed by Tyers (Uehara and Tyers 1980, Lin 1986) is used here because of its ability to isolate income growth effects and to account for supply-side effects without prohibitive data requirements. In the case of ASEAN integration, this approach is advantageous because it goes beyond the estimation of trade creation and trade diversion and provides estimates of growth of exports, imports, consumption, and production. More importantly, the analysis can be done on a disaggregated industrial level which allows some analysis of changes in the structure of production in the region. It should be noted that under the Armington assumption, a country will simultaneously export, import, and produce a good for domestic consumption because the same good produced in a different country is considered to be an imperfect substitute — that is, textiles produced in the Philippines are not perfect substitutes for textiles produced in Thailand. Substitution and price elasticities as well as the extent of the tariff change will determine the change in the proportion of imports to total consumption (which is equal to total production less exports plus imports). Exports are determined by imports from partners and total production is the sum of exports plus production for domestic consumption. The model is basically demand-driven but, unlike most models of this type, supply is not perfectly elastic. Production increases are constrained by supply elasticities.

In the model, there are six countries (Indonesia, Malaysia, the Philippines, Singapore, Thailand, and the rest of the world) which are simultaneously producers, importers, and exporters of each commodity. The study looks at all manufactured goods with the exception of petroleum, or a total of 25 goods at the three-digit ISIC level. These goods comprise approximately 60 per cent of total ASEAN trade. The data represent the average for 1983 and 1984 imports and production. Price and supply elasticity estimates were imputed while substitution elasticities were assumed to be 2.0 for trade among the ASEAN countries and 0.5 for trade with the rest of the world.

ASEAN'S Economic Features

The total population of ASEAN member states reached 314.9 million in 1988. Extreme di sparity exists in the level of income among these countries. The lowest per capita Gross National Product (GNP) was US$490 for Indonesia while Brunei was placed at the top with US$17,000 mainly due to its abundant oil resources. Singapore, recognized as a Newly Industrializing Economy (NIE), had the second highest per capita income with US$10,450 and has since attained developed country status (Table 2.1). Indonesia and Malaysia, both rich in natural resources, are fast expanding their manufacturing capabilities. Thailand is also rapidly developing as an exporter of manufactures with a solid agricultural base; it has registered the highest growth rate in the region. The situation is not similar for the Philippines which is constrained with a host of socio-economic and political problems.

The region as a whole was considered a high-growth area during 1971–80 and has carried the momentum into the nineties. GDP growth in Thailand in 1990 was the highest in ASEAN — at 10 per cent — and is expected to be maintained in 1991. The GDP growth rate of the Philippines on the other hand was 2.5 percent in 1990, the lowest in the region, together with highest inflation rate at about 15 per cent. However, the average growth rate in the region is well above that of many developing economies outside the region. Singapore has been maintaining the economic pace with its usual role as an “entrepôt” for trade and a centre of production and investment with increased emphasis on high-technology activities.

A look into the sectoral share of GDP shows an increasing role of the industrial and service sector implying a continuing transformation of the economy from a primarily agricultural base to an industrial and service sector base. In 1989 the agricultural sector in the Philippines contributed 26.9 per cent to its GDP with the domination of the service sector (40%) and industry (33.1%).

As 1992 approaches, there is much discussion of the effects of the single market on third countries. The main concern of third countries is the creation of a “fortress Europe” rather than a Europe that will share its “prosperity” with the rest of the world. One of the traditionally sensitive sectors already subject to import restrictions is the textile and clothing industry. Since the EC market is one of the most important markets for textiles and clothing from countries of the Association of Southeast Asian Nations (ASEAN), it is useful to analyse how full economic integration of the European Community (EC) will affect its exports of textiles and clothing.

The aim of this chapter is to look into the various possible scenarios of the impact of the formation of the EC single market on third country imports of textiles and clothing. This includes an examination of the impact of specific EC policies on textiles and clothing on third countries, as well as any impact arising from changes in the textile and clothing industry in the EC countries after the formation of the single market.

The rest of this chapter is divided into five sections. The first section provides a general background of trends in textile and clothing production, employment, and trade of the EC and ASEAN countries relative to other countries. The second section compares the characteristics of the textile and clothing industry in each region. The third section describes EC policies towards third countries on textiles and clothing and the impact on the ASEAN countries up to the present time. We then look into a set of alternative scenarios regarding the impact of the EC single market on ASEAN trade in textiles and clothing. Some conclusions and recommendations are provided at the end of the chapter.

General Trends in Production, Employment, and Trade in Textiles and Clothing

To understand EC policies on textiles and clothing, we begin with a background on the trends in production, employment, and trade in textiles and clothing of the EC and ASEAN countries relative to other countries.