Tung warns on threat of regional blocs
A HONGKONG businessman has warned that the trend towards regional integration - a dominant theme around the world - might work against free trade.
Mr C.C. Tung, vice-chairman of Orient Overseas International Ltd (OOCL) , said although he was confident that Asia would have a bright future, world trade was unlikely to develop without peace and stability.
''While these initiatives (towards integration) might reduce intra-regional trade restrictions and create synergies among member states, it is crucial that they do not develop into regional trade blocs, threatening an open, free trade system,'' he said.
Presenting a paper entitled ''Asia as the dynamo of international trade'' at the International Containerisation and Intermodal Expo (ICIE) last week, Mr Tung said the dangers involved were why the world was anxious about the policies of the Clinton administration, the European Community and North American Free Trade Agreement (NAFTA).
Other current integration initiatives included ASEAN Free Trade Area (AFTA) and South American nations Argentina, Brazil, Paraguay and Uruguay moving to form a common market by 1995.
''An inward-looking United States, which preaches free trade but does not practise it, will be calamitous for world trade,'' he warned.
Mr Tung said trade would not be able to thrive if instability resulted from a power vacuum caused by the withdrawal of American forces from the Philippines, or new-found confidence as a result of economic prosperity leading to Asian countries engaging inregional disputes.
Although the combined economy of ASEAN countries and the newly industrialised economies (NIEs) was forecast to have grown at six per cent last year against a backdrop of recessions in Europe and the US, Asia also was plagued by infrastructural problems, he said.
''Power shortages, inadequate communication facilities and networks and poor domestic transportation links are holding back trade development,'' Mr Tung said.
''This is affecting China, many of the Southeast Asian countries, and the Indian sub-continent.'' Their prosperous neighbours were in a better position to tackle the issue, he added.
Mr Tung said Taiwan was going ahead with its US$325 billion, six-year plan aimed at upgrading the island's infrastructure while Singapore planned to turn the nation into an ''intelligent island'' linking every home, school and factory with computers by 2005.
Thailand was working on a second airport for Bangkok, a Bangkok mass-transit railway, 16 new highways and a major expansion of telecommunications facilities.
Mr Tung said the average annual return on US investments in many Asian countries was higher than American investment in other countries.
In 1991, the average annual returns on American investments in Singapore was 25.5 per cent; in Malaysia 30.3 per cent; in Hongkong 22 per cent; and in Taiwan 17.1 per cent - all higher than the 10.9 per cent recorded for American investments in an other foreign countries.
