ASEAN-led free trade agreements (FTAs) have been generally underused by the region’s small and medium-sized enterprises (SMEs) although there are currently 92 FTAs involving the association and its member states (AMSs).

These FTAs are either already in full swing, signed but not in effect, under negotiation or still under consultation and study. While the majority are pursued bilaterally between the AMSs and their key strategic economic partners, five have been implemented under the ASEAN framework, including those with China, Japan, the Republic of Korea, Australia, New Zealand and India.

According to a survey conducted by Deni Friawan from the Indonesia-based Centre for Strategic and International Studies (2012), although the use of the Certificate of Origin in Indonesia has been on the rise in recent years, only 16-17 percent of Indonesian-based firms were using FTAs pursued by the country and/or ASEAN.

Malaysia, Vietnam and Thailand have somewhat higher rates: 24 percent (in 2012), 31 percent (in 2011), and 61.3 percent (in 2011) respectively.

Notably, the utilisation rates of bilateral FTAs pursued by an individual AMS are generally higher in comparison to those carried out under the ASEAN framework.

Indonesian-based firms’ utilisation of the Indonesia-Japan Economic Partnership Agreement was at 32 percent, compared to the utilisation of the abovementioned ASEAN-led FTAs in 2012 (ranging from two percent for the ASEAN-Australia-New Zealand FTA to 23 percent for the ASEAN-China FTA).

It appears that bilateral FTAs offer more attractive preferences for key products and have simpler rules of origin compared to ASEAN-led FTAs.

Unsurprisingly, firms capable of making use of ASEAN-led FTAs are predominantly large multinationals. The promise of the potential benefits from ASEAN-led FTAs has not apparently reached the region’s SMEs.

Based on the survey carried out by the ASEAN Business Advisory Council (ASEAN-BAC) in 2012, the lack of information on ASEAN-led initiatives and the lack of opportunities to network regionally appear to be the major barriers to their engagement in regional and international trade.

In 2012, the utilisation of the ASEAN-Australia-New Zealand FTA by Philippine-based firms reached 76.1 percent, in comparison to Thailand (24.6 percent), Vietnam (15.9 percent), and Indonesia (a mere one percent).-VNA