Asean market faces hitch on chemicals

       Asean integration may have hit a snag with fresh moves by Indonesia and the Philippines to delay a plan to remove all petrochemical tariffs by the beginning of next year.
       Petrochemical firms in Indonesia are lobbying their government to postpone by one to two years the tariff elimination agreed by the 10 members of the Association of Southeast Asian Nations.
       The move is aimed especially at protecting polyvinyl chloride (PVC) production, said Arin Jira, chairman of the Asean Business Advisory Council.
       As a result, doubts have arisen over the prospect for full integration into a single market and production base under the Asean Economic Community (AEC)by 2015, he said at a seminar held by the Federation of Thai Industries (FTI).
       "Our stance is to stand firm with the commitment to eliminate the tariffs next year. If we agree to delay this plan, other things already agreed might have the same fate," added Mr Arin, also an FTI deputy secretary-general.
       Petrochemicals are among 12 sectors to be liberalised within Asean starting next year. A study by the Centre for International Trade Studies shows that Thailand's exports of petrochemical and plastic products to Asean would rise by 12.8% from the current $4.5 billion to $5 billion when the tariffs are eliminated.
       Mr Arin also voiced concern that Asean should consider reducing dependence on US dollars in intra-regional trade to leverage risks, given the recession's impact on US and European economies.
       About 90% of trade within Asean is denominated in dollar transactions.
       Kiat Sitheeamorn, head of the Thailand Trade Representative office, said the Chinese yuan could emerge as a major currency for Asean trade when the global economy recovers.
       "China is currently the major trade partner of Asean, thus the chance is there for the yuan to have a bigger role in regional trade," he said.
       Kasikorn Reseach Center said the recently signed Asean free-trade pact with China would give Thailand greater possibilities to capitalise on China's fast recovery from the recession.
       Thai companies in agricultural, electronics and automotive parts would have greater access to the mainland, while Chinese investors are keen to invest in processed agricultural products here.