ASEAN ECONOMIC CO-OPERATION IN PRIMARY COMMODITIES : PRESENT AND FUTURE

Abstract

Since the formation of ASEAN in I967, there has been a proliferation of literature on ASEAN economic co-operation and related topics and issues. However, the literature on intra-ASEAN trade in Primary Commodities generally is scanty. Primary commodities are normally defined as products of land, produced by forms of agriculture (including food, agricultural raw materials and livestock) or extracted by mining and subjected to a limited amount of processing. It is a well-established fact that five of the six ASEAN nations (except Singapore) are blessed with such natural resources and primary commodities such as rubber, palm oil, timber, petroleum, maize, sugar, coffee and tin. Thus, the export earnings from these Primary Commodities constitute an important element in their foreign exchange earnings as well as their economic progress. The contribution made by the primary sector of ASEAN in foreign exchange earnings is indeed significant. In 1976, out of every dollar earned for exports, the share of primary commodities was 99 cents in Indonesia, 83 cents in Philippines, 82 cents in Malaysia, 77 cents in Thailand and 57 cents in Singapore. In addition, the contribution from the primary sector to their (ASEAN) GNP and employment was and continues to be significant. The purpose of this Academic Exercise is to examine the existing ASEAN economic co-operation in Primary Commodities. Specifically, the analysis is done for rubber and palm oil. Of these, the farmer commodity is a well-established one, while the latter is a relatively new commodity in the international trade arena. The analysis is done on each major producing country of rubber and palm oil in the areas of production and exports to detect any co-operation in terms of trading, distribution and production among the ASEAN member countries. An attempt has also been made in this exercise to suggest ways to implement future intra-ASEAN trade in Primary Commodities.