SME development in ASEAN has important contribution for ASEAN economic development. Nevertheless, the establishment of ASEAN and China Free Trade Area (ACFTA) may threaten this sector. On the other way, it may also strengthen cooperation in SME development in order to increase competitiveness. ACFTA, that would generate higher trade volume between ASEAN member countries and China, will provide many opportunities for ASEAN SMEs to expand their market. There are also several challenges that should be noticed. The most serious challenge is weak competitiveness of ASEAN SME products compared to China’s products. However, it is debatable whether ACFTA create more opportunities or threats.
Keywords: ASEAN, China, trade, free trade area, SMEs
The Association of Southeast Asian Nations (ASEAN) has been one of the fastest growing regional groupings in the world (Tongzon, 1998). Small and medium enterprises (SMEs) are recognized to have important contribution in maintaining economic development in this region. Nowadays, China has been rapidly growing and recognized as one of the most powerful economic power in the world. Unquestionably, the economic integration between ASEAN and China through Agreement on Comprehensive Economic Co-Operation between ASEAN and the People's Republic of China followed by establishment of ASEAN-China Free Trade Area would generate a large internal market and more powerful bargaining position in international forum.
The emergence of China as economic power has spread fears among its competitors, include ASEAN member countries. Furthermore, the implementation of ACFTA seems worsen this situation. Through removal of tariffs and non-tariff barriers, China’s products can freely enter and dominate domestic market in ASEAN member countries. It is clear that ASEAN SMEs will be threatened if China’s products with lower price and large scale of production dominated their domestic markets.... [continues]
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(2011, 01). The Implication of Acfta: Opportunities and Challenges for Sme Development in Asean. StudyMode.com. Retrieved 01, 2011, from http://www.studymode.com/essays/The-Implication-Of-Acfta-Opportunities-And-550882.html
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