The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region
Issue link: https://asiaminer.epubxp.com/i/632337
Volume 13 • Issue 1 | 2016 | ASIA Miner | 11 SOUTH East Asian leaders have created a unifed economic com- munity in the region 13 years after mooting the idea. The ASEAN Economic Community (AEC) was formalised by the 10 Association of South East Asian Nations (ASEAN) leaders during a summit in November with the hope that it can compete with China and India. The AEC forms part of a larger ASEAN Community that aims for political, security, cultural and social integration. Malaysian Prime Minister Najib Razak hailed the AEC as a land- mark achievement and urged members to accelerate integration. "The region is primed to expand exponentially." Many AECs fundamentals have been applied in the region, in- cluding the removal of tariff barriers and visa restrictions, while the ASEAN organisation is already benefting from greater political and cultural cooperation. Johns Hopkins University professor of international economics at the Europe Centre, Michael Plummer, who is based in Bologna, Italy, told Associated Press that the AEC would bolster income and employment, and provide the region with stronger economic mus- cle in facing the other giants. "ASEAN integration will help balance the economic power of Chi- na and India," he said. "Individually, ASEAN countries are, perhaps, too small to be important players in the economic and security game but as an integrated group of more than half a billion people, they would be in the major league." There is a long way to go before the AEC becomes fully functional after becoming a legal entity on December 31. The region's diversity can be a hindrance. ASEAN has 630 million people, speaking dif- ferent languages, following various faiths and governed by various systems, including rambunctious democracies, a military dictator- ship, quasi-civilian, authoritarian, monarchy and communism. Professor Plummer said, "The AEC is arguably the most ambitious economic integration program in the developing world and imple- mentation is increasingly uphill. Much remains to be done and the region faces many challenges in fnishing." He said it fell short in more sensitive areas such as opening up ag- riculture, steel, auto production and other protected sectors while progress had been slow in services liberalization. Cross-border fow of investment was restricted by large exclusion lists and caps on foreign ownership while government procurement and curbing monopolies by state-owned enterprises were highly sensitive and untouched. Although the four poorer economies - Cambodia, Laos, Myanmar and Vietnam - have until 2018 to bring down tariffs, economic in- tegration could further reinforce income equalities. There were also other hurdles, such as corruption, uneven infrastructure and un- equal costs of transportation and shipping while a wide economic gulf divides the region's rich and middle income economies of Ma- laysia, Indonesia, Singapore, Brunei, Thailand and the Philippines, and the four less developed members. THE surplus of raw materials, particu- larly metal, together with a correspond- ing massive fall in prices, have left a mark on the balance sheets of German mining machinery manufacturers. The industry expected a 3% drop in sales to 3.62 billion Euros with a continuing decline in profts expected for 2016. The downward trend has continued on the domestic market for German mining machinery manufacturers. Po- litical discussions about the future of lignite fuelled power stations "is putting pressure on investment levels," said Dr Michael Schulte Strathaus, who is chairman of the Mining Association in the German Engineering Federation (VDMA). He announced a de- cline in sales of 8% to 210 million Euro for the industry in 2015. Manufacturers expected a 3% fall in international sales to 3.41 billion Euros in 2015. The Mediterranean and Middle East account for the largest export markets (17%) while Saudi Arabia has become the larg- est customer with an 8% share. Together with Iran, governments there want to reduce their dependency on oil, according to Michael Schulte Strathaus. Mining is being developed as an additional mainstay. Latin America is the second biggest sales region with an 11% market share, followed by China with 8%, the USA with 7% and Russia with approximately 5%. The industry expects a further low single-fgure percentage decline in exports for 2016 which the president blames on weak investment lev- els due to ongoing poor results from raw material producers. They are fghting falling prices by shutting down production plants, said Michael Schulte Strathaus. Given the diffcult situation, all in all mining machinery manufacturers had done really well, he said. Signifcant adjustments to staffng levels have been avoided, with the number of employees falling by only about 600 to 13,700 in 2015. Despite the gloom, he said mining machinery manufacturers held a positive outlook on the future. "An increasing number of companies are registering a rise in customer enquiries. Some sectors are also developing new areas of business, for example in hard-rock mining. They assume that demand for the raw materials extracted in hard-rock mining will increase substantially as a result of a global expansion in al- ternative methods of energy production. "Manufacturers see the need for raw material producers to reduce costs as a further cause for op- timism, since this can only be achieved by increasing effciency. And that is where our machinery and plant come into play." A global trend toward increasing safety also benefts German man- ufacturers. He also believes that the bauma 2016 industry trade fair in Munich from April 11-17 may "provide a certain boost". South East Asia forms economic community Decline takes toll on German manufacturers VDMA mining president Dr Michael Schulte Strathaus