Asean scrambles to set trade competition rules

Asean members are set to review trade competition regulations as concerns about fast-changing business structures grow, driven by the pandemic.

According to Sakon Varunyuwatana, chairperson of the Office of Trade Competition Commission, all 10 Asean members agreed that business operators in their countries, especially small and medium-sized enterprises (SMEs), have encountered rapidly shifting business structures because of the pandemic.

Mr Sakon, who attended the first meeting of heads of trade competition offices in Asean via video conference on Oct 11, said Asean SMEs are hurting from flourishing online platforms and e-commerce squeezing them out. Another concern is the increase of mergers and acquisitions (M&A) by large, cash-rich firms in the region, he said.

In 2007, the Asean Economic Ministers endorsed the establishment of the Asean Experts Group on Competition as the official authority for the association, comprising representatives from competition offices in member states.

Mr Sakon said the meeting agreed to develop a manual to regulate the digital economy because online platforms have had a chilling effect on many domestic businesses in Asean. The deadline for a completed manual is next year.

Asean plans to submit the blueprint on trade competition to the Asean summit meeting next year.

Asean members need their own guidelines to supervise M&A because of rising prospects for such activity in Asean. Countries also need capacity building to upgrade the efficiency of trade competition law enforcement, he said.

Trade competition boards and the design of trade competition regulations need to restore businesses after Covid-19 is controlled, said Mr Sakon. The rules should focus on public health, food security, food safety, digital skills for domestic workers, and labour policy in preparation for a social crisis, he said.

“The regulations should create fair market practices and help SMEs to overcome the crisis. They should help SMEs to maximise the intra-Asean market as well as develop the economy for inclusive growth aid the digital transformation,” said Mr Sakon.

He said it is incumbent upon SMEs to learn more about how their businesses are changing, including studying constantly evolving technologies and laws related to trade competition to avoid exploitation by other operators.

“Market structures have already changed with the advance of various e-platform technologies, such as e-service, e-logistics and e-commerce,” said Mr Sakon. “Traditional businesses that can’t adapt will face tougher competition and lose market share to online retail and wholesale and tourism businesses.”

In 2020, the top five Asean countries for internet use were Brunei (95% of the population), Singapore (88%), Malaysia (81.8%), Thailand (81.7%) and the Philippines (81%).

E-commerce in Asean was valued at US$100 billion in 2019, a surge from $32 billion in 2015.