Connectivity within the Asia-Pacific Economic Cooperation region has improved, boosting regional linkages, but there are still gaps that hinder trade and transport, says a study recently presented by the APEC Policy Support Unit (PSU).
The study analyzed institutional, physical, and people-to-people connectivity in the region as well as identified the gaps and opportunities for APEC moving forward.
“It is crucial to view the three concepts of connectivity within a holistic framework because they are interrelated,” said Denis Hew, director of the PSU.
“Improved institutional connectivity, such as better customs cooperation, will strengthen transport linkages,” added Hew. “Improvement in physical connectivity, for example, better air transport infrastructure, will in turn also facilitate the movement of business people and tourists and enhance people-to-people connectivity.”
Under institutional connectivity, progress has been made by APEC, particularly in lowering intra-trade costs to make them more comparable with other regional groupings.
But improvements to further facilitate trade and transport and remove non-tariff barriers should still be implemented, suggested the study. These include fast-tracking customs modernization and the single window initiative, and introducing structural reforms, explained Akhmad Bayhaqi, senior analyst at the Policy Support Unit.
“The single window system faces challenges, such as high development cost, lack of political support and coordination among government agencies, and varied levels of IT readiness,” added Bayhaqi.
Under physical connectivity, six APEC economies occupied the top six positions in 2012, according to the UNCTAD Liner Shipping Connectivity Index, an indicator of how well an economy is connected to global shipping networks.
Other APEC economies have also been making progress in connecting to these networks. Still, there is room for raising the competence and quality of APEC economies’ maritime transport services, said the study.
On people-to-people connectivity, 91 percent of APEC Business Travel Card holders enjoyed a positive experience with the program, which currently consists of 120,000 travelers. APEC economies engaged in more than US$2 trillion in cross-border service trade each year from 2007 to 2011, and intra-regional service trade has been growing by 7 percent per year, making labor mobility critical for the region.
“In particular, there is still substantial room for the tourism industry to expand, making air transport infrastructure a critical part of enhancing people-to-people connectivity in the tourism sector,” said Bayhaqi.
Photo: Mark Fischer