AEC 5: Aviation, Telecom, Mobile Money and Retail in the ASEAN

Last week, March 17, South East Asia Network for Development (SEANET) and the ASEAN People's Forum (APF) co-sponsored a forum about the ASEAN Economic Community (AEC) in Kuala Lumpur. One of the two presentations that day was a paper,

IS MALAYSIA READY FOR THE AEC? IMPACT OF THE AEC ON SMES
by Tan Sri Dr Mohd Munir Majid, Chairman of the ASEAN Business Advisory Council, and also IDEAS Council Member.

It is a technical paper, lots of important data and reflections by an industry player. I am copy-pasting his presentation below.
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LOW COST CARRIERS (LCCS) BOOM IN ASEAN CREATES INFRASTRUCTURE CONGESTION AND PUTS PRESSURE ON HUMAN CAPITAL

1. The aviation landscape in ASEAN is changing rapidly, especially with the advent of the low-cost carriers (LCCs).

• which now account for more than half of all airline capacity in Indonesia, the Philippines, Malaysia.

• Total  weekly capacity of all carriers in ASEAN is 9.78 million seats.        

• average LCC penetration rate is 29% and LCCs’ share of capacity is expected to increase more dramatically in the next decade.               

• In 2009, LCC passenger traffic and aircraft movements at Singapore Changi airport increased 50% over previous year. 

• Six intra-ASEAN routes are now among the top ten busiest international LCC routes in the world.

2. Infrastructure build up to meet the growing LCC traffic is lacking in ASEAN and airports and terminals dedicated to LCC  operations remain the exception.

• Many of the main airports in ASEAN capitals have reached saturation point or even exceed their intended capacity, resulting  in congestion and delays.

• The LCC boom exacerbates the congestion problem, especially since LCCs typically use smaller planes with higher frequency of take-off and landings.

• Due to the lacking infrastructure and high congestion there is a problem with the availability of suitable landing and take-off slots, which has forced some airlines to take-off and arrive at unfavourable hours.

3. Human capital – The growth in the aviation sector also puts pressure on the provision on human capital: the Asia-Pacific is estimated to require 185,000 more pilots and 243,500 more maintenance personnel for the next 20 years.

RESEARCH SHOWS LIBERALISATION I N ASEAN AVIATION INDUSTRY WOULD YIELD SIGNIFICANT BENEFITS

Most studies are unanimous that the overall benefits of liberalizing the aviation industry include: 

BARRIER 1: ASEAN SHOULD ADOPT A REGIONAL TELECOMMUNICATIONS FRAMEWORK TO LOWER INTRA-ASEAN ROAMING AND IDD CHARGES BY BALANCING THE INTERESTS OF CONSUMERS AND TELCOS

RECOMMENDATIONS:

BARRIER 2: ASEAN REGULATORS SHOULD ENCOURAGE THE GROWTH OF MOBILE ADVERTISING WITH POLICIES TO PROTECT CONSUMERS’ PRIVACY AND INTERESTS

RECOMMENDATIONS:

Regulators to focus on three initiatives:

1. Defining guidelines for consumer privacy notably covering the right to access and delete personal data, sensitive information sharing, use of data for advertising purposes, resale of data, security of data storage andrecord keeping.

2. Setting up consumer friendly policies for opting in/opting out to address advertising concerns mirroring policies in more mature markets.

3. Creating a designated national authority to monitor telco performance, behavior and for conflict resolution. 

BARRIER 3: REGULATORS CAN FOSTER THE DEVELOPMENT OF MOBILE MONEY - TO BRING MOBILE MONEY SERVICE TO THE UNBANKED ASEAN POPULATION

RECOMMENDATIONS:

Regulators can help foster the development of the mobile payment segment in ASEAN by:

1. Providing a robust regulatory framework that clarifies roles, boundaries and prerequisites for

(a) telco operators, (b) financial services companies, (c) Merchants.

2. Managing and monitoring transaction fees, consumer privacy, forbidden uses and applicable controls to  protect consumers, ensure broad participation and  prevent problems such as fraud, money laundering and illegal lending or gambling

3. Selectively guiding which services/platforms should be open to different technologies/standards (to create a level playing field, prevent customer lock-in and stay on top of technology evolution) vs. where a common standard is needed (to ensure interoperability and stimulate investment).

RETAIL

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See also:
Free Trade 34: ASEAN's Bilateral and Regional FTAs, February 27, 2014
Free Trade 36: Taxation, Regulations, Trade and Rule of Law in ASEAN, August 05, 2014
Free Trade 37: Multiple Concerns and Regulations in the ASEAN, September 11, 2014
Free Trade 42: ASEAN Trade and Unilateral Liberalization Challenge, January 23, 2015 

AEC 3: PCCI Muntinlupa Forum on ASEAN Integration, February 22, 2015 
AEC 4: Malaysia's MITI Presentation, March 19, 2015