Fostering competition in Asean is the Organisation for Economic Co-operation and Development’s (OECD) latest project across the 10 member states to support the implementation of a regional competition action plan. The OECD’s Paris-based senior competition expert, Ruben Maximiano, tells Freny Patel in an exclusive interview how adopting an effective competition policy helps increase investor confidence and prevents trade being lost through anti-competitive practices
Asean stands to benefit by USD4 billion annually from e-commerce alone if governments in the 10 member states remove existing regulatory barriers to competition in the logistics sector, based on recommendations made by the OECD in its Competitive Neutrality Review of Asean’s small-package delivery services.
The association’s 10 members – Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – form one of the world’s largest markets, with more than 650 million consumers. The decision to focus on Asean’s logistics sector is because of its importance in developing e-commerce in the region.
The OECD looked into two parallel components – competition assessment reviews of specific logistics sub-sectors, and competitive neutrality reviews of small-package delivery services across its member states.
In the study, the OECD assessed the regulatory constraints on competition in the logistics sector across the Asean region, and made numerous recommendations to address restrictions found in legislation in the 10 member states, after discussions with regulators and competition authorities in the past two years.
Cross-border e-commerce transactions, the new dynamics of international trade, have seen rapid and unprecedented growth in the demand for small-package delivery services. This is very relevant to Asean, where member states are moving away from export-oriented to consumer-driven economies. The covid-19 pandemic further expedited the shift to e-commerce, says the OECD in its review.
Asean total freight and logistics market revenues were estimated at USD357.78 billion in 2019. They are expected to have dropped by 12% in 2020 to USD316.54 billion as a consequence of restrictions on mobility and activity as a result of the covid-19 pandemic, according to the review.
Freight transport within cities, on the other hand, such as courier, express and parcel delivery services, is expected to have grown by about 20% in 2020 as a result of changing consumer behaviours during the lockdown.
The covid-19 pandemic has compelled governments around the world, including from Asean, to impose social distancing measures and lock down since early 2020. While this put a strain on the brick-and-mortar retail sector due to the widespread closure of physical establishments, it accelerated the shift towards online retail and increasing use of e-commerce channels.
The OECD’s suggestions, therefore, could not have been better timed, as evidence demonstrates the critical importance of competition law and policy, especially during times of crisis. A statement issued by the Asean Expert Group on Competition, on 9 June 2020, emphasised the importance of fair competition, regional co-operation and enforcement by national competition agencies to overcome the adverse impacts of the pandemic.