Southeast Asia has overcome the economic and financial crisis that it experienced in 1997 and 1998.  The economic performance of the past year exceeded most estimates as the whole East Asian region had a remarkable resurgence.  The economic recovery was made possible by national policies and programmes to reform and strengthen the financial and real sectors and by regional measures aimed at accelerating the process of economic integration to maintain the region's competitiveness as a single trade and investment area.

ASEAN exports recovered in 1999 growing by 6.4 percent from US$ 322.8 billion in 1998 to US $ 343.4 billion in 1999. The growth was helped by the continued strength of the U.S. economy, the economic expansion in Europe and the strong recovery of East Asia.  Imports, which had contracted sharply in the wake of the crisis, came back from US$ 268.8 billion in 1998 to US$ 281.8 billion in 1999.  Malaysia (15%) and the Philippines (19%) had double-digit growth in exports, while Malaysia (12%) and Thailand (18%) exhibited the strongest surge in imports. On the other hand, intra-ASEAN trade declined by 5.6 percent from US $ 33.4 billion during the first half of 1998 to US $ 31.5 billion in the first half of 1999.

ASEAN enjoyed a large trade surplus for the second year in a row.  The trade surplus rose from US$ 24.3 billion in the first half of 1998 to US$ 27.3 billion in the first half of 1999 or by 12.3 percent.  Large surpluses were recorded with the US (US$ 12.2 billion), EU (US$ 6.9 billion) and India (US$ 1.5 billion). However ASEAN continued to run a huge deficit with Japan, but this was markedly lower than in the previous period (i.e. US$ 7.4 billion in the first half of 1998 compared to US$ 5 billion in the first half of 1999).

ASEAN member states remain committed to regional economic integration.  This objective is being pursued in the areas of trade, investment, services, transport and communication, information technology, industrial cooperation, food, agriculture, and forestry.

ASEAN has agreed to advance the elimination of all import duties by 2010, ahead of the original schedule of 2015, for the six original signatories to the Agreement on the Common Effective Preferential Tariff Scheme for the ASEAN Free Trade Area - Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand.  Newer parties (Cambodia, Laos, Myanmar and Viet Nam) have committed to eliminate all import duties by 2015, with some sensitive products to follow the original date of 2018.

Demonstrating ASEAN's resolve to achieve the objectives of the ASEAN Free Trade Area, almost 83% of all products under the Common Effective Preferential Tariff scheme are already in the Inclusion List.  In the case of the original six signatories, the percentage of the Inclusion List out of their total product lists has reached 98%. 

Implementing the mandate of the ASEAN leaders, ASEAN investment missions were sent to Japan, the United States and Europe.  The missions held investment seminars to inform current and potential foreign investors of business opportunities in the ASEAN region.  The seminars provided opportunities for ASEAN to reassure the foreign audience of ASEAN's continued commitment to economic integration and open regionalism.

To strengthen its ability to compete in the New Economy, ASEAN has established the e-ASEAN Task Force, composed of government and private sector representatives, to work on a cooperation framework to facilitate the development of an electronic marketplace in ASEAN. The framework will focus on encouraging and facilitating the growth of e-commerce.  It will also include measures to narrow the digital divide in the region.  ASEAN has initiated consultations with the private sector to explore short and long-term plans for building the ASEAN Information Infrastructure.

Under the ASEAN Industrial Cooperation (AICO) scheme, related products of companies operating in two or more ASEAN countries immediately enjoy tariffs of only 0-5 percent.  With the recent improvements in the AICO scheme, including the waiver of the 30% national equity requirement for all AICO applications received between 1 January 1999 and 31 December 2000, the number of AICO applications increased from 62 to 89, 52 of which have been approved.  These approved AICO arrangements are expected to generate US$ 534 million in trade transactions per year.

Infrastructure development is one of the most essential components of ASEAN's economic integration efforts.  The ASEAN infrastructure agenda includes the ASEAN Highway Network, the Singapore-Kunming Rail Link, the trans-ASEAN energy network consisting of the ASEAN Power Grid and the Trans-ASEAN Pipeline Projects, and the ASEAN Information Infrastructure. The major challenge for ASEAN is to raise the huge resources required.  Cooperation in these areas is guided by the ASEAN Transport Cooperation Framework Plan 1999-2004 and the ASEAN Plan of Action for Energy Cooperation 1999-2004.

ASEAN's competitiveness is being promoted by cooperation projects in the areas of science and technology, environmental protection and sustainable development, and human resource development.  Cooperation on transnational issues is also intensifying, particularly in combating transnational crime.

ASEAN has undertaken several initiatives to address the social impact of the recent economic and financial crisis and to deal with the problem of poverty.  Regional cooperation in human capital development focuses on the sharing of best practices in and capacity building for employment promotion, manpower planning, skills training, social monitoring, and design of emergency social safety nets.  These projects are being implemented in the frameworks of the ASEAN Plan of Action on Rural Development and Poverty Eradication and the ASEAN Action Plan on Social Safety Nets to ensure that measures are taken to protect the most vulnerable sectors of the communities.

With all ASEAN countries having acceded now to the Agreement on the ASEAN Food Security Reserve, the total earmarked quantity for the ASEAN Emergency Rice Reserve stands at 87,000 metric tonnes.   Total rice production in the ASEAN region in the 1998/99 seasons, which was around 86 million tonnes, exceeded the total consumption demand by 14 percent.  To promote information exchange in food security, ASEAN has established the ASEAN Food Security Information Homepage at www.dft.moc.go.th.

ASEAN continued to enhance political and security dialogue and cooperation at various levels.  The annual meeting of the ASEAN Heads of Government since 1995 has provided an important venue for political dialogues and consultations at the highest level.  The Third ASEAN Informal Summit was held in Manila in November 1999.  On the occasion of the meeting, the ASEAN leaders and their counterparts from China, Japan and the Republic of Korea issued the Joint Statement on East Asia Cooperation.

The ASEAN Regional Forum continued to serve as a force for peace and stability in the Asia-Pacific.  ASEAN has reaffirmed its commitment to strengthen its role as the primary driving force of the ARF process.

ASEAN supported the implementation of the Agreement between Indonesia and Portugal on the question of East Timor and the Agreements between the United Nations and the Governments of Indonesia and Portugal of 5 May 1999 regarding the modalities for the popular consultations of the East Timorese, which were held on 30 August 1999. Some ASEAN member countries contributed to the International Force for East Timor (INTERFET) and the UN Transitional Administration in East Timor (UNTAET).  Since 28 February 2000, the UN peacekeeping force under UNTAET has been headed by the Philippines.