Maximizing the Utilization of ASEAN-Led Free Trade Agreements

The report examines why MSMEs in the ASEAN region have low utilization rates of free trade agreements despite their significant contribution to regional GDP and employment. It identifies key barriers, including lack of information, complex Rules of Origin (RoO), and limited access to finance. The document compares ASEAN's experience with other regions and proposes a coordinated information campaign, financial infrastructure improvements, and the simplification of certification processes to better integrate MSMEs into regional and global value chains.

• MSMEs are critical to the Southeast Asian economy, accounting for 96% of all enterprises and contributing between 30% and 53% of the total GDP of ASEAN.
• Despite the proliferation of over 90 FTAs involving ASEAN and its Member States as of 2013, MSMEs have generally not benefited from these agreements and show low utilization rates.
• The primary reasons for low FTA utilization among ASEAN-based firms include a lack of information, low margins of preference, and high administrative costs related to Rules of Origin (RoO) and Certificates of Origin (CoO).
• Specific national data shows varying utilization rates: in 2012, the utilization rate for Thai-based firms fell to 47.3%, while Indonesian-based firms showed a use rate of only 16 to 17%.
• The Philippine government's "Doing Business in FTAs" (DBFTA) initiative is cited as a successful model of a coordinated information campaign that increased FTA use among local firms.
• Access to finance remains a critical barrier for MSMEs to expand into new business opportunities and engage with FTAs, and financial liberalization alone is deemed insufficient to solve this.
• The report recommends accelerating the negotiation of the Regional Comprehensive Economic Partnership (RCEP) to consolidate existing ASEAN FTAs and reduce the confusion caused by overlapping commitments.
• MSMEs face significant technical hurdles with Rules of Origin, specifically the regional-value content requirement, which is typically around 40% in most ASEAN-led FTAs.

APA

Tambunan, T., & Chandra, A. C. (2014). Maximizing the Utilization of ASEAN-Led Free Trade Agreements. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/tkn_maximizing_asean.pdf

Chicago

Tambunan, Tulus, and Alexander C. Chandra. Maximizing the Utilization of ASEAN-Led Free Trade Agreements. International Institute for Sustainable Development, 2014. https://www.iisd.org/system/files/publications/tkn_maximizing_asean.pdf.

Wikipedia

{{cite report |last1=Tambunan |first1=Tulus |last2=Chandra |first2=Alexander C. |title=Maximizing the Utilization of ASEAN-Led Free Trade Agreements |publisher=International Institute for Sustainable Development |date=March 2014 |url=https://www.iisd.org/system/files/publications/tkn_maximizing_asean.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{tambunan2014maximizing, author = {Tambunan, Tulus and Chandra, Alexander C.}, title = {{Maximizing the Utilization of ASEAN-Led Free Trade Agreements}}, institution = {International Institute for Sustainable Development}, year = {2014}, month = mar, url = {https://www.iisd.org/system/files/publications/tkn_maximizing_asean.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }