Riyadh to host first GCC-Asean investment summit

via Reuters

• GCC and Asean announce 2024 conference
• Joint trade worth $137bn
• Oil 40% of GCC exports to region

Riyadh will host the first GCC-Asean Economic and Investment Conference next year amid calls for the two regions to negotiate a free trade agreement.

The conference, planned for the first half of 2024, was announced in a joint statement following the Gulf Cooperation Council (GCC) and the Association of Southeast Asian Nations (Asean) summit held in the Saudi capital on Friday.

Leaders pledged to work together to strengthen food, energy and water security and to build cooperation in green and renewable energy sources and technologies and tourism infrastructure. 

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A joint GCC-Asean Framework of Cooperation has also been agreed for 2024-2028. It sets out a roadmap for increasing cooperation across a range of sectors.

Asean’s membership consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, with a total population of more than 600 million people.

Important partners

Chairing Friday’s summit, Saudi Crown Prince Mohammed bin Salman said the volume of trade between GCC and Asean countries has reached $137 billion, equivalent to 8 percent of the GCC’s global trade.

He added that GCC exports to Asean countries constitute 9 percent of its total exports while GCC imports from Asean make up 6 percent of total imports.

Oil remains important to GCC-Asean trade, comprising more than 40 percent of the GCC’s total exports.

The crown prince said the collective GDP of GCC and Asean countries exceeds $7.8 trillion. GCC economies grew by 7.3 percent last year, while Asean countries recorded 5.7 percent growth.

Over the past 20 years, the GCC has invested 4 percent – $75 billion – of its total foreign direct investment in Asean countries. Asean investment in the GCC accounts for nearly $25 billion, 3.4 percent of total foreign direct investment.

Pursuing free trade

Malaysian Prime Minister Anwar Ibrahim urged the creation of a free trade agreement between the two blocs, saying it would be “crucial in advancing progressive, inclusive and sustainable growth”.

Efforts to establish free trade deals between regions have been protracted, with some members with exports-reliant economies, such as the UAE, independently seeking access to their key markets.

According to think tank Asia House, the UAE’s trade with Asean accounted for the highest proportion of GCC countries, at more than 48 percent of the total in 2021. 

Asia House sees GCC-Asean trade growing in importance “with the expansion of Asean’s middle classes and good growth prospects for both regions”. Asean’s middle class is predicted to increase by more than two-thirds from around 135 million in 2019 to 334 million in 2030.

According to the think tank, Vietnam and Indonesia have enjoyed particularly strong trade growth with the GCC, growing by 235 percent and 69 percent respectively between 2010 and 2021.

The joint statement issued on Friday following the Riyadh summit said the GCC-Asean Framework of Cooperation will have “special emphasis” on sustainable infrastructure, renewables, petrochemicals, agriculture, manufacturing, healthcare, tourism, logistics, smart cities and digitalisation.

Bth sides said they will also work closer to combat trafficking related to the recruitment of hundreds of thousands of Southeast Asian workers who are employed in the GCC region.

Leaders have agreed to hold a GCC-Asean summit every two years, with the next one to be hosted by Malaysia in 2025.