Asean Free Trade Area Agreement

We should expect the Asean Free Trade Area Agreement or AFTA comes into force in 2013. The idea behind this agreement is to eliminate whatever tariff and non-tariff barriers between the member countries. The main objective is to increase the region's competitive edge as a production hub.

Its objective may sounds too good to hold, but its open market concept may kills local logistics industry particularly the transportation sector. By 2013, we will see that prime movers from our neighboring country Thailand are free to carry a different kind of commodities into Malaysia. The worst scenario is that, they are free to travel right down to Singapore--the region's most preferred port--and of course will sideline our local ports which are viewed as not being cost effective and efficiently competitive.

Currently, local transportation sector is facing problems such as high cost of Malaysian road taxes and difficulties to meet the licensing requirements. If unchecked, these problems would definitely cripple the transportation sector. In the long run, it would affects other sectors such as logistics providers, warehouse operators and freight forwarders.

To face this looming risk and challenges, logistics and transportation industries must beef up their capacity such as:

• improve and increase work efficiencies by maximizing productivity and at the same time be able to minimize operating cost.
• increase the use of information technology for better connectivity with customers
• create more innovative services
• to find better ways to do business more smartly especially by the logistics and transportation players.
• provide better infrastructure and info structure
• increase reliability
• address the quality of people in this industry by developing skillful manpower
• enlarge the scope of services to include high-end value-added services
• create multimodal transport system
• integrate local logistics sectors into internatioal supply chain
• improve the inter-agency link-ups