Report of the NEAT Working Group Meeting on Deepening
APT Third-Party Market Cooperation
Organized Online by NEAT China
23 June 2022
I

Overview

1. Third-Party Market Cooperation (TPMC) is an open and inclusive approach tointernational cooperation that can help business partners to draw upon each other’s
strengths and work together for better industrial development, infrastructure
improvement and higher living standard in third countries, achieving the effect of
1+1+1>3. In practice it was first proposed by China in 2015, but the idea can betraced back to 2013, when UNIDO approved the operational strategy for South-Southand triangular industrial cooperation.
2. It is more than necessary to strengthen Third-Party Market Cooperation among
APT countries. On one hand, given the facts of downward economic trends,
restructuring of value chains, and uprise of deglobalization, TPMC provides asolution for intraregional cooperation and economic integration, which is good for allparties. On the other hand, considering the diversity and complexity in the region,
TPMC provides a flexible and adaptive way for further cooperation, which is suitablefor APT countries, providing effective supplies based on comparative advantages andsatisfying diversified demands based on national conditions.
3. Under the guidelines of leaders’ consensus, MOUs and specific agreements, somespecific projects have been carried out. However, in practice APT Third-Party Market
Cooperation is far from enough. For instance, the region is still in lack of professional
TPMC mechanism covering all APT countries. Besides, the financing gap is huge,
especially in infrastructure area. Moreover, as an inevitable factor, national businessenvironments differ greatly among APT countries, which may cause inefficiency.
4. Given the importance of TPMC among APT countries and the fact of
intraregional practices far from enough, the on-line NEAT Working Group Meeting on
Deepening APT Third-Party Market Cooperation was held on 23 June 2022 to provide
a platform for NEAT members to share knowledge and experience on TPMC, toconduct joint research on the status quo and future development in the areas related to
intraregional trade, FDI and financing, particularly and most importantly, to pool
wisdom to propose a professional TPMC mechanism with all APT parties involved
and for multi-win outcomes.
5.

The list of NEAT participants is at Annex.
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IICountries Perspectives

6. Cambodia views Third-Party Market Cooperation as an open and inclusive
approach to international cooperation, which can draw on each other’s strength forbetter productivity and benefit participants for win-win outcomes. However, theregion is still encountered with some challenges, including lack of institutional
mechanism, limited participation for all APT countries, constraints of local demands,
financial gap, different business environment, etc. In order to improve economic
efficiency within TPMC, knowledge and experience should be shared, and some key
issues should be taken into full consideration such as institutionalization,marketization and multi-objective optimization. As to institutionalized mechanism,
Regional Comprehensive Economic Partnership (RCEP) is modern andcomprehensive with high quality, and covers both traditional and ultramodern issues,
which is good for TPMC. ASEAN centrality and reduction of development gap arealso important, and experience and practices can be shared from bilateral to trilateraland to multilateral level. In practice, regional platforms should be in place toencourage the engagement of private sectors in regional supply chains. CJK’s
advantages in high-end production lines and equipment manufacturing will havetechnological spillover effect through TPMC.
7. Indonesia finds after research that food security raises more concern, whichneeds long-term sustainable development and international cooperation. Food crisis
problems include low productivity, declining agricultural lands, decreasing
agricultural workforce, climate change, hunger and malnutrition, etc. APT countries
experienced a decline in the value-added share of GDP in the agricultural sector,
caused by the shift to the manufacturing and service industries. The integration offood security in nutrition, social protection, increased investment, technology,
research and development to support food and agricultural productivity are crucial infacing the pandemic and food insecurity. Intraregional trade cooperation and openness
to cooperation need to be increased, and the possibility of protectionism practices
needs to be reduced. The challenges ahead of ASEAN+3 include threat to foodavailability and productivity from the demographic perspective, transformation ofagricultural sector, and resource degradation. Therefore, stronger trade cooperation isneeded to minimize the impact of shock in food production, and ASEAN Plus Threeneed to strengthen the cooperation within the region, where TPMC provides asolution.
8. China officially proposed Third-Party Market Cooperation in 2015, and in thepast years APT countries have not only reached consensus and signed MOUs, but also
participated in many projects. Within APT countries, TPMC is significant and suitable
for the region, because it means mutual complementarity based on respective
advantages, provides impetus for economic recovery and value chains, and serves asadapted collaboration based on local demands. TPMC is a new promising model for
economic cooperation, and has already achieved practical effects of 1+1+1>3.
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However, it’s still faced with some challenges, including lack of comprehensive andprofessional TPMC mechanism, insufficient infrastructure connectivity and hugefinancial gap, and diversification of national conditions and policies. In order tofurther strengthen intraregional cooperation by means of TPMC, great efforts need tobe made. Long-term mechanism should be established to coordinate policies andprovide platforms to share information and technology. The principle ofmarket-orientation needs to be implemented in practice, and if possible APT TPMC
Fund would be good to provide professional financial service. Centrality of ASEAN
should be insisted to achieve society-centered sustainability.
9. Japan thinks that Third-Party Market Cooperation is based on "win-win-win"collaboration to promote developing industries and tackle social issues. TPMC should
be driven by sustainable growth, improved on the basis of innovation, designed tocooperate on energy and food security issues, and evaluated through SWOT analysis.
As to key areas for cooperation, infrastructure is the core project, energy and foodsecurity should draw great attention, while other areas are also important, including
manufacturing, environment and sustainability, digitalization and natural disaster.
Based on G20 principles of openness, transparency, economic efficiency and debt
sustainability, Japan can promote "Quality Infrastructure". Green/energy transition,
digital economy, life and social infrastructure, and urban development are proposed
areas to enhance infrastructure export, which are also key areas for TPMC. In
manufacturing, shortage of semiconductor supply brings a challenge for APT
countries and needs further cooperation. In energy transition and decarbonization,
Japan provides a solution in Asia Energy Transition Initiative (AETI), which is also
helpful for TPMC. In firm level, companies are required to develop human rights
policies and conduct due diligence throughout the supply chain.
10. Republic of Korea points out that Third-Party Market Cooperation can takeplace in combination of several companies with different resources and production
factors. Within TPMC, companies from CJK may cooperate with each other, or
specific CJK companies cooperate with ASEAN companies, or APT companies
cooperate with other countries. TPMC can utilize abundant resources as inputs
including labor, capital, technology, management skill and raw materials, and yieldaffluent goods and services as output. TPMC obviously raises the efficiency of thebusiness activities if more companies in different countries are cooperating. But therequired conditions include perfect information, transparent system and mutual trust,and therefore, a new system must be made. Given the national conditions andeconomic specialization of Republic of Korea, international economic cooperation isimportant and TPMC is beneficial for Korean companies. During the collaboration,
the involvement of local partners is indispensable and helpful. Although it cannot bedone within short time, a more active regional cooperation is necessary, providing
more information available for all APT countries, and guaranteeing transparent
governance with rule-based business environment and less government intervention.
311. The Philippines recognizes Third-Party Market Cooperation as a new form ofinternational collaboration. TPMC is inspired by the Belt and Road Initiative, andaims to pursue open, green and clean cooperation. As an inclusive and internationalmodel, TPMC draws upon the strengths of each for better industrial development.
TPMC has solid foundation for collaboration, with well-functioning 10+3 cooperation
mechanism, with RCEP for further cooperation, with concrete firm-level agreements,
and with promising regional collaboration. As companies are major players in TPMC,
there should be means in the third-party in ASEAN to instill mechanisms and provide
sound business environment so as to ensure quick business transactions, and thePhilippines has already made great efforts to encourage private sectors andPublic-Private Partnership (PPP). Capacity building for feasibility studies is necessary
to care for stakeholders, to contain vital information, to strengthen capacity of local
contractors and consulting services, and to evaluate economic viability of projects.
There is urgent need to strengthen the role of government as well as financing
mechanism, and the government can take actions in infrastructure program, PPP
program and convergence programs such as TRIP (Tourism Road Infrastructure
Program).
12. Singapore realizes that Third-Party Market Cooperation is important andbeneficial with flexible and adaptive forms, and APT TPMC is good to promote green
development through RCEP. With green development as a share aspiration, only incooperation can we solve the problem of climate change, and RCEP countries havealready made various efforts for carbon neutrality. Given the diversity within the"ASEAN Plus" region, ASEAN centrality is crucial for cooperation. RCEP is an ideal
platform to promote TPMC, since it facilitates post-Covid economic recovery,
reinforces regional supply chains and introduces new building blocks for regional
integration. Potential areas for cooperation include green investment, green finance,
green trade and green innovation/technology. Multiparty engagement is indispensablefor TPMC in practice. Within the region, we need inter-government cooperation
through RCEP. National governments need to improve business environment, provide
policy incentives for green development, and enhance social protection. As forbusiness and business associations, they need to strive for good business practices
such as ESG. The region is not the strongest in institution-based integration, andtherefore, RCEP at present and TPMC mechanism in the future are very important.
13. Thailand underlines the importance of Micro, Small and Medium Enterprises(MSMEs) in APT countries. Southeast Asia’s robust growth over the past 10 years has
been underpinned by MSMEs, which are the backbone and important “engines ofgrowth” in ASEAN, and therefore, strengthening MSMEs’ role through structuralreform will be critical in maintaining the region’s dynamism. Local MSMEs have thepotential to create more jobs, and promoting MSMEs’ internationalization throughparticipation in global value chains will boost national productivity, and hencewell-organized government support is required. Despite its importance, MSMEs in
Cambodia, Lao PDR, Myanmar and Vietnam (CLMV) face several challenges,
4especially lack of adequate financing to expand their business, and access to finance isthe key factor underlying MSMEs’ growth. Actions should be taken to enhance
inclusive, resilient and sustainable connectivity in trade and investment, and MSMEs
can be the pilot project. Besides, Asia’s rapid shift into using digital transactions for
MSMEs should be further encouraged. Furthermore, TPMC is also good news for
MSMEs, and TPMC can be utilized to create production capacity cooperation andalleviate poverty for APT countries.
III

Consensus Reached

14. The following issues are mentioned recognized by many experts:
15. Importance and potentials of TPMC. In the wake of globalization andregionalization, TPMC is a good option to recover and integrate the economy within
the region. Areas for cooperation include food and energy security, infrastructure,
AETI, digitalization, PPP, green economy, MSMEs, etc.
16. Both opportunities and challenges with TPMC. In order to maximize thepositive effects and cope with possible challenges of TPMC, concrete actions should
be taken to seize opportunities, and some key issues should be taken into fullconsideration, including centrality of ASEAN, mutual trust, regional diversity, role of
RCEP, capacity building, etc.
17. Principles and guidelines for TPMC. Guided by international norms andintraregional consensus, TPMC is essentially business actions carried out by market
players, so some fundamental principles need to be applied, including transparent
governance, market orientation, rule-based business environment, inclusive growth
benefiting all APT countries, ESG, etc.
IV

Policy Recommendations

18. The participants to the NEAT Working Group Meeting noted that it is essential
for APT countries to enhance intraregional cooperation and Third-Party Market
Cooperation provides a good solution, which is suitable for diversified local
conditions. In order to maximize benefits for all APT countries in both economic andsocial areas, the Working Group on “Deepening APT Third-Party Market Cooperation”
puts forward policy recommendations based on all the presentations and discussions
at the Meeting as follows:(a) Long-term cooperation mechanism and rule-based business environment

APT TPMC Mechanism or Working Group would be better. Throughnegotiation and coordination, it’s good to improve mutual trust and eliminate
misunderstandings. Besides, TPMC needs a specific platform to share5

experience and good practices, finance and technology, and information for
detailed projects and specific local demands. Moreover, multiparty
engagement for all APT countries is necessity for further and effective
cooperation.
Transparent governance for sound business environment can provide
basic guarantee for TPMC. In order to achieve open and inclusive TPMC,
transparent governance in member countries and within the region shouldplay a part, to ensure equal and fair treatment for every single TPMC
participants. Besides, the sound business environment should be rule-based
and market-oriented, where the importance of lawful regulations and market
mechanism should be emphasized and implemented in practice.

(b) Intraregional policy coordination and development convergenceCentrality of ASEAN should be insisted. As to cooperation among APT
countries, TPMC can learn experience from ASEAN in the field of goodpractices and harmonious collaboration. Furthermore, ASEAN centrality is
indispensable for satisfying diversified demands based on local conditions.
Only with ASEAN centrality, can TPMC be differentiated in appropriate
forms, which is more suitable for differentiated local needs.



RCEP would be an ideal instrument to promote TPMC. Except many
10+1 agreements, RCEP provides high-standard regulations which are goodfor regional economic cooperation. Since TPMC has no effective bindinglaws at present, RCEP can serve as lawful guarantee, to facilitate intraregional
businesses, and to protect reasonable benefits for all parties.



Convergence programs should be implemented together for shareddevelopment. For APT countries, we share the same goals of economic
growth and sustainable development, and therefore many regional andnational arrangements can be utilized and combined, such as AETI, BRI,
TRIP, etc.

(c) Major areas for cooperation with financial support
Priority areas for cooperation should be selected as pilot program.
Infrastructure is not only the major impetus for TPMC, but also thefundamental element in TPMC. Besides, food security, energy transition andgreen economy draw great attention, and should also be priorities in TPMC.
Moreover, High-end manufacturing as local advantages and high-tech R&D
as promising industries should also be emphasized within TPMC.

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

Sustainable financial support with diversified source is urgent andindispensable. Since TPMC projects are mostly time-consuming andcapital-demanding, it would be good if APT TPMC Fund could bespecifically invented, either as independent fund or within the business scopeof certain financial institutions. More importantly, there is no single
institution which can satisfy the entire financial needs. So cooperation among
financial institutions is necessity, including but not limited to WB, IMF, ADB,
AIIB, and Silk Road Fund. Besides, PPP is also a good option, not only
because of diversified financial resources, but also for the involvement ofprivate sectors.

(d) Society-centered approach with multi-objective optimizationV

With roots in business, TPMC aims high for society. On one hand, TPMC
has pilot projects as priority for economic development, and on the other hand,
TPMC should also aim at small and beautiful livelihood projects for social
sustainability. In order to promote market vitality, bring more jobs andimprove living standards, MSMEs should also be TPMC’s focus in practice.

With focus in economy, TPMC aims further for green economy. TPMC
harmonizes economic growth with environmental protection, and its
sustainability covers economic, social, cultural and environmental areas. In
practice, TPMC should be carried out with comprehensive effects in different
aspects for all APT countries.
Conclusion

19. Although confronted with some difficulties and challenges, yet undoubtedly
TPMC is more suitable for APT countries, and it will definitely witness promisingdevelopment in the future. Within the region, China, Japan, Republic of Korea andSingapore have already taken concrete actions, but more work needs to be done.
During the cooperation, multi-party engagement is fundamental, multi-source financeis necessary, and multi-objective optimization is helpful. With consensus and policies
for coordination, with major areas as cooperation priority, with qualified businesses asmarket players, and with social demands as ultimate goal, TPMC will bring overall
development effects for specific countries and among the entire region.

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Appendix: List of Participants of the NEAT Working Group Meeting on Deepening
APT Third-Party Market Cooperation
LIST OF PARTICIPANTS

BRUNEI
Lennard Pang Wei Loon
Programme Leader (Economics),UBD School of Business and Economics(UBDSBE),Universiti Brunei Darussalam
Mohammad HadiHazwan bin Dato Paduka HjHaini
Lecturer,UBD School of Business and Economics (UBDSBE),Universiti Brunei
Darussalam
CAMBODIA
KHIM Samitt
Deputy-Director of ASIA Pacific, Ministry of Commerce
INDONESIA
Mohamad Dian Revindo
Head of Business Climate and Global Value Chain Research Group, Institute for
Economic and Social Research, Faculty of Economics and Business, Universitas
Indonesia
JAPAN
SHINTANI Daisuke
General Manager, Asia, China and Oceania Department, Global Economic andPolitical Studies Division, Mitsui & Co. Global Strategic Studies Institute of Japan
REPUBLIC OF KOREA
Choong Lyol LEE
Professor,Department of Economics and Statistics,College of Public Policy,Korea
University
LAO PDR
SyviengnguenBounlutai
Deputy Chief, Department of Industry and Handicraft, Ministry of Industry andCommerce
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PHILIPPINESFrancis Mark A. Quimba
Project Director, Philippine APEC Study Center Network andSenior Research Fellow, Philippine Institute for Development Studies
Abigail E. Andrada
Research Analyst, Philippine Institute for Development Studies (PIDS)Jean Clarisse T. Carlos
Project Evaluation Office, Philippine APEC Study Center Network, PIDSSINGAPORE
Sarah Tong Yueting
Senior research fellow, the East Asian Institute of the National University ofSingapore
THAILAND
NisitPantamit
Ph. D., Director of Center for ASEAN Studies, Chiang Mai University
VIETNAM
Lam Thanh Ha
Vice Dean, Faculty of International Economic, Diplomatic Academy of Vietnam
CHINA
GuoYanjun
Director, Institute of Asian Studies,
China Foreign Affairs University (CFAU)
Cui Haining
Deputy Director, Institute of Asian Studies,
China Foreign Affairs University (CFAU)
Li Feng
Associate Professor, School of International Economics, CFAU
Miao Ji
Associate Professor, Institute of Asian Studies, CFAU
Zhang Yingjin
Research Assistant, Institute of Asian Studies, CFAU
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Qu DanResearch Assistant, Institute of Asian Studies, CFAU

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