The Impact Of ASEAN Free Trade Area On Intra-Asean Manufacturing Trade

  • Colin Koh-King Wong Universiti Malaysia Sarawak
  • Venus Khim-Sen Liew Universiti Malaysia Sarawak
  • Mohammad Affendy Arip Universiti Malaysia Sarawak


This study investigates the effects of ASEAN Free Trade Area (AFTA) agreement on the bilateral manufacturing trade between the 10 member countries of ASEAN and 39 of their trading partners. The period ofstudy covers 1995 to 2014. Results obtained from panel data analysis of the gravity model with random effectsshow that the economic sizes, populations, relative endowments, common language and geographical factors like distance, island, landlocked and neighbour are significant determinants of the bilateral manufacturing trade for ASEAN member countries. Moreover, results obtained from the fixed effects model in this study suggests that AFTA has generatedpure trade creation effects in terms of exports. Ontop of that, AFTA has resulted in larger magnitude of trade creation effects in imports than import diversion effects. Overall, AFTA promotes trades among ASEAN member countries through the elimination of tariff and non-tariff barriers, for bringing aboutpure trade creation effects in terms of exports as well as imports and also trade diversion effects in terms of imports. In sum, this study with more recent data set covering more ASEAN trading partners shows empirical evidence to justify the success of AFTA arrangement.

How to Cite
Colin Koh-King Wong, Venus Khim-Sen Liew, & Mohammad Affendy Arip. (2017). The Impact Of ASEAN Free Trade Area On Intra-Asean Manufacturing Trade. International Journal of Business and Society, 18(3), 633-643.