Speaking at the 48th anniversary of ASEAN’s founding ceremony on the 8th of August 2015 – Thailand Foreign Minister Tanasak Patimapragorn emphasized that the union should tighten up cooperation in all fields to make the community more inclusive, which is a key principle of the Asian Economic Community(AEC).
Rewinding 8 years prior to the ceremony, the leaders of the Association of Southeast Asian Nations (ASEAN) has adopted the ASEAN Economic Blueprint on 20 November 2007 to served as a plan to guide the establishment of the AEC, due for implementation by the end of 2015.
The main goal is for regional economic integration, defined by four characteristics: a single market and production base, a competitive economic region, a region of equitable economic development, and a region fully integrated into the global economy.The European Union economic community is the likely example taken for this endeavor.
It was initially forecast for 2020, however, the deadline was moved forward to the beginning of 2015 before being pushed back again to the end of this year. With the dateline looming, The Asian Diplomat compiled perspectives and discourses on the AEC prospects:
Financial Investor perspective
From an investor perspective, AEC in principle shall make capital market products to be available freely in any ASEAN market from a single access point. Capital market intermediaries should also be able to provide services throughout the region, based on home country approval.
Too good to be true? Possibly. Though the plans and priorities have been approved by the respective governments, the devil is always in the details where in this instance, the speed and extent of implementation.
There is a host of initiatives and actions outlined in the AEC Blueprint, divided into four broad areas, targeted to be phased in over eight years (2008 to 2015). However, the general consensus by observers and ASEAN watchers is that a full integration will not happen by the end of 2015.
Small Medium Enterprise
Apart from investors, the prospect may also paint differently for existing Small Medium Enterprises.
While larger companies seem ready for the AEC (Garuda Indonesia announced its readiness/Antara News 2014), small and medium-sized enterprises (SMEs) are less prepared. According to a survey by the Asian Development Bank, less than one-fifth of ASEAN businesses are ready for the transition. This is despite the fact that small to medium-sized businesses generate approximately 90 percent of ASEAN jobs and 30 to 50 percent of GDP.
Some commentators highlight a lack of awareness and understanding among SMEs regarding the AEC. According to a 2013 survey conducted by the ASEAN Secretariat in Jakarta, three out of every four ASEAN citizens questioned had no real understanding of what the AEC entails.
ASEAN has taken some steps to promote awareness of the AEC for SMEs. A seminar held in Bangkok from the 15th to 16th of June 2015 aimed to promote awareness of the AEC for businesses.
Secretary-General of the ASEAN-Business Advisory Council, Syed Nabil, raised some of the issues faced by SME’s. These include limited access to finance, markets, and improved technology, as well as challenges in facilitating the free movement of goods. To overcome these challenges, much more will need to be done in order for SMEs to be prepared for the AEC’s implementation.
Free labour Movement
A recent policy brief from a Philippine-based think-tank(Ibon International) indicates that AEC may increase corporate profits at the expense of workers’rights. Secondly, there are also continued fears that AEC will worsen inequalities between and within ASEAN countries – with poorer countries experiencing distorted development as they continue to be the primary source of raw materials and cheap labour. In other words, the perpetuation of skewed labour mobility from poorer countries to more developed ones.
In a nutshell
From a short-term perspective, ASEAN Economic Integration will indeed happen by this year end. However, the burgeoning question is to what extent it will take into effect? While not in its entirety, investors and business people should expect pockets of areas where capital, services, and goods begin to flow more freely. More crucially, ASEAN members that are better prepared will kick-start the initiatives, with the circle widening as and when other member economies are ready to join.
However from a long- term perspective, it will take some time for ASEAN to be turned into a comprehensive economic community. Investors and businesses should avoid the expectation of an immediate change Post 31 December 2015.
More importantly, wealthier and stable ASEAN members should also take corrective measures to address any political, economic and social inequalities that exists between its members. This is required for the sustainability of the co-operation.
Worth noting that – it took the European Economic Community, which was created in 1957 to establish a common market among its politically and economically less prominent members, a total of 36 years. It was then finally declared a “completed project” in 1993.
Hence with the current different political climate and diverse economic performance for each ASEAN members – similar scenario should likely be anticipated for ASEAN.