After being questioned by some of my students, I am sharing a brief description about The ASEAN Economic Community, which is scheduled to start being a reality next year (2015).
The ASEAN Economic Community (AEC) shall be the goal of regional economic integration by 2015. AEC foresees the following key characteristics: (a) a single market and production base, (b) a highly competitive economic region, (c) a region of equitable economic development, and (d) a region fully integrated into the global economy.
The AEC areas of cooperation include human resources development and capacity building; recognition of professional qualifications; closer consultation on macroeconomic and financial policies; trade financing measures; enhanced infrastructure and communications connectivity; development of electronic transactions through e-ASEAN; integrating industries across the region to promote regional sourcing; and enhancing private sector involvement for the building of the AEC. In short, the AEC will transform ASEAN into a region with free movement of goods, services, investment, skilled labour, and free flow of capital.
Under the Asean Economic Community (AEC), a single regional common market of Asean countries will be created by 2015. The regional integration’s objective is to create a competitive market of over 600 million people in Asean countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. There will be free flow of goods, services, investment capital and skilled labor following the liberalization. These will include tariff reductions and streamlining of certain administrative procedures. Many businesses have begun preparing themselves three years ahead of time to meet the challenges and opportunities of the Asean Economic Community (AEC).
Benefits of the Asean Economic Community (AEC):
- It will open more regional cooperation and will improve the scale efficiencies, dynamism and competitiveness of Asean members. AEC will enable easier movement of goods, services, investment, capital and people. Ultimately, it will offer new ways of coordinating supply chains, or access to new markets for established products.
- All Asean countries are more important to foreign investors if they are considered as one node in a larger regional market of nearly 600 million people – a single market. The Asean Free Trade Agreement will be expanded to zero tariffs on almost all goods by 2015. Asean plans to remain engaged with the global economy through regional-level free trade agreements – today, Asean has such agreements with China, Japan, Korea, India, Australia and New Zealand.
- The USITC’s Asean: Regional Trends in Economic Integration, Export Competitiveness, and Inbound Investment for Selected Industries Report noted that the AEC is coming at a time when it is recognized that investment in emerging markets is more desirable than in the US and Europe. “There will be no shortage of funding coming from within Asean, the Asia Pacific or even the US and Europe. These investments can bring about badly needed capital for some countries, allowing them to leapfrog from the 20th century into the 21st in terms of competition in mature countries such as Thailand and Malaysia”, said the report.
- SMEs accounted for 96% of enterprises and between 50-85% of domestic employment across Asean. Integrating these SMEs and supporting them in the inital period will be a challenge throughout ASEAN but particularly in the lesser developed ASEAN countries. Recently I was in SIngapore and it is obvious that the Singapore government fully realizes the challenge and the opportunity that the AEC will represent to SMEs and is putting both the planning talent and the resources to better support their SMEs. I was also in Vietnam and Thailand and although both countries are starting to verbalize and meet to develop more effective plans for SME integration and support, it is obvious that these plans are probably behind where they need to be. In countries, such as Cambodia, Laos and Myanmar (Burma), plans are even further behind and more in need of support and resources.
- Tourism opportunity. Asians travels more in the region and there are more travelers from other countries that have begun to reach out to Asia as new visitors. The trends were evident at the recent Hub City Forum, held by the Pacific Asia Tourism Association (Pata), where more than 100 travel industry executives discussed the tourism potential, government’s spending to upgrade facilities both for leisure attractions like museums; and also MICE facilities such as convention centers, reported the newspaper. MICE tourism opportunities are particularly large and hopefully countries that have the most experience in this area such as Thailand and SIngapore will render their assistance to those with weak MICE experience – recent examples of this are Thailand with Vietnam and also some talk in Thailand about rendering assistance in Laos and possibly Cambodia.
- Internationalization of health care under the AEC. Health care is one of the sectors to be internationalized. This is definitely a big challenge as it is more complicated than just the popularity of Singapore and Thailand’s “medical tourism” that patients travel from one country to another seeking better care at lower cost. The legal and licensing frameworks are still needed to be worked out. However, it offers potentials for the free-flow of health services, etc. in the region. Recent examples here were noted in the Bangkok Post in mid-March which noted programs by Thailand’s largest medical service BGH and other Thai hospital groups to step-up the pace of mergers and acquistions and joint ventures in other AEC countries to help give them a better platform to better take care of developing AEC opportunities.
ASEAN Economic Community (AEC) Blueprint
The ASEAN Leaders adopted the ASEAN Economic Blueprint at the 13th ASEAN Summit on 20 November 2007 in Singapore to serve as a coherent master plan guiding the establishment of the ASEAN Economic Community 2015. To read more about the subject, kindly download through the following link THE ASEAN ECONOMIC COMMUNITY BLUEPRINT