AEC formation in 2015 highly unrealistic

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asean summit1The ten-member bloc of the Association of Southeast Nations (ASEAN) will most likely not meet its ambitious target of forming the ASEAN Economic Community by the end of 2015, it turned out at the 22nd ASEAN Summit held on April 24 and 25 in Brunei.

Overall, the group said it had implemented 77.5 per cent of AEC measures, up from 74.5 per cent in October 2012. However, the remaining steps are the tough ones, including issues of trade barriers in government-protected sectors, free labour movement and certain investment restrictions.

While some targets have been achieved to ease trade between the core members of the group, ASEAN-5 (consisting of Thailand, Malaysia, Singapore, Indonesia and the Philippines), there are still enormous gaps to bridge to the other, poorer countries which are considered as highly sensitive in a political and economic context.

In this regard, there has been slow progress and even some regression, especially in eliminating non-tariff barriers and lowering obstacles to the free flow of labour in the diverse region of 600 million people.

While the slow decision-making progress is attributed to the poorer members such as Myanmar, Cambodia, Laos and Vietnam, other countries have even enforced measures to protect their own economies.

For example, Malaysia has been reluctant to liberalise auto trade barriers for fear of competition from regional car-manufacturing powerhouse Thailand. The Philippines had kept in place heavy restrictions on foreign investors that critics said were aimed at shielding domestic businesses from competition. Indonesia, Southeast Asia’s biggest economy, had taken a protectionist turn over the past year by capping foreign ownership of mines and introducing a 20 per cent export tax on metal ores in an effort to boost its industry, and also introduced import restrictions on certain goods such as fruits and other agricultural products.

Furthermore, domestic political pressures had limited steps to liberalise worker migration within ASEAN to a handful of professions. Singapore is currently shielding its labour market and has imposed strict immigration controls even for its ASEAN neighbours. Complex and unpredictable import standards in some countries are further holding up the liberalisation of agriculture trade.

While the ASEAN member states did not clearly say that the 2015 goal of establishing the AEC will not be reached, spectators feel that it is not going to happen as planned, arguing that the bloc appeared to have reached the limits of its integration unless its decision-making and institutional powers were strengthened, including the ASEAN Secretariat in Jakarta, which has less than one per cent of the staff numbers at the European Commission.

Former ASEAN secretary-general Surin Pitsuwan, the strongest advocate of the AEC  in the history of the group, insisted on the roadmap to launch the AEC by the end of 2015 when asked by Inside Investor by the end of last year. The new secretary-general Le Luong Minh said the common market “could make it timely”.

However, the ASEAN Summit’s final communique contained no specific commitment to the 2015 goal, saying that leaders had agreed to ‘leverage upon ongoing work to establish the AEC.

“Essentially ASEAN’s community-building is an ongoing process that will continue even after our 2015 milestones,” Brunei Prime Minister and Sultan Hassanal Bolkiah told a summit-concluding news conference on April 25. He acknowledged “challenges due to the varying levels of development”.

 

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The ten-member bloc of the Association of Southeast Nations (ASEAN) will most likely not meet its ambitious target of forming the ASEAN Economic Community by the end of 2015, it turned out at the 22nd ASEAN Summit held on April 24 and 25 in Brunei. Overall, the group said it had implemented 77.5 per cent of AEC measures, up from 74.5 per cent in October 2012. However, the remaining steps are the tough ones, including issues of trade barriers in government-protected sectors, free labour movement and certain investment restrictions. While some targets have been achieved to ease trade between the...

Reading Time: 2 minutes

asean summit1The ten-member bloc of the Association of Southeast Nations (ASEAN) will most likely not meet its ambitious target of forming the ASEAN Economic Community by the end of 2015, it turned out at the 22nd ASEAN Summit held on April 24 and 25 in Brunei.

Overall, the group said it had implemented 77.5 per cent of AEC measures, up from 74.5 per cent in October 2012. However, the remaining steps are the tough ones, including issues of trade barriers in government-protected sectors, free labour movement and certain investment restrictions.

While some targets have been achieved to ease trade between the core members of the group, ASEAN-5 (consisting of Thailand, Malaysia, Singapore, Indonesia and the Philippines), there are still enormous gaps to bridge to the other, poorer countries which are considered as highly sensitive in a political and economic context.

In this regard, there has been slow progress and even some regression, especially in eliminating non-tariff barriers and lowering obstacles to the free flow of labour in the diverse region of 600 million people.

While the slow decision-making progress is attributed to the poorer members such as Myanmar, Cambodia, Laos and Vietnam, other countries have even enforced measures to protect their own economies.

For example, Malaysia has been reluctant to liberalise auto trade barriers for fear of competition from regional car-manufacturing powerhouse Thailand. The Philippines had kept in place heavy restrictions on foreign investors that critics said were aimed at shielding domestic businesses from competition. Indonesia, Southeast Asia’s biggest economy, had taken a protectionist turn over the past year by capping foreign ownership of mines and introducing a 20 per cent export tax on metal ores in an effort to boost its industry, and also introduced import restrictions on certain goods such as fruits and other agricultural products.

Furthermore, domestic political pressures had limited steps to liberalise worker migration within ASEAN to a handful of professions. Singapore is currently shielding its labour market and has imposed strict immigration controls even for its ASEAN neighbours. Complex and unpredictable import standards in some countries are further holding up the liberalisation of agriculture trade.

While the ASEAN member states did not clearly say that the 2015 goal of establishing the AEC will not be reached, spectators feel that it is not going to happen as planned, arguing that the bloc appeared to have reached the limits of its integration unless its decision-making and institutional powers were strengthened, including the ASEAN Secretariat in Jakarta, which has less than one per cent of the staff numbers at the European Commission.

Former ASEAN secretary-general Surin Pitsuwan, the strongest advocate of the AEC  in the history of the group, insisted on the roadmap to launch the AEC by the end of 2015 when asked by Inside Investor by the end of last year. The new secretary-general Le Luong Minh said the common market “could make it timely”.

However, the ASEAN Summit’s final communique contained no specific commitment to the 2015 goal, saying that leaders had agreed to ‘leverage upon ongoing work to establish the AEC.

“Essentially ASEAN’s community-building is an ongoing process that will continue even after our 2015 milestones,” Brunei Prime Minister and Sultan Hassanal Bolkiah told a summit-concluding news conference on April 25. He acknowledged “challenges due to the varying levels of development”.

 

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