AEC ‘unlikely’ to kick off by 2015

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ASEAN flagsThe economic integration of the ASEAN Economic Community (AEC) will likely not be attained by 2015, economists of the Asian Development Bank (ADB) said.

At the book launch of “The ASEAN Economic Community,” ADB lead economist at the Office of Regional Economic Integration Jayant Menon said the targets for the regional economic integration would likely be missed.

“The December 2015 deadline will not see ASEAN achieving all AEC targets in 2015. And it will still involve more work for post-2015,” Menon said.

Based on a review of the AEC scorecard, only around 77.5 per cent of targets have been reached between 2008 to March 2013. Worse, a slowdown was even observed for the unattained targets. Although various reasons were cited for the continued difficulties of attaining the AEC targets one of the major reasons remain seemingly unmindful stance unawareness of the private sector.

The book’s co-author Dr. Omkar Shrestha, said that various surveys indicated that majority of those surveyed were unaware of AEC 2015 and its implications. Those included national government agencies involved in AEC 2015 and the private sector, including corporates and small and medium enterprises.

The survey showed that firms with foreign investments were more aware of gains from AEC integration. Likewise, most respondents from mature ASEAN economies feel less AEC impact in their business. The majority of the respondents, or 77 per cent, never benefited from lower tariff privileges from any free trade agreements signed by ASEAN, and 40-per cent of them were unaware of such low tariff facilities.

The AEC 2015 agreement is preceded by the ASEAN Free Trade Agreement (AFTA), which should have resulted in numerous FTAs on a nation-to-nation, or sector-to-sector basis.

The survey also indicated that majority had not benefited from investment liberalisation measures. To top it all, 78 per cent learned about AEC 2015 from the Internet or business contacts, and a mere 28 per cent from their respective governments.

Rodolfo Severino, another co-author, lamented that governments seem more concerned about window dressing rather than getting to ground and conducting extensive knowledge campaigns in their respective jurisdictions.

“It should not be a beauty contest courting the constituents for political posturing,” Severino said. “It is the private sector that will make or break the AEC.”

Meanwhile, Menon said several challenges  remain to be met.

“Removing barriers to trade in sensitive areas such as agriculture, steel and the increasingly important areas of services,” the ADB economist said, adding that the issue of large number of Filipino nurses dominating one or two ASEAN member nations remains an issue.

Other issues are the elimination non-tariff barriers such as closing loopholes that permit misuse of rules that have been made for good, including sanitary and phytosanitary rules on food and antidumping regulations; removing border barriers such as quantitative restrictions, border administration, and even closures; removing behind-the-border constraints related to logistics, transport, infrastructure bottlenecks, and weak institutions; and adopting harmonised standards on competition policy and intellectual property rights.

Also to be addressed are promoting greater labor mobility of skilled workers – more than just Philippine nurses in Singapore – and better regulation and management of unskilled labor movements.

“Although ASEAN labour markets are becoming increasingly integrated, policies relating to cross-border movement of people continue to lag behind,” the ADB economists said.

Other challenges that should have been addressed before 2015 are: narrowing the development divide, that is, ensure that the less developed economies of Cambodia, Laos and Myanmar catch up more rapidly to other economies in the region; and, addressing risks such as contagion through better surveillance and safety nets.

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Reading Time: 3 minutes

The economic integration of the ASEAN Economic Community (AEC) will likely not be attained by 2015, economists of the Asian Development Bank (ADB) said.

Reading Time: 3 minutes

ASEAN flagsThe economic integration of the ASEAN Economic Community (AEC) will likely not be attained by 2015, economists of the Asian Development Bank (ADB) said.

At the book launch of “The ASEAN Economic Community,” ADB lead economist at the Office of Regional Economic Integration Jayant Menon said the targets for the regional economic integration would likely be missed.

“The December 2015 deadline will not see ASEAN achieving all AEC targets in 2015. And it will still involve more work for post-2015,” Menon said.

Based on a review of the AEC scorecard, only around 77.5 per cent of targets have been reached between 2008 to March 2013. Worse, a slowdown was even observed for the unattained targets. Although various reasons were cited for the continued difficulties of attaining the AEC targets one of the major reasons remain seemingly unmindful stance unawareness of the private sector.

The book’s co-author Dr. Omkar Shrestha, said that various surveys indicated that majority of those surveyed were unaware of AEC 2015 and its implications. Those included national government agencies involved in AEC 2015 and the private sector, including corporates and small and medium enterprises.

The survey showed that firms with foreign investments were more aware of gains from AEC integration. Likewise, most respondents from mature ASEAN economies feel less AEC impact in their business. The majority of the respondents, or 77 per cent, never benefited from lower tariff privileges from any free trade agreements signed by ASEAN, and 40-per cent of them were unaware of such low tariff facilities.

The AEC 2015 agreement is preceded by the ASEAN Free Trade Agreement (AFTA), which should have resulted in numerous FTAs on a nation-to-nation, or sector-to-sector basis.

The survey also indicated that majority had not benefited from investment liberalisation measures. To top it all, 78 per cent learned about AEC 2015 from the Internet or business contacts, and a mere 28 per cent from their respective governments.

Rodolfo Severino, another co-author, lamented that governments seem more concerned about window dressing rather than getting to ground and conducting extensive knowledge campaigns in their respective jurisdictions.

“It should not be a beauty contest courting the constituents for political posturing,” Severino said. “It is the private sector that will make or break the AEC.”

Meanwhile, Menon said several challenges  remain to be met.

“Removing barriers to trade in sensitive areas such as agriculture, steel and the increasingly important areas of services,” the ADB economist said, adding that the issue of large number of Filipino nurses dominating one or two ASEAN member nations remains an issue.

Other issues are the elimination non-tariff barriers such as closing loopholes that permit misuse of rules that have been made for good, including sanitary and phytosanitary rules on food and antidumping regulations; removing border barriers such as quantitative restrictions, border administration, and even closures; removing behind-the-border constraints related to logistics, transport, infrastructure bottlenecks, and weak institutions; and adopting harmonised standards on competition policy and intellectual property rights.

Also to be addressed are promoting greater labor mobility of skilled workers – more than just Philippine nurses in Singapore – and better regulation and management of unskilled labor movements.

“Although ASEAN labour markets are becoming increasingly integrated, policies relating to cross-border movement of people continue to lag behind,” the ADB economists said.

Other challenges that should have been addressed before 2015 are: narrowing the development divide, that is, ensure that the less developed economies of Cambodia, Laos and Myanmar catch up more rapidly to other economies in the region; and, addressing risks such as contagion through better surveillance and safety nets.

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