Getting the ASEAN Economic Community train back on track

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Arno Maierbrugger
By Arno Maierbrugger

A recent report by the CIMB ASEAN Research Institute published on June 20 and titled The ASEAN Economic Community: The Status of Implementation shed light on a pressing problem the Association of Southeast Asian Nations is facing: The implementation of the ASEAN Economic Community, or AEC, is way behind schedule and, according to the report’s findings, unlikely to come into effect as scheduled at the end of 2015 due to “unsettled problems” among member states.

It appears that there is a mismatch between political ambition and political will among several member states, the report says,fears that have already been voiced by several economists. The report even showed that trade between ASEAN member states was down instead of going up over the past years, indicating there is a gap between the highly ambitious integration targets and the reality.

At the latest ASEAN summits in Brunei is has been reiterated that the bloc 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. Some economists even fear that the bloc appears to have reached the limits of its integration.

What can be done to push the economic integration of ASEAN? Many countries seem busy to intensify trade relations to large regional economies such as Japan and Korea and to other trade blocs such as the Trans-Pacific Partnership (TPP) or the Regional Comprehensive Economic Partnership (RCEP)rather than seeking closer ties to their own neighbours in ASEAN. Certainly, there are big gaps between single countries and the decision-making processes can be very different.

Thus, the ASEAN summits held this year on the AEC have turned out to be more a reality check whether the AEC would be possible at all, and many who are involved are now talking more of a “vision” than a roadmap, which is discouraging given the fact that the AEC launch is technically just two years and a few months away.

In fact, there is a need to temper the expectations of what can be achieved by end-2015. It is time for the ASEAN Secretariat as well as the bloc’s member states to articulate what is possible and what not and then set a realistic timeframe which would rather be 2020 than earlier, and many ASEAN leaders and officials are already calling for an honest assessment.

This assessment needs to take into account that four urgent issues must be resolved in the near future if integration shall move forward: 1) Implementing a common ASEAN visa system; 2) Closing or at least minimising the development gap by strongly pushing growth of the newer members Cambodia, Laos, Myanmar and Vietnam; 3) Moving forward with an integrated liberal market system by aligning trade regulations and 4) Resolving regional disputes on a diplomatic level to enable the ASEAN bloc to operate on the global stage without disturbances.

Do you think the end-2015 deadline for the ASEAN Economic Community is realistic? Is it a good thing at all? Should the launch be officially postponed? Let us know through Twitter: @insideinvestor.

 

This comment is part of Inside Investor’s weekly column series in Brunei’s leading newspaper Brunei Times and is published every Monday.

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Reading Time: 3 minutes

By Arno Maierbrugger

A recent report by the CIMB ASEAN Research Institute published on June 20 and titled The ASEAN Economic Community: The Status of Implementation shed light on a pressing problem the Association of Southeast Asian Nations is facing: The implementation of the ASEAN Economic Community, or AEC, is way behind schedule and, according to the report’s findings, unlikely to come into effect as scheduled at the end of 2015 due to “unsettled problems” among member states.

Reading Time: 3 minutes

Arno Maierbrugger
By Arno Maierbrugger

A recent report by the CIMB ASEAN Research Institute published on June 20 and titled The ASEAN Economic Community: The Status of Implementation shed light on a pressing problem the Association of Southeast Asian Nations is facing: The implementation of the ASEAN Economic Community, or AEC, is way behind schedule and, according to the report’s findings, unlikely to come into effect as scheduled at the end of 2015 due to “unsettled problems” among member states.

It appears that there is a mismatch between political ambition and political will among several member states, the report says,fears that have already been voiced by several economists. The report even showed that trade between ASEAN member states was down instead of going up over the past years, indicating there is a gap between the highly ambitious integration targets and the reality.

At the latest ASEAN summits in Brunei is has been reiterated that the bloc 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. Some economists even fear that the bloc appears to have reached the limits of its integration.

What can be done to push the economic integration of ASEAN? Many countries seem busy to intensify trade relations to large regional economies such as Japan and Korea and to other trade blocs such as the Trans-Pacific Partnership (TPP) or the Regional Comprehensive Economic Partnership (RCEP)rather than seeking closer ties to their own neighbours in ASEAN. Certainly, there are big gaps between single countries and the decision-making processes can be very different.

Thus, the ASEAN summits held this year on the AEC have turned out to be more a reality check whether the AEC would be possible at all, and many who are involved are now talking more of a “vision” than a roadmap, which is discouraging given the fact that the AEC launch is technically just two years and a few months away.

In fact, there is a need to temper the expectations of what can be achieved by end-2015. It is time for the ASEAN Secretariat as well as the bloc’s member states to articulate what is possible and what not and then set a realistic timeframe which would rather be 2020 than earlier, and many ASEAN leaders and officials are already calling for an honest assessment.

This assessment needs to take into account that four urgent issues must be resolved in the near future if integration shall move forward: 1) Implementing a common ASEAN visa system; 2) Closing or at least minimising the development gap by strongly pushing growth of the newer members Cambodia, Laos, Myanmar and Vietnam; 3) Moving forward with an integrated liberal market system by aligning trade regulations and 4) Resolving regional disputes on a diplomatic level to enable the ASEAN bloc to operate on the global stage without disturbances.

Do you think the end-2015 deadline for the ASEAN Economic Community is realistic? Is it a good thing at all? Should the launch be officially postponed? Let us know through Twitter: @insideinvestor.

 

This comment is part of Inside Investor’s weekly column series in Brunei’s leading newspaper Brunei Times and is published every Monday.

Brunei Times logo

 

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