Weighing Brunei’s ASEAN opportunity
In three years’ time, Brunei will most likely be a member of ASEAN Economic Community (AEC). This represents an opportunity and a challenge at the same time.
The AEC will encompass a region that covers 600 million people with a combined gross domestic product of $2 trillion and is expected to be inaugurated on December 1, 2015. However, forming an economic union between ten diverse countries is, as a fact, not easy. ASEAN Secretary-General Le Luong Minh in an interview with Inside Investor has recently admitted that the ten bloc members have only put in place about 74 per cent of measures necessary to reach an economic union that earns one’s reputation. Brunei can play an important role to speed up the development, as it chairs ASEAN in 2013 and can adopt and drive measures as a role model.
However, any country must look at the challenges and obstacles the AEC is currently facing.
The AEC development has long been criticised for being too slow and some observers have said that the issues that have been delayed were those of importance and could make or break the success of the integration. Some experts also commented about the lack of leadership on this issue within ASEAN, but it remains to be seen to what extent Le Luong Minh, possibly with the support of Brunei this year and beyond, will drive the project forward.
One big issue, not particularly for Brunei, but for most of the other ASEAN countries, is lack of infrastructure and thus the need for significant investments. Both the development of hard infrastructure such as roads, ports, airports, etc. and soft infrastructure such as human resource and training are being addressed, but not entirely resolved. According to the ASEAN Secretary-General, an amount of no less than $60 billion annually is necessary to upgrade infrastructure within ASEAN to make it internationally competitive, and this only relates to hard infrastructure.
For soft infrastructure, better English speaking countries in ASEAN, such as Brunei, Singapore, Malaysia and the Philippines will have an advantage over countries like Thailand where English proficiency is poor. Another issue, and this is something where Brunei also has to ponder its own position, is that ASEAN members still view each other as competitors. Ultimately, these distinctions should start to fade to some extent but in the future the line between competitor and collaborator within ASEAN has to be drawn clearly.
As for companies in the region and for investors, executives will have to adjust their strategies. Inside the AEC, managers will increasingly have to pursue sales opportunities across the region while focusing relentlessly on cost efficiencies by integrating their operations across ASEAN, managing through lean techniques but also developing effective corporate centralisation. Externally, managers especially in the West are going to have to start paying better attention to the new opportunity of the AEC. Outside Asia-Pacific, the AEC is probably not fully appreciated nor understood yet, and investors indeed need to pay more attention to the opportunities that the AEC presents. Brunei can indeed support this aim.
This comment is part of Inside Investor’s weekly column series in Brunei’s leading newspaper Brunei Times and is published every Monday.
[caption id="attachment_7466" align="alignleft" width="127"] By Arno Maierbrugger[/caption] In three years’ time, Brunei will most likely be a member of ASEAN Economic Community (AEC). This represents an opportunity and a challenge at the same time. The AEC will encompass a region that covers 600 million people with a combined gross domestic product of $2 trillion and is expected to be inaugurated on December 1, 2015. However, forming an economic union between ten diverse countries is, as a fact, not easy. ASEAN Secretary-General Le Luong Minh in an interview with Inside Investor has recently admitted that the ten bloc members have only...
In three years’ time, Brunei will most likely be a member of ASEAN Economic Community (AEC). This represents an opportunity and a challenge at the same time.
The AEC will encompass a region that covers 600 million people with a combined gross domestic product of $2 trillion and is expected to be inaugurated on December 1, 2015. However, forming an economic union between ten diverse countries is, as a fact, not easy. ASEAN Secretary-General Le Luong Minh in an interview with Inside Investor has recently admitted that the ten bloc members have only put in place about 74 per cent of measures necessary to reach an economic union that earns one’s reputation. Brunei can play an important role to speed up the development, as it chairs ASEAN in 2013 and can adopt and drive measures as a role model.
However, any country must look at the challenges and obstacles the AEC is currently facing.
The AEC development has long been criticised for being too slow and some observers have said that the issues that have been delayed were those of importance and could make or break the success of the integration. Some experts also commented about the lack of leadership on this issue within ASEAN, but it remains to be seen to what extent Le Luong Minh, possibly with the support of Brunei this year and beyond, will drive the project forward.
One big issue, not particularly for Brunei, but for most of the other ASEAN countries, is lack of infrastructure and thus the need for significant investments. Both the development of hard infrastructure such as roads, ports, airports, etc. and soft infrastructure such as human resource and training are being addressed, but not entirely resolved. According to the ASEAN Secretary-General, an amount of no less than $60 billion annually is necessary to upgrade infrastructure within ASEAN to make it internationally competitive, and this only relates to hard infrastructure.
For soft infrastructure, better English speaking countries in ASEAN, such as Brunei, Singapore, Malaysia and the Philippines will have an advantage over countries like Thailand where English proficiency is poor. Another issue, and this is something where Brunei also has to ponder its own position, is that ASEAN members still view each other as competitors. Ultimately, these distinctions should start to fade to some extent but in the future the line between competitor and collaborator within ASEAN has to be drawn clearly.
As for companies in the region and for investors, executives will have to adjust their strategies. Inside the AEC, managers will increasingly have to pursue sales opportunities across the region while focusing relentlessly on cost efficiencies by integrating their operations across ASEAN, managing through lean techniques but also developing effective corporate centralisation. Externally, managers especially in the West are going to have to start paying better attention to the new opportunity of the AEC. Outside Asia-Pacific, the AEC is probably not fully appreciated nor understood yet, and investors indeed need to pay more attention to the opportunities that the AEC presents. Brunei can indeed support this aim.
This comment is part of Inside Investor’s weekly column series in Brunei’s leading newspaper Brunei Times and is published every Monday.
