Thursday, March 31, 2016

Asean Economic Community

The decision to establish an ASEAN Economic Community at a summit meeting in Kuala Lumpur in 1997 was borne from the vision to transform ASEAN nations into a stable, prosperous, and highly competitive region. The plan to achieve this was through a single market and production base with a free flow of goods, services, investment, labor and capital. Since then, some have suggested that Indonesia, being the biggest market in ASEAN, will be the most vulnerable country when the AEC is implemented, as goods and services from other countries in the community will enter without restriction.
Significant hope has accompanied the AEC’s formation. Many analysts have pointed out that integrating ASEAN economies would create the world’s seventh-largest single market, and they are certainly right. However, taking advantage of this market requires dealing with its complexities and contradictions, and accommodating the vast differences and national sensibilities. The challenge of diversity is formidable enough: Politically, the somewhat cacophonous, unstable democracies of Indonesia and the Philippines cohabit with the Communist dictatorship of Vietnam and the military junta of Thailand; economically, high-developed states and top ranking economies stand along with some of the poorest countries in the world; culturally, the plurality of religions, languages, ethnicities, and ways of living is difficult to describe. To cite only one example, Malaysia and Indonesia’s Muslim populations co-exist with peoples who are mostly Buddhist (as in Myanmar), alongside the predominantly Roman Catholic Philippines. Against this kaleidoscopic backdrop, it is surely reasonable to question the ability of the AEC to deliver on its promise of a seamless economic bloc.
What is more, the extremely pervasive and, some would say, blind adherence to the overarching principles of consensus and non-interference, combined with the lack of a robust and sound institutional architecture, have left intact the problem of ensuring compliance and effective implementation of targets by national governments and agencies. In spite of the various commitments entered into under the AEC, ASEAN is still missing the necessary institutional glue, which could take the form of an overarching regional mechanism that ensures the smooth coordination of the vast array of government actors from the different national sectors, ministries and agencies. Consumer laws, intellectual property rights, land codes, and investment rules have yet to be harmonized at the regional level, while the lack of common, integrated banking structures, alongside the absence of an agreement on common and acceptable currencies, are likely to hinder market access for regional small and medium-sized enterprises. Also still unresolved is the question of the free movement of labor, including in the so-called “high-skilled sector,” with many ASEAN countries imposing heavy requirements on firms wanting to employ foreigners. Meanwhile, in the shadow of the regional debate on skilled labor migration, millions of marginalized migrants deemed unskilled, from domestic workers to fishermen, illegally flit between countries.

development of intra-regional infrastructure, and reducing the administrative burdens of national regulations on the creation of new businesses and foreign investment. However praiseworthy, these objectives will take decades to achieve if ASEAN does not provide the adequate institutional means and material resources to give the final impetus to economic integration.