ASEAN Economic Community: opportunities and challenges
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The document outlines the economic landscape and integration efforts of the ASEAN region, highlighting its population of 628 million, GDP of $2.432 trillion in 2015, and aspirations to become the 4th largest economy by 2030. Key initiatives include the ASEAN Economic Community (AEC) aimed at enhancing economic connectivity, competitiveness, and resilience through strategic action plans and cooperation across member states. Challenges such as trade barriers, talent mobility, and social issues are identified, emphasizing the need for implementation and coordination to achieve a fully integrated ASEAN.
ASEAN Economic Community: opportunities and challenges
- 1. 2018 Dr Rebecca Fatima Sta Maria Senior Policy Fellow ASEAN ECONOMIC COMMUNITY : opportunities and challenges
- 2. ASEAN – at a glance Population 628 million - Youth 60% GDP (2015) current prices US$2,432 billion GDP Growth 4.7% GDP per capita USD3,867 Total Trade (2015) USD2,270 billion - Intra-ASEAN USD543.7 billion - Ratio to GDP 93.3% Total FDI USD120.8 billion - Intra-ASEAN USD22.2 billion Tourist Arrivals 108.9 million - Intra-ASEAN 46 million 2
- 3. ASEAN: Growing through economic integration 334 606 1,898 2,432 GDP (US$ mil) 760 1,172 3,162 3,867 GDP per capita (US$) 317 519 593 628 Population (mil) 1990 2000 2010 2015 Source: ASEANStat, IMF, WB, UNCTAD 306 759 2,009 2,270 Total Trade (US$ bil) 144 167 511 543.7 Intra-ASEAN Trade (US$ bil) 13 23 100 120.8 FDI Inflows (US$ bil) 1990 2000 2010 2015 3
- 4. 3rd largest market in the world Population in million JAPAN 128 EU 502 INDIA 1,195 CHINA 1,340 USA 310 ASEAN 628 16.8 7.7 5.2 5.0 7.7 5.2 5.0 2.2 1.6 The whole is greater than the sum of its parts 4 Source: ASEANStat, IMF, WB In 2015, 7th largest economy in the world and on to be the 4th largest by 2030 GDP 2015 in US$ trillion Brazil ASEAN United Kingdom France Germany Japan China United States 16.8 9.2 4.9 3.7 2.8 2.7 2.4 2.2 4
- 5. The considered path to economic integration • 1975: first AEM • 1980s: Preferential Trade Agreement • 1992: Framework Agreement on Enhancing ASEAN Economic Cooperation, which led to AFTA • 1995: ASEAN Framework Agreement on Services (AFAS) • 1998: ASEAN Investment Agreement • 2007: AEC Blueprint 2015 • 2015: AEC Blueprint 2025 5
- 6. I feel I am a Citizen of ASEAN 46% 71% 32% 67% 64% 58% 39% 44% 36% 15% 21% 32% 18% 41% 25% 29% 21% 47% 34% 25% 30% 56% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ASEAN BRUNEI CAMBODIA INDONESIA LAO PDR MALAYSIA MYANMAR PHILIPPINES SINGAPORE THAILAND VIET NAM Very much Moderately 6
- 7. • AEC 2015: – ASEAN aspires to be a competitive, dynamic region, which allows for free flow of goods, services and investment, and freer flow of capital and skilled workers, by 2015. The dream: A highly integrated region 7
- 8. AEC 2025: consolidation and going beyond… • Incorporate unfinished commitments from AEC 2015 • Framework of the ASEAN Economic Community 2025: covers 5 main pillars: – A Highly Integrated and Cohesive Economy; – Competitive, Innovative and Dynamic ASEAN; – An ASEAN with Enhanced Economic Connectivity and Deeper Sectoral Cooperation; – A Resilient, Inclusive and People-Oriented and People Centered ASEAN; and – Global ASEAN. 8
- 9. Masterplan of ASEAN Connectivity 2016-2025 (MPAC) • To achieve a seamlessly and comprehensively connected and integrated ASEAN that will promote competitiveness, inclusiveness, and a greater sense of community 9 • To seamlessly integrate with the AEC and the regional value chains; and to become globally competitive, innovative, inclusive and resilient. ASEAN Strategic Action Plan for SME Development 2016-2025
- 10. The Reality: The To-Do list is comprehensive and ambitious • The Consolidated Strategic Action Plan (CSAP) comprises 153 measures and 513 action lines for implementation through 2025. • Example: Of these, 5 measures and 28 action lines are related to connectivity in ASEAN – to move towards greater connectivity, efficiency, integration, safety and sustainability of ASEAN transport – to strengthen ASEAN’s competitiveness and foster regional inclusive growth and development. • New Masterplans being added: ASEAN Air Transport Masterplan 10
- 11. What we sought to do: • AEC 2015 and 2025 Blueprints – ASEAN Trade in Goods Agreement • Working on a Single window; • self-certification • Creating a common trade repository system to increase transparency in trade rules • Working to harmonise product standards and procedures – ASEAN Comprehensive Investment Agreement: • a single investment destination of 600 million people and GDP of US$2 trillion – ASEAN Framework Agreement on Services – ASEAN Dispute Settlement Mechanism 11
- 12. 1212 ASEAN-6: 99.65% duties eliminated (1 Jan 2010) CLMV on track to meet tariff reduction commitments in 2018 The Reality: Trade in Goods – So far only tip of the iceberg? NTBs 12
- 13. 13 What we sought to do: Facilitating Movement of Professionals and Talent ASEAN Movement of Natural Persons Agreement (MNP) – temporary entry or temporary stay of natural persons: limited to business visitors, intra- corporate transferees, and contractual service suppliers; does not cover permanent entry and unskilled labour. 13
- 14. 14 The Reality: Much more to do… • Equity restrictions • Impediments, including limits on the number of service providers • Cumbersome procedures, rules and regulations • Mobility of skilled persons 14
- 15. 15 MRA – Agreement to facilitate movement of ASEAN professionals across the region. ASEAN has concluded 8 MRAs; in various stages of operationalization: NO. MRA DATE OF SIGNING 1. MRA for Engineering Services 9 Dec 2005 2. MRA for Nursing Services 8 Dec 2006 3. MRA for Architectural Services 19 Nov 2007 4. Framework MRA for Surveying Qualifications 19 Nov 2007 5. MRA for Medical Practitioners Services 26 Feb 2009 6. MRA for Dental Practitioners Services 26 Feb 2009 7. MRA for Tourism Professionals 9 Nov 2012 8. MRA for Accountancy Services 26 Aug 2014 Mutual Recognition Agreements (MRA) 15
- 16. Pressing Problems 29% 31% 29% 18% 27% 33% 22% 39% 29% 47% 23% 24% 27% 28% 30% 32% 35% 36% 46% 47% 0% 20% 40% 60% 80% 100% Quality education provision and access Unemployment Infrastructure availability and quality Human rights Poverty Agriculture and food security Trade, investment, and regulatory coherence Income disparity and social inequality Climate change and natural disasters Corruption Faced by ASEAN Faced by Country 16
- 17. ASEAN’s Success= f (Implementation, Implementation, implementation) • Is the ‘ASEAN Way good enough? • What about ‘ASEAN Centrality?’ • ASEAN Alignment, Coordination, Coordination: the ‘Whole-of-ASEAN’ approach 17
- 18. Whither the ‘ASEAN Way?’ 18
- 19. 19 Example: Our journey towards liberalising the services sectors… 1977, 1st package December 1998, 2nd package; December 2001, 3rd package September 2004, 4th package ASEAN Economic Community December 2006, 5th package November 2007, 6th package 1967: Bangkok Declaration February 2009, 7th package October 2010, 8th package August 2014, 9th package 2015, 10th package 19
- 20. 20 Evolution of Investment Liberalisation and Protection in ASEAN 1987 Agreement for Promotion and Protection of Investments (IGA) 1998 ASEAN Investment Area Agreement (AIA) 2009 ASEAN Comprehensive Investment Agreement (ACIA) 20
- 21. ASEAN ‘Centrality’ : Are we shaping the rules of the game? Or singing to someone else’s tune… Or worse still are we being led… 21
- 22. • Unnecessary Regulatory Burden; • Lack of transparency; • Multi-agency processes Tariffs almost 0% Research support • Ad-valorem equivalent • Regulatory convergence • Transaction costs Push for • greater transparency • reduction • Clarify impact • Prioritise • Monitor outcomes • Reduce • Review • Institutionalise Alignment, Coordination, Collaboration: Managing NTMs 22
- 23. Alignment, Coordination, Collaboration: Trade Facilitation ASEAN Seamless Trade Facilitation Indicators (ASTFI) & Trade Transaction Costs Develop ASTFI • Institutionalise • oversight 23
- 24. ‘Whole-of-ASEAN’ : We’re in this race together… 24