The blueprint for the ASEAN Economic Community (AEC) was signed on the 22nd of November as the leaders of the 10 Southeast Asian countries inked the document at the ASEAN Summit held in Malaysia.

It has been more than 13 years since the SEA leaders imagined a trade zone to match the US and Europe, keeping up with the pace of the mainland Asian giants of India and China.

Malaysian Prime Minister Najib Razak described the declaration as a “milestone” in the integration process. He voiced his belief that ASEAN held immeasurable potential for growth. Najid urged that all nations gave their best efforts to accelerate the process of integration.

The summit also showed the symbolic unison of ASEAN nation states by having the 10 leaders show their teamwork by banging on their national drums at once.

Even before that day, the AEC has slowly progressed with many of its goals, such as the removal of tax barriers and visa restrictions, already met. Many experts expect a rise in employment, political cooperation, and cultural integration.

Ever since the inception of the blueprint for the initial integration of ASEAN countries in 2002, there have been challenges which are still formidable today. A John Hopkins University economics professor commented that AEC is “one of the most ambitious economic integration programs in the developing world”.

 

The ASEAN Economic Community Will Take Time

There are many uphill battles to be faced. Even though progress has been made in the field of cross-border trade by slashing tariffs and customs, there are still lots of non-tariff barriers.

Most believe, and even diplomats of the ASEAN countries themselves admitted, that it will be several years until the ASEAN Economic Community will be fully functional and achieve its goal of becoming a single market.

The first obstacle to face is the region’s diversity. There are differences in each of the countries’ economies, demographics, politics, and language.

ASEAN has countries of different economic tiers. At the top, there are two of the world’s richest countries: Singapore and Brunei. These are followed by emerging economies such as Malaysia, Indonesia, Thailand, Philippines and Vietnam. At the bottom are frontier markets like Cambodia, Laos, and Myanmar.

The political systems also range from democracy to an absolute Islamic Monarchy. Brunei, for example, has a plan to implement Sharia Law.

 

Tariffs and Restrictions in the ASEAN Economic Community

Second, even though the goal is to have a single market for production and labor, there are still considerable barriers to that happening. There are many politically sensitive sectors that the governments have not yet opened up to other countries. Such protected sectors include but not limited to agriculture, steel, and auto-production depending on the country.

The jobs that other ASEAN citizens qualify for in the other 9 countries will be limited to only 8 sectors, including engineering, accountancy, and tourism. These jobs only make up a small percentage of the total workforce – in fact only 1.5%. In addition to this, the host countries still hold the right to introduce laws that could potentially cap the inflow of talent.

Thirdly, it seems that the countries themselves are still somewhat hesitant to change. Not only are they not involved in intraregional trading as much as their European counterparts (24% compared to 60%), they’re also very frequently engaged in diplomatically hostile activities such as the border disputes between Cambodia and Vietnam and the Indonesian forest fires.

There were also other factors such as uneven infrastructure, corruption, and unequal costs of logistics.

However, even with the challenges faced today, the chairman of the ASEAN council Mohamed Munir Abdul Majid said that AEC “is not the finished article. There is much work to be done.”

The declaration will help change the ASEAN countries’ attitude and mindset nonetheless. A diplomat added that this will help nations prioritize the progress of the region as a whole.

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