The start of 2016 marked a milestone for the ASEAN region with leaders coming together to implement the ASEAN Economic Community, or AEC. The community aims to unite Southeast Asia, turning the region into a single trading bloc similar to the European Union in many ways, but without drawbacks such as a single currency and deeper political integration.

Despite the generous amount of publicity generated, the AEC hasn’t shown much progress in the 3 months. However, InvestAsian would like to take this opportunity to remind our readers not to despair. This sort of delay is normal, especially in the attempt to unite 10 very diverse nations into one single trading bloc.

When ASEAN’s leaders signed the AEC agreement, they were well aware of the challenges. Southeast Asia consists of countries with a large gap between each other in terms of economic development. While Singapore is among the richest countries in the world, the economies of nearby Indonesia, Vietnam, and Malaysia are still dominated by light industry and even, in the case of Vietnam, low-skill agricultural work.


Much More to Come for the AEC

With an aim to build an integrated economy with a combined market of US$2.6 trillion and over 600 million people, it has been nearly 4 months since the agreement has been signed. Even though the amount of progress made has been gravely disappointing if expectations were set to a tangible level, to say that there has been zero progress would be untrue.  Many companies both inside and outside of Southeast Asia have shown their interest in investing in ASEAN.

A chief executive from Singapore Business Federation revealed that a lot of companies are looking to invest in ASEAN as opposed to China where the labor cost is rising. Manufacturers are more interested in ASEAN, especially Cambodia and Vietnam due to their participation in the Trans-Pacific-Partnership.

However, despite much interest, there has been little action taken toward actually investing in ASEAN. One of the main reasons is because of the lack of transparency and clarity of benefits and opportunities.

Investors who have never stepped into ASEAN simply do not know the key benefits of the AEC or how the different sectors have different opportunities. Experts agree that business chambers of ASEAN countries need to do a better job of reaching out to overseas investors, many of whom are wary of the dangers yet unaware of opportunities.


ASEAN Governments Jump to Action

Even though there has been little action taken by overseas investors, the same cannot be said for the regional ministers. Several meetings have passed since the beginning of the year and there has been some progress. The very first of such progress is an insurance policy and collective investment schemes.

Announced on the April 5th, one of the initiatives involves setting up the ASEAN Insurance Forum to support trade, investment and economic integration which will be “in line with the AEC.”

This aims to streamline the authorization processes that a fund manager in one country has to undergo to sell their products across ASEAN borders.

Even though the road ahead is long and tough, there will eventually be progress. ASEAN member nations will work together, bring about economic integration, and put ASEAN on the world stage. Businesses and investors who act now will benefit in the long-term.

About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He's experienced with trading stocks and buying property in Thailand, Cambodia, and elsewhere. He's been featured in publications such as Forbes, Nomad Capitalist, Property Report, and Seeking Alpha. Download his free investment guide by clicking here.

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