Tuesday, November 5, 2013

The Emergence of the ASEAN Economic Community

The special report, “What Happens Next” by Bisson, Kirkland, Stephenson and Viguerie, highlights the rapid rise of emerging markets as the focal point of long term innovation and profitability, and the need for countries and businesses to adapt to this new reality to ensure competitiveness and survival.

With regards to the Asian market, the report focuses on the degree of human capital development, innovative low-cost high-quality products and lean business models of companies in China and India. However, another regional economic powerhouse is set to emerge in the near future, and that is the ASEAN (Association of Southeast Asian Nations) Economic Community. The discussion by the 10 ASEAN member states of the plan to unite as a single economic entity to boost regional economic growth and global competitiveness, much like the EU, first began in 2007. A blueprint on how to bring this plan into reality was put together in 2008 with a plan for full implementation by December 2015.

The aims of the AEC is consistent with the points made in Bisson and co.’s report – namely, seeking to create a united economic entity with free movement of capital and labor, efficient institutional infrastructure, no barriers to restrict exchange of goods and ideas within the community, enhanced communication and connectivity as well as opening all industries to both inter-ASEAN and foreign investments. If successfully implemented, in addition to the robust markets in China and India, investors and businesses elsewhere would be presented both with massive investment opportunities but also, powerful competition in the international arena. Current estimates suggest that the size of the joint ASEAN economy would rival that of the EU.

What does the creation of an organization such as the AEC mean for the developed economies? For the United States? Michael Plummer, a researcher at the East-West Center, argues that forging closers ties with the ASEAN brings plenty of strategic value for the United States – 1) boosting the commercial ties between the US and ASEAN (the US exports 4 times more goods to ASEAN than to India), 2) secure an important ally in the global war on terror and 3) balance the economic growth of China and India, neither of which seem pro-US outright.

What is your take on the emergence of the AEC?

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