AEC Moving Forward: Slowly but surely
he ASEAN Economic Community (AEC), which took effect end of 2015, is admittedly not moving as fast as it should and that progress largely remains unpalpable.
But instead of contradicting the critics and arguing the stagnation theory hurled against AEC, Senen Perlada, director of the Exports Management Bureau of the Department of Trade and Industry, would rather look at ASEAN perceptively.
“What if there is no ASEAN, no AEC, what would have happened to southeast Asia, not only in the economic aspect but also socio, cultural and political fronts,” Perlada asked.
It is a good thing for us to realize though that it’s 50 years already from the time ASEAN started in 1967.
“None of the ASEAN countries ever imagined that we even reached this stage,” said Perlada.
With the disparity in economic developments and fragile young democracies of its member countries that are separated by bodies of water, ASEAN has slowly emerged. Other regional blocs though were quick to integrate, only to be heading for disintegration years after.
ASEAN has also emerged that the real role of ASEAN now really it has become a very big economic bloc. It has a young demographic with a growing consumer spending power of its more than 500 million population.
“ASEAN has slowly emerged, slowly but surely it is now a force to reckon with here in Asia,” said Perlada.
“With the giant China flexing its muscle and dominating in the region, can you imagine without ASEAN. However small or slow our pace towards integration is, it is still better that we have it. Just imagine if we did not have ASEAN. I think that is one perspective that we have to realize. So far, slowly but surely we are integrating,” he pointed out.
One thing that could is slowing down ASEAN is the way it is being structured with the concept of centrality where no one is left behind. ASEAN operates on a consensus basis all the time. But this model works well for ASEAN in ensuring that nobody can dominate the grouping whether you are a big country like Indonesia or small but with huge economic power like Singapore. The developing member countries are also growing.
“ASEAN is not integrating fast but we are moving towards that. Because of that we are the darling of the world now,” Perlada pointed out.
The AEC, which took effect at the end of 2015, has four pillars. These are single market and production base; competitive economic region; equitable economic development; and ASEAN’s integration into the global economy.
Of these four, the first pillar appeared to be most quantifiable to gauge the success of ASEAN.
The operative vehicle for the first pillar is the ATIGA (ASEAN Trade in Goods Agreement). The free flow of goods in ASEAN was substantially achieved with the realization of the AFTA in 2010.
With the effectivity of AEC, the original ASEAN 6 (Brunie, Indonesia, Malaysia, Philippines, Singapore, Thailand) have at least 99.65 percent of tariff lines already at duty-free. The CLMV (Cambodia, Laos, Myanmar, Vietnam) are at least nearly 98.86 percent of all tariffs in the 0-5 percent range. Duties remain only for products in the Sensitive List and the Highly-Sensitive List.
If this is going to be the basis of integration, then ASEAN is already integrated.
ASEAN has come up with priority integration sectors as catalysts for overall ASEAN economic integration. These are composed of 7 goods sectors agriculture, automotive products, electronics and electrical goods, fisheries, rubber, textiles and clothing, and wood-based products. There are also priority services sectors, including air transport, E-ASEAN, health care services, logistics, and tourism.
To become a single production base, ASEAN also implemented the ASEAN Comprehensive Investment Agreement on March 29, 2012 to facilitate a free flow of investment and promote greater investor confidence. Already, companies are investing and expanding in ASEAN countries.
To facilitate free flow of capital, ASEAN seeks to liberalize financial services, capital accounts and capital market development.