Asean bangs in economic community

KUALA LUMPUR – There will be a freer flow of goods, financing, workers and skills after the Association of Southeast Asian Nations yesterday formally organized the ASEAN Economic Community (AEC).

Leaders of the 10-member ASEAN, attending an annual summit held this year in Kuala Lumpur, put an aural exclamation mark on the agreement that will take effect at the end of the year by banging once in unison on a traditional drum from each of their nations.

The ASEAN bloc held the AEC as “a milestone in the integration process” as it attempts to create freer movement of trade and capital in an

area of 625 million people with a combined economic output of $2.6 trillion.

The AEC includes a political, security and socio-cultural dimension in a region with governments ranging from communist in Vietnam and quasi-military in Myanmar to the kingdom of Brunei and the boisterous democracy of the Philippines.

But it is the economic community that offers the most concrete opportunities for integration in a region whose combined gross domestic product (GDP) would make it the world’s seventh-largest economy.

“In practice, we have virtually eliminated tariff barriers between us,” said Malaysian Prime Minister Najib Razak, the summit host. “Now we have to assure freer movements and removal of barriers that hinder growth and investment.”

Najib said achievement of this vision will cause foreign investment in the region to “expand exponentially.”

The countries aim to harmonize economic strategies, recognize each other’s professional qualifications, and consult more closely on macroeconomic and financial policies.

They have also agreed to enhance the connectivity of their transportation infrastructure and communications, better facilitate electronic transactions, integrate industries to promote regional sourcing, and enhance private-sector involvement in the economy.

Eight groups of professionals will be able to work more easily throughout the region: engineers, architects, nurses, doctors, dentists, accountants, surveyors and tourism professionals.

‘No practical effect’

Diplomats, however, admitted Sunday’s declaration has no practical effect, and was largely meant to avoid having ASEAN – regularly criticized for its lack of concrete achievements – miss its own deadline of creating an AEC.

Several years ago, ASEAN set a 2015 target for launching an economic community.

A Southeast Asian diplomat conceded the single market vision is many years away but argued the declaration will help change ASEAN’s “mental map” and provide momentum.

“We hope this will help the people and governments to think more and more on the basis of regional interests rather than purely national interests,” the diplomat said.

Apart from Vietnam, Myanmar, Brunei and the Philippines, other members of the ASEAN are wealthy Singapore, one of the world’s most developed countries; developing states like Malaysia, Indonesia and Thailand, and poorer nations like Cambodia and Laos.

Although ASEAN’s plans were inspired by Europe, officials insist they want to pursue integration in a way suitable to the region’s circumstances, and have ruled out a common currency.

US President Barack Obama, who was also in Kuala Lumpur for a Sunday summit of ASEAN and regional partners such as China, Japan and India, praised the AEC and pledged American support.

Obama called the declaration a “major step toward integrating economies and greater regional stability.”