The ASEAN Economic Community (AEC) is an initiative by ASEAN leaders to bring about economic integration and free trade among its member nations. It is comparable in the West to the European Economic Community (EEC) and the North American Free Trade Agreement (NAFTA). ASEAN comprises 10 member countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. All the governments of these member countries have made public their commitment to developing a vision for the ASEAN Community by 2015.
AEC is one of the three pillars for establishing and developing an ASEAN Community, the other two being the ASEAN Socio-Cultural Community (ASCC) and the ASEAN Political-Security Community (APSC). As with the AEC, the main objectives of these pillars are to transform ASEAN into a region with free movement of goods, services, investment, skilled labor, and freer flow of capital.
Selected Key ASEAN Economic Indicators
How It All Started
- ASEAN leaders met in Kuala Lumpur in 1997 to form the Vision 2020 Blueprint.
- At the 12th ASEAN Summit in 2007, with the world economy becoming more competitive, the leaders realized the importance of accelerating the formation of ASEAN Community.
- In early August 2014, the leaders met at Nay Pyi Taw in Myanmar to reiterate their commitment to accelerating the implementation of an ASEAN Community vision for 2015, particularly for the AEC.
- The AEC is now on the fourth and final phase of implementation.
Characteristics of the AEC
As envisioned at the ASEAN Summit in 1997, the following are the key characteristics:
- A single market and production base
- A highly competitive economic region
- A region of equitable economic development
- A region fully integrated into the global economy
These characteristics are considered to be inter-related and mutually reinforcing.
Facts About and Benefits for ASEAN Members
- With a land area of 4.4 million square kilometers and a population of more than 625 million, the ASEAN Community will have better resources and scale efficiencies to be competitive at a global level.
- The AEC has the potential to improve regional cooperation within ASEAN.
- Many businesses have been gearing up for the past few years to meet the challenge and opportunities of the AEC.
- This aim of a common market shall facilitate smoother movement of businesspersons, skilled labor, and talent within ASEAN. The goal is that investors from these countries will face fewer regulatory measures, and qualified/skilled workers will have greater mobility and fewer restrictions on working in any of the ASEAN countries.
- The tourism sector and the healthcare industry anticipate plenty of opportunities from the AEC.
- The initiative has the potential to overcome the current inequitable economic development among the ASEAN nations.
- It could ultimately lead toward adopting English as the common language for business communication across ASEAN.
What Will 2015 Bring About?
The year 2015 is when specific changes are due to be implemented across ASEAN as outlined in the AEC blueprint “Strategic Schedule.” It includes the elimination of certain tariffs and import duties, leading to fewer restrictions for trade and investments. However, there is widespread speculation that many AEC measures are too ambitious and far-sighted for members to see any tangible changes in key areas, such as “facilitating free labor movement, freer movement of capital, and the elimination of Non-Tariff Barriers (NTBs).” Much will depend on how the local governments and markets in each of the member countries follow through and overcome local political opposition that values immediate national goals over long-term regional goals.
Nevertheless, 2015 will be a landmark year to bring home to each member country the weight of its commitment to the AEC and to kick-start time-bound measures toward integration into the regional economy.
