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Time running out to address problems ahead of AEC

Publication Date : 25-09-2013

 

Looking at the potential downside of things can be useful - and now would be a good time for countries in Asean to consider and prepare for any problems relating to the Asean Economic Community they could face in the not-too-distant future.

Countries in Southeast Asia are seeking ways to come together under the name of the AEC, scheduled for launch by the end of 2015. The 10 countries in the region will integrate themselves politically, economically and socially.

It is very logical for them to get together when the world order is changing, as countries are matching up and grouping together to improve economies of scale and competitiveness.

With a population of over 600 million, Asean has pledged to merge their economies into a single market promoting liberalisation in trade, investment and services as well as the free movement of professional workers. Import duties and non-tariff barriers are coming down and will be eliminated eventually.

Politically, the 10 countries created their association as a legal entity and tried to adopt a common stance, if not a single policy, toward many international issues.

Socially and culturally, they are preparing to promote people-to-people linkages, cultural exchanges and even consideration of a more harmonised view of history.

Time is running out fast. There are only two years left. Many countries say they are preparing in a rushed manner to usher their economies and people into the community.

Former Malaysian prime minister Mahathir Mohamad shouted a loud warning recently that nine of the 10 Asean countries are not ready for integration. Many countries, notably the new emerging economies, would face difficulties if they hurried to join the Asean Community.

The European Union, which was an inspiration for Asean integration, had a very long history in building a common community but failed due to inequality, he said.

Singaporean Prime Minister Lee Hsien Loong, whose country is regarded as the most ready Asean member, agreed, saying the poor countries might need to bite the bullet if the group really wants to deepen the integration.

The two senior Asean politicians might be right. There are differences among Asean members in term of economic development, policy and strategy. The gap between the rich and poor members is very wide. Singapore's per-capita GDP is US$50,130, while it is only $879 in Cambodia and $875 in Myanmar.

Even among the mid-ranked countries, their gaps vary yawningly. |Per-capita GDP in Malaysia is $9,941, |in Thailand $5,116, Indonesia $3,563, the Philippines $2,341, Vietnam $1,403 and Laos $1,279. This might make Asean an unequal community.

Trade and investment within other regional groupings are very high but they are relatively low within Asean. Of the combined $2.3 trillion in trade done by Asean members, only 25 per cent is among the 10 members. Intra-Asean investment was only 23 per cent of the $114 billion foreign direct investment in the region.

People in Asean are relatively poor. They don't travel much to see each other. Most visitors to Asean countries come from outside the region. This means Asean people have a weak sense of community.

 

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