On November 20, 2007, on the 40th anniversary of the founding of the Association of Southeast Asian Nations (Asean), the heads of government of the 10 member-states formally adopted the Blueprint for the Establishment of the Asean Economic Community (AEC) in 2015. Under the blueprint, Asean would be transformed into a “single market and production base, a highly competitive economic region, a region of equitable economic development, and a region fully integrated into the global economy.”
Fast-forward eight years and one month, we are no longer looking at a blueprint but rather the concrete reality of a single market and community of 625 million people. The nations have been working through a long list of tasks, from the elimination of import duties, the integration of capital markets, liberalization of skilled labor mobility, to intra-regional connectivity.
The single market has proved successful in drawing attention to the region. Since the blueprint was adopted in 2007, the region’s GDP nearly doubled, from $1.33 trillion to $2.57 trillion in 2014. In that year the Asean economy was the third largest in Asia and the seventh largest in the world. Total trade also increased $1.6 trillion to $2.5 trillion. Foreign direct investment (FDI) inflows into Asean also rose from $85 billion of 5 percent of global FDI to $136 billion of 11 percent. Gone are the days when investors see Asean as 10 stand-alone economies.
Without doubt, major strides have been taken in the few short years since the blueprint was signed, particularly in streamlining the legislative environment and trade facilitation. Big business has adapted particularly well to the regional environment, with major companies from most of the Asean states having realized the advantages of the single market many years ago. For them, the AEC means new opportunities and more business growth.
But in a region where the disparities among the member-countries stand out more that the commonalities, many sectors of society are struggling to come to terms with the dawning reality. SMEs, which make up the bulk of businesses and employers in countries across the region, are wondering what will happen when their locally made products face better or cheaper imported goods. Workers in many countries worry if they will still have jobs once better-qualified, multilingual people from the neighboring countries arrive in their country to work.
The reality is that the formation of the AEC on January 1, 2016, is not the goal in and of itself. AEC integration is, rather, an ongoing work-in-progress requiring constant adaption and reinvention in the light of continuous and often unpredictable global change. The full implementation of key measures and the realization of benefits for stakeholders may carry through under the Post-2015 Agenda, which will need the support from all.
The launch of the AEC is, in fact, just the start of the journey for the region’s 10 countries and 625 million people.