SINGAPORE — The Association of South-east Asian Nations (ASEAN) has set a goal of merging the economies of its member states into an integrated economic region by the end of next year, but questions remain over whether the project, known as the ASEAN Economic Community (AEC), will be fully achieved come its end-2015 deadline.
The work that remains over the next year is expected to be much tougher as the effort shifts towards reviewing each country's laws to open up domestic markets and allaying the protectionist concerns of local businesses and industries.
Analysts said much will depend on the political will of the countries to ensure that progress remains in sight, cautioning that the deadline should be seen more as a milestone in the integration effort to make the bloc a competitive economic region.
"The analogy is that we are waiting for a train of complete integration. The train will probably be a bit late and it's running slower than we had hoped, but it has not been knocked off of the rails," said Mr Simon Tay, chairman of the Singapore Institute of International Affairs. "But if we try driving it too fast, we will also have a derailment. So I think a steady, step-by-step process is needed."
The AEC aims to create a single market and production base with free movement of services, goods, capital, investment and skilled labour. Given the project's ambitious goals, analysts said, it is hardly surprising that it faces tremendous challenges.
But the opportunity is there for the 10-nation bloc, which groups Singapore with Indonesia, Thailand, the Philippines, Vietnam, Myanmar, Malaysia, Cambodia, Laos and Brunei. They have a combined nominal gross domestic product of US$2.4 trillion (S$3 trillion) and a population of more than 600 million people.
First mooted in 2003, the AEC is the economic plank of ASEAN's three-part vision of political-security and sociocultural integration by the end of next year. The project aims to produce a highly competitive economic region of equitable economic development that is fully integrated into the global economy. To help it achieve its goals, the AEC provides a blueprint and a scorecard to track progress.
ASEAN leaders provided an update on their progress at the ASEAN Summit last month, with the chairman's statement released after the meeting revealing that the bloc had implemented 82.1 per cent of the overall measures under the AEC. Noting that ASEAN was "at the tail end" of the implementation, it would prioritise fast-tracking the implementation of the remaining measures over the next year, the statement said.
So far, much of the success has been in the reduction of tariffs and the progressive liberalisation and removal of barriers to trade. But the remaining areas, which include issues such as eliminating non-tariff barriers, services liberalisation, labour migration, and the involvement of small- and medium-sized enterprises, are likely to be challenging to implement, said analysts.
"The remaining measures will be harder to achieve ... because if you want them to be achieved, it's going to involve domestic adjustment. It means these countries have to adjust their domestic laws and regulations to comply with the AEC agreement," said Dr Kaewkamol Pitakdumrongkit, an assistant professor at the S Rajaratnam School of International Studies' Centre for Multilateralism Studies, who studies the AEC.
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