THREAT OF THE FUTURE FOR INDONESIA TO

ASEAN ECONOMIC COMMUNITY (AEC) IN

2015-2020 PERIOD

Disusun oleh :
1. Fitri Qurotul A’yun (20181111087)
2. Widia Sabilla (20191111042)

KELAS MN52R

STIE INDONESIA BANKING SCHOOL

Prodi Manajemen

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 FOREWORD
Praise and Gratitude for the presence of Allah SWT who until now still
gives us the favors of faith and health, so that we were given the opportunity to
complete the task of the Indonesian Economy entitled " Threat of The Future For
Indonesia To Asean Economic Community (AEC) In 2015-2020 Period ". We do
not forget to offer prayers and greetings to the Prophet Muhammad SAW who has
enlightened mankind, hopefully by upholding his Sunnah we will get happiness in
this world and the hereafter.

We also sincerely hope that this research will be useful and beneficial in
increasing knowledge as well as insight related to "Threat of The Future For
Indonesia To Asean Economic Community (AEC) In 2015-2020 Period", which
we present based on observations from various sources. This research is not
perfect because the knowledge and experience we have is still lacking. And
because of the limited theory and practice.

Thus our group expects constructive criticism and suggestions from

readers to improve and perfect the writing of this research. Therefore constructive
criticism and suggestions are expected by our group in order to achieve good
research.

Jakarta, 9 March 2020

Writer

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 TABEL OF CONTENT
FOREWORD...........................................................................................................2

TABLE OF CONTENT...........................................................................................3

CHAPTER 1 INTRODUCTION.............................................................................5

1.1 Background...................................................................................................5

1.2 Formulation of the problem...........................................................................9

1.3 Purpose........................................................................................................10

1.4 Benefits........................................................................................................11

1.5 Writing Systematics....................................................................................11

CHAPTER 2 THEORETICAL BASIS..................................................................13

2.1 Understanding Economy.............................................................................13

2.2 Understanding the Indonesian Economy.....................................................12

2.3 Introduction Indonesia and ASEAN Economic Community......................14

2.4 Indonesia In the Activities of the ASEAN Economic Community.............16

2.5 The potentials of the ASEAN Economic Community for Indonesia..........17

2.6 Threats In the Indonesian Economic Market …………………………….18

CHAPTER III RESEARCH METHODS..............................................................21

3.1 The Type of Research Used........................................................................21

3.2 The Method Used........................................................................................21

CHAPTER IV ANALYSIS...................................................................................23

4.1 What are the opportunities and challenges that can be taken in the ASEAN
Economic Community (AEC) performance program........................................23

4.2 What strategies should Indonesia do to face the AEC................................25

4.3 Data.............................................................................................................28

CHAPTER V CONCLUSION AND SUGGESTIONS.........................................33

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 5.1 Conclusion...................................................................................................33

5.2 Suggestions..................................................................................................35

DAFTAR PUSTAKA............................................................................................36

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 CHAPTER 1 INTRODUCTION

1.1 Background

We will see a new era in the economic integration of ASEAN

member countries in the near future. Indonesia and nine other ASEAN
member countries have agreed on an ASEAN Economic Community
(AEC) or ASEAN Economic Community (AEC) agreement. The nine
countries include Malaysia, Singapore, Thailand, Brunei Darussalam,
Cambodia, Myanmar, Laos, the Philippines and Vietnam.

MEA is a form of ASEAN economic integration which is held by

the trade system between ASEAN countries. Free trade means the absence
of tariff barriers (import duty 0-5%) and non-tariff barriers for ASEAN
member countries. This is done so that competitiveness in ASEAN can
increase and in order to attract investment and be able to compete with
India and China. The AEC was formed to allow one country to easily sell
goods and services to other countries throughout Southeast Asia so as to
create intense competition.

On the eve of entering the ASEAN Economic Community, in fact

there are still many unresolved problems that will be under the control of
the Indonesian government. These problems include the readiness of
Indonesian workers to compete with workers from abroad, slow economic
growth in the regions, the entry of foreign cultures that cause the fading of
Indonesian indigenous culture, and the lack of public knowledge about
opportunities arising from the implementation of the AEC.

The minimal threat to business actors will certainly be creativity

and innovation, and will be a problem for the sustainability of an industry.
Given the free market in ASEAN at the end of 2015, business actors are
required to be able to develop and innovate from products that have been

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produced. Lack of competitiveness between Southeast Asian countries,
which belong to the 2015 ASEAN Economic Community (AEC).
Indonesia will certainly be threatened when products and services from
outside can enter freely. Of course we can see this from several existing
indicators, such as gross domestic product (GDP), human resources (HR),
weakening exports, the quality of products and services will
simultaneously weaken when these business actors cannot compete with
countries that are joined in MEA 2015.

The background to the establishment of ASEAN is the strong

desire of the founders of ASEAN to realize a peaceful, safe, peaceful,
stable and certainly prosperous Southeast Asia. This occurs because the
situation in the 1960s was faced with a conflict-prone situation, namely the
struggle for ideological influence between major countries and conflicts
between countries in the region which could possibly disrupt the region so
that of course it could hinder development.

Starting from a desire to create a peaceful region, on August 8

1967 there were five foreign ministers, namely Adam Malik from the State
of Indonesia, Narciso R. Ramos from the Philippines, Tun Abdul Razak
from the State of Malaysia, S. Rajaratnam from the State of Singapore,
and Thanat Khoman from Thailand to be able to sit down together in the
main hall of the Ministry of Foreign Affairs building in Bangkok,
Thailand. The meeting discussed the region to discuss future cooperation
and relations between the five countries in Southeast Asia.

Since ASEAN was founded (1967-2017), ASEAN has made many

achievements and contributions to its member countries. ASEAN is
developing into an increasingly mature and dynamic organization, proven
by its resilience in facing various challenges at the regional and global
levels. ASEAN has also proven successful in maintaining security and
preventing the region, preventing the potential for open conflict so that it

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can become a driving force for growth, attract investment and sustainable
economic development.

Improving economic stability in the ASEAN region has agreed on

priority sectors towards that time. As it progresses, being able to face the
competition for the 9th ASEAN Summit in 2003 is determined by the 11
Priority Integration Sectors (PIS). However, in 2006 the PIS was
determined to develop into 12 which are divided into two parts, namely
seven industrial goods sectors and five service sectors.

There are seven goods sectors in the industry consisting of various

agricultural-based products, electronics, fisheries, rubber-based products,
textiles, automotive, and wood-based products. Meanwhile, the five
service se ctors are air transportation, health services, tourism and logistics
services. ASEAN countries and build a better economy in ASEAN
countries and can increase foreign investment in various countries.

ASEAN's desire to be able to form the MEA driven by external

developments and internal area. From the external side, Asia predicted to
be an economic power new, supported by several countries such as India,
China, and ASEAN countries. While internally, the economic strength of
ASEAN until 2013 has produced GDP of US $ 3.36 trillion with a growth
rate of 5.6 percent and has a support population of 617.68 million people.

The 2015 Asean Economic Community (AEC) or the ASEAN

Economic Community (AEC) is a form of ASEAN Vision 2020. The
ultimate goal is economic integration in ASEAN to face global challenges.
Creating a stable, prosperous and highly competitive ASEAN economic
region with free flow of goods, services, investment, skilled labor and free
capital. The AEC is a realization of the ultimate goal of economic
integration that has been adopted in the ASEAN Vision 2020 which is
based on the convergence of the interests of ASEAN member countries to

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be able to expand and deepen economic integration through existing and
new initiatives with a clear time limit. AEC was formed based on four
pillars, namely making ASEAN a single market and production center,
creating balanced economic growth, becoming a competitive economic
area, and integrating into the global economy.

MEA is a form of realization of the ultimate goal of the economic

industry in the Southeast Asian region. In line with the rapid dynamics
relations between nations in various region, ASEAN realizes its
importance integration of countries in Southeast Asia. At an informal
meeting of the Heads ASEAN countries in Kuala Lumpur on the 15th
December 1997 agreed to the ASEAN Vision 2020 which is then followed
up with the meeting in Hanoi that resulted Hanoi Plan of Action (HPA).
Vision 2020 including HPA contains, among other things: conditions that
want to be realized in several fields, such as outward orientation,
coexistence peacefully and creates peace international.

How important is ASEAN for the State of Indonesia. Because

Southeast Asian countries are the closest environment to Indonesia. The
impact, whether good or bad, will have a very big impact on Indonesia.
For example, during the financial crisis in 1997, it started from Thailand
first, then to Malaysia and Indonesia. So the impact will be very
pronounced because the environment is very close.

Then there's transboundary crime. So like it or not we have to be

able to pay attention to the closest environment around us. Is it from cross-
border drug crimes, or it could be terrorism, or human trafficking and so
on. If something in our neighboring country is on fire, it will affect us too.
We could burn too. For example like this, the influence of the presence of
many refugees in a Southeast Asian country, the impact is certainly clear
on us, such as the boatmen, Vietnam, the Rohingya.

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 So for Indonesia it is very important and it is also in accordance
with what is in the 1945 Constitution, which says that we must be
committed and carry out world order. This will directly affect us, carry out
world order, because it maintains peace and stability in the region so that
development in Indonesia can be carried out in a sustainable manner. So
the answer is very, very important.

Several agenda of activities to be implemented to realize the Vision

2020 is to improve quality human resources, economy, environment live,
social, technology, intellectual, copyright security and peace, and tourism
through a series of deep collective actions form a good cooperative
relationship and mutual benefit among ASEAN member countries.

Furthermore, at the 9th ASEAN Summit in Bali in 2003 produced

Bali Concord II, which agreed on the formation ASEAN Community to
strengthen ASEAN integration. There are three communities in the
customized ASEAN Community with three pillars in ASEAN Vision
2020, namely in the field of political security (ASEAN Political-Security
Community), economy (ASEAN Economic Community), and socio-
culture (ASEAN Socio-Culture Community). MEA is the ultimate goal
economic integration as it was declared in ASEAN Vision 2020, is “To
create a stable, prosperous and highly competitive ASEAN economic
region in which there is free flow of goods, services, investment, skill
labor and freer flow of capital, equitable economic development and
reduced poverty and socio-economic disparities in year 2020.”

There are four things that will become the AEC industry in 2015
which can be used as a good momentum for Indonesia, namely First, the
industries in the Southeast Asian region will be made into a unified area of
markets and production bases. With the creation of a unified market and
production base, there will be no barriers to the flow of goods, services,
investment, large amounts of capital and skilled labor from one ndust to

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 another in the Southeast Asia region. Second, MEA will be formed as an
economic area with a high level of competition, which requires a policy
that includes competition policy, consumer protection, Intellectual
Property Rights (IPR), taxation, and E-Commerce. Thus, a fair
competition climate can be created; there is protection in the form of
network ndust from consumer protection agents; prevent copyright
infringement; creating an efficient, safe, and integrated transportation
network; eliminating ndust Double Taxation, and; increase commerce with
online-based electronic media. Third, the MEA will also be used as an area
with equitable economic development, by prioritizing Small and Medium
Enterprises (UKM). The competitiveness and dynamism of SMEs will be
enhanced by facilitating their access to the latest information, market
conditions, human resource development in terms of capacity building,
finance, and technology. Fourth, the AEC will be fully integrated into the
global economy.

By building an industry to improve coordination with member

countries. In addition, the participation of countries in the Southeast Asian
region in the global supply network will be increased by developing a
package of technical assistance to the least developed ASEAN Member
States. This was done to increase industrial capacity and productivity so
that not only would they increase their participation at a regional scale but
also led to initiatives to be globally integrated.

1.2 Formulation of the problem

Based on the background description, the main problem in this

study is:

1. What are the opportunities and challenges that can be taken in the
ASEAN Economic Community (AEC) performance program?

2. What strategies should Indonesia do to face the AEC?

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1.3 Purpose
1. Knowing opportunities and challenges that can be taken in the
ASEAN Economic Community (AEC) performance program.
2. Knowing strategies should Indonesia do to face the AEC.

1.4 Benefits

1. Readers can find out what opportunities and challenges that can be
taken in the ASEAN Economic Community (AEC) performance
program.

2. Readers can find out what strategies should Indonesia do to face

the AEC.

1.5 Writing Systematics

The writing systematics will be described as follows:

Chapter I: Introduction
This chapter is an introduction to the problem so that
understanding of the ASEAN economic community (AEC) is easy to
understand. Where in this chapter contains the background, problem
formulation, research objectives, research benefits, writing systematics.

Chapter II: Theory Basis

This chapter describes the theoretical basis and references to
journals related to the existence of the ASEAN Economic Community
(AEC). Reference is also possible regarding laws / regulations related to
the ASEAN economic community.

Chapter III: Research Methods

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 This chapter contains a description of the types of research.
regarding how to collect data with preliminary studies, identification and
formulation of problems, research objectives.

Chapter IV: Analysis

This chapter contains a discussion of the ASEAN Economic
Community (AEC).

Chapter V: Conclusions and suggestions

This chapter contains the conclusions and suggestions of
researchers on the ASEAN economic community (AEC).

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 CHAPTER 2 THEORETICAL BASIS

2.1 Understanding Economy

Economy or economic comes from the Greek word Oikos or Oiku

and Nomos which means household rules. In other words, the meaning of
the economy is all that is related to matters relating to life in the
household, of course what is meant and in its development the word
household does not merely refer to a family consisting of husband, wife
and children, but also home. Broader ladder, namely the household of the
nation, country and the world.

In general, it can be said that the economy is a field of study

concerning the management of individual, community and state material
resources in order to improve the welfare of human life. Because
economics is a science in which there are human behavior and actions to
be able to meet the varied and developing needs of life with existing
resources through choices of production, consumption and / or distribution
activities. According to Adam Smith, Economics is an investigation of the
state and causes of state wealth. According to Abraham Maslow,
Economics is a field of study that tries to solve the problem of the basic
needs of human life through the galvanizing of all existing economic
resources on the basis of certain principles and theories in an economic
system that is considered effective and efficient.

2.2 Understanding the Indonesian Economy

According to Chester A. Bernard, he stated that the Indonesian

economy is a system which in fact is a large organization. In a system,
there is a bond between subject and subject or subject and object. The

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 definition of Chester can also be presented as an integrated and integrated
system. But each part in it still has individual characteristics and
characteristics, so that the parts that are joined are easy to distinguish.

According to Dumairy (1996), this particular economist expressed

his opinion that the economy is a form of system that functions to help and
establish economic cooperation, which is carried out through human and
institutional relationships. Dumairy added that his opinion again that the
economy that occurs in the order of life does not have to stand alone, but
must be based on a philosophy, ideology, and community traditions that
develop from creating a place.

According to Jhon Mc. Manama. Economics from the point of

view of John Mc. Manama concept that combines all functions into an
organic unit which is the goal of being able to achieve effective and
efficient results from the activities carried out.

In conclusion, the Indonesian economy is a combination of

methods or rules that are integrated and can be used to achieve goals in an
economy. By studying economics, namely to improve the welfare of the
whole society, and not for the welfare of individuals individually. AEC
2015 aims to improve the welfare of ASEAN which has the characteristics
of a single market and production base, a more dynamic and competitive
ASEAN region, has equitable development, and accelerates economic
integration in the ASEAN region and with regions outside ASEAN.

2.3 Introduction Indonesia and ASEAN Economic Community

With the large economic power between China and India, the
global economy has shifted towards Asia. The importance of the Southeast
Asian economy should not be underestimated either. A recent Asian
Development Bank report stated that - if the Association of Southeast
Asian Nations (ASEAN) were one economy - it would be the seventh

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largest economy in the world (having a market of USD $ 2.6 trillion) and
could be the Fourth economy - Largest economies provide growth rates
before 2014.

Unlike the European Union, ASEAN member countries are more

careful in their approach to regional economic integration. Therefore, there
will be no single currency (such as the euro in the European Union).
ASEAN consists of Indonesia, Malaysia, the Philippines, Singapore,
Thailand, Brunei, Cambodia, Laos, Myanmar (Burma), and Vietnam.

There are four pillars in the ASEAN Economic Community (AEC),

namely a single market and production base, a competitive economic area,
equitable economic development, integration with the global economy.

In Southeast Asia, Indonesia has the largest economy, has the

largest population and the largest land area. More than 250 million
inhabitants, Indonesia accounts for nearly 42 percent of the total
population in the ASEAN market. This implies that Indonesia has - and is
- a very large market. However, with high logistics costs (mainly due to
lack of quality and infrastructure) and relatively low quality of human
resources, it can be found that Indonesia is only a consumer (and
consumes products and services from other ASEAN countries).

The MEA also implies that member states must reduce

protectionist measures (such as non-tariff barriers) and open up sectors
that are politically and economically sensitive such as natural resources.
Recently, Indonesian President Joko Widodo said that the Indonesian
government must reduce protectionism and cut large subsidies because it
makes state businesses less competitive. On the other hand, the
government should be able to launch a series of economic stimulus
packages that include deregulation to strengthen domestic business.

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 In terms of competitiveness, Indonesia ranks 34th in the 2014-2015
World Economic Forum Global Competitiveness Index. This country is
below Singapore (2nd), Taiwan (14th), Malaysia (20th) and Thailand
(31st), but above the Philippines (52nd), Vietnam (68th) and Cambodia
(95th).

In terms of trade, the AEC may not have a major impact as most of
the tariffs among ASEAN members have been eliminated to zero percent
under the General Effective Preferred Tariffs system (which was
implemented - in stages - in 2003). However, under the system all
countries still have the freedom to set product-specific rules and non-tariff
barriers.

The main problem facing Indonesia is that it does not have a well-
developed manufacturing industry. In terms of productivity and growth,
Indonesia's manufacturing industry has been outperformed by other
countries in the region. This situation is caused by inadequacies in areas
such as technology, infrastructure, gas / electricity supply and slow
reforms in industry (thus limiting foreign direct investment).

2.4 Indonesia In the Activities of the ASEAN Economic Community

He the Asean Economic Community is ASEAN integration in the

economic field. The formation of the MEA is based on four pillars. First, it
can make ASEAN a single market and production center. Second, to
become a competitive economic area. Third, can create a balanced
economic growth, and the fourth or the last is integration into the global
economy. This integration aims to increase regional competitiveness,
promote economic growth, reduce poverty and improve the standard of
living of ASEAN people.

This integration is expected to build the ASEAN economy and

direct ASEAN as the backbone of the Asian economy. With the AEC

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 which was initiated, each ASEAN member country must combine its
territorial boundaries in a free market. MEA will unite the markets of each
country in the region into one market.

As a single market, free flow of goods and services is a necessity.

In addition, countries in the region are also required to free the flow of
investment, capital and skilled labor.

Indonesia adheres to economic openness and cooperation in the

exchange of goods and services to optimize the economic benefits we have
for the nation's progress, however the Indonesian state does not adopt free
trade in the sense that no single product can be freely traded across
borders. Things that can be the motor of economic growth in the context of
an open economy, namely international trade, namely exports and imports
as well as foreign capital inflows, so that national income from an open
economy, the role of exports and imports is important for increasing
economic growth.

2.5 The potentials of the ASEAN Economic Community for Indonesia

Indonesia is a potential market that has the largest area and

population in the region (40% of the total ASEAN population). This
certainly makes for a productive and dynamic economy that can lead the
ASEAN market in the future with market and investment opportunities.
The investment proportion of ASEAN countries in Indonesia reaches 43%
or nearly three times the investment proportion of ASEAN countries
which is only 15%. The country of Indonesia has the opportunity to
become an exporting country, because the value of Indonesia's exports to
intra-ASEAN is only 18-19% while outside ASEAN is around 80-82%,
this means that the opportunity to increase exports to intra-ASEAN-
ASEAN still has to be increased so that the rate of increasing exports to
intra-ASEAN was balanced by the rate of increasing imports from intra-
ASEAN. The liberalization of ASEAN trade in goods will ensure the

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 smooth flow of goods for the supply of raw materials and finished
materials in the ASEAN region because there are no longer tariff and non-
tariff barriers.

Free market conditions in the region will automatically encourage

producers and other business actors to produce and apply quality goods
efficiently so that they are able to compete with products from other
countries.

On the other hand, consumers also have a variety of alternative

choices that can be selected according to their needs and abilities, from the
cheapest to the most expensive. Indonesia is one of the big countries that
has a high level of integration in the electronics sector and a comparative
advantage in the natural resource-based sector, and has great opportunities
to develop industries in that sector at home.

Indonesia as the country with the largest population will benefit

from what is called a demographic bonus. The ratio of productive
population in Indonesia compared to other ASEAN countries is around 38:
100, meaning that for every 100 ASEAN residents, 38 people are
Indonesian citizens.

It is estimated that this bonus can still be enjoyed until 2035, which
is expected by the productive population to be able to support economic
growth and increase the per capita income of the Indonesian population.

2.6 Threats In the Indonesian Economic Market

The ASEAN Economic Community (AEC) in 2015 the

government will not back down or delay its involvement in the
liberalization of these goods and services.

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 The AEC includes intensive cooperation in the security and socio-
cultural fields. So that the Ministry of Foreign Affairs believes that the
benefits for Indonesia will be greater when joining in it.

ASEAN Competition Institute (ACI), Soy Martua Pardede assessed

that competition in the ASEAN free market will be very tight and cannot
be found in other regions such as Europe or America. Thus, it is
imperative to increase the competitiveness of domestic products mental
changes and perspectives in dealing with free trade in regional countries.
Because, not only ASEAN members, other developed countries also
participated in it. Indonesia also faces threats ahead of the holding of the
ASEAN free market.

Threats that will threaten the threat are Transactional and the threat
of Terrorism. Both threats will present challenges in themselves to
Indonesia. Transactional crime itself is a crime that sells illegal drugs,
there is also human smuggling and sea piracy. Several ASEAN countries
are the largest drug producers and have become transit points for the
distribution of illegal drugs to other regions.

Terrorism in the sea has emerged as a new threat in the world's

maritime, in contrast to piracy (piracy) and weapons piracy (Hijacking),
which are generally more often a threat at sea. The most basic difference
between terrorism at sea and piracy or piracy is motivation. of the
terrorists themselves, which can be seen when piracy and piracy are based
on economic motives, while terrorism at sea is based more on political
motives.

At this time, ASEAN already has a cooperation forum, namely the

ASEAN Regional Forum (ARF) and ASEAN Counter-terrorism (ACT)
which as in conducting dialogue between ASEAN countries or between

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ASEAN countries and countries in the Asia Pacific region that have an
interest in political issues and of course regional security together.

One of the steps that ASEAN can take in accelerating regional

political-security cooperation is to form the ASEAN Political-Security
Community or APSC which aims to achieve regional peace, including
with the international community. The ASEAN Ministerial Meeting on
Transnational Crime or AMMTC can become one of the sectoral bodies
under the APSC with reference to the ASEAN Work Program on
Transnational Crime.

The role of ASEAN, through its neutrality and centrality, can be

expected to be the key and the main player in defense cooperation in
maintaining regional peace and security. However, ASEAN can still be
considered a solid regional organization for other countries in the Indo-
Pacific region.

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 CHAPTER III RESEARCH METHODS

3.1 The Type of Research Used

The method we use in this research is qualitative method.

According to Uma Sekaran (2011), Chapter III Research Methodology
Research comes from the word "research" (research) which means looking
again. In other words, research is the process of finding solutions to
problems after doing research and also looking at relative factors. Based
on the type, research is divided into Quantitative and Qualitative Research.

According to Sugiyono (2015: 14) that the quantitative approach is

research based on the philosophy of positivism to examine specific
populations or samples and random sampling by collecting data using
instruments, data analysis is statistical.

According to Sugiyono (2009: 15) qualitative research is a research

method based on the philosophy of postpositivism, it is used to examine
the conditions of natural objects where the researcher is the key
instrument, the sampling of data sources is done purposively, the
collection technique is triangulation, the data analysis is inductive or
qualitative, and the results of qualitative research emphasize meaning
rather than generalization.

3.2 The Method Used

The type of data in this paper is qualitative data. According to

Lofland and Lofland in Moleong (2007: 157) in a main data source in
qualitative research, namely words, actions, the rest is additional data such
as documents and others. However, to be able to complete the research
data of this paper, two data sources are needed, namely primary data
sources and secondary data sources. Here we are using a secondary data
source. Secondary Sources of Data are sources that do not directly provide

21
data to data collectors, for example through other people or through
documents (Sugiyono, 2009: 309). Secondary data is data that has been
collected in order to solve the problems faced. This data can be found
quickly. in this paper, which can be a secondary data source is literature,
articles, journals and sites on the internet related to the research conducted.

22
 CHAPTER IV ANALYSIS

4.1 What are the opportunities and challenges that can be taken in the
ASEAN Economic Community (AEC) performance program

MEA provides opportunities for Indonesia. Helping Indonesia in

the ASEAN arena is becoming increasingly strategic where 43% of
ASEAN's population currently reaches 608 million people, and Indonesia
has the largest population in Southeast Asia. Geographically 53% of the
ASEAN region is Indonesian territory. Indonesia's economic growth is
quite high and relatively stable in the ASEAN region, which has grown in
the range of 6.1-6.5% in the last three years. 48.8% of Indonesia's
population is the younger generation representing the productive period or
era, so that is a demographic bonus.

For this reason, Indonesia must be able to fully compete with other
countries in the ASEAN economic community with all the opportunities
and challenges and immediately take an Action Plan so that the AEC has a
positive effect on the Indonesian economy. Indonesia can be used as a
reference for dominating the market in ASEAN if it is supported by high
productivity. Indonesia also has the potential for natural resources (SDA)
and human resources (HR). Of course, this is in line with the ASEAN
Economic Community Blueprint, which is essentially needed to provide
statements between ASEAN countries.

AEC can also be used as a bridge in building a food supply chain

and can act as an intermediary in carrying out export-import activities with
non-ASEAN countries. Indonesia is able to increase export-import
activities so that it can increase gross domestic product (GDP) or gross
domestic product (GDP). Thus, Indonesia is able to compete with its
superior products in the fields of fisheries, agriculture and plantations.

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 The challenges that arise from the enactment of the ASEAN free
market arise from various fields, such as trade in goods / services,
investment, employment, and MSMEs. In the field of trade and MSMEs,
every consumer wants the best products at affordable prices. This needs to
be watched out if the imported products that arrive are of better quality
than domestic products. An effect is a trade balance deficit.

The challenge that we can see, we hope to progress rapidly is the

diversity of Southeast Asia itself. The political system is different in each
country, some are democratic, some are monarchical, and some are still in
transformation and this can be a challenge too. So there are also challenges
from the political and socio-cultural systems as well as from the style of
religion, and also ethnicity. On one side this could be a unit, but there may
also be other parties this could be a challenge.

Because this diversity is very, very wide, it could be a diver in the

world, then its progress will be invincible with its diversity. So if the
Indonesian State can progress very quickly in one area, other countries
may not necessarily be ready in that field. Let's say that in the field of
human rights, there are countries that we may not be able to say, and
which are not yet diverse.

Then there is the next biggest challenge, which is the dynamics of

the relationship between the big powers and the big powers. These great
powers can see the region as a region that is competing for their influence.
Now this is also a challenge for ASEAN as well, because if member
countries are not very careful, maybe later the influence of the big
countries will be drawn. Therefore, ASEAN members must be aware and
must unite so as not to become an influential proxy in these big countries.
Now this could be a big challenge category that will certainly create.

24
 Meanwhile there are also many other internal challenges, such as
the diversity factor, there are also territorial disputes that have not been
resolved among ASEAN member countries, of course it could also be a
problem. The real challenge can also be the threat of transnational crime.
These can all be challenges. So, there are challenges that are internal, and
some are external.

4.2 What strategies should Indonesia do to face the AEC

Asean Economic Community (MEA) / AEC (Asean Economic

Community) 2015 is a project that has long been prepared by all ASEAN
members which aims to increase economic stability in the ASEAN region
and form a strong economic region among ASEAN countries. With the
enactment of the AEC at the end of 2015, ASEAN member countries
experienced free flow of goods, investment, labor to and from their
respective countries. The government issued Presidential Instruction
(Inpres) Number 11 of 2011 concerning the Implementation of the AEC
Blueprint Commitment in an effort to be able to prepare for the ASEAN
free market. In this AEC blueprint, there are 12 priority sectors that are
integrated by the government. The sector consists of seven goods sectors,
namely agro, automotive, electronics, fisheries, rubber-based industries,
wood-based industries, and textiles. Then the rest comes from five service
sectors, namely air transportation, health, tourism, logistics and
information technology. In this MEA era, these sectors are implemented in
the form of free flow such as goods, investment and labor. Indonesia's
strategy in dealing with MEA or AEC, namely:

1. Strengthening Economic Competitiveness

On 27 May 2011, the Government launched the Master

Plan for the Acceleration and Expansion of Indonesia's Economic
Development (MP3EI). MP3EI is a form of national economic
transformation that can be oriented towards sustainable, inclusive,

25
 quality, and of course sustainable economic growth. Since the
MP3EI was launched until the end of December 2011, 94
groundbreaking projects have been carried out in the real sector
and infrastructure development.

2. ACI Program (I Love Indonesia)

ACI (I Love Indonesia) is one of the 'Nation Branding'

movements part of the development of the creative economy which
is included in Presidential Instruction No.6 of 2009 which contains
Creative Economy Programs for 27 State Ministries and Local
Governments. This movement itself is still running until now in the
form of a national campaign that continues to run in various
domestic products such as clothing, accessories, entertainment,
tourism and so on.

3. Strengthening the MSME Sector

As for anticipatory steps that have been prepared by the

Ministry of Cooperatives and SMEs to assist KUKM players in
facing the ASEAN free market era, including increasing the insight
of KUKM players towards the AEC, increasing the efficiency of
production and business management, increasing market
absorption of local KUKM products, and can create a conducive
business climate. However, there is one of the main inhibiting
factors in the cooperative and SME sector to be able to compete in
the free market era, namely the quality of human resources (HR) of
KUKM actors, which is generally still low. Therefore, the Ministry
of Cooperatives and Small and Medium Enterprises conducts
guidance and empowerment of KUKM which is directed at
improving the quality and standard of products, in order to improve
the performance of KUKM to produce highly competitive

26
 products. The Ministry of Industry also carries out guidance and
empowerment of the small and medium industrial sector (IKM)
which is part of the UMKM sector.

4. Infrastructure improvements

We have succeeded in increasing the capacity and quality

of infrastructure such as road infrastructure, railways, land
transportation, sea transportation, air transportation,
communication and information technology, as well as electricity
such as Improving Road Access and Transportation, Repair and
Development of ICT Lines, and Repair and Development of the
Electrical Energy Sector.

5. Improving the Quality of Human Resources (HR)

There is one way to improve the quality of human

resources, namely through education. In addition, in order to
provide quality education services, the government has built
adequate educational facilities and infrastructure, including the
rehabilitation of classrooms that were severely damaged. Data from
the Ministry of Education and Culture for 2011 shows that around
173,344 classrooms at the SD and SMP levels were severely
damaged.

6. Institutional and Governance Reforms

In order to encourage the Acceleration of Corruption

Prevention and Eradication, a long-term 2012-2025 and 2012-2014
national strategy for preventing and eradicating corruption has been
established as a reference for all stakeholders to carry out actions
every year. Efforts to take action against Corruption Crime (TPK)

27
 are enhanced through coordination and supervision carried out by
the KPK to the Attorney General's Office and the Police.

4.3 Data

Gross domestic product of the ASEAN countries from 2015 to

2020

The data above is data from 2010 to 2020. We will discuss the data
for 2015 to 2020. We obtain this data by in billion international dollars. It
was founded in 1967 among these five countries (Indonesia, Malaysia,
Thailand, Singapore and the Philippines) to facilitate trade and economic
growth, as well as promote the development of cultural and social
structures in the region. To date, five other countries have joined them.
Countries that join, namely Brunei, Cambodia, Laos, Myanmar, and
Vietnam.

28
 In the data above, it can be seen that in 2015 the GDP of Brunei
was 33.24. Cambodia has a GDP of 54.5. Indonesia's GDP is 2,856.55.
Laos has a GDP of 41.84. Malaysia has a GDP of 831.27. Myanmar has a
GDP of 261.2. The Philippines has a GDP of 746. 28. The country of
Singapore has a GDP of 493.12. Thailand has a GDP of 1,118.84. Vietnam
has a GDP of 713.99. It can be seen that Indonesia is in the first position or
the highest position, while the second position is Thailand, the third
position is Malaysia, the fourth position is the Philippines, the fifth
position is the State of Vietnam, the sixth position is Singapore, the
seventh position is Myanmar, the eighth position is the country Cambodia,
the ninth position of the Lao State, and the last or the lowest is the State of
Brunei.

For data in 2016, we can see that for Brunei, the GDP is 32.76.
Cambodia has a GDP of 58.85. The country of Indonesia has a GDP of
3,031.39. Laos has a GDP of 45.24. Malaysia has a GDP of 877.25.
Myanmar has a GDP of 280.82. The Philippines has a GDP of 805.92.
Singapore has a GDP of 514.38. Thailand has a GDP of 1,169.19. Vietnam
has a GDP of 769.65. we can see that the State of Indonesia is still in the
first position or the highest in 2016, Thailand is also still in second
position, Malaysia is still in third position, the Philippines is also still in
fourth position, Vietnam is in fifth position, Singapore is in sixth position,
Myanmar is in seventh position, Cambodia is in eighth, Laos is in ninth
position, and Brunei is still in the last position or a low position in 2016.

In 2017 we can see that Brunei has a GDP of 33.82, Cambodia's

GDP 64.15, Indonesia has the highest GDP of 3,245.06, Laos has a GDP
of 49.24, Malaysia has a GDP of 945.09, Myanmar's GDP of 302.56,
Philippines has a GDP of 875.93, Singapore's GDP is 546.8, Thailand's
GDP is 1,239.65, and the last country Vietnam has a GDP of 838.56. In
2017, Indonesia still ranks first, second place is Thailand, third is
Malaysia, fourth is the Philippines, fifth is Vietnam, sixth is Singapore,

29
seventh is Myanmar, and eighth. is the State of Cambodia, the ninth
position is the State of Laos, and the lowest is the State of Brunei.

For 2018, Brunei has a GDP of 34.66, Cambodia's GDP is 70.66,

Indonesia has a GDP of 3,495.97, Laos's GDP is 53.62, Malaysia's GDP is
1,014.02, Myanmar has a GDP of 329.78, Philippines has a GDP of
953.29. Singapore's GDP is 579.38, Thailand's GDP is 1,322.56,
Vietnam's GDP is 919.77. In 2018, Indonesia was still in first position, in
second place was Thailand, in third place was Malaysia, in fourth position,
the Philippines, in fifth position was Vietnam, in sixth position, Singapore,
in seventh position, Myanmar, in the eighth position is the State of
Cambodia, the ninth position is the State of Laos, and the lowest is the
State of Brunei.

For 2019, Brunei has a GDP of 36.63, Cambodia's GDP is 76.96,

Indonesia has a GDP of 3,735.64, Laos has a GDP of 57.13, Malaysia's
GDP is 1,076.37, Myanmar has a GDP of 357.34, Philippines has a GDP
of 1,027.19 , Singapore has a GDP of 593.8, Thailand's GDP is 1,377.54,
Vietnam has a GDP of 1,001.48. In 2019, Indonesia was still in first
position, in second place was Thailand, in third place was Malaysia, in
fourth position was the Philippines, in fifth position was Vietnam, in sixth
position Singapore, in seventh position was Myanmar, in the eighth
position is the State of Cambodia, the ninth position is the State of Laos,
and the lowest is the State of Brunei.

For 2020, Brunei has a GDP of 37.34, Cambodia's GDP is 76.22,

Indonesia has a GDP of 3,778.13, Laos has a GDP of 57.91, Malaysia's
GDP is 1,064.8, Myanmar's GDP is 366.08, Philippines has a GDP of
1,040.41 , The country of Singapore had a GDP of 576.84, the country of
Thailand had a GDP of 1,293.92, the country of Vietnam had a GDP of
1,035.05. In 2020, Indonesia is still in first position, in second place is

30
Thailand, in third place is Malaysia, in fourth place is the Philippines, in
fifth position is Vietnam, in sixth position is Singapore, in seventh position
is Myanmar, in the eighth position is the State of Cambodia, the ninth
position is the State of Laos, and the lowest is the State of Brunei.

From the results above, I can conclude that in 2020 the GDP that
will decline is Singapore and Thailand. Even though in 2019, Singapore's
GDP was 593.8, in 2020 it decreased to 576.84, and for Thailand in 2019
its GDP was 1,377.54, experiencing a decrease in 2020 to 1,293.92.

The GDP of a country can go up and down due to several things

such as companies or people working so as to produce more goods and
services. Companies or people who work produce fewer goods and
services that make GDP fall. What causes the company or person to
produce more or less of these goods and services. What can affect is
demand. If demand increases, the company or person will produce a lot of
goods and services, and vice versa. Then what affects demand. What
affects demand is the price, if the price rises, the transaction will definitely
require more money, but the amount of money that comes in remains.
Because the amount of money is fixed, fewer goods and services will be
produced.

The ASEAN Economic Community (AEC) which took shape in

2016 provides opportunities for the entry of labor from Southeast Asia to
Indonesia. And Ag. However, there are concerns that the opportunities that
can be enjoyed during the AEC will harm Indonesia.

It is feared that the implementation of the AEC will make

Indonesian human resources with the best talents choose to work abroad.

Infrastructure to support business in Indonesia tends to be a little

expensive when compared to other countries in the Southeast Asia region

31
 MEA is an economic integration program launched by ASEAN
countries for trade and trade between ASEAN countries, which is
appropriate at the end of 2015. This program supports borderless
economic integration between ASEAN countries. The MEA program itself
aims to realize the ASEAN Vision 2020 which includes the ASEAN
Political Security Community and the Asean Socio-Cultural Community.

The benefits obtained by these parties must be positive sum-

game / absolute gain, or benefit all parties working together, these rules
exist not to curb, but to ensure that the parties in it do not act as they please
and harm the other party, because in fact the international world is
anarchy, because of the regulations as required. This idea later became the
basis for the MEA and other trade agreements.

32
 CHAPTER V CONCLUSION AND SUGGESTIONS

5.1 Conclusion

Economic development in Indonesia's performance has resulted in

the need for Asean to form an integrated economy which aims to achieve
the formation of an Asean economic community. AEC, namely making
Asean an economic area, creating balanced economic growth and
integration into the global economy, in the form of Asean member
countries to be above state sovereignty and to have power for member
countries in an agreement in the form of Asean. Indonesia's performance
can work together to achieve the Joint Asean goal of an integrated
economy. increase economic stability in the ASEAN region, and is
expected to be able to overcome economic problems between ASEAN
countries. One of the consequences of the AEC agreement is the free flow
of skilled labor for ASEAN countries. In the free flow of skilled labor,
Indonesian workers are free to enter ASEAN countries, as well as foreign
workers who are free to enter Indonesia without any significant obstacles.

There are four things that will become the AEC industry in 2015
that can be used as a good momentum for Indonesia, namely First, the
industry in the Southeast Asia region will be made into a unified market
area and production base. With the creation of a unified market and
production base, there will be no barriers to the flow of goods, services,
investment, large amounts of capital and skilled labor from one ndust to
another in the Southeast Asia region. Second, the MEA will be formed as
an economic area with a high level of competition, which requires policies
that include policy policies, consumer protection, intellectual property
rights (IPR), taxation, and E-Commerce. Thus, a healthy climate
competition can be created if; there is protection in the form of networks
and consumer protection agents; prevent preventing copyright; creating an
efficient, safe, and integrated transportation network; implementation of

33
double tax ndust, and; increase commerce with online-based electronic
media. Third, MEA will also be used as an area with equitable economic
development, by prioritizing Small and Medium Enterprises (SMEs). The
competitiveness and dynamics of SMEs will certainly be improved by
facilitating their access to the latest information, market conditions, human
resource development in terms of capacity building, finance and
technology. Fourth, the MEA will be fully integrated into the global
economy. By building industry to improve coordination with member
countries.

The ASEAN Economic Community was formed with a mission to

make the economy in ASEAN even better and of course able to compete
with countries with more advanced economies compared to the current
conditions of ASEAN countries. In addition, with the realization of the
ASEAN Community in which the AEC will certainly place ASEAN more
strategically in the international world, we certainly really hope that the
realization of the ASEAN economic community can open the eyes of all
parties, so that there will be dialogue between sectors that will also occur.
complement each other among economic sector stakeholders in this
ASEAN country. Indonesia's challenge going forward is to bring
meaningful changes to the daily lives of its people. Hopefully all the
people in this country of Indonesia can participate in helping to realize a
decent economic and social life so that we can all of course create an
ASEAN economic community.

If the opportunity is wide open, if it is not immediately exploited,

we will certainly be left behind, because this process also follows the
movements of other countries and continues to roll. We must prepare
ourselves to prepare Indonesian Human Resources that are competitive
and of global quality.

34
5.2 Suggestions

The Indonesian people must increase the level of readiness they

have in facing the ASEAN economic community. Foreign workers are not
only seen as a threat, but can also encourage the development of local
labor so that they can become useful human resources and can compete
with foreign workers who are brought in an integrated open market.
Protection of Indonesia's performance must also be improved so that there
is a balance between foreign and local workers.

35
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