ASEAN INTEGRATION

Supplement to the Global and Regional Economic Cooperation and Integration

Association of Southeast
Asian Nations
• ASEAN is a regional grouping that promotes economic,
political, and security cooperation among its ten
members.

• Member Countries: Brunei, Cambodia, Indonesia,

Laos, Malaysia, Myanmar, the Philippines, Singapore,
Thailand, and Vietnam.

• 8th of August is observed as ASEAN Day.

Did you know that
there is an ASEAN
Integration 2015?
History

1967 1992 2002 2007

signing of the ASEAN
Declaration (Bangkok
Declaration) by the Founding
Fathers of ASEAN, Indonesia,
Malaysia, Philippines, Singapore
and Thailand.
creation of ASEAN Free Trade formally called the regional advanced the achievement of
Area (AFTA) where the 6 older economy as ASEAN Economic the entire ASEAN communities
ASEAN member countries grant Community (AEC) – focusing on from 2020 to 2015.
preferential tariffs among each trade.
other and eventually abolish
such tariff and removed non-
tariff barriers.

Brunei Darussalam joined on

1984, Vietnam on 1995, Lao PDR
and Myanmar on 1997, and adoption of ASEAN Vision 2020 – included the ASEAN Security
Cambodia on 1999, making up leading to an ASEAN Economic Community and the ASEAN
the 10 Member States of ASEAN. Region. Socio-cultural Community.

1984 1997 2003

ASEAN
Integration 2015

• Addressing sub-regional issues

to support ASEAN-wide goals.
• GOAL: A region with free
movement of goods, services,
investment, skilled labor and
free-flow of capital.
Three Pillars ASEAN Political-Security
Community
ASEAN Economic
Community
ASEAN Socio-Cultural
Community
of ASEAN
Community ▪ Rules-based community ▪ Common market and
shared base of
▪ Human resources
development
▪ Peaceful, evolutionary,
production
shared sense of ▪ Provide adequate social
responsibility, and ▪ Competitive with other welfares and services
possessing regions
▪ Social rights and justice
comprehensive security
▪ A region with few
▪ Environmental
▪ Dynamic, supports efforts developmental gaps
sustainability
to form a global outreach
▪ A region that is
and mutual ▪ ASEAN identity
integrated yet able to
interdependence
retain its own ▪ The narrowing of
▪ Promotion and Protection momentum in moving developmental gap
of Human Rights forward external between member states
economic relations
 Goods & Manufacturing
• Electronics
• Wood-based products
• Automotive
• Rubber-based products
• Textiles and apparel
• Agriculture / Fisheries-based
products
Services
▪ ICT (e-ASEAN)
▪ Healthcare
Priority ▪
▪
Air travel
Tourism
Sectors ▪
▪
Education
Financial
 Forming: 2003 / 2007 – 2015
▪ Single Market and Production Base

Storming: 2016 – 2018

ASEAN Economic ▪ Competitive Economic Region
Community
Transition Map Norming: 2019 – 2021
▪ Equitable Economic Development

Performing: 2021 – 2025

▪ Integration into the Global Economy
What happened to
ASEAN Integration
2015?
 • From the business perspective, what is more
important than ASEAN's contribution to
ASEAN has peace and stability is what is built upon it.
optimistic plans • This depends on if outcomes are optimized.
for further Government officials would appear to be
integration until satisfied with ASEAN pursuing sub-optimal
goals as long as the group survives.
2025
• Businesses want ASEAN to thrive by
achieving optimal results.
Businesses point out that
ASEAN has so far failed to
become a fully functioning
single market and production
base because some tariffs
continue to exist and new non-
tariff barriers have appeared
even after the establishment
of the AEC was announced in
2015, which affects the cost of
intra-regional trade.
• For example, ASEAN bases its economic growth forecast through 2025
on several assumptions: tariffs will be zero (possible), the cost of
intra-regional trade will be reduced by 20% (improbable), and non-
tariff barriers will be reduced by half (unlikely). On the contrary, since
the AEC was announced, there have been many instances of the
reverse. Certificates of origin have been rejected, trade in some halal
products have been held up, and other conditions of doing business
within the region have not improved as expected.
• There are many complaints about rules and regulations that continue
to hinder investment, prevent services being delivered to those that
need them, and curb the movement of skilled labor despite the
signing of mutual recognition agreements, such as those pertaining to
engineers.

• ASEAN's consensual approach of not rocking the boat delays

progress despite the frantic pace of working groups meeting to
propose solutions. The pace of economic integration is insufficient in
meeting not only ASEAN's own goals but the ability of the region to
meet future global challenges.
China Syndrome
• ASEAN has not adequately taken into account the rise of China in its
integration plans, which could undermine its assumption of regional
cohesion. China's trade and investment with Southeast Asia is often
expressed in aggregated amounts. But this fails to convey the fact that
China's relations with ASEAN member countries are primarily conducted in a
bilateral manner, with some sub-regional consequences.
• In the sub-region of Cambodia, Laos, Myanmar, Vietnam, and Thailand,
economic ties with the southern Chinese provinces of Yunnan and Guangxi
are strong. Together, they form a distinct economic area of 400 million
people with an economy about half the size of the ASEAN. It is also growing
by 7%-8% a year, well above the ASEAN average of about 5%.
China Syndrome
• While such sub-regional developments are not extraordinary, what is
new is the central role being played by China, which is becoming the
most powerful country in east Asia, if not the world.
• China's Belt and Road Initiative is not empty rhetoric. The
transportation connections and logistics networks it will establish are
likely to change trade flows and volume within Southeast Asia. For
example, China has raised the possibility of helping to build the long-
discussed Kra canal across the Thai isthmus of the same name. This
will allow ships to bypass the Strait of Malacca, which would reduce
port business for Singapore and affect its distribution network.
China Syndrome
• ASEAN has to face up to these developments and possibilities and
redraw its economic integration plan to accommodate them. Its
gradual economic integration process cannot meet the dynamic
expectations of business, which wants fast results.
• The digitization of the economy is proceeding at a rapid rate, but the
2025 master plan only addresses this trend on a piecemeal basis. The
rise of automation, which threatens unskilled and semi-skilled
employment, is not addressed at all. The best way to meet this
challenge is developing new paradigms in education and job training,
but this is left up to the individual ASEAN countries to determine.
The Economic Divide
• Digitalization also threatens to widen the disparities among Southeast
Asian countries. Automation could end the use of low-cost labor in
manufacturing on which the poorest ASEAN survive, while countries
attuned to the potential of the digital economy will likely grow richer
because of greater productivity and the creation of higher value-
added industries.
• Chinese companies are beginning to dominate the digital space in
ASEAN economies, which could prevent Southeast Asia's own
technology companies from taking full advantage of the fourth
industrial revolution.
• These are all very real developments for the near future that
ASEAN is failing to address. Even with its less dynamic model of
integration, ASEAN is struggling to keep pace.
• The group needs a radical overhaul in thinking and leadership if
ASEAN is to remain the most relevant model for closer economic
integration in the future - a future that is already happening
now.
 Sources:
• ASEAN Economic Community (asean.org)
• Munir Majid, ASEAN integration lags the real
world, Nikkei Asian Review (asia.nikkei.com)