As Asean moves towards one community at the end of 2015, a troubling question is being asked - whether the grouping is really gluing, or just mere rhetoric. Well, the answer would be - a combination of both.
To be fair, it has taken Asean nearly five decades to come this far with such an ambitious plan for economic, political, social and cultural integration. Persons familiar with Southeast Asia and its diversity will immediately understand the difficulties all these developments have to overcome. The beauty of this evolutionary process of simultaneous national building, coupled with a regional community-building approach, is that no country is being left out. For sure, it is a slow train reaching its destination.
Looking ahead, Asean has some good news. For the time being,the nework has made great strides in reducing the poverty level in member countries from 45 percent in 1990 – to about 15 per cent a decade later in 2010. Only China has been able to reduce a higher poverty level.
A middle income group within the 630-million community has risen from 15 per cent in 1990 to 37 per cent in 2010, totalling 144 million people – while China and India will each have 230 and 75 million respectively. The Asean middle class was larger than India’s, although much lower than China’s. This middle income group will become the new engine of growth in East Asia and part of a global economic driving force.
Another trend is the inbound investment from around the world. As the Asean Community (AC) is approaching, new investors are coming and wanting to take advantage of the market that is bigger than European Union. They know well the grouping’s potential and want to come early to harness its rising economic power.
From the regional perspective, at the moment both Asean and China have enjoyed huge foreign direct investment, overriding fear that the latter would attract a larger share. In 2013, Asean received US$126 billion worth of investment, US$2 billion higher than China at US$124 billion. Indonesia, Vietnam and Myanmar are also attracting increased new investment from abroad. The future trend is favorable to ASEAN as the community-building is going on at full swing. However, the region’s biggest challenge is to improve its overall competitiveness vis-à-vis China.
However, despite this encouraging progress, Asean still needs to eradicate poverty within its ranks. In 2010, there were 100 million people living in dire poverty and nearly 200 million – if the threshold income is set at US$2 dollars a day. Indeed, the ultimate aim of Asean integration is to improve the overall standard of living and quality of life. Otherwise, the people-centred community that the Asean leaders pledged again and again to attain would be hollow.
With Malaysia as the new Asean chair, the economic integration in Asean will be a further boost as it oversees the AC arrival. Several Asean countries are still lagging behind in implementing some of the so-called behind the border measures, such as national single windows, investment liberalization, services, to name but a few. At the recent summit in Nay Pyi Taw, all Asean leaders pledged to do more.
In the case of Thailand, the Nation Reform Council has recently identified a total of 106 Thai laws that needed to be amended in order to implement fully the action plans outlined in the Asean Economic Community. Although the Prayut government has made the country’s integration with an Asean economy its top priority, the Thai bureaucrats are still not in sync with him. Over six months have elapsed and the government is still struggling to improve its scorecard among Asean countries. Thailand achieved nearly 90 per cent of the AEC blueprint with the Asean average of 82.1 per cent. It seems, albeit all the promises and good faith, the AC deadline will pass without Thailand reaching full compliance as pledged.
Thailand is not alone, other original Asean members also face a dilemma in fulfilling the AEC blueprints. Indonesia, the Philippines and the Philippines have their own Achilles’ heels. Under the new administration, Indonesian President Joko Widodo has to display more political will if the grouping’s largest economy is to further integrate with the Asean economic dynamism. So must the Philippines.
Ranking fifth in implementing AEC blueprints, Malaysia has a herculean task to perform, compounded by the aftermath of floods in the country’s Eastern Coast. While tracking the Asean implementation of all three pillars, the new chair has to complete the AC Post 2015 Vision by the end of next year, through the Asean Coordinating Council, for the Asean leaders.
Eventually, to deepen economic integration in Asean, there must be an effective monitoring mechanism within the grouping that follows up on each member’s commitment and quality of implementation. Otherwise, the effort to turn Asean into a competitive single market and produce base will remain elusive.
(Note: All statistics were from Asean Rising: Asean and AEC Beyond 2015, published by ERIA)