Macroscope | Asean Economic Community faces numerous challenges
Southeast Asian economies are among the most closed in some sectors
The Asean Economic Community (AEC) was born on New Year’s Day, but the full realisation of the AEC vision laid out in 2007 will take more time still.
The birth of the AEC met with wide acclaim in some circles and was assigned damp squib status by others.
The Asean conception of what regional integration means is far-reaching. But that does not mean it is overreaching. The role of naysayer is easy when ambition is high.
It is as well to remind ourselves how far Southeast Asia has come since 1967, when five states established Asean. The economics mattered, but at that time they were secondary to the politics. Asean then was crucially about working together to keep the peace in an extraordinarily diverse environment. That is still part of the integration drive in Southeast Asia.
Nearly a quarter of a century later, Asean’s 10 economies – Brunei, Indonesia, Malaysia, the Philippines, Singapore, plus Cambodia, Laos, Myanmar and Vietnam – are a growing force in global affairs. With a gross domestic product of US$2.6 trillion, the AEC is the seventh-largest economy in the world. With a population of more than 620 million, it is the third largest in Asia after China and India.
The AEC does not plan to pursue political or monetary union, as the EU has aspired to do, with mixed results
The AEC economies have collectively grown faster than any other Asian economy save China since the beginning of the century. During that same time span, GDP has expanded fourfold, per capita income threefold, and foreign direct investment inflows fivefold. The poverty rate has halved.
