Asean Economic Community – Gearing up for 2016 in 2015

The Asean Economic Community aims to help ASEAN become an international driving force and promote a real economic community. As with all forms of trade across countries within a region, a wide range of customs laws poses constraints.

In addition, manufacturing countries also need to review non-trade barriers, non-tariff barriers, customs licenses, import restrictions and other import conditions. The ASEAN community should eliminate all these barriers.

Industries that set up manufacturing bases in ASEAN will first have to realize economies of scale that reach beyond ASEAN. To use ASEAN as a global export base, success in the Region is essential. Looking at the long run, in order to maintain regional development, it is essential to keep the balance between domestic and export sales.

Despite its purported benefits, there are challenges to the successful implementation of the AEC:

* There is concern that countries might resort to protecting their own industries from the impact of integration.

* There is a need to synchronize the standards and policies across countries in the AEC. Excessive localization is to be avoided.

* Differences in terms of politics, religion and culture still exist and need to be addressed to avoid conflicts as the integration progresses.

The Thai Board of Investment expressed satisfaction that projects seeking its privileges reached US$ 33billion in value as of mid-December. Japan is still No. 1 among foreign investors applying for tax breaks, followed by the US and EU. The new BOI strategy promotes high-tech, creative and service industries that support the development of the ‘digital economy’, and industries that use local resources. Tax privileges are not the main incentives but the ease of doing business in the SEZs such as financial transactions, warehousing, logistics and support facilities.

Vietnam has started operating a new US$ 900 million airport terminal that will nearly double Hanoi’s flight capacity, the latest move in expanding what is one of the world fastest-growing aviation markets. The country also plans for a US$ 18.7 billion international airport in Ho Chi Min City as the existing airport will be at full capacity of 25 million passengers a year in 2016.

Against the major barriers to the formation of the AEC, labor and talent mobility could be the pushing force that can drive the AEC becoming a reality. The diversity in economic development among the ASEAN states has created irresistible pull and push factors for ASEAN talents and workers to flow from one nation to another in search of their dreams.

Just like the EU, until this economic diversity is equalized the cross-flow of talents among ASSEAN states will continue irrespective of whatever barriers each nation can erect to stem such a tide. The countries should abandon the fear of competing among themselves and avoid setting up immigration barriers that, at the end of the day, become impossible to supervise. Once there is harmonization of ASEAN standards and professional certifications, it will open up greater opportunities for skill upgrading in all areas of human resources, leading to improvements in work quality in the various ASEAN professional and craft categories. It will make sense to harness the ASEAN diversity in human resources by systematically facilitating free flow of ASEAN workers and talents to where they are needed the most. In the process, this can unleash the full potential of the 600 million ASEAN citizens and develop ASEAN into the formidable economic region that it ought to be.