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The Association of Southeast Asian Nations (ASEAN) is facing a number of challenges in the full implementation of the Asean Economic Community (AEC), the vehicle for regional economic integration, by end-2015, or barely a year from now.
At the AEC Forum held in Manila late last week, government officials and entrepreneurs of the 10-nation regional grouping all agreed that there is still a lot to be done although they maintained that they are getting ready for AEC.
The upbeat statement underlined the desire of ASEAN members to enhance the economic relevance of the grouping amid the growing integration of global economy.
Part of ASEAN economic integration efforts, initiated in early 1990s, are the ASEAN Free Trade Area (AFTA), ASEAN industrial Cooperation Scheme (AICO), ASEAN Framework Agreement on Services ( AFAS) and ASEAN Investments Area (AIA). The AEC is supposed to bring the 10 economies of ASEAN closer together than ever before.
According to the AEC Blueprint, 2015 will be the milestone year when ASEAN will be transformed into a region with free movement of goods, services, investments and skilled manpower.
The advantage of a more integrated ASEAN cannot be underestimated, experts here said.
It is the fourth most populous economic bloc in the world with combined gross domestic product of 2.3 trillion U.S. dollars and consistently among the fastest growing. The trade volume within the bloc was valued at 598 billion U.S. dollars in 2011, a 15 percent increase from 2010.
The implementation of AEC certainly presented an enticing prospect for business and investors in general.
As Singapore's Trade and Industry Minister Lim Hng Kiang said in late February on the sideline of the four-day Trans-Pacific Partnership (TPP) talks held in Singapore involving trade ministers from 12 Asia-Pacific nations, having an AEC will be crucial in the internationalization plans for Singapore companies, adding that "it's very natural that Singapore companies look at our immediate neighborhood...to see how we can look at the market opportunities."
But given the consensual manner that characterizes ASEAN and what has been agreed for the AEC initiative, the implementation has been fraught with delays and difficulties. Under the timeline for implementation earlier agreed by ASEAN's economic ministers, liberalization of the e-commerce, healthcare, logistics and tourism sectors was supposed to have been accomplished last year. Air transport was also supposed to have been liberalized last year but the deadline has been moved to next year.
Experts said that different national interests among ASEAN members still stand in way of the implementation of AEC. This is particularly evident in sectors such as agriculture, mining and financial services where the dynamics of domestic politics can hinder any progress toward trade liberalization.
The goal of regional economic integration by late next year is also shrouded in uncertainty because of the latest political developments in some major members of ASEAN.
For example, Indonesia, which is the largest and most important player in the implementation of AEC, will have a presidential election in July, so any quick decision related to AEC by Indonesia is very unlikely for most part of this year.
With its internal politics still in disarray, Thailand, the second largest ASEAN economy, will also likely to take longer time to agree on any terms of implementing AEC.
And there are a number of long-standing pitfalls among individual ASEAN members that have yet to be removed for AEC to be effectively implemented. These include weak judicial system, corruption, vulnerable financial infrastructure and various forms of restrictions on land-use and investment in some member countries.
Without addressing all these concerns, ASEAN may have a long way to go in realizing its ambitious goal of establishing a more integrated regional trade bloc, one expert said.
