The Asean Economic Community, which should come into effect on December 31, 2015, is further away than ever. That dream collides with the harsh reality. The question is: how serious are the participating countries in achieving a common goal, writes Nithi Kaveevivitchai in the Asian Focus attachment of Bangkok Post.
Many economists, academics and diplomats have doubted for years whether such a diverse group of ten countries is prepared to form an economic union.
Diverse indeed, as gross domestic product (GDP) per capita is US$43.929 in Singapore, one of the richest countries in the world, and $715 in Myanmar, one of the poorest countries. The ratio between the highest and lowest GDP is 1:61 in Asean against 1:8 in the European Union.
The main hurdles on the way to the AEC are a mismatch between political ambitions, a lack of opportunities and often a lack of political will in some member states, analyzes a recent report by the CIMB Asean Research Institute (CARI).
“The political emphasis on intra-regional trade does not correspond to economic reality,” says Jörn Dosch, the main author of the CARI report. If we look at current practice, it is striking that since 2003 intra-Asean trade has hardly increased and since 1998 by only 4,4 percent. It remains stuck at about 25 percent of the total trading volume in Asean.
Significantly, existing free trade provisions in Asean are hardly used, and 46 percent of companies surveyed by CARI say they have no plans to do so in the future. That is worrying because 99 percent of the flow of goods between Asean's six major economies is tariff-free. Moreover, competition hinders free trade. Many countries in the region produce the same products, so by definition they are not interested in opening up the borders.
The big companies are eyeing the US, EU and China
But there is more: about 95 to 98 percent of all companies in the Asean market are small and medium-sized companies. Most have little interest and opportunity to spread their wings beyond borders. The large companies in the region, on the other hand, are outward-looking. They focus on and compete with each other for access to the US, EU and China.
Are there no bright spots? Yes, intra-regional investments have increased in recent years. Apparently the Asean countries like to invest in their neighboring countries.
Conclusion of Jörn Dosch: 'Given the current state of affairs and the resistance that exists between member countries at national level, it is unlikely that all goals can be achieved. The AEC 2015 is a process, not an end point.'
(Source: Asia Focus, Bangkok Post, July 15, 2013)
an ordinary example: my brother-in-law retailer buys and sells duriam purchase around 30bth/kg at the Thai/Cambodian border and sales in BKK at 80bth the kg (attention you still have to deduct transport + accommodation + cutting and packing) his customers/acquaintances start already complaining BECAUSE with the free market economy of ASEAN in the offing, the price will have to go down (chinese / malaise cheaper)
I try to explain to him 1992 12 countries eu now 2013 27 countries but the pie has not gotten any bigger and so who is going to take care of the poor Singapore just like us in the EU!