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Benefits of the ASEAN Economic Community

AEC

Last update: February 25, 2016 Doing Business, Market information & data, Southeast Asia
business resources AEC, business, capital, competition, development, integration, investment, labor,
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Implemented on 31 December 2015, the ASEAN Economic Community proposes to

consolidate the economic integration of the region. This review summarizes the
state of the ASEAN integration, how it will benefit the private sector to do business
in the region and the progress of each country towards this ambitious goal.

From the official report of May 2014 by the ASEAN, entitled Thinking Globally,
Prospering Regionally ASEAN Economic Community 2015 the following table
summarizes its very positive economic and demographic evolution between 1990,
2000 and 2012.

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Principles of the ASEAN Economic
Community AEC
The ASEAN countries are engaged in a process to transform ASEAN into a real
economic community by the end of 2015. Originally built as a political alliance to
limit the spread of communism in Southeast Asia, ASEAN gradually became a
diplomatic organization to manage regional issues and expand trade with the
inclusion of Vietnam, Cambodia and Laos and their opening to a market economy.

Having stood on a minimalist smallest common denominator approach that

emphasized harmonious relations and respect of national sovereignties, ASEAN
countries nonetheless also came to greatly develop trade through quite ambitious
economic treaties and free-trade agreements for Southeast Asia.

ASEAN leaders have now embarked the Southeast Asian association to the next step
of economic development, which will also ultimately bring the Southeast Asian
peoples closer. They have engaged since 2007 towards the integration of ASEAN into
an ASEAN Economic community based on 4 economic pillars:

4 pillars of the ASEAN Economic Community

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 Single Market and Production Base: the region as a whole must become a
single market and production base to produce and commercialize goods and
services anywhere in ASEAN
Competitive Economic Region: the region must emphasize on the
competitiveness of its production and capacity for export, as well as the free
competition inside of its frontiers
Equitable Economic Development: to receive the benefits of th AEC, the people
and businesses of ASEAN must be engaged into the integration process of the
AEC
ASEANs integration into the globalized economy: ASEAN must not be isolated
but an integrated part of the global economy

Through the implementation of these 4 pillars for economic integration, stability,

competitivity and dynamism, ASEAN is bound to realize the principles of an
Economic Community, inspired by the model of the European Union.

5 core principles of the ASEAN single market and

production base
Free flow of goods
Free flow of services
Free flow of investment
Free flow of capital
Free flow of skilled labor

Various business leaders such as AirAsia CEO Tony Fernandes, and political
ones like Singapore PM Lee Hsien Loong have stated that ASEAN will require some
more time beyond 2015 to fully realize the vision of the AEC. Yet, ASEAN is well
advanced on its roadmap to formally realize the AEC by December 2015
as it achieved almost all its targets in the reduction of trade duties.

To present all the work that has been completed and inform ASEAN economies and
businesses, the Association of Southeast Asian Nations has produced the report
Thinking Globally, Prospering Regionally ASEAN Economic Community
2015 that highlights the achievements towards the AEC and its vision for the future.

ASEAN economic integration

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achievements and objectives report
highlights
ASEAN countries form a market of over 600
million consumers and combined GDP of
almost US$3 trillion, with a vibrant and
growing economy that presents fantastic
economic perspectives for the future of
ASEAN.

Trade
Concerning the free flow of goods: as of
2010, duties were eliminated on 99.2% of
tariff lines for the ASEAN-6 Member States
(Brunei Darussalam, Indonesia, Malaysia,
Philippines, Singapore and Thailand).
Click to download the full report on
In the other member states (Cambodia, Lao
the ASEAN Economic Community
PDR, Myanmar and Viet Nam), 97.52% of
tariff lines have been reduced to 0-5%.
Measures to reduce technical barriers to trade are also being implemented.

ASEAN Member States are also working towards the achievement of the free flow of
services through the ASEAN Framework Agreement on Services (AFAS).

For more information, check this overview of trade and foreign investment in
ASEAN.

Investment
ASEAN is committed to building an investment environment to attract businesses: it
created the ASEAN Comprehensive Investment Agreement (ACIA), which includes
commitments towards the liberalization and protection of cross-border investments
operations, together with best practices for the treatment of foreign investors and
investments.

For the free flow of capital, stock exchanges from Indonesia, Malaysia, Philippines,
Singapore, Thailand and Viet Nam are working together to form the ASEAN
Exchanges, aiming to promote ASEAN capital markets and to offer more
opportunities to investors in the region.

Labor
ASEAN works towards facilitating the free flow of skilled labor: the ASEAN
Agreement on the Movement of Natural Persons (MNP) provides a legal framework
to ease temporary cross-border movements of people engaged in the trade in
goods, services and investment.

For more information on the skilled labor market in ASEAN as well as existing
opportunities for certain professions through Mututal Recognition Agreements,
check this overview of the ASEAN skilled labor market.

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Competitive Economic Region
By creating a competitive economic region, the AEC wants to foster a culture of fair
competition, which includes protection of consumers and guarantees for
intellectual property rights. It also requires infrastructures (highways, airports and
rail links, power grids and gas pipelines) under planning and development.

Equitable Economic Development

The AEC will enhance competitiveness and expansion of SMEs in ASEAN through
various projects under the Strategic Action Plan for ASEAN SME Development
(2010-2015).

Integration into the Global Economy

Thanks to various ASEAN+1 free trade agreements with the Peoples Republic
of China, Japan, the Republic of Korea, Australia, New Zealand and India, ASEAN is
positioned in the middle of global supply chain, developing strong trade
connections with the major Asian economies and generating new business
opportunities.

Increased business interest in the AEC

ASEAN is benefiting from a steady increase in Foreign Direct Investment (FDI), with
an average growth of 14% since 2000.

As the 2015 deadline of the AEC arrives, ASEAN expects business interest in the AEC
to increase, as more and more businesses will benefit the ASEAN integration and
develop ASEAN-centered strategies in their corporate policies.

This very positive sentiment towards business in ASEAN is shared by many local and
foreign companies, as shown by the US companies outlook in ASEAN for 2015,
and opportunities of AEC for Chinese and Hongkongese companies outlined at the
Asian Financial Forum of 2014.

Progress of the ASEAN integration

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For a more comfortable reading, it is quite
suggested to open the report in full screen. This
report is also available in PDF format, click on
the report cover to open it.

In this report by Bloomberg Briefs from

December 2014, the situation and progress of
each ASEAN country is detailed with a
particular focus on trade of goods and
services, investments evolution review and
insights on capital regulations.

This report assesses the macroeconomic

situation of each country and gives extensive Click on the report cover to open
reviews as to what should come after 2015 to the PDF
further the ASEAN integration, using the
European Union and North American Free
Trade Agreement NAFTA as benchmarks.

ASEAN integration progress report summary

Target 2015 Deliverables for next year. page 3
ASEAN by the numbers How Asean stacks up against its peers. page 5

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 Brunei Scorecard of Aseans top oil exporter. page 6
Indonesia Scorecard of Aseans largest population. page 7
Malaysia Scorecard of Aseans largest local currency bond market. page 8
Philippines Scorecard of Aseans largest household spender. page 9
Singapore Scorecard of Aseans richest member. page 10
Thailand Scorecard of Aseans automotive hub. page 11
CLMV countries Cambodia, Laos, Myanmar and Vietnam Scorecard of
Aseans newest members. page 12
Implementation reality Bloomberg Brief talks with Iwan Azis, head of the
Asian Development Banks Office of Regional Economic Integration. page 13

ASEAN real work comes post-2015

Integration precedents Insight from the European Union and Nafta. page 15
Experiences in the European Union and America foreshadow gains in ASEAN

Progress benchmarks How Asean is on track to reap the rewards of

integration. page 17
Political will
Economies of scale
Extra provisions
Flexibility

Key Messages of the ASEAN Economic Community

SHARED MARKET, SHARED BENEFITS
FROM TEN to ONE

SIMPLIFIED RULES, GREATER ACCESS

TRADING ON A BIGGER STAGE

ASEAN: HOME FOR YOUR INVESTMENT

PARTNERS IN BUSINESS

MAKING CAPITAL WORK FOR YOU

EXPANDING ACCESS TO FINANCE

ASEAN PROFESSIONALS ON THE MOVE

BEST PEOPLE AND BEST PRACTICES

What comes next?

The private sector must be engaged as the key partner in making the AEC a success

ASEAN is embarked on a journey to transform economic relations in South-East Asia

2015: JUST THE BEGINNING

Related posts

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 7 insights and perspectives about ASEAN

ASEAN trade and foreign investment overview

Connecting the ASEAN community

Opportunities of the ASEAN Economic
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Tessie Sy-Coson: ASEAN awareness in the
Philippines

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3 thoughts on Benefits of the ASEAN Economic

Community AEC

Agus Burhan
December 18, 2015 at 20:06

Excellent description of Asean Single Market as a base for corporate strategic

directions. Thank u.

Reply

David
March 3, 2016 at 15:21

Will members of one country be able to travel and live in another member country?

and also buy property in another member country?

Reply

ASEAN UP
March 3, 2016 at 15:35

Hi David,

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 Well, as of 2016, some skilled workers can go work in other ASEAN countries
provided they satisfy the criteria and complete the skills recognition process in
place in the country where they want to travel. For more on these Mutual
Recognition Agreements, check the overview of the ASEAN skilled labor market.

With regards to buying property, it depends on each ASEAN countrys laws. Most
ASEAN countries already allow foreigners to buy apartments in condominium
buildings, yet the laws governing land and houses ownership are usually more
restrictive.

Hopefully ASEAN countries will keep on opening further to enable freer

movement of people and liberalize their property ownership rules and real estate
markets.

Reply

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