Asean launches economic bloc but analysts sceptical

Asean launches economic bloc but analysts sceptical 

Southeast Asian nations officially launched an EU-inspired economic bloc aimed at boosting the region’s trading clout and attracting more investment.

The ten-member Association of Southeast Asian Nations (ASEAN) hailed the project as a “milestone” in combining the economic force of a resource-rich and growing market of more than 600 million people.

What is ASEAN Economic Community?

The ASEAN Economic Community (AEC) is one of the three pillars of the ASEAN.

It aims to “implement economic integration initiatives” to create a single market across ASEAN nations.

It will integrate Southeast Asia’s diverse economies, a region with 620 million people and a combined gross domestic product of USD 2.4 trillion.

On 20 November 2007, during the 13th ASEAN Summit in Singapore, its blueprint was adopted.

What are its objectives ?

•  a single market and production base,

•  a highly competitive economic region,

•  a region of fair economic development, and

•  a region fully integrated into the global economy.

• co-operation in human resources development.

• recognition of professional qualifications.

• closer consultation on macroeconomic and financial policies.

• trade financing measures.

• enhanced infrastructure and communications connectivity.

• development of electronic transactions through e-ASEAN.

• integrating industries across the region to promote regional sourcing.

• enhancing private sector involvement.

Through the free movement of skilled labour, goods, services and investment, ASEAN will rise globally as one market with each member gaining from each other’s strengths, thus increasing its competitiveness and opportunities for development.

What are the critics?

• Experts say such an idea is difficult, if not impossible, to achieve in a region marked by extremes in development levels, democratisation, and institutional capability.

• The official launch of the AEC has no practical effect, and diplomats have said ASEAN – regularly criticised for a lack of concrete achievements – was keen not to miss its own deadline of 2015, set several years ago.

• Research group Capital Economics said in a note the establishment of the AEC was “no game changer”, and it was likely to fall short in tackling major challenges such as reducing non-tariff barriers and improving infrastructure.

What is  Association of Southeast Asian Nations (ASEAN)?

The Association of Southeast Asian Nations (ASEAN) is a political and economic organization of ten Southeast Asian countries.

It was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore, and Thailand,when foreign ministers of five countries signed the ASEAN Declaration, more commonly known as the Bangkok Declaration.

Since then, membership has expanded to include Brunei, Cambodia, Laos,Myanmar (Burma), and Vietnam.

Purpose :

• To accelerate economic growth, social progress, and cultural development in the region.

• To promote regional peace and stability.

• To promote collaboration and mutual assistance on matters of common interest.

• To provide assistance to each other in the form of training and research facilities.

• To collaborate for the better utilisation of agriculture and industry to raise the living standards of the people.

• To promote Southeast Asian studies.

• To maintain close, beneficial co-operation with existing international organisations with similar aims and purposes.

The end of the Cold War between the United States and the Soviet Union at the end of the 1980s allowed ASEAN countries to exercise greater political independence in the region, and in the 1990s ASEAN emerged as a leading voice on regional trade and security issues.

In 1990, Malaysia proposed the creation of an East Asia Economic Caucus composed of the members of ASEAN as well as the People’s Republic of China, Japan, and South Korea, with the intention of counterbalancing the growing influence of the United States in Asia-Pacific Economic Cooperation (APEC), and in the Asian region as a whole.

The proposal failed, however, because of heavy opposition from the US and Japan.

Member states continued to work for further integration and ASEAN Plus Three( China, Japan, and South Korea) was created in 1997.

In 1992, the Common Effective Preferential Tariff (CEPT) scheme was adopted as a schedule for phasing out tariffs, and as a goal to increase the “region’s competitive advantage as a production base geared for the world market”.

This law would act as the framework for the ASEAN Free Trade Area(AFTA).

AFTA is an agreement by member nations concerning local manufacturing in ASEAN countries.

The AFTA agreement was signed on 28 January 1992 in Singapore.

On 15 December 1995, the Southeast Asian Nuclear-Weapon-Free Zone Treaty was signed with the intention of turning Southeast Asia into aNuclear-Weapon-Free Zone.

December 2008, the members of ASEAN met in the Indonesian capital of Jakarta to launch a charter, signed in November 2007.

The charter turns ASEAN into a legal entity and aims to create a single free-trade area for the region encompassing 500 million people.