The ongoing intensive regional economic integration leads to the establishment of ASEAN Economic Community (AEC), a single regional common market of ASEAN countries, by 2015.
The objective of the regional integration is to create by then a competitive market of over 600 million people with an approximate GDP of over 2 trillion USD in the member countries:
Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
The AEC has the goal to transform ASEAN into a stable, prosperous, and highly competitive region with economic development and reduced poverty and socio-economic disparities.
In addition to the AEC, the ASEAN Community comprises the ASEAN Security Community and the ASEAN SocioCultural Community.
Following the liberalisation AEC will establish ASEAN as a single market and production base, composed of five core elements: free flow of goods, free flow of services, free flow of investment, free flow of capital, and free flow of skilled labor. These will include the eventual elimination of tariffs and the streamlining of certain administrative procedures.
Benefits of the ASEAN Economic Community (AEC)
As mentioned above the ASEAN single market and production base will comprise five core elements:
1. Free flow of goods
Free flow of goods is one of the principal means by which the aims of a single market and production base can be achieved. A single market for goods will also facilitate production development and networks in the region and enhance ASEAN’s capacity to serve as a global production centre or as a part of the global supply chain.
2. Free flow of services
Free flow of trade in services is one of the important elements in realising the AEC, where there will be substantially less restriction to ASEAN services suppliers in providing services and in establishing companies across national borders within the region.
3. Free flow of investment
A free and open investment regime is key to enhancing ASEAN’s competitiveness in attracting foreign direct investment (FDI) as well as intra-ASEAN investment. Sustained inflows of new investments and reinvestments will promote and ensure dynamic development of ASEAN economies.
Therefore, all industries will be opened up for investment, with exclusions to be phased out according to schedules. National treatment is granted immediately to ASEAN investors with few exclusions. Investment process and procedures will be streamlined.
4. Freer flow of capital
Strengthening ASEAN Capital Market Development and Integrations facilitates the flows of capital facilitates the flows of payments and transfer of current account transactions.
5. Free flow of skilled labour
This allows for managed mobility or facilitated entry for the natural person’s movement engaged in trade in goods, services, and investments, according to the prevailing regulations of the receiving country, primarily in order to support the free flow of services
The above-described measures will open more regional cooperation and will improve the scale of efficiencies, dynamism and competitiveness of AEC-based companies. AEC will enable easier movement of goods, services, investment, capital and people. Ultimately, it will offer new ways of accessing new markets for established companies and service providers.
As mentioned above, soon, all parts of the economic system in ASEAN countries, including the service sector, will be integrated into the ASEAN Economic Community.