BANGKOK– The 2015 self-imposed deadline for the ASEAN Economic Community (AEC) is quickly approaching. ASEAN member states are working to amend their laws to bring it closer in line with the requirements of the AEC.
ASEAN comprises ten nations whose combined economies represent a population of over 600 million and would rank the sixth largest economy in the world. The purpose of ASEAN is to accelerate economic growth, social progress, and cultural development of the region and to promote regional peace and stability in the region. ASEAN has helped to stabilize the region, promoted free trade, and has acted as a buffer to the world’s larger nations.
The ASEAN Economic Community is an agreement for greater economic integration of the ASEAN member states by the end of 2015. According to the AEC Blueprint, the goal of the ASEAN Economic Community is to create “a single market and production base, a highly competitive economic region, a region of equitable economic development, and a region that is fully integrated into the global economy.”
Economic integration and the free flow of businesses and labor in the region is a worthwhile goal. Increase integration provides for the free flow of knowledge and skills. Labor competition forces governments to provide education and training that is valued by the business industry. The free flow of services will benefit consumers. The freer flow of capital will put budgetary pressure on government to ensure the soundness of their economies.
The lofty goals of the ASEAN Economic Community are more difficult than the initial goals of when ASEAN was formed. Economic integration requires nations to individually amend their laws to comply with the adopted requirements of the ASEAN Economic Community. This means that member nation states will have to open up their economies to other member nation states.
It is always a difficult matter for governments to release controls over their economy. It is even more difficult when the governments have to inform their population that foreign owned businesses and foreign workers will be allowed to compete with local businesses and local workers. These governments fear that their local businesses and local workers do not have the capability to compete without protection.
Many of the ASEAN Member States have protectionist policies to limit competition to their local industries. The two largest ASEAN countries, Indonesia and Thailand, have several restrictive policies that prevent foreign owned businesses from operating in their country or restrictions on foreign nationals from employment in certain occupations. Nearly all of the ASEAN member states have some type of restrictions on foreign ownership of land or property.
The future of the ASEAN Economic Community is still cloudy. The dilemma is that Member States that feel that they are better able to compete within ASEAN will free up their economies sooner. They will be able to obtain the benefits of economic integration and foreign investments faster. Member States that delay opening up their markets or place unwarranted hindrance to competition may feel even more strongly that their country cannot compete in a free market.
By Mr. Robert R. Virasin
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