ASEAN’s 50th anniversary is a crucial year. Association of Southeast Asian Nations (ASEAN) was formed in 1967 and now comprise of countries like Brunei, Indonesia, Thailand, Philippines, Malaysia, Singapore, Vietnam, Myanmar, Cambodia, Laos, and Brunei. Now five decades later, they stand in a different stage of development but with a shared objective of being a regional powerhouse. In its 50th anniversary, we look at some of the progresses that will grace its future.
7 – ASEAN economy will account to 7.6 percent in global arena
ASEAN trade contribution to the world will account to up to 7.6 percent by 2025. Decades of work will lead up to this result. In 2004, it was 6.2 percent; in 2014, 6.8 percent; and in 2020, it is estimated to be 7.2 percent. ASEAN countries have definitely done their fair share of work to get there. Starting from late ‘60s, till the formation of ASEAN Economic Community (AEC), the leaders are anxious to move towards progress and haven’t shied away from introducing various agendas.
Even though there are preexisting challenges, for example, the countries in the group are from different economic growth level. It is not ideal for a steady rise. Laos and Cambodia’s economies is nowhere near to Indonesia’s, which is touted to be the largest economy in the region. Indonesia’s nominal GDP is slated to be double of what it was in 2015 in the next 10 years. However, this reality hasn’t deterred the ASEAN countries.
6 – Six important dates in AEC implementation timeline
AEC came into existence to transform the ten member nations into prosperity. Past to future, every day is important in ASEAN timeline. However, here are a few that you can’t live without knowing.
In 2003, the ASEAN heads of states came together to establish the AEC during the Bali Resolution. In 2012, Economic Research Institute for ASEAN and East Asia (ERIA), an international organization which works to support ASEAN for economic building, published a mid-term review. But in November 2012, ASEAN leaders agreed to move the launch date to December 31, 2015, from 2020. By 2018, Non-Tariff Barriers (NTB) within ASEAN is expected to be eliminated. By 2030, the impacts of AEC implementation can be observed. The causes of the change are as follows.
5 – Five drivers of ASEAN economic growth
With AEC’s pledge to work towards ASEAN’s economic prosperity, five factors need to be taken into account. The first factor that can be considered as the driver of economic growth is the young demography who are of working age and can hasten the rate of globalization. The second is the improved competitiveness relative to China. ASEAN is creating market friendly environments – the low labor costs is one and increased foreign direct investment (FDI) is another.
Rise of the greater Mekong sub region is the third reason. The rich natural resources resulting in tourist attractions, and big consumer markets are contributing in the rise. ASEAN’s strategic location for greater supply chains in fourth. And lastly, regional integration.
4 – Four components of regional integration
Regional integration is one of the most important driver for ASEAN economic growth. The idea highlights the core of ASEAN values and why it came together in the first place. It can be split into four components. These are single market base, competitive economic region, equitable economic development, and integration into global economy.
3 – Three high-income countries in ASEAN
While the economic drivers can be accredited for the group’s collective development, individual countries will reach their own milestone. In 2025, ASEAN will have three high-income countries. The third country to join the ranks of Singapore and Brunei is Malaysia. It is the fastest among the five countries of ASEAN – Vietnam, Philippines, Indonesia, Thailand, and Malaysia – to reach the criteria. Laos, Myanmar, and Cambodia are yet to meet that criteria and are deemed low-income economies.
2 – Doubling ASEAN economy
ASEAN economy in 2025 will be double of what it is in 2015. That’s a big shoe to fill but it is expected as even the total FDI stock will double collectively. With three high-income countries, and the FDI growth, however, it is totally likely. What’s more Singapore, Indonesia, Vietnam, Malaysia, and Thailand will get the cream of the FDI inflow.
1 – A single market
All this development and AEC’s objective is to make the ten ASEAN nations into a single market and production base. The establishment of ASEAN Free Trade Area will boost trade convergence and uniformity throughout the region.
Sachi Mulmi is a researcher with Frost & Sullivan. She can be reached at firstname.lastname@example.org
Sapan Agarwal drives content and marketing for Frost & Sullivan. Sapan is based out of Kuala Lumpur Malaysia and can be reached at email@example.com | +603 6204 5830