AEC scores high on the institutional frameworks, but implementation lags behind

 

CARI just completed an independent assessment on key integration areas of the AEC, including free trade, customs harmonisation, competition law and policy, investments regimes, free flow of services, SME support, as well as standards and non-tariff-barriers to trade, based on existing data and findings. In the report, entitled ‘The ASEAN Economic Community: The Status of Implementation, Challenges and Bottlenecks’, the AEC scores high on the political, legal, institutional and technical frameworks that govern regional economic integration, but the actual implementation lags significantly behind the stated objectives and timelines.

The report calls for ASEAN member states to take more ownership of the integration process and the expectations of the AEC 2015 may require some adjustment.

“Economic integration cannot work on the basis of non-binding agreements. If Member states are allowed to opt out at any time or choose not to implement agreed actions, integration is hardly achievable,” said Jörn Dosch, senior fellow of CARI and Professor of International Relations at Monash University. He calls for the Asean Way a dilemma of ASEAN.

In the area of free trade, intra-ASEAN trade (as a percentage of the overall trade of the AMS) has only increased by a mere 4.4 per cent since 1998, but has stagnated around 25 per cent between 2003 and 2011. The utilization of the free trade agreements remains low. Between 2009-2012, ASEAN has however made some progress in the area of customs harmonization; while ‘soft objectives’ of competition law and policy are unlikely to result in a regional regulatory framework.

The reports states that member states are trying to achieve far-reaching visions of economic community-building, which are not that much dissimilar to European integration, without the necessary modifications to the traditional ASEAN Way of cooperation.   

The report also suggests that ASEAN member states’ lack of political will is the biggest roadblock to the implementation of the AEC. “The decisive capacity and implementation gaps are to be found at the national level of the ASEAN Member states. The Member states, not the ASEC, are the bottlenecks in the process of economic community building,” said Dr. Dosch.

 “But its time we go beyond rhetoric. The ASEAN Way should still have its place in our culture, but the commitment to integration should be built on binding agreements,” Dato’, Sri Nazir Razak, Group Chief Executive, CIMB Group. 

 “There’s work to be done. The AEC is too important to be just a top-down effort by the governments. CIMB is doing its small part to put the argument of AEC’s importance across. There’s space for private sector to take part, and CARI is committed to building perspectives for ASEAN stakeholders by connecting the business and the public sector in support of ASEAN integration, and to take ownership of the ASEAN identity,” said Dato’ Robert Cheim, Director of CARI. 

 

 

AEC scores high on the institutional frameworks, but implementation lags behind 

 

The Nation

The main hurdles in achieving the ASEAN Economic Community (AEC) are a mismatch between political ambitions, a lack of capabilities, and often political will among several member states, CIMB Asean Research Institute stressed.

CARI just completed an independent assessment on key integration areas of the AEC, including free trade, customs harmonisation, competition law and policy, investments regimes, free flow of services, SME support, as well as standards and non-tariff-barriers to trade, based on existing data and findings. In the report, entitled ‘The ASEAN Economic Community: The Status of Implementation, Challenges and Bottlenecks’, the AEC scores high on the political, legal, institutional and technical frameworks that govern regional economic integration, but the actual implementation lags significantly behind the stated objectives and timelines.

The report calls for ASEAN member states to take more ownership of the integration process and the expectations of the AEC 2015 may require some adjustment.

“Economic integration cannot work on the basis of non-binding agreements. If Member states are allowed to opt out at any time or choose not to implement agreed actions, integration is hardly achievable,” said Jörn Dosch, senior fellow of CARI and Professor of International Relations at Monash University. He calls for the Asean Way a dilemma of ASEAN.

In the area of free trade, intra-ASEAN trade (as a percentage of the overall trade of the AMS) has only increased by a mere 4.4 per cent since 1998, but has stagnated around 25 per cent between 2003 and 2011. The utilization of the free trade agreements remains low. Between 2009-2012, ASEAN has however made some progress in the area of customs harmonization; while ‘soft objectives’ of competition law and policy are unlikely to result in a regional regulatory framework.

The reports states that member states are trying to achieve far-reaching visions of economic community-building, which are not that much dissimilar to European integration, without the necessary modifications to the traditional ASEAN Way of cooperation.   

The report also suggests that ASEAN member states’ lack of political will is the biggest roadblock to the implementation of the AEC. “The decisive capacity and implementation gaps are to be found at the national level of the ASEAN Member states. The Member states, not the ASEC, are the bottlenecks in the process of economic community building,” said Dr. Dosch.

 “But its time we go beyond rhetoric. The ASEAN Way should still have its place in our culture, but the commitment to integration should be built on binding agreements,” Dato’, Sri Nazir Razak, Group Chief Executive, CIMB Group. 

 “There’s work to be done. The AEC is too important to be just a top-down effort by the governments. CIMB is doing its small part to put the argument of AEC’s importance across. There’s space for private sector to take part, and CARI is committed to building perspectives for ASEAN stakeholders by connecting the business and the public sector in support of ASEAN integration, and to take ownership of the ASEAN identity,” said Dato’ Robert Cheim, Director of CARI.