Wed, June 29, 2022


An urgent early step for the AEC

Southeast Asia must step up digital cooperation to accelerate the pursuit of common goals

It’s all too easy to recommend that Southeast Asia, which is striving to get its Asean Economic Community (AEC) going, learn from Europe, whose institutionalised economic integration has become fragile over the past few years. Unfortunately, even with all the European lessons learned, the AEC would still not 
necessarily be successful on a 
sustained basis. The relatively small region is a cultural, religious and racial melting pot, with immigration and refugee controversies forever simmering. That is in addition to the fact that competition, no matter what improvements it might force, will always cause conflict.
The AEC has for the most part begun quietly, its agenda of issues rarely occupying the front pages. On one hand, the slow start is helpful, since too much ambition can cloud any realistic focus. On the other hand, it could be a signal of fundamental problems waiting to be tackled. The parties and countries concerned are required to perform a balancing 
act politically, economically and socially.
The briefest glance at Thailand demonstrates how the AEC’s path is strewn with potentially explosive problems. Insurgency in the far South might cause an immigration headache. Then there’s a trust issue with Singapore, where Thaksin Shinawatra has popped in and out and whose leaders are disliked by anti-Thaksin elements in Thailand. Laos, Vietnam, Cambodia and Myanmar will be drawn closer together economically and all of them dislike Thailand’s pretensions of superiority, a matter of perception that could nevertheless stymie free trade. Political problems with Cambodia and competition with Vietnam stand to test every concerned nation’s AEC resolve. 
The AEC kicked into life last year despite all of these challenges and similar situations elsewhere in the region. Changes have been slow in coming and an international review has called for greater effort at integration. Deutsche Bank wants to see more trade barriers dismantled, more supportive national and regional policies, and more investment in digitalisation. It believes the AEC is in a strong position, with Indonesia, the Philippines and Vietnam expected to achieve at least 5-per-cent growth this year and next, but it advises that critical reforms are still needed.
For the AEC to reach maturity, Deutsche Bank says, it must fully implement the Asean Single Window for customs clearances. It must establish a firm process for removing non-tariff barriers. And it must fully embrace measures to facilitate trade, including the World Trade Organisation Trade Facilitation Agreement. 
The only relatively easy measure suggested by Deutsche Bank is stepping up digitalisation to bolster integration. The bank believes that digital technology, if political aspects can be minimised, can benefit everyone, not just those at the top of the economic pyramid. Regional leaders, however, must make it a central pillar of their planned single market, the bank stresses.
It’s a relatively easy proposal, and it should be a top priority. To succeed, the AEC must have sound infrastructure that serves economic needs rather than political ones. It is in the realm of politics that comparisons with Europe are most readily made. For integration to be achieved, economic competition, labour migration, tax and tariff barriers and currency issues will gradually be tackled. What can be done right away and will have significant lasting value is a digitised infrastructure to benefit all the citizens of Southeast Asia.

Published : June 09, 2017

By : The Nation