The Build-up to the AEC

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The Build-up to the AEC

In this issue we will return to a more overall view of the AEC in order to provide some further detail on the road the Southeast Asian region has taken to reach what will be a truly momentous moment in its history.

In August 1967, at the height of the Second Indochina War, more colloquially known simply as the Vietnam War, senior representatives of five countries came together at a meeting in Bangkok. That meeting created what was called the Association of Southeast Asian Nations, or ASEAN.

Those five original members were Thailand, Indonesia, Malaysia, Singapore, and the Philippines. As war ravaged much of the eastern mainland states, ASEAN stayed at just five members until January 1984 when Brunei, newly independent from Britain, was admitted as the sixth state.

Vietnam became the seventh member state in June 1995, both Laos and Myanmar were admitted in July 1997 and Cambodia became the tenth and final member in April 1999. Only Timor Leste, granted independence from Indonesia in 2003, is yet to be admitted.

In 1992 the-then six member states agreed to remove import taxes on 8,000 goods over an agreed time frame. That position was reached in 2010.

Thirty years after the creation of ASEAN, a meeting in Kuala Lumpur in December 1997 agreed on what they termed ASEAN Vision 2020. This was a joint statement agreeing to forge economic integration similar to that of the European Union, envisioning the free flow of goods and services as well as capital and investment between the states.

When the AEC comes into being on 1 January 2015, the four newer members of ASEAN, namely Vietnam, Laos, Myanmar, and Cambodia will be given until 2025 to lower their tariffs to zero. The other six will be at zero tariff from the start.

Since a lot of groundwork has already been performed in the tariff arena in respect of streamlining the examination of goods at customs points as well as other procedural steps, trade should flow a lot easier between the member states. There will be standard certification for goods from each AEC state.

Foreign direct investment will be liberalised to allow 100 percent equity in agriculture, fishing, forestry, manufacturing and mining, although service industries will still be capped at 70 percent in most cases.

One of the biggest improvements will be in the ability of professionals to move freely between AEC members. Engineers, doctors, dentists, nurses, certified accountants, architects, surveyors and the like will be able to work in any of the 10 member states. ASEAN will create a standard certification process that will be recognised across the region. Unskilled labour, however, will remain subject to the laws of individual countries.