Updating the AEC scorecard
The ASEAN Economic Community (AEC) is still 16 months away from its inception. As we know only too well, that time will move much faster than many anticipate. In this article, we will look at a presentation of Thailand’s scorecard as it relates to the implementation of the various aspects of the AEC. This information is based on findings that were collated in the early part of June this year, just a few weeks after the coup that led to the installation of a military government.
To recap the basic tenets of the AEC. There are five core elements: 1. The free flow of goods; 2. The free flow of services; 3. The free flow of investment; 4. The free flow of capital, and 5. The free flow of skilled labour.
It’s that last element which has many people pondering the future of labour markets in Thailand. Yet the key word is ‘skilled’. So, for those businesses who might have been thinking they could remove their unskilled or low-skilled local workforce and replace them with similarly unskilled or low-skilled workers from elsewhere within the 10-member AEC network, are in for a rude awakening. That is not going to happen, and never was.
It becomes a little more complicated when dealing with ‘skilled’ workers. There is yet to be complete clarity on what level of skills are required, or are acceptable, for a business to contemplate replacing their current skilled employees with those from another country. The usual thinking runs along the lines of being able to employ someone with the requisite skills but possibly at a lower wage rate.
Naturally, once the AEC becomes a reality, the logistics will be modified and the rulings changed as each country comes to terms with the events actually taking place on the ground. The unforseen circumstances and unintended consequences will start to emerge and governments and industries will no doubt enact legislation and introduce rules and regulations to combat the anomalies that will inevitably occur.
The AEC has three main governing agreements. The first, the ASEAN Framework Agreement on Services (AFAS) came into force on 19 September 1998. The second, the ASEAN Trade in Goods Agreement (ATIGA) came into force in May 2010. The third, the ASEAN Comprehensive Investment Agreement (ACIA) came into force in April 2012.
So, Thailand has managed to have the basic agreements in place in plenty of time.
Taking the free flow of goods as one example, Thailand has indeed reduced tariffs to zero on all intra-ASEAN goods.
Another key factor for the future of the AEC is the creation of what is called the ASEAN Single Window (ASW). Put simply, this is designed to facilitate trade by simplifying trade and customs processes.
Continued next issue