Is the AEC going to happen this year?


Is the AEC going to happen this year?

Wrap: In the last issue we noted how the United States Chamber of Commerce ‘ASEAN Business Outlook Survey 2015’, released in the middle of 2014, had cast some doubts as to whether the AEC would become a reality on 31 December this year. This, despite the AEC Scorecard of 2012 noting that 67 percent of required measures were in place.

One of the areas of concern for full implementation is the ASEAN Secretariat which consists of a staff of around 300 people and operates on a small budget of about US$16 million, which makes it difficult to attract the best and brightest talent from the wealthier Asean nations such as Singapore and Brunei.

Oftentimes, comparisons are being made between the European Union (EU) and the fledgling AEC. The EU, for example, employs around 34,000 people and its budget runs over US$4 billion.

Of course the EU began with just six member nations and has taken over half a century to evolve into the monolith it is today. The AEC is attempting to meld 10 disparate nations with quite significantly differing cultures, so that is a task which alone is daunting.

Perhaps the biggest hurdle for the AEC to overcome is precisely the same as faced by the EU, and that is the hardly-surprising parochialism within the member nations. It has been argued that within the corridors of power of the member nations, those in positions of authority have yet to embrace the idea of a single market which will, or should, ultimately deliver results for the common good. Simple economies of scale would result in a positive expectation for all member states.

One example used to show how the signed paper agreements between the member states sometimes don’t result in the practical implementation of those agreements is the failure of Indonesia to ratify the ASEAN Multilateral Agreement for Full Liberalization of Air Freight Services (MAFLAFS). Why? The Indonesians want to protect their domestic aviation industry from regional competitors such as Singapore, Malaysia and Thailand. Basically, this means the single aviation market exists in

name only.

There are plenty of other examples, including the failure to complete the ASEAN Master Plan on Connectivity due to a combination of poor financing, slack governance, the usual face of corruption, and the inability of Asean governments to engage in proper coordination.

Whether the AEC is to actually get off the ground at the end of 2015, or be delayed yet again (no doubt with the spin doctors reasoning that the original aim was 2020 anyway), those at the helm of national governments will need to educate their populations to the economic long-term benefits that will accrue to the AEC and narrow national interests need to take a back seat for the greater good.