The questions for the AEC, as the early months roll on


The questions for the AEC, as the early months roll on

In the months leading up to the start of the Asean Economic Community (AEC) there was much speculation about what the future held for the region, at least in an economic sense, once it came into being.


As noted in the February issue, there won’t be too many people who have noticed any particular or major change in the way they conduct business, both within Thailand and in the region.


Just to recap, the creation of the AEC is meant to allow for the free movement of goods, services and skilled labour among the region’s 600 million or so people. The reality is that this free movement, especially of labour, is still some way off being fully implemented.


The Asean Secretariat, which oversees the AEC, has a small staff of just over 400 people and a relatively tiny budget, so in reality almost all issues relating to the new community are reliant on each member state doing the right thing.


A lengthy article in The Diplomat (from which we have been quoting for the last couple of issues) asked two key questions: 1. Can Asean achieve ‘coherent economic integration on the sole basis of voluntary commitments, especially given the extreme diversity of the region?’ and 2. If this can be achieved, ‘which objectives it should pursue next to build on the AEC?’


The AEC now ranks as the seventh-largest single market in the world, but ‘taking advantage of this market requires dealing with its complexities and contradictions, and accommodating the vast differences and national sensibilities.’


The Diplomat suggests Asean ‘is still missing the necessary institutional glue, which could take the form of an overarching regional mechanism that ensures the smooth coordination of the vast array of government actors from the different national sectors, ministries and agencies.’ As the article notes, ‘Although 95 percent of tariff lines are at zero, non-tariff barriers on goods and services render cross-border trade particularly painful. Consumer laws, intellectual property rights, land codes, and investment rules have yet to be harmonized at the regional level, while the lack of common, integrated banking structures, alongside the absence of an agreement on common and acceptable currencies, are likely to hinder market access for regional small and medium-sized enterprises.’


Despite the lofty ideals, the question of the free movement of labour also remains unresolved. A number of Asean member states have imposed significant hurdles on companies wanting to employ skilled foreigners. All the while, ‘millions of marginalized migrants deemed unskilled, from domestic workers to fishermen, illegally flit between countries.’


As The Diplomat article contends, ‘For economic integration to succeed, minimum levels of uniformity in political, economic and cultural standing among countries are essential.’ The reality is that this will take a lot more time to come to fruition.