ASEAN

Association of
Southeast Asian
Nations

ESTABLISHMENT
The Association of Southeast Asian

Nations, or ASEAN, was established

on 8 August 1967 in Bangkok,
Thailand, with the signing of the
ASEAN
Declaration
(Bangkok
Declaration) by the Founding Fathers
of
ASEAN,
namely
Indonesia,
Malaysia, Philippines, Singapore and
Thailand. Brunei Darussalam then
joined on 7 January 1984, Viet Nam
on 28 July 1995, Lao PDR and

The ASEAN region has a population of

about 500 million, a total area of 4.5
million square kilometers, a combined
gross domestic product of almost US$
700 billion, and a total trade of about
US$ 850 billion.
ASEAN was a product of the Cold War
period, its initial interests focusing
mainly on security matters, especially
those linked to settling intra-regional
disputes and resisting superpower
influence.

AIMS AND PURPOSES

1) To accelerate the economic growth, social

progress and cultural development in the

region
2) To promote regional peace and stability
through abiding respect for justice and the
rule of law in the relationship among
countries of the region and adherence to the
principles of the United Nations Charter
3) To promote active collaboration and mutual
assistance on matters of common interest in
the economic, social, cultural, technical,
scientific and administrative fields;

4) To provide assistance to each other in the form of

training and research facilities in the educational,
professional, technical and administrative spheres
5) To collaborate more effectively for the greater
utilization of their agriculture and industries, the
expansion of their trade, including the study of
the problems of international commodity trade,
the improvement of their transportation and
communications facilities and the raising of the
living standards of their peoples;
6) To promote Southeast Asian studies; and
7) To maintain close and beneficial cooperation with
existing international and regional organizations
with similar aims and purposes, and explore all
avenues for even closer cooperation among

FUNDAMENTAL
PRINCIPLES
Mutual respect for the independence, sovereignty,

equality, national integrity, and national identity

of all nations;
The right of every State to lead its national
existence free from external interference,
subversion or coercion;
Non-interference in the internal affairs of one
another;
Settlement of differences or disputes by peaceful
manner;
Renunciation of the threat or use of force; and
Effective cooperation among themselves.

Charter of the Association of

Southeast Asian Nations
The ASEAN Charter serves as a firm foundation in

achieving the ASEAN Community by providing legal

status and institutional framework for ASEAN. It also
codifies ASEAN norms, rules and values; sets clear
targets for ASEAN; and presents accountability and
compliance.
The ASEAN Charter entered into force on 15
December 2008. A gathering of the ASEAN Foreign
Ministers was held at the ASEAN Secretariat in
Jakarta to mark this very historic occasion for
ASEAN.
The ASEAN Charter has become a legally binding
agreement among the 10 ASEAN Member States.

The importance of the ASEAN Charter

New political commitment at the top level
New and enhanced commitments
New legal framework, legal personality
New ASEAN bodies
More ASEAN meetings
More roles of ASEAN Foreign Ministers
New and enhanced role of the SecretaryGeneral of ASEAN
Other new initiatives and changes

Challenges for ASEAN

Community
To narrow the development gap
To enhance connectivity within the

region
To maintain ASEAN centrality in the
regional architecture
To increase public awareness and the
sense of ownership among ASEAN
peoples
To provide quality of life and welfare for
all the ASEAN peoples

ASEAN Secretariat
The ASEAN Secretariat was set up in February 1976 by the Foreign

Ministers of ASEAN. It was then housed at the Department of

Foreign Affairs of Indonesia in Jakarta. The existing ASEAN
Secretariat at 70A Jalan Sisingamangaraja, Jakarta, was established
and officiated in 1981 by the then President of Indonesia, H.E.
Soeharto.
The ASEAN Secretariat's basic function is to provide for greater
efficiency in the coordination of ASEAN organs and for more
effective implementation of ASEAN projects and activities.
The ASEAN Secretariat's vision is that by 2015, it will be the nerve
centre of a strong and confident ASEAN Community that is globally
respected for acting in full compliance with its Charter and in the
best interest of its people.
The ASEAN Secretariat's mission is to initiate, facilitate and
coordinate ASEAN stakeholder collaboration in realizing the
purposes and principles of ASEAN as reflected in the ASEAN Charter.

External Relations
Australia
Canada
China
European Union
India
Japan
ROK (Republic of Korea )
New Zealand
Russia
United States
Pakistan

Opportunities of ASEAN
ASEAN is observed to be an evolving

economic powerhouse and has been

gaining lot of attraction with the
international investors and enterprises.
Amidst the growing economic uncertainty
in the well developed markets, the regional
association comprising largely of
developing nations is brimming with
opportunities in all sectors.
It is especially important for companies
operating in the infrastructure sector.

ASEAN Business Outlook Survey 2011,

conducted by The American Chamber of

Commerce in Singapore in collaboration with
many other related associations and
chambers, revealed that American companies
expect the ASEAN market to become
increasingly important for their businesses.
The survey polled 327 senior executives from
US companies in Cambodia, Indonesia,
Malaysia, Singapore, the Philippines, Thailand
and Vietnam.
73% of the survey respondents said they
expect ASEAN's importance to their business
will increase over the next two years, with
85% of them planning to expand their
business in ASEAN.

Trade accounts for nearly 100% of aggregate gross domestic

product across ASEAN the region lives or dies on the dynamism of

trade and depends on investment to fuel growth.
ASEAN has made significant progress in this area by implementing
the ASEAN Free Trade Area (AFTA) and reducing over 95% of tariffs
to 0-5% across member countries.
To compete for investment, technology and entrepreneurism ASEAN
knows it must follow through on similar pacts to liberalize
investment rules, trade in services and tear down non-tariff barriers
ASEAN has a significant commodity and natural resources sector.
Malaysia and Indonesia combined produce 85% of the worlds crude
palm oil, the major edible oil consumed in China and in India.
ASEAN countries are also responsible for about 80% of global
rubber production.
Indonesia has coal reserves of more than 4,000mn tones and has
become one of the key suppliers of thermal coal to both India and
China, two of the world's fastest growing energy markets.
Its geographic location, close to both countries, gives Indonesia a
competitive advantage in terms of the costs of transporting coal.

ASEAN GDP projected to grow from US$1.7 trillion in 2010

to US$4 trillion in 2025 Demographics are positive, with a

rising share of population in the working-age bracket
Singapore poised to benefit from growth of Asias high-networth population ASEAN is exciting in part because its a
melting pot of different types of economies.
On the one hand, you have a developed economy like
Singapore; on the other hand you have emerging
economies, such as Vietnam and Indonesia, that offer very
exciting growth opportunities.
If you look at Indonesia, for example, it has the largest
population in the region, with 238mn people, and at the
same time it is very rich in agriculture and commodity
resources, which feed very nicely into growing markets like
China and India. Or Thailand agriculture for instance.
Thailand is also a major exporter of auto parts and large
trucks for the region.

3 Pillars of ASEAN
Community

APSC

AEC

ASCC

(ASEAN Political
Security
Community)

(ASEAN Economic
Community)

(ASEAN Social &

Cultural
Community)

Rules-based

community

Peaceful,
evolutionary,

shared-sense of
responsibility, and

possessing
comprehensive
security

Dynamic, supports
efforts to form a
global outreach and

Common
market and
shared base of
production
Competitive
with other
regions
A region with
few
developmental
gaps
A region that is
integrated and
yet able to
retain its own

Human
resources
Development
Provide
adequate social
welfares and
services
Social rights
and justice
Environmental
sustainability
ASEAN identity
The narrowing
of
developmental

ASEAN ECONOMIC
COMMUNITY
The ASEAN Economic Community (AEC) shall

be the goal of regional economic integration

by 2015.
AEC envisages the following key
characteristics:
a) a single market and production base,
b) a highly competitive economic region,
c) a
region
of
equitable
economic
development, and
d) a region fully integrated into the global
economy.

The AEC areas of cooperation include

human resources development and capacity building;
recognition of professional qualifications;
closer

consultation on macroeconomic and financial

policies;
trade financing measures;
enhanced
infrastructure
and
communications
connectivity;
development of electronic transactions through e-ASEAN;
integrating industries across the region to promote
regional sourcing; and
enhancing private sector involvement for the building of
the AEC.
In short, the AEC will transform ASEAN into a region with
free movement of goods, services, investment, skilled
labour, and freer flow of capital.

The ASEAN Free Trade

Area (AFTA)
Most of the Southeast Asian region is now a free

trade area. Accounting for over 96 percent of all

ASEAN trade, the first six signatories of the Common
Effective Preferential Tariff scheme for the ASEAN
Free Trade Area have reduced their tariffs on intraregional trade to no more than five percent for
almost all products in the Inclusion List or removed
them altogether
The ASEAN Free Trade Area was established in
January 1992 to eliminate tariff barriers among the
Southeast Asian countries with a view to integrating
the ASEAN economies into a single production base
and creating a regional market of 500 million people.

The ASEAN Free Trade Area

(AFTA)
The ASEAN Free Trade Area (AFTA) has

now been virtually established.

ASEAN Member Countries have made
significant progress in the lowering of
intra-regional tariffs through the Common
Effective Preferential Tariff (CEPT) Scheme
for AFTA.
More than 99 percent of the products in
the CEPT Inclusion List (IL) of ASEAN-6,
comprising Brunei Darussalam, Indonesia,
Malaysia, the Philippines, Singapore and
Thailand, have been brought down to the

ASEAN Free Trade Area (AFTA), it aims to

promote the regions competitive advantage as

a single production unit.
The elimination of tariff and non-tariff barriers
among Member Countries is expected to
promote
greater
economic
efficiency,
productivity, and competitiveness.
The FTA collectively covers a market of nearly
1.8 billion people and proposes to gradually
slash tariffs for over 4,000 product lines.
Currently the FTA is restricted to trade in goods
while negotiations for a similar agreement for
services are currently under way

Benefits of FTA
Increase in Incomes/Growth:

An FTA expands trade volumes among member

countries and tends to increase incomes/growth of
the members. Intuitively, starting from a situation
of tariff-distorted trade, the elimination of tariffs
allows each member to specialize in the production
of the goods in which it has a comparative
advantage and trade those goods in exchange for
imports of other goods from fellow members.
Achievement of Economies of Scale:
An FTA, by eliminating tariffs, expands a member
country's export market thereby allowing it to
expand its scale of operations and lower its
average cost of production.

Reduction of Monopoly Inefficiencies:

If inefficient monopolies exist in the

domestic
market,
then
increased
competition from foreign products dampen
domestic monopoly inefficiencies, if not
eliminate them altogether.
Availability of Greater Product Variety:
The opening up of free trade increases
trade flows and expand the variety of
products available to consumers in the
home country.

Challenges in FTA
Low utilization of rates of FTA: A free trade agreement

bestows numerous benefits like preferential tariffs,

market access, and new business opportunities for
partner economies
Coverage of Agricultural Goods in FTA: Another
potential problem with Asian FTAs is the suboptimal
level of liberalization in agricultural products. Lack of
political will and pressure to the pressures from the
farm lobbies and social concerns.
Rules of Origin (ROO): Rules of origin are used to
determine the country of origin of a product for
purposes of international trade. They are used to
determine which goods will enjoy preferential tariffs to
prevent trade deflection among FTA members

ASEAN SOCIO-CULTURAL
COMMUNITY
ASEAN Work Programme for Social Welfare, Family,

and Population;
ASEAN Work Programme on HIV/AIDS;
ASEAN Work Programme on Community-Based Care
for the Elderly;
ASEAN Occupational Safety and Health Network;
ASEAN Work Programme on Preparing
ASEAN Youth for Sustainable Employment and
Other Challenges of Globalization;
ASEAN
University Network (AUN) promoting
collaboration
among
seventeen
member
universities ASEAN;

 ASEAN Students Exchange Programme,

Youth Cultural Forum, and the ASEAN Young

Speakers Forum;
The Annual ASEAN Culture Week,
ASEAN Youth Camp and ASEAN Quiz;
ASEAN Media Exchange Programme; and
Framework for Environmentally Sustainable
Cities (ESC) and
ASEAN Agreement on Tran boundary Haze
Pollution.