GS302 – Introduction to ASEAN

Pillars of ASEAN

ASEAN Economic Community

(AEC)

Instructed By: KLL

 Three Pillars of ASEAN
Ø ASEAN Community
▪ ASEAN Political-Security Community (APSC)
▪ ASEAN Economic Community (AEC)
▪ ASEAN Socio-Cultural Community (ASCC)
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CONTENT
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 ASEAN Economic Community

Ø ASEAN Economic Community

▪ Main Goal
✓ Economic Integration
▪ Four Pillars of AEC
✓ Single Market and Production Base
✓ Competitive Economic Region
✓ Equitable Economic Development
o Eliminate development gap between ASEAN-6
(Brunei, Indonesia, Malaysia, the Philippines,
Singapore, and Thailand) and CLMV
(Cambodia, Laos, Myanmar, and Vietnam)
✓ Integration into the Global Economic
Ø Why is ASEAN important as a single marketplace and production center?
▪ $2.3 trillion economy, 600 million people, hundreds of millions of middle class
consumers
▪ Second-fastest growing economy in Asia between 2001-2013 (behind only
China)
▪ 3rd largest economy in Asia and 7th global
▪ $5.3 trillion in global trade • $1 trillion infrastructure investment needed
through 2020
 Four Pillars of AEC

Ø AEC Pillar I: Single Market and Production Base Ø AEC Pillar III: Equitable Economic Development
• Free flow of goods • Development of Small and Medium
• Free flow of services and skilled labor Enterprises (SMEs)
• Free flow of investment • Initiative for ASEAN Integration (IAI)
• Freer flow of capital Ø AEC Pillar IV: Integration into the Global
• Priority integration sectors (PIS) Economy

• Food, agriculture and forestry • Coherent approach toward external

Ø AEC Pillar II: Competitive Economic Region economic relations
• Competition Policy • Enhanced participation in global supply
• Consumer Protection networks
• Intellectual Property Rights
• Infrastructure Development
 ASEAN’s Partners, Imports, & Exports

Ø What are ASEAN’s top 10 trading partners? Ø What is RCEP?

• The Regional Comprehensive
Economic Partnership (RCEP) is a
multilateral free trade agreement
(FTA) between Australia, China,
Trading Partners
Japan, New Zealand, South Korea,
and Member States of ASEAN.

ASEAN 24%, China 15.2%, Japan 10.5%, the EU

10.0%, the US 9.4%, Korea 5.4%, Taiwan 4.2%,
Hong Kong 4%, India 2.6%, Germany 2.4%
 ASEAN’s Partners, Imports, & Exports

Ø What are ASEAN’s key exports? Ø What are ASEAN’s key imports?
• ASEAN’s top 10 exports are: electronics • ASEAN’s top 10 imports are: mineral
and electrical machinery (20.2%), fuels & oils (21.9%), electronics,
mineral fuels & oils (18.4%), nuclear electrical machinery, & parts (19.3%),
reactors, machinery & appliances machinery & mechanical appliances
(10.9%), rubber & articles (4.2%), (12.7%), iron & steel (3.5%), plastics &
business services & miscellaneous articles (3.1%), vehicles & parts (3.0%),
repairs (4.1%), animal/vegetable oils & precious stones and jewelry (2.1%).
products (3.8%), plastics & articles
(3.0%), organic chemicals (3.0%),
vehicles & parts (2.5%), and precious
stones & jewelry (2.1%).
 ASEAN’s Free Trade Agreement (AFTA)

Ø A free trade agreement is a pact between two or more nations to reduce barriers to
imports and exports among them. Under a free trade policy, goods and services can be
bought and sold across international borders with little or no government tariffs, quotas,
subsidies, or prohibitions to inhibit their exchange.
• Free trade agreements reduce or eliminate barriers to trade across international
borders.
• Free trade is the opposite of trade protectionism
• In the U.S. and the E.U., free trade agreements do not come without regulations and
oversight.
Ø Examples of Free-Trade Agreements
• ASEAN-Australia-New Zealand Free Trade Area
• ASEAN-China Free Trade Area
• ASEAN-India Free Trade Area
• ASEAN-Japan Comprehensive Economic Partnership
• Regional Comprehensive Economic Partnership

Visit these websites for more info about FTAs:

- https://www.aseanbriefing.com/news/aseans-free-trade-agreements-an-overview/
- https://aric.adb.org/fta-all
 ASEAN Single Window

Ø The ASEAN Single Window is a regional electronic platform that promotes ASEAN
economic integration by enabling the electronic exchange of border trade-related
documents among Member States.
Ø Traders can exchange customs documentation through the ASW platform, expediting
cargo clearance and reducing paperwork. This boosts regional trade efficiency and
competitiveness for inclusive economic growth.
Ø Objective of ASW
• To expedite the cargo clearance process, reduce cost and time of doing business, and
enhance trade efficiency and compactivities
• To provide simpler and faster processing time, and a more transparent way of doing
business
Ø Incremental Benefits of ASW
• Technical inter-operability
• Legal inter-operability
• Platform for any business application
• Better view of regional data
• Time stamping
 AEC’s Successes and Challenges
Ø Successes
i. Gradual and flexible liberalization over time while setting high goals;
i. ASEAN Free Trade Area (AFTA)
ii. Foreign direct investment companies have played a major role;
i. job creation, technology transfer, development of industries…
iii. Trade with countries outside the region has been promoted;
i. ASEAN-China Free Trade Area (ACFTA)
iv. efforts have been made to correct intra-regional disparities
i. Initiative for ASEAN Integration (IAI) – assistance and capacity-building
v. a transportation infrastructure has been developed
i. the ASEAN Highway Network & Singapore-Kunming Rail Link
ii. Reduce transportation costs, increase efficiency, and enhanced regional
integration
Ø Challenges
i. Development gaps
i. Singapore and Malaysia vs. Laos, Cambodia, and Myanmar
ii. Disparities in good governance, rule of law, lack of regulatory convergence
i. Difficulty for businesses to operate across borders and limits the efficiency
of regional trade and investment
iii. Large unskilled workforce
i. economic diversification, upgrading industries, and transitioning to higher
value-added sectors
iv. Lack of ratification and implementation of ASEAN agreements
i. Delays in ratification, inconsistent adoption of regulations
v. Reliance on FDIs – lack of industrial innovation
i. limit the region's ability to move up the value chain and compete globally
 Conclusion
Ø The AEC is the realization of the region's end goal of economic integration. It envisions
ASEAN as a single market and product base, a highly competitive region, with equitable
economic development, and fully integrated into the global economy.

Ø ASEAN is the 3rd largest trading partner for the U.S. behind China and Japan, and it is the
largest destination for U.S. investment in Asia.
• The AEC will strengthen commercial ties between the U.S. and ASEAN
• The AEC should reduce development gaps among ASEAN member nations and lead
to reforms that could create better opportunities for foreign investors.
• ASEAN integration will help balance the economic power of China and India.

Ø National Single Window (NSW) is a system, which enables

• a single submission of data and information
• a single and synchronous processing of data and information
• a single-making for customs release and clearance
Thank You!