Association of Southeast

Asian Nations
Learning Outcomes:
Students will gain knowledge
about ASEAN, its operations
and pathway

ESTABLISHMENT AND
MEMBERSHIP
The Association of Southeast Asian Nations or ASEAN
was established on 8 August 1967 in Bangkok by the
five original Member Countries, namely, Indonesia,
Malaysia, Philippines, Singapore, and Thailand.
Brunei Darussalam joined on 8 January 1984
Vietnam on 28 July 1995
Laos and Myanmar on 23 July 1997
Cambodia on 30 April 1999
 
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 US$737 billion
A total trade of US$ 720 billion.

and To promote regional peace and stability through abiding respect for justice and the rule of law. . social progress and cultural development in the region through joint endeavors.Goals of ASEAN To accelerate the economic growth.

. no tension has escalated into armed confrontation among ASEAN members since its establishment more than three decades ago.Political Objective : Promoting Peace & Stability  Through political dialogue and confidence building.

some of the earliest economic cooperation schemes of ASEAN were aimed at addressing this situation  The Framework Agreement on Enhancing Economic Cooperation was adopted at the Fourth ASEAN Summit in Singapore in 1992. which included the launching of a scheme toward an ASEAN Free Trade Area or AFTA.ECONOMIC AND FUNCTIONAL COOPERATION  When ASEAN was established. trade among the Member Countries was insignificant  Thus. .

transportation and communication. inland waterway transport. small and medium enterprises. The vision statement also resolved to create a stable. industry. intellectual property. capital. regional economic integration is being pursued through the development of Trans-ASEAN transportation network consisting of major inter-state highway and railway networks. forestry. prosperous and highly competitive ASEAN Economic Region. principal ports and sea lanes for maritime traffic. the ASEAN leaders adopted the ASEAN Vision 2020. ASEAN economic cooperation covers the following areas: trade. investment. and major civil aviation links  Today. services. . agriculture. services. in which there is a free flow of goods. and tourism. which aimed at forging closer economic integration within the region. and equitable economic development and reduced poverty and socio-economic disparities  In addition to trade and investment liberalization. finance. investments. energy. In 1997.

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.ASEAN Tourism To promote Southeast Asia as a single tourism destination.

Integrating ASEAN .

Within three years from the launching of AFTA. exports among ASEAN countries grew from US$43.ASEAN Free Trade Area Launched in January 1992 • Eliminating tariff barriers among the Southeast Asian countries • Integrating the ASEAN economies into a single production base • Creating a regional market of over 500 million people • ASEAN cooperation has resulted in greater regional integration.26 billion in 1993 to almost US$80 billion in 1996 .

39% 5 0 1993 2003 .ASEAN Free Trade Area Average tariff under AFTA 20 P e r c e n t 15 12.76% 10 2.

ASEAN GOAL: ECONOMIC INTEGRATION .

ASEAN maintains contact with other intergovernmental organizations .EXTERNAL RELATIONS ASEAN has made major strides in building cooperative ties with states in the AsiaPacific region Consistent with its resolve to enhance cooperation with other developing regions.

European Union. Russian Federation. Republic of Korea. India. Canada. New Zealand. China.EXTERNAL RELATIONS Dialogue Partners Australia. Japan. United States of America .

EXTERNAL RELATIONS: Outward-looking ASEAN .

Ministerial meetings on several other sectors are also held Supporting these ministerial bodies are 29 committees of senior officials and 122 technical working groups. The ASEAN Summit is convened every year The ASEAN Ministerial Meeting (Foreign Ministers) is held on an annual basis. .STRUCTURES AND MECHANISMS The highest decision-making organ of ASEAN is the Meeting of the ASEAN Heads of State and Government.

AEM:  ASEAN Economic Ministers AMM:  ASEAN Ministerial Meeting  AFMM:  ASEAN Finance Ministers Meeting  SEOM:  Senior Economic Officials Meeting ASC:  ASEAN Standing Committee SOM:  Senior Officials Meeting ASFOM:  ASEAN Senior Finance Officials Meeting .

ASEAN SUMMIT .

 To support the conduct of ASEAN’s external relations. ASEAN has established committees composed of heads of diplomatic missions in major capitals  The Secretary-General of ASEAN is appointed on merit and accorded ministerial status. The Secretary-General of ASEAN. advise.  ASEAN has several specialized bodies and arrangements promoting inter-governmental cooperation in various fields . and implement ASEAN activities. coordinate. who has a five-year term. is mandated to initiate.

Towards an ASEAN Economic Community From ASEAN Free Trade Area to an ASEAN single market and production base characterized by free flow of goods. and capital by 2020. . investment. labor. services.

competition searches for lowest cost. .  In a flat world.  The world is more borderless. and people within the region  Relatively similar psychology and national interest within region  National borders still have economic meaning.Regionalization: The Right Balance Globalization Regionalization Localization 22  ICT has allowed wide information access. services.  Goods and services can move cheaper thanks to cheap transportation and ICT.  National economic and political setbacks can threaten globalization.  National markets exist and are defined by psychology and politics. goods.  Convenience of flows of information.

tough labor laws and bureaucracy all deter investment  Woeful infrastructure  Lackluster primary education system  Exclusive growth environment to the rich  The privatization of key Weaknesses Weaknesses  Heavy reliance on low prices  Weak financial system  Inefficient capital system  Slow population growth  Strong technology and service industry  Relatively efficient capital market  Strong private sector and legal framework  Younger workforce  Growing population  Great university system  Strong entrepreneurial culture Strengths Strengths 23  Manufacturing giant with the lowest prices  Hybrid communist-capitalist model that enables development  Solid primary schools  Infrastructure that lures foreign investment  Good distribution of wealth with higher per-capita income India . where the world's workshop meets its offi China  Attracts higher prices  Red tape.ndia. corruption.

ASEAN Countries at a Glance 24 .

25 (Observer ) . brought together leaders of the former flying geese. the first East Asia Summit held in Kuala Lumpur. in December 2005. Malaysia.The First East Asia Summit Driven by ASEAN Initiated by ASEAN. with the objective to establish the East Asia Free Trade Area by 2015 and moving towards the New Asia.

India. and New Zealand. South Korea. as well as Russia (as an 26observer) in one table during the first East Asia Summit. Japan. Australia.The Rising East: Threat or Opportunity? Opportunity Threat Individual countries in ASEAN are nothing compared to Chindia ASEAN Integratio n ASEAN is the only region capable of being in the driver seat of the Greater East Asia integration* * ASEAN is the first to seat ASEAN countries together with China. .

and New Zealand 27 High Bargaining Power Attractive Single Regional Market  Huge market  High consumption  Less competitive Competitive Regional Production Base  Smooth flow of goods. and people under FTA  Abundance of natural . Japan. India.ASEAN in the Driving Seat of the Greater East ASEAN Neutral Position ASEAN is not considered a “threat” to China. services. South Korea. Australia.

and policies on intellectual property rights and competition are put in place  Regional infrastructure will be more developed with the expansion of transportation. capital. telecommunications and energy linkages .What does ASEAN Integration Mean? All barriers to the free flow of goods. services. and skilled labor are removed The region will become a more level playing field 28  Tariffs will be eliminated and non-tariff barriers will be gradually phased out  Rules and regulations will be simplified and harmonized  ASEAN investors will be permitted to invest in sectors formerly closed to foreigners and the services sector will also be opened up  Applicable international standards and practices are followed.

2003. ASEAN Competitiveness Study.Four Key Success Factors of ASEAN Integration Rigorous Focus on High-Impact Sectors Workable Institutions Continued Support by ASEAN Leaders More Effective Public-Private Collaboration 29 Source: McKinsey&Company. .

orporate Trends Supporting ASEAN Integratio Global trends in manufacturing indicate a shift towards adopting flexible production techniques and integrated production chains 30  It is no longer cost effective for all manufacturing activities to be done in in-house or in a single country  MNCs are integrating their manufacturing activities across several locations  MNCs are not only seeking large consumer markets but also regional sites where they can establish efficient production networks Regional Production Base .

Potential Cost Savings from ASEAN Integration 31 .

A Balanced Approach is Needed Benefits to MNCs  Targeting more sales volume in the ASEAN market  Components procurement on an ASEAN-wide basis  More product specialization to achieve economies of scale  Greater emphasis on profitability using ASEAN-wide operations 32 Benefits to Local Companies  More export opportunities to ASEAN market  ASEAN-wide expansion opportunity for corporate growth strategy  Technology and financial support opportunities from MNCs  ASEAN-wide pool of talent A Balanced Approach .