Principles of the ASEAN Economic Community – AEC
The ASEAN countries are engaged in a process to transform ASEAN into a real economic community by the end of 2015. Originally built as a political alliance to limit the spread of communism in Southeast Asia, ASEAN gradually became a diplomatic organization to manage regional issues and expand trade with the inclusion of Vietnam, Cambodia and Laos and their opening to a market economy.
Having stood on a minimalist “smallest common denominator” approach that emphasized harmonious relations and respect of national sovereignties, ASEAN countries nonetheless also came to greatly develop trade through quite ambitious economic treaties and free-trade agreements for Southeast Asia.
ASEAN leaders have now embarked the Southeast Asian association to the next step of economic development, which will also ultimately bring the Southeast Asian peoples closer. They have engaged since 2007 towards the integration of ASEAN into an ASEAN Economic community based on 4 economic pillars:
4 pillars of the ASEAN Economic CommunitySingle Market and Production Base: the region as a whole must become a single market and production base to produce and commercialize goods and services anywhere in ASEAN
Competitive Economic Region: the region must emphasize on the competitiveness of its production and capacity for export, as well as the free competition inside of its frontiers
Equitable Economic Development: to receive the benefits of th AEC, the people and businesses of ASEAN must be engaged into the integration process of the AEC
ASEAN’s integration into the globalized economy: ASEAN must not be isolated but an integrated part of the global economy
Through the implementation of these 4 pillars for economic integration, stability, competitivity and dynamism, ASEAN is bound to realize the principles of an Economic Community, inspired by the model of the European Union.
5 core principles of the ASEAN single market and production base
Free flow of goods
Free flow of services
Free flow of investment
Free flow of capital
Free flow of skilled labor
Various business leaders such as AirAsia CEO Tony Fernandes, and political ones like Singapore PM Lee Hsien Loong have stated that ASEAN will require some more time beyond 2015 to fully realize the vision of the AEC. Yet, ASEAN is well advanced on its roadmap to formally realize the AEC by December 2015 as it achieved almost all its targets in the reduction of trade duties.
To present all the work that has been completed and inform ASEAN economies and businesses, the Association of Southeast Asian Nations has produced the report “Thinking Globally, Prospering Regionally – ASEAN Economic Community 2015” that highlights the achievements towards the AEC and its vision for the future.
ASEAN economic integration achievements and objectives – report highlightsASEAN countries form a market of over 600 million consumers and combined GDP of almost US$3 trillion, with a vibrant and growing economy that presents fantastic economic perspectives for the future of ASEAN.
Trade
Concerning the free flow of goods: as of 2010, duties were eliminated on 99.2% of tariff lines for the ASEAN-6 Member States (Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand).
In the other member states (Cambodia, Lao PDR, Myanmar and Viet Nam), 97.52% of tariff lines have been reduced to 0-5%. Measures to reduce technical barriers to trade are also being implemented.
ASEAN Member States are also working towards the achievement of the free flow of services through the ASEAN Framework Agreement on Services (AFAS).
For more information, check this overview of trade and foreign investment in ASEAN.
Investment
ASEAN is committed to building an investment environment to attract businesses: it created the ASEAN Comprehensive Investment Agreement (ACIA), which includes commitments towards the liberalization and protection of cross-border investments operations, together with best practices for the treatment of foreign investors and investments.
For the free flow of capital, stock exchanges from Indonesia, Malaysia, Philippines, Singapore, Thailand and Viet Nam are working together to form the ASEAN Exchanges, aiming to promote ASEAN capital markets and to offer more opportunities to investors in the region.
Labor
ASEAN works towards facilitating the free flow of skilled labor: the ASEAN Agreement on the Movement of Natural Persons (MNP) provides a legal framework to ease temporary cross-border movements of people engaged in the trade in goods, services and investment.
For more information on the skilled labor market in ASEAN as well as existing opportunities for certain professions through Mututal Recognition Agreements, check this overview of the ASEAN skilled labor market.
Competitive Economic Region
By creating a competitive economic region, the AEC wants to foster a culture of fair competition, which includes protection of consumers and guarantees for intellectual property rights. It also requires infrastructures (highways, airports and rail links, power grids and gas pipelines) under planning and development.
Principles of the ASEAN Economic Community – AECThe ASEAN countries are engaged in a process to transform ASEAN into a real economic community by the end of 2015. Originally built as a political alliance to limit the spread of communism in Southeast Asia, ASEAN gradually became a diplomatic organization to manage regional issues and expand trade with the inclusion of Vietnam, Cambodia and Laos and their opening to a market economy.Having stood on a minimalist “smallest common denominator” approach that emphasized harmonious relations and respect of national sovereignties, ASEAN countries nonetheless also came to greatly develop trade through quite ambitious economic treaties and free-trade agreements for Southeast Asia.ASEAN leaders have now embarked the Southeast Asian association to the next step of economic development, which will also ultimately bring the Southeast Asian peoples closer. They have engaged since 2007 towards the integration of ASEAN into an ASEAN Economic community based on 4 economic pillars:4 pillars of the ASEAN Economic CommunitySingle Market and Production Base: the region as a whole must become a single market and production base to produce and commercialize goods and services anywhere in ASEANCompetitive Economic Region: the region must emphasize on the competitiveness of its production and capacity for export, as well as the free competition inside of its frontiersEquitable Economic Development: to receive the benefits of th AEC, the people and businesses of ASEAN must be engaged into the integration process of the AECASEAN’s integration into the globalized economy: ASEAN must not be isolated but an integrated part of the global economyThrough the implementation of these 4 pillars for economic integration, stability, competitivity and dynamism, ASEAN is bound to realize the principles of an Economic Community, inspired by the model of the European Union.5 core principles of the ASEAN single market and production baseFree flow of goodsFree flow of servicesFree flow of investmentFree flow of capitalFree flow of skilled laborVarious business leaders such as AirAsia CEO Tony Fernandes, and political ones like Singapore PM Lee Hsien Loong have stated that ASEAN will require some more time beyond 2015 to fully realize the vision of the AEC. Yet, ASEAN is well advanced on its roadmap to formally realize the AEC by December 2015 as it achieved almost all its targets in the reduction of trade duties.To present all the work that has been completed and inform ASEAN economies and businesses, the Association of Southeast Asian Nations has produced the report “Thinking Globally, Prospering Regionally – ASEAN Economic Community 2015” that highlights the achievements towards the AEC and its vision for the future.ASEAN economic integration achievements and objectives – report highlightsASEAN countries form a market of over 600 million consumers and combined GDP of almost US$3 trillion, with a vibrant and growing economy that presents fantastic economic perspectives for the future of ASEAN.TradeConcerning the free flow of goods: as of 2010, duties were eliminated on 99.2% of tariff lines for the ASEAN-6 Member States (Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand).In the other member states (Cambodia, Lao PDR, Myanmar and Viet Nam), 97.52% of tariff lines have been reduced to 0-5%. Measures to reduce technical barriers to trade are also being implemented.ASEAN Member States are also working towards the achievement of the free flow of services through the ASEAN Framework Agreement on Services (AFAS).For more information, check this overview of trade and foreign investment in ASEAN.InvestmentASEAN is committed to building an investment environment to attract businesses: it created the ASEAN Comprehensive Investment Agreement (ACIA), which includes commitments towards the liberalization and protection of cross-border investments operations, together with best practices for the treatment of foreign investors and investments.For the free flow of capital, stock exchanges from Indonesia, Malaysia, Philippines, Singapore, Thailand and Viet Nam are working together to form the ASEAN Exchanges, aiming to promote ASEAN capital markets and to offer more opportunities to investors in the region.LaborASEAN works towards facilitating the free flow of skilled labor: the ASEAN Agreement on the Movement of Natural Persons (MNP) provides a legal framework to ease temporary cross-border movements of people engaged in the trade in goods, services and investment.For more information on the skilled labor market in ASEAN as well as existing opportunities for certain professions through Mututal Recognition Agreements, check this overview of the ASEAN skilled labor market.Competitive Economic RegionBy creating a competitive economic region, the AEC wants to foster a culture of fair competition, which includes protection of consumers and guarantees for intellectual property rights. It also requires infrastructures (highways, airports and rail links, power grids and gas pipelines) under planning and development.
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