Under the asean economic community (AEC) ,a single regional common market of Asean countries will be created by 2015 .the regional integration objective is to create a competitive market of over 600 millions people in asean countries :Brunei, Cambodia, Indonesia, Laos ,Malaysia, Myanmar, the Philippines , Singapore, Thailand, and Vietnam. There will be free flow of goods, services, investment capital and skilled labor following the liberalization. These will include tariff reductions and streamlining of certain administrative procedures. Many business have began preparing themselves three years ahead of time to meet the challenges and opportunities of asean economic community(AEC.)
even though, according to the Bangkok post newspaper in Thailand, the AEC scorecard at the moment show the region behind schedule, having achieved only 73.6% of phase 1 goals , it still offers a big opportunity in Asia as it will be viewed as a single large market. Further more, the integration will help increase Asean competitiveness with china and India. The delayed issues, such as agriculture, nontariff barriers, integration of the less developed CLMV( Cambodia , Laos , Myanmar , and Vietnam )members, and financial integration remain to be worked out . according to the U.S. international trade commission report on AEC , the challenges were seen in the area of importing and exporting which vary widely among Asean member . For example , procedures for trading are relatively easy to complete in Singapore , Thailand , and Malaysia . but very difficult in Laos and Cambodia .the quality of logistics services also varies among the Asean member, such as custom brokerage, freight forwarding, and express delivery . logistics service are world-class in Singapore but poor in Laos, Cambodia ,and Myanmar . in many Asean countries, restrictive regulations hamper the delivery of high-quality logistics service.
Benefits of the Asean Economic Community (AEC)
It will open more regional cooperation and will improve the scale efficiencies , dynamism and competitiveness of Asean members. AEC will enable easier movement of good , service, investment, capital and people . Ultimately , it will offer new ways of coordinating supply chains, or acess to new markets for established products.
All Asean countries are more important to foreign investors if they are considered as one node in lager regional market of nearly 600 million people a single market. The Asean Free Trade Agreement(AFTA) will be expanded to zero tariffs on almost all good by 2015
The USITC’s Asean: Regional Trends in Economic Integration, Export Competitiveness, and Inbound Investment for Selected Industries Report noted that the AEC is coming at a time when it is recognized that investment in emerging markets is more desirable than in U.S. and Europe.
Small and medium-sized Enterprises(SME’s) accounted for 96% of enterprises and between 50-85% of domestic employment across Asean. Integrating these SME’s and supporting them in the initial period will be a challenge throughout ASEAN but particularly in the lesser developed ASEAN countries.
Tourism opportunity .Asean travels more in the region and these are more travelers. The other countries that have began to reach out to Asia as new visitors. The trends were evident at the recent Hub city Forum, held by the Asia tourism Association(PATA) , where more than 100 travel industry executives discussed the tourism potential, government’s spending to upgrade facilities both for leisure attractions like museums; and also MICE (Meeting, Incentives, Conventions, and Exhibitions) facilities such as convention centers, reported the newspaper
Internationalization of health care under the AEC . Health care is one of the sectors to be internationalized. This is definitely a big challenge as it is more complicated than just the popularity of Singapore and Thailand “medical tourism” that patients travel from one country to another seeking better care at lower cost. The legal and licensing frameworks are still needed to be worked out.
These are vast and ambitions pursuits . Business need to have an international mindset, which give them the appetite and ability to make cross-border investments and acquisitions. Momentum has been established, as seem from many investments and merger and acquisition activity that has occurred in the region . Still, we believe the future is clearly in favor of the AEC and that it offers clear opportunities and challenges that all businesses need to be thinking about and preparing for. Those who fail to do so , have no to blame but themselves for missing out on a wonderful new opportunity for sales, investment and engagement with Asia.