Common Market
AEC(Asean Economic Community) is a common market agreement between the Asean countries, which will create a regional common market of 600 million consumers from December 2015 in 5 areas: investment, services, goods, skilled labor and capital. Unlike the EC, no supra-national government or single currency will be created.
Investment
Currently under the FBA(Foreign Business Act), foreign ownership of a business is generally not allowed in Thailand, unless you get special BOI priviliges. Under AEC, this will change dramatically as Thailand commits to allow Asean majority investment in mining, fisheries, forestry, manufacturing and agriculture.
Services
This will be an area of major change, as AEC will create an open market for services.
Liberalization of services is already under preparation with AFAS, the Asean Framework Agreement on Services and would allow a 70% of (foreign) Asean ownership. Thailand must ultimately allow complete liberalization for all service business within Asean by end of 2015.
Goods
Under the current AFTA agreement trade of goods between the original Asean countries (Thailand, Singapore, Malaysia, Brunei , Philippines and Indonesia) is already open with standard duty at zero to 5%. Tariffs for goods from other countries (Myanmar, Laos, Vietnam, Cambodia) are dropping gradually. Ultimately the AEC aims to eliminate all tariffs and non-tariff barriers and to simplify and harmonize all customs processes & procedures.
No Free Movement Of Labor In The AEC Agreement
In the current agreement, after 2015 there will be a free movement of only skilled labor for these 7 professions only: doctors, dentists, nurses, engineers, accountants, architects, surveyors and tour guides. The liberalization after 2016 will still be limited by Thai domestic profession related requirements and also Thai language requirements could be a main obstacle. The free flow of unskilled labor is not included in the AEC agreement, in reality Thailand is now already granting a massive amount of work permits to foreign workers from Birma, Laos and Cambodia.
SME
More than 90% of all Thai companies are Small or Medium (SME) size. SME companies will face the biggest challenges, as the AEC will create a much bigger market in which the strongest, most efficient, best organized, most internationally oriented, most automated, most innovative companies will gradually gain advantage. Many Asean family-owned SME companies(not only in Thailand) will need to invest in these fields to retain or increase their business.
Thailand will need to improve the English skills of its workforce throughout its education system, in order to prepare employees to do business with other Asean countries.
In reality, the strength of the AEC after 2015 will depend on the ambitions of the individual governments to urgently start preparing national legislation in order to achieve the goals stated in the agreements.