IDEAS: ASEAN needs a stronger commitment to integration to address challenges in turbulent times
IDEAS has published its second annual ASEAN Integration Report, which assesses progress towards the ASEAN Economic Community (AEC) Blueprint 2025. The report was launched at the second annual ASEAN Prosperity Forum hosted by IDEAS. The AEC Blueprint specifies a range of different measures to be taken by the ASEAN Member States to achieve the vision of ASEAN as a unified production base and single market. The IDEAS ASEAN Integration Report assesses progress in implementing this vision. The report was prepared by the IDEAS Research Team and Asia Development Bank Lead Economist, Dr Jayant Menon who is also Senior Fellow at IDEAS.
The report found that:
• There are over 600 specific actions agreed by the ASEAN Member States to implement the AEC Blueprint. Of these, 17.7% have been Fully Implemented, 35.2% have been Partially Implemented and 3.9% is Overdue. There is No Evidence for the remaining 43.1% of actions. This suggests that some progress has been made, but significant efforts are needed to realise the vision of the AEC by 2025.
• Business perceptions of the AEC remain poor, which could be explained by slow progress in important areas including Customs, Trade Facilitation and Intellectual Property. The report recommends the ASEAN Member States focus on implementing reforms that will deliver impact on the ground.
• ASEAN has become significantly more integrated into Global Value Chains since 2003, which suggests that the AEC has been successful in developing ASEAN as a single production base. Although there is a divergence between Member State, with Cambodia, Laos and Myanmar significantly less integrated.
• Growth in intra-ASEAN trade and investment remains stable but is not growing faster than overall trade and investment. As a result, ASEAN is unlikely to meet its target to double the level of intra-ASEAN trade by 2025. The report notes that this is largely driven by underlying economic dynamics, including relatively low levels of trade complementarity between the ASEAN Member States.
• The US-China trade war and wider uncertainties in the global economy risk reducing the appetite for reform in ASEAN, as the focus of political leaders are drawn to addressing short term issues. The report recommends ASEAN Leaders continue to focus on delivering long term reforms to ensure ASEAN and its Member States are economically resilient.
Speaking at the launch of the Report, Deputy Minister of International Trade and Industry, Dr Ong Kian Ming reiterated Malaysia’s commitment to supporting ASEAN integration and noted that the US-China trade wars has created an opportunity to increase ASEAN integration, as supply chains are reorganised to respond to the conflict. Commenting on the launch of the report, IDEAS CEO Ali Salman said that “The ASEAN Member States have put forward ambitious goals for economic integration and it is important that these targets and commitments are monitored. We welcome the progress that has been made and urges ASEAN leaders to continue to focus on long term reforms which will promote prosperity for the people of ASEAN. Challenges in the global economy will continue to weigh on our attention, but it is also important to remain focussed on delivering long term reform.”
IDEAS is a policy research organisation with the mission of improving the level of understanding and acceptance of public policies based on the principles of the rule of law, limited government, free markets and individual liberty and responsibility.