[151015.EN.BIZ] Much Doubt Promise of ASEAN Community Will Ever Bear Fruit

PESSIMISM trumped optimism among speakers at the recent Global Logistics and Supply Chain Symposium (GLCS LogiSYM Malaysia) in Kuala Lumpur about the launch of the ASEAN Economic Community (AEC) on December 31.

The AEC hopes to duplicate the European Union by freeing the flow of goods and services across borders - creating a single market and production base encompassing the 10 member states of ASEAN, says Lloyd's Loading List.

But a number of speakers at the conference were far less optimistic about AEC than ASEAN's political leaders.

Deborah Elms, executive director of the Singapore-based Asian Trade Centre, said AEC will be launched with much political fanfare, but would mean little to most companies operating in the region.

"It's supposed to mean freer movement of capital, and the free movement of goods, skills and investment," she said. "It's an unbelievable aspiration."

The political structure of ASEAN, and its underfunded and under-staffed Secretariat, would make achieving those aims extremely difficult.

"Countries have no particular incentive to liberalise, and there's no mechanism to make them, even if they've committed to it," she said.

"There is already tariff-free movement within ASEAN, but that's not AEC. Non-tariff barriers are not addressed by AEC.

"I'm not trying to be pessimistic, I'm trying to be realistic. The rhetoric is amazing, but the details are disconnected," she said.

Gwyneth Fries, senior sustainability advisor at Forum for the Future and an ex-advisor to the World Bank, said ASEAN member states had made "really, really slow" progress, with non-tariff barriers seemingly an intractable challenge.

"The WTO registered 2,000 non-tariff barriers in the ASEAN bloc, that's up 30 per cent from 2010 to June 2015," she said. "People are frustrated with the ASEAN Secretariat as there is no enforcement."

Asia Executive Insights managing director Wayne Hunt said ASEAN had major obstacles to overcome to make AEC function as planned.

"The challenges are real, but I am hopeful that because of the wins that are available, if they can get their act together at some stage it will be a wake-up call. December 31 is not far away," he said.

"I feel that Singapore, Malaysia and Thailand are a bit more committed and can see the opportunities for opening up more clearly than others," he said.

"We could see a Tier 1 of these three countries progressing faster and that could put pressure on others.

"They will quickly see that if they are not on that journey, the benefits will pass them by. The Heads of State have signed off on this, so there is question of integrity if they don't follow through," he said.

Source : HKSG.