It has been 10 years since the ASEAN Concord II spelled out ASEAN’s strong commitment to establish an ASEAN Economic Community (AEC) by 2015 which was guided by the AEC 2015 Blueprint. Post-2015, we are now in the AEC 2025 Blueprint. While retaining most of its key visions in the earlier blueprint, one significant difference is the re-describing of headings and sub-headings as “necessary implementations rather than as aspirational phrases”.
Single Market and Production Base is now A Highly Integrated and Cohesive Economy; free movement of goods is now trade in goods; and the like for services and investment; free movement of skilled labour is now facilitating movement of skilled labour and business visitors; while freer flow of capital is now financial integration, financial inclusion, and financial stability. It seems that reality has set in.
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The launching of the AEC 2015 was hailed as a game-changer for the region. The common narrative then was that ASEAN was to be the EU of Asia. ASEAN did, after all paint a picture of a common market with the taglines of “single market” and “free movement of goods, services, investment and skilled labour”. AEC 2025, however, seems to pull back from the vision of realizing a common market.
This is reflected on the ground. Take the free movement of skilled labour in Malaysia for example. Malaysian companies have to fulfill certain criteria before being able to hire a skilled foreign national: minimum paid-up capital, type of company and priority of economic sector are among those criteria. Moreover, these conditions apply to both non-ASEAN and ASEAN citizens alike. In other words, being from ASEAN is insignificant when it comes to hiring policies.
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The tone set in AEC 2025 is one that is more realistic albeit being a pullback from the AEC’s initial goal. It somewhat acknowledges that aligning from disparate national interests to aggregated regional interests is precarious given ASEAN’s non-interference policy – one which ASEAN is reluctant to forego.
The AEC is therefore in a state where it cannot yet clearly define what it is. On one hand, it is retreating away from a common market but on the other, insists on an integrated regional economy. At the moment, the AEC merely looks like a glorified free trade agreement (FTA) that is the culmination of selectively convenient policy choices with marginal commitment and limited effect.
Also read “ASEAN: The Quest For Economic Integration“
The answer to the question “what am I?” is crucial for the AEC and ASEAN as a whole. The concept of opportunity cost is of relevance here. The resources spent in pursuing a (failed) single market in the AEC 2015 Blueprint could have been better spent on another policy agenda to a more successful end.
Likewise, the absence of a clear definition as to what the AEC is in the 2025 Blueprint will again see ASEAN incurring huge opportunity costs. Only this time, the opportunity cost may prove too much to bear. In a time where global hegemony and economic systems are quickly being disrupted by a rise in protectionism and digitization, a strong ASEAN is needed now more than ever.
Certainly, ASEAN’s decision at this crossroad has the potential to thrust the region into the league of global elites. The alternative; feeble tales of the could haves in a region that once had such potential. At the core of this is the question “what am I?”, one that ASEAN has to answer, fast.
Timothy is passionate to see potential unlocked; that includes ASEAN. He is currently working in a state government think tank and is finding the balance between rigorous policy research and simple implementation strategies.
Disclaimer: All opinions expressed in this article are the author’s own and do not necessarily reflect the views of the ASEAN Economic Forum.