INTRODUCTION TO ASEAN

This unofficial introduction to ASEAN is prepared by CIL staff.  For official information on

ASEAN, please visit the ASEAN Secretariat Website and its “About ASEAN” section.

ASEAN’s Founding

The Association of Southeast Asian Nations (ASEAN) was founded on 8 August 1967 when the

Foreign Ministers of Indonesia, Malaysia, Singapore, Thailand and the Philippines completed

negotiations on the 1967   ASEAN Declaration   (also known as the Bangkok Declaration). Against

a backdrop of the Cold War and the tumultuous transition to independence occurring in many

Southeast Asian states, ASEAN’s objective at its founding was “to accelerate the economic

growth, social progress and cultural development in the region through joint endeavours in the

spirit of equality and partnership in order to strengthen the foundation for a prosperous and

peaceful community of South-East Asian Nations”.

Such a commitment was of great importance for building trust in a region divided by stark

differences of ethnicity and a scant history of inter-state cooperation during the period of

colonization.  As Southeast Asian countries struggled with newfound independence in the 1960s,

differing visions of fiery nationalism and what shape the region should take in the post-colonial

era gave rise to territorial disputes and confrontations amongst members even as neighbouring

countries in Indochina were in the throes of war and internal conflict.  In fact relations between

two founding members, Malaysia and the Philippines, were not normalised until 1969. The

1967 Bangkok Declarationwas an initiative to ensure peace and stability in the region, through a

commitment to work together and deal peacefully with mutual differences.  Member states hoped

to forge an independent bloc in Southeast Asia, which would not be dominated or exploited by

external powers.  Today, the notions of sovereignty, equality, territorial integrity and non-

interference among member states remain central tenets of ASEAN unity and cooperation.

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ASEAN’s primary mode of activity is inter-governmental meetings among the representatives of

the ten member states.  ASEAN institutions do not include any sort of assembly representing the

people of ASEAN, although various ASEAN institutions maintain contact with civil society

organizations in the region and the ASEAN Inter-Parliamentary Assembly.  The latter is not

officially a part of ASEAN as to date, only eight member countries’ political systems incorporate

representative legislative bodies.

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OBJECTIVE OF ASEAN

At the time of ASEAN’s founding, the primary objective of furthering regional cooperation was

couched in generalterms in the 1967 Bangkok Declaration.

Some of the earliest ASEAN initiatives were those that pertained to norms of peace and

security in the region, including the 1971   Declaration on the Zone of Peace, Freedom and

Neutrality   (ZOPFAN) and the 1976   Treaty of Amity and Cooperation .  This was

later supplemented by the 1995   Southeast Asia Nuclear Weapons Free Zone (SEANWFZ) and

the  2002   Declaration on the Conduct of Parties in the South China Sea .

In the early years, ASEAN also initiated cooperation on economic and cultural projects, which

were seen as means to enhance regional stability.  Some early initiatives were in the areas of

preferential trading agreements, industrial complementation, agriculture, tourism, cultural and

media cooperation, and the promotion of Southeast Asian studies.

The objectives of ASEAN were broadened with the notion of an “ASEAN Community”

encompassing security, economic, social and cultural cooperation.  The idea of the ASEAN

Community was seeded in the 1976   Declaration of ASEAN Concord   (also known as the “Bali

Concord”), and further developed into the three specific areas of security, economic and socio-

cultural cooperation in the  1997   ASEAN Vision 2020 , and the  2003   Declaration of ASEAN

Concord II   (Bali Concord II). ASEAN continues to work towards the attainment of these goals,

guided by a series of specific targets and work plans for each of the three communities. 

ASEAN’s official work plans include theHanoi Plan of Action 1997-2003 (HPA), Vientiane

Action Programme 2004-2010   (VAP), and now the Roadmap for an ASEAN Community (2009-

2015) comprising the ASEAN Political-Security Blueprint, ASEAN Economic Blueprint,

ASEAN Socio-Cultural Blueprint and the Initiative for ASEAN Integration Workplan II.

Recent priorities for the ASEAN Community in 2009-2010 include enhancing

connectivity, financial stability, sustained development, responses to climate change and the

implementation of the ASEAN Charter.

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Asean Principles set out in the charter include:

Emphasising the centrality of ASEAN in regional cooperation.

Respect for the principles of territorial integrity, sovereignty, non-interference and national

identities of ASEAN members.

Promoting regional peace and identity, peaceful settlements of disputes through dialogue and

consultation, and the renunciation of aggression.

Upholding international law with respect to human rights, social justice and multilateral

trade.

Encouraging regional integration of trade.

Appointment of a Secretary-General and Permanent Representatives of ASEAN.

Establishment of a human rights body and an unresolved dispute mechanism, to be decided

at ASEAN Summits.

Development of friendly external relations and a position with the UN (like the EU)

Increasing the number of ASEAN summits to twice a year and the ability to convene for

emergency situations.

Reiterating the use of the ASEAN flag, anthem, emblem and national ASEAN day on

August 8.

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THE PURPOSES OF ASEAN

1. To maintain and enhance peace, security and stability and further strengthen peace-oriented

values in the region;

2. To enhance regional resilience by promoting greater political, security, economic and socio-

cultural cooperation;

3. To preserve Southeast Asia as a Nuclear Weapon-Free Zone and free of all other weapons of

mass destruction;

4. To ensure that the peoples and Member States of ASEAN live in peace with the world at large

in a just, democratic and harmonious environment;

5. To create a single market and production base which isstable, prosperous, highly competitive

and economically integrated with effective facilitation for trade and investment in which there is

free flow of goods, services and investment; facilitated movement of business persons,

professionals, talents and labour; and freer flow of capital;

6. To alleviate poverty and narrow the development gap within ASEAN through mutual

assistance and cooperation;

7. To strengthen democracy, enhance good governance and the rule of law, and to promote and

protect human rights and fundamental freedoms, with due regard to the rights and responsibilities

of the Member States of ASEAN;

8. To respond effectively, in accordance with the principle of comprehensive security, to all

forms of threats, transnational crimes and transboundary challenges;

9. To promote sustainable development so as to ensure the protection of the region’s

environment, the sustainability of its natural resources, the preservation of its cultural heritage

and the high quality of life of its peoples;

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10. To develop human resources through closer cooperation in education and life-long learning,

and in science and technology, for the empowerment of the peoples of ASEAN and for the

strengthening of the ASEAN Community;

11. To enhance the well-being and livelihood of the peoples of ASEAN by providing them with

equitable access to opportunities for human development, social welfare and justice;

12. To strengthen cooperation in building a safe, secure and drug-free environment for the

peoples of ASEAN;

13. To promote a people-oriented ASEAN in which all sectors of society are encouraged to

participate in, and benefit from, the process of ASEAN integration and community building;

14. To promote an ASEAN identity through the fostering of greater awareness of the diverse

culture and heritage of the region; and

15. To maintain the centrality and proactive role of ASEAN as the primary driving force in its

relations and cooperation with its external partners in a regional architecture that is open,

transparent and inclusive.

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GENERAL PRINCIPLES OF ASEAN

1. In pursuit of the Purposes stated in Article 1, ASEAN and its Member States reaffirm and

adhere to the fundamental principles contained in the declarations, agreements, conventions,

concords, treaties and other instruments of ASEAN.

2. ASEAN and its Member States shall act in accordance with the following Principles:

(a) respect for the independence, sovereignty, equality, territorial integrity and national identity

of all ASEAN Member States;

(b) shared commitment and collective responsibility in enhancing regional peace, security and

prosperity;

(c) renunciation of aggression and of the threat or use of force or other actions in any manner

inconsistent with international law;

(d) reliance on peaceful settlement of disputes;

(e) non-interference in the internal affairs of ASEAN Member States;

(f) respect for the right of every Member State to lead its national existence free from external

interference, subversion and coercion;

(g) enhanced consultations on matters seriously affecting the common interest of ASEAN;

(h) adherence to the rule of law, good governance, the principles of democracy and constitutional

government;

(i) respect for fundamental freedoms, the promotion and protection of human rights, and the

promotion of social justice;

(j) upholding the United Nations Charter and international law, including international

humanitarian law, subscribed to by ASEAN Member States;

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(k) abstention from participation in any policy or activity, including the use of its territory,

pursued by any ASEAN Member State or non-ASEAN State or any non-State actor, which

threatens the sovereignty, territorial integrity or political and economic stability of ASEAN

Member States;

(l) respect for the different cultures, languages and religions of the peoples of ASEAN, while

emphasising their common values in the spirit of unity in diversity;

(m) the centrality of ASEAN in external political, economic, social and cultural relations while

remaining actively engaged, outward-looking, inclusive and non-discriminatory; and

(n) adherence to multilateral trade rules and ASEAN’s rules-based regimes for effective

implementation of economic commitments and progressive reduction towards elimination of all

barriers to regional economic integration, in a market-driven economy.

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ADVANTAGES AND DISADVANTAGES OF ASEAN

Criticism 

Western countries have criticized ASEAN for being too "soft" in its approach to promoting

human rights and democracy in the junta-led Myanmar. Despite global outrage at the military

crack-down on peaceful protesters in Yangon, ASEAN has refused to suspend Myanmar as a

member and also rejects proposals for economic sanctions. This has caused concern as the

European Union, a potential trade partner, has refused to conduct free trade negotiations at a

regional level for these political reasons. International observers view it as a "talk shop", which

implies that the organization is "big on words but small on action". 

During the 12th ASEAN Summit in Cebu, several activist groups staged anti-globalization and

anti-Arroyo rallies.[68] According to the activists, the agenda of economic integration would

negatively affect industries in the Philippines and would cause thousands of Filipinos to lose

their jobs. They also viewed the organization as "imperialistic" that threatens the country's

sovereignty. A human rights lawyer from New Zealand was also present to protest about the

human rights situation in the region in general. 

ASEAN has agreed to an ASEAN human rights body which will come into force in 2009. The

Philippines, Malaysia, Indonesia and Thailand want this body to have an enforcement capacity,

however Singapore, Viet Nam, Burma, Laos and Cambodia do not. 

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THE GOOD: 

Free Trade Area 

The foundation of the AEC is the ASEAN Free Trade Area (AFTA), a common external

preferential tariff scheme to promote the free flow of goods within ASEAN.[44] The ASEAN

Free Trade Area (AFTA) is an agreement by the member nations of ASEAN concerning local

manufacturing in all ASEAN countries. The AFTA agreement was signed on 28 January 1992 in

Singapore. When the AFTA agreement was originally signed, ASEAN had six members,

namely, Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. Vietnam joined in

1995, Laos and Myanmar in 1997, and Cambodia in 1999. The latecomers have not fully met the

AFTA's obligations, but they are officially considered part of the AFTA as they were required to

sign the agreement upon entry into ASEAN, and were given longer time frames in which to meet

AFTA's tariff reduction obligations. 

Comprehensive Investment Area 

The ASEAN Comprehensive Investment Area (ACIA) will encourage the free flow of

investment within ASEAN. The main principles of the ACIA are as follows 

* All industries are to be opened up for investment, with exclusions to be phased out according

to schedules 

* National treatment is granted immediately to ASEAN investors with few exclusions 

* Elimination of investment impediments 

* Streamlining of investment process and procedures 

* Enhancing transparency 

* Undertaking investment facilitation measures 

Full realization of the ACIA with the removal of temporary exclusion lists in manufacturing

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agriculture, fisheries, forestry and mining is scheduled by 2010 for most ASEAN members and

by 2015 for the CLMV (Cambodia, Lao PDR, Myanmar, and Vietnam) countries. 

Trade in Services 

An ASEAN Framework Agreement on Trade in Services was adopted at the ASEAN Summit in

Bangkok in December 1995.Under the agreement, ASEAN members are negotiating intra-

regional services liberalization in several sectors, including air transport, business services,

construction, financial services, maritime transport, telecommunications and tourism. Although

some sectors have liberalized faster, such as air transport, other sectors remain subject to

continued negotiation. Efforts to expand the scope of the Framework Agreement also remain

subject to continued negotiations. 

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AIMS AND IT'S FUNCTION Of ASEAN

As set out in the ASEAN Declaration, the aims and purposes of ASEAN are:

To accelerate the economic growth, social progress and cultural development in the region

through joint endeavours in the spirit of equality and partnership in order to strengthen the

foundation for a prosperous and peaceful community of Southeast Asian Nations;

To promote regional peace and stability through abiding respect for justice and the rule of law in

the relationship among countries of the region and adherence to the principles of the United

Nations Charter;

To promote active collaboration and mutual assistance on matters of common interest in the

economic, social, cultural, technical, scientific and administrative fields;

To provide assistance to each other in the form of training and research facilities in the

educational, professional, technical and administrative spheres;

To collaborate more effectively for the greater utilisation of their agriculture and industries, the

expansion of their trade, including the study of the problems of international commodity trade,

the improvement of their transportation and communications facilities and the raising of the

living standards of their peoples;

To promote Southeast Asian studies; and

To maintain close and beneficial cooperation with existing international and regional

organisations with similar aims and purposes, and explore all avenues for even closer

cooperation among themselves.

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IMPORTANCE OF ASEAN

A S Cambodia draws nearer to the date in 1997 when it hopes to become a member ofthe

Association of South East Asian Nations (ASEAN) it reaches a pivotal time inits economic and

political growth.Its full acceptance into ASEAN will mark a tremendous achievement in the

rebuildingof the Kingdom.The economic repercussions will be significant and likely painful as

Cambodia graduallymoves its import tariffs into line with those required by the organization.

However,the long term importance of ASEAN membership should not be

underestimated.Regional groupings based on economics are becoming increasingly important as

theworld moves toward the twenty-first century.There are at least 32 economic groupings of

some form now in existence: three inEurope, four in the Middle East, five in Asia and ten each in

Africa and the Americas.Some of these groupings around the world have the superstructure of

nation states(such as the European Union); some (like the ASEAN Free Trade Area or AFTA),

aremultinational agreements that tend to be more political arrangements than cohesivetrading

blocs at present. With respect to the three major blocs - the North American,western European

and Asian - intra-bloc trade has grown rapidly, while trading betweenthe blocs or with outsiders

has either declined or grown far more slowly.The development of a unified trading bloc in Asia

has been quite different from thatin Europe and in the Americas.While European and North

American arrangements tend to have been driven by politicalwill, market forces and more

pragmatic considerations are what have been compellingpoliticians in Asia to move toward more

a formal integration.First, European and American markets are significant for the Asian

producers andsome type of organization or bloc may be needed to maintain leverage and

balanceagainst the two other blocs.Secondly, given that much of the growth in trade for the

nations in the region isfrom intra-Asian trade, having a common understanding and policies is

becoming moreand more necessary.A future arrangement will most likely be using the frame of

the most establishedarrangement in the region, ASEAN.ASEAN as a regional body has grown

up for various purposes.Defense and a common foreign policy were initially more important

reasons for theformation of the grouping than the goal of economic development. But, with

perceived threats to safety receding, economic development has taken on a more important role

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as the general goal of the ASEAN states.The states now have booming economies and have

attracted much attention from foreign

investors.Traditionally, the Asian region has received more foreign investment than any

otherpart of the developing world.There has been significant inter-regional investment, with

capital from countrieslike Singapore, Hong Kong and Taiwan moving to other countries in the

region. Thereis also a considerable and ever increasing flow of capital from one ASEAN state

intoanother in the form of foreign investment.The states of the region have mixed economies and

are inclined towards growth thatis led by foreign investment.Within the ASEAN region, the

example provided by Singapore which grew spectacularlythrough foreign investment is one

factor that makes states of the region more hospitableto foreign investment than many other areas

of the world.The attraction to foreign investment, however, is balanced by nationalism and

understandableefforts to ensure that investment that is made will further the economic

developmentof the state and not be detrimental to local business interests.For this reason, some

control over foreign investment has been instituted in varyingdegrees in all ASEAN states.The

techniques used by the ASEAN states to attract foreign investment are largely

similar. The use of tax incentives as a means of channeling investment into desiredareas has been

widely prevalent and there have in the past been calls for a coordinationof efforts on a regional

basis on the granting of such incentives.Other moves to increase regional economic

cooperation have included the ASEAN IndustrialJoint Venture, established in 1983 as a means of

encouraging the development of intra-regionalproduction.This is also a concept that promotes

cooperation.There have also been efforts to develop areas which have not been traditionally

attractiveto investors through the creation of "growth areas" such as the trianglebetween

Singapore, Johore (a state in Malaysia) and the Riau Islands of Indonesia.The aim for this

particular area is for Malaysia and Indonesia to provide land andother natural resources and

Singapore to provide management and technical expertisefor the development of industries

within the triangle. Other "growth areas"include a triangle linking Medan in Indonesia, Phuket in

Thailand and Penang in Malaysia.Before late 1991, ASEAN had no real structures, and

consensus was reached throughinformation consultations.In October 1991, ASEAN members

announced the formation of a customs union calledASEAN Free Trade Area (AFTA).A customs

union is a grouping whose members dismantle barriers to trade in goodsand services among

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themselves and establish a common trade policy with respect tonon-members.Typically thistakes

the form of a common external tariff, whereby imports from non-membersare subject to the

sametariff when sold to any member country.Tariff revenues are then shared among members

according to a prespecified formula.It is through this aspect of ASEAN membership, the

adjustment of tariff rates toconform with AFTA requirement, that Cambodia will likely enjoy the

greatest longterm gain and the harshest short term pain.Trading businesses and those importing

raw materials from ASEAN nations will benefitgreatly.However, with the bulk of the kingdom's

tax revenue presently coming from customsduties and tariffs, other sources will have be

developed to allow the governmentto compensate for the resulting loss of income.

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WHY IS ASEAN IMPORTANT?

ASEAN’s geostrategic importance stems from many factors, including the strategic location of

member countries, the large shares of global trade that pass through regional waters, and the

alliances and partnerships which the United States shares with ASEAN member

countries. Recognizing its geostrategic importance, the US cooperates with ASEAN and its

member states on a multitude of intitatives ensuring security and stability in the region.

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ASEAN COMMUNITY COUNCILS

1. The ASEAN Community Councils shall comprise the ASEAN Political-Security Community

Council, ASEAN Economic Community Council, and ASEAN Socio-Cultural Community

Council.

2. Each ASEAN Community Council shall have under its purview the relevant ASEAN Sectoral

Ministerial Bodies.

3. Each Member State shall designate its national representation for each ASEAN Community

Council meeting.

4. In order to realise the objectives of each of the three pillars of the ASEAN Community, each

ASEAN Community Council shall:

(a) ensure the implementation of the relevant decisions of the ASEAN Summit;

(b) coordinate the work of the different sectors under its purview, and on issues which cut across

the other Community Councils; and

(c) submit reports and recommendations to the ASEAN

Summit on matters under its purview.

5. Each ASEAN Community Council shall meet at least twice a year and shall be chaired by the

appropriate Minister from the Member State holding the ASEAN Chairmanship.

6. Each ASEAN Community Council shall be supported by the relevant senior officials.

ASEAN NATIONAL SECRETARIATS

Each ASEAN Member State shall establish an ASEAN National Secretariat which shall:

(a) serve as the national focal point;

(b) be the repository of information on all ASEAN matters at the national level;

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(c) coordinate the implementation of ASEAN decisions at the national level;

(d) coordinate and support the national preparations of ASEAN meetings;

ASEAN Political-Security Community

The objectives of the ASEAN Political-Security Community (APSC) are to ensure that the

peoples and Member States of ASEAN live in peace with one another and with the world at large

in a just, democratic and harmonious environment. Activities in this community include

cooperation on building norms of peace and security, strong relationships with external partners,

the promotion of political development in areas such as good governance and human rights, as

well as specific sectoral meetings on defence, law, and transnational crime.  Traditionally the

APSC also includes the ASEAN Foreign Ministers, who serve core coordinating and decision-

making functions in ASEAN.  As the first ministerial body created at ASEAN’s founding in

1967, the Foreign Ministers’ meeting was termed the ASEAN Ministerial Meeting (AMM).  In

2009 with the implementation of the ASEAN Charter, the Foreign Ministers functions were

separated into their roles as the ASEAN Foreign Ministers (which retains the acronym AMM)

and the ASEAN Coordinating Council.

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ASEAN Economic Community

The objective of the ASEAN Economic Community (AEC) is to transform ASEAN into a region

with free movement of goods, services, investment, skilled labour, and freer flow of capital.  The

AEC envisages a single market and production base making ASEAN more dynamic and

competitive with new mechanisms and measures to strengthen the implementation of its existing

economic initiatives; accelerating regional integration in the priority sectors; facilitating

movement of business persons, skilled labour and talents; and strengthening the institutional

mechanisms of ASEAN.  Initiatives under the AEC include the ASEAN Free Trade Area,

ASEAN Investment Area, and sectoral cooperation in the specific areas of energy, finance,

agriculture and forestry, minerals, science and technology, telecommunications and IT, tourism,

and transport.

Enabling economic development throughout ASEAN is also an important objective of the AEC.

With the enlarged membership of ASEAN came a new set of challenges.  Cambodia, Laos,

Myanmar and Vietnam were the last four members to join and were acknowledged to have a

significant development gap with the first six members.  “Narrowing the Development Gap” thus

became an additional priority of ASEAN.  Projects under the Initiative for ASEAN Integration

(IAI) are designed to enable new ASEAN members to accelerate the pace of economic growth,

and to enable them to participate on a similar level with the first six members.

ASEAN Socio-Cultural Community

The ASEAN Social-Cultural Community (ASCC) contributes to realising an ASEAN

Community that is “people-centred and socially responsible with a view to achieving enduring

solidarity and unity among the nations and peoples of ASEAN by forging a common identity and

building a caring and sharing society which is inclusive and harmonious where the well-being,

livelihood, and welfare of the peoples are enhanced.” Areas of cooperation in this community

include culture, arts and information, disaster management, education, environment, health,

labour, rural development and poverty eradication, social welfare and development, youth and

civil service cooperation.

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External Relations

Another essential aspect of ASEAN’s activities today is the development of close partnerships

with other countries.  The simultaneous engagement of many important countries with an interest

in South East Asia forms part of ASEAN’s strategy to remain in the driver’s seat in regional

developments – ensuring that the region is stable and prosperous, and free from domination by

any single external power. The main instruments of ASEAN’s relations with its partners are the

promotion of norms of peace and conciliation, and the creation of  a network of economic

agreements in the region.

Today, ASEAN has established official dialogue relations with ten external partners including

Australia, Canada, China, the European Union, India, Japan, Korea, New Zealand, Russia, and

the USA.  ASEAN also has relations with the United Nations and a sectoral partnership with

Pakistan.  At the regional level, ASEAN is the driving force for forums including the ASEAN

Regional Forum, ASEAN+3 (with China, Japan and Korea) and the East Asia Summit (with

Australia, China, India, Japan, Korea and New Zealand).

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ASEAN INVESTMENT AREA (AIA) COUNCIL

The AIA Council is the Ministerial body under the ASEAN Economic Ministers responsible for

overseeing the implementation of the ASEAN Comprehensive Investment Agreement (ACIA),

ASEAN’s main economic instrument to realise a free and open investment regime. It is

composed of Ministers from the ten Member States responsible for investment and the Secretary-

General of ASEAN.  

The Coordinating Committee on Investment (CCI) composed of senior officials responsible for

investment and other officials from other government agencies supports the AIA Council in

carrying out its functions.

Free Flow of Investment

A key element to establishing ASEAN as a single market and production base is having a free

and open investment regime where (a) non-discriminatory treatment is extended to ASEAN and

ASEAN-based investors, save for limited exceptions that are also due for progressive

elimination; (b) rules and regulations are made transparent; and (c) investors and their

investments (i.e. covered investments) enjoy protection.

ASEAN is achieving these via the implementation of the ACIA, which took effect on 29 March

2012.  The ACIA, as one of the economic instruments for realising regional economic

integration, aims to create a liberal, facilitative, transparent and competitive investment

environment in ASEAN.  

Comprehensive in scope it covers investment liberalisation, protection, promotion and

facilitation.  At par with international best practices it adopts a single negative list approach,  

extends automatic most-favoured nation treatment to all Member States, and carries a

comprehensive and detailed investor-state dispute settlement mechanism, among others. 

Forward looking, it prohibits performance requirements, and contains provision on senior

manager and board of directors (SMBD) to encourage inflow of key foreign managerial and

senior management personnel. Comprehensive and integrated in approach, it revised, merged and

improved upon the ASEAN Investment Guarantee Agreement (ASEAN IGA) and theFramework

Agreement on ASEAN Investment Area (AIA Framework Agreement) and provides a clearer

interaction of provisions pertaining to investment liberalisation and protection under a single

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investment agreement. ACIA supersedes these two precursor investment agreements (issued in

1987 and 1998, respectively) including their subsequent amendments.

ASEAN’s task now is to effectively implement the ACIA to ensure that the benefits from the

Agreement are realised with ASEAN and ASEAN-based foreign investors taking advantage of

the opportunities that the ACIA provides.    ASEAN through the AIA Council and its subsidiary

body (the CCI) has intensified its efforts to support the implementation of the Agreement

cognisant of  the importance of the ACIA in keeping ASEAN’s competitive strength vis-à-vis the

changing economic landscape, and in achieving ASEAN’s economic integration goal. It has

given focus to: (a) completing the work pertaining to the build-in agenda items; (b) promoting

the ACIA and reaching out to businessmen and investors to create awareness about the benefits

of ACIA; (c) enhancing the capacity of ASEAN and its Member States in implementing the

Agreement; and (d) developing a regional cooperation work programme aimed at supporting the

work of ASEAN on investment liberalization, protection, promotion and facilitation.

Key Developments in the Implementation of ACIA At the entry into force of the ACIA on 29 March 2012, ASEAN also issued the ACIA

Scheduleor the Member States Reservation Lists. The Lists contains measures that are maintained by Member States that do not conform to the National Treatment and SMBD provisions of the Lists are required to be reduced or eliminated as prescribed in the Agreement.

The AIA Council endorsed the Modality to Improve and Eliminate the Impediments to Investment, which sets out the process in carrying out the task to progressively reduce and/or eliminate non-conforming measures in the Lists.

A vital component of the Modality is the adoption of the ASEAN Investment Peer Review Process that enhances the operation of the transparency provisions of the ACIA. The Peer Review Process requires the regular reporting of any changes in the law, rules and regulations, policies and administrative guidelines that may significantly affect investments or commitments of Member States under the Agreement.  It also demands the reporting of any international agreement that a Member States has entered into and grants preferential treatment.

Underway is the development of a mechanism by which changes or modification in the Schedule or reservations of Member States could be effected.

ASEAN has implemented various activities to promote and create awareness on the new investment agreement.  It published an introductory booklet on ACIA in April 2012 and anACIA Guidebook for Businessmen and Investors in March 2013.  It also recently organized an ACIA Socialization Forum in cooperation with the Malaysia Investment Development Authority in Kuala Lumpur.

To have a greater reach in the promotion of ASEAN as a single investment destination, ASEAN is also developing an ASEAN investment website that will serve as ASEAN’s gateway for

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sharing information on investing in the  region, and as a window for investors to learn and know more about ASEAN, its opportunities and potentials.  

ASEAN has stated a platform for strategic discussion among the Heads of the ASEAN Investment Promotion Agencies on enhancing investment facilitation and promotion in ASEAN via the annual event “The ASEAN Investment Forum”.

THE ASEAN CHAPTER

The 2007   ASEAN Charter   is a landmark constitutional document for ASEAN, reaffirming

ASEAN’s status as an intergovernmental organization, establishing its legal personality,

codifying ASEAN’s purposes and principles, and setting up an institutional framework to allow

ASEAN to better coordinate its many areas of cooperation and operate effectively in a rules-

based system.  ASEAN is distinct from other regional and international organizations in that this

“basic” document was created not upon its founding, but instead created only after forty years of

confidence-building and cooperation, and signed at the association’s 40th anniversary.

The ASEAN institutional system set out in the Charter incorporates key existing institutions,

while creating new structures which are being phased in to ASEAN’s operations. The key

features are as follows:

The ASEAN Summit. The ASEAN Summit is the supreme policy making body of ASEAN. It

has been convened since 1976 and comprises the heads of government of the ten member states. 

As the highest level of authority in ASEAN, the Summit sets the direction for ASEAN policies

and objectives. Signing or endorsement of agreements, and the issuance of declarations by the

ASEAN Leaders at the Summit signify the highest level of commitment of ASEAN member

states.  The Summit authorizes the establishment or dissolution of ASEAN sectoral bodies for

specific areas of cooperation. It also functions as final decision-making body in matters referred

to it by ASEAN ministerial bodies or the Secretary-General, and plays the role of an appellate

body for disputes and cases of non-compliance that cannot be resolved by ASEAN’s dispute

settlement mechanisms.  Under the Charter, the Summit meets twice a year.

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ASEAN Ministerial Councils.   The Charter established four important new Ministerial bodies to

support the Summit.  They are the ASEAN Coordinating Council (ACC) which takes over the

ASEAN Ministerial Meeting’s functions of support for the ASEAN Summit’s meetings and to

oversee overall implementation and coordination in the ASEAN Community, the ASEAN

Political-Security Community Council, ASEAN Economic Community Council, and ASEAN

Socio-Cultural Community Council to ensure coordination of the activities under each of the

three areas. Together, the Councils supervise the sectoral activities of ASEAN – over 700

meetings each year in the various sectoral areas of the ASEAN Community.

ASEAN Secretariat (ASEC). Administrative support for ASEAN’s official activities is provided

by the ASEAN Secretariat, which was established in 1976. ASEC is headed by the ASEAN

Secretary-General, staffed by nationals from ASEAN member states and located in Jakarta. 

ASEC is also responsible for monitoring implementation of ASEAN commitments and

maintaining the organisation’s official records.

Committee of Permanent Representatives (CPR). For the day-to-day working level coordination

of ASEAN activities, the Charter established a Committee of Permanent Representatives (CPR)

in Jakarta, comprising ambassadorial-level representatives from the member states. The CPR

will take over the work of the ASEAN Standing Committee, which was established in 1967 to

perform the coordinating role for ASEAN.

Dispute Settlement. The Charter calls for the resolution of disputes between ASEAN members in

a peaceful and timely manner through dialogue, consultation and negotiation, in which the

Chairman of ASEAN or the Secretary-General may be called upon to offer their good offices,

conciliation or mediation.  The Charter further mandates dispute settlement mechanisms for all

fields of ASEAN cooperation.  Whereas the economic community is covered by

the 2004   ASEAN Protocol on Enhanced Dispute Settlement Mechanism , the other two

communities will be addressed through new dispute settlement institutions currently under

negotiation.   Unresolved disputes and non compliance with the findings of dispute settlement

mechanisms are to be referred to the ASEAN Summit. For further information please see CIL’s

resource page on dispute settlement in ASEAN.

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Decision Making. The primary mode of decision-making in ASEAN is consultation and

consensus, a tradition that ensures that ASEAN initiatives have the full support of its members

and that no member state will feel discriminated against.  However, the Charter enshrines the

principle of ASEAN-X in implementation.  This means that if all member states are in

agreement, a formula for flexible participation may be used so that the members who are ready

may go ahead while members who need more time for implementation may apply a flexible

timeline.  In cases where consensus cannot be reached, the Charter provides for the ASEAN

Summit to decide on an alternative method of decision-making.

Human Rights. Article 14 of the ASEAN Charter called for the establishment of an ASEAN

Human Rights Body.  Accordingly, ASEAN officials completed negotiations on the  Terms of

reference for the   ASEAN Inter-governmental Commission on Human Rights  (AICHR), which

was established at the 15th ASEAN Summit in October 2009. The AICHR can be seen as a

culmination of discussions on the establishment of a human rights mechanism in ASEAN that

began at the ASEAN Ministerial Meeting in 1993 and continued with the work of the ASEAN

Working Group for a Human Rights Mechanism. For further information please see CIL’s

resource page on human rights in ASEAN.

ASEAN Integration 2015

Initially launched in the 4th ASEAN Summit held in Singapore in November 2000 as an

"Initiative for ASEAN Integration" (IAI) by then Prime Minister Goh Chok Tong which created

a framework for human resource development programs and the integration of the new member

States - Vietnam, Lao PDR, Myanmar and Cambodia.

The IAI has set-up four human resource development training centers in the new member States

and by 2002 there were more than 10,000 participants in the program in various fields such as

English Language, Information and Communication Technology, Trade and Tourism.

During the 12th ASEAN summit held in Cebu, Philippines in 12–15 January 2007, the member

States signed the 5 agreements aimed in further strengthening the integration of ASEAN and

further enhancing political, economic and social cooperation in the region.

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Among those issues drafted in the agreement includes the "Cebu Declaration on the Acceleration

of the Establishment of an ASEAN Community by 2015."

On the 13th ASEAN Summit in Singapore, from 18–22 November 2007 with the theme "One

ASEAN at the Heart of Dynamic Asia" leaders of the member States endorsed the ASEAN

Economic Community Blueprint on a plan to establish a single market and production base in the

ASEAN region by 2015.

ASEAN Economic Community Blueprint[edit]

The ASEAN Leaders adopted the ASEAN Economic Blueprint at the 13th ASEAN Summit on

20 November 2007 in Singapore to serve as a coherent master plan guiding the establishment of

the ASEAN Economic Community 2015

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One Market Economy

The ASEAN Integration 2015 will see member-nations converge with one market economy,

where trade is done with less restrictions (like no tariffs). The business playing field is flowing

with goods (raw materials and products) and services (manpower). Nationalities are given a wide

array of product choices which range from low end to high end. The integration encourages

competition (showcasing the best) and complementarity (providing unique products).

Member-nations will place the right infrastructure to keep up with the fast changing ASEAN

economic landscape. It also poses challenges, especially to member-nations like the Philippines

whose economy is starting to boom. Journalist-businessman Wilson Lee Flores in his column

titled Bull Market, Bull Sheet interviewed tycoons and identified different challenges that

ASEAN businessmen face. They are the challenge of size or scale (family businesses can survive

or flourish by becoming big or remaining small); the challenge of competitive spirit (market

players should work harder); the challenge of speed (increase in transactions and productivity

and developing new ideas); the challenge of efficiency (investment in technology and human

resources); and the challenge of having a global mindset (thinking the international way).

Manila Bulletin writer Reynaldo Lugtu Jr. in his article titled ASEAN 2015 — challenges and

opportunities adds “Entry of imported products” and “The challenge to innovate” as the other

challenges entrepreneurs in the region will face when the integration is fully implemented next

year. The former will see local manufacturers compete in the market share, where cheaper and

competitive products are made available. On the other hand, the latter will see companies invest

“in research and development, market research, and new technologies of production.” This is

inevitable and expected since the business sector needs to deliver goods to consumers in a faster

way (The challenge of speed). As Lugtu Jr. shares the ASEAN single market comprises 600

million consumers and with $1.9 trillion in combined Gross Domestic Product (GDP). On top of

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these challenges, he sees opportunities such as “Access to a bigger market,” and “Supply of

human capital,” where member-nations with large population, like the Philippines whose

population is now at 100 million and most members of workforce speak English, can take

advantage.

The report written by Mia Aznar further discusses the challenges the Philippines will encounter

when the integration takes place in 2015. According to Mia’s interview with Philippine Stock

Exchange president and CEO Hans Sicat, ASEAN “only constitutes (the) 17 percent share of

(the Philippines’) exports” as compared to East Asia with 50.1 percent export share. It is a

question whether the integration will become beneficial to the country? China, Hong Kong,

Japan, Macau, Mongolia, North and South Korea and Taiwan compose the East Asia group.

Other points raised by Sicat in the article titled “Asean integration in 2015 will be challenge for

PH: PSE president” are Philippines has “a small economy, its citizens have a low awareness

about the integration initiative, it has limited products and a small investor base.” Sicat also

offers solutions to lessen the challenges that lie ahead. These include having political will,

implementing arrangements, coordinating and mobilizing resources, capacity building,

strengthening institutions and consulting with public and private sectors.

Lessening the vulnerabilities of Phl “to foreign competition and exposure to market risks” is also

the concern of Rafael Alunan III in his article “2015: Asean Integration, ready or not?.” The

sectors which will be affected are the agribusiness and manufacturing industries. This is extra

challenging to the agricultural industry which has to work double time in achieving its self-

sufficiency status and surplus growth for export. Like Sicat, Alunan III also shares his two cents

on making these identified sectors ready for the Asean integration in 2015. The author shares that

by providing “adequate incentives, critical infrastructures and universal access to know-how

capital” and addressing “high business costs, low import duties and extensive technical

smuggling” the agribusiness and manufacturing sectors, respectively, will improve. The present

manufacturing industry should be developed into an industry capable of producing dual purpose

factories “producing for the domestic and export markets, supported by vital infra and systems,

to spur industrialization.” It is also implied that the Phl’s defense should be built up to its

“minimum desired level” to make the economy more competitive.

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The Future of ASEAN

ASEAN is widely recognized in the international community as an exemplar of enlightened and

successful regionalism. But what precisely constitutes the nature and measure of its

achievements?

In the first place, it is remarkable enough that ASEAN has survived for all of three decades,

considering that at the time of its birth, not a few political observers had predicted that, like its

predecessors - the SEATO, the Association of Southeast Asia (ASA) and the Maphilindo - it

would soon wither in the blast of the complex and unpredictable regional situation. As

Indonesian Foreign Minister Ali Alatas recalls, "When ASEAN was born, there were a good

number of skeptics who would not believe that, given the wide divergences of view among the

ASEAN countries, the differences in the political and economic systems of its founding

members, it would ever succeed in this endeavor at regional cooperation. Well, ASEAN proved

all its critics wrong and it is now a vibrant reality, an Association recognized not only in its own

region but also in the world at large as one of the most successful regional cooperative schemes".

The recollection of the Foreign Minister of Singapore, Professor S. Jayakumar is that when

ASEAN was founded, the situation in Southeast Asia was so grim the mass media kept

comparing it with the European region that would eventually hand down the horrible legacy of

"ethnic cleansing"-the Balkans. "The media described us as dominoes about to fall at any time,"

he says. "Indeed, there was no optimism on the future of the countries of Southeast Asia. But

now, 30 years later, the situation is very different. The countries in Southeast Asia now constitute

one of the most peaceful, stable and prosperous regions in the world. I don't think this would

have been possible if it were not for ASEAN".

Former ASEAN Secretary General, Narciso G. Reyes, once suggested that in order to measure

ASEAN's worth, one should ask what could have happened to Southeast Asia without ASEAN.

"Southeast Asia minus ASEAN," he said, "equals greater political instability, more widespread

economic deterioration and, almost surely, the ascendancy of expansionist forces that thrive on

the weakness, isolation and disunity of others." He said this in 1981 when ASEAN was proving

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to be a bulwark of political cohesion and solidarity in the face of the situation in Indochina and

he was then anticipating only that the ASEAN countries would show excellent economic

performance during the rest of the decade. Optimistic as he was, it was beyond his expectations

that the ASEAN countries would prove to be among the world's most dynamic economies going

into the 21st century.

And even today, ASEAN's political achievement tends to be cited more spiritedly than its

considerable role in the economic development of its members. Says Philippine Foreign

Secretary Domingo L. Siazon Jr : "ASEAN has transformed itself from a small subregional

organization into a major influence in world affairs. During the last 30 years, ASEAN has been

able to maintain peace and stability among its Member Countries despite the many territorial

problems and other issues among them. ASEAN today is the only subregional organization in

Asia that provides a political forum where Asian countries and the world Powers can discuss and

consider problems related to security, political issues and military concerns".

The relative peace, security and stability that ASEAN has helped achieve and maintain in

Southeast Asia as well as in the entire Asia-Pacific has been good for business. It created a

favorable environment where rapid and sustained economic growth became possible. Economic

development, in turn, brought about social progress and human development.

Just how was ASEAN able to achieve its phenomenal success? Malaysian Foreign Minister

Abdullah Haji Ahmad Badawi explains it convincingly. "ASEAN has been successful," he says,

"because there is a very strong commitment among ASEAN members to cooperation.

Cooperation for the benefit of all and cooperation for stability and peace of the region. This is a

very important hallmark of ASEAN… (Second), there is also a very strong commitment to

pragmatism. ASEAN has been pragmatic in ways that develop cooperation among the members

in undertaking various projects. And ideology has never been a problem to ASEAN. Ideological

differences have never interfered in efforts to cooperate positively for the common good of all

and for regional prosperity. And, third, I think the ASEAN Leaders and Ministers are never tired

of seeking consensus. We work hard, we work with full commitment to seek consensus on any

particular issue, on any particular program we wish to develop and when we do this, we are very

very aware of one another's sensitivity."

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ASEAN has acknowledged that periods of rapid social and economic progress are often

accompanied by fundamental shifts in power relations among States. If not managed well, such

realignments can lead to conflict. At the same time, increased economic globalization,

accompanied by structural adjustments of national economies, can create challenges to social

order. With its rapid economic development, ASEAN also faces some issues related to resource

conservation including environmental protection. Greater mobility of people, goods and capital

also demands sophisticated border security measures and closer collaboration among States. All

these concerns ASEAN must continue to address. It helps that the nations of the Asia-Pacific

delight in their prosperity and realize that tensions and armed conflict make bad economics. It

helps that ASEAN, the Asia-Pacific Economic Cooperation (APEC) and the recently established

Asia-Europe Meeting (ASEM) processes are effectively promoting a more constructive and

cooperative approach to international relations in this part of the world.

The establishment of the ASEAN Regional Forum (ARF) also represents a breakthrough in the

history of the region and, as stated in the Chairman's Statement of the ARF's inaugural meeting

in 1994, "signified the opening of a new chapter of peace, stability and cooperation for Southeast

Asia".

The expansion of ASEAN "shall pave the way for a new synergy, maximizing the cooperation

potential for growth of the entire region", Vietnam's Foreign Minister Nguyen Manh Cam

envisions. He expresses caution, however, that "In the face of a greater ASEAN which comprises

countries at different levels of economic and technological development and with different

cultures and historical backgrounds, there emerges a need on how to keep those differences from

slowing down the ASEAN growth pace and concurrently from creating difficulties for those

countries of lower levels of development."

The virtual realization of the vision of the Founding Fathers of ASEAN to have an association of

all Southeast Asian countries is by no means the end of ASEAN history. It is a call for a renewed

commitment towards broader regional solidarity among the peoples of Southeast Asia. As

Foreign Minister Prachuab Chaiyasan of Thailand stated: "As we move towards the year 2020,

ASEAN will have derived its strength not only from unity among governments but unity among

its diverse peoples. The ASEAN experience and the ASEAN process must reach out to all

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spectrum of our societies. Through ASEAN, this region will become a grassroot- supported and

close-knit community bound together not only by common interests, but by shared values,

identity and aspirations among our peoples."

ASEAN faces the future with confidence. Its strong foundation and remarkable achievements

will serve ASEAN well as it pursues higher goals at the dawn of the new millennium. The

ASEAN Heads of Government have reaffirmed succinctly that Cooperative peace and shared

prosperity shall be the fundamental goals of ASEAN. Towards these goals, ASEAN shall remain

a driving force in building a more predictable and constructive pattern of relationships among

nations in the Asia-Pacific region to ensure lasting peace and security. Economically, ASEAN

shall move towards greater economic integration with emphasis on sustainable and equitable

growth. Finally, ASEAN shall nourish a caring and cohesive ASEAN community, whose

strength lies in fostering a common regional identity and a shared vision for the future.

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CONCLUSION

The dynamism of the ASEAN region has been inextricably intertwined with the appearance of

theeconomic rise of East Asia at a time during the early 1980s when the world's economic

activitydeclined. While the United States and EC-12 experienced a protracted recession, Japan

continued itsexpansion at a lower rate of growth.Japan has become the locomotive for the East

Asian region as a source of investment, trade anddevelopment aid, especially in the NIEs, China

and ASEAN. Japan and the NIEs faced similarchallenges, such as: world economic recession,

currency appreciation, increasing wages andprotectionism, resulting in the movement of some

industrial sectors to neighbouring countries in orderto maintain competitive advantages.15In the

face of such challenges, ASEAN countries launched measures of deregulation and

restructuringboth at the national and regional level. As a whole, ASEAN countries experienced

large inward FDIflows, especially from Japan and the NIEs, except for the Philippines where

most FDI originated fromthe United States. These flows have strengthened ASEAN's exports.

ASEAN exports however, weremuch higher to extraregional than to intraregional markets.

Nevertheless, little progress both in tradeand investment was achieved. And yet ASEAN is the

most successful subregional cooperation group in the Asian Pacific region. The Association has

been successful in speaking in one voice on majorinternational trade and economic issues. It

presented a joint stand at the Uruguay Round ofmultilateral trade negotiations to improve world

trade and worked out trade benefits jointly with EC-12,Japan and other major trading

partners.According to many predictions, ASEAN will keep its dynamism during the 1990s.While

ASEAN'sbooming economies might be confronted with changing internal and external

conditions, like Japanand the NIEs during 1980s, the New Indochina (Viet Nam, Laos and

Cambodia) looks an attractivedestination for future ASEAN investment and trade. With their

new free-market economic system,liberalised foreign investment laws and more open borders,

the countries of Indochina more and more serve as production bases for a host of industries, from

garment-making to assembly of the basic electronics.

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