Peformance of ASEAN Doc

8/11/2019 Peformance of ASEAN Doc

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CHAPTER 1 - Introduction

ASEAN, a bloc of 10 nations with an aggregate economic size of USD 2.3 trillion, is

preparing to go throgh profon! changes. Alrea!" to!a", ASEAN is the 3r! pillar of

growth in Asia in a!!ition to #hina an! $n!ia, with a%erage &D' growth o%er the past

1( "ears at aron! )* p.a.

+he regions prospects will be mch enhance! b" an ambitios integration effort

which see-s to achie%e a single mar-et an! pro!ction base, incl!ing higher mobilit"

of labor an! capital within the region, an! promote closer lin-ages with other -e"

economies sch as #hina, apan, Soth /orea, $n!ia, Astralia an! New ealan!.Eciting proects to increase an! impro%e connecti%it" in transport, commnication

an! $+ networ-s are in the ma-ing. 4inancial flows within the region are set to

increase, an! initiati%es sch as a panASEAN stoc- echange collaboration are

ta-ing place alrea!".

+he ASEAN Economic #ommnit"s en%isage! lanch at the en! of 201( will not

onl" is an integration milestone bt a potential game changer for ASEAN. +he blocs

!i%ersit" 5 ranging from a!%ance! economies li-e Singapore to !e%eloping contries

li-e 6"anmar 5 col! be a sorce of s"nergies, bringing the capital an! -nowhow of

the more matre economies together with the competiti%e costs an! abn!ant labor

an! resorces of the less!e%elope! member contries. +o be sre, there will be

winners an! losers in the process, bt o%erall, we epect AE# to bring abot a net

positi%e contribtion to ASEANs economies an! its people.

ASEAN 7Association of Sotheast Asian Nations8, establishe! in 19):, is a large

economic bloc in Asia. #omprising 10 contries 5 ;rnei Darssalam, #ambo!ia,

$n!onesia, ietnam 5, the region boasts a poplation of o%er )00

million 7chart 18, roghl" half that of #hinas or $n!ias an! aron! 9* of the worl!s

total. ASEANs economic weight is also sbstantial, with a &D' of USD 2.3 trillion

in 2012 5 aron! 30* the size of #hinas, roghl" the same size as that of the U/ an!

2(* larger than $n!ias. $ts &D' acconts for 3* of the worl!s total1.

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ASEAN is a mi!!leincome region. Nominal percapita &D' of the fi%e ASEAN

fon!ing members 7or ASEAN(? $n!onesia, 6ala"sia, 'hilippines, Singapore an!

+hailan!8 was USD @,(00 in 2011, slightl" lower than #hinas USD (,@00. +a-ing

into accont the 10 members, ASEANs &D' per capita was USD 3,)00. $ncome

le%els among ASEAN member contries are hgel" !i%erse. #ontries sch as

Singapore an! ;rnei eno" a %er" high &D' per capita at aron! USD @9,000 an!

USD 39,000, respecti%el", on par with the top tier of !e%elope!mar-et economies. $n

contrast, 6"anmar an! #ambo!ia ha%e a &D' per capita of st below USD 900.

ASEAN growth was %er" robst o%er the past two !eca!es, ecept aron! the time of

the Asian financial crisis in 199:9 an! the global financial crisis in 20009. 4or thenet few "ears we epect ASEANs annal real &D' growth to reach aron! )*

7chart 28.

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ASEAN? A region in nee! of in%estment

Dring the 1990s, the in%estmentB&D' ratio was 30*@0* in the ASEAN(

contries, ecept in the 'hilippines. $n%estment ecee!e! !omestic sa%ings, as

manifeste! in sbstantial crrentaccont !eficits, fn!e! to a large etent b" Chot

mone". +his change! abrptl" after the 199: financial crisis 7chart 38. #rrent

accont balances trne! to srpls mostl" at the epense of !omestic in%estment,

which !roppe! to 20*30* of &D'.

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$n comparison, #hina an! $n!ia were mch less affecte! b" the Asian financial crisis,

an! their !omestic in%estment acti%it" remaine! strong. $n the case of #hina, a %ast

pool of !omestic sa%ings an! hge 4D$ inflows has fn!e! in%estment. $n!ia, b"

contrast, !oes not ha%e sfficient !omestic sa%ings to fn! its in%estment nee!s, bt it

manage! to increase 4D$ inflows almost eightfol! from 20032011.

a%ing a!ste! its eternal balances an! become an Cecess sa%ings region,

ASEAN now nee!s to increase !omestic in%estment in or!er to lift its potential rate of

growth. Among other things, ASEAN contries wol! benefit from sa%ings being

channele! to intraregional in%estment. +o be sre, this is alrea!" happening? intra

ASEAN 4D$ rose from 1@* of total 4D$ !ring 200209 to 1.(* in 200911 7chart

@8, o%erta-ing the EUs share of 1:*. Fith the EU still beset b" the Erozone !ebt

crisis, the role of intraASEAN 4D$ flows is e%en more significant. +he share of other

tra!itional sorces of 4D$ to ASEAN sch as apan 712*8 an! the US 710*8 also saw

a !ecline !ring 20092011.

A case for frther facilitating in%estment flows

$n%estment liberalisation an! the promotion of intraregional flows also ser%e to

enhance the regions attracti%eness to global in%estors. 4or eample in the case of the

EU, the formation of the Single 6ar-et le! to the gra!al increase in its share of

global 4D$ inflows from 3@* !ring 1901992 to @1* !ring 1993200:2. $n

ASEAN, earl" in%estment liberalisation measres were effecti%e bt the" nee! to be

spplemente! with new measres to maintain the regions attracti%eness. +he 1992

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ASEAN $n%estment Agreement 7A$A8 an! ASEAN $n%estment &arantee Agreement

7$&A8 were effecti%e in increasing global inflows into ASEAN ntil the Asian

financial crisis. $ts share of global 4D$ inflows rose to aron! :* !ring 1992199:

from (* !ring 1901991. $t then saw a sli!e to @* !ring 1992009, which,

among other factors, might sggest a lac- of impro%ement in the regionGs in%estment

framewor-. $n 2009, a new an! enhance! ASEAN #omprehensi%e $n%estment

Agreement 7A#$A8 replace! the pre%ios A$A an! $&A framewor-s. $n!stries

incl!ing manfactring, agricltre, fisher", forestr" H mining an! Iarr"ing are

now reIire! to grant national treatment to foreign in%estors. 4ollowing the re%ampe!

agreements, the region saw a mp in its share of global 4D$ inflows to aron! :.(

* in 201011.

$ntraregional tra!e booste! b" the most open ASEAN contries

ASEAN is a sbstantial tra!ing bloc with a merchan!ise tra!e %ale of USD 2.@trillion 7as of 20118, 2(* of which is intraregional tra!e. $ntraASEAN eports

amonte! to USD 32 bn in 2011, 2)* of total eports. $ntraASEAN imports

totalle! USD 2:1 bn, or 2@* of total imports.

ASEANs tra!e openness is high, at 110* of &D'. Among its members, Singapore

has the b" far highest tra!eto&D' ratio, at close to 300* of &D'. 6ala"sia an!

+hailan! ha%e tra!eto&D' ratios wa" abo%e 100* 7chart (8. All three contries are

tightl" integrate! into regional an! global manfactring sppl" chains. 6oreo%er,

the" ha%e high stan!ar!s in tra!e logistics? the Forl! ;an-s


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$n!e 7


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+ra!e patterns reflect pro!ct specialisation an! rising !omestic consmption in

ASEAN contries

+he maorit" of the regions tra!e reflects the specialisation in electronics, hea%"

machiner", %ehicles an! parts, chemicals, plastics an! processe! raw materials sch as

oil an! rbber 7chart 98. ASEAN eports to #hina incl!e commo!ities sch as

rbber, oil, coal an! palm oil in a!!ition to electronic integrate! circits 7$#s8.

Eports to the US an! EU are !ominate! b" electronics an! machiner" an! natral

rbber. +he tra!e pattern reflects of the significance the US an! the EU as final

consmers of electronic pro!cts an! #hinas important role as a commo!ities import

mar-et.

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$ntraASEAN tra!e has seen an ptren! in tra!e of final consmer goo!s, which is an

encoraging sign of the growing importance of !omestic consmption within

ASEAN. Accor!ing to the $64, Cthe increasing role of intraregional tra!e in final

consmption goo!s, together with a large !omestic mar-et, especiall" in $n!onesia,

appears to pro%i!e the region with a potential sorce of resilience against global

!eman! shoc-s

1.2 What is the ASEAN Economic Community?

ASEAN Economic #ommnit" 7AE#8 is the en!goal of the blocs economic

integration( as espose! in its C>ision 2020. +he latter was articlate! in 199: b"

the ASEAN hea!s of state, in the aftermath of the erption of the Asian financial

crisis, see-ing to create a stable, prosperos an! highl" competiti%e economic region.+he !ecision to establish the ASEAN Economic #ommnit" was affirme! b" the

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Declaration of ASEAN #oncor! $$ in ;ali, $n!onesia, in 2003. +he Declaration came

not long after #hina oine! the F+J an! $n!ia emerge! as an in%estment an! offshore

location for mltinational corporations. +he rise of the emerging mar-ets, in particlar

the ;=$#, appears to ha%e gi%en ASEAN lea!ers the impets to !o something to -eep

the region n!er in%estors ra!ar.

+he lanch of AE# is crrentl" planne! for the en! of 201(. +he start !ate was

initiall" set for 2020 an! sbseIentl" mo%e! forwar! to anar" 1, 201(. $n

No%ember 2012, ASEAN lea!ers agree! to mo%e the lanch !ate again to December

31, 201( in or!er to gi%e member states more time to prepare for necessar" reglator"

changes.

AEC !ue"rint#s $ision and %oa!s

AE# was frther booste! b" the a!option of the AE# ;leprint in Singapore in 200:.

+he ;leprint stiplates the %ision, goals an! strategic sche!le, en%isaging for -e"

characteristics for the Economic #ommnit"?

18 A single mar-et an! pro!ction base. $n short, barriers to tra!e in goo!s an!

ser%ices will be broght !own or -ept to a minimm. 4lows of in%estment, capital an!

s-ille! labor will be facilitate! an! cooperation in sectors !esignate! as priorit"

integration sectors will be promote!.

K 4ree flow of goo!s

K 4ree flow of ser%ices

K 4ree flow of in%estment

K 4reer flow of capital

K 4ree flow of s-ille! labor

K 'riorit" integration sectors

K 4oo!, agricltre an! forestr"

28 A competiti%e economic region. +o promote ASEAN as a competiti%e economic

bloc, it is important to ha%e a regional stan!ar! in tra!e polic" an! for the bsiness

operating en%ironment. +his pillar see-s to a!!ress the following areas to enhance the

regions competiti%eness to in%estors?

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K #ompetition polic"

K #onsmer protection

K $ntellectal propert" rights

K $nfrastrctre !e%elopment

K +aation

K Ecommerce

38 EIitable economic !e%elopment. ASEAN member states will stri%e to le%el the

pla"ing fiel! as mch as possible. $n this regar!, two areas will be n!er focs?

K S6E !e%elopment

K $nitiati%e for ASEAN integration 7$A$8. $ts obecti%es are to narrow the

!e%elopment gap between members an! to accelerate economic integration of the

newer members, namel" #ambo!ia,


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+o !ate there ha%e been nmeros agreements in the rnp to the AE#. Among the

-e" agreements are?

a8 &aster P!an on ASEAN Connecti$ity 'chart 11()+he plan stri%es to ma-e

pro!ction an! !istribtion networ-s in ASEAN !eeper, wi!er, an! more entrenche!

in the East Asian an! global econom". $t pro%i!es a 3pronge! strateg"?

K 'h"sical connecti%it" throgh enhance! ph"sical infrastrctre !e%elopmentL

K $nstittional connecti%it" throgh effecti%e instittions, mechanisms an! processesL

K 'eopletopeople connecti%it" b" pro%i!ing e!cation, promoting torism, etc.

Eamples of proects to enhance ASEAN connecti%it" incl!e the ASEAN ighwa"

Networ- an! highspee! railwa"s between 6ala"sia an! Singapore. +he ASEAN

$nfrastrctre 4n! was establishe! with the Asian De%elopment ;an- to fn!

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ph"sical infrastrctre proects in ASEAN.

b8 ASEAN Trade in *oods A%reement 'ATI*A()$ts -e" obecti%e is to achie%e a

free flow of goo!s in ASEAN as a means to establish a single mar-et an! pro!ction

base. A+$&A see-s to eliminate nontariff barriers an! implement the crossbor!er

ASEAN +ra!e 4acilitation For- 'rogram 7A+4F'8. +he A+4F' in trn see-s to

simplif" the rles of origin, harmonise pro!ct stan!ar!s an! reglations an! carr"

ot cstoms integration. +he ASEAN Single Fin!ow 7ASF8 is inten!e! to streamline

an! s"nchronise the processing of !ata an! information, creating a single !ecision

ma-ing point for cstoms release an! clearance. Sccessfl implementation of

A+4F' will re!ce transaction costs an! time, accelerating the mo%ement of goo!s

within ASEAN an! facilitating access to raw materials, labor an! technolog" from

%arios parts of the region.

+here are nmeros agreements with regar! to other areas of cooperation sch as

in%estment, capital mar-ets, a%iation, etc. $mplementation of the agreements is !one

b" consenssL there is no enforcement of penalt" for noncompliance.

Pro%ress re"ort) Ho+ ,ar has AEC ad$anced?

+he Economic =esearch $nstitte con!cte! a 6i!+erm =e%iew of the

implementation of the AE# ;leprint for ASEAN an! East Asia 7E=$A8. +he 6i!

+erm =e%iews Eecti%e Smmar" was pblishe! in Jctober 2012: 7chart 128

'rogress with the implementation of AE# measres is note! in the following areas?

K ietnam are in an a!%ance! stage towar! li%e implementation b" 201(.

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$n%estment liberalisation 7goo!s sector8. #ommitments in the goo!s sector 5 n!er the

ASEAN #omprehensi%e $n%estment Agreement 7A#$A8 5 are alrea!" liberal in most

ASEAN member contries, accor!ing to the benchmar- of :0* permissible foreign

ownership.

4ree +ra!e Agreements 4i%e CASEANM1 4+As were signe!, with #hina, apan,

/orea, $n!ia an! AstraliaBNew ealan!. Negotiations are ongoing for ser%ices an!

in%estment agreements with apan an! $n!ia.

Air transport. A nmber of air transport agreements ha%e been signe! n!er the

ASEAN formla. +he ASEAN formla gi%es the fleibilit" for ASEAN member

states to sign agreements with one another withot ha%ing to incl!e members which

are not "et rea!". +he sccess of the air transport agreements gi%es rise to hopes that

the ASEAN formla col! be replicate! to forge forwar! other parts of the regional

agen!a.

&onetary coo"eration.

+he signing an! implementation of the #hiangmai initiati%e is a notable !e%elopment.

Signator" contries agree to pool their foreignechange resorces to pro%i!e liIi!it"

to member contries in times of emergenc" throgh bilateral swap arrangements. +he

#hiangmai $nitiati%e is bt one eample of instittional mechanisms an!

arrangements at the ASEANM3 le%el that increase the regions abilit" to respon! to

crisis.

+he establishment of the ASEANM3 6acroeconomic =esearch Jffice also enhances

the regions sr%eillance an! coor!ination efforts.

K 4ree flow of s-ille! labor. 6tal =ecognition Arrangements 76=As8 for s-ille!

professionals will co%er : professions? !octor of me!icine, !entist, nrse, engineer,

architect, accontant an! sr%e"or. +he aim is for professional Ialifications in these

fiel!s to be recognise! in other ASEAN member states, facilitating flows of s-ille!

labor within ASEAN. Accor!ing to the 6i!+erm =e%iew fin!ings, 6=As on

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engineers an! architects are n!erwa" to fll implementation, with regional an!

national s"stems in place. A few ASEAN contries alrea!" ma!e recommen!ations

for regional accre!itation.

K #apital mar-ets. +he ASEAN Echange, a collaboration of the se%en stoc-

echanges of ASEAN9, -ic-e! off in September 2012 with the li%e rollot of the

ASEAN +ra!ing


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remain obstacles to the free flow of tra!e in both goo!s an! ser%ices. Jne

recommen!ation pt forwar! in the mi!term re%iew is to a!!ress the nontra!e

barriers an! nontariff measres s"stematicall" throgh the setp of a comprehensi%e

!atabase of N+6s in ASEAN. +he !atabase col! then be the starting point for

member contries to negotiate an! re!ce N+;s an! N+6s in an efficient an!

s"stematic manner.

K +ra!e an! in%estment facilitation. Althogh se%eral contries ha%e starte!

implementing National Single Fin!ows 7NSF8, cstoms an! logistical integration

still has some wa" to go. A wi!e gap still eists in terms of the nmber of !a"s nee!e!

to carr" ot eports an! imports, with the highest nmber registere! in


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CHAPTER 2 - CHAEN*ES

200 mar-e! the @0th anni%ersar" of the fon!ing of the Association of Sotheast

Asian Nations 7ASEAN8. Fhile starting as a loose coalition of !e%eloping contries,

ASEAN is now recognize! as an increasingl" capable regional an! international

pla"er. ASEAN contries, howe%er, face a nmber of internal an! eternal

challenges, incl!ing social instabilit" an! regional economic an! militar"

imbalances.

+he ASEAN #harter, which became legall" bin!ing at the en! of 200, see-e! to

bil! a more effecti%e mechanism for cooperation an! coor!ination among Sotheast

Asian contries to a!!ress the pressres of globalization an! the bil!p of larger,

nonASEAN neighbors.

#arnegie ;eiing sponsore! an! cohoste! a polic" !ebate with the $nstitte of Asia

'acific St!ies, #hinese Aca!em" of Social Sciences 7#ASS8 an! the #enter for

=egional Secrit" St!ies 7#=SS8 to a!!ress the crrent internal an! eternal

challenges ASEAN contries face an! the #harters implications for alle%iating some

of these problems an! impro%ing regional relations.

'articipants incl!e! an 4eng, Dept" Director of the $nstitte of Asia'acific

Affairs an! the #enter for =egional Secrit" St!iesL #heng i from the 6inistr" of

4oreign AffairsL Oan ;o from the =esearch #enter of $nternational +ra!e an!

#ommercial #ooperation n!er the 6inistr" of #ommerceL hang egang from the

#hina 6o!ern $nternational =elations =esearch $nstitteL Shen Shishn from the

#hina $nstitte of $nternational St!iesL


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the passage of a proposal if it !isagrees with it, is highl" inefficient when tr"ing to

reform the organization. +his !ifficlt" is compon!e! b" the political instabilit" an!

social phea%al within man" of the member contries that ro!e the thir! wa%e of

!emocratization.

Eterna! Cha!!en%es'articipants i!entifie! three eternal challenges facing ASEAN?

globalization, regional imbalances, an! a lac- of engagement mechanisms. 6an"

spea-ers conten!e! that ASEANs !e%elopment necessaril" carries with it the

!rawbac-s of globalization. 4or instance, rapi! regional !e%elopment has le! to fierce

competition between ASEAN contries. Jthers rge! ASEAN contries alrea!"

in%ol%e! in international ban-ing an! foreign in%estment to strengthen their financial

capabilities to a%oi! meeting the same fate as East Asian contries that were

embroile! in the Asian financial crisis of the late 1990s. ASEAN contries are also

worrie! that Festern %ales ha%e ero!e! spport for their own %ales.

+he secon! point of insecrit" for ASEAN is its neighbors. +he rise of large

neighboring contries cople! with increase! in%estment in their militaries an!

economies has ma!e ASEAN contries etremel" ner%os. $n recent "ears,

American, apanese, #hinese, an! Astralian interest in Sotheast Asias affairs has

also risen, ma-ing them worr" that the" ma" be marginalize!.

+he thir! challenge is ASEANs abilit" to cooperate an! coor!inate regionall" an!

internationall". Fhile man" participants !escribe! ASEAN as a passi%e global pla"er

5 one that is often an obser%er rather than an actor in its interactions with the worl! 5

the" also ac-nowle!ge that its engagement capabilities are limite!. ASEANinitiate!

forms an! smmits are ineffecti%e mechanisms for !ecisionma-ing becase the"

sall" !o not incl!e global powers.

Sotheast Asia is among the important pillars in Asias economic integration whereb"

ASEAN is epecte! to gain soli! economic integration from tra!e an! in%estment.

+his wol! mean that ASEAN mst ha%e significant an! positi%e relations in her intra

regional tra!e an! intra regional in%estments. Oet a pre%ios st!" fin!s them to be

significant ne%ertheless ha%ing negati%e relations 7>erico, 20128. &i%en its longrn

economic integration obecti%e, ASEAN mst trn this relation into one that is

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significant an! positi%e. +his will reIire an economic con%ergence b" which an

eIi%alent le%el of pla"ing fiel! within its member states.

Economic con%ergence is a necessar" con!ition for a soli! regional economic

integration.

$t will mo%e ASEANs economic integration stage from an intra regional tra!e to that

of an intra regional in%estment. owe%er, ASEAN still faces hge economic gaps

between its ASEAN) an! ASEAN@ as well as within the grops themsel%es. +his

economic !i%ergence becomes a maor sorce of as"mmetric information in the

ASEAN econom".

Among one of the sefl tools to pro%e this !i%ergence is the Pgra%it" mo!el of tra!e

7+inbergen, 19)2, An!erson, 19:9, elpman an! /rgman, 19(8. +he mo!el, which

was inspire! b" Newtons


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+hese two figres show that within its member states, ASEAN has a large economic

size! contr" 5 $n!onesia that has a low economic le%el an! also has a high

economic le%el contr" 5 Singapore 5 "et is a low economic size. ence ASEANs

economic power seems to resemble a P!ont, lac-ing a contr" that has the

characteristics of ha%ing both a large economic size an! high economic le%el. +his is

in contrast to the EUs eperience with &erman", a high income contr" that also has

a large economic size of &D', poplation an! geographic proportions. +his P!ont

shape is a maor challenge for ASEAN in obtaining a soli! intraregional tra!e an!

in%estment.

2.2 What does ASEAN need to do to o$ercome this economic inte%ration

disad$anta%e?

4rom the mar-et!ri%en strateg", ASEAN will gain her economic integration

a!%antage when her largest economicsize member attains highincome le%el. +his

wol! mean when $n!onesia becomes a !e%elope! contr". Among the references for

this proection is P>ision 2030, where $n!onesia is pre!icte! to become a !e%elope!

contr" in "ear 2030 with an income per capita per "ear abo%e USQ 1,000.

&i%en this circmstance, frthermore, sing the EUs eperience, if the ASEAN

Economic #ommnit" 7AE#8 of 201( is similar to the Eropean Economic

#ommnit" 7EE#8 of 19): then ASEAN is forecaste! to complete her comprehensi%e

economic integration in "ear 20(0. +he latter is n!er the assmption that ASEAN

will follow EUs timeframe which too- aron! 3( "ears to mo%e from EE# of 19):

to Ero as a single crrenc" in 2002.

As from the go%ernment inter%ention strateg", ASEAN col! tilize her wi!e

regionalism strateg" to increase its intra regional in%estment. Different from the

#stom Union 7#U8 in Erope, ASEAN a!opts an Popen an! soft regionalism

principle. $n its Popen regionalism principle, ASEAN implements the 4ree +ra!e Area

74+A8 at which the regional economic instittion !oes not reglate eternal tariff

between member state an! nonmember state enabling each member state to ha%e

P!irect bilateral tra!e agreements with nonmember states. +his gi%es benefits to non

member states as the" can still ha%e a free tra!e relation with the member states ofASEAN withot being a member themsel%es.

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$n its Psoft regionalism principle, ASEAN implements a Pnonlegal bin!ing principle

withot a spranational bo!". ;oth theopen an! soft regionalism principles ma-es

PASEANwi!e framewor-s sch as the ASEANM1, ASEANM3 an! so on, appropriate

for ASEAN.

$n the shortrn, the ASEAN 'ls framewor-s will sol%e ASEANs maor problem in

not ha%ing a member state with both large economic size an! high income le%el.

$ntra regional in%estment is estimate! to come from the newmember states of sch

regionalwi!e framewor-s.

At last, the relation between mar-et!ri%en an! go%ernmentle! strateg" is

complementar" therefore ASEAN mst combine them in or!er to achie%e her

comprehensi%e regional economic integration obecti%e.

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CHAPTER / - The ASEAN Charter

+he ASEAN #harter !efines it as a legal entit" an! intergo%ernmental organization

that has athorit" o%er its members. Un!erl"ing the mo%e towar!s nit" an!

integration is its new motto? Cone %ision, one i!entit", one commnit".

+he #harter impro%es ASEANs s"stem of !ecisionma-ing an! enforcement. $n the

past, the absence of sch athorit" le! to instabilit" an! a lac- of cohesi%eness an!

efficienc". Decisionma-ing an! implementing bo!ies are crrentl" split into three

!efine! grops? the ASEAN smmit, the ASEAN #oor!inating #oncil, an! the

ASEAN #ommnit" #oncil.

+he #harter strengthens the athorit" of the ASEAN Smmit as the highest !ecision

ma-ing bo!". $f it !isco%ers a member contr" that is not implementing ASEAN

proposals or !ecisions, or !isco%ers a serios breach of the charter or ASEANs basic

principles, the Smmit is empowere! to isse a resoltion on the matter. +he Smmit

will also recei%e an annal report from the secretar"general as well as three separate

reports an! sggestions from the #ommnit" #oncil.

Im"!ications ,or Re%iona! Po!itics+he form pre!icte! that ASEAN integration will

strengthen it as a regional pla"er an! perhaps offset the !ominance of greater powers

in the area. $ntegration will n!obte!l" affect regional cooperati%e efforts in the

Asia'acificL ASEAN can ser%e as a mo!el for other East Asian partnerships.

6an" participants saw integration as a means of enhancing the internal stabilit" of

member contries, thereb" pro%i!ing a fon!ation for ftre regional partnerships.

Jthers raise! the possibilit" that a stronger ASEAN i!entit" ma" wea-en its

willingness to participate in East Asiale! cooperati%e efforts.

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ASEAN) Another E0?A central !ebate !ring the conference focse! on whether a

meaningfl comparison col! be ma!e between ASEAN an! the Eropean Union

7EU8, especiall" now that ASEAN has assme! legal stats.

+he aims of both bo!ies are Iite similar? economic prosperit" an! the preser%ation of

competiti%eness in a globalizing worl!, regional secrit", an! stronger inflence %isR

%is powerfl neighbors. ASEAN see-s to mirror the EUs economic integration.

4rthermore, its three !ecisionma-ing an! implementing bo!ies mimic the EUs set

p.

owe%er, the respecti%e forms of integration within the EU an! ASEAN are

fn!amentall" !ifferent. +he EU is a spranational mo!el of cooperation. 6ember

contries share in !ecisionma-ing that transcen!s national bon!aries. ASEAN, on

the other han!, is strongl" committe! to an intergo%ernmental approach in which

integration allows states to cooperate in specific fiel!s while retaining their

so%ereignt". +his nwillingness to ce!e power for oint cooperati%e efforts hin!ers

economic initiati%es. +his lac- of nit" can be seen in member states that, frstrate!

b" slow progress on tra!e negotiations, bro-e ran- to sign bilateral tra!e agreements.

$t re%eals a gap in intraASEAN epectations? some members want collecti%e

negotiation an! others want faster progress. $t is nclear whether the #harter will

allow for nimbler negotiations or resol%e these isses at all.

/.2 STR0CT0RE AN P0RPSE o, ASEAN

ASEAN is a regional organization establishe! on 0 Agst 19):. Jn its 30th

anni%ersar", ASEAN lea!ers agree! on a share! %ision of ASEAN as a concert of

Sotheast Asian nations, otwar! loo-ing, li%ing in peace, stabilit" an! prosperit",

bon!e! together in partnership in !"namic !e%elopment an! in a commnit" of caring

societies. At the 9th ASEAN Smmit in 2003, the ASEAN


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Article 2 of the ASEAN #harter sets the 'U='JSES of the organisation as follows?

1. +o maintain an! enhance peace, secrit" an! stabilit" an! frther strengthen peace

oriente! %ales in the regionL

2. +o enhance reional resilience b" promoting greater political, secrit", economic an!

sociocltral cooperationL

3. +o preser%e Sotheast Asia as a Nclear Feapon 4ree one an! free of all other

weapons of mass !estrctionL

@. +o ensre that the peoples an! 6ember States of ASEAN li%e in peace with the

worl! at large in a st, !emocratic an! harmonios en%ironmentL

(. +o create a single mar-et an! pro!ction base a which is stable, prosperos, highl"

competiti%e an! economicall" integrate! with effecti%e facilitation for tra!e an!

in%estment in which there is free flow of goo!s, ser%ices an! in%estmentL facilitate

mo%ement of bsiness persons, professionals, talents an! laborL an! free flow of

capitalL

). +o alle%iate po%ert" an! narrow the !e%elopment gap within ASEAN throgh

mtal assistance an! cooperationL

:. +o strengthen !emocrac", enhance goo! go%ernance an! the rle of law, an! to

promote an! protect hman rights an! fn!amental free!oms, with !e regar! to the

rights an! responsibilities of the 6ember States of ASEANL

. +o respon! effecti%el", in accor!ance with the principle of comprehensi%e secrit",

to all forms of threats, transnational crimes an! transbon!ar" challengesL

9. +o promote sstainable !e%elopment so as to ensre the protection of the regions

en%ironment, the sstainabilit" of its natral resorces, the preser%ation of its cltral

heritage an! the high Ialit" of life of its peoplesL

10. +o !e%elop hman resorces throgh closer cooperation in e!cation an! lifelong

learning, an! in science an! technolog", for the empowerment of the peoples of

ASEAN an! for the strengthening of the ASEAN #ommnit"L

11. +o enhance the wellbeing an! li%elihoo! of the peoples of ASEAN b" pro%i!ing

them with eIitable access to opportnit" for hman !e%elopment, social welfare an!

sticeL

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12. +o strengthen cooperation in bil!ing a safe, secre an! !rgfree en%ironment for

the peoples of ASEANL

13. +o promote a peopleoriente! ASEAN in which all sectors of societ" are

encorage! to participate in, an! benefit from, the process of ASEAN integration an!

commnit" bil!ingL

1@. +o promote an! ASEAN i!entit" throgh the fostering of greater awareness of the

!i%erse cltre an! heritage of the regionL

1(. +o maintain the centralit" an! proacti%e role of ASEAN as the primar" !ri%ing

force in its relations an! cooperation with its eternal partners in a regional

architectre that is open, transparent an! inclsi%e.

. Structure

As the legal an! instittional framewor-, the ASEAN #harter also !escribes the

strctre of time organisation, setting forth the man!ate an! fnction of %arios

ASEANs organs. +he charter pro%isions on the organs pro%i!e a general gi!e on

how to engage ASEAN. +hose organs, an! their man!ate an! fnctions are?

1. ASEAN Summit

ASEAN smmit is the spreme polic"ma-ing bo!" of ASEAN. +his organ

!eliberates, pro%i!es polic" gi!ance an! ta-es !ecisions on -e" isses pertaining to

the realisation of the obecti%es of ASEAN, important matters of interest to 6ember

States an! all isses referre! to it b" the ASEAN #oor!inating #oncil, the ASEAN

#ommnit" #oncils an! ASEAN Sectorial 6inisterial ;o!ies.

$n a!!ition to the abo%e !escription, +he ASEAN Smmit also ?

7a.8 $nstrct the rele%ant 6inisters in each of the #oncils concerne! to hol! a! hoc

interministerial meetings an! a!!ress important isses

#oncerning ASEAN that ct across the #ommnit" #oncilsL

7b.8 Athorise the establishment an! the !issoltion of Sectoral 6inisterial

;o!ies an! other ASEAN instittionsL

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7c.8 Appoint the Secretar"&eneral of ASEANL an!

7!.8 A!!ress emergenc" sitations affecting ASEAN b" ta-ing appropriate actions.

2. ASEAN Coordinatin% Counci!

ASEAN #oor!inating #oncil is an organ that is compose! of the ASEAN

4oreign 6inisters. +his organ will prepare the meetings of the ASEAN Smmit,

coor!inate with the ASEAN #ommnit" #oncils to enhance polic" coherence,

efficienc" an! cooperation among them, coor!inate the reports of the ASEAN

#ommnit" #oncils to the ASEAN Smmit, consi!er the report of the Secretar"

&eneral on the fnctions an! operations of the ASEAN Secretariat an! other rele%ant

bo!ies, to appro%e the appointment an! termination of the Dept" Secretaries &eneral

pon the recommen!ation of the Secretar" &eneral, an! last bt not least n!erta-e

tas-s pro%i!e! for in the ASEAN #harter or sch other fnctions as ma" be assigne!

b" the ASEAN Smmit.

/. ASEAN Community Counci!s

ASEAN #ommnit" #oncil is comprise! of the ASEAN 'oliticalSecrit"

#ommnit" #oncil, ASEAN Economic #ommnit" #oncil, an! ASEAN Socio

#ltral #ommnit" #oncil. $n each ASEAN #ommnit" #oncil meeting, each

6ember State of ASEAN !esignates its national representation.

Accor!ing to Article 9 of the ASEAN #harter, this organ shol! ensre the

implementation of the rele%ant !ecisions of the ASEAN Smmit, coor!inate the wor-

of the !ifferent sectors n!er its pr%iew, an! on isses, which ct across the other

#ommnit" #oncils, an! last bt not least sbmit reports an! recommen!ations to

the ASEAN Smmit on matters n!er its pr%iew.

3. ASEAN Sectora! &inisteria! ody

Each ASEAN Sectoral 6inisterial ;o!" has for general fnctions?

7a.8 4nction in accor!ance with their respecti%e establishe! man!atesL

7b.8 $mplement the agreements an! !ecisions of the ASEAN Smmit n!er their

respecti%e pr%iewsL

7c.8 Strengthen cooperation in their respecti%e fiel!s in spport of ASEAN integration

an! commnit" bil!ingL an!

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7!.8 Sbmit reports an! recommen!ations to their respecti%e #ommnit"

#oncils.

4. Secretary-*enera! o, ASEAN and ASEAN Secretariat

ASEAN Secretariat is comprise! the Secretar"&eneral an! staff. +he Secretar"

&eneral an! the staff ha%e the obligation to refrain from an" action which might

reflect on their position as ASEAN Secretariat officials responsible onl" to ASEANL

not see- or recei%e instrction from an" go%ernment or eternal part" otsi!e of

ASEANL an! phol! the highest stan!ar!s of integrit", efficienc", an! competence in

the performance of their !ties. +he ASEAN

Smmit appoints the Secretar"&eneral of ASEAN for a nonrenewable term of office

of fi%e"ears. eBshe will be assiste! b" for Dept" Secretaries &eneral, which will

be accontable to the Secretar"&eneral in carr"ing ot their fnctions.

5. Committee o, Permanent Re"resentati$es 'CPR( to ASEAN

Each ASEAN 6ember State appoints a 'ermanent =epresentati%e to ASEAN, with

ran- of Ambassa!or base! in a-arta. #ollecti%el", the" constitte a #ommittee of

'ermanent =epresentati%es, who will spport the wor- of the ASEAN #ommnit"

#oncils an! ASEAN Sectoral 6inisterial ;o!ies. +he" liaise with the Secretar"

&eneral of ASEAN an! the ASEAN Secretariat on all sbects rele%ant to its wor-,

an! facilitate ASEAN cooperation with eternal partners. +he" also coor!inate with

ASEAN National Secretariats an! other

ASEAN Sectoral 6inisterial ;o!ies an! perform sch other fnctions as ma" be

!etermine! b" the ASEAN #oor!inating #oncil.

6. ASEAN Nationa! Secretariats

Accor!ing to the ASEAN #harter, each ASEAN 6ember State shall establish an

ASEAN National Secretariat which will ser%e as the national focal points, be the

reprisitor" of information on all ASEAN matters at the national le%el, coor!inate the

implementation of ASEAN !ecisions at the national le%el, contribte to ASEAN

commnit" bil!ing. ;esi!e these, the" also coor!inate an! spport the national

preparations of ASEAN meetings an! promote ASEAN i!entit" an! awareness at the

national le%el.

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. ASEAN $ntergo%ernmental #ommission on man =ights 7A$#=8

+he ASEAN $ntergo%ernmental #ommission on man =ights 7A$#=8 is the

Chman rights bo!" man!ate! to be establishe! n!er Article 1@ of the

ASEAN #harter. +he primar" prpose of this bo!" is the promotion an! protection of

hman rights in conformit" with the prpose an! principles of the

#harter.

9. ASEAN 4on!ation

+his organ will spport the Secretar"&eneral of ASEAN an! collaborate with the

rele%ant ASEAN bo!ies to spport ASEAN commnit" bil!ing b" promoting greater

awareness of the ASEAN i!entit", peopletopeople interaction, an! close

collaboration among the bsiness sector, ci%il societ", aca!emia an! other

sta-ehol!ers in ASEAN.

+his organ will be accontable to the Secretar"&eneral of ASEAN, who will sbmit

report abot this bo!" to the ASEAN Smmit throgh the ASEAN

#oor!inating #oncil.

ASEAN also has other organs that are relate! to hman rights. +his incl!es the

ASEAN #ommission on the 'romotion an! 'rotection of the =ights of Fomen an!

#hil!ren 7A#F#8 an! the ASEAN #ommittee on the $mplementation of the ASEAN

Declaration on the 'rotection an! 'romotion of the =ights of 6igrant For-ers

7A#6F8.

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Cha"ter 3 - I&PACT 7 ASEAN 8 Eam"!e o, Thai!and as a

mem9er o, ASEAN and +ith the comin% AEC.

+he ASEAN Economic #ommnit" aims to increase regional competiti%eness b"re!cing the cost of crossbor!er tra!e, thereb" increasing the flow of both people an!

goo!s throgh the 11 710 fll time8 member states. $t achie%es this with simplifie!

%isa processes, eIitable economic !e%elopment, low import !ties an! the

!e%elopment of a single mar-et. All of these things are positi%e contribtors to a

growing nmber of regional tra%ellers for both bsiness an! leisre prposes, an!

greater integration between companies who operate internationall".

As the effects of ASEAN integration will impact a broa! spectrm of companies in

+hailan!, it is important that organisations are rea!" to not onl" cope bt also

capitalise on the growth effects of the impen!ing liberalisation broght abot b" fll

ASEAN Economic #ommnit" integration.

Which countries are "arts o, ASEAN?

#rrentl", ASEAN 7Association of Soth East Asian Nations8 consists of 10 fll

members?

$n!onesia

6ala"sia

'hilippines

Singapore

+hailan!

;rnei 6"anmar

#ambo!ia

ietnam

East +imor 7bi! stage8

CASEAN pls 3 incl!es Soth /orea, #hina an! apan, who ha%e ple!ge! spport

to certain rles concerning the re!ction in crossbor!er legislation an! cost

re!ction, bt who are not fll members of the ASEAN commnit".

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There are 9oth o""ortunities and threats in the emer%in% sin%!e mar:et and

"roduction 9ase ,rame+or:.

What are the "otentia! 9ene,its and dan%ers ,or any com"any?

$n terms of benefits, the AE# effecti%el" means an integrate! total consmer base of

o%er )00 million potential cstomers. +his is the most eiting facet of economic

integration. =e!ction in the cost of mo%ing people an! goo!s across bor!ers will

bring a real openingp of the regional mar-et particlarl" in terms of hospitalit" an!

the 6$#E sector, where more people in Asia will be encorage! to !isco%er a wi!er

%ariet" of bsiness an! leisre !estinations at a lower cost. +his will reslt in hge

growth in the torism, hospitalit" an! international bsiness sectors. +he lower cost

bases will also encorage health" competition, raising the bar ni%ersall" on a %ariet"

of in!stries in Asia. $t has the potential to increase the appeal of this area for both

international bsiness an! leisre %isitors. J%erall, ASEAN Economic $ntegration is

seen as being a highl" eciting prospect an! man" organisations welcome it warml".

$n terms of threats, the ASEAN Economic #ommnit" will bring increasing le%els of

high Ialit" o%erseas competition to mar-et, so firms with an a!%ance! mar-et

position ha%e to ensre that their operations spport the maintenance of their position

as regional lea!ers in this regar!. 4or this reason, in!stries in +hailan! nee! to offer

a nilaterall" high stan!ar! of ser%ice, a more sophisticate! pro!ct offering an! the

abilit" to flfill the !eman!s of international an! regional bsiness an! leisre

cstomers, withot losing the niIel" charming +hai approach to bsiness, leisre

an! torism in +hailan!.

Inde"endent Nationa! Identity under ASEAN

+wo cornerstones of the ASEAN #ommnit" since its inception in 19): ha%e beennational eistence an! national i!entit". +his is significant in sectors in%ol%ing

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inbon! tra%el or inbon!s bsiness to +hailan! becase a core part of the appeal of

tra%el to %arios contries is to eno" a local eperience, which is in-eeping with a

national i!entit". $n the case of +hailan!, this means worl! famos hospitalit",

cltrall" significant sites an! attractions, low cost of !oing bsiness, a liberalise!

econom", a probsiness go%ernment 7regar!less of political !ifferences an! shifts in

lea!ership8 an! a fn!amentall" son! econom" which is capable of sstaine!

growth. ASEAN will remo%e barriers in terms of cltral integration, bt its

important that +hailan! is able to retain its intrinsic C+hainess for both bsiness an!

leisre tra%ellers to the contr".

7or Thai!and; +hat are the country#s stren%ths and +ea:nesses in the 11-country

ASEAN %rou"in%; %enera!!y?

Strengths

A famosl" ser%icemin!e! cltre

A strong reptation of being able to ta-e care of international an! regional

%isitors

A %isitor eperience that is eotic, welcoming, relaing an! fn. &reat %ale with ecellent retrn on in%estment

An alrea!" liberalise! tra!e econom"

A probsiness go%ernment

#ontine! in%estment in infrastrctre proects

UniIe blen! of tra!itional an! mo!ern elements that ha%e become

s"non"mos with the contr"

A Iintessentiall" +hai eperience which gests to the contr" epect an!

eno"

Fea-nesses

'oor reptation for h"giene, cleanliness, health an! safet",


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'rices ha%e become sbect to recent inflationar" pressres

A lac- of a baseline stan!ar! across man" professional in!stries

Unstable an! npre!ictable political en%ironment

Fi!esprea! corrption at ministerial, !e%ol%e! regional an! in!epen!ent

policing tiers Satrate! retail an! leisre mar-ets

$ncreasingl" sophisticate! !eman!s of cstomers

What measures shou!d industries 9e ta:in% uni$ersa!!y in "re"aration ,or AEC?

All organisations at %arios le%els ha%e to oin together to impro%e an! le%erage the

stan!ar! of their in!str" in +hailan! to maintain the contr"s mar-et position an!

cltral integrit". New inno%ati%e !e%elopments in terms of pro!cts an! ser%ices

shol! help to e%ol%e the in!str" as +hailan! remains a forwar!loo-ing

en%ironment for bsiness. De%elopment of facilities an! infrastrctre 7again, with a

ni%ersal stan!ar!8 will spport ftre growth. +hailan! is able to le%erage its

international reptation for ser%ice regar!less of the sector being consi!ere!. +he

contr" will nee! to maintain a strong go%ernment that is probsiness an! pro

in%estment in or!er to spport this obecti%e. #entralize! bsiness operations 7in

+hailan! or o%erseas8 an! control of licensing an! franchising will help to e%ol%e an

international stan!ar! !omesticall", which positions the contr" to be most effecti%e

postintegration. +he contr" nee!s to implement effecti%e monitoring of h"giene,

sanitation, cleanliness an! the !e%elopment of personnel across a %ariet" of pblic

facing sectors.

Fhilst it is impossible for a single organisation to fll" spearhea! these wi!esprea!

initiati%es, companies shol! be loo-ing at their own internal operations, strctre,

proce!res an! strategic planning an! resorces to be rea!" to eploit opportnities

for growth, an! mitigate an" contr"le%el perception threats.

Trade and E"ort

+hailan!s baseline growth has been enigmatic o%er the last fifteen "earsL economic

crashes in Asia an! Erope, political cops, wi!esprea! corrption, floo!s, isses withthe =e! Shirt political mo%ement, trmoil in the far Soth of the contr" an! recent

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bomb threats in the capital, "et still the econom" grows. +his is potentiall" the reslt

of +hailan!s efforts towar!s becoming a more !i%ersifie! econom", as it mo%es awa"

from being simpl" a torism hotspot an! eporter of rice. +hailan! crrentl" eno"s a

strong global reptation in finance, manfactring, pro!ce H commo!ities,

technolog", healthcare, e!cation, atomobile manfactring an! software

!e%elopment 5 an ecellent &D' mi that has manage! to o%ercome m"ria! isses in

the last two !eca!es. +his mi shol! mean that +hailan! will not onl" prosper after

integration, bt be able to !ri%e regional growth as both a thoght lea!er an! mo!el

for impro%ing baseline re%ene generation ami!st its peers. owe%er, se%eral

contries within the region are also eno"ing strong growth le%els, an! from a lower

base cost of pro!ctionL ASEAN economic integration will pro%i!e a platform for the

accelerate! growth of competitors, which ma" or ma" not pro%e to be !etrimental to

+hailan!s own !esigns on a thrst towar!s sstaine! epansion.

a9our &ar:et

Jne of the -e" benefits that integration has affor!e! to people within the EU is the

nprece!ente! le%el of mobilit" it gi%es to those of wor-ing age. +he common mar-et

has reslte! in a highl" reacti%e wor-force, which has little hesitation in relocating to

fin! 7or impro%e8 their wor-ing life. $t also raises isses in terms of ncappe!

immigration, as 4rance, &erman" an! the U/ ha%e !isco%ere! to be !etrimental in a

nmber of wa"s. $nbon! flow of s-ills an! a rea!il"emplo"e! labor force is great

for a growing &D' contribtion, bt teething trobles in the s"stems chec-s an!

balances reslts in hn!re!s of thosan!s of people mo%ing between bor!ers,

ob%iosl" ha%ing a consi!erable impact on citizens of a so%ereign state. Jnce signe!

p, it is impossible for a member contr" to limit the nmber of immigrants from

other member states, creating !eman!s on hosing, healthcare an! policing resorces.

$t also opens p a potential eas" channel for C;rain Drain, where the most e!cate!

members of societ" lea%e to prse opportnities in regional competitor labor

mar-ets.

Tra$e!; Tourism < Hos"ita!ity

An in!str", which is li-el" to see hge benefits 7an! challenges8 after integration, the

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tra%el an! torism sector is on the front line of -e" changes throgh integration. $t is

eas" to assme that with tra%el restrictions being re!ce! that inbon! tra%eller

nmbers to +hailan! will increase, bt the sector nee!s to be aware that this increases

the mobilit" of tra!itional !omestic Csta"cation mar-ets. Jne effect of EU

integration was a hge re!ction in the cost of o%erseas holi!a"s, which meant that it

was often cheaper for holi!a"ma-ers to go for cheap o%erseas pac-ages rather than

ta-ing holi!a"s in other parts of their own contr". +his has an effect on the

econom"s re%enegenerating abilities at large. $n terms of inbon! nmbers, there

col! be a profon! effect on hospitalit" !eman!, bt with +hailan! alrea!"

o%erspplie! with hotels, con!os an! resorts, the effect is "et to be fll" n!erstoo!.

6ost within the in!str" see ASEAN as a -e" gamechanger for the net !eca!eL

althogh a nee! for increasing le%els of competiti%eness are necessar" for +hailan! to

remain a regionall" attracti%e !estination o%er other eotic an! newtomar-et

!estinations li-e


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=e!ction in legislati%e barriers to st!ents wishing to st!" in other contries within

the commnit" will li-el" ha%e a similar affect to that seen within the EU. Effecti%el",

a st!ent ma" choose where to st!", with a single pool of e!cation 7conceptall"8

open to all. +here are limitations, of corse. 4or eample, a st!ent from


35/36

C+he Aca!em" will pro%i!e -nowle!ge to or mi!le%el eecti%es, co%ering areas

incl!ing general bsiness, the ASEAN retail mar-et, goo! preparation in response to

mar-et integration an! !ealing with the threat of growing competition from the AE#,

sai! #hairman 6a"taprecha-l, Senior #hief 6ar-eting Jfficer.

+he AE# is sppose! to allow a wi!er flow of pro!cts, in%estments an! s-ille!

wor-ers within the region, so when torists %isit an" ASEAN contr", the" will

epect to see similar pro!cts when the" go shopping. +he 6all has negotiate! with

bran! owners of fashion pro!cts in other ASEAN contries to carr" these items.

CSome fashion items a%ailable in apan will ha%e to be here as well. +hats wh" or

people ha%e to n!erstan! the tren!s an! -now the regional mar-et, he sai!. Staff

langage s-ills are also important to the firm. +herefore, a nmber of English

spea-ing sales staff will be a%ailable at Siam 'aragon, Emporim an! other branches

of +he 6all.

+he compan" is ecite! abot the AE#s potential as there is hge prchasing power

across the region, an! +hailan! is one of the most poplar torist !estinations.

Conc!usion

Fhen the AE# officiall" comes into effect on December 31, 201(, it will mar- a

significant milestone of ASEAN member contries commitment to come an! wor-

together as an economic bloc. Fhile it wol! be nrealistic to epect a smoothl"

fnctioning economic commnit" right from the start, the AE# framewor- col! lift

the sense of soli!arit" an! ltimatel" bsiness an! consmer confi!ence. +he AE#

will still be a wor- in progress an! shol! be percei%e! in that light. $t is also

important to recognise that a regional networ- will not cre !omestic economic ills.

35


36/36

Different contries an! !ifferent sectors will see !ifferent effects.

A potential negati%e impact col! be fiercer competition an! wage constraints for

lows-ille! wor-ers in highcost 7highincome8 contries, similar to what blecollar

wor-ers in the US an! EU ha%e face! in the wa-e of globalisation. 4or small

bsinesses in the highcost contries, more competition col! also bring abot a

sIeeze in profit margins. 4or small contries, a s!!en srge in capital inflows can

be o%erwhelming an! lea! to high inflation, bbble ris-s, a boombst c"cle an!

stress for the ban-ing sector. 6easres shol! ths be prepare! to help potentiall"

affecte! wor-ers 7i.e. epan!ing social secrit" nets an! training8 an!, in the smaller

economies, to bil! instittions to cope with the new economic para!igm.

+hose that stan! to gain from the AE# are companies that alrea!" ha%e a regional or

global networ-, as the ease of mo%ing goo!s, capital an! labor aron! will re!ce

costs an! sa%e time an! ths enhance pro!cti%it". E!cate! wor-ers from lower

wage contries are li-el" to be in !eman! in the initial stage. ob creation is epecte!

to be strong in the lowerwage contries. +he financial sector is another clear winner.

$ncreasing tra!e an! in%estment flows spell more bsiness for financial instittions.

J%erall, we epect the AE# to bring abot a net positi%e contribtion to ASEAN

members economic growth an! the welfare of its people.

II*RAPH>

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