1. •ASEAN Economic Community
•– A Work in Progress
•Sanchita Basu Das
•Fellow and Lead Researcher (Economic
•Affairs), ASEAN Studies Centre, ISEAS, Singapore
•April 18, 2013

2. •3
•ASEAN Economic Community:
•Vision and Blueprint
 Single Market and Production Base
 Free flow of goods, services, investment & skilled labor; Freer flow of capital.
Focus on PIS
•~Highly Competitive Economic Region
 Transport facilitation, infrastructure, ICT and connectivity;
•IPR, taxation, competition
policy
 Region of Equitable Economic Development
 Narrowing Development Gap; Initiative for ASEAN Integration;
SME development
 ASEAN Fully Integrated into the Global Economy
 Coherent approach to external economic relations
•2

3. •3
•ASEAN Integration Matters:
•Potential Impact of AEC Measures on AMSs’GDP
•(Cumulative percentage increase over baseline 2011-2015 in 2015)
•5.
04.
54.
03.
53.
02.
52.
01.
51.
00.
50.
0
•RoSEAsiaCambodia Indonesia LaosMalaysiaPhilippinesSingaporeThailand Viet Nam
•A5: Tariff AS:Tariff+ServicesAT: Tariff+Services+ Time
•Notes: Brunei is proxied by "Rest of South East Asia"in the simulation. No estimates for Myanmar
because of serious data problems.
•Source: Computed by Itakura for MTR project.

4. •3
•OfficialAEC Scorecard
 Expected to track the implementation of measures and the achievement of
•milestones committed in the AEC Strategic Schedule.
•- compliance tool and not a mechanism for impact assessment.
 ASEAN Secretariat came out with two official scorecards
 2008-09 : 87.6% of 105 total measures
 2010-11: 56.4% of 172 measures.
ASEAN
Economic
Community
Pillar I
:
Single
Market
Production
Base
Pillar II:
Competitive
Economic
Region
Pillar III:
Equitable
Economic
Development
Pillar IV:
Integration into
t h e G l o b a l
Economy
68.2 66.5 69.2 66.7 85.7

5. •How is the progress for the member countries and the
•businesses?
•What are the challenges?

6. •Progress inAEC (1)
•Free Flow of Goods
 ASEAN-6 countries applied zero tariffs on 99.6% of goods.
 The CLMV countries are trading 98.86% of goods at 0-5 percent of tariff
•rate.
•8.0
0
•7.0
0
•6.0
0
•ASEAN-6
CLMV
ASEAN-10
•percent
(%)
•5.0
0
•4.0
0
•3.0
0
•2.0
0
•1.0
0
•-
•199
6
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012

7. •Progress inAEC (2)
 ASEAN Trade in Goods Agreement (ATIGA) came into effect
•in May 2010
 Operationalise the customs chapter – 30April 2012.
•Malaysia
 It has ratifiedATIGAon 17 June 2009.
 The tariff levels on imports looks as follows:
 12,169 tariff lines (98.69%) have zero import duties
 56 tariff lines (0.45%) of selected tropical fruits and tobacco were
•reduce
d
•to 5 per
cent
 10 tariff lines (0.08%) on rice were reduced from 40 per cent to 20
•percent
 96 tariff lines (0.78%) on alcoholic beverages and weapons are excluded
•from tariff reduction and elimination.

8. •Progress in AEC (3)
•Trade Facilitation
•~ Progressing on ASEAN Single Window: network of National
•Single Window
 Single point of decision for the release of cargo
 Indonesia, the Philippines, Malaysia, Singapore, and Thailand have
•implemente
d
•with full roll out plan for significant ports and airports by
•2015
 Brunei and Vietnam are in advanced stages of development
•Malaysia
 Implemented its NSW on January 1, 2009.
 Supported by 5 core services - e-Declare, e-Permit, e-Payment, e-
•Preferential Certificate of Origin (e-PCO) and e-Manifest
 Has been in operation since November 19, 2009.
 The approval of PCO can now be done within one working day.

9. •Progress inAEC (4)
 There exist several Non-Tariff Barriers (NTBs)
 Custom surcharges, internal taxes, administrative price fixing, single
•channel of imports, requirement of product characteristics, labeling
Most NTMs Least NTMs
Country Myanmar, Indonesia, and
the Philippines
and
CambodiaThailand
Industry Food and chemical industry Metal andLight
manufacturing
•Source:Ando and Obashi, 2010
 ASEAN needs to reduce transportation and logistics costs
•between and within member countries.
 Logistics Performance Index, 2012: Singapore ranks 1st and
•Myanma
r
•129th out of 155 countries surveyed
 Malaysia ranks 29th .

10. •Trade inASEAN, 1993-2011
•3000.
0
•2500.
0
•2388.
6
•USD
billion
•2000.
0
•1500.
0
•Export Import
•Total Trade
•1536.
9
•1000.
0
•1242.
3
•1146.
3
•429.
9
•500.
0
•0.
0
•1993 1994 1995 1996 1997 1998 2000 2003 2008 2009 2010 2011
•Source: ASEAN Statistical Yearbook (various issues)
•1
0

11. •Progress inAEC (5)
•Free Flow of Services
 Completed Eighth packages of commitments to liberalise services trade under
•ASEAN Framework Agreement on Services.
 BUT services sector liberalisation is far from full integration
 Progress in Tourism: 81 million of international arrivals in 2011 with 7.4%
•growth; 47% is intra-ASEAN visitors
•Mutual RecognitionArrangements
 ASEAN has concluded seven MRAs:
 engineering, architecture, nursing, accountancy, surveying
•services, medical and dental profession
 BUT MRAs should not be equated to market access
 MRAs do not contain any liberalisation commitments but only frameworks or
•procedures to facilitate the flow.

12. •Progress in AEC (6)
•Investment Liberalization and Facilitation
•~ASEAN Comprehensive Investment Agreement is effective
since
•April 2012
 incorporates provisions on liberalisation, protection, facilitation and
•promotion
 expected to benefit ASEAN-owned investors and companies and foreign-
•ownedASEAN-based
investors.
 Malaysia ratified the agreement on 16 August 2009
 BUT ASEAN continues to struggle in raising inward FDI
 Regional investment agreements have to be supplemented with effective
•and well carved-out domestic investment
policies.

13. •Progress inAEC (7)

14. •Progress in AEC (8)
•ASEAN’s competitiveness : Two aspects
 Effective standardized competition policy in the region
 Singapore, Indonesia,Thailand and Vietnam have established independent
•competition authorities.
 Malaysia, Philippines and Brunei are lagging on this matter
 Infrastructure is a key component
 Adopted the Master Plan of ASEAN Connectivity in 2010
 Physical, Institutional and People-to-People Connectivity
 ASEAN needs US$60 billion a year for infrastructure investment
•for the 2010-20 period.
 ASEAN Infrastructure Fund in collaboration with ADB – US$485.2
•million and Private-Public-Partnership

15. •Progress in AEC (9)
•Equitable Economic Development
 Narrow the Development Gap
Socio-economic Indicators Range Country Representing
Per Capita GDP (PPP US$, 2012) 1,401 – 60,883 Myanmar - Singapore
Population (million, 2012) 0.43 – 245 Brunei - Indonesia
% Share of Agriculture in GDP*, 2010 0 - 36 Singapore - Cambodia
% Share of Industry in GDP*, 2010 23- 67 Cambodia - Brunei
% Share of Services in GDP*, 2010 32 - 72 Brunei - Singapore
Imports /GDP (%), 2010 14 - 153 Myanmar – Singapore
Exports /GDP (%), 2010 20 - 171 Myanmar – Singapore
Human Development Index (Rank) (2011) 26 - 149 Singapore - Myanmar
Poverty (headcount ratio at $1.25 (PPP) a
day, %) **
0 – 33.9 Malaysia – Lao PDR
•*Myanmar is excluded as data was not consistently available, ** data is not available for Singapore, Brunei and Myanmar
 Initiative of ASEAN Integration (IAI)
 Second IAI Work Plan ( 2009- 2015)
 BUT IAI program areas does not fully fit the CLMV’s key priorities

16. •Progress inAEC (10)
 ASEAN+1 FTAs/ RCEP
 ASEAN+ China and ASEAN + Korea
 Goods, Services and investment agreements signed
 ASEAN+ Japan and ASEAN+ India
 Goods completed; Negotiation concluded for services and investment
 ASEAN + Australia + New Zealand
 Comprehensive agreement implemented – Jan 1, 2010
 ASEAN plays a role of “ bridge builder” among countries in the greater
•scope of Asia
Total
Population, 2011
Total GDP, 2011 Total Trade to
theWorld,2011
Persons in million US$ billion PPP$ billion US$ billion
ASEAN-Australia-New
Zealand FTA
635 3,822 4,390 2,983
ASEAN-China FTA 1,955 9,474 14,651 6,036
ASEAN-Japan CEP 736 8,043 7,735 4,072
ASEAN-RoK FTA 658 3,292 4,905 3,474
ASEAN-IndiaFTA 1,815 4,003 7,772 3,162
•Author’s compilation/ estimates

17. •Regional Comprehensive Economic
•Partnership (RCEP)
Characteristics RCEP is led by ASEAN
Born out of ASEAN+1 FTAs with China, India, Japan, South Korea, Australia and New
Zealand
Based on open accession clause, where membership can be expanded later as they sign FTA
with ASEAN.
Negotiation expected to start in May 2013 and be concluded by 2015.
Aims to form an integrated regional economic agreement that are deeper than the existing
FTA co-operations and support equitable economic development.
Areas include: liberalise trade in goods, services and investment, technical cooperation,
intellectual property, dispute settlement (WTO+ issues)
Economic Coverage, 2011*
GDP (% global share) – 28.4
Merchandise trade (% global share) – 27.7
Population (% global share) – 47.9
Concerns Building on “ASEAN way” and differential treatment depending on level of members’
development could contribute to slow progress.
Conflict due to tension between China and the US.
ASEAN+1 FTAs have different features and are at different stages of implementation.
•Author’s compilation/ estimates

18. •EastAsia Integration Matters:
•Economic Impacts of Development ofASEAN++ FTA(Regional
•Comprehensive Economic Partnership)
2.3 9.5
5.8
3.0 5.0 3.3 2.9 13.4
8.3
•16.
0
•14.
0
•12.
0
•10.
0
•8.
0
•6.
0
•4.
0
•2.
0
•0.
0
•ASEAN
•Coexistence of Five ASEAN+1 FTAs
•Coexistence of Five ASEAN+1 FTAs and CJK FTAs
ASEAN+6 FTA
•NOTE: Cumulative Percentage Point, deviation from baseline, 2011 to 2015;
NA for Myanmar due to data availability
•1
8
•Source: Dynamic GTAP Simulation by Itakura (2012)

19. •Concluding Remarks
 The pace of implementation is slow
•~ Due to delay in the ratification of agreements; alignment of domestic
•law
s
•to regional
initiatives
 There is lack of awareness onASEAN matters.
 Non-tariff barriers replaced tariff rates as a form of protection
 Scorecard defies the understanding ofASEAN public and private sector
 BUTefforts of AEC will not be derailed easily.
 Private sector is getting increasingly aware
 ASEAN-EU Business Summit, Business Dialogue, ASEAN-China
•expo, ASEAN-China Business & Investment Summit, ASEAN-US
•Business Summit, India-ASEAN Business Fair
 TIME is a big constraint
 On 31 December 2015, if not all, at least the “core” elements of the AEC is
•likely to be in place
 tariff reduction, trade facilitation (ASW), liberalization of selected
•service
s
•(tourism), progress in MPAC,ASEAN+1 FTAs/ RCEP
•1
9

20. •Thank-
You!
•sanchita@iseas.edu.s
g

21. •ASEAN’s Engagement with Major
•Partners
Bilateral Total
Trade, US$ billion
ASEAN FDI Inflow,
US$ million
Tourist arrivals in
ASEAN, (‘000)
1998 2010 2003 2010 2011
Intra- 121.0 520 2,712 12,279 37,733 (46.5)
ASEAN (21.0) (25.4) (11.1) (16.1)
Extra- 455 1,525 21800 63929 43496 (53.5)
ASEAN (79.0) (74.6) (88.9) (83.9)
Australia 12.8 55.4 (2.7) 155 1765 (2.3) 3926 (4.8)
(2.2) (0.63)
Canada 4.1 (0.7) 9.9 (0.5) 82 (0.3) 1641 (2.2) 594 (0.7)
China 20.4 232.0 201 (0.8) 2861 (3.8) 7315 (9.0)
(3.5) (11.3)
EU-27 83.6 208.5 6866 17066 7326 (9.0)*
(14.5) (10.2) (28.0) (22.4)
India 6.9 (1.2) 55.4 (2.7) 104 (0.4) 2584 (3.4) 2711 (3.3)
Japan 81.4 206.6 3903 8386 (11.0) 3664 (4.5)
(14.1) (10.1) (15.9)
Rep.Of 17.1 98.6 (4.8) 552 (2.3) 3770 (4.9) 3862 (4.8)
Korea (3.0)
New 1.6 (0.3) 7.3 (0.4) 83 (0.3) 93 (0.1) 390 (0.5)
Zealand
Russia 1.0 (0.2) 9.1 (0.4) -- 61 (0.1) --
USA 115.5 186.6 1363 8578 (11.3) 2838 (3.5)
(20.1) (9.1) (5.6)
Total 576.1 2,045 24512 76208 81,229
ASEAN
•Intra-ASEAN trade comprised of one-
fourth of ASEAN’s total trade.
•China, EU-27, Japan and USA continue
to be four major trade partners of
ASEAN. However, the combined share
of EU-27, Japan and USA to ASEAN’s
total trade has dwindled from 48.7% in
1998 to 29.4% in 2010.
•EU-27, Intra-ASEAN, USA and Japan
are the top providers of ASEAN FDI
inflows for 2010.
•For tourist arrivals, intra-ASEAN is the
biggest source, followed by EU and
China
•Source: ASEAN Statistical Yearbook
(various issues)
•Note: * is for EU-25; figures in bracket
give the share in total
•2
1