2015 will see the ten economies of the Association of Southeast Asian Nations (ASEAN) become a single, integrated market. How prepared are you to navigate this new market terrain?
Conceived in 2007, a unified ASEAN economic community presents real opportunities for growth outside China and India. To give a concrete picture of ASEAN’s collective potential, the International Monetary Fund (IMF) and the Asian Development Bank (ADB) predicts ASEAN’s GDP growth reaching 5.4% by 2015, compared to the global economy’s 3.9% for the same year.
This means that ASEAN 2015 integration is a key historic step to the development of what could be the fourth or fifth largest economy in the world, and would also be the most significant step towards launching ASEAN as the second largest common market after the EU.
"The potential is huge and the participants are picking up the lessons of the common market from the EU," says InsightAsia CEO, Sajan Koch.
"They're learning from their mistakes and planning a slower but more stable integration of these diverse economies. Combined with the fact that ASEAN is one of the fastest growing regions in the world, this integration has the potential to accelerate employment creation, regional consumption skills transfer, regional investments and economic mobility at an unprecedented scale.”
A unified ASEAN stands on four pillars:
- a single market and production base where goods, services, investments, capital and skilled labour flow freely
- a highly competitive economic region, backed by a competition policy, and interconnected infrastructure
- a region of equitable economic development, narrowing development gaps and levelling the playing field for small businesses
- integration with the global economy, including free trade deals with major economies like China, Japan, India, South Korea, Australia, and New Zealand.
In real terms, this will mean greater mobility for skilled labour across the region, with more potential for professionals to practice in different countries using just one, unified set of credentials.
While the ability to work in different ASEAN countries looks set to be greatly streamlined, policy-makers are looking at ways to avoid potential frictions sometimes experienced by the EU. Mechanisms to protect the rights of local workers in the face of potentially cheaper foreign labour are a priority to ensure fairness for all.
With the ASEAN market unifying itself amid political and cultural diversity, what strategies will you invest in to cater to this emerging opportunity?
In a study conducted by the Economic Research Institute for ASEAN and East Asia (ERIA), 80% of business professionals surveyed in the Philippines cited as ‘beneficial and urgent’ the realisation of the AEC four pillars.
From this we can see that popular opinion favours the vision of the ASEAN economic integration and that businesses are getting ready to jump on board come what may.
Whether the AEC is a dream come true, or just too good to be true, what are the implications for your business and customers in this brave new world?