WORLD ECONOMIC FORUM

Many gaps to plug before single Asean market can be realised

Flags of Asean member states are seen displayed in a conference room at the Prime Minister's Office (PMO) Building Complex in Bandar Seri Begawan, Brunei.
Flags of Asean member states are seen displayed in a conference room at the Prime Minister's Office (PMO) Building Complex in Bandar Seri Begawan, Brunei.PHOTO: ST FILE

Trust is biggest issue, even as many recognise AEC’s potential

ON THEIR way to creating a single market at the end of this year, South-east Asian nations will need to bridge many gaps before they can integrate successfully.

The 10-member Asean grouping has well-catalogued disparities, whether in income – the per capita GDP ranges from US$1,300 (S$1,700) in Myanmar to over US$48,000 in Singapore and Brunei – education or infrastructure.

Yet the most important gap to close may well be the trust gap.

Some 800 of the best and brightest thinkers and movers from the region and beyond spent three days in Jakarta teasing out the benefits and challenges that will accompany Asean’s transformation into a region with free movement of goods and services, investment, skilled labour and freer flow of capital.

The dimensions of the Asean Economic Community (AEC) are impressive. If it were an economy, it would be the world’s seventh largest, with a combined GDP of US$2.4 trillion. More importantly, the AEC will remain the world’s fastest growing region for decades to come. With a population of 600 million, it is larger than the EU or North America.

One of the most enthusiastic AEC votaries at the World Economic Forum on East Asia, which ended yesterday, was Malaysia’s Minister of International Trade and Industry Mustapa Mohamed. Asked to scope out its potential, he said with little hesitation that it could rival the EU, the world’s biggest economic bloc. Give it a few years, he said.

“To the extent that Asean grows at 5 per cent per annum and Europe by less than 2 per cent, of course we will catch up with Europe; one day we will be there,” said Datuk Seri Mustapa.

Agreeing, Mr Tony Fernandes, AirAsia’s group chief executive officer, said: “We have the numbers: 600 million people and a lot of good work. Definitely the AEC can rival the EU.”

Many participants, among them Philippine tycoon Teresita Sy-Coson, embraced the idea of a single Asean-wide visa and wished that an “Asean consciousness” would pervade the region.

If there were a vote by acclamation at the forum, AEC would have sprung into existence. Yet, the reality hit just hours later.

The AEC hardly figured in Indonesian President Joko Widodo’s much anticipated speech on Monday evening. Instead, his message was for businessmen to make “incredible” profits from investing in his country. The lack of emphasis on AEC, despite the theme of regionalism around which the WEF discussions revolved, was glaring.

Indonesia is the region’s largest economy, accounting for 40 per cent of its economic output, and is seen as crucial to driving AEC. Yet its limited enthusiasm was not surprising to many.

“It is not top priority with Jokowi, who is internally oriented,” said Mr Dharsono Hartono, an Indonesian entrepreneur.

Mr Mustapa, whose country will host the year-end summit where AEC will be launched, admitted the region’s small and medium-sized enterprises, unlike the economic elite, feared the AEC.

Said Mr Hans-Paul Buerkner, chairman of the Boston Consulting Group: “The region needs more self-confidence to trust in itself, its potential and future.

“No one is sure who will benefit  at this point; the only good option is to grasp the opportunity.”

Just as Mexico feared the North American Free Trade Agreement and Spain, the EU as the blocs were being formed, both nations now see clear benefits from being part of the grouping, Mr Buerkner pointed out.

bhagya@sph.com.sg