AS ASEAN members push towards an economic community by December, warnings have come from various quarters that full integration will not take place for another decade or more yet. These are not misplaced, for while the opportunities to be had from economic integration are enormous, the challenges towards realising it are daunting for a grouping of 10 diverse nations at disparate levels of development.
Asean as a common market will undoubtedly be an economic powerhouse with a combined economy of US$2.4 trillion (S$3.2 trillion) and a population of 640 million including a burgeoning middle class. Its members, by working together, can leverage on one another's strengths to better compete with the rest of the world. A report released earlier this month by ANZ Bank said the grouping is on track to become Asia's third engine of growth alongside China and India, and the fifth-largest economy in the world by 2020. Others have said integration would take the bloc to a higher level of economic growth of 6-8 per cent from its steady growth of more than 5 per cent in recent years.
However, analysts have also said that while the Asean Economic Community has met most targets to qualify as an economic bloc, it would take another 10 to 15 years before it becomes a borderless common market. Ratings agency Moody's noted that other important aspects such as elimination of non-tariff barriers, better labour mobility and financial integration would face delays. The free flow of goods, services, skilled labour and investment and freer flow of capital, as envisioned - apart from trade in goods - will not happen come December.
Standing in the way of full integration are factors such as institutional weakness, disparities in development among members and the need to balance domestic interests with the broader common good. Regrettably, Indonesia, the largest economy in the bloc, is acting to protect its financial sector even as other countries are gradually opening up theirs.
Indeed, members which see themselves as benefiting less are likely to put in place protective measures. Less developed states also fear that liberalisation will lead to competition that they cannot cope with, leaving them further behind richer members. Such concerns might be shortsighted, but they are nonetheless real and will have to be addressed through programmes like capacity-building to help all members take advantage of the many opportunities to be had across the bloc. Only when all members realise the benefits from economic integration will it be sustainable and meaningful. Most importantly, the momentum must be kept to ensure that the common market is widely accepted and resolutely implemented.