The Asean Economic Community (AEC) will fall short of its goals by the 2015 deadline, economists and researchers said yesterday.
Speaking at the Dara Airport Hotel in Phnom Penh, Asian Development Bank representatives took pains to describe the AEC deadline as part of the journey, rather than a destination.
The AEC is framed as a single market for the 10-member Association of Southeast Asian Nations. In theory, on December 31, 2015, borders will fall and trade, goods and labour will flow. But it’s not that simple.
“It is part of a process of reform, and it is useful to think of it [the date] as a milestone rather than a hard target,” Jayant Menon, lead economist at the ADB’s office of regional integration, said.
Though much has been achieved, there will be heavy lifting beyond 2015, when labour mobility, trade agreements, and goods and services liberalisation are tested, according to the ADB, which called on governments throughout Asia to take “national actions” and stand up if they are to reap the benefits of the AEC.
“It is one thing to get together and sign agreements, but another altogether to come home and implement what has been agreed. And this is difficult sometimes because it could require national laws to be changed to accommodate implementation,” Menon told reporters after a seminar at the hotel on Asian economic integration.
While progress has been made on reducing trade barriers, the ADB said more needs to be done in the realm of trade facilitation, as “red tape” at borders mount in tandem with tariffs coming down.
“One of the obstacles for further regional integration is that there is still huge diversity in terms of the rules and regulations,” said the ADB’s chief of regional economic integration, Iwan Azis, who was referring to a standardisation required to support cross-border trade.
Srinivasa Madhur, director of research at the Cambodia Research Development Institute, said Cambodia, along with other least-developed members of the ASEAN, have the most to gain from regional integration.
“They have the potential to close this development gap within Asean over the next 15 to 20 years,” he said, pointing to CLMV’s [Cambodia, Laos, Myanmar and Vietnam’s] high share of a labour-intensive manufacturing force compared to the rest of the region.
Echoing the ADB, Madhur said that as CLMV countries graduate to middle income status, the responsibility lies with national governments to invest in education, infrastructure and health, as well as to strengthen their financial systems.
“CLMV countries, although they have not had a huge macro-financial crisis in the past, need to be extremely careful, extremely cognizant of the fact that it could happen any time and without much notice,” he said.