Even though, according to the Bangkok Post newspaper in Thailand, the AEC Scorecard at the moment shows the region behind schedule, having achieved only 73.6% of Phase 1 goals, it still offers a big opportunity in Asia as it will be viewed as a single large market. Further, the integration will help increase ASEAN competitiveness with China and India.

The delayed issues, such as agriculture, non-tariff barriers, integration of the less-developed CLMV [Cambodia, Laos, Myanmar (Burma), Vietnam] members, and financial integration remain to be worked out.

According to the US International Trade Commission report on AEC (www.usasean.org/ASEAN/pub4176.pdf), the challenges were seen in the areas of importing and exporting which vary widely among ASEAN members. For example, procedures for trading are relatively easy to complete in Singapore, Thailand, and Malaysia, but very difficult in Laos and Cambodia. The quality of logistics services also varies among the ASEAN members, such as customs brokerage, freight forwarding, and express delivery. Logistics services are world-class in Singapore but poor in Laos, Cambodia, and Burma. In many Asean countries, restrictive regulations hamper the delivery of high-quality logistics services.

Benefits of the ASEAN Economic Community (AEC)

• It will open more regional cooperation and will improve the scale efficiencies, dynamism and competitiveness of ASEAN members. The AEC will enable easier movement of goods, services, investment, capital and people. Ultimately, it will offer new ways of coordinating supply chains, or access to new markets for established products.
• All ASEAN countries are more important to foreign investors if they are considered as one node in a larger regional market of nearly 600 million people - a single market. The ASEAN Free Trade Agreement will be expanded to zero tariffs on almost all goods by 2015. ASEAN plans to remain engaged with the global economy through regional-level free trade agreements - today, ASEAN has such agreements with China, Japan, Korea, India, Australia and New Zealand.
• The USITC's ASEAN: Regional Trends in Economic Integration, Export Competitiveness, and Inbound Investment for Selected Industries Report noted that the AEC is coming at a time when it is recognized that investment in emerging markets is more desirable than in the US and Europe. "There will be no shortage of funding coming from within ASEAN, the Asia Pacific or even the US and Europe. These investments can bring about badly needed capital for some countries, allowing them to leapfrog from the 20th century into the 21st in terms of competition in mature countries such as Thailand and Malaysia", said the report.
• SMEs accounted for 96% of enterprises and between 50-85% of domestic employment across ASEAN. Integrating these SMEs and supporting them in the initial period will be a challenge throughout ASEAN but particularly in the lesser developed ASEAN countries. Recently I was in Singapore and it is obvious that the Singapore government fully realizes the challenge and the opportunity that the AEC will represent to SMEs and is putting both the planning talent and the resources to better support their SMEs. I was also in Vietnam and Thailand and although both countries are starting to verbalize and meet to develop more effective plans for SME integration and support, it is obvious that these plans are probably behind where they need to be. In countries, such as Cambodia, Laos and Myanmar (Burma), plans are even further behind and more in need of support and resources.
• Tourism opportunity. Asians travels more in the region and there are more travelers from other countries that have begun to reach out to Asia as new visitors. The trends were evident at the recent Hub City Forum, held by the Pacific Asia Tourism Association (PATA), where more than 100 travel industry executives discussed the tourism potential, government's spending to upgrade facilities both for leisure attractions like museums; and also MICE facilities such as convention centers, reported the newspaper. MICE tourism opportunities are particularly large and hopefully countries that have the most experience in this area such as Thailand and Singapore will render their assistance to those with weak MICE experience - recent examples of this are Thailand with Vietnam and also some talk in Thailand about rendering assistance in Laos and possibly Cambodia.
• Internationalization of health care under the AEC. Health care is one of the sectors to be internationalized. This is definitely a big challenge as it is more complicated than just the popularity of Singapore and Thailand's "medical tourism" where patients travel from one country to another seeking better care at lower cost. The legal and licensing frameworks are still needed to be worked out. However, it offers potentials for the free-flow of health services, etc. in the region. Recent examples here were noted in the Bangkok Post in mid-March which noted programs by Thailand's largest medical service BGH and other Thai hospital groups to step-up the pace of mergers and acquisitions and joint ventures in other AEC countries to help give them a better platform to better take care of developing AEC opportunities.

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About the Author:

Christopher W. Runckel, a former senior US diplomat who served in many counties in Asia, is a graduate of the University of Oregon and Lewis and Clark Law School. He served as Deputy General Counsel of President Gerald Ford’s Presidential Clemency Board. Mr. Runckel is the principal and founder of Runckel& Associates, a Portland, Oregon based consulting company that assists businesses expand business opportunities in Asia. (www.business-in-asia.com)

Until April of 1999, Mr. Runckel was Minister-Counselor of the US Embassy in Beijing, China. Mr. Runckel lived and worked in Thailand for over six years. He was the first permanently assigned U.S. diplomat to return to Vietnam after the Vietnam War. In 1997, he was awarded the U.S. Department of States highest award for service, the Distinguished Honor Award, for his contribution to improving U.S.-Vietnam relations.

 

(Source: http://www.business-in-asia.com/asia/asean_economic_community.html  retrieved 10/2/2014)

 

Comprehension questions: Matching

 

About	Questions	Click Answer Key	Your comments
Opportunities	1. What is the regional integration objective of the AEC?	To create a competitive market of over 600 million in ASEAN countries. There will be free flow of goods, services, investment capital and skilled labor following the liberalization. These will include tariff reductions and streamlining of certain administrative procedures. The integration will help increase ASEAN competitiveness with China and India. The delayed issues, such as agriculture, non-tariff barriers, integration of the less-developed CLMV [Cambodia, Laos, Myanmar (Burma), Vietnam] members, and financial integration The areas of importing and exporting which vary widely among ASEAN members It will open more regional cooperation and will improve the scale of efficiencies, dynamism and competitiveness of ASEAN members. If they are considered as one node in a larger regional market of nearly 600 million people or a single market. There will be no shortage of funding coming from within ASEAN 96% of enterprises and between 50-85% of domestic employment Tourism and MICE facilities Convention centers Medical tourism where patients travel from one country to another seeking better care at lower cost
About the benefits in the region	2. What benefits will the region receive?
	3. What else can the integration help increase?
	4. What delayed issues still have to be worked out?
	5. According to the US International Trade commission report on the AEC, what seem to be the challenges?
	6. What are the benefits of the AEC?
To foreign investors	7. How would all ASEAN countries become more important to foreign investors?
Emerging markets	8. Why would investment in emerging markets be more desirable than in the US and Europe?
SMEs (Small and Middle Entrepreneur) business	9. What percentages do SMEs account for across ASEAN?
Tourism opportunity	10. What areas are popular for travelers from other countries?
	11. What does MICE include?
Internationalization of health care under the AEC	12. What is an example of internationalization of health care under the AEC?