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Analysis
Obstacles to integration in Asean

Obstacles to integration in Asean

Variance of development hinders cohesion

by National University of Singapore authors

Wed 21 Feb 2018

Greater integration in the 10-country Association of Southeast Asian Nations, which some forecasters predict will become the world's fourth largest economic region by 2030, is an attractive proposition. But market watchers doubt the feasibility of deep economic cohesion in Asean, which faces several obstacles to further development.

The region has made steady progress towards economic integration since its formation in 1967. The adoption in 2007 of the Asean 'blueprint' was the culmination of decades of collaboration. This set out the guiding principles for establishing the Asean Economic Community and promoting the free flow of goods, services, capital, skilled workers and investment. Affirming the region's confidence in the blueprint, Asean leaders brought forward the date for establishing the AEC to 2015 from 2020.

However, although a great deal was achieved between the adoption of the plan in 2007 and the establishment of the AEC in 2015, the region missed several significant targets. This led to the creation of a new AEC blueprint, with 2025 as its deadline.

Doubts are exacerbated by internal obstacles including inconsistent implementation of regional policies across countries and widely varying productivity, skilled labour and economic development. While establishing the new blueprint confirmed the commitment of member states, the documents merely provided extensive directions for implementation. The related 'consolidated strategic action plan' alone consisted of 153 measures and 513 action points to be executed by 2025. In the light of limited resources and budgets, the AEC should review its institutional structure for implementation and re-evaluate its strategies to ensure goals can be met on time.

Countries have committed to the elimination of non-tariff measures and non-tariff barriers and are developing the Asean 'single window', which aims to expedite cargo clearance and facilitate the electronic exchanges of documents between members. While these commitments were spelt out regionally, the execution must be carried out nationally. This raises problems around individual countries' legal and political restrictions, as illustrated by the proposed adoption of 'mutual recognition agreements'. These are intended to allow practitioners of eight professions – medicine, dentistry, architecture, engineering, nursing, tourism and accountancy – to work in other Asean states. However, only the MRA for engineering services, adopted in 2005, is operational. The others are still being discussed and are subject to approval from domestic customs and legal regulations.

Since the countries that comprise the AEC are at varying levels of economic development, some may not have the resources to implement policies for seamless economic integration. The 'single window' platform raises one such example, as only Singapore, Malaysia, Indonesia and Thailand are using electronic certificates of origin. Less-developed Asean countries may face challenges in terms of funding, technological infrastructure and legal frameworks to execute this arrangement.

The bloc's traditional method of consensus decision-making may help to resolve these issues. Leaders must likewise promote Asean's role as a major economic force in negotiations with partners. The China-led Regional Comprehensive Economic Partnership is an opportunity for Asean member states to negotiate beneficial terms and display their economic leadership to the world.

A united approach that aligns individual countries' goals, resources and commitments to the region will be essential to overcoming obstacles and deepening economic integration in Asean.

This is an edited version of an article from Global-is-Asian, the digital platform of the Lee Kuan Yew School of Public Policy, and reproduced here with the permission of the National University of Singapore.

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