The ASEAN Economic Community

THE ASEAN Economic Community (AEC) was realised on Dec 31, 2015, marking a milestone in the region's economic integration. To guide the next phase of the journey over the following 10 years, the AEC Blueprint 2025 was developed, and adopted by the ASEAN leaders at the 27th ASEAN Summit in 2015. The AEC vision is one of regional economic integration: establishing ASEAN as a single market, with the free flow of trade and investment among the 10 member states. Under the first AEC Blueprint from 2008 to 2015, key achievements included:

Building upon this first Blueprint, ASEAN continues to seek deeper and broader integration under the AEC Blueprint 2025.

HIGHLY INTEGRATED, COHESIVE

The AEC aims to facilitate the seamless movement of goods, services, investment, capital, and skilled labour within ASEAN.

Tariff elimination measures under the ASEAN Trade in Goods Agreement have improved the flow of goods. In AEC 2025, the agreement will be strengthened to streamline and eliminate non-tariff barriers.

The Rules of Origin for products will be simplified, for instance by streamlining the process for determining origin criteria.

ASEAN will speed up and deepen its trade facilitation measures. This includes rolling out the ASEAN Single Window for customs clearance in all member states; simplifying regulatory regimes and documentary requirements; and addressing other forms of non-tariff barriers.

For trade in services, the priority is to negotiate and implement the ASEAN Trade in Services Agreement. Other efforts include improving mechanisms to attract foreign direct investment in services.

To become a more attractive investment destination, ASEAN will establish an open, transparent, and predictable investment regime. This is via enhancements to the ASEAN Comprehensive Investment Agreement, which provides for the progressive liberalisation of investment restrictions in manufacturing, agriculture, fishery, forestry, mining and related services. The agreement also strengthens investment protection and ensures transparency of investment laws, regulations and guidelines. To facilitate capital flows, ASEAN will increase financial integration with a bigger role for regional banks, more integrated insurance markets and more connected capital markets. This includes work to develop greater financial inclusion and capital account liberalisation, to encourage greater capital flows - investments and loans - among member states, but with adequate safeguards against potential macroeconomic instability.

A second area is payment and settlement systems. ASEAN will enhance payments connectivity to enable more cost efficient and timely funds transfer in support of cross-border trade and investments, including in e-commerce. Third, ASEAN will focus on capacity building to narrow the financial development gap in the region, with learning programmes and sharing of best practices and expertise.

To facilitate the flow of skilled labour within the region, the ASEAN Agreement on the Movement of Natural Persons and mutual recognition agreements (MRAs) for professional services are in place.

By becoming highly integrated and cohesive, ASEAN will also be able to improve its participation in global value chains.

COMPETITIVE, INNOVATIVE AND DYNAMIC

The AEC aims to make the region more competitive and productive by creating a level playing field; fostering knowledge creation and protection; and strengthening regulation. One aspect is effective competition policy. This involves introducing competition laws in member states that lack them, and implementing such laws in all member states based on international best practices and agreed-upon ASEAN guidelines. Regional agreements for enforcement cooperation will help to tackle cross-border competition issues. Consumer protection is another area of focus, with a common ASEAN framework to be established for this.

The region will also cooperate more in the area of intellectual property (IP) rights. This includes strengthening IP offices and building IP infrastructure. For productivity-driven growth, ASEAN will promote innovation, research and development, and the commercialisation of technology.

Regional competitiveness will be supported through tax cooperation, with measures such as bilateral tax agreements. For a more dynamic ASEAN, the region will promote good governance and regulatory practices. Sustainable economic development is also a key part of ASEAN's growth strategy, with the promotion of clean energy and low-carbon technologies, for example.

More broadly, under AEC 2025, ASEAN will formulate strategies for global mega-trends such as the rise of digital technology, and emerging trade-related issues.

ENHANCED CONNECTIVITY AND SECTORAL COOPERATION

In line with the Master Plan on ASEAN Connectivity, the region will improve connectivity on various fronts. In transport, this covers land, air and maritime transport, as well as the new sector of sustainable transport. In information and communications technology (ICT), ASEAN will focus on bridging the digital gap so that more can benefit from ICT adoption.

An ASEAN Agreement on e-Commerce will be developed to facilitate cross-border e-commerce transactions, so as to further develop and intensify the use of e-commerce in driving economic growth in the region.

On the energy front, the ASEAN Plan of Action for Energy Cooperation 2016-2025 will be implemented in two phases, to achieve energy security cooperation, connectivity and integration. Plans include a trans-ASEAN gas pipeline and reducing ASEAN's energy intensity. The region will also cooperate on food, agriculture and forestry; tourism; healthcare; minerals; and science and technology.

RESILIENT, INCLUSIVE, PEOPLE-ORIENTED, AND PEOPLE-CENTRED

For equitable economic development, ASEAN will help micro, small, and medium enterprises participate in the region's growth, through measures such as facilitating their access to finance and other markets. The private sector will play a greater role in ASEAN integration, with ASEAN governments working more closely with the ASEAN Business Advisory Council and ensuring its recommendations are taken into account. ASEAN is also promoting public-private partnerships, especially for infrastructure projects.

Regional integration must also involve narrowing the development gap between member states. Recognising that pockets of underdevelopment and development gaps exist in all countries, ASEAN is also working with other sub-regional cooperation frameworks on this front.

A GLOBAL ASEAN

On top of integration within the region, ASEAN is also integrating itself into the global economy, through FTAs, comprehensive economic partnership (CEPs) agreements and economic cooperation work programmes with various external partners. Individual member states also have bilateral agreements with trade partners, complementing the regional ones.

Under AEC 2025, ASEAN will develop a more strategic, coherent approach towards external economic relations - with a view to adopting a common position in regional and global fora. It will also continue to review and improve its FTAs and CEPs, and develop closer partnerships with non-FTA dialogue partners.

AEC Blueprint 2025

The AEC Blueprint 2025 envisions five characteristics for the region, and sets out measures to achieve them.

A highly integrated and cohesive economy

Objectives include the facilitation of the seamless movement of goods, services, investment, capital, and skilled labour within ASEAN in order to enhance ASEAN's trade and production networks, as well as to establish a more unified market for its firms and consumers.

A competitive, innovative and dynamic ASEAN

Measures include those contributing to the region's competitiveness and productivity by engendering a level playing field for all firms through effective competition policy, fostering the creation and protection of knowledge, deepening ASEAN participation in global value chains, and strengthening related regulatory frameworks and overall regulatory practice and coherence at the regional level.

Enhanced connectivity and sectoral cooperation

This includes cooperation to enhance economic connectivity involving the transport; telecommunications; e-commerce; food, agriculture and forestry; tourism; healthcare; minerals; science and technology; and energy sectors, and to further integrate and cooperate in key sectors that complement existing efforts towards creating an integrated and sustainable economic region.

A resilient, inclusive, people-oriented and people-centred ASEAN

Measures include strengthening the role of micro, small and medium enterprises, partnerships with the private sector, and narrowing the development gap.

A global ASEAN

ASEAN will work towards further integrating the ASEAN Economic Community into the global economy, and promote complementarities and mutual benefits for ASEAN through its global engagements.