Forum highlights challenges to Asean Economic Community

Singapore

THE Asean Economic Community (AEC), due to launch by this year-end, faces challenges in terms of regulation, corruption, and political and religious stability, speakers at the Stars Symposium said on Monday.

For one thing, the 10 Asean countries still have very different regulations, said Joerg Wolle, president and chief executive of Zurich-based market expansion services provider DKSH Holding. Non-tariff barriers especially "remain a serious obstacle to the free flow of goods and services" which the AEC hopes to achieve, he said at a plenary discussion at the symposium.

Also, stable legislation and regulations are needed in Myanmar, Victor Tay, chief operating officer of the Singapore Business Federation, said.

For that to materialise, political stability is key, he added. Many Asean member states are however plagued by political instability.

"Every four to eight years, they have a change of political regime and political parties," he said, referring to countries such as Thailand, Indonesia and the Philippines. For the investor, such instability brings uncertainty and is hence "worrying", he said.

Religious instability is also a cause for concern, what with three major religions - Christianity, Islam and Buddhism - being in close proximity to each other in the region, Mr Tay said.

Another hurdle the AEC has to overcome is corruption, which is present in most Asean countries.

While Singapore may be corruption-free, the same cannot be said for its neighbours, which have been scarcely influenced by Singapore's "integrous" government, Mr Tay said. As a result, doing business in those countries and "following their practices and cultures" will be a concern.

That being said, it is certainly not all doom and gloom for the AEC. There may be challenges, but they can be overcome, Dr Wolle reassured the symposium participants.

The two speakers also allayed concerns raised by the participants, such as the growing nationalism in Asean countries which some believe may hinder regional economic integration.

"I don't see nationalism as a threat," Mr Tay said. Granted, there are instances of nationalism, he said, but "in the face of strong challenges, the 10 countries without fail come together".

He gave the example of Asean members issuing a joint statement during the Spratly Islands dispute with China. Besides, free trade agreements with other economies also serve as incentive for Asean countries to work together, he said.

Despite the challenges, the AEC seems to be largely on schedule for its expected formation in end-2015, according to Mr Tay. Dr Wolle agreed, adding that the pace is realistic given the circumstances.

The integration is expected to bring about a single market and production base for businesses. Each AEC member will bring to the table its own capabilities and expertise and complement each other, Mr Tay said.

"As singular countries, none of the Asean countries are 100 per cent competent," he said. "But when you put them together, all of a sudden the investment makes sense."

"They are 10 different pieces of a jigsaw puzzle which gives you the holistic supply chain," he added. He believes the AEC will, in time to come, gain economic and political clout and inevitably become a force to be reckoned with.

The Stars Symposium is co-organised by Temasek Holdings and the Stars Foundation. It targets talents who are earmarked to be leaders in their organisations. This year, more than 100 participants from 25 countries are attending the four-day event which ends on Wednesday.