1.Basic Facts & Figures about ASEAN 2.The ASEAN Community & AEC 3. Has AEC benefitted ASEAN? 4.The Private Sector 5.The Challenges 6.The ASEAN Vision 2025 7.Conclusion

1. ASEAN Economic
Community: Present
& Future
Pushpanathan Sundram
Managing Director, Asia Pacific
EAS Strategies
Senior Fellow, Singapore Institute of
International Affairs
4th OECD-AMRO-ADB Asian Regional Roundtable
Tokyo, 14-15 May, 2015

2. 1. Basic Facts & Figures about
ASEAN
2. The ASEAN Community & AEC
3. Has AEC benefitted ASEAN?
4. The Private Sector
5. The Challenges
6. The ASEAN Vision 2025
7. Conclusion
2
Agenda

3. 3
1. Basic Facts & Figures
Total FDI USD 122.4 billion
Intra ASEAN USD21.8 billion
Tourism Arrivals 89.3
million
Intra ASEAN 39.9 million
Total Trade USD2,511
billion
Intra ASEAN USD 608 billion
Ratio to GDP 104.7%
GDP USD2,398 billion
GDP growth 5.1%
Per capita USD 3,837
Population 625
million
Youth 60%

4. ASEAN Integration Milestones
Birth of
ASEAN
ASEAN
Preferential
Trading
Arrangement
ASEAN
Free
Trade Area
ASEAN
Vision 2020 AEC
Blueprint
Vientiane
Plan of
Action
ASEAN
Framework
Agreement
on Services
1967 1992 1997 20031998 2009
Bali Concord II
(ASEAN
Community)
Roadmap for an
ASEAN
Community –
APSC/ASCC
Blueprint
1977 1995
ASEAN
Investment
Agreement
Hanoi
Plan of
Action
2004 20082007
ASEAN
Charter
2010
Bali Concord
III
(RCEP/AFE
ED)
2012
Master Plan on
ASEAN
Connectivity

5. 5
2. The ASEAN Community & AEC

6. The AEC Structure
•FTAs
•Global Supply Networks
•SME Development
•Initiative for ASEAN Integration
• Competition Policy
• Consumer Protection
• IPR, Taxation
• e-Commerce
• Infrastructure
•Free flow of goods
•Free flow of services
•Free flow of investment
•Freer flow of capital
•Free flow of skilled labour
•PIS & Food,Agri & Forestry Single Market
& Production
Base
Competitive
Economic
Region
Linkages with
Global
Economy
Equitable
Economic
Development
6

7. 7
Status of AEC Implementation
 ASEAN-wide: Implementation rate of Phases I to III (2008-
2013) is 80.7% or 334 out of 414 ASEAN-wide measures.
 For Phase IV (2014-2015), 38.7% or 82 out of 212 measures
have been implemented (As of December 2014).
 Member States are targeting to complete 95% of integration
measures by end of 2015.
 Rest of the measures will be implemented by 2018
 AEC is work in progress

8. Desired Impact of AEC
AEC key objectives is to improve business environment
(desired impact):
 increase ASEAN’s attractiveness as an investment
destination – jobs creation, technology
advancement
 promote cross trade and investment across ASEAN
– leveraging on strengths – sharing resources, ease
of doing business
 provide business opportunities including for SMEs –
inclusivity within ASEAN + wider market access
through FTAs;
 foundation for strong economic base – resilient and
stable economy: legacy for future generation
ASEAN as
A Single
Production
Base

9. Single Market & Production Base
Key drivers to promote Single Production Base through liberalization:
 elimination of import duties for intra-ASEAN trade
 removal of equity restrictions on services and investments in
ASEAN
 removal of other forms of impediments, such as limiting the
number of services providers, etc.
 facilitation of intra-ASEAN trade and investment by removing
cumbersome procedures, rules and regulations
 facilitating the mobility of skilled people
The focus is to remove, to the maximum extent possible, barriers
within the region to facilitate trade and economic activities - to allow
business to operate in a competitive environment and allow firms to
benefit from economies of scale.

10. Trade in Goods Liberalization
10
Elimination of Duties
ASEAN-6
99.65% duties eliminated
(1 January 2010)
CLMV
93% duties eliminated
(1 January 2015; 7% by 2018)
ASEAN Trade in Goods Agreement (ATIGA)
2010
 Removal of non-tariff barriers (NTBs)
 Harmonization of standards to international standards, practices and guides
and harmonization of conformity assessments
 ASEAN Single Window in 7 ASEAN countries - facilitate cross-border trade
by enabling electronic data exchange for cargo clearance and release
Domestic taxes
e.g. excise duty,
export tax can
be maintained.

11. Services Sector Liberalization
11
 The ASEAN Framework
Agreement on Services
(AFAS) was signed on 15
December 1995.
 Liberalization of 128 sub-
sectors by 2015 covering 4
modes of supply under AFAS
with FLEXIBILITY
Sectors for services liberalization :
 Business Services;
 Communication Services;
 Construction and Related Engineering
Services;
 Distribution Services;
 Educational Services;
 Environmental Services;
 Financial Services;
 Health Related and Social Services;
 Tourism and Travel related Services;
 Recreational, Cultural and Sporting
Services;
 Transport Services; and
 Other Services Not Included Elsewhere.

12. Progressive Liberalization of Service Sector
AFAS Packages Date of signing
1st Package 15 Dec 1997, Kuala Lumpur, Malaysia
2nd Package 16 December 1998, Ha Noi, Viet Nam
3rd Package 31 December 2001 (Ad-Referendum Signing);
4th Package 3 September 2004, Jakarta, Indonesia
5th Package 8 December 2006, Cebu, the Philippines
6th Package 19 November 2007, Singapore
7th Package 26 February 2009, Cha-am, Thailand
8th Package 28 October 2010, Ha Noi, Viet Nam
9th Package 26 August 2014, Nay Pyi Taw, Myanmar
•Final AFAS Package: 2015

13. Facilitating Movement of Professionals
and Talents
13
ASEAN Movement of Natural Persons Agreement (MNP)
 Business Visitors
 Intra-Corporate Transferees
 Contractual Service Suppliers
Mutual Recognition Arrangements (MRA)
 Engineering Services
 Nursing
 Architecture
 Accountancy
 Medical Practitioners
 Dental
 Surveying
Greater mobility for
skilled workers and
professionals –
Work is on-going to
operationalize the
MNP Agreement and
the various MRAs

14. 14
 Mutual Recognition Arrangements (MRAs): Engineering Services,
Architecture, Accountancy, Nursing, Medical & Dental Practitioners
and Surveying.
 MRAs provide for recognition of qualification, authorization, licensing
and certification to enable service providers to work in different
ASEAN Member States in a regulated manner.
 For example, to date, there are:
• 794 ASEAN Chartered Professional Engineers (ACPEs) –
Indonesia (154), Malaysia (199), Myanmar (72), The Philippines
(38), Singapore (218) and Viet Nam (113).
• 203 ASEAN Architects (AAs) – Indonesia (51), Malaysia (32),
Myanmar (12), The Philippines (40), Singapore (58), Thailand (3)
and Viet Nam (7).
Facilitating Movement of Professionals
and Talents

15. ASEAN Comprehensive Investment Agreement
15

16. 16
Protection - ASEAN Comprehensive
Investment Agreement
ACIA provides for protection for investments from being appropriated.
Protection is accorded to the following:
 Moveable and immoveable property and property rights.
 Shares, stocks, bonds and debentures.
 Intellectual property rights and goodwill.
 Claims to money or to any contractual performance related to a
business.
 Rights under contracts, including turnkey, construction, management,
production or revenue sharing contracts.
 Business concessions required to conduct economic activities and
having financial value conferred by law or under a contract.

17. 17
Competitive Economic Region
17
 Intellectual Property Rights (IPR):
• strengthening domestic IP systems that deliver timely,
quality and accessible IP services through a strong IP
regime; and
• acceding to core international agreements.
 Competition Policy - National competition law in all Member
States
 Consumer Protection
• Focus on ensure consumer legislation in all Member
States, consumer access to information, information
exchange mechanism for recalled/banned products and
consumer redress mechanism.
 Taxation - Network of bilateral agreements to address
issues on double-taxation.

18. Cooperation in Other Economic Sectors
(Strengthening Connectivity)
18
 Development of rail/road/highways/
port networks
 Regional power transmission grid &
Trans-ASEAN gas pipeline
 ICT – Broadband corridors
 Transport Agreements/Protocols, e.g.
• ASEAN Framework Agreement
on Multimodal Transport (AFAMT)
• ASEAN Framework Agreement
on Facilitation of Goods in Transit
(AFAFGIT)
• ASEAN Framework Agreement
on the Facilitation of Inter-State
Transport (AFAFIST)
• Open Sky Policy / Single Aviation
Market
• Single Shipping Market

19. 19
ASEAN Integration into the Global
Economy
* EIF: entry into force
** Realized: Tariffs for all products in the Normal Track and Sensitive Track reaches the lowest level or totally eliminated as per
commitment in the Trade in Goods Agreement, mainly by ASEAN-6 and FTA Partner

20. 20
ASEAN Integration into the Global Economy
Besides the 5 ASEAN FTAs, ASEAN is also enhancing engagement with
other Dialogue Partners:
 USA: Trade and Investment Facilitation Arrangement (TIFA) and
Enhanced Economic Engagement (E3) Initiative.
 Canada: Trade and Investment Facilitation Arrangement (TIFA)
 Russia: Roadmap for Trade and Investment Cooperation
 Hong Kong SAR: On-going negotiations for ASEAN-HK FTA

21. Regional Comprehensive Economic Partnership
(RCEP)
21
The scope and coverage of
RCEP goes beyond the
ASEAN+1 FTAs:
 Comprehensive market access
 Trade and business facilitation
 Trade remedies
 Economic cooperation
 Trade in Goods, Trade in
Services and Investments
 Economic and technical
cooperation
 Competition policy and
Intellectual property rights
 Dispute settlement mechanism
 E-commerce
 The RCEP is not an exclusive
regional grouping.
 Other countries can participate
only after the existing 16
countries have completed the
negotiations.
 Since 2013, SEVEN rounds of
negotiations have been held.
Substantial conclusion of
negotiations by 2015.

22. Regional Economic Architecture
22

23. 3. Has AEC Benefitted ASEAN?
The regional integration has benefitted ASEAN:
 Expansion in trade and investments, including intra-ASEAN trade
and investment.
 Sustained FDI flows to the region and technology transfer.
 Job creation and sustained economic growth.
 Economic development of newer members of ASEAN.
 ASEAN is well positioned in the center of global supply chain
activities.
 Developed strong trade links with major regional economies opening
new business opportunities.

24. 24
ASEAN: Trade in Goods
Source: AEC Chart book 2013
3,000
Total Trade
Extra-ASEAN
Intra-ASEAN
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
2,500
2,000
1,500
1,000
500
0
(USD Billion)

25. 25
USD Million
30,000
28,000
26,000
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
EU
Japan
ASEAN
USA
China
2000 2005 2008 2009 2010 2011 2012
Total
Extra-ASEAN
Intra-ASEAN
20,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
120,000
100,000
80,000
60,000
40,000
Source: AEC Chart book 2013
USD Million
ASEAN: Foreign Direct Investments

26. 26
Collectively, ASEAN represents:
 7th largest economy in the world, with combined GDP of US$2.5
trillion.
 A major trading bloc with total trade of US$2.51 trillion. Intra-ASEAN
trade contributing 24% of ASEAN total trade (2013).
 Total FDI inflows to ASEAN US$122 billion (2013), Intra-ASEAN
investments (17%).
 Dynamic production base and business for global companies.
 620 million people, with rising per capita income US$3,800 (2013),
rising demand for consumer goods and services.
 3rd largest labor market in the world.
AEC Gains

27. 4. The Private Sector
 Collaboration with the private sector is crucial in identifying
problem and areas of concerns towards the establishment of
AEC.
 Discussion and dialogues have taken place through different
private sector entities such as the ASEAN Business Advisory
Council (ASEAN-BAC).
 ASEAN-BAC has played a strategic role in facilitating
engagement with the private sector, particularly with the
ASEAN Economic Ministers.
27

28. Private Sector Perception of ASEAN
 The AEC has created conducive environment for local ASEAN companies to
increase sales, open operations outside their domestic market, and
sourcing on a region wide basis.
 MNCs will only invest if there is a large consumer market and efficient
production networks.
 Integration is still weak and barriers to trade remain, especially NTBs.
Financial integration is not moving fast to complement trade liberalization.
 Compliance to international standards and practices are still falling short,
and resulting in companies having to bear additional costs to meet the
requirements of the individual ASEAN Member States.
 Policies on intellectual property rights and competition need to be further
upgraded and streamlined within the region.
 Need for further enhancement of regional infrastructure – expansion of
transportation, telecommunications and energy linkages.
28

29. 29
5. Challenges in ASEAN Integration
 Availability of skilled workforce. Inflow of FDIs to the region has
placed tremendous pressure on countries in the region.
 ASEAN has been very cautious on adopting the EU-style free
movement of labor, whereby, regardless of skills and
qualifications, the EU citizens can be freely employed in any
other EU countries.
 What ASEAN has done via the MRAs is to enable ASEAN
professionals/talents/service providers to work in different
Member States in a regulated manner. Compliance to domestic
regulations is one of the main challenges in the mobility of
skilled workforce and professionals.

30. 30
Challenges in ASEAN Integration
 Strengthening and developing necessary infrastructure facilities to
support the AEC. This involves both hard and soft infrastructures.
Building physical connectivity requires huge funding, for example,
upgrading ports, roads, rails, and airports.
 Promoting Public Private Sector Partnership as one possible
approach to develop hard infrastructures in the region.
 Balancing competing interests with internal integration and integration
with FTA partners.

31. 6. Vision 2025
31
 Financial Services Liberalisation and
Capital Market Development and
Integration;
 Towards Facilitative Standards and
Conformance;
 Trade Facilitation;
 Enhancing Participation in Global
Value Chains (GVCs);
 Competition Policy;
 Productivity-Driven Growth,
Innovation, Research and
Development and Technology
Commercialisation;
 Taxation Issues;
 Sustainable Development;
 Strengthening the Role of the
Private Sector;
 Public Private Partnership (PPP);
 Narrowing the Development Gaps;
 Financial Inclusion [Access to
Financing for Individuals and
MSMEs];
 Engagement with Civil Society;
 Finance;
 Energy, Power and Utilities;
 Tourism;
 Minerals;
 Science and Technology; and
 Healthcare.
Elements incorporated under the Framework include:

32. 7. Conclusion
 The AEC has created a conducive environment for local
ASEAN companies to increase sales, open operations outside
their domestic market, and sourcing on a region-wide basis.
 Fully cognizant of the remaining impediments to optimal
realization of commitments under AEC Blueprint, ASEAN is
making efforts to effectively address these.
 Engagement with private sectors is key in improving the
“coherence”, transparency and synergies of government
policies and business across actions across industries and
sectors in the ASEAN region”
32

33. Thank you
33