The Association of Southeast Asian Nations should be an economic powerhouse. Asean’s population of 625m is set to grow by 120m before 2030, adding to an abundant pool of labour that complements bounteous natural resources. Yet the 10-member region punches well below its weight: it accounts for 3 per cent of global gross domestic product but is home to 9 per cent of the world’s population. The underachievement derives in part from political and regulatory diversity that undermines regional competitiveness and inhibits inflows of investment into manufacturing and infrastructure.
Thus the launch of the Asean Economic Community, due by the end of this year, represents a milestone. The AEC aims to accelerate integration and establish a single market and production base. Hopes for the potential on offer are accentuated by a slowdown that has depressed the region’s GDP growth rate to its lowest level since the 2008/09 financial crisis.
On paper, the AEC’s aspirations resemble the early days of the European Economic Community. A blueprint agreed in 2007 envisaged a single market and production base, which included measures to standardise trade tariffs and dismantle non-tariff barriers, plus a free flow of services and investment. It allowed for more liberal migrations of skilled labour and freer interchanges of capital.