Through this whole year, the country will be hosting all the meetings of the ASEAN. It is the regional association’s 50th year and an important vantage point for looking at the possibilities economic integration offers down the road.
Over the last five decades, the ASEAN has proven to be the most successful regional framework among the developing countries. Although the ASEAN grappled with its nature and goals in the first few years, sustained cooperation brought focus to the association’s work. Today, the ASEAN is committed to build an “economic community” that will produce the economies of scale to be competitive with the other regions of the world.
The ASEAN Free Trade Area (AFTA), which came into full effect in 2015, provides a strong platform for more intensive economic regionalism in the years to come. The platform enhanced intra-regional trade and enabled closer integration between our enterprises.
Trade accounts for nearly a third of the GDP of the association’s member countries. In a world threatened by the clouds of rising protectionism, intra-regional trade secures the basis for growth in the region.
It is now impossible to imagine the region’s economies without the AFTA framework. Our markets have reached a point of integration that it is impossible to step back to autarky.
In the transition from AFTA to a full-blown economic community, the association is undertaking several initiatives beyond open trade. We are jointly promoting E-commerce in the region, deepening connectivity (both digitally and physically), supporting region-wide infrastructure development and jointly enhancing the region’s consumer markets.
The ASEAN encompasses a market of 600 million people or eight percent of the world’s population. That is a young market and one with rising disposable incomes. The ASEAN countries have the 7th highest GDP in the world and constitute the 4th largest exporting region. The region’s labor force, estimated at about 300 million, is the largest in the world.
The economies of the region are among the fastest growing in the world, with the Philippines leading the pack by posting a 6.8 percent growth rate last year. This makes Southeast Asia a leading engine for global growth.
By keeping our growth robust, we will help the global economy recover its own growth momentum. Should the global economy perk up from low-growth phase it is now in. When the world economy perks up, our own trade-driven economies could further escalate their growth rates.
It is important not to equate regionalism with protectionism. The Southeast Asian regional market is not exclusionary. Its borders are open and the member-states equally aspire to promote inclusive growth. This is the reason the ASEAN is actively seeking to deepen its trade partnerships with other countries such as Australia, China, India, Japan, New Zealand and South Korea within the framework of the Regional Comprehensive Economic Partnership (RCEP).
With the Trump administration turning its back on the Trans-Pacific Partnership (TPP), the region has now accepted responsibility for carrying on with the vision of broad and intensive trade partnerships. With the US seemingly turning inward, the Asian economies are turning to such institutions as the Asian Infrastructure Investment Bank (AIIB) to achieve the goal of heightened cooperation in investments and finance.
The ASEAN’s greatest asset is its young labor force. That labor force is estimated to be 300 million-strong. It is talented, cosmopolitan and raring to innovate. That strong asset assures the region continued robust economic expansion and improving competitiveness.
While the labor force in Europe and Japan rapidly ages, the ASEAN economies are ready to step in and provide the productivity the global economy requires.
This week, ASEAN finance ministers and central bank governors convene in Cebu for their annual meeting. They will share experiences and concerns. High on the agenda is mobilizing the financial resources required to improve infrastructure across the region.
This is an important meeting to observe. The ministers will refine the AEC Blueprint 2025 and the Master Plan on ASEAN Connectivity 2025. This involves harmonizing customs procedures towards the development of the ASEAN Single Window. Harmonization of customs procedures will further enhance trade facilitation.
The governments in the region appear ready to take regionalism forward. The question now is whether our private enterprises are ready to respond with the same enthusiasm.
Since the 1990s, development theorists have anticipated the rise of the regional economy and the corresponding decline of national economies. Regional economies possess the market mass to make economies more efficient. They can better mobilize capital and more efficiently deploy resources.
For many years, the model for building regional economies has been the European Union (EU). It was the first experiment in regional economic integration. Brexit and the fiscal failures of EU member-countries such as Greece threw a large cloud of doubt over the feasibility of building regional economies.
Despite Brexit and even if Greece finally goes into bankruptcy, the EU remains a strong experiment. Although far-right nationalist parties challenge the regional governance framework of the EU, the experiment has had more successes than failures. It is in no danger of dissipating. The advantages outweigh the disadvantages.
With Donald Trump threatening to build his wall on the border with Mexico and scuttling the North American Free Trade Agreement (NAFTA) to please his redneck political base rooted in the obsolete sections of the American economy, ASEAN stands as the more viable experiment in regional integration after Europe.
We have learned enough from the experiences of the EU and NAFTA to avoid the weaknesses and enhance the strengths of regional economic integration. So far, we see in Southeast Asia the beginnings of a strong regional economic bloc.