ASSOCIATION of Southeast Asian Nations (Asean) member states need to invest in infrastructure and adopt measures to enhance connectivity for a seamless integration process crucial to achieving high income status, a new study showed.
In a statement released by Philippine Exporters Confederation Inc. on June 2, the Stratbase ADR Institute (ADRi) Special Study—“Asean’s Golden Opportunity: The Future of Southeast Asia”—noted spending on human and physical capital will enable Southeast Asia to surpass the “middle income trap” and maximize the demographic window of opportunity.
“Asean’s continuing economic integration should accelerate the returns on those investments. If existing potentials are harnessed properly and in time, more Asean members may approach, or even achieve, high income status within a generation,” according to the study written by Angelica Mangahas and Weslene Irish Uy of ADRi.
It identified inadequate infrastructure connecting continental Asean as a hurdle the region must pass before a seamless economic union can be realized.
The study said archipelagic countries are also facing connectivity problems within their borders.
Other obstacles include varying regulatory regimes and financial arrangements, lack of financial market integration, as well as domestic restrictions on the movement of labor and capital across member states.
Asean economies are still only partially integrated, preventing member countries from reaping more extensive benefits from the Asean Economic Community (AEC), even after the adoption of sectoral work plans and the implementation of trade facilitation initiatives.
Launched at the end of 2015, the AEC aims to create a single market and production base to facilitate the free movement of goods, services, investment, labor and capital.
“Economic integration has so far been driven by the production networks of multinational corporations and the rise of free trade and investment agreements between Asean and its external partners,” the study said.
Asean member states must continue to work on reducing non-tariff barriers, liberalize trade in services and facilitate foreign direct investments.
Asean consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.