WHILE the Association of Southeast Asian Nation (Asean) is touted to be the next economic powerhouse among global economies, a senior financial institution official said more work needs to be done to ensure that the Asean Economic Community (AEC) integration that commences this year will actually bring about a stronger and more prosperous region.
Jose Isidro Camacho, Credit Suisse vice chairman for Asia Pacific division, said that the real integration among Asean member nations has yet to fully materialize despite the long list of agreements reached since its establishment in 1967.
Speaking at The Manila Times 2nd Business Forum on Wednesday, Camacho said: “It can be a lot better if only we were a more integrated economic region, which we are not . . . The question in my mind is what tangible outcomes have we really accomplished with all the declarations and agreements.”
The Credit Suisse official stressed that in spite of the removal of tariffs on almost all goods within the region, “more work is needed on trade facilitation, uniform customs procedures and removal of non-tariff measures to truly realize a seamless production base.”
He noted that the integration should include elimination of visa requirements for inter-Asean travel to encourage greater interaction, understanding and awareness as tourism and investments are boosted, just like what is observed within the European Union.
Camacho explained that the five clauses of the AEC 2015 are the free flow of goods, services, capital, investments and labor.
In terms of goods, Camacho reiterated that the region is “almost there” with the zero tariffs in almost all goods, although work still needs to be done on the non-tariff issues.
On services, he said there has been “very little progress” in the vision to provide services in air transport, healthcare, tourism and logistics which can upgrade scale and efficiency as well as bring about cheaper accommodation of such services.
Also, he said not much has been accomplished on the capital side to have a more integrated capital market for the region with a unified membership of exchange commissions and stock exchanges intra-Asean.
To date, the Philippines and a handful of Asean countries have yet to be included in the International Organization of Securities Commissions (IOSCO)—an association of corporate regulators that manages the securities and futures markets globally.
There has been no progress as well in investments, and it may have even regressed in some economies, Camacho said.
As for skilled labor, Camacho said: “Given the various stages of economic development and different levels of education amongst Asean members, an expedited flow of skilled labor would have been helpful in deploying excess skills from one Asean economy to another. But instead, in recent times, we have seen even more restrictions on foreign labor in some of the Asean countries.”
But all of these problems may be addressed by starting with issuing an Asean visa to facilitate travel within the region for non-Asean individuals, as well as adopting the concept of Asean citizenship.
He said the issuance of an Asean visa will link trade, tourism and investments across all member countries, while accepting Asean citizenship can bring closer the economic proximity of each Asean member.
In the next few years, Camacho believes that “Asean will continue its economic growth momentum due to a number of megatrends that are unlikely to reverse.”
These “megatrend” factors include the fast pace of urbanization within member countries, an improving Asean consumer base, the amount of infrastructure to be built, the rise of high net worth individuals in the region, Asean having rich resources which makes it a major supplier of commodities, and the emergence of Asean multinationals and brands.
Asean is an economic region with a 600 million population, generating a combined gross domestic product of about $2.4 trillion, which is 5.5 percent of the world GDP. In the last five years, the region has been growing by 5.6-percent annually.