Indonesia must get ready now for the ASEAN Economic Community
April-June 2014
By: Ngurah Swajaya

Despite skepticism and possible delays in implementing all aspects of the ASEAN Economic Community (AEC) blueprint, leaders of the Association of Southeast Asian Nations nonetheless claimed significant progress in actually building a community during the leaders summit in Phnom Penh in November 2012. They firmly set the date for the establishment of the AEC, one of the three mutually reinforcing pillars of the ASEAN Community, as New Year’s Eve 2015. They also reaffirmed that establishing the ASEAN Community is a continuing process that will not end on that day.

The goal of economic community in Southeast Asia has been a long and evolutionary process dating back to 1977. It started with the creation of the ASEAN Preferential Trading Arrangement, followed by the launch of the ASEAN Free Trade Area in 1992 and negotiations for free trade agreements with the grouping’s dialogue partners. Subsequently, the adoption of the AEC blueprint in 2007 set out an agreed roadmap as a guide. In other words, to arrive at where we are today, it took 37 years of deliberation, negotiation, preparation and the development of numerous initiatives at the national and regional level.

The AEC is not only a single market. It is strategically comprised of four mutually supporting components or pillars: a single market and production base, a competitive economic region, equitable economic development and integration into the global economy. As of 2013, the AEC blueprint scorecard indicated that 78 percent of measures and action lines across those four components have been implemented during the past six years. Thus, in the remaining two years – the final phase – around 22 percent remains to be accomplished.

Benefits already seen

What has ASEAN economic integration contributed thus far to Southeast Asia’s economy, including Indonesia? In the past two decades, it generated a significant increase in ASEAN’s total trade, from $429 billion in 1993 to $825 billion in 2003, and around $2.4 trillion in 2011. The share of intra-ASEAN trade as part of the region’s total also increased from 22 percent in 2000 to 25 percent in 2011. As economic integration strengthens further, the hope is that intra-ASEAN trade will grow further.

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