Unit 4 Macro: Ambitions for ASEAN in next phase of Globalisation

ASEAN is a trade bloc of 10 nations with an aggregate economic size of $2.3 trillion. Their aim is to establish a fully-fledged economic community (AEC) by the end of 2015. The trading bloc’s diversity – ranging from advanced economies like Singapore to developing countries like Myanmar is an interesting feature – who will be the winners and losers from deeper economic integration in the region?

Current members

10 countries - Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam

Economic Background to ASEAN

• ASEAN is a middle income region but with big differences in per capita incomes
• Countries such as Singapore and Brunei enjoy a very high GDP per capita at around USD 49,000 and USD 39,000, respectively, on par with the top tier of developed-market economies. In contrast, Myanmar and Cambodia have a GDP per capita of just below USD 900.
• Region has a population of over 600 million, roughly half that of China’s or India’s and around 9% of the world’s total
• GDP of USD 2.3 trillion in 2012 – around 30% the size of China’s, roughly the same size as that of the UK and 25% larger than India’s. ASEAN GDP accounts for 3% of the world’s total
• 25% of ASEAN trade is intra-regional trade – the aim is to increase this as economic ties deepen and also for a rise in intra-regional FDI flows
• China has emerged as the No. 1 trading partner for ASEAN
• 5 “ASEAN+1” FTAs have been signed, with China, Japan, Korea, India and Australia/New Zealand
• The basics of a single market / economic community

As part of the ASEAN integration plans, barriers to trade in goods and services will be brought down or kept to a minimum. Flows of investment, capital and skilled labour will be facilitated and co-operation in sectors designated as priority integration sectors will be promoted.

1. Free flow of goods and services
2. Freer flow of capital and the Free flow of skilled labour
3. Priority integration sectors
4. Food, agriculture and forestry

This will be added to by establishing regional standards for Competition policy, Consumer protection, Intellectual property rights, Taxation and E-commerce

The ASEAN Infrastructure Fund was established with the Asian Development Bank to fund physical infrastructure projects in ASEAN. An example is the building of a new high speed railway between Malaysia and Singapore.

Video Resources

ASEAN economies continue growth (BBC news, May 2012)