SEGMENT 1:

1.

What is ASEAN Economic Community?

2.
How well do you think Economic Integration has been established among the
ASEAN countries ?
3.
How significant free trade could play a role as a stimulus to regional
competitiveness ?
4.

What main elements could support the progress in economic integration ?

5.

What are strengths of ASEAN? When they integrate more ?

6.
How well AEC 2015 could empower ASEAN to remain a competitive player in the
regional & global chains ?

1.
In 2003, under the Bali Concord II, ASEAN agreed to create the ASEAN Economic Community
(AEC) by 2015. The AEC will establish ASEAN as a single market and production base that, in
theory, will make the regional grouping more dynamic and competitive, leading to greater
economic development.
The planned ASEAN single market and production base will comprise five principle elements: the
free flow of goods, services, investment, capital and skilled labor. In theory, a single market has
many benefits.

2.
the AEC Scorecard at the moment shows the region behind schedule, having achieved
only 73.6% of Phase 1 goals, it still offers a big opportunity in Asia as it will be viewed
as a single large market. Further. the integration will help increase Asean
competitiveness with China and India. The delayed issues, such as agriculture, nontariff barriers, integration of the less-developed CLMV (Cambodia, Laos, Myanmar
(Burma), Vietnam) members, and financial integration remain to be worked out.
According to the US International Trade Commission report on AEC
(www.usasean.org/ASEAN/pub4176.pdf), the challenges were seen in the area of
importing and exporting which vary widely among Asean members. For example,
procedures for trading are relatively easy to complete in Singapore, Thailand, and
Malaysia, but very difficult in Laos and Cambodia. The quality of logistics services also

varies among the Asean members, such as customs brokerage, freight forwarding, and
express delivery. Logistics services are world-class in Singapore but poor in Laos,
Cambodia, and Burma. In many Asean countries, restrictive regulations hamper the
delivery of high-quality logistics services.
After more than four decades of conscious efforts for greater integration of their economies, the five original
Asean membersIndonesia, Philippines, Malaysia, Singapore and Thailandfind their economies no closer to
each other than they were when they first formally got together in 1967.
Asean was established in 1967, but 25 years elapsed before the organization started integrating its member
economies through the establishment of the Asean Free Trade Area (Afta) in 1992.
Nothing much happened and it took another 11 years before Asean leaders in 2003 resolved to establish an
Asean Economic Community (AEC) as a single production base and market by 2020. In 2007, this date was
advanced to 2015.

A 2013 survey by the Economist of 147 big companies operating in the Asean region shows that only 6.3
percent were expecting that the AEC could be put in place by 2015.

A 2013 study by the Asian Development Bank and Institute of Southeast Asian Studies cautions that: Although
the self-imposed deadline for the realization of the Asean Economic Community is 2015, it should not be
viewed as a hard target. One should not expect 2015 to see Asean suddenly transformed, its nature and
processes abruptly changed, its members interests substantially altered. Rather, 2015 should be viewed more
as a milestone yeara measure of a work in progressrather than as a hard target year.
The study concludes that Asean has no prospect of coming close to (a) single market by the AECs 2015
deadlineor even by 2020 or 2025.
There you have it. Governments, business leaders, journalists, research centers and financial institutions
agree that Asean 2015 will not take place. Why has it been a long and tortuous effort for Asean economic
integration to come about?

A specter haunting Aseans path toward integration are the social inequalities within and between Asean
countries.
Asean economies have been trading more with non-Asean economies than with themselves by a ratio of three
to one.

3.
Proponents believe that with the free trade and flow of all factors of production between member
countries, the allocation of all the factors of production will be more efficient, and thus lead to
increased productivity.

Benefits of the Asean Economic Community (AEC)

It will open more regional cooperation and will improve the

scale efficiencies, dynamism and competitiveness of Asean

members. AEC will enable easier movement of goods, services,

investment, capital and people. Ultimately, it will offer new ways

of coordinating supply chains, or access to new markets for
established products.

All Asean countries are more important to foreign investors if

they are considered as one node in a larger regional market of
nearly 600 million people - a single market.

Tourism opportunity.

Internationalization of health care under the AEC. Health care is one of

the sectors to be internationalized.
the AEC is coming at a time when it is recognized thatinvestment in
emerging markets is more desirable than in the US and Europe. "There
will be no shortage of funding coming from within Asean, the Asia Pacific or
even the US and Europe. These investments can bring about badly needed
capital for some countries, allowing them to leapfrog from the 20th century into
the 21st in terms of competition in mature countries such as Thailand and
Malaysia", said the report.

4.
Infrastructure development among the Asean countries: both the development of
hard infrastructure such as roads, ports, airports, etc. and soft infrastructure such as
human resource and training are being concentrated
Hard infrastructure: Many countries' governments have plans to upgrade their
infrastructure, such as the plan of three highways linking Asean.
For soft infrastructure, better English speaking countries in Asean, such as Singapore,
Malaysia and the Philippines will have an advantage over countries like Thailand.

The banking sector will particularly need to stay ahead of the game to facilitate
investors and to support their moves throughout the region. Singaporean and
Malaysian banks and telecoms, for instance, have invested heavily in the region and
seem to be slightly ahead of other competitors in better preparing themselves for the
AEC.

5.
The strength of ASEAN is at its greatest when members work together, to be able to negotiate as a group.

The ten countries of the Association of Southeast Asian Nations

(ASEAN) represent a collective market of 620 million people,
significantly larger than that of North America, Latin America and
the Caribbean, the eurozone, or the Middle East and North Africa.
They are home to a young, large, and growing labor pool, as well
as a growing and increasingly consumption-oriented middle class.
The ASEAN countries posted a combined GDP of over $2.2 trillion in
2012 -- larger than Russias GDP and almost the same size as
Brazils -- and many economists expect that number to double by
2020.

6.

SEGMENT 2:

7.
How do you see the current Indonesia's economic performance compare to its
neighbouring countries in ASEAN?
8.

What will be the short term macro economic challenges the region is facing?

9. What Indonesia must prioritize to steer the economies towards sustainable growth, in
keeping up with the neighbouring countries in ASEAN region, related to the mutual benefit
integration ?
10. How well prepared are we in integrating ourselves into AEC 2015?

11. Is Asia still considered to be an important player in the global economy?

12. How favourable the current economic conditions in Asia?

7.

Giant Indonesia soared during the last half decade, boasting high
growth, low inflation, an extremely low debt-to-GDP ratio, strong
foreign exchange reserves, and a top-performing stock market.

8.
Structural impediments to inclusive growth rising inequality, large gaps in social protection and
inadequate investment in infrastructure and agriculture.
The region will have to adapt to the current global economic situation and should step-up public
social spending will be key to the regional response. Policies to enhance access to high-quality
education, health and social protection could contribute to enhancing the size of the consuming
class and support economic growth.

Macroeconomic Indicators section informs about important macroeconomic ratios and social
statistics (such as inflation, gross domestic product and unemployment), that provide useful insight
into the current state of the Indonesian economy.

9.
Indonesia should have a new approach to macroeconomic policymaking in order to balance the
objective of stability with that of sustainable and equitable growth. Increase domestic demand to
compensate for weaker demand from developed countries, that not all capital inflows are beneficial,
the need to enhance productive capacities by investing in human capital and infrastructure, and the
imperative to reduce poverty.

10.
According to a recent Singapore Straits Times news article published on January 11, 2014
on the AEC, the prognosis on each of the countrys readiness is as follows:

Singapore All set and helping the region

Malaysia Scepticism over 2015 deadline
Indonesia Handicaps to overcome
Thailand Firms lack global outlook
Philippines AEC? Whats that ?
Vietnam Workers still far from ready
Laos Smaller businesses feel the heat
Cambodia Eager for more businesses
Myanmar Raising GDP, an uphill battle

Brunei Reaffirms its commitment to the AEC agenda

11.
Yes. Asia is not just about China and India. It is a fantastic consumption market. The power to consume is
immense (and) the majority of those new customers come from ASEAN.

ASEAN with a population, the third biggest in the world following that of China and India, provides a good
pool of workers and consumers that businesses can take advantage.

As recently as 2008, the economies of Southeast Asia received

roughly less than half as much foreign direct investment as China
did. Four years later, in 2012, they pulled to within spitting
distance ($111 billion versus $121 billion). This surge in
international interest reflects the regions attractive demographics
and, even more so, its impressive recent economic performance.

12.
Given lingering uncertainties in the global economy, Asean is a bright spot with its favorable macroeconomic
fundamentals and demographics such as GDP growth by an average of 4.7 percent this year (2014) from 5%
in 2013.

While global GDP growth from 2.5% in 2013 to 3.3% in 2014.

ASEANs five core countries -- Indonesia, Malaysia, the Philippines,

Singapore, and Thailand -- have been growing as fast as any other
regional grouping in the world over the past five years.

SEGMENT 3:

13. How well do you think economic integration has been established among the Asia
countries?
14. What efforts should be done, in improving ASEAN competitiveness, from its industrial
readiness, within the global economic framework?
15. How do you see the current Indonesia's economic performance compare to it's
neighboring countries in ASEAN?
16. What challenges and opportunities might be faced by the local industry, after Indonesia
integrated itself to AEC 2015?

13.
Asean was established in 1967, but 25 years elapsed before the organization started integrating its member
economies through the establishment of the Asean Free Trade Area (Afta) in 1992.
Nothing much happened and it took another 11 years before Asean leaders in 2003 resolved to establish an
Asean Economic Community (AEC) as a single production base and market by 2020. In 2007, this date was
advanced to 2015.

A 2013 survey by the Economist of 147 big companies operating in the Asean region shows that only 6.3
percent were expecting that the AEC could be put in place by 2015.

A 2013 study by the Asian Development Bank and Institute of Southeast Asian Studies cautions that: Although
the self-imposed deadline for the realization of the Asean Economic Community is 2015, it should not be
viewed as a hard target. One should not expect 2015 to see Asean suddenly transformed, its nature and

processes abruptly changed, its members interests substantially altered. Rather, 2015 should be viewed more
as a milestone yeara measure of a work in progressrather than as a hard target year.
The study concludes that Asean has no prospect of coming close to (a) single market by the AECs 2015
deadlineor even by 2020 or 2025.
There you have it. Governments, business leaders, journalists, research centers and financial institutions
agree that Asean 2015 will not take place. Why has it been a long and tortuous effort for Asean economic
integration to come about?

14.
Problems of integration
Asean leaders AEC vision is weakened by a strong aversion for a diminished national sovereignty for the sake
of deeper economic integration. National strategies clash with Aseans internal goals. Several members refuse
to lower tariffs on certain critical products. Malaysia insists on protecting its state-owned car and vehicle parts
industries, fearing competition from Thailand.
Indonesia continues to protect its agricultural products while the Philippines refuses to open up its
petrochemical products sector.
Conflicting national strategies, similar export product lines, social and economic inequalities within and
between Asean societies, and moves away from integration pose serious obstacles to realizing the AEC and
reflect the absence of a distinct and unifying regional identity.
Given the diversity of its 10-member economies, there is little that ties (Asean) together naturally.

15.
Indonesias economic growth has softened from 5.7% in 2013 to projected 5% in 2014
which reflects the impact of rising inflation and sharp depreciation of the Rupiah.
Five (5) other countries are expected to have higher growth percentages Philippines,
Myanmar, Cambodia and Laos (up to 7.8% growth).
16.
The first issue is Human resources and industrial relations. Indonesia, like most other ASEAN
members, has an abundance of unskilled labor that flows across the region seeking jobs, mostly
illegally and without protections afforded by law. Unless Indonesia and ASEAN have clear and
strong manpower policies regarding migrant workers, those seeking to work abroad are unlikely
to benefit from an economic community and will remain vulnerable to exploitation.
The second issue is Indonesias weak trade and investment-related policies. Unless Indonesia
has a solid and clear trade and investment policy that protects local initiatives and workers,
regional trade agreements could actually be counterproductive to the countrys economic
development.
The third problem is the imbalanced economic development and competitiveness among ASEAN
members, which may result in some countries dominating others. This imbalance of economic
power will lead to disputes, especially among countries that share land and sea borders, such as
Indonesia, which can be counterproductive to AEC goals.