ASEAN Community 2025: Moving forward to obtain an Integrated Economical Region by : Cynthia Sipahutar

ASEAN integration is once again being challenged due to its preparedness in achieving the goals of ASEAN Community 2015. Elite sectors of each member-states are dealing with several of challenges to attain the next year’ program and begin to reaffirm and rebuild the clauses from each pillars for the upcoming plan by post 2015 until year 2025. International community started to realize and become fully aware of the emerging market that have grown in the Southeast Asia region. Economic sector and its developing market have grown in a larger scale and its role become significantly important for the global market resilience. Since ASEAN established in 6 August 1967 with the birth of Bangkok Declaration, this regional association promised to build a united and integrated region where single market approach and non-tariff barrier will be compromise among the AMCs (ASEAN Member Countries) for long-term implementation. ASEAN Economic Community 2015 was formed in order to boost and embrace economic stability and prosperity among ASEAN citizens.

The ASEAN Economic Community blueprint stated four (4) strategic and specified actions in order to wide-spreading the achievement to each of the AMCs economic aspects, namely (i) Single Market and Production Base; (ii) Competitive Economic Region; (iii) Equitable Economic Development; and (iv) Integration into the Global Economy. Obstacles and challenges that ASEAN fear the most are the application and compliance among national department in each state. ASEAN countries obviously consist of variety and diversify backgrounds when it comes to economic sector. Singapore, Malaysia, and Brunei are the three countries that developed well enough compare to other AMCs in the region and should easily adapt with the ongoing growth towards ASEAN Economic Community. However, the stumbling blocks begins when reaching the points of realizing financial services liberalization, capital account liberalization, capital market developments, and payment settlement systems within AMCs’ national financial and market system. The fact where ASEAN also consist of under-developing and developing countries such as the LCMV countries and Indonesia, Thailand, and the Philippines is the most basic argument and reason ASEAN should rebuild and re-plan a detailed proposal without eliminating essences of AEC 2015 final purposes.

In forming economic sustainable development within ASEAN circular and as well as defending the resilience of global market, AMCs leaders envision to create schedules and programs to support the continuance of AEC blueprint without depleting the fundamental essence of its purposes and goals. To develop the AEC’s post-2015 vision in which it scheduled by the end of 2025, AEC bring a 10-year framework consist of five interconnected and mutually based on the 2008 created AEC blueprint into existence. The five proposed pillars and elements of AEC 20125 are: (a) An Integrated and Highly Cohesive Economy; (b) Competitive, Innovative and Dynamic ASEAN; (c) Resilient, Inclusive, People-Oriented and People-Centered ASEAN; (d) Enhanced Sectorial Integration and Cooperation; and (e) Global ASEAN.

It has been awarded that ASEAN integration on trade related movement into a single-market community and implementation of non-trade barriers nearly accomplished and shifting into a new whole level of integration. Nevertheless, several of points in this pillar are necessary to be re-affirmed and re-focus back again to complete the challenging agenda within the post-2015 proposal program. Some of the key elements that urgently required to finished are: financial services liberalization and capital market development and integration, financial inclusion, and taxation issues.

As one of the key actor in administering the financial liberalization and either developing or integrating capital account market in the region, Bank Indonesia (Indonesia’s central bank) has the mandate to supervise consumer-banking service and insurance services both in city and district area. AMCs including Indonesia’s banking system services must bear into its mind that by improvising and strengthening each of the national bank in the country is a priority to build a cohesive competition in the region. By doing so, countries with indifference capability are without any doubt able to increase developing conditions in financial liberalization and capital account market without being anxious about economic gap and competency diversity within the AMCs circle.

Thus, the priorities for financial services and integration post-2015 will be including the financial stability infrastructure by emending regulations among AMCs, supporting capacity building and technical assistance especially for the developing, under-developing countries and as well as newer member states (e.g. Timor Leste issued to join), financial inclusion and literacy initiatives to enlarge amount of capable investors and its issuer base that have not been touched by economic dispute settlement in ASEAN, intensifying macroeconomic surveillance within ASEAN and ASEAN+3 relations and holding an intensive and educational studies related to form economic integration in regional area with an additional information for countries who need special preparedness in order to eliminate cultural shock and economic instability due to the financial liberalization.

The principle of non-trade barriers including the application of minimum tariffs is indeed an urgent discussion among member states in ASEAN. The clause from the previous 2015 blueprint demanded the completion of bilateral agreement to avoid such double taxation tariffs that might occur among AMCS. The proposed program for post-2015 should be re-negotiating more further to produces a cohesive, legally binding and shows greater technical commonality on tariffs treaties. In addition, AMCs is highly advised to treat every ASEAN member states (including newer member or under-developing member states) with the absence of discriminatory behavior.

Due to the evolving of time and a constant change of financial environment in ASEAN, providing high-access of formal financial system to support the creation of impartial economic advancement is being put forward for consideration in the 2025 program. Within this program, local government with the support from its specified department is required to make adequate facilitation such as education transfer on financial knowledge and information (e.g. the importance of savings and its benefits). Since financial inclusion have never been discussed further in the AEC 2015 blueprint and by fulfilling the elimination of economic gap among the regional countries, the ASEAN Finance Ministers endorsed a conference held specifically to discuss intensely about the realization of financial inclusion and financial literacy among ASEAN countries. With the ongoing process of negotiation and talks, ASEAN countries, such as Myanmar and Viet Nam, demonstrate its best performance on economic sector (with growth of 7.8% and predicted to continue next year). It happened simultaneously with the implementation of free-flow market by the two countries where investors are become more likely to investing its stock market.

The global market community such as the European Union (one of the largest and oldest regional organization in the world) appreciates outstanding performance by ASEAN countries in attaining its developing economic integration and consolidation whereas EU itself started to decline caused by its political turbulence in East Europe and financial debt crises in Greece and Spain. Without any doubt, ASEAN could turn out into the next key player for defending the global market resilience and main partner/negotiator in most of international economic forums. Long story short, with the firm grip of ASEAN Charter and its pillars (ASEAN Economic Community blueprint, particularly for economic aspect) ASEAN member states are inevitably to achieve its longing aspiration, the actual ASEAN Community.