12 Things you should Know about ASEAN Economic Community

By 2015, ten countries in Southeast Asia plan to launch a single market for goods, services, capital and labor, which has the potential to be one of the largest economies and markets in the world.

Here are 12 things to know about the ASEAN Economic Community (AEC).

The Association of Southeast Asian Nations (ASEAN) is intensifying efforts to realize by 2015 the ASEAN Economic Community and implement the initiatives to achieve a single market and production base, allowing the free flow of goods, services, investments, and skilled labor, and the freer movement of capital across the region.
Source: Nay Pyi Taw Declaration, 24th ASEAN Summit, 11 May 2014.
If ASEAN were one economy, it would be seventh largest in the world with a combined gross domestic product (GDP) of $2.4 trillion in 2013. It could be fourth largest by 2050 if growth trends continue.
Source: ASEAN Integration and the Private Sector, speech by ADB Vice-President Stephen Groff, 23 June 2014 in Berlin, Federal Republic of Germany.
With over 600 million people, ASEAN’s potential market is larger than the European Union or North America. Next to the People’s Republic of China and India, ASEAN has the world’s third largest labor force that remains relatively young.
Source: ASEAN Integration and the Private Sector, speech by ADB Vice-President Stephen Groff, 23 June 2014 in Berlin, Federal Republic of Germany.
ASEAN is one of the most open economic regions in the world, with total merchandise exports of over $1.2 trillion – nearly 54% of total ASEAN GDP and 7% of global exports.
Source: ADB publication ASEAN 2030: Toward a Borderless Economic Community
Created in 1967 mainly for political and security reasons, ASEAN is today a successful model for regionalism, widely recognized globally.
Source: ADB publication ASEAN 2030: Toward a Borderless Economic Community
On its 40th anniversary in 2007, ASEAN adopted the ASEAN Economic Community Blueprint, which advanced the completion target to 2015 from 2020.
Source: Declaration on the ASEAN Economic Community Blueprint, Singapore, 20 November 2007.
The ASEAN Economic Community is defined by four pillars: (i) creating a single market and production base, (ii) increasing competitiveness, (iii) promoting equitable economic development, and (iv) further integrating ASEAN with the global economy.
Source: Declaration on the ASEAN Economic Community Blueprint, Singapore, 20 November 2007.
In November 2007, ASEAN leaders also approved the Initiative for ASEAN Integration Strategic Framework and Work Plan (2009-15), which is meant to bridge the perceived “development divide” between the older and economically more advanced members – Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand, known as the ASEAN-6, and the four newer ones – Cambodia (1999), Lao People’s Democratic Republic (1997), Myanmar (1997), and Viet Nam (1995).
Source: ADB publication The ASEAN Economic Community: A Work in Progress
As of October 2013, 279 measures (79.7%) of the ASEAN Economic Community Blueprint have been implemented.
Source: Chairman’s Statement of the 23rd ASEAN Summit, Bandar Seri Begawan, Brunei Darussalam, 9 October 2013.
Under the ASEAN Free Trade Agreement, the Common Effective Preferential Tariff scheme has brought down tariff rates on goods coming from ASEAN members to virtually zero for ASEAN-6. The four new ASEAN members have until 2015 to reduce their tariff.
Source: ADB publication The ASEAN Economic Community: A Work in Progress
While progress has been made in lowering tariffs and some behind-the-border economic hurdles, non-tariff barriers remain as major impediments to achieving a single market by 2015. The liberalization of trade in services has also been slow despite the industry’s growing importance in the region.
Source: ADB publication The ASEAN Economic Community: A Work in Progress
An ADB Institute study finds that that the ASEAN Economic Community should be considered a stepping stone to deeper integration. With the appropriate policy mix, ASEAN could triple per capita income by 2030, raising its citizens’ quality of life to levels enjoyed today by members of the Organisation for Economic Co-operation and Development (OECD).