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ASEAN ANALYSIS

Asean Affairs  26 November 2010

Are Asean countries prepared for the AEC?


By  David Swartzentruber
AseanAffairs     26 November 2010

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As this year comes to an end there appears to be a good deal of uneasiness in a number of Asean countries about the arrival of the Asean Economic Community in 2015.

Writing in May of this year, Indonesian economics professor Carunia Mulya Firdausy, said: “But as the implementation of the Asean Economic Community (AEC) is only five years away, we need to start paying it the attention it deserves, as its impact could be even more severe on our economy. Unlike the negative impacts brought by CAFTA, AEC will not only hit the commodity sector harder, but also the capital and employment sectors.

Certainly, there are many reasons why the AEC is needed to be pursued by Indonesia. Of these reasons, the need to increase of the inflow of foreign direct investment (FDI) to Indonesia has been argued as the most important.”

Indonesia is of course, Asean’s largest economy and if it is trembling in the face of the new trade community, then imagine what fears may be lurking in a few of the smaller economies.

Here’s a question from the Vietnamese press, “Vietnam is a developing country and its competitiveness is not high, so is joining AEC beyond Vietnam's capacity? There is an opinion that if Vietnam joins AEC, the FDI (foreign direct investment) inflow to Vietnam will decrease and run into other countries in the region. What do you think of this opinion?”

Vietnamese Minister of Industry and Trade Vu Huy Hoang replied that these fears were groundless and in fact, he predicted that foreign direct investment would increase. However, the episode reveals the uncertainty about the arrival of the AEC.

Other rumblings also come from Asean’s second largest economy, Thailand.

Sommat Khunset, secretary-general of the Federation of Thai Industries said that “low awareness by Thai business operators was a serious concern. I am worried about SMEs because they don't even understand what the AEC is," he said, adding that human resources improvements were the most critical need.

Humans often put off things until the last minute. Could this be the case of Asean countries and the AEC?

 



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Paul A. Ebeling, Jnr

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