Experts assess prospects for success of AEC

The 3rd International Conference on AEC ended yesterday, with participants discussing infrastructure development, Special Economic Zone development, migration of skilled labour, and small/medium enterprise development.

The meeting follows on from the establishment of the Asean Community at the beginning of this year. The AEC aims to have single market and production base by encouraging the free flows of goods, skilled labour and capital within the 10-member bloc.

However, in order to fully implement the AEC and maximise the potential benefits, many challenges need to be addressed.

Speaking at the meeting, the National University of Laos's Vice Dean of the Faculty of Economics and Business Management, Associate Prof. Dr Phouphet Kyophilavong, said the AEC would bring opportunities and challenges to Laos.

“Lao enterprises will suffer in the short term due to a lack of competitiveness and capacity, but there might be positive impacts in terms of increased productivity and technical transfers.”

In order to benefit from the AEC, Associate Prof. Dr Phouphet said the government should formulate effective policies and strategies.

“Strengthening coordination and cooperation between policy makers and researchers is crucial in order to implement effective policies and strategies,” he added.

A representative from Kyoto University in Japan, Prof. Kiyoshi Kobayashi, noted that the goal of the AEC is to bring about economic integration of the Asean member states. The AEC aims to become a single market and production base that is fully integrated into the global economy

Kobayashi said the economic integration of Asean states will have a massive impact on both the Asian economy and the global economy. Their combined population of 620 million is larger than that of the EU or the North American Free Trade Agreement (NAFTA).

Between 2001 and 2013 the combined Asean per centage economic growth was second only to China in all of Asia. Combining the skills and financial weight of its high and middle income members with the low labour costs of its low income members, the AEC is poised to become another “workshop of the world” next to China.

“If this is to happen, however, a number of cross-border challenges must be met. Tariff elimination is only a first step towards integration; eliminating non-tariff barriers may prove even more difficult,” he said.

Kobayashi stressed that inefficient border management and inadequate transportation infrastructure in some member states further inhibit integration both internally and with global markets.

Enhancing “Asean Connectivity” to facilitate cross-border supply chains in the region is a vital issue for the AEC. Institutional differences, as well as income gaps among Asean members, make overcoming these challenges more difficult.

At this crucial moment for the AEC, Kobayashi added that analysis and discussion by researchers and practitioners on addressing cross-border challenges is crucial.

The creation of academic platforms enabling scientists and practitioners in regions world-wide to identify promising ways to success should be one of the most important policy measures.