ASEAN Forum Editorial
By Mark Bibby Jackson, Editorial Director ASEAN Forum
Southeast Asia is set for a seismic change. When the ASEAN Economic Community (AEC) comes into force in December this year, the region will be transformed from a bunch of independent nations loosely held together by a common geographical bond into a 600-million strong trading bloc. Whether it’s Thai designers, Myanmar tour operators or Cambodian car importers you talk to, the message is the same – this is a brave new world full of opportunities.
Opportunities, yet challenges too. Difficult questions remain to be answered as to what the AEC will mean to the inconsistent application of duty on luxury items, or to the standardisation of professional qualifications and training across the zone, but such legitimate concerns should not detract from the undeniable potential that such a vast market – larger than either the EU or NAFTA – provides.
With the notable exceptions of the Asian financial crisis (1997) and the global financial crises (2007-8), growth across the region was a constant 5 percent between 1980 and 2013, consistently outperforming the global level. Its combined GDP of $2.4 trillion (2013), makes ASEAN the eighth largest global economy. And due to its relatively youthful population – a median age of about 27 (2010) contrasted to China’s 32 – ASEAN’s labour force is expected to grow by a further 70 million, with China’s projected to contract by the same amount by 2030 (compared with the 2010 figure).
Unsurprisingly considering these figures, the region has seen a massive influx in overseas money. ASEAN’s share of global foreign direct investment (FDI) rose from 4.1 percent in 2005 to 9 percent in 2013.
In that year, ASEAN attracted more FDI than China, indicating a potentially significant shift in the balance of power between the two economic blocs. Standard Chartered, in its 2014 report, ‘ASEAN – Growth in the fast lane’ from which the above data was extracted, postulates that ASEAN could even overtake China as the world’s top exporter; it had 7 percent of global exports in 2013.
It seems a truth almost reluctantly acknowledged by the rest of the world that ASEAN is truly in the fast lane. Whether it’s a state visit from a Japanese prime minister, an American president or a British trade envoy, ASEAN is drawing the type of diplomatic interest that would have been unthinkable even a decade ago.
Yet despite all this, the region is misted under a veil of confusion. Commentators oft highlight the differences rather than the similarities, the obstacles to rather than the simplicity of doing business.
Take Cambodia as an example. When interviewed foreign businesspeople, whether Australian, America, Japanese or British, all speak of a peaceful and stable nation where it is remarkably easy to set up and run a business; a country where you can actually own your company outright, rather than having to seek out some “trustworthy” local partners.
Yet scour the Word Bank’s ‘Ease of Doing Business’ report and you will find Cambodia languishing in 135th place, sandwiched between Kiribati and Kenya. And if you mention the possibility of investing in the country to colleagues back home – wherever that may be – the response is an inevitable, “is it safe?”
This is why we have decided to publish ASEAN Forum in the run up to the AEC. We wish to challenge the prevailing orthodoxy through thought-provoking, well-researched and insightful articles written by seasoned journalists and industry professionals who have decided to make the region their home. We want it to be a Forum for people to share their viewpoints as to what direction this brave new business community should take. We do hope that you join us in this important debate.
Mark Bibby Jackson, Editorial Director ASEAN Forum, [email protected].