News Analysis: Formal establishment of ASEAN Community sees both opportunities, challenges

As another significant milestone in its history and the regional integration process, Dec. 31 finally witnesses the formal establishment of the ASEAN (the Association of Southeast Asian Nations) Community.

Despite the euphoria and excitement, Malaysian Foreign Minister Anifah Aman said in a statement on this special day that the coming into being of the ASEAN Community does not mean that it has arrived towards the end of the community building process.

"In fact, this is just the beginning," said the official.

As what the foreign minister has revealed, the set-up of the ASEAN Community is far from the completion of the regional integration process, but a fresh starting point for this journey with both opportunities and challenges lying ahead.

Great wisdom and vision are required for the region to chart its route to a win-win outcome by taking advantage of the awards of the community building and avoiding its side-effects.

ASEAN announced in November at its 27th summit that the ASEAN Community, comprising the Political and Security Community, the Economic Community and the Socio-Cultural Community, will be established on Dec. 31, 2015. At the heart of the regional integration course is the ASEAN Economic Community (AEC), the most advanced of all the pillars of regional community.

In a bid to realize this blueprint, the ASEAN member states have made tax cut to each other. At the same time, they have also reduced non-tariff barriers, coordinated technological regulations and standards, and simplified customs procedures, significantly boosting the free flow of commodities, service, investment, labor and capital in the region.

By far, the implementation rate of AEC measures have reached 92.7 percent with 469 measures carried out, 37 still pending and some to be addressed on a priority basis early next year, Malaysian Prime Minister Najib Razak said at the summit.

Oh Ei Sun, senior fellow at the S. Rajaratnam School of the International Studies of Singapore Nayang Technological University, said the opportunities associated with the ASEAN Community, especially the ASEAN Economic Community, are wide ranging.

"The removal or reduction of tariffs among ASEAN countries over goods will almost certainly improve trade among ASEAN members at a time when internal ASEAN trade is only one-third of external ASEAN trade volume," he said, adding that a single ASEAN market and production base will also become an even more attractive foreign direct investment destination, and help better integrate ASEAN economy with the global economy.

Vitavas Srivihok, deputy permanent secretary of the Ministry of Foreign Affairs of Thailand, said the building of an ASEAN Community is a win-win process for all ASEAN member states and the peoples of the region, which is expected to help narrow regional development gaps. The region will become a larger single market and production base with freer flow of capital, goods and services, he added.

Chheang Vannarith, chairman of the Cambodian Institute for Strategic Studies, said the community will boost the 10-nation bloc's influence and prestige on the global stage.

"ASEAN will play a more critical role in maintaining regional peace and stability, and promoting regional community in East Asia," said Vannarith.

"It will have more diplomatic leverage on the international stage," He said, adding that ASEAN member states will benefit from the realization of the community at different levels.

However, as the old saying goes that every coin has two sides, the regional integration process is also no exception. While seeing the enormous opportunities brought by the building of the ASEAN Community, the challenges can never be ignored.

"As assessed by the ASEAN Secretariat, the preparation of policies fully fulfilling the commitment to the integration of the governments is considered sufficient. However, enterprises of the less developed countries are not really well prepared for the integration," Tran Dinh Lam, director of the Center for Vietnamese and Southeast Asian Studies in Vietnam's Ho Chi Minh City, said.

Lam said a research conducted by the Institute of Southeast Asian Studies in Singapore on the awareness of the Vietnamese enterprises about the AEC, 63 percent of them think that the AEC will have minor effects on their business.

A survey made by Vietnam's Hanoi Young Entrepreneurs Association also showed that 80 percent of enterprises surveyed said they are "very indifferent to and not interested in" the AEC integration, and only 20 percent, mostly large-scale enterprises, expressed interest.

"Due to different origin, historical context and development level of each country when they joined the ASEAN, the establishment of the AEC may face a number of obstacles," Lam said.

Lam cited differences in religion, culture, geography, levels of economic development of the member countries, the imbalance within each country, and the lack of consistency in the evaluation of the South China Sea disputes as among the barriers to the creation of a region-wide economic integration.

Echoing Lam's opinion, Oh said the main challenge for AEC remains the unequal development needs among ASEAN members, with the CMLV (Cambodia, Myanmar, Laos and Vietnam) countries requiring special assistance to catch up with the rest of the ASEAN.

"Some ASEAN members thought integration may harm the interest of their small-and medium-sized enterprises. For instance, Cambodia worried that its enterprises may suffer when competing with companies from other countries a few years ago. But nowadays, the momentum of regional economic development is quite satisfying," said Lee Chian Siong, senior adviser to chairman of the China-ASEAN Business Association.

He said frequent communication and interaction will help to overcome difficulties, and ASEAN members can learn from each other.

Meanwhile, with the deepening of China-ASEAN cooperation, many people put high expectation on this partnership to help further exploit the opportunities of the ASEAN Community building and handle the future challenges.

Oh also said the AEC can work well with China's Belt and Road Initiative as the two complement each other in enhancing regional and world prosperity and harmony. He said AEC can align well with the Belt and Road Initiative.

It enables China to engage even more closely and easily with its closest neighbors as a whole when China carries out the initiative, Oh said, adding that AEC will need large amounts of connectivity in land, on sea and in air to succeed, and the Belt and Road Initiative can complement these efforts.

AEC as a whole can become a super hub for the Belt and Road Initiative as China seeks to engage with countries as far as in South Asia, the Middle East and East Africa, he said.

Agreeing with Oh, Vitavas said China is appreciated for its "constructive role" in promoting regional connectivity through various initiatives including the establishment of the Asian Infrastructure Investment Bank (AIIB) and the launch of the 21st Century Maritime Silk Road.

The 21st Century Maritime Silk Road will not only connect China with the ASEAN, but also link them up with other countries and outer regions along the road, which would spur growth and bring more opportunities for mutual benefit, such as the promotion of maritime commerce, disaster relief, search and rescue, environmental protection and conservation, Vitavas stressed. Enditem