‘Asean could miss the target’

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Tuesday, June 17, 2014

THE economic integration of the Association of Southeast Asian Nations (Asean) will likely not be attained by 2015, an economist of the Asian Development Bank (ADB) said.

“There is still a lot of work to be done. The December deadline will not see Asean achieving all of its Asean Economic Community (AEC) targets. Don’t expect it will suddenly be transformed,” said Dr. Jayant Menon, lead economist of the Regional Economic Integration of the ADB during the Entrepreneurship Seminar hosted by the Cebu Chamber of Commerce and Industry (CCCI) yesterday.



Based on the latest AEC scorecard only around, 77.5 percent of the AEC targets have been reached between 2008 to March 2013. He also noted that the AEC scorecard suggests a slowdown in the level of achievement over time, from 89.5 percent during the initial phase in from 2008 to 2009 to 72 percent during the second phase from 2010 to 2011. Asean countries achieved 71.9 percent from 2012 to 2013.

“This only reflects that as we move forward and approach the finish line, we will be dealing with more difficult issues,” said Menon, adding that there are still a lot of issues that remained unaddressed by the AEC such as the movement of unskilled workers and the huge development divide between rich and poor Asean-member countries.

“But the Asean integration will happen anyway. What we will see are real works happening after 2015, which include signings of agreements between Asean-member countries and ratification and implementation of policies,” he said. He noted there might be changes of domestic laws to accommodate these commitments.

“2015 should not be seen as a deadline but a milestone of a longer journey.”

Although there are several factors leading to the difficulty of achieving the AEC targets, one of those he cited is the lack of awareness about AEC, especially in the business sector.

Caught unaware

“The three waves of the Asean-Business Advisory Council survey on Asean competitiveness has consistently revealed consultation with businesses and dissemination on AEC initiatives as the least satisfactory areas rates by businesses,” Menon reported.

Around 60 percent of the respondents indicated that they had at least general knowledge of these initiatives while 32 percent reported having limited knowledge. 

Only seven percent of the respondents reported having detailed knowledge of the AEC initiatives.

In a separate survey conducted by the ADB-ISEAS study, Menon pointed out that 55 percent of the respondents are unaware of the AEC and that respondents are more likely aware of the Asean-China free trade agreement than the AEC.

The study further revealed that less than a fifth of the Asean businesses have made any plans for the end of 2015. 

In contrast, 54 percent of senior business leaders from US companies polled in the most recent Asean Business Outlook survey said that their company has a strategy based on the goals of AEC. Domestic and small firms are more likely to feel threatened by greater integration.

Moreover, Asean’s own survey on Asean Community Building Effort 2012 revealed that the overall level of understanding about AEC among businesses and the general public is still low and that preparation work done by businesses and the general public has been minimal.

It added that most businesses have not prepared activities related to the AEC, nor considered how the AEC would link to their company’s vision.

Needed investments

Menon said results of these surveys are “quite alarming” and that there should be a lot to be done in terms of informing and engaging businesses in Asean.

Moreover, Menon warned that the “grand plans” in attaining full Asean integration don’t come cheap, which means the Philippine Government should pour in huge investments for infrastructure development and in providing a good business
environment to the investors. 

He said innovative financing and public-private partnership will be necessary to achieve broader reforms like investing in both hard and social infrastructure and education and health to increase capital inflows and boost efficiency and productivity.

Published in the Sun.Star Cebu newspaper on June 18, 2014.


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