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What is ASEAN and its main objectives?

What are ASEAN integration and its objectives?

ASEAN or Association of Southeast Asian Nations is a political and economic organization of 10 south-east Asian countries with the aim of accelerating socio-economic growth, socio cultural revolution, regional peace and stability and opportunity for member nations to discuss their issues peacefully (ASEAN, 2003). The association was formed on 8th August, 1967 Malaysia, Indonesia, Thailand, Singapore and Philippines. After that the association spread to Cambodia, Myanmar, Brunei, Loas and Vietnam. ASEAN has been making headway in bringing the nations in this region closer. The organisation is committed to making it possible for businesses in these countries to operate on a pan-national level and benefit from the international opportunities that open up to them thanks to increased cooperation between South East Asian nations (ASEAN, 2010). This is exactly what the ASEAN Economic Integration brings to the table for thousands of businesses in the participating nations.

The economic integration is a joint effort to bring together the nations of South East Asia, consolidate their various assets, and use it to leverage better economic deals on a global level. A number of nations are deeply involved in this effort and are trying to find new avenues where mutual cooperation can result in brighter business prospects (Vijian, 2010).

It will affect the way companies conduct their business in the region, and the manner in which they trade internationally. It will open up increased opportunities for infrastructure development, and will give a major boost to local businesses for all participating ASEAN members.

According to the ASEAN Declaration, the purposes and aims of ASEAN are:

  • To conduct combined activities in the fortitude impartiality as well as corporation to make stronger the groundwork for an affluent as well as peaceable centre of population of Southeast Asian Nations and boosting the cultural development, social progress and economic growth.

  • To abide admiration for impartiality as well as rule of law with other nations of region and adhering to the main beliefs of the UN charter and promoting stability and regional pace.

  • To promote assistance mutually on issues of common concern related to social, economic, cultural, scientific, technical and administrative field.

  • To offer assistance such as training as well as research opportunities in education, technical, specialized along with organizational spheres.

  • To provide mutual assistance in fields such as trade, agriculture, industries and studying problems related to it.

  • To uphold secure as well as superior collaboration with active intercontinental and provincial organisations with same aims as well as purposes, and explore all possibilities for even nearer collaboration among themselves.

  • In association with each other, all the ASEAN member nations have agreed to the below stated principles:

  • To have shared admiration for the autonomy, freedom, territorial uprightness, equality and national identity of all member states;

  • Every member nation has the right to lead and maintain its national existence free from any pressure from other nation.

  • There should be no interference in the internal affairs of any nation;

  • Proper cooperation among members

  • Settling disputes amongst each other in a peaceful manner.

On the occasion of its 30th anniversary, the ASEAN leaders took a decision and shared a vision of formulating an ASEAN community for the Southeast Asian nations keeping in mind the following points:

  • Living in peace
  • External looking
  • Prosperity and constancy
  • Attachment in affiliation with a caring society

At the ASEAN’s 9th summit in 2003, the leaders finally agreed to establish the community. At the 12th summit of ASEAN, all the leaders confirmed on the commitment to accelerate the establishment of this ASEAN community by the year 2015.

This community has three major pillars:

  • ASEAN Political Security Community – for building a peaceful harmonious and democratic community.
  • ASEAN Economic Community – for free movement of investments, good and services, skilled labour and free flow of capital.
  • ASEAN Socio-Cultural community – for creating a socially responsible and people oriented ASEAN.

Characteristics of AEC 2015

  • No taxes and single market.
  • A highly competitive economic region and environment.
  • Equal economic development
  • Complete integration for a global economy.

The impact that the South East Asian nations have on the global market has continued to grow over the years. A lot of high growth countries belong to this region, and are involved in industries as diverse as manufacturing, fabrication, agriculture, IT, and high technology. They are producing oil as well as nuclear energy, experimenting with renewable energy and pushing the boundaries of civil and mechanical engineering. If these efforts were combined, far greater progress could be made by all the participants (Keck, 2012). With this simple goal, ASEAN Economic Integration is attempting to change the face of business in the region. Over the past several years the economic globe has witnessed one of the most important changes i.e. the integration of markets in ASEAN. Various companies in the landscape are prompting themselves to develop various business strategies to adapt to the integration across their market. Countries like China, Vietnam, Myanmar, and Indonesia are expanding their markets within the ASEAN landscape in order to spread their base of customer, ease of use of trained human resources as well as levelheaded manufacturing costs. For that reason, greater part of respondents in ASEAN look forward to their organizations to augment their workforce size in the coming years, considering financing and borrowing not being a big constraint as an effect of integration policies. As these alterations take place, already a noteworthy quantity of U.S companies are willing to bounce in and enter the sphere of the integrated markets developing in ASEAN (Sikdar, 2011). As a result of the agreements reflecting integration within ASEAN markets, around half of the executives expect their companies to have a remarkable increase in the total number of employees within their companies. The integration would be creating a huge investment opportunity for American firms in countries forming the ASEAN. The process doesn’t only open wide doors for US market to usher in but also strengthens the economies of huge markets of the ASEAN. The free flow of merchandise due to the several agreements within the ASEAN will not only make it easy for the markets to flourish but also bring the  economic downfalls in certain low lying areas come back to survival. The integration within various businesses amongst ASEAN would make it easy for firms to travel and conduct businesses across the region. The ASEAN integration can lead to a huge success for the flourishing businesses to increase their markets within the neighbouring countries rather than heading to farther places hence reducing operational costs. According to the recent survey by the ASEAN Business Outlook, the level of trade and investment in between various ASEAN countries is expected to increase by the next five years. In the past two years ASEAN markets have become more important in terms of their companies’ worldwide revenue and not only does ASEAN integration bring in new avenues amongst ASEAN markets but is also inviting outside firms to come and invest. The changes will eventually turn out to bring cultural integrity and economic peace amongst the ASEAN members. Not only will the trade and tourism flourish, the integration might be a step in bringing the now developing nations to come into the race of being the developed ones. Although the impact of integration brings in positive change but it might result in political transparency causing of high political unrest amongst various nations. Also, it might be an economic distracter as nations would be competing amongst each other and might not be able to cope with the western markets as diligently as they should (World Bank, 2013).

ASEAN Economic Integration and its purpose

Countries across the world are striving to increase the number of jobs available to citizens. Employability of a nation has always been a burning issue, and with the growing population, it has taken an even more central position. It deeply affects the policy makers and affects their choices. With increase in global business opportunities, newer jobs will be created as well. The economic ministers of the participating nations are already predicting strong growth in 2015. Jobs in local businesses are expected to grow up across all quarters. Instead of the average growth of 3.5% that countries have experienced recently, the Economic Integration is expected to take the growth for ASEAN members all the way to 5.1% this year (Pal, 2009).

In fact, the integration will serve to create a buffer which will help stabilise the economy, that too at a time when the global market is wrought with uncertainties. The impact of the AEC has been observed already on many fronts. Tariff liberalisation, talent recognition has benefited tremendously from the integration.

By the end of the year 2015, the ASEAN Economic Integration will be formally established, and begins to deliver on all that it has promised. All of this will help integrate the region and present these nations as a united front. In a nutshell, ASEAN members must foster healthy business agreements causing integration in order to further improve their individual markets and economies.

By the year 2015, ASEAN is moving towards a new coagulated community with it ambitious plan of economic, political, social and cultural integration. Although the beauty of this evolutionary process is the simultaneous building up of nations where no nation is left out, yet a basic question arises that whether the grouping of the nations poses a real hike or is it challenging as well. Along with the gluing changes ushering in due to the ASEAN integration come a wide range of political, social and regional challenges that might be faced by the ASEAN members (Dasgupta, 2008). As is evident, the integration of ASEAN has led to a remarkable decline in the poverty levels of the member nations leading to higher economic reforms. There has been a potential for the inbound investments as well. As the ASEAN community is created, investors from all over the globe are flooding in to take advantage of the economic power of the group. However despite the progress, ASEAN needs to eradicate the poverty on a broader perspective across all its member nations keeping in mind the basic target behind the coagulation. As the main aim behind the integration of the ASEAN members was to heighten the level of living and the quality of the citizens amongst the nations, The ASEAN members need to further work on the poverty issues within them. Whereas China has made a remarkable decrease in the poverty levels despite its huge population, ASEAN members are still lagging behind in their functioning towards this particular goal. The development of various economic and social reforms under different governments is making it difficult to achieve the goal of seeing poverty free nations under ASEAN. Eventually, to deepen economic integration in ASEAN, there has to be an effective monitoring mechanism within the group that follows up on each member's commitment and quality of implementation. Otherwise, this effort to turn ASEAN into a competitive single market and produce base will remain elusive (Devraj, 2009). The ASEAN needs to strictly implement its promises made and the agreements done in order to achieve what it has thought of.

Characteristics of AEC 2015

This requires the symbiotic functioning of the member nations working on a much higher note than their individual interests so as to flourish as a whole and not just individually. The members need to strictly amend the laws that are required in order to fully implement the plans outlined by the ASEAN integration. For an example, Even though the Prayut government has made the country’s integration with an ASEAN economy as its top priority and has reflected so in its regional and economic policies, the Thai bureaucrats are still not showing their interest into the same. Over six months have passed and the government is still struggling to improve its scorecard amongst ASEAN countries. Thailand is not alone; other original ASEAN members also face confusion in fulfilling the requirements. Indonesia and Philippines also have been in the same queue as well. Also, several ASEAN countries are falling behind in implementing some of their so-called behind the border measures, such as national single windows, investment liberalization, services. As various political challenges make it difficult for ASEAN integration to be a success, the economic and social challenges also are causing problems in the race. Corruption, insufficiency of adequate infrastructure and geographical risks are some of the major issues that pose a threat in achieving the aims towards creating an integrated community. It is very important for the ASEAN members to fight the menace of corruption and provide good governance in order to achieve the economic development as promised (Devraj, 2009).

One of the major challenges viewed by the integration of ASEAN is the security issues caused by the ethno-religious movements that may disrupt the peaceful coexistence of the ASEAN members. Even when ASEAN recognises that the regions are divided into various ethno-cultural groups ,efforts can only be taken in order to promote regional identity and the diversity in cultural heritage in order to have a harmonious community. Various countries might have their own policies in tackling various social movements and groups.  It should also be remembered that even though boundaries are transparent, security should also be remain tight in order to look for terrorist attacks and threats emerging from individual groups. On the other hand, different rates of development between ASEAN countries make it difficult for all of them to work cohesively on large scale. Many ASEAN countries have widely different economic states, making fulfilling the goal of establishing the ASEAN community. One of the major challenges faced by ASEAN is that the countries have different government systems which make it rather difficult for the countries to cooperate as the actions by different countries in tackling a given situation and might result in conflicts amongst various governments (Devraj, 2009). The type of government greatly affects the domestic stability of a country and is responsible for the security and welfare of the citizens. As a result the various political systems might affect the coordination amongst the various countries in the integration of the ASEAN.

ASEAN countries face quite a number of challenges in achieving the promises that they have committed as a result of the integrated community. Security issues, political systems and various ethno religious movements going on around the member countries will make it difficult for the ASEAN members in achieving their goal of economic and social harmony. It is very important for the members to coordinate together if they want to achieve their dreams by the year 2015. Also there is a dire need for the countries to address to these challenges in various fields in order for them to finally rise above them and form solutions in order to work towards their annual goal (Devraj, 2009). ASEAN has to put in the much needed efforts in order to rectifying the above stated problems, even though much effort has already been already put into establishing the ASEAN community.

References

ASEAN, (2003). "Framework Agreement on Comprehensive Economic Cooperation Between the Republic of India and the Association of Southeast Asian Nations". Accessed on 4 Mar, 2015.

ASEN, (2010). "India, ASEAN Sign Free Trade Agreement". Accessed on 4 Mar, 2015.

Vijian, P. (2010). "Not All Easy As India-Asean FTA Comes Into Effect On Jan 1". Bernama. Accessed on 4 Mar, 2015.

Limsamarnphun, N. (2010). "World's largest trading zone creates a new era for industries, consumers". The Nation. Accessed on 4 Mar, 2015.

Baru, S. (2010). "India and ASEAN: The Emerging Economic Relationship Towards a Bay of Bengal Community". ICRIER.

ASEAN, (2010). "ASEAN-India Dialogue Relations". Accessed on 4 Mar, 2015.

Keck, Z. (2012). "India, ASEAN Celebrate 20th Anniversary With Two FTAs". The Diplomat. Accessed on 4 Mar, 2015.

Sikdar, C. (2011). "Impact of India-ASEAN Free Trade Agreement: A cross-country analysis using applied general equilibrium modelling". RTNeT.

World Bank, (2013). "Exports of goods and services (% of GDP)". Accessed on 4 Mar, 2015.

Pal, P. (2009). "The ASEAN-India Free Trade Agreement: An Assessment". Economic and Political Weekly 44 (38): 11–15.

Dasgupta, M. ( 2008). "Does a Free Trade Agreement with ASEAN make sense?". Economic and Political Weekly 43 (46): 8–12.

Devraj, R. (2009). "Kerala fights clock in ASEAN free-trade deal". Asia Times. Accessed on 4 Mar, 2015.

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