One step forward for ASEAN

The Association of South-East Asian Nations (ASEAN) has taken an important step towards greater economic integration by deciding to form an ASEAN Economic Community (AEC), much like the European Economic Community. The Kuala Lumpur declaration of the member nations envisages the community to come into being on December 31, 2015. The ASEAN has till now been more a trade bloc than an economic entity. The 10 members have gained much from their mutual association and the region has emerged as a strong and dynamic economic grouping. The benefits have not been uniform for all member states but all of them have gained in the 50 years since the trade bloc came into being in 1967. Setting up of an economic community is a natural progression from the success of the ASEAN. The association, which plans to move towards a “politically cohesive, economically integrated and socially responsible” community, has also laid down a road map for the next 10 years.

The ASEAN community will have a single market with free flow of goods, capital and skilled labour across national borders. Travel and business among the members will become easier and it is expected to open up new opportunities in economic activities and employment. Uniformity in laws and rules and coordination of policies will help members to deal better with the world outside the grouping. There will also be a common policy and actions on environmental, social and cultural issues and in fighting terrorism and problems like drug trafficking. The proposed union will offer both challenges and opportunities for the members. They are at different stages of growth and include economically bigger and stronger countries like Indonesia and Singapore and others like Cambodia and Myanmar which are trying to catch up. They also have politically diverse systems ranging from democracy to monarchy to military rule. The political and social diversity is a strength but it can also weaken the grouping if the differences are not handled well. 

The community can also gain from its proximity to big and growing economies like those of China and India. It may hope to gain from the perceived competition between the two, but healthy competition can benefit all competitors. With a population of 620 million and a combined GDP of $2.4 trillion, the AEC will be a major economic power. Prime Minister Narendra Modi was present at the summit where the declaration for the formation of the community was signed. The ASEAN has been an important economic partner for India. India will have to deepen the relationship and further strengthen its Act East policy in the new context.