ASEAN - A regional profile

ASEAN - A regional profile

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This article provides an overview of ASEAN countries for those keen on exploring the possibility of living and working there. The information presented is gathered from open sources and is not exhaustive or meant to supplement or substitute legal and professional advice.

Introduction

The Association of Southeast Asian Nations (ASEAN) is a 10-nation regional organisation made up of Brunei, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. ASEAN was first established on 8 August 1967 in Bangkok, Thailand when the Foreign Ministers of Indonesia, Malaysia, Philippines, Singapore and Thailand signed the ASEAN Declaration.1 ASEAN subsequently became a 10-member regional organisation when Brunei Darussalam joined on 7 January 1984, Vietnam on 28 July 1995, Lao PDR and Myanmar on 23 July 1997, and Cambodia on 30 April 1999.2

Economic growth and integration

Encompassing more than 650 million people, the ASEAN economy is relatively large, comparable to India in terms of GDP. In terms of an economic bloc, ASEAN is one of the top worldwide destinations for foreign direct investment and its trade-to-GDP ratio exceeds 100 percent.3 The ASEAN economy grew 4.6 percent in 2019, remaining close to the average growth of five percent over 2015-2018. Due to the impact of COVID-19 on its economy, for 2020, the region’s economy was expected to contract by 2.7 percent. Nevertheless, a quick recovery of 5.2 percent growth is expected in 2021.4

ASEAN’s merchandise trade amounted to US$2,815.2 billion in 2019. Intra-ASEAN accounted for 22.5 percent of ASEAN’s total trade, followed by China (18.0 percent), the United States (10.5 percent), and the EU28 (10.0 percent). Inflows of foreign direct investments (FDI) rebounded by 4.9 percent in 2019 compared to 2018 to stand at US$160.6 billion. Among external partners, the US contributed the largest FDI inflow with 15.2 percent of the total, followed by Japan (12.7 percent) and the EU28 (10.1 percent), while intra-ASEAN accounted for 13.9 percent.5

The economic response to the COVID-19 pandemic has been comprehensive, even taking into account fiscal and administrative constraints. All the major economies in the region have put in place large macroeconomic policy support packages to mitigate the economic impact of the outbreak, including by providing direct assistance to firms and households. The most important preparation for restarting economic activity is to help firms and vital economic relationships survive the crisis. 6

The economic recovery is expected to revive trade and resuscitate supply chains to some extent. Large private firms, especially lead firms in global value chains, are already helping to support their suppliers in developing countries. More generally, the beneficiaries of the economic revival will be those countries that are open to trade and foreign direct investment, are well connected to global markets, and have a predictable environment for doing business. As the world economy recovers, ASEAN could support stronger international rules to restrain both protection and incentives to ensure that the world continues to reap the efficiency benefits of trade and global value chains. The post-pandemic recovery will offer new opportunities to build a more sustainable, inclusive and resilient future in a world transformed by the pandemic.7

ASEAN Economic Community (AEC)

The establishment of the ASEAN Economic Community (AEC) in 2015 is a major milestone in the regional economic integration agenda in ASEAN. The AEC Blueprint 2025 seeks to achieve the vision of having an AEC by 2025, that is highly integrated and cohesive; competitive, innovative and dynamic; with enhanced connectivity and sectoral cooperation; and a more resilient, inclusive and people-oriented, people-centred community, integrated with the global economy. It also seeks to ensure that the 10 countries are sustainably and gainfully integrated in the global economy, thus contributing to the goal of shared prosperity.8

Regional Comprehensive Economic Partnership (RCEP)

On 15 November 2020, Singapore signed the Regional Comprehensive Economic Partnership (RCEP) agreement, on the sidelines of the 37th ASEAN Summit and Related Meetings, with counterparts from the ASEAN Member States and Australia, China, Japan, New Zealand and South Korea.The RCEP establishes a modern, comprehensive, high-quality and mutually beneficial economic partnership that builds on existing bilateral ASEAN agreements with its Free Trade Agreement (FTA) partners. Comprising about 30 percent of global GDP and close to a third of the world’s population, RCEP is the world’s largest FTA to date. As a key regional agreement, the RCEP will complement Singapore’s existing network of FTAs, expand its economic space, and boost trade and investment flows. It will further broaden and deepen Singapore’s economic linkages and connectivity with the region, open up opportunities and provide businesses with preferential access into growing markets.9

References

  1. History: The founding of ASEAN. (n.d.). Association of Southeast Asian Nations. Retrieved January 25, 2021, from http://asean.org ↩

  2. Overview. (n.d.). Association of Southeast Asian Nations. Retrieved January 25, 2021, from http://asean.org ↩

  3. Khuong, V. (2020, July). ASEAN economic prospects amid emerging turbulence: Development challenges and implications for reform. Brookings Institution. Retrieved January 25, 2021, from https://www.brookings.edu ↩

  4. ASEAN Economic Integration Brief. (2020, July). ASEAN. Retrieved January 25, 2021, from https://asean.org ↩

  5. ASEAN Economic Integration Brief. (2020, July). ASEAN. Retrieved January 25, 2021, from https://asean.org/ ↩

  6. ASEAN Economic Integration Brief. (2020, July). ASEAN. Retrieved January 25, 2021, from https://asean.org/ ↩

  7. ASEAN Economic Integration Brief. (2020, July). ASEAN. Retrieved January 25, 2021, from https://asean.org/ ↩

  8. ASEAN economic community. (n.d.). Association of Southeast Asian Nations. Retrieved January 25, 2021, from http://asean.org ↩

  9. Regional comprehensive economic partnership agreement signed. (2020, November 15). MTI. Retrieved January 25, 2021, from https://www.mti.gov.sg ↩

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