The move towards an ASEAN Single Aviation Market boosted infrastructure investment and aviation development plans in the region. Growth is also attributed to the proliferation...
ASEAN Economic Community
How viable is investing?
Single Market and Production Base
The ASEAN Economic Community (AEC) envisions ASEAN as a single market and production base characterized by free flow of goods, services, and investments, as well as freer flow of capital and skills.
ASEAN, through the establishment of the AEC, is committed to enable businesses to fully tap on the potential of the region as an integrated and single investment destination. Rather than having 10 fragmented economies, ASEAN is creating a single market that will allow investors to increase their market reach to a total of 600 million, compared to only a minimum of half a million people or maximum of 240 million if they are to access only the market of one ASEAN country.
AEC is also about the establishment of a single production base which allows businesses to tap on product and services complementation in the region, establish a network of industries across ASEAN, and participate in the global supply chain. ASEAN-based companies can access raw materials, production inputs, services, labor, and capital wherever in ASEAN they choose to set-up their operations. Companies can save on production costs, focus on their specialization, and/or maximize economies of scale without necessarily leaving high potential market areas within the region.
ASEAN has evolved to ensure a better enabling environment for investors in the region. It has evolved to become rules-based, codifying economic-related measures that would govern the conduct of trade and investment and drive the vision for a free flow of goods, services, investment, capital, and skills region-wide.
In pursuit of a single market and production base, ASEAN has transformed its economic agreements (which were penned two to three decades ago) into agreements that are at par or better than international best practices and more responsive to global and regional realities.
ASEAN’s agreement on trade in goods has evolved from the Common Effective Preferential Tariff (CEPT) to a more comprehensive ASEAN Trade in Goods Agreement (ATIGA). Today, tariff rates for over 96 percent of traded products among the ASEAN-6 countries (Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand) are virtually zero. By 2015, this tariff rate will be realised for the rest of the region.
For investments, ASEAN replaced the ASEAN Investment Area (AIA) Agreement and ASEAN Investment Guarantee Agreement (IGA) with the ASEAN Comprehensive Investment Agreement (ACIA) which came into force in 2012. ACIA provides for liberalisation, protection, promotion, and facilitation of investments in the region.
In 2012, the ASEAN issued the ASEAN Agreement on Movement of Natural Persons (AAMNP) as a complementary agreement to facilitate the movement of people engaged in trade in goods and services, and investment. The ASEAN is also looking at enhancing the provisions of the ASEAN Framework Agreement on Services (which was signed in 1995) to better facilitate trade in services.
Integrating ASEAN’s Economy
ASEAN is keen on integrating the region through the realisation of the ASEAN Economic Community (AEC) by 2015. Vast opportunities await investors as ASEAN strives to achieve the four pillars of an integrated economic region.