Discussed at Davos: Regulatory Harmonisation Vital for AEC to Succeed

 

Senior government and business leaders from ASEAN gathered at the World Economic Forum (WEF) annual meeting in Davos last week to discuss the state of the global economy and map the key transformations reshaping the world. A significant focus of the discussions was on ASEAN, where government and business leaders evaluated whether the region is on the right track towards achieving ASEAN Economic Community (AEC) 2015.

A panel session dedicated to ASEAN’s economic integration goal, “Creating the ASEAN Economic Community”, focused on the progress made towards the AEC 2015. It was recognised that while progress is being made, greater harmonisation of standards and regulations is needed in order to deliver the full potential of a united trade block. The panel focused on how deeper regional integration and regulatory harmonisation were co-dependent in achieving AEC 2015.

Acknowledging the need for greater growth and prosperity in ASEAN, Deputy Prime Minister of Thailand, Pridiyathorn Devakula*, expressed the importance of tariff reductions in this region and highlighted that there needs to be more work done on cutting non-tariff barriers.

His sentiments were echoed by Pham Binh Minh, Deputy Prime Minister and Minister of Foreign Affairs of Vietnam* who said that ASEAN’s regional integration should spur governments to implement structural reforms, and that more developed ASEAN countries should assist less developed states in catching up to avoid a two-tier economic block.

Despite the challenges of integrating a culturally, politically fragmented zone, the region has still grown at an average of 6% annually for decades. Abdul Wahid Omar, Minister, Economic Planning Unit, Malaysia* said that if structural reforms are successful then the next stage should be to ensure that economic prosperity is “translated” into higher personal income for the people. He mentioned that integrations of rules and regulations and the creation of an ASEAN identity are logical next steps.

Various industry sectors are focused on supporting regional economic integration and regulatory harmonisation. Not least, the food industry, which remains committed to playing its part in contributing to AEC 2015 through a collaborative effort with government leaders. Reflecting on the valuable comments made at WEF Annual Meeting last week, Principal Advisor to the ASEAN Food & Beverage Alliance (AFBA), Pushpanathan Sundram commented that “AFBA is supporting the implementation of AEC 2015, as part of the food industry’s commitment. Comprised of national food associations in ASEAN, AFBA is seeking to partner ASEAN by addressing knowledge gaps in food issues and providing regulatory, technical and market information to stakeholders.”

He added: “AFBA has been engaging actively with policy makers at national and regional levels, to exchange views and share information on addressing trade barriers and how the industry can facilitate the greater flow of food products around the region. Regulatory coherence and standards harmonisation is crucial to realising the goal of a Single Market under the AEC by the end of this year. We are encouraged to see that at Davos, government and business leaders alike are working towards the same objective of building a prosperous and vibrant ASEAN.”

The strive towards regulatory harmonisation will not only boost intra-regional trade, but also help to elevate ASEAN globally, as the region unites into a common market and a single production base. Supporting the views of government leaders, captains of industry in the panel also highlighted the importance of an integrated ASEAN. “ASEAN is growing faster than China or India, but it must be seen by outside investors as a single market,” Anthony F. Fernandes, Group Chief Executive Officer, AirAsia, Malaysia*, said. He added the 10 countries still have divergent regulatory systems and bureaucracies and that government leaders should make it easier for companies and investors to operate in all 10 countries simultaneously. “Not everything will get done by December, but a lot will be fixed and it will be a fantastic platform,” he predicted.

Progress is being made towards achieving AEC 2015 and both businesses and governments are contributing towards this shared outcomes. Both sectors have moved away from protectionist impulses with a renewed determination for a single regional unit. Commenting on this progress, Serge Pun, Chairman, Serge Pun & Associates in Myanmar*, said “I have drawn a lot of optimism from looking at how governments view integration.” He added that the community’s diverse economies are an advantage.

There is much talk about the benefits of an integrated ASEAN economic community. And while progress has been made and initiatives are in full swing to make that a reality, the Davos discussion last week highlighted the complexities of making this a success.

“The way forward is to have both government and the private sector work hand-in-hand to ensure that ASEAN achieves its full potential as an integrated economic powerhouse,” said Pushpanathan.


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