The proposed ASEAN Economic Community could offer new market opportunities for nations such as Japan that are currently in talks to form the Trans-Pacific Partnership, a Malaysian minister has said.
Abdul Wahid Omar, who serves in the Prime Minister’s Department in charge of Economic Planning, said in an interview in Davos, Switzerland, that members of the Association of Southeast Asian Nations have so far implemented 80 percent of the initiatives needed to enable such integration, and that they aim to bring the AEC into existence by the end of this year.
The AEC represents one step toward creating a broader ASEAN Community, and aims to transform ASEAN into a region with free movement of goods, services, investment, skilled labor and freer flow of capital.
“I don’t think we’ll get 100 percent compliance by December 2015, but we will be able to achieve more than 90 percent,” said the minister, who oversees a number of government agencies, including the Economic Planning Unit and the Department of Statistics.
At the 12th ASEAN Summit in 2007, ASEAN leaders affirmed their commitment to accelerate moves toward building an ASEAN Community in 2020, a regional economic and political bloc. They also committed to creating the AEC by 2015.
The AEC is one pillar of three in the envisaged ASEAN Community. The other two are the ASEAN Security Community and the ASEAN Socio-Cultural Community.
ASEAN comprises 10 countries — Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Laos, Myanmar, Brunei and Cambodia.
“Malaysia and the ASEAN will become a single economic community, and four countries in ASEAN are now working on the TPP,” Abdul Wahid said, referring to Brunei, Singapore, Vietnam and Malaysia.
“I think TPP will become a reality, and that will also enable ASEAN countries to benefit from increased market access to member countries that sign up with TPP but also across the ASEAN countries as well.”
The minister said the AEC will also benefit businesses in TPP member countries, including small and medium-sized enterprises.
“As we progress further, we do welcome more and more Japanese enterprises to come to Malaysia,” he said. “If we all agreed to TPP terms, then I believe prospect for cross-border business for Japanese SMEs to expand into the ASEAN market through Malaysia will be greatly enhanced.”
However, Omar acknowledged there are still challenges to overcome to conclude TPP trade pact. For example, Japan has certain market access issues, such as agriculture, while Malaysia has some issues in respect to intellectual property and government procurement, he said.
“We should put all these issues on the table and discuss them so that we can come up with an arrangement, ” he said.
Malaysia this year chairs ASEAN, and he said the nation is excited to be leading the region with a population of 620 million and GDP of $2.4 trillion at a time when it is taking on greater economic integration.
He said low-cost carriers are one example of improved economic connectivity in the region.
“Take AirAsia, for example. Fifty percent of the routes they are flying into now would not be covered by bigger airlines. Low-cost carriers will enable better connectivity within the region,” he said.
Abdul Wahid, a former president and CEO of Maybank, Malaysia’s largest banking group, said integration in ASEAN’s banking sector is also underway.
“This is to allow banks in one ASEAN country to operate in another ASEAN country, provided with the need of minimum standards prescribed with respected central banks,” he said, adding that once the banks meet such requirements, they will be able to open branches in the other country.