World Economy

Asean Benefits From Integration

Asean Benefits From IntegrationAsean Benefits From Integration

Asean nations are upbeat on the opportunities the Asean Economic Community has to offer, citing the integration that helps increase the region’s resilience to global jitters.

“Regional economic integration will continue to contribute to economic resilience and growth performance. Looking to 2015 and beyond, the macroeconomic landscape of Asean will continue to transform to weather challenging global economic conditions,” the association said through the Asean Integration 2015 Report, NewsNow reported.

Released Friday, the report noted that continued efforts to implement economic integration initiatives embodied in the AEC will have a significant, positive influence on trade and foreign direct investment, promoting overall economic growth in the region as well as stimulating structural transformation across Asean economies.

It noted that the region remains relatively robust and better than the global average. Against the global growth forecast of 3.3% in 2015, Asean’s economic performance remained resilient in 2014 at 4.6% and the region is projected to sustain its growth momentum in 2015 before accelerating to 4.9% in 2016. The relatively slower regional output growth in 2014 largely reflected lower growth by most of the larger economies in Asean (Indonesia, the Philippines, Singapore and Thailand) while Malaysia, Myanmar and Vietnam recorded higher growth rates in 2014 compared to 2013.

 Bigger Role

Since the adoption of the AEC Blueprint in 2007, the services sector has played a bigger role. Share of the services sector in the economy steadily increased to reach 50.2% in 2014 while both the industry and the agriculture sector’s share declined and stood at 38% and 11% respectively. Growth in the region has been driven by an increasing share of foreign direct investment inflows to the services sector, as well as a solid performance in the trade sector, contributing to the region’s output expansion.

The report also confirmed that all 10 nations are committed to move forward with the integration. It concluded that Asean countries have cut most of the intra-regional import duties.

Asean-6 nations (Brunei, Indonesia, Malaysia, the Philippines, Thailand and Singapore) have cut 99.2% of their tariff lines at the end of 2014.

The rate for the other four countries–Cambodia, Laos, Myanmar and Vietnam–is 72.6% and is expected to increase to 90.8% this year.

 China’s Slowdown

The Organization of Economic Cooperation and Development says growth in China is expected to continue to slow to an average of 6% annually over the next five years, while India’s expansion will pick up to 7.3% during the same period, AP reported.

According to the OECD annual outlook launched at a regional business conference on the sidelines of Asean summits this weekend, China’s slowdown means lower export demand and investment flows to Southeast Asia, which will see growth dip to an average 5.2% annually through to 2020.

The report cites China’s slowdown, US monetary tightening and slowing productivity growth as key challenges to maintain the region’s growth momentum.

It says the transformation of the Southeast Asian region into an economic community modeled after the European Union by Dec. 31 is a major milestone, but actual integration activities such as in services sector have been slow. It calls for more efforts to help poorer members Cambodia, Laos and Myanmar to narrow development gaps in the region.

 Fresh Agreement Needed

The head of Southeast Asia’s main grouping says the region needs a legally binding agreement to ensure that a maritime dispute with China is resolved peacefully, because an existing declaration of amity has proved to be useless.

The 10 members of the Association of Southeast Asian Nations and China signed the declaration, known by its acronym DOC, in 2002, promising in good faith to resolve their territorial and jurisdictional disputes by peaceful means, without “resorting to the threat or use of force.”

ASEAN Secretary-General Le Luong Minh told The Associated Press Friday that “the DOC has never been fully and effectively implemented and that’s why we need a new agreement which would be legally binding.”