Competitiveness of the ASEAN Countries

Competitiveness of the ASEAN Countries

Corporate and Regulatory Drivers

New Horizons in International Business series

Edited by Philippe Gugler and Julien Chaisse

In an age of increased necessity for competitiveness of nations and at a time when the world economy is facing recession, this book explores the possible trajectory of ASEAN – arguably one of the most dynamic areas in the world – as a regional economic and political bloc. The expert contributors address the industrial competitiveness of ASEAN and analyse the role of MNEs against the background of the challenges of integration. They illustrate that regional integration will only be a success if ASEAN’s linkages are broadened with global partners through negotiations of Free Trade Agreements. The book concludes that although much still remains to be done, and many promises are still to be unveiled, ASEAN’s ‘coming of age’ is an historic milestone.

Chapter 5: Accelerating ASEAN Trade and Investment Cooperation and Integration: Progress and Challenges

Siow Yue Chia

Subjects: asian studies, asian business, asian economics, business and management, asia business, international business, economics and finance, asian economics, international economics

Extract

Siow Yue Chia INTRODUCTION The Association of Southeast Asian Nations (ASEAN) was formed in 1967 with the underlying objective of promoting regional peace and security as a foundation for economic development (ASEAN Secretariat, 2004). Economic cooperation schemes began only ten years later with the 1977 ASEAN Preferential Trading Arrangement, followed by the 1992 ASEAN Free Trade Area and the 2003 ASEAN Economic Community (AEC). Over the years, especially following the Asian financial crisis of 1997–98, and prior to the agreement to establish the AEC, ASEAN faced growing criticism of its slow progress towards economic integration, as the many schemes and initiatives were not being effectively implemented (Dobson and Chia, 1997). Cambodia, Laos, Myanmar and Vietnam (CLMV) joined the ASEAN6 (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand) during 1995–99 resulting in the ASEAN-10 grouping. The membership expansion reflects the changed geo-political environment in the postCold War era. The CLMV countries have different political systems, are economies in transition from a command to a market economy and are economically the least developed in Southeast Asia. Economically, ASEAN membership offers CLMV markets and investment resources as well as lessons in economic management and the functioning of the market economy. These new members were concerned about the pace of trade and investment liberalization required, which led to the emergence of a two-track ASEAN, as the new members were given a longer period within which to fulfil their commitments under AFTA, AFAS and AIA.1 ASEAN has a market of more than 500...

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