Corporate and Regulatory Drivers
New Horizons in International Business series
Edited by Philippe Gugler and Julien Chaisse
Chapter 5: Accelerating ASEAN Trade and Investment Cooperation and Integration: Progress and Challenges
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...