Asean to launch ambitious, integrated common market tomorrow

The flags of Asean members flying at Asean headquarters in Jakarta. Photo: Wikimedia Commons.

Asean will tomorrow launch its common market, in an ambitious attempt to improve its global clout and bring greater prosperity to the bloc’s 622 million citizens.

The Asean Economic Community calls for the bloc’s 10 members to integrate their markets and allow the free flow of labour, capital and services across the region.

“It’s a big milestone for us,” Asean secretary-general Le Luong Minh said today, pointing out that some countries in the region were still at war less than half a century ago.

“We’ve made a lot of progress,” he said.

The common market draws together rich countries like Singapore with poor ones such as Myanmar and middle-income countries like Thailand and Malaysia.

The other six members of the bloc are Brunei, Cambodia, Indonesia, Laos, the Philippines and Vietnam.

Asean hopes the common market will allow it to compete with neighbouring economic giants China and Japan, and expects its combined economy of nearly $2.6 trillion to almost double by 2030.

China and Japan have both expressed support for the bloc’s efforts at greater integration. But Asean does not plan to introduce a single currency, like the European Union, and it still limits travel across borders.

And analysts say there are other barriers, such as import quotas and language requirements for foreign workers, that will take years to dismantle.

“The reality, we tell our members, is that you need to have both an Asean strategy and 10 individual strategies as well for now,” said Alexander Feldman, head of the US-Asean Business Council.

Some business owners and governments also have concerns about the new common market. The Philippines and Indonesia both cut their import tariffs on sugar to meet Asean rules, and later expressed concern about cheaper sugar from Thailand.

The American Sugar Alliance says Thailand subsidises its sugar industry with $1.3 billion a year, although Bangkok denies this.

Tri Widodo, head of economic sciences at Indonesia’s Gadjah Mada University, predicted that unemployment would rise with greater market integration. Competition in the labour market would continue to intensify due to the free flow of skilled labour, he said.

Some Indonesians also worry about a possible brain drain to richer countries such as Malaysia and Singapore.

“I’m worried we could lose our best and brightest to better salaries overseas,” said Haryadi Sukamdani, chairman of the Indonesian Employers Association.

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