Asean rising: Can the region be transformed into one cohesive community?


The Association of Southeast Asian Nations (Asean) is celebrating its 50th year. Somehow, the Association has overcome its Cold War beginnings. It was established in 1967 as an anti-Communist bloc at the height of the US war campaign in Indochina.

Today, the socialist-oriented states of Cambodia, Laos, Myanmar and Vietnam (CLMV) are now ironically part of the Asean, which includes the original states of Indonesia, Malaysia, Philippines, Thailand and Singapore. The 10th member is oil-rich Brunei.

In the last two and a half decades, the focus of the Asean has been the transformation of the Southeast Asian region into one economic bloc. As repeatedly written in numerous Asean declarations issued in the annual Asean Summits, the goal is to have one Asean Economic Community (AEC) characterized by the free flow of goods, free flow of capital/investments and free flow of skilled labor. Accordingly, Asean shall become one production base, one regional market, one borderless economy.

For this purpose, the Asean adopted in 2007 a road map or blueprint for the realization of AEC by 2015. This AEC 2015 blueprint has since been replaced by AEC 2025 blueprint.

The reality is that economic community-hood will not happen simply because tariffs for intra-Asean exports and imports have gone down to zero and various trade and investment facilitation measures have been put in place. Intra-Asean trade has remained stuck at a quarter of the aggregate trade of the 10 Asean members with the world, while trade with non-Asean countries, especially China, has gone up much faster.

The fact is Asean is 10 countries at 10 different levels of development, with limited complementarities.  Due to historical, political and economic reasons, the region has developed in a very uneven manner. Such unevenness is further accentuated by the unequal outcomes for the 10 Asean countries under regional and global economic integration.

As far back as 2007, the ILO Office in  Bangkok noted the “significant gaps” among the Asean countries, which targeted 2015 as the year for the realization of fuller economic integration.  The ILO wrote:

“In 2005, per capita GDP in Singapore was 2.6 times greater than it was in Malaysia and 3.5 times more than in Thailand. And the latter two are the third and fourth most developed Asean economies, respectively. The gap between Singapore and the poorer members of the Asean community is even more striking. In 2005, Singapore’s per capita GDP was more than 11 times higher than that in Cambodia, the Lao People’s Democratic Republic, and Myanmar. Closing this gap will take a long time. Assuming that recent trends continue, reducing the per capita GDP gap between Singapore and Cambodia by 25 percent, for example, would take 15 years. A reduction by 50 percent would take about 34 years.”

The gaps in per capita GDP have not only persisted; they have also been widening. For 2014, the Economic Research Institute for Asean and East Asia reported that Singapore had a nominal per capita GDP of US$56,287, which is 53 times bigger than the per capita GDP of Cambodia amounting to US$1,105.

Equally disturbing is the growing inequality within each Asean country, even in wealthy Singapore.  The other more developed Asean countries – Indonesia, Malaysia, Philippines and Thailand – have gini coefficients of over .40, or very high income inequality (zero coefficient is perfect equality). On the other hand, the CLMV countries have gini coefficients of less than .40, and yet their populations generally enjoy lower standards of living.

The informal sector also accounts for the majority of the workers in the semi-agricultural and semi-industrial Asean countries, meaning all the Asean states minus Singapore, Brunei and Malaysia. The informals include the landless rural poor, small farmers, fisherfolks, indigenous peoples, micro entrepreneurs, home-based producers, ambulant and sidewalk vendors, and the “unpaid” family workers. Collectively, they constitute as much as two-thirds of the total employed.

Also, the lament of the Philippine trade unions against “contractualization” is a problem Asean-wide. Casuals and short-term hires outnumber the regulars in the formal labor market in most countries. The flexibility in labor hiring is augmented by the employment of migrant workers who do the 3Ds – dirty, dangerous and difficult jobs. Malaysia and Thailand have millions of low-skilled migrant workers coming from adjacent or neighboring Asean countries. Many of these migrants are undocumented. In Indonesia, the trade unions shut down Jakarta in 2012 to protest the widespread use of “outsourcing” or hiring of workers by industries through third-party manpower recruitment agencies, which, like in the Philippines, pose as workers’ direct employers.

Clearly, a major challenge to the Asean is how to close or narrow the development gaps not only between or among the Asean member states but also within each country.  The urgency of closing these gaps is widely acknowledged by the Asean Secretariat and the member states. The problem is that there are no development funds to close the gaps, similar to what the European Union had in the 1960s-1980s. This means the Asean should be more daring and creative in crafting economic development programs that promote inclusion and balanced growth across the region even if these programs deviate somewhat from the Asean’s open liberalization programs. For example, those lagging behind in development should be encouraged to diversify and modernize their economies in accordance with their national priorities, not necessarily based on their liberalization commitments to the AEC blueprints.

As to the inequality and socio-economic gaps obtaining within each Asean member state, this is clearly a task that every Asean government must be able to address, with or without any Asean resolution.


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