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The formation of ASEAN Economic Community (AEC), an unified market of ten South East Asian economies, will be a key catalyst for the region's emergence from dull economic cycle triggered by a multitude of domestic issues and challenges, according to senior economists and geopolitical experts.
Kishore Mahbubani, dean & professor, policy, Lee Kuan Yew school of public policy said the region stands to benefit three very favourable winds blowing including the AEC. "This year the ASEAN ministers will meet to declare victory on AEC. It won't be completed. But, about 80% completed. They will still put some goodies on the table to prove that AEC is real. That is a favourable wind," Mahbubani, a best selling author and a well regarded authority on foreign policy, said while speaking at the Invest ASEAN summit organised by Maybank Kim Eng, a leading securities firm in the region.
Mahbubani identified increasing geopolitical conversations in the region that includes US, China and Japan and the emergence of governor Jokowi as a favourite to win Indonesian presidential elections as other favourable factors.
Suhaimi Ilias, chief economist said," the coming of AEC heralds an,exciting time and opportunities for ASEAN economies, businesses and capital markets."
The AEC, targetted to be operational by end 2015, marks a significant milestone in the region's integration. ASEAN initially started off in the 1960s as a security bloc evolving into an economic one over the decades.
According to Maybank, the formation of single market that will include 10 countries from the region with a population that equals Europe and a combined GDP of $2 trillion augurs well for the long term.
The ten countries include Singapore, Malaysia, Indonesia, Thailand, Brunei, Vietnam, Phillipines, Cambodia, Laos and Myanmar.
The AEC movement has reached a critical stage where several corporate players are looking to expand beyond their home markets. Favourable demographics of the region's 600 million population, natural resources to be unlocked by the opening up of new areas like Myanmar and significant financial resources waiting to be tapped in the form of domestic savings are seen as building blocks of this new community.
However, intra regional inequalities can pose a serious issue, said Supachai Panitchpakdi, former secretary general, UNCTAD. He pointed out that one one hand the GDP per capita was at $60,000, whereas the poorer countries of Cambodia, Laos and Myanmar, known by acronym CLM have per capita income lesser than $900. The former UN diplomat from Thailand said also said " we have to change from being Japan centric or China centric. We need to be ASEAN centric." Increasing dissatisfaction of commoners over the incumbent political regimes was also seen as a key threat to the investments and businesses in the region.
