ASEAN Economic Community (AEC): Malaysia takes over the Chair on 1st January 2015

Malaysia, Prime Minister Datuk Seri Najib Razak will assume the ASEAN chair on Jan 1, 2015 The chair of the Asean Business Advisory Council (Asean BAC) will also be handed to Malaysia, to Tan Sri Dr Munir Majid, the current chairman of the Malaysian chapter of the Asean BAC, on Jan 1, 2015

Being the chair next year, Malaysia is tasked with sheperding the regional grouping to a significant milestone in its 47-year history, the formation of the Asean Economic Community (AEC), which comes into being on Dec 31, 2015.
Malaysia has chosen the theme “A people-centric Asean” for next year but not much is known as yet about what programme or plans will flow from this theme. What is known is that Malaysians have the lowest levels of awareness of Asean matters among the regional grouping’s citizens, according to findings carried out by the Asean Foundation.
The findings belie Malaysia’s trade links with her neighbours. Trade with Asean has risen by leaps and bounds, with members accounting for 28.1% of exports last year while they accounted for 26.7% of Malaysia’s imports.
Economic integration is the best way forward to deeper regional ties with the AEC being one of three pillars forming the Asean Community. In fact, given that the region already has deepening trade and investment ties, the AEC will pave the way for integration under the Asean Political Security Community and the Asean Socio-Cultural Community pillars.
The AEC envisions a single market and production base, a highly competitive economic region, a region of equitable economic development, and a regional economy fully integrated into the global economy.
“Its not going to be perfect, which is likely to be the case, and while there has been genuine progress in economic integration, there’ll be shortfalls and at the same time there’ll be new initiatives to drive the AEC forward,” Munir says, referring to the Dec 31, 2015 deadline.
Even where agreements have been signed, there will still be obstacles as signatories have to amend legislation and that takes a long time. Munir says the reality is that the enabling legislation in the domestic jurisdiction is not always followed through. Indeed, observers say that Asean needs to be restructured to be more nimble in carrying out its duties to integrate the region.
While barriers for trade in goods are almost all gone, there are still non-tariff barriers to contend with. Also, not all sectors and industries are opened to foreign investment. Malaysia’s automotive industry comes to mind.
Furthermore, progress on the economic integration blueprint, which uses a scorecard system to chart compliance, does not give the full picture of realities on the ground. Critics argue that this is an imperfect system. One critic notes that the scorecard does not assess how well or effectively obligations are being implemented, it just assesses whether these regulations are in place.
Munir says while the scorecard has its uses, the Asean private sector prefers to know more about immediate concerns such as how to operate in different jurisdictions.
“For example, I’m interested in the banking/financial services industry and its operating environment,” Munir, who is also Bank Muamalat Malaysia Bhd chairman, says. He prefers to see Asean integrate project by project and sort out the issues as they come up. “If you go on the basis of having everything in place first (the enabling legislation), nothing will get done. Build around these projects, solve the problems arising from these projects, then percentages of compliance doesn’t matter anymore,” Munir says.
He adds that when benefits of working across borders are seen for a project, there will be more momentum for integration.
/theSTAR 08-11-2014
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