ASEAN Economic Community

ASEAN Economic Community
The world that is changing from day to day is responded to by the countries in
Southeast Asia who are members of ASEAN by strengthening relations between countries.
Relationships that are formed are usually manifested in the form of cooperation in several
fields. One area of focus is the economic field. Currently, several ASEAN countries have
shown significant developments, even including their position that is taken into account in the
international arena.
Call it Indonesia, Thailand, Vietnam, Malaysia, and Singapore. These countries are
now not just consumers, but also become producers for other countries. This is a positive
value, of course. The existence of the European Union and the North American Free Trade
Agreement encourage ASEAN countries to initiate cooperation in the wider trade sector. The
ASEAN Economic Community (AEC) was conceived to form a single market and create
competitive conditions between countries for the improvement of member countries.
A. Background of the ASEAN Economic Community
The history of the MEA begins with a mutual agreement at the Summit which
was held in Kuala Lumpur, Malaysia, which produced a shared vision of Southeast
Asian countries (ASEAN Vision 2020). The aim is to make the Southeast Asian
region a prosperous region with equitable development and economic development in
each of its member countries.
The summit in Bali, Indonesia in October 2003 produced similar results to the
1997 summit. At the Bali Summit, the leaders of the ASEAN countries stated the
importance of integrating the ASEAN Economic Community (AEC) as one of the
main objectives in the integration of economic behavior in the regional region will be
implemented in 2020.
The next summit in 2006 in Kuala Lumpur, Malaysia gave birth to a new
consensus. It states that the year of the entry into force of the MEA was advanced.
Which initially in 2020 became 2015. The consensus gave birth to a declaration called
the Cebu Declaration. With the signing of the Cebu Declaration, the consensus
decision from year to year becomes a concrete step to make ASEAN a free trade area
that includes all components of economic activity. Starting from goods, labor
(skilled), investment, capital, to services.1
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B. ASEAN Economic Community
The Asean Economic Community (AEC) was officially adopted on December
31, 2015. The most influential country is the State of Vietnam. Vietnam has potential
sectors similar to those of Indonesia. Vietnam has the same industrial products as
Indonesia. They have textile products and shoe products.
The Association of Southeast Asian Nations (ASEAN) is an organization for
Southeast Asian countries which was founded on August 8, 1967 in the City of
Bangkok. This agreement was approved by five founding figures who were
representatives of five different countries in Southeast Asia. And these are the names
of the five ASEAN founding countries and their founding figures:
1. Indonesia, at that time was represented by its foreign minister named
Adam Malik
2. Malaysia, at that time was represented by its foreign minister named Tun
Abdul Razak.
3. Thailand, at that time was represented by his foreign minister named
Thanat Khoman.
4. Singapore, at that time was represented by his foreign minister named S.
Rajaratnam.
5. The Philippines, at that time was represented by its foreign minister named
Narciso Ramos.
Then the number of ASEAN members increased to 10 countries. ASEAN
countries include: Indonesia, Malaysia, Thailand, the Philippines, Singapore, Brunei
Darussalam, Vietnam, Laos, Myanmar, Cambodia.
With the opening of the MEA, automatically foreign securities companies can
easily offer their products in Indonesia and encourage Indonesian companies to
register their shares in other countries. In quality, fruits and vegetables from Indonesia
are recognized by many countries as the best tropical plant products in the world.
However, improvements have not been made, so that the competitiveness of
Indonesian vegetable and fruit products has not yet been lifted.2
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The ASEAN Economic Community (AEC) is a form of regional economic
integration that is planned to be achieved. It is known that the ASEAN Economic
Community (AEC), has a goal as a single market and production base, so that the free
flow of goods, services, investment, and skilled labor and capital flow can be more
free with the presence of the AEC.
The problems that have stemmed Indonesia so far as trade barriers, with the
presence of the ASEAN Economic Community (AEC) can be a solution by reducing
those obstacles. In fact, with the presence of the MEA (ASEAN Economic
Community) trade barriers will no longer exist. If this can happen, it will benefit the
Indonesian people.
On another aspect, the presence of the AEC (ASEAN Economic Community)
will provide new challenges for the nation and state of Indonesia. The challenges of
the presence of the ASEAN Economic Community (AEC) in the form of the problem
of homogeneity of commodities traded for example, agricultural commodities,
textiles, wood products, rubber, and electronic goods.
In some cases, Indonesia is said to be not ready to face the ASEAN Economic
Community (AEC). These ideas and statements are not without cause, because the
competitiveness of national and regional economies is not ready. Infrastructure
limitations are also the most crucial obstacles Indonesia will face in the future.
In general, what is meant by the ASEAN Economic Community (AEC) is an
initiative of ASEAN countries to realize ASEAN as a solid economic region and
taken into account in the international economic arena.
In realizing the ASEAN Economic Community (AEC) there are 4 pillars that
are an agreement for ASEAN leaders.3
The Four Pillars of the MEA are:
1. Single market and production base;
2. Highly competitive economic zones;
3. Regions with equitable and equitable economic development; and
4. Regions that are integrated with the global economy.
The four pillars are contained in the Blueprint document agreed at the 38th
ASEAN Economic Ministers Meeting (AEM) in Kuala Lumpur in August 2006.
In 2015, ASEAN member countries approved the ASEAN Economic
Community Blueprint 2025. The MEA Blueprint 2025 will be built on the 2015 MEA
Blueprint consisting of five interrelated and mutually reinforcing characteristics,
namely: (a) an integrated and integrated economy full; (b) ASEAN which is
competitive, innovative and dynamic; (c) Increased connectivity and sectoral
cooperation; (d) ASEAN which is resilient, inclusive, and oriented and community
centered; and (e) global ASEAN. MEA 2015 aims to improve the welfare of ASEAN
which has characteristics as a single market and production base, ASEAN region is
more dynamic and competitive, has equal development, and accelerates economic
integration in the ASEAN region and with regions outside ASEAN.
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To implement the 2015 MEA Blueprint, scorecards containing deliverables are
determined, namely:
1. 611 action steps in the Full Scorecard category; and
2. 506 action steps in the Focused Base category.
As of December 31, 2017, 72 out of 118 priorities (61%) of the AEC
implementation in 2017 have been successfully implemented. Of the 46 priorities that
have not been implemented, 12 of them have been implemented by several ASEAN
member countries. So far Indonesia has implemented 85 of the 118 priorities.
MEA 2025 is a continuation of the 2015 MEA, and aims to make the ASEAN
economy more integrated and cohesive; competitive and dynamic; improved sectoral
connectivity and cooperation; tough, inclusive, oriented and community centered; and
global ASEAN.
The scope of ASEAN economic cooperation: ASEAN economic cooperation
covers the fields of industry, trade, investment, services and transportation,
telecommunications, tourism, and finance. In addition, this cooperation covers the
fields of agriculture and forestry, energy and minerals, as well as micro, small and
medium enterprises (MSMEs). We can see the profile of the ASEAN economy as
follows:
1. ASEAN countries are rich in natural resource commodities in the form of
energy, minerals and food crops;
2. The large ASEAN population, which is 632 Million People (2015), the
majority are of productive age;
3. The economic growth of ASEAN countries is relatively high, an average
of 5% - 6% per year. To encourage equality of development between
member countries (narrowing the development gap), ASEAN has the
Initiative for ASEAN Integration (IAI) or the ASEAN Integration Initiative
(IIA). IIA aims to create equitable development between ASEAN-6
(Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and
Thailand) and the CLMV (Cambodia, Laos, Myanmar and Vietnam).
Implementation of the Initiative for ASEAN Integration: The Initiative for
ASEAN Integration is carried out in the form of capacity building training projects,
institutional development assistance, policy advice, and feasibility studies.
Project Funding Initiative for ASEAN Integration: Project implementation
generally receives funding from ASEAN-6, dialogue partners, or international
institutions in the framework of IIA and bilaterally.
Initiative for ASEAN Integration Projects: Initially the Initiative for
ASEAN Integration project was implemented in the fields of economics such as
infrastructure development, human resources, capacity building for regional
integration, energy, investment climate, tourism, poverty alleviation, and improving
the quality of life. In its development, the IIA project expanded to cover the fields of
politics-security and social culture.
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In addition, at the suggestion of Indonesia, ASEAN has approved the ASEAN
Framework on Equitable Economic Development (AFEED) or the ASEAN
Framework on Equal Economic Development. The framework emphasizes efforts,
among others, to reduce development gaps, strengthen the quality of human resources,
increase social welfare, develop micro, small and medium enterprises (MSMEs), and
broader participation in the ASEAN integration process.4
C. The Purpose of the ASEAN Economic Community (AEC)
As explained earlier, the establishment of the AEC has the main objective of
presenting economic equality for all citizens of the ASEAN region. If elaborated more
deeply based on the Cebu Declaration, the main objectives of the establishment of the
ASEAN Economic Community (AEC), namely:
1. Creating a single market that includes ASEAN countries as well as a
production base with relation to the elements of free economic activity
products, such as labor (educated / skilled), duty free for the flow of goods
and services from the ASEAN region, and investment in and out and
capital flows to countries in the region.
2. Making ASEAN a region with high economic competitiveness marked by
strengthening regulations in economic competition, including consumer
protection, Intellectual Property Rights (IPR), taxation, smooth eCommerce activities, and infrastructure development.
3. Spread the economic empowerment of the ASEAN region with the main
target of revitalizing Small and Medium Enterprises (SMEs), especially for
the countries of Cambodia, Myanmar, Laos, and Vietnam (CMLV). As is
known with the CMLV country has long and repeatedly been plagued with
a variety of political, social and cultural issues that affect the security of
the country. Thus, as summarized in the ASEAN Vision 2020 and the
ASEAN Concord II Pact, the AEC was created with the intention to evenly
distribute the economy throughout the region.
4. Integrate the regional economy with the global economy with the basic
aim of increasing ASEAN's participation in the global policy arena. All
done with a coherent approach between the regional and global economies.
This certainly is one of the positive sides because later input from ASEAN
countries is considered important.
The purpose of establishing AEC in accordance with the pact in the Cebu
Declaration certainly provides a new style for the economic characteristics of the AEC
region. These characteristics can be described as follows:
a. The economic climate of the region has become more competitive.
b. Efforts for economic equality within the scope of countries joined in
ASEAN.
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c. Integration of the global economy and remote areas to become a
production base and single market.
Considering how big the goals and strictness of the global economic style of
the AEC region is, certainly it is felt necessary for the Indonesian people to know
more deeply the intricacies behind the AEC and its benefits.5
D. Issues discussed in the ASEAN Economic Pillars
1. ASEAN trade
a) ASEAN Goods Trade
i.
ASEAN trade liberalization began since the formation of the
ASEAN Free Trade Area (AFTA) in 1992. To facilitate smoother
trade, the ASEAN Trade in Goods Agreement (ATIGA) was
adopted in February 2009. ASEAN as a whole has eliminated
96.01% of tariff posts.
ii.
ASEAN goods trade negotiations carried out in the Coordinating
Committee on ATIGA (CCA). The CCA discusses issues related to
goods trading practices by each ASEAN member country and their
compliance with ATIGA, such as the issue of tariff transposition,
non-tariff measures (NTMs), and rules of origin (ROO).
iii. AEC 2025 Trade Facilitation Strategic Action Plan (ATF-SAP)
was adopted at the 31st AFTA Council Meeting in September
2017, with the aim of realizing the target of the AEM mandate of
reducing the transaction costs by 10% by 2020, and doubling the
amount of intra-ASEAN trade between 2017 and 2025.
iv.
To facilitate trade in the region, ASEAN has launched ASEAN
Solutions for Investments, Services and Trade (ASSIST) which can
be used directly by business actors to submit complaints about
Non-Tariff Barriers (NTB) and other obstacles encountered when
conducting business relations with Other AMS.
v.
ASEAN also has an ASEAN Trade Repository (ATR) which
compiles the National Trade Repositories of each AMS. This ATR
contains AMS policies and regulations related to trade in goods.
ASEAN has also launched Tariff Finder which is an online
mechanism to get information related to tariff preferences that are
included in the ATIGA and ASEAN + 1 Free Trade Agreement
(FTA) schemes.
vi.
As for the ASEAN Single Window, from 1 January 2018, 5 (five)
AMS countries, namely Indonesia, Malaysia, Singapore, Thailand
and Vietnam, have been carrying out Live Operation e-Form D.
join so that ASEAN can immediately implement it in full.
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vii.
The Strategic Action Plan (SAP) for Trade in Goods (TIG)
contains outcomes for liberalizing tariffs that are not yet 0%,
impacting alcoholic beverage products that Indonesia still places on
the General Exclusion List (GEL) and rice and sugar products in
the Highly Sensitive List (HSL) . There is a desire by ASEAN
member countries to review ATIGA to accommodate the MEA
2025.
b) ASEAN Trade in Services
i.
In an effort to increase economic cooperation through trade
liberalization in services, ASEAN countries have agreed and
ratified the ASEAN Framework Agreement on Services (AFAS) on
December 15, 1995 in Bangkok, Thailand. Since the signing of
AFAS in 1995, service liberalization has been carried out through
negotiations at the Coordinating Committee on Services (CCS) in
package form.
ii.
At present service trade negotiations have entered the ASEAN
Framework Agreement on Services (AFAS) Package 10.
Meanwhile, specifically for financial services and air transportation
negotiations are carried out at the level of other relevant Ministers
(Minister of Transportation and Minister of Finance). Financial
services liberalization negotiations are negotiating AFAS 8 while
transportation services have signed the 10th AFAS. ASEAN
service trade liberalization negotiations used a positive approach.
iii.
Thus, the service sector opened is limited to the sectors committed
by each country. Sectors opened by each country are listed in the
Schedule of Commitment (SOC).
iv.
As of December 2017, 5 (five) countries have fulfilled the 10th
AFAS Package, namely Brunei Darussalam, Indonesia, Myanmar,
Singapore and Thailand.
2. Displacement of Skilled Workers
i.
The movement of skilled workers in ASEAN is regulated through the
Mutual Recognition Agreement (MRA). ASEAN currently has 8
(eight) MRAs, namely for the profession of engineers, architects,
surveyors, general practitioners, dentists, nurses, tourism services and
accountants.
ii.
ASEAN also regulates the movement of other professional workers
through the signing of the ASEAN Agreement on the Movement of
Natural Persons (MNP) in November 2012. This agreement provides
guarantees of additional rights and rules that have been regulated in
AFAS about MNPs and also facilitates MNPs in carrying out services
in services and investation.
3. Investation
i.
Investment cooperation is guided by the ASEAN Comprehensive
Investment Agreement (ACIA) which has been in force (entry into
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ii.
iii.
iv.
v.
force / EIF) starting March 29, 2012. The main objective to be
achieved is to create an ASEAN investment area that is liberal and
transparent so that it can increase investment flows into the region.
Indonesia ratified ACIA on August 8, 2011 through Presidential
Regulation No. 49 of 2011 concerning Ratification of the ASEAN
Comprehensive Investment Agreement.
ACIA contains four pillars of ASEAN investment cooperation, namely
liberalization, protection, facilitation, and promotion. The main
principle is openness / transparency, equal treatment and international
best practices.
The investment cooperation forum in ASEAN is under the ASEAN
Investment Area (AIA) Council which is the Ministerial Body under
the coordination of the ASEAN Economic Ministers which is
responsible for overseeing the implementation of ACIA. In carrying
out its duties, AIA is assisted by the Coordinating Committee on
Investment (CCI).
ASEAN 6 countries (Brunei, Indonesia, Malaysia, the Philippines,
Singapore and Thailand) remain the main sources of intra-ASEAN
FDI, with an average share of 97.6% from 2008-2016. The
Coordinating Committee on Investment (CCI) has prepared the ACIA
Protocol to Amend. Indonesia in this regard, has ratified the ACIA
Protocol to Amend on 12 August 2015 through Presidential Regulation
No. 92 of 2015 concerning Ratification of the ACIA Protocol to
Amend.
The four priority CCI achievements to be agreed upon by ASEAN
heads of state at the 2017 ASEAN Summit (ASEAN Summit), namely:
(i) completion of the signing of the Second Protocol to Amend ACIA
by all ASEAN countries, (ii) completion of the Third Protocol to
Amend provisions the ACIA in particular by Thailand, (iii) organizing
the Regional Forum on Investment Disputes, Resolution, and
Prevention, and (iv) Focused and Strategic (FAST) Action Agenda on
Investment.
4. Master Plan on ASEAN Connectivity (MPAC)
To improve connectivity between member countries, ASEAN has developed a
Master Plan on ASEAN Connectivity (MPAC) which contains various projects
and programs for the development of infrastructure, institutions, and relationships
among member countries. ASEAN also established the ASEAN Infrastructure
Fund (AIF) or the ASEAN Infrastructure Fund (DIA) to support connectivity
between ASEAN member countries.
5. Regional Comprehensive Economic Partnership (RCEP)
i.
At the 19th ASEAN Summit in 2011 during Indonesia's Chairmanship,
ASEAN Leaders agreed to consolidate the existing ASEAN Free Trade
Agreement + 1 (FTA +1) and form the Regional Comprehensive
Economic Partnership (RCEP).
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ii.
iii.
iv.
6.
RCEP has an important meaning to support the pace of economic
growth in the region through the integration of existing ASEAN Free
Trade Agreements. RCEP will cover 3.4 billion world population
(48%), GDP of USD 21.7 trillion (29% of world GDP), and total
exports of USD 5.1 trillion (29% of world exports).
RCEP's scope includes Trade in Goods (TIG), Trade in Services (TIS),
Investment, Economic and Technical Cooperation (ETC), Intellectual
Property (IP), Competition, Legal and Institutional Issue (LII), ECommerce, SME , Government Procurement, and Movement of
Natural Persons (MNP).
RCEP negotiations have entered the 21st round in Yogyakarta,
Indonesia on 5-9 February 2018. Of the 18 planned chapters,
negotiations have only successfully completed 2 chapters namely on
Economic and Technical Cooperation (ECOTECH) at the 15th round in
Tianjin, October 2016 and the chapter on Small and Medium
Enterprises (SMEs) in the 16th round in Banten, December 2016.
Tourism
i.
ASEAN cooperation in tourism is regulated in the 2016-2025 ASEAN
Tourism Strategic Plan (ATSP). ATSP carries the vision of ASEAN as
a single destination, with the tagline "One Community Towards
Sustainability".
ii.
Indonesia has ratified the Agreement on the Establishment of the
ASEAN Regional Secretariat on the Implementation of the MRA TP
through Perpres Number 61 of 2017. As a follow up to the Agreement,
currently the draft of the Country Country Agreement (HCA) prepared
by Indonesia, as the host, is still being negotiated with the Regional
Secretariat represented by the ASEAN countries as the Governing
Council. As of the latest negotiations in December 2017 in Nay Pyi
Taw, the HCA was agreed not to contain articles on tax exemptions and
privatization and immunities for the Regional Secretariat and its
officials. HCA negotiations will continue in 2018.
7. ASEAN Economic Cooperation with External Partners
ASEAN memiliki kerja sama ekonomi dengan pihak eksternal yang diwujudkan
dalam ASEAN+1 Free Trade Area Partners (AFPs), yakni perdagangan bebas
dengan Tiongkok (RRT), Jepang, Korea Selatan, Australia dan Selandia Baru,
serta India. Sedangkan FTA antara ASEAN dan Hong Kong telah selesai
dinegosiasikan pada tahun 2017.
8. MSME
Since 2016, the Ministry of Cooperatives and SMEs has acted as a focal point in
the cooperation of the ASEAN Coordinating Committee on Micro, Small, and
Medium Enterprises (ACCMSME). The cooperation forum bridges the synergy
and integration of work programs at the ASEAN level with national work
programs, especially in the development of MSMEs. The participation of the
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Ministry of Cooperatives and SMEs in ACCMSME is realized through
involvement in MSME development activities and programs implemented in
ASEAN member countries, which refers to the Strategic Action Plan for the
Development of SMEs in ASEAN (Strategic Action Plan on SMEs
Development).6
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E. References
1. https://kemlu.go.id/portal/id/read/113/halaman_list_lainnya/masyarakatekonomi-asean-mea
2. https://www.artikelsiana.com/2019/08/pengertian-mea-tujuan-latar-belakangdampak-mea.html
3. https://www.cermati.com/artikel/masyarakat-ekonomi-asean-mea-inilah-yangperlu-diketahui
4. http://sukseskey.blogspot.com/2015/12/mea.html
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