SOUTHEAST ASIA REPORT
The Association of Southeast Asian Nations (ASEAN) has outlined the framework for a new implementation plan for the ASEAN Economic Community (AEC), which is attempting to integrate the regional market. The plan will focus on digitalization and decarbonization of the economy as key objectives to be achieved by 2026-30. It will accelerate the integration of the market of 700 million people.
According to the draft plan, it will be structured around six goals, including creating an environment that encourages technological innovation, attracting investment in the green economy and building a food security system. It will include more than 200 specific implementation plans. The plan will be discussed at the ASEAN summit, which began in Laos on Oct. 9, 2024.
The plan includes creating a renewable energy supply network that spans member countries, making it easier for companies to provide financial services, such as fintech, across multiple countries in the region. In addition to digitizing trade transactions to facilitate trade, discussions are underway to include cooperation in the development of EV supply networks and infrastructure.
Laos has begun exporting hydropower to Singapore, and there are plans to export wind power to Vietnam. The new targets will leverage existing infrastructure to expand decarbonization businesses in the region.
It will also support the creation of a cross-border settlement system. It will expand the area where payments can be made using a common QR code in the region. In 2022, Singapore, Indonesia, Thailand, Malaysia and the Philippines agreed to integrate QR payments. Connections between Malaysia and Cambodia were also launched in mid-September.
The AEC was established in 2015. Unlike Europe’s economic integration, which began among the rich, developed countries of Western Europe, ASEAN, which has a wide range of differences in the size of its member countries’ economies and levels of development, has a history of gradually promoting integration through measures such as tariff reductions.
The next goal will be to address issues such as the liberalization of the movement of skilled labor, with the aim of creating a single market. The period will be shortened to five years and the integration of the single market will be accelerated.
Source: The Nikkei
PSR Analysis: Southeast Asia, where market sizes and levels of development vary from country to country, has sought to develop its relationship with the major powers of Europe and the United States by uniting the countries of the region. Despite the stagnation caused by the COVID-19 pandemic, the region has continued to achieve stable economic growth of about 5% since 2015.
In addition to boosting intra-Southeast Asian trade, the region is attracting investment from Europe and the United States, and economies of scale are likely to emerge as market integration progresses.
One concern is the relative political instability in the region, as evidenced by the recent coup in Myanmar, and the rise of protectionist sentiment. In addition, China’s economic influence is growing, and if this trend continues, the distance between Southeast Asia and Europe and the United States is likely to increase. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
