THE Asean Economic Community (AEC) has been formally established by the countries of the Association of the Southeast Asian Nations (Asean) on December 31, 2015. But what exactly is the AEC, and what does it mean for Brunei Darussalam?
According to a press release from the Ministry of Foreign Affairs and Trade (MoFAT), the creation of the AEC in 2015 is simply another milestone, albeit an important one, in Asean’s journey of economic cooperation that has been going on for the past 40 years.
What started out as a group of countries in Southeast Asia trying to overcome significant political and security challenges at the time when Asean was created in 1967, has slowly evolved into a movement to transform the region into an economic powerhouse.
Today, if Asean were to be considered as a single country, it would be the 7th largest economy in the world, with a population of 622 million people. Data has also shown that the region’s gross domestic product (GDP) has nearly doubled since 2007.
Brunei Darussalam is at the centre of Asean, and our businesses here in Brunei – especially our small and medium enterprises – is where the opportunities await.
If Asean were to be considered as a single country, it would be the 7th largest economy in the world, with a population of 622 million people. Brunei Darussalam is at the centre of Asean
The next stage of integration for Asean was agreed last year through the AEC 2025 Blueprint, with the focus for Asean economic integration set out through five key characteristics
So what is the AEC? To define it, one just needs to simply remember its four important and mutually reinforcing pillars:
– Single market and production base
Under the first pillar, Asean has worked hard to improve trade and investment in the region.
The achievement of local Bruneian companies such as Sabli Foods, BMC, KTM, Tri-Sun and Hasmit Roofing are just some of the many success stories made possible through the AEC, where local companies are able to benefit from the lowering of production costs, for example through accumulation and access to cheaper raw materials, and subsequently export their goods more competitively to other Asean countries like Malaysia, Singapore and the Philippines, and even beyond.
The focus for Asean now is to further improve customs procedures and ensure that all rules and regulations are clearly published so as to make it easier for our private sectors whenever they want to import or export their goods.
– Competitive Economic Region
Asean’s efforts under Pillar 2 are aimed at improving the competitiveness not just of each Asean member state, but the region as a whole.
As a direct result of Asean’s targets and commitments under this pillar, Brunei Darussalam introduced several laws, such as the Competition Order 2015 and the Consumer Protection Order 2011.
At the same time, efforts under this pillar have also been focused at developing the capabilities of each Asean member state, including Brunei Darussalam, in other areas that were targeted at improving the region’s attractiveness for trade and investment.
One good example is in the area of intellectual property rights, where Brunei has been able to learn from its Asean counterparts, as well as benefitted from the various technical assistance programmes provided by Asean’s Dialogue Partners especially in making Brunei Darussalam an attractive destination for foreign direct investment.
– A region with equitable economic development
Under the third pillar, efforts have been concentrated towards ensuring that the benefits of improved trade and investment in the region would also be equitably shared and enjoyed by the lesser developed economies, as well as small and medium enterprises (SMEs), whose active contribution provides for up to 90 per cent of total employment in the region.
Brunei Darussalam has been able to benefit from the many programmes provided for SMEs, and in particular, has relied significantly on the expertise available through the various trade and investment promotion centres, such as the Asean-Japan and the Asean-Korea Centres, based in Tokyo and Seoul respectively.
Local products have benefitted in terms of product design and packaging techniques from programmes provided for SMEs through the third pillar of AEC. PHOTOS: MOFAT
Because of this, some of our companies such as IBIC Sdn Bhd and Mustaqim Enterprise have benefitted from valuable product design and packaging techniques aimed at giving them an edge in marketing their goods abroad.
– A region that is fully integrated into the global economy
The work under the fourth pillar aims to ensure that the AEC will not be isolated, but will instead be a relevant and key player in the global economy.
In order to achieve this objective, Asean established free trade agreements with a number of countries including China, Japan, South Korea, India and Australia and New Zealand.
Because of the achievements Brunei Darussalam has made in opening up markets abroad, Bruneian companies such as Golden Corporation and Brunei Methanol Company have been successful in entering overseas markets such as Australia, New Zealand and South Korea.
Now, efforts are underway to create a single mega trade agreement between Asean member states and these existing FTA partners of Asean, through the Regional Comprehensive Economic Partnership (RCEP).
This is expected to potentially lead to the creation of one of the world’s largest free trade areas, establishing an integrated market comprising of over three billion people with a combined GDP of about US$17.23 billion (based on 2010 figures).
What all this means for our local companies, as well as potential investors, is that doing business in Brunei will not result in dealing primarily with a small domestic market of 400 thousand, but rather having access to a much larger regional and international market.
They can instead look towards capturing the significant opportunities of Brunei being part of an integrated market such as the AEC, and all the benefits it can bring.
AEC 2025
With AEC now established, the next stage of integration for Asean was agreed last year through the AEC 2025 Blueprint.
For the next 10 years, the focus for Asean economic integration is set out through five key characteristics as follows: Integrated and highly cohesive economy; competitive, innovative and dynamic Asean; resilient, inclusive, people-oriented and people-centred Asean; enhanced connectivity and sectoral cooperation; and global Asean.
The MoFAT will be organising an outreach programme on April 2 at the International Convention Centre, to share information on the AEC as well as other key initiatives being undertaken by Brunei.
Interested members of the public are welcome to pre-register via e-mail to trade.brunei@mfa.gov.bn by March 29.
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