Variance Among ASEAN Economies Poses Challenges

By Zhang Yuan

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Variance Among ASEAN Economies Poses Challenges

By Zhang Yuan

The ASEAN Community was established on Dec. 31， 2015， marking a historical step forward in the construction of the regional bloc. This is the third milestone in ASEAN integration after the original grouping was founded in August 1967. With balanced economic development across the present 10 member states， it is expected to accomplish the free flow of commodities，services， investment， capital and human resources. In the meantime， it will gather the strength of all member states to gain a more influential role in the global political arena.

According to Xu Bu， Chinese Ambassador to ASEAN， the ASEAN Community will provide China with a broader market， more favorable terms in trade and a better environment for investment. As the first sub-regional community in Asia， the ASEAN Community will display an improved level of integration in economy， politics， society and culture. However， the fact that ASEAN faces numerous challenges to fully realize integration cannot be ignored.

At present， the ASEAN Community is composed of both developed countries and underdeveloped countries. there is a big gap in economic development. The underdeveloped members have to take into consideration necessary protective measures to deal with the potential negative impact from the establishment of the Community.

For instance， from Jan 1 this year， ASEAN members gained access to free flow and open migration in eight specific areas： dentistry，physiotherapy， technology， construction，accounting， architecture， expedition and tourism. However， according to the AEC， in order to be allowed free movement， applicants must undertake extensive professional training and be an expert in foreign languages， especially English.

That will change the present situation of the labor market in Vietnam， for example. According to the World Bank， Vietnam lacks sufficient skilled labor， especially senior technical workers. Among 12 economically competitive Asian counties， it ranks 11th in terms of the quality of human resources. By this measure， Vietnam scores just 3.79 out of 10， while this score is 4.94 in thailand and 5.59 in Malaysia. Due to this absence of highly skilled workers， it is likely that a large number of workers from the Philippines， Indonesia and Malaysia will pour into Vietnam， making it more difficult for Vietnamese to find jobs.

In addition， due to the saturated job market in Singapore， people from high-end industries are eyeing Vietnam， prepared to enter the sectors of accounting， architecture，health care and business administration in 2016. Based on a survey， the English proficiency level of the Vietnamese labor force is lower than their peers in neighboring Thailand， Cambodia， the Philippines， and Laos. As a result， they lack the competitive ability to go global.

Because of that， developed ASEAN States， like Singapore， still need to underpin underdeveloped counterparts in terms of financial assistance， investment facilitation，infrastructure building and human resources cultivation.

Except for differences in economic development， ASEAN members have diversified political systems and ideologies. Religious and ethnic barriers have long existed. Disputes over territory and territorial waters are yet to be resolved. Different political environments domestically create tension between interest groups and sluggish bureaucracy. Given these facts， and with the addition of the recently booming NGOs and civil society factors，ASEAN's economic agreements face big pressure to get approval through domestic legal procedures. There is still a long way to go towards a unified political and social community.

Against the complicated international political backdrop， ASEAN has creatively found the approach to unique regional cooperation： the ASEAN Way， with remarkable achievements in safeguarding regional stability and facilitating the cooperation among its member states. However， the long pursued“consensus”， the sovereignty of each country that tends to be overemphasized， organizational slack， and the shortage of central decision-making mechanisms are the main reasons for ASEAN's lack of efficiency in the past.

Although the ASEAN Charter in 2007 granted legal standing to ASEAN，the basic principle of non-intervention in internal affairs did not change. Recently，Hor Namhong， Cambodian Deputy Prime Minister and Minister of Foreign Affairs said the ASEAN Community planned neither to establish a unified administration like that of the EU， nor to introduce any law will have binding force on ASEAN members. How to develop a bondless multinational group into a unified political community in a real sense still needs considerable practice and exploration.

Economically developed ASEAN countries have signed bilateral Free Trade Agreements with non-ASEAN economies. These trade arrangements will probably divide the overall benefit gained in the process of building the ASEAN Community. Apart from that， the US is actively pushing the Trans-Pacific-Partnership that involves some ASEAN members. the US advocates the joining of individual countries. That not only changes ASEAN's custom of working as a whole， but also undermines ASEAN's efforts to behave collectively. In addition， for better development， the ASEAN Community must maintain a closer cooperative relationship with related major powers， especially China and the US，to seek a careful balance.

About the author：

Zhang Yuan is a researcher at Anbound Consulting.