With Launch of ASEAN Economic Community, Region Must Make Integration a Reality

Jakarta, Indonesia, 21 April 2015 – With the milestone launching of the ASEAN Economic Community (AEC), South-East Asian nations have the opportunity to take the region to the next level of development, though there are significant challenges ahead, the Co-Chairs of the 24th World Economic Forum on East Asia agreed in the closing session of the meeting. “There is an eagerness to make this work and put all the elements in action to move forward, have a level playing field, a much bigger market and grow the pie significantly in the next few years,” said Hans-Paul Bürkner, Chairman of The Boston Consulting Group.

The theme of the World Economic Forum on East Asia 2015 was “Anchoring Trust in East Asia’s New Realism”. Building trust among all stakeholders and in institutions will be crucial if ASEAN is to succeed in reaping the full benefits of regional integration.

“People have lost trust in the ability of markets and business to create wealth and to fairly allocate opportunities,” observed John Riady, Executive Director of the Lippo Group in Indonesia. “So it is important for business to reflect on its role and the role that it can play in society. But this is important not only for business. No matter who we are – whether in government, education, media or NGO – this is an important time to reflect on stewardship, how we can be better stewards of what we have been given, and how we can rethink what we are doing and better structure our institutions to reflect the realities of our world.” Budi Gunadi Sadikin, Chief Executive Officer of Bank Mandiri (Persero) in Indonesia, added: “We can get things done faster if we have mutual trust that we have built in these meetings.”

For her part, Teresita Sy-Coson, Vice-Chairperson of SM Investments Corporation in the Philippines, said that the discussions at the World Economic Forum on East Asia had highlighted the major challenges ahead for ASEAN, in particular labour mobility. “There is now an understanding of the importance of the freer movement of human capital,” she said. William Lacy Swing, Director-General of the International Organization for Migration (IOM) in Geneva, agreed: “It is quite clear that, with the very exciting regional integration going on here, human mobility will be increased and expedited as a result. We have to look at it as both a challenge and opportunity. Migration is not a problem to solve; it is a reality to be managed.”

Earlier, in a session on the global impact of ASEAN, business and government leaders spoke of the opportunities and challenges of ASEAN’s regional integration. “If you think about the notion of a more complete supply chain across the region, there are huge advantages,” said H. Raymond Bingham, Chairman of the Board of Flextronics International in the US. “Many of the elements are already here in ASEAN, but there are barriers – boundaries, regulations, the inability to have a mobile workforce.”

“The practice of the AEC is there, but trade in services is still limited,” acknowledged Bambang Brodjonegoro, the Minister of Finance of Indonesia. “The homework for all ASEAN leaders is to make sure that the Community becomes a reality.” With ASEAN integration deepening, Myanmar will have to address issues such as the lack of skills and the need to improve education, said Serge Pun, Chairman, Serge Pun & Associates (Myanmar). “As the youngest member of ASEAN, we want to have our cake and eat it. We want all the benefits of integration, but we are also worried about competing with mature economies and companies.”

India sees significant opportunities for driving its growth in engaging the ASEAN, said Adi B. Godrej, Chairman, the Godrej Group, Godrej Industries, in India. “There are a lot of things that ASEAN countries can do to leverage each other’s strengths to further rapid growth,” he advised. “India could be a great partner of ASEAN.”

The AEC and regional integration of ASEAN are “a work in progress, but we have done a lot,” Cesar V. Purisima, Secretary of Finance of the Philippines, told participants, noting that electronics is a sector where major significant integration across the 10 South-East Asian economies has already been achieved. “We have seen the value of one market. We are working through it systematically – in the ASEAN way.”

“It is time to take action,” Murat Sönmez, Chief Business Officer and Member of the Managing Board of the World Economic Forum, told participants in remarks at the end of the closing session. He outlined four issues that were the focus of discussions at the World Economic Forum on East Asia, including public-private cooperation on infrastructure development, financial inclusion, the need to address non-communicable diseases and food security. At the meeting, the Forum, in cooperation with the ASEAN Secretariat, launched Grow Asia, a new programme to strengthen food security and sustainable agriculture in ASEAN, reaching 10 million farmers by 2020.

In closing the World Economic Forum on East Asia, Mustapa Mohamed, Minister of International Trade and Industry of Malaysia and Philipp Rösler, Member of the Managing Board of the World Economic Forum, announced that next year’s meeting will be held in Malaysia

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