AEC (ASEAN Economic Community) – “A Community of Caring and Sharing Societies”
“We see Asean as a very important area and the fastest growing in the world. Now Asean’s intra-trade of only 25 per cent can increase to 50-60 per cent in the near future.” (source – The Nation).
The AEC will be fully established by 2015 and is expected to improve competitiveness by transforming the economic group into a single market and production base, based on the following five objectives:
- Free flow of goods – Eliminating existing non-tariff barriers through improvements in the transparency of non-tariff measures, and the promulgation of rules and regulations which conform to international standards and practices. Trade will be facilitated through the harmonisation and standardisation of trade and customs procedures.
- Free flow of trade – The removal of all restrictions relating to the provision of services and the formation of companies across the borders of the 10 ASEAN member states by 2015, subject to respective national regulations. Asean is also working toward harmonisation and standardisation to help facilitate the movement of skilled labour within the region. As such, the Asean framework goes beyond a push to simplify visa and work permit processing, as it also involves ways for member countries to recognise the professional qualifications issued within each. Clearly, harmonisation and standardisation of professional qualifications across member counties is a difficult undertaking.
- Free flow of investment – The full establishment of a free and open investment regime, to boost competitiveness within ASEAN countries, and to attract flows of investment to the economic bloc.
- Free flow of capital – Fortify capital market development by harmonising financial standards through the promulgation of regulations in areas such as the offering of debt securities, and disclosure requirements, to enhance capital flows throughout the region.
- Free flow of skilled labour – Member countries are aiming to increase the mobility of labour within the ASEAN region, by facilitating the issuance of visas and employment passes for professionals and skilled labour, thus intensifying competition for employment opportunities in the region by 2015.
One of the goals set in the Asean Economic Community Blueprint is the free flow of skilled labour. However,Thailand’s domestic laws are far more restrictive. For example, the Alien Employment Act imposes work permit requirements and also gives effect to a 1979 royal decree, which wholly excludes non-Thais from 39 occupations reserved for Thai nationals.
Given that other member countries face similar issues, Article 33 of the Blueprint provides that ” … Asean is working to facilitate the issuance of visas and employment passes for Asean professionals and skilled labour who are engaged in cross-border trade and investment-related activities.”
Numbers 2-4 above will be huge challenges to all member countries except Singapore, which has long since liberalised foreign investment. For Thailand, significant amendments are needed in order to open up the market to its ASEAN counterparts. AEC envisages the following key characteristics:
- a region fully integrated into the global economy;
- a single market and production base;
- a highly competitive economic region; and
- a region of equitable economic development.
As the name suggests, AEC is all about achieving regional economic integration with effective facilitation for trade and investment by 2015. However, the AEC will NOT adopt a single currency like the Euro. The main areas of cooperation are:
- recognition of professional qualifications;
- regional human resources development;
- trade financing measures;
- enhanced infrastructure and communications;
- financial and economic policies;
- development of electronic transactions throughout ASEAN;
- integration of industries across the region to promote regional sourcing; and
- enhancement of private sector involvement to help build the AEC.
The AEC blueprint adopted by leaders in 2007 stated clear directions and measures to be implemented by ASEAN countries, and divided the ASEAN members into two groups in recognition of their different levels of development:
ASEAN+6: (Nation of Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand) – the ‘original’ members.
ASEAN+4: (Cambodia, Lao PDR,Myanmar andVietnam) – the ‘new’ members. An organisation exists that is collectively known as ASEAN Dialogue Partners, including ASEAN+3 (China, Japan and South Korea); and ASEAN-CER (Australia and New Zealand).
One of the foundations of the AEC is the ASEAN Free Trade Area (AFTA), which is a preferential tariff scheme aimed at promoting the free flow of goods within ASEAN that are manufactured within any ASEAN country.
The AEC will also open up an opportunity for all government agencies to meet with their counterparts for the first time. Therefore, it will not only affect government agencies, but also local administrative organisations located along the border with other countries.
Consequently, in the future, it will not be surprising to see local government officials from Thailand engaging in dialogue in the same room with their counterparts from other countries about issues affecting their common interest.
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As political leaders and high level ASEAN officials head towards the AEC, they must ensure that the general public is not simply left behind. The acceleration of the AEC must go hand-in-hand with an intensified education program for people at all levels, particularly in terms of the English language so that they are fully prepared for the AEC. After all, there is little point in having an integrated community if nobody is able to communicate with each other.
“Thais don’t have an interest in Asean countries. Instead we look towards Japan, China and the West. I think our neighbours are more skilled in terms of language, and Thailand has to adapt in order to become a hub.” (source – Bangkok Post)
“Thailand’s geographical location is very good for becoming a hub and Suvarnabhumi is a very nice airport for cargo shipments. Thailand also has three interesting neighbours – Burma, Laos and Cambodia – while China is not far away and it could be attractive. Thailand should not look too far and should look around the western part of China.” (source – The Nation).
As a member of ASEAN, the establishment of an ASEAN Community in 2015 will inevitably affect Thailand in every aspect. Thus, it is imperative that Thailand prepares itself for an ASEAN Community, both in terms of being a good member, and having the capability of utilising the ASEAN Community to the best of its advantage.
One of the ways Thailand can do this is through education, both in terms of educating its people through an intensified language skills/education program, and through the liberalisation of trade in education services, thus allowing Thailand to potentially become the education hub for the region.
In direct response to the establishment of an ASEAN Community and a Second 15 Year Long Range Plan on Higher Education for Thailand, the Office of Higher Education Commission (OHEC) launched its Higher Education Strategies for the ASEAN Community in 2015.
The main goal of the strategy is for all Thai graduates to meet international standards, and to recognise their responsibilities as members of an ASEAN Community.
As Thailand has no English language legal textbooks, and the majority of business information, and ALL legal regulations and acts are only available in Thai, this currently inhibits and restricts foreign corporations from trying to conduct business in the lucrative Thailand market. It also means that corresponding with many Thai firms is extremely problematic.
Another problem which currently exists is that many teachers in Thailand are not really aware of the coming changes. “Many of them (teacahers) do not have even basic knowledge about ASEAN, especially those who work upcountry”, said Prapat Thepchatree, Director-General, ofthe Centre for ASEAN Studies at Thammasat University.
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Linguistic difficulties and widening cultural differences will doubtless prove to be the biggest hindrances to companies wishing to seek out and maximise opportunities, and broaden their respective services to reach the 600 million potential clients who populate the 10 countries which make up the AEC.
In order to succeed and prosper within ASEAN/AEC, increased competition and regional expansion is unavoidable, and communication is the key to success.
At the moment, it is envisaged that countries with better standards of English will initially prosper (such as Singapore and Malaysia). “The wide discrepancies in living standards between ASEAN nations will likely increase with the difference in annual GDP per capita between a Singaporean and an average ASEAN citizen growing from almost US$42,000 to nearly US$54,000.” (source – Business Times Malaysia).
However, in reality, the ASEAN Community relies on the normal people of the countries and how they understand, visualise, interpret, instigate and carry out the various policies agreed by their leaders.
With only three years left, the CSC in Thailand is rushing to equip government officials with the language skills and knowledge about other countries in Southeast Asia in preparation for the change. “The ASEAN Community will bring about interactions in the bureaucracy at all levels. It’s inevitable,” said Mr Prapat.
Some agencies such as the Customs Department are desperately trying to improve the English language skills of their officials in preparation for the AEC.
The lack of language skills could put Thailand at a severe disadvantage in any future negotiations.
“The problem is that ASEAN uses English as the official language. We cannot push forward our agenda in the talks with other countries if we still have a language problem,” Mr Prapat explained.
The CSC is considering using knowledge about ASEAN as a factor in assessing the performance of civil servants, in an attempt to make them ready for the change. They will target officials in senior positions who will be required to deal directly with other ASEAN countries in the future.
For local administrative agencies, the commission is using Chiang Rai as a model to equip local and government officials with the necessary information and knowledge about the AEC, before expanding the programme to other border provinces.
Thailand lags behind Malaysia, Indonesia and Singapore in the preparation of officials for the establishment of the AEC. This is partly because the country has been plagued with political conflicts, which have forced the kingdom to prioriise attention toward resolving its internal problems, Mr Prapat said. “We are our own custodian, but we still have time to prepare our officials for the change,” said Mr Prapat.