Page 6 - AEC Digital Edition

AEC fact sheet

The ASEAN Economic Community (AEC) is the ASEAN, as a single economy, is projected to become the
realisation of the end goal of regional economic fourth-largest economy in the world by 2030, behind only
integration by 2015 of the 10 economies of the ASEAN the US and China.
Member States, namely Brunei, Cambodia, Indonesia, Laos,
Malaysia, Myanmar, the Philippines, Singapore, Thailand In terms of labour force, ASEAN with its 600 million
and Vietnam. people has the third-largest labour force in the world –
after China and India.
What is the AEC?
However, a McKinsey report said the region needs to
The AEC aims to integrate Southeast Asia’s diverse do more to develop its human capital – in Indonesia and
economies into a single market with 625 million people Myanmar, McKinsey has projected an undersupply of 9
and a combined gross domestic product of US$2.5 trillion million skilled and 13 million semi-skilled workers by
in 2014. 2030.

It is to be defined by a few key characteristics – a What is the progress on the AEC so far?
single market and production base, a highly competitive
economic region, a region of equitable economic Up till June this year, 458 out of 506 measures under the
development and a region fully integrated into the global AEC Blueprint have been implemented – translating to an
economy. implementation rate of 90.5%, according to Dr Bambang
Irawan, Assistant Director, Finance Integration Division,
The areas of cooperation among ASEAN members ASEAN Secretariat.
include:
• Human resources development and capacity Tariffs on exports of Asean-originating products
between member states are already near zero, but
building; businesses investing across borders still face non-tariff
• Recognition of professional qualifications; issues such as complex licensing and land acquisition
• Closer consultation on macroeconomic and financial requirements.

policies; Meanwhile, The ASEAN Framework Agreement on
• Trade financing measures; Services eases restrictions on cross-border trade in some
• Enhanced infrastructure and communications 80 sub-sectors, though companies still face various foreign
equity restrictions in the different ASEAN states.
connectivity;
• Development of electronic transactions through Where the insurance sector is concerned, majority
foreign ownership of insurance companies is possible in
e-ASEAN; most ASEAN countries.
• Integrating industries across the region to promote
Evidently, much progress has been achieved on the path
regional sourcing; and towards integration, although there is far to go to reach the
• Enhancing private sector involvement for the destination of a truly single market. But the journey was
always meant to be a long-haul and all the key stakeholders
building of the AEC. are onboard.
In short, the AEC will transform the ASEAN economy
into a region with free movement of goods, services, As the AEC train picks up speed, not many can afford
investment, skilled labour and freer flow of capital. to be left behind.
It will benefit businesses in ASEAN by providing
a conducive environment through transparency, Back to Contents
predictability and consistency. This will, in turn, benefit
consumers who will have access to cheaper and wider
range of goods and services.

When is it being launched?

The AEC – which has been eight years in the making – is
set to be established on 31 December 2015.

The ASEAN Leaders adopted the Asean Economic
Blueprint at the 13th ASEAN Summit on 20 November
2007 in Singapore; and the document serves as a coherent
masterplan for the AEC.

How will the AEC impact on the global economy?

By transforming ASEAN into a single market and
production base, the AEC will boost the competitiveness
and connectivity of the region as a whole. If implemented,
the AEC could lift aggregate output by 7% by 2025,
according to analysts.

4 AEC – IMPACT ON INSURANCE • DECEMBER 2015