A new era kicked off on December 31, 2015, for the 10 countries that are part of the Association of Southeast Asian Nations: The alliance launched the Asean Economic Community (AEC), a trade bloc aimed at creating a unified, cross-border market where labor, services and capital can flow without restrictions.
“It’s a big milestone for us,” said the secretary-general of the coalition, Lê Lu’o’ng Minh, celebrating the event. “We’ve made a lot of progress.”
Established in 1967 by Indonesia, Malaysia, Philippines, Singapore and Thailand, the Asean community has since added Brunei Darussalam, Laos, Vietnam, Myanmar and Cambodia. With a population of more than 600 million, the region has the third-largest labor force in the world after China and India. It represents the world’s seventh-largest economy, with GDP of over $2.6 trillion, a figure expected to double by 2030.
Vast economic and political differences among its members, however, could hinder the AEC’s ambitious plans to create a European Union‒style trading and manufacturing entity. The AEC seeks economic and financial integration without either a monetary union or a common political framework. With the Asean Secretariat acting as the bloc’s main authority, and a yearly budget of less than $20 million, it may prove difficult to implement programs and ensure commitments are met.
“I would say that the glass is half full,” says Manu Bhaskaran, partner at US strategic advisory firm Centennial Group. “It will take a while before enough real changes are made to nontariff barriers so as to allow the genuine, freer flow of goods, services, people and capital that the AEC promises.”
But perhaps the best is yet to come. China and Japan, Asia’s two largest economies, are rapidly aging. With half its population under 30, the AEC has just started taking its very first steps.