ASEAN is maturing into a regional economic community at a time when Malaysia is the chair of the grouping. From a humble beginning in 1967, when cooperation was largely cultural in nature and economic cooperation was in areas of less resistance, such as tourism, Asean has evolved into a mature economic cooperation entity.
Moving into a regional economic community after 48 years of existence is, therefore, a natural progression.
As with most regional cooperation schemes, any higher level economic partnership demands a greater sacrifice in economic sovereignty in order to achieve a freer movement of goods and services, and a more integrated economic space.
Asean moves towards a regional economic community based on four pillars: the need for a single market and production base; being a competitive economic region, promoting equitable economic development; and, achieving higher integration with the global economy.
Among these four pillars, it cannot be denied that the first pillar is what is generally understood as the main element of an economic community. The rest are contributory factors, important as they are, or are consequences of an existing process after years of trade liberalisation.
Moving towards a single market and production base means, inter alia, doing away with import duties and most, if not all, non-tariff barriers to facilitate trade among members.
Furthermore, it also implies facilitating cross-border investments among and between members, and easier movement of production factors, particularly capital, professionals and labour.
To a certain extent, much progress has been made in trade facilitation. For these conditions to prevail, efforts to harmonise domestic regulations and laws must also be mounted, or, at least to arrange for mutual recognition of standards and regulations.
At this point, while Asean is working towards its integration into an economic community, two other initiatives are also taking place, the Regional Comprehensive Economic Partnership (RCEP) and the Trans-Pacific Partnership (TPP). The former involves all Asean members plus the free trade partners, such as China, Japan, South Korea, India, Australia, and New Zealand, with the view towards greater liberalisation of trade and investments between members.
TPP, on the other hand, is an effort to a higher level of liberalisation, beyond the level achieved by World Trade Organisation). Parties from this region invited to negotiate include Singapore, Malaysia, Vietnam and Brunei. TPP is yet to be finalised, and some areas are still contentious, such as in the area of government procurements.
In as much as countries want to negotiate with the view of getting the best deals and minimise costs, we cannot help but assert that all these negotiations and agreements must not delay our Asean Economic Community (AEC) target come next year.
Countries must promote RCEP with the view of positioning Asean interests at the forefront, and we should participate and negotiate the TPP initiative with the view that it benefits the Asean community in the medium and long term, or at least, its interest are not compromised. The centrality of Asean has to be emphasised.
These expectations can be demanding. Indeed, Malaysia is carrying a heavy weight next year: its position as chair of Asean, and the need to steer the organisation into a strong regional economic entity.
Other members are surely watching Malaysia as to how it is going to steer the member counties to prepare for the eventual creation of AEC.
There should be much discussion now about the AEC and the discussions should take place in all parts of the country, given its profound implications upon our lives.
If the European Community is any guide, does it mean we will be having workers from member countries in our backyard? Does it mean we will have common economic regulations, such as competition law, and standards? Are we going to have a common economic framework relating to private investments?
Should we not be discussing what we want to liberalise next year, within the next five years, and the five years after that? What are we prepared to offer and what are we not prepared to give in at all? There seems to be silence.
Malaysia is also being watched for another reason. We are now a member of the United Nations Security Council, allowing us to have a say in the governance of international security.
In this regard, let them take some comfort. Malaysia’s frequent calls for greater moderation and our record for taking a principle-based approach in most international matters will, I am sure, be a source of reassurance for many.