KUALA LUMPUR: The establishment of the Asean Economic Community (AEC) presents opportunities for stronger growth and increase the proportion of intra-Asean trade, says an economic expert.
"The process of economic integration in Asean moved up a gear in 1992 when members pledged to create a free trade area, and accelerated seven years ago, when they agreed to remove tariffs completely by 2015," said the Institute of Chartered Accountants in England and Wales (ICAEW) chief economist, Douglas McWilliams.
However, McWilliams who is also the executive chairman of the Centre for Economics and Business Research Ltd (CEBR) said free trade between nations, requires more than lowering tariffs.
"Other barriers such as quotas, customs procedures and differences in standards or regulations, also need removing and this is harder to do," he added.
McWilliams said this at a media briefing session on, "What the establishment of the AEC means for Malaysia", here, today.
He noted that Asean economic integration would give a small boost for the region, but gradually build up, as the industrialisation process as a whole, is seen to move faster than in the Europe.
"If Asean can complete its integration in a quarter of the time what it took for the Europe Union (EU), then instead of a four per cent growth in 30 years (in EU), it will be four per cent in seven and a half years for the regional grouping, which is roughly half a per cent boost to its gross domestic product (GDP) per annum," he said.
Beyond a free trade area, another key goal he said is to achieve a common market where both capital and labour can move freely across borders.
"While Asean has demonstrated rising regional interdependence, with intra-Asean foreign direct investment (FDI) rising from 13 per cent in 2000 to 17 per cent in 2013 of total inbound FDI, a common banking and legal framework could increase the scale of investment," McWilliams added.
He said apart from this, better mobility is necessary to allow workers to move to where they are most in demand and enable the transfer of skills.
According to the ICAEW's latest Economic Insight report, Malaysia's intra-Asean export stood at 27.3 per cent of total exports in 2013.-- Bernama