This week the Economist
Intelligence Unit (EIU) published “Redrawing
the ASEAN Map,” a survey of the business environment in ASEAN, sponsored by
CIMB Bank and Baker & McKenzie. The EIU survey focuses on how companies view the
ASEAN Economic Community as a market and a production base.
I recommend the EIU survey
as a pretty good overview of corporate opinion of ASEAN, although it is
probably a tad optimistic. This optimism
reflects the survey participants, as 85.8% of the participating companies were
headquartered outside of ASEAN, and 77.6% had a capitalization of over US$ 1
billion. Hence the participants were
primarily large multinationals with operations in ASEAN, and as I have noted
earlier, these business segments are indeed more optimistic about the AEC. The
SME sector and the indigenous ASEAN sector were not significant segments of the
survey, and they have not been as involved in regional economic integration.
Nevertheless, from the law
and policy point of view, the EIU survey does indicate how ASEAN government
policies are negatively impacting private sector sentiment towards the
AEC. “Different laws & business
regulations” were listed as the most important barrier to to adopting a
consistent approach to sales and marketing across different ASEAN countries. The EIU survey takes this in a positive
light, noting as follows:
For the
ASEAN organisation this must be encouraging news. The results suggest that the
greatest barriers preventing companies from treating ASEAN as a single market
are institutional barriers that can be addressed. Language, religion and culture cannot be changed. But disjointed
regulations and unharmonised standards are more easily fixed.
That’s
true. Regulatory issues are indeed easier to address than non-regulatory
structural impediments. The more
difficult question is how the ASEAN institutions will deal with the regulatory
barriers. The EIU survey does recognize
this:
Not that
anybody is suggesting the process of integration at this level will be simple.
Certainly many companies express concern at the slow pace of change. . . . Nonetheless,
as these results show, if governments really want to link ASEAN markets into
one, and thereby reap the benefits of creating regional scale, then addressing
these institutional barriers will go a long way towards achieving their goal.
There’s
the rub. The EIU report was limited to a survey, and so it did not mention how
ASEAN should address these regulatory barriers.
However, regular readers of this blog know what I would recommend:
strengthening ASEAN by further empowering the ASEAN institutions and/or
providing for a robust ASEAN dispute resolution system. Without some sort of reform of the ASEAN
institutions, the institutional barriers will continue hinder the AEC from
benefitting all ASEAN citizens.
