ASEAN economic community 2015 and beyond

Abstract

Although the constitution of ASEAN in its very beginning in 1967 includes economic rationales, economic cooperation was confined to mixture of sectoral and commodity based concerns under the Foreign Ministers Meeting in the initial organizational structure of. ASEAN after the Bangkok Declaration (ASEAN Secretariat 1997). It was almost a decade later before the first economic ministerial meeting took place at the 1976 Bali Summit, prompted in part by the 1973-75 recession in the U.K. and the USA. ASEAN then made its first move towards economic integration in industry and trade with the signing of the ASEAN Industrial Projects (ATP) and the Preferential Trading Arrangement (PTA) in 1996 and 1997, respectively (Kosandi 2012). Economic cooperation thus lagged behind political and security cooperation (Chan 2003). Several other attempts at industrial cooperation were launched subsequently, such as the ASEAN Industrial Complementation Scheme (AIC) in 1981 (subsequently modified as the ASEAN Brand-to-Brand Complementation (BBC) and the ASEAN Industrial Joint Ventures in 1983. When these schemes did not progress well due to both an expectation and implementation gap (Wong 2003), sub-regional initiatives in the form of growth triangles that were meant to be private-investment led were also launched for exploiting sub-regional economic complementarities. The progress of these sub-regional initiatives was also, however, affected by similar political, economic and social challenges as in the industrial and trade cooperation schemes. The 1990s, however, brought about a renewed effort to forge closer economic cooperation within ASEAN in its "search for a common prosperity" (Lee 2003, pp. 194), due to both internal and external factors. Domestically, the strong economic performance in the second half of the 1980s boosted the confidence of the ASEAN member states (AS) in their ability to withstand the increased competitive challenges that inevitably accompanies increased liberalization. Moreover, the trade strategies of these countries have shifted from import substitution to export orientation and a greater inclination towards a Foreign Direct Investment (FDI) led growth strategy, due in part to changes in economic thinking as well as increasing influence of international financial institutions on the domestic policy formulation of the AMS at that time.