The Association of South East Asian Nations (ASEAN), one of the most established trade blocs in the world, recently met for its 23rd summit.
Its three pillar plan to put south-east Asia in ascendency has important implications for the developing world and the global economy at large. By combining politics, economics and social responsibility, ASEAN, already a key player on the world stage, is set to become even more influential.
The region is a central economic force for growth, with the World Bank's latest economic update placing Asia's contribution to GDP growth at 40%. Coinciding with the ASEAN summit, India pledged to sign an agreement with the 10-member bloc on services and investment by the end of the calendar year, with the view to reconciling a free trade agreement by 2014.
The US is also confident it will sign a trade pact by the end of 2013 with Asia and the Pacific. The Trans-Pacific Partnership involves 12 nations and will create a free trade bloc stretching from Vietnam to Chile to Japan.
Asia's time is certainly coming, and achieving the ASEAN goal of community through improved collaboration will create strong new markets for businesses.
ASEAN's 23rd summit - the verdict
For those considering doing business in the ASEAN region, there were several key initiatives to come out of the summit.
Political cohesion
ASEAN nations are moving closer to becoming a united political partnership capable of interacting at an international level. During the summit, leaders recognised the "importance of the ADMM-Plus (ASEAN Defence Ministers’ Meeting-Plus) as an effective platform to foster constructive dialogue and cooperation between ASEAN and the Plus countries". This will help to politically and economically open up the region to its partners and those willing to do business.
The meeting also affirmed the importance of ASEAN taking a central role in the evolving regional architecture, working closely with external partners to maintain "peace, security, stability and prosperity" - all comforting words for investors.
Economic integration
The economy was a major theme at the summit and ASEAN will continue to make it easier for firms to operate within its member states by:
- considering proposals for a common visa for non-ASEAN nations, while reaffirming its commitment to facilitating the movement of member-state citizens, business persons and tourists in the region. Part of this is the creation of ASEAN lanes in airports to enable intra-ASEAN travel, and there is talk of developing a business travel card for the region
- deepening and broadening economic integration to improve competitiveness
- liberalising trade and investment through initiatives such as streamlining non-tariff measures and addressing the non-tariff barrier. There have also been efforts to enhance services integration through the ASEAN Framework Agreement on Services and the Comprehensive Investment Agreement
- working to reform competition policy and intellectual property rights
- creating a robust capital market to "ensure financial stability, efficient allocation of capital, harness foreign capital inflows, and develop new investment vehicles in the region"
- using the Infrastructure Fund - set to commence this year -to start vital infrastructure projects in the region and reduce disparity between nations
- strengthening maritime and shipping services between member states
- unlocking the potential of small and medium-sized enterprises to contribute to the region's development.
Social responsibility
The final report of the Mid-term Review of the Implementation of the ASEAN Socio-Cultural Community Blueprint laid down key steps to improving social responsibility among member states. Now, 90% of all action lines in the report have been addressed since their approval in 2009.
ASEAN will continue to encourage cross-sector coordination and multi-stakeholder participation to this end, including greater civil-military cooperation in emergency response situations. It will also support rural development and poverty eradication, making the region more self-sustainable. Meanwhile, job creation and safety nets for small businesses will be a core part of social responsibility in the future.
What's the significance of ASEAN's progress?
Axel van Trotsenburg, World Bank East Asia and Pacific Regional Vice President, recently noted: "With overall global growth accelerating, now is the time for developing economies to make structural and policy reforms to sustain growth, reduce poverty and improve the lives of the poor and vulnerable."
These ideas are at the heart of ASEAN and through its collaborative approach it breaks down political, economic and social barriers that lock individual nations out of growth.
By creating a simpler, freer, open and more cohesive economic area, ASEAN has been able to attract investment, make the region stronger and turn itself into a place in which it pays to do business.
Last year, ASEAN's economy grew by 5.7% and it secured US$108.2bn in Foreign Direct Investment (FDI). Furthermore, US$2.47tn in total merchandise trade was recorded. This position is only set to strengthen, as China enters talks with ASEAN to improve bilateral relations, the US makes its move and India increases trade with member states.
In the fast-changing environment that is ASEAN, it pays to have a team of experts on the ground. TMF Group offers businesses access to accountants, legal, financial, corporate secretarial and HR and payroll professionals to help navigate the systems in the ASEAN region and maximise opportunities in the zone.