ASEAN: Increasing Trade and Economic Development in Southeast Asia
Since the inception of the first regional organization in Southeast Asia, the Association of Southeast Asian Nations (ASEAN) has turned into a global powerhouse and is gaining more significance. It has developed into a major global player and is now used as an economic and political instrument in the international arena. Today, it is the sixth-largest economy in the world.
The projected growth in emerging Asia, specifically Southeast Asia, China and India – is expected to continue. It is predicted that over 2018-2022, the Asian region is expected to grow by an average 6.3% per year, but on the assumption that trade momentum holds, and domestic reforms continue.
However, in an article written for the World economic forum on ASEAN, it states that one of the challenges in the Asian region is the declining global economic growth (Wijeratne, 2018). OECD added on their journal that other challenges in emerging Asia are the possible more rapid monetary policy contraction in advanced companies, expansion of trade restrictions and limited progress in regional trade agreements.
However, we have seen some declining economic growth in recent years in ASEAN. In the emerging economies of Indonesia, Malaysia, Philippines, Thailand and Vietnam, growth rate fell to 4.9% from a high of 6.9% back in 2010. Singapore, which is considered a developed economy in ASEAN, had its GDP growth drop below the global average of 2% in 2016.
Other challenges in ASEAN member countries include over-dependence on external trade partners, aging population, decaying productivity growth and lack of infrastructure.
Taking everything into account, in order to maintain and increase the trade and economic growth in the emerging Asia and to mitigate the existing challenges and its potential risks, ASEAN needs to act immediately to preserve the economic order in the region.
ASEAN, as a regional cooperation and a significant international economic player, must continue to work for economic growth and expansion to achieve the Asian region’s growth potential.
The regional organization should be able to develop a thorough framework on how to improve and integrate the objectives of the ASEAN Economic Community (AEC) as one of its three pillars. Thus, ASEAN needs to have more proactive measures and strategies to attract more investment and to facilitate economic growth.
Part of future ASEAN strategic plans should focus on incorporating structural reforms, fostering regional integration, improvement of its labor force, economic innovation towards digital economy, accelerate liberalization of trade services and reducing non-tariff trade barriers.
These initiatives should not only be on the ASEAN platform, but should also be on the domestic policies of the member states and its regional economic partners.
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