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A sustainable and future-oriented ASEAN Economic Community – Universities

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Dato Lim Jock Hoi (The Jakarta Post)

Jakarta ●
Mon 8 Aug 2022

2022-08-08
01:21
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ASEAN,security,challenges,anniversary,growth,prosperity,community,industrial-revolution,economic,COVID-19,Trade,goods,service
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As we celebrate the anniversary of the founding of ASEAN today, it is worth reflecting on the extraordinary journey the association has undertaken over the past 55 years.

Southeast Asia’s transformation has been nothing short of remarkable. The founding of ASEAN in 1967 ushered in extraordinary growth and prosperity through the collective pursuit of trade liberalization and economic development.

With a combined GDP of over US$3.4 trillion in 2021, the region has now become the world’s fifth largest economy and is on track to become the fourth by 2030.

There is no doubt that ASEAN still has a long way to go, but more importantly, member states remain committed to moving towards a genuine ASEAN Economic Community (AEC). The achievements of this gradual and progressive process are indeed worth celebrating.

The ASEAN Trade in Goods Agreement (ATIGA) and the ASEAN Trade in Services Agreement (ATISA), in particular, have helped facilitate the region’s trade growth potentials.

Signed in 2009 against the backdrop of the worst global economic crisis since the Great Depression, the ATIGA resulted in zero-duty treatment for more than 98% of intra-ASEAN tariff lines. The agreement instituted a number of initiatives, such as the ASEAN Single Window and the ASEAN Trade Repository, which help ASEAN businesses navigate trade rules.

ATIGA is currently being updated to make the agreement more relevant to today’s business needs.

Likewise, the ATISA, which was signed in 2020 and replaces the ASEAN Framework Agreement on Services, further advances the region’s trade in services. Among other things, the agreement sets a clear mandate and timetable for ASEAN to move to negative lists which provide a higher degree of transparency and a deeper level of services trade integration.

Both initiatives have contributed significantly to the growth of ASEAN trade. Over the past decade, intra-ASEAN trade has grown from $500 billion in 2010 to $712 billion in 2021, accounting for around 21% of the region’s total trade. With over $3 trillion in total trade, ASEAN has become the fourth largest trader in the world, behind only the European Union, China and the United States. Similarly, ASEAN’s trade in services has also increased by 70%, from $441 billion in 2010 to $637 billion in 2020.

At the same time, the improvement in the business climate has made ASEAN more attractive to global investors. The ASEAN Comprehensive Investment Agreement signed in 2009 and the recently launched ASEAN Investment Facilitation Framework have established a free and open investment regime in the region. Total foreign direct investment (FDI) inflows into ASEAN increased from $108 billion in 2010 to $175 billion in 2021, making ASEAN the world’s third largest recipient of FDI after the United States and China.

Great progress has also been made in other key areas of cooperation. Development of infrastructure for physical and digital connectivity; promoting sustainable agriculture to enhance food security; promote innovation in science and technology; and the integration of micro, small and medium-sized enterprises (MSMEs) into the global marketplace are among ASEAN’s major achievements in this regard.

ASEAN also plays a proactive role in the global economy. With China, Japan, the Republic of Korea, Australia and New Zealand, ASEAN is committed to a Regional Comprehensive Economic Partnership (RCEP), currently the largest free trade agreement in the world, which came into force in January. Under RCEP, companies benefit from reduced tariffs for their exports; better access to cheaper and better quality inputs for their production; and a more transparent business environment to develop, not only for trade in goods, but also for trade in services, investment and movement of people.

Coping with emerging trends and challenges

Maintaining political security and stability is the foundation for promoting economic prosperity and social progress in the region. In this regard, we must bear in mind that ASEAN’s journey as a community continues to take shape in an increasingly complex and uncertain strategic landscape, including non-traditional security challenges.

There are also emerging trends in the region that will shape the future of ASEAN community building and integration efforts – among the most salient are digital transformation and a pressing demand for sustainability considerations: both are leading the ASEAN economic integration agenda. A community-wide approach is essential given the cross-pillar nature of these important issues.

On digitization, ASEAN is accelerating the pace of digital transformation in the region. With the average proportion of cash transactions increasing from 48% in 2020 to 37% in 2021, and given the region’s over 440 million active internet users, digital transformation, which has been accelerated by the coronavirus pandemic COVID-19, is ongoing. the minds of ASEAN policy makers and stakeholders. If managed well, ASEAN’s digital economy is expected to reach $1 trillion by 2030.

Within the ACS, many initiatives have also been put in place to propel the region’s digital economy. The recently adopted consolidated strategy on the fourth industrial revolution (4IR) for ASEAN and the Bandar Seri Begawan (BSBR) roadmap on digital transformation, for example, reinforce ASEAN’s commitment to inclusive digital transformation. . While the 4IR strategy provides a clear narrative on how the ASEAN community intends to move towards an inclusive and sustainable digital transformation, the BSBR highlights, among other things, ASEAN’s commitment to start negotiations for an agreement framework on the digital economy of ASEAN by 2025.

With increasing digitization also comes the challenge of making cyberspace safe and secure, including for businesses and individuals. ASEAN recognizes the importance of this and has launched a Cybersecurity Cooperation Strategy 2021-2025 to secure cyberspace for the development of the region’s digital economy.

However, decades of strong regional economic growth have also led to increased carbon emissions in the region. Current estimates suggest that if no action is taken to reduce global emissions, ASEAN’s GDP is expected to decline by 11% by 2100. It is therefore essential for ASEAN to ensure the right balance between economic growth and sustainability.

Commit to net zero carbon emissions as soon as possible in the second half of the 21st century, for example, the ACS has put in place numerous initiatives on various fronts and sectors – from energy, transport, agriculture, tourism to finance – to advance the region’s goals in climate and sustainability. Examples include the ASEAN Green Bond Standards, the ASEAN Taxonomy for Sustainable Finance, the AEC Circular Economy Framework and the ongoing development of the ASEAN Carbon Neutral Strategy. of these efforts.

A future-oriented AEC

ASEAN’s economic journey over the past 55 years has been long and arduous. Despite many challenges, ASEAN has remained firm in pursuing its integration agenda and priorities, redoubling its efforts to ensure that all commitments made under the AEC Blueprint 2025 are met.

In the same vein, ASEAN needs to invest more in building the resilience of its education, health and social protection systems. These efforts must go hand in hand with the pursuit of economic growth and development. We have seen how the multidimensional challenge of the COVID-19 pandemic has upended the lives and livelihoods of many people in Southeast Asia, further exacerbating pre-existing inequalities. Our efforts to advance human capital development are therefore crucial to the region’s post-pandemic recovery and a key part of our integration efforts.

Finally, with the start this year of the conversation on the post-2025 vision of an ASEAN community that will chart the future direction of ASEAN, we must ensure that the economic integration efforts of the ASEAN are not only supported, but solidified and translated into other tangible projects. that benefit the people of ASEAN and lift ASEAN’s position in the global economy to a higher level.

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The writer is Secretary General of ASEAN.