ASEAN, as a region, has some 32,000 islands spanning over 4 million square kilometers which are inhabited by about 600 million people who speak more than 900 different languages and dialects on a daily basis. Equally diverse is the level of economic development where the GDP per capita between the most and least advanced members varies from US$800 to $49,000.
Despite the socio-economic disparities, ASEAN has collectively made significant progress through various economic, social and political initiatives to be one of the fastest developing regions in the world.
One such initiative is the establishment of growth triangles to link different ASEAN member-states with different comparative advantages to form sub-regions of economic growth such as the BIMP-EAGA, IMT-GT and SIJORI-GT.
For example, under the BIMP-EAGA (the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area), the expansion of air linkages through the granting of fifth freedom traffic rights for designated international airports, removal of restrictions on frequency and capacity and code sharing arrangements will help set the ground work for region-wide implementation.
However, ASEAN must not rest on its laurels, for there are significant challenges that lie ahead as she works toward establishing her community by 2015.
Internally, one of the key challenges to address is trade facilitation as reflected in World Bank Logistics Performance 2010 where ASEAN member-states ranked from second to 146th out of the 155 countries
surveyed.
Externally, ASEAN would need to step up its intra-regional trade if she is to maintain a central role as the driving force for regional integration framework, given the emergence of new economic superpowers such as China and India.
Last October, the ASEAN leaders adopted the master plan on ASEAN connectivity which aims to facilitate economic growth and narrow development gaps by enhancing physical, institutional and people-to-people linkages in the region.
For physical linkages, the key issues to be addressed, among others, are enhancing transportation links, connecting archipelagic member-states to the mainland, narrowing the digital divide and addressing increasing energy demands.
In its ongoing effort to establish an efficient, multimodal transport system for seamless movement of goods, services and utilities, as well as the movement of people across and beyond the region, ASEAN drafted strategies to upgrade existing road links, construct missing rail links, enhance key ports’ infrastructures, promote greater use of roll-on/roll-off activities to connect archipelagic regions and capitalize on endowed navigable inland waterways.
Such strategies will benefit both consumers and producers in terms of access to a variety of goods
and services and alternative transportation links, respectively.
More importantly, it will help develop and link local markets in the archipelagic member-states with the rest of the region.
ASEAN also recognized the increasing role of information, communication and technology (ICT) in its endeavor to create a single market and production base through the simplification of trade documentations, clearance of goods and enhanced logistic services.
ASEAN further recognized the need to address the digital divide, nurture technological innovation and harmonize ICT regulations.
Strategies are in place to ensure that ICT infrastructure is accessible and affordable across the member-states with the view to promote greater usage of ICT as an empowering tool for governance and
innovation.
This includes the establishment of the ASEAN Internet Exchange, which will increase the speed of transactions while reducing the associated costs, the establishment of the ASEAN Broadband Corridor to offer seamless broadband quality across the member states and adherence to the Universal Services Obligations to promote accessibility and affordability for ICT services.
Under institutional linkages, the key challenge here is to put in place requisite legal and institutional mechanisms to enable physical linkages to facilitate movements of goods, services, utilities and people within and beyond the region.
One such mechanism is the establishment of a system (e.g., the ASEAN Single Window and the associated National Single Windows) which will process all related documents such as customs declarations, import/export permit applications and quarantine inspections, in relation to the release and clearance
of cargo.
Currently, importers and exporters are required to obtain necessary papers and permits from
several government agencies in order to complete their respective transactions.
When the system is in place, traders will benefit from an open and transparent process, effective deployment of resources, faster clearance and release of cargoes and reduction in transaction costs.
The governments will benefit from greater compliance on the part of traders, high revenue yield and enablement of risk management tools for control and enforcement purposes.
Another important ASEAN initiative relates to the minimization of technical barriers to trade to support free flow of goods in the region.
This will address differences in technical regulations, standards
and conformity assessment to realize the ASEAN goal of one product, one test, accepted everywhere (in the region).
The key benefits to the manufacturers are cost savings, inasmuch as they do not have to perform
multiple tests for their products to meet local requirements, as well as access to a larger market for their products.
The consumers will also benefit from a wider choice of products whose quality and interoperability have been assured as a result of the requisite tests when the products enter the local market.
Another promising mechanism is the establishment of an ASEAN Single Aviation Market where there will be no restrictions on routes, capacities, frequencies or types of aircrafts over ASEAN skies.
From the passengers’ perspective, they will benefit from lower fares, better services and more options on how to get to their destinations. Airlines will also benefit from the access to new markets.
With the master plan in place in this three-pronged set of strategies for improved physical connectivity, better institutional connectivity and deeper people-to-people connectivity, its full implementation will deepen and widen ASEAN production and distribution networks which will create more opportunities for inclusive economic growth.
Finally, it is important to underline that the concept of ASEAN connectivity is consistent and strengthens the ASEAN community building efforts.
A more connected ASEAN region would certainly improve the region’s competitiveness which is an important ingredient to sustaining ASEAN centrality in tougher global competition.
By Dionisius Narjoko researcher and Hong Hin Lim associate researcher at the Economic Research Institute for ASEAN and East Asia.
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