ASEAN ECONOMIC COMMUNITY: WHAT DOES IT MEANS FOR CAMBODIA’S ECONOMY AND BUSINESSES Join Membership Briefing 3 August 2016 Mr. HING Vutha
ASEAN INFOGRAPHIC 2
ASEAN has been transformed into an increasingly well-regulated, � dynamic and creative platform for trade and commerce Source: ASEAN (2015). ASEAN Economic Community 2015: Progress and Key Achievements. Jakarta, The ASEAN Secretariat. 3
AEC: WHAT & WHERE IS IT NOW?
GOALS AND COMPONENTS � To establish ASEAN as a single market and production base, transforming it into a more integrated, dynamic and competitive region for trade and commerce; � The AEC Blueprint as a comprehensive master plan to chart the region’s integration journey; 5
AEC INVOLVES FIVE FUNDAMENTAL LIBERALISATIONS •Eliminate tariff and non-tariff barriers •Trade facilitation such as harmonisation of tariff free trade in goods lines, and simplifying and harmonising customs procedures •It involves the removal of restrictions on barriers free trade in services to trade in services such as foreign ownership, market access, and mobility of service providers. • Achieve free and open investment regime & enhance free flow of ASEAN’s attractiveness as an investment destination investment • ACIA cover: investment liberalization, protection, facilitation and promotion •Strengthens ASEAN capital market development freer flow of capital and integration •Allows greater capital mobility freer flow of skilled •Facilitate mobility of professional within ASEAN labour •Covers 8 professions 6
IT’S A WORKING PROGRESS � Gradual Implementation � No abrupt change � Journey, rather than destination, toward a more open ASEAN � The establishment of AEC 2015 is a major milestone in ASEAN integration agenda � ASEAN leaders agreed on post-2015 measures and action plans toward AEC 2025 vision 7
AEC AND ITS POTENTIAL IMPACTS
BENEFITS FOR WHOLE ECONOMY � Increase investment and trade; participate in regional production networks � Positive effects on productivity, private sector development � Stimulate economic growth � Lock in some sensitive domestic reform agendas � Improve investment and business climate 9
AEC BECOME MORE MEANINGFUL FOR BUSINESSES � The AEC will bring more opportunities for business partnerships or mergers and acquisitions � With lower tariffs and easier access to regional markets, export firms will be able to expand more easily. � Producers will benefit from lower production costs due to cheaper inputs sourced from other ASEAN countries. � Mobility will increase and thus workforce diversity will also 10
HOW BUSINESSES VIEW AEC?
HIGH OPTIMISM International companies’ attitude toward integration are overwhelmingly positive with regard to both their business and the regional economy 12 Source: BCG (2014), Winning in ASEAN: How Companies Are Preparing for Economic Integration, Boston: Boston Consulting Group
For local businesses, majority of firms believe that AEC will bring some opportunities for their companies How much of an opportunity do you Do you understand the AEC and its believe the AEC poses to your implication for your business company? [CATEGOR Y NAME] Yes I No idea [PERCE understan 26% NTAGE] d it well, 33% No I don't understan d / not sure, Somewhat 67% of an opportunit y 70% Source: CAMFEBA(forthcoming), AEC Guide for Businesses in Cambodia 13
PREPARING FOR INTEGRATION The vast majority of companies reported that they are taking action to prepare their organizations 14 Source: BCG (2014), Winning in ASEAN: How Companies Are Preparing for Economic Integration, Boston: Boston Consulting Group
FOR BUSINESSES IN CAMBODIA Majority of firms surveyed are generally not yet well prepared for the AEC To what extent is your enterprise making the PREPARING FOR following adjustment/preparation for AEC? AEC [SERIE S NAME] Prepare HR plan (skill recruitment) [SERIE [VALUE S ] Invest in innovation and technology NAME] [VALUE ] Be part of regional supply chains Invest in international talent [SERIE S NAME] Adjust product or services offerings [VALUE Investing in better understanding of other ] ASEAN markets Expand internationally and enter more ASEAN [SERIE markets S NAME] Increase penetration of existing Cambodia’s [VALUE [SERIE market S ] Incorporate AEC in strategic planning NAME] [VALUE ] Already in action Planning Considering Wait and see No plan 15 Source: CAMFEBA(forthcoming), AEC Guide for Businesses in Cambodia
KEY LAST MESSAGE � AEC is a journey rather than a destination…..That journey is to move toward a more open ASEAN “The formal establishment of the AEC by end-2015 marks a major milestone in ASEAN’s effort to fulfil the goal of an integrated region ... The implementation of the AEC measures does not mean that ASEAN will become a single economic entity by 1 January 2016; rather it sends a strong signal that positive measures have been put in place towards a more liberalised and integrated economic region.” Chairman of ASEAN Economic Minister (during the 21st ASEAN Economic Ministers Retreat, 28 February-1 March 2015 in Malaysia) 16
THANK YOU Mr. Hing Vutha Head, Economics Unit CDRI Email: Vutha@cdri.org.kh Tel: 011 766 268
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