With weakened economy and disrupted development on each countries, try achieve its desired ASEAN integration remains uncertain.
Asean countries are now employing drastic measures to keep the economy from further declining. With the threat of recession, millions of people becomes unemployed, Industry production has been slowed down and trade has been impacted.
Asean deficits ballooned since the financial crisis in 2008, ultra-low interest rates and quantitative easing (QE) in the US, Europe and Japan triggered money flows into Asean.
Income inequality and the development gap within Asean are also a concerning trend, Since it’s founding, The effort of the region to in creating an economic community has boosted in many fronts including Asean Trade in Goods Agreement where tariff barriers coming close to zero and Asean Framework Agreement on Services.
ASEAN is still far from its target. The non-tariff barriers still hinder intra-regional trade therefore making hard for international investors to look at the region as one single market.
However, the region can achieve integration by following four key recommendation:
The first recommendation is the “Sunset law”. This policy is most suitable to ASEAN as member countries have signed up for economic integration, their protectionism policies are time sensitive. This helps enforce a period or framework on their industry.
The second one will be “integration on investment and finance”. Since the Asean member states are intertwined, the integration is a more concerted push. The regional trading link must be revived to promote cross-border investments.
The third recommendation is to “Revitalise Asean swap arrangement (Asa)”. Sole reliance on external arrangements such as the Chiang Mai Initiative Multilateralisation (CMIM) will greatly affect the region’s financial cooperation. The grouping must set atleast $50 billion fund for Covid-19 emergency response. The last recommendation is “Development over integration”. Asean should focus on the development roadmaps for each AMS. The region must assist AMS to shift their attention inwards into improving their policies and structures.