ASEAN faces integration hurdles
Updated: 2014-05-12 08:43
Leaders of the Association of Southeast Asian Nations are expected to use the 24th ASEAN Summit that started on Saturday to establish an economic community by the end of 2015, regardless of the political and economic obstacles and challenges they face, says a Xinhua News Agency analysis.
With less than two years to go before the scheduled deadline to establish the ASEAN Economic Community (AEC), ASEAN member states have said that they remain committed to achieving the goal despite the obstacles.
The AEC, initiated in 2003, is aimed at creating a single market and production base covering a population of more than 600 million to allow free movement of goods, services, investments and skilled labor. Latest statistics from the ASEAN Secretariat show that about 80 percent of the work for the AEC is complete.
But despite the progress, political unrest in some ASEAN member states and economic uncertainties both in and outside the region could delay the establishment of the AEC, say analysts. Many economic risks, including reduced US monetary stimulus and the slowing pace of China's economic growth, are threatening to disrupt the region's economic integration process.
ASEAN's export to China, its biggest trade partner, appears to be losing steam because of the country's shrinking demand triggered by economic slowdown. According to latest figures, the total value of ASEAN-China trade was $105.22 billion in the first quarter of this year, up 4.9 percent year-on-year but lower than the 15.5 percent growth in the first quarter of 2013.
The region's medium-term outlook is still healthy thanks to solid domestic demand, but ASEAN economic leaders admit that the regional economy suffers from capital outflows, volatile currency movements, high inflation and tightening financial conditions. This is troubling especially because the regional economy's pace of growth slowed down last year. Though the recovery of Western countries is expected to help boost ASEAN's exports to some extent, the bloc's economy as a whole is not likely to see a remarkable rebound because of the obstacles it faces.
Besides, being vigilant against the downside risks, and given the bloc's uneven social and economic development, some ASEAN member states are likely to revert to measures, such as protectionist policies, which could deal a blow to the economic integration process, analysts say.
So, ASEAN also needs to improve its connectivity, ensure that its policies are well executed and increase support to less developed member states to facilitate the integration process.