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n 2007, the ASEAN Charter was drawn up, enshrining into law its institutional framework — primarily underlined by consultation and consensus of all member countries. The charter also solidified three basic pillars for ASEAN to function as “a community of opportunities”: • Political-security community • Economic community • Socio-cultural community The association has developed a common market between its members for free movement of goods, capital, services and people across South East Asia. Its collective GDP exceeds $2.8tn, the sixthhighest figure in the world. The region accounts for a population of over 622 million — more than the population of the EU and US. It also accounts for the world’s third-largest labour force, behind China and India. It is projected to be the world’s fourth-largest economy by 2050. Beyond this, it ranks as the fourth-largest exporting region (behind North America, China and the EU) and accounts for roughly seven percent of global exports. ASEAN is currently China’s third-largest trading partner — $444.4 billion annually — with EU trade placed at some $260bn. It has developed free trade agreements with China, South Korea, Japan, and India, Australia and New Zealand, developing ‘plus-three’ and ‘plus-six’ groups, (fifth after India’s withdrawal from negotiations in 2019) respectively. Economic statistics suggest that the region is operating at near optimum capacity. ASEAN is one of the fastest-growing economies, and has massive potential for sustained growth. It has had a great many successes and is poised to go further. Economic co-operation has seen intra-ASEAN trade increase year-on-year (four percent from 1993 to 2017), spurred on by free movement of goods and services, and increased economic integration. Pushing for further integration and developing effective initiatives such as the Chiang Mai Initiative — a currency swap arrangement between South East and East Asian countries that helped to stabilise domestic currencies amid heavy market speculation — ASEAN proved itself to be an effective economic organisation. Of the top 10 Most Inclusive Emerging and Developing Asian Economies, ASEAN member countries make up half, with Thailand at number one. Promoting and maintaining peace and stability throughout the region has been a focus. Examples of efforts to stabilise and ensure peace can be seen with the Nuclear Treaty, with members banned from owning or testing nuclear weapons and counter-terror pacts, intelligence-sharing networks and extradition processes in place. ASEAN also oversaw the introduction of Myanmar to the bloc and has been instrumental in engaging that country in economic initiatives to forge new diplomatic relations.
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Much of ASEAN’s relative internal peace stems from its policy-making processes, based on consensus and consultation. This approach to decision-making allows member countries to avoid confrontation; members are able to act independently with differing objectives under a collective association or regional economic co-operation. A consensual approach is vital in reconciling and facilitating significant diversity in demographic, religious, ethnic and economic developments, as well as geographical and governance issues. It is this diversity, however, that has seen ASEAN struggle to overcome certain hurdles. Member countries often have competing objectives and alliances, and fail to form effective action as a result. The dispute over territory in the South China Sea is an example of this. ASEAN is failing to find consensus on an approach to China and the dispute as countries such as Cambodia maintain close ties to China. These also present security risks with terrorist insurgencies, the Rohingya crisis, and ongoing narcotics and human trafficking recurring problems. Disparity in economic development also produces its own difficulties with growth, with increased GDP per capita not uniform. In Singapore, average GDP per capita is roughly $65,000; in Indonesia it is $10,000, and in Myanmar less still at $1,400. Economic growth is not only uneven between countries, but within with middle classes benefitting from economic growth and integration. ASEAN is seeing the rise of a major consumer class within the region. Household purchasing power is improving, fast-becoming one of the world’s major consumer goods markets. Members are estimated to have 125 million households within this consumer class by 2025. While initiatives are spread across three core pillars, they are set to focus on economic endeavours. The region is projected to see major growth in terms of population and economy, from 142 cities with more than 200,000 residents. But the future is not clear. There must be large investment in relevant infrastructure. Comprehensive transport networks are planned in Thailand and Philippines, but other members are trailing. Education is a vital factor. If universal, or at least wide-spread, education systems are not developed, ASEAN nations will struggle to capitalise on projected population growth and urbanisation. Myanmar and Indonesia are projected to have major skills shortages by 2030. While ASEAN’s strength lies predominantly in its size, the region looks set to become a powerhouse and an effective global economic force. This is not without its challenges. ASEAN must adapt, build, and facilitate this growth with transport, education, economic integration, trade regulation and financial services as essential components. Human rights abuses must be addressed, too, in order to ensure a region at peace with itself. i CFI.co | Capital Finance International