ASEAN Adopts Ambitious Economic Plan To Make Next Leap, Renews Quest For A Single Market
A Commentary By M.Saraswathi
KUALA LUMPUR, May 26 (Bernama) -- The leaders of Southeast Asia’s 10-member grouping have adopted an ambitious new economic strategy that envisions a developed ASEAN as the epicentre of growth in the larger Asia-Pacific region, elevating its stature to emerge as the world’s fourth-largest economy.
The ASEAN Economic Community (AEC) Strategic Plan 2026–2030 that leaders adopted on Monday will now move into the implementation phase with each AEC sector developing its own sectoral plans, translating strategic objectives into concrete actions, timelines and performance indicators.
These plans are expected to be finalised by the fourth quarter of 2025.
The documents touch on a wide range of topics including renewed interest to emerge as a prosperous single market as well as new plans that encompass increasing the use of local currencies for cross-border transactions, considering megatrends, reframing economic integration as well as putting a stronger emphasis on digital and technology transformation.
To recap, the AEC was first formed in 2003 to focus on deepening integration through free movement of services in addition to free movement of goods.
This vision was further advanced with the introduction of the AEC Blueprint 2025 with an expanded scope of integration to align more closely with the global economy.
Under this framework, ASEAN has actively pursued comprehensive free trade agreements with key external partners, reinforcing its position as a dynamic and outward-looking economic bloc.
The 10-year timeframe provided a broader and long-term perspective for guiding ASEAN’s economic integration, but the implementation of the AEC Blueprint 2025 during 2016–2025 highlighted the need for greater flexibility and responsiveness amid fast-changing geopolitical shift and economic condition.
Hence, unlike its predecessor, the AEC Strategic Plan spans just five years -- a realistic decision which will allow for more timely reviews and greater flexibility in navigating future challenges.
While the plan to use local currencies for cross-border transactions, considering megatrends that have shaped the global landscape, and emphasis on digital and technology transformation are needed currently, ASEAN’s single market aspiration remains somewhat elusive.
The 10-member bloc achieved a remarkable feat in reducing tariffs on goods traded especially among with the six founding members Malaysia, Brunei, Indonesia, Philippines, Singapore and Thailand (ASEAN-6), albeit at a slower pace by Cambodia, Laos, Myanmar and Vietnam (CLMV).
The ASEAN Single Window also plays a critical role in facilitating regional customs payment.
However, despite the call to increase intra-ASEAN trade and work toward an ASEAN single market, initially targeted for 2015, progress has been slow.
ASEAN’s total trade improved significantly to US$3.8 trillion in 2024 from US$2.3 trillion in 2015, but intra-ASEAN trade only increased to US$0.8 trillion from US$0.5 trillion during the period.
There are also other difficult areas such as labour mobility, especially that of high-skilled workers.
According to a World Bank report released in 2017, ASEAN migrants, often low-skilled and undocumented, are compelled to move in search of economic opportunities, mainly in the construction, plantation and domestic services sectors.
Although the AEC has taken steps to facilitate mobility, these regulations only cover certain skilled professions and the overall migration procedures across ASEAN remain restrictive.
Similarly, the liberation of the services sector and capital market integration remain a work in progress.
“The plans for a single market may not be achievable in the next few years though the geopolitical volatility generated by United States President Donald Trump provided an impetus for ASEAN to achieve a single market,” said University of Nottingham Malaysia assistant professor of business economics, Dr Tan Chee Meng.
Challenges abound, he said, noting that a single market requires policy harmonisation but the income disparities between highly developed ASEAN-6 nations such as Singapore versus developing countries such as Cambodia would dampen the regional bloc’s ability to create a single market in the near future.
He said the digitisation of the economy not only enhances firm productivity and efficiency but also improves market accessibility for micro, small and medium enterprises (MSMEs).
But while this infrastructure is readily available in many of the ASEAN-6, the same cannot be said for some of the less affluent CLMV nations, he said.
ASEAN needs to narrow the inequality in development between member states before a single market can be achieved and this will undoubtedly take time.
Tan said there are also other hindrances that ASEAN needs to zoom in on as well, which include protectionism.
“Protectionist policies such as non-tariff trade barriers that ban items from entering or exiting ASEAN nations need to be addressed, especially when the trading partner is another ASEAN country,” he said.
To boost confidence that trade disputes can be resolved and economic integration achieved, the region needs to utilise the bloc’s dispute settlement mechanism.
However, he said, this mechanism appears to be severely underutilised, which may prove to be a major stumbling block in achieving a single market.
Implementation is an issue as well, opined Tan.
Unlike the European Union (EU) which is a political union, ASEAN isn’t.
“While member states with the EU are required to adhere to the union’s policies as a condition for membership, ASEAN nations have a great deal of autonomy in setting their own national agenda. The mutual respect between ASEAN members is one of the bloc’s greatest appeals but appears to be one of its largest stumbling blocks as well,” he said.
That said, the different political systems adopted by member states may also influence how they run the economy, which is likely a source of conflict with other member states that possess different political values.
Going forward, ASEAN should first tear down trade barriers among member states and increase regional trade to get a feel of what it is like to integrate their economies.
What ASEAN could perhaps consider is to bring a single market to segments of the ASEAN-6 before expanding this idea regionwide. If this is achievable, then other member nations may follow suit and a single market would then move from vision to reality.
-- BERNAMA