Evaluating ASEAN Economic Community Blueprint 2025: Will it Bridge or Widen Development Gap

The Association of Southeast Asian Nations (ASEAN) is a regional organization comprising countries in Southeast Asia. ASEAN was officially established on August 8, 1967, amidst an unstable regional and international situation, by five founding countries: Indonesia, Malaysia, the Philippines, Singapore, and Thailand. Brunei Darussalam joined ASEAN in 1984, followed by Cambodia, Laos, Myanmar, and Vietnam, which joined between 1995 and 1999. Most recently, Timor-Leste became a member in 2022. 

Initially, the primary objective of ASEAN's formation was to maintain peace and security in Southeast Asia in the aftermath of World War II, as well as to curb communism, which at the time was growing rapidly and clashing with liberalism. These two ideologies were actively competing to expand their influence globally, ultimately disrupting political stability, security, and peace in Southeast Asian nations. 

ASEAN itself stands out as a unique organization because it comprises countries with diverse backgrounds in terms of religion, geography, language, ethnicity, culture, and colonial experiences, all of which differ from one another. With such varied backgrounds, it is evident that they require norms intended to govern relations among member states. These norms did not emerge spontaneously but were the result of various processes and decisions that ultimately culminated in the Kuala Lumpur Declaration. The Kuala Lumpur Declaration contains agreements to oppose the use of violence, resolve conflicts arising among member states, and prevent conflicts through peaceful means. 

In addition to focusing on security and peace issues, ASEAN also engages in economic activities. These economic activities may include economic cooperation among ASEAN member states or collaboration between ASEAN and other regions. Although economic activities are not ASEAN's primary objective, the economic needs of each member state and the rapid phenomenon of globalization have driven the critical importance of economic cooperation within ASEAN. 

In the 1980s, ASEAN initiated several economic collaborations through agreements that did not always proceed smoothly. One such initiative was the ASEAN Industrial Project, which aimed to create specific industries to be traded within the ASEAN market. Under this project, Indonesia and Malaysia agreed to establish industries focused on fertilizer production, while Singapore was set to develop a diesel industry. However, in practice, Indonesia was unwilling to reduce its diesel production, which negatively impacted Singapore’s diesel industry. In this case, the countries prioritized their respective national interests, ultimately rendering the ASEAN Industrial Project unsuccessful. Nevertheless, the efforts made by ASEAN during the 1980s laid the foundation for fostering shared perspectives on the importance of economic cooperation in the years to come. 

In 1992, ASEAN established an economic cooperation framework known as the ASEAN Free Trade Area (AFTA). This initiative aimed to promote free trade relationships among ASEAN member states. Several factors drove the establishment of AFTA, including the motivation of ASEAN members to maintain the organization's relevance as a regional entity following the resolution of the Cambodian conflict. At the time, political and military challenges within the ASEAN region had been addressed, although not entirely resolved. Economic issues increasingly came to the forefront, demanding ASEAN to play a more active role in the economic sphere. Additionally, Singapore, lacking sufficient natural resources and heavily reliant on trade as its primary source of revenue, strongly advocated for liberalization and an open economy to maximize its gains. The desire of ASEAN member states to attract as many investors as possible also contributed to the creation of AFTA. Finally, the presence of large economic blocs in America, Europe, and other parts of Asia further motivated ASEAN to ensure it would not lag behind in the global economic landscape.

In addition to this, there is the ASEAN Economic Community (AEC), which was declared in 2003 in Bali. ASEAN hoped that the AEC would be achieved by 2020. The AEC itself is one of the three main pillars of ASEAN, alongside the ASEAN Security Community, ASEAN Economic Community, and ASEAN Socio-Cultural Community. The AEC plays its role in the trade of goods and services, technology, investment, and human resources among ASEAN member states. The AEC was established in response to the growing competitiveness between China and India, both of which were able to attract investors effectively and directly. As countries with populations exceeding one and a half billion, China and India were certainly more appealing to Western investors compared to ASEAN. Therefore, the AEC was expected to attract back investors who had begun to shift toward these two economic giants.

In practice, the AEC of 2015 has successfully expanded market access for member states. Member states are now able to export their domestic products with regulations that are less complicated compared to engaging in economic cooperation with countries outside the region. However, challenges and obstacles still remain that have not been fully addressed within the AEC. 

The ASEAN Economic Community (AEC) is one of the three pillars of ASEAN, focusing on the economic sector. The AEC was established to deepen economic integration, enhance regional competitiveness, and position ASEAN as a single market and production base. The creation of AEC itself involved a long journey. In 2003, the concept of AEC was formalized at the 9th ASEAN Summit, where ASEAN leaders adopted the Bali Concord II Declaration. Through this declaration, ASEAN leaders agreed to build a major community pillar, with the AEC serving as the key to regional economic integration, with a target for achievement set for 2020. 

In 2007, ASEAN held its 13th Summit in Singapore. At this summit, ASEAN successfully established the ASEAN Charter, which serves as the constitution for ASEAN. The ASEAN Charter strengthens the structure and institutions of ASEAN and provides the legal foundation for ASEAN to realize its vision and mission, including economic integration through the AEC. At this summit, ASEAN also decided to accelerate the goals and targets of the AEC, moving the original deadline from 2020 to 2015. 

The ASEAN Summit held in Singapore in 2007 was a concrete step towards the AEC target. In the same year, ASEAN held its 12th Summit in the Philippines to discuss and design the AEC 2015, known as the AEC Blueprint 2015. The AEC Blueprint 2015 outlines various steps and strategic initiatives to establish the AEC as an integrated economic region. The AEC Blueprint 2015 includes several key characteristics, namely: creating a single market and production base in the region, creating a region where goods, services, investment, and labor can move freely, enhancing a more competitive economic region, including infrastructure and the application of fair competition policies, promoting inclusive economic development to reduce economic disparities among member states through initiatives such as the development of SMEs and economic cooperation across various sectors, integrating with the global economy to connect with global markets through free trade agreements and economic cooperation outside the region.

After more than a decade of planning and preparation for the AEC, it was officially launched on December 31, 2015. With the launch of the AEC, ASEAN became a more integrated regional organization, with approximately 600 million consumers and a collective GDP of around USD 2.4 trillion. ASEAN also contributed about 7% of global GDP. Amid global challenges that increasingly bind countries together, the AEC serves as a relevant framework to maintain regional economic stability and reduce the occurrence of crises. From an ideational framework, the AEC is the ultimate realization of regional economic integration. If trade and investment laws operate harmoniously, the goals of the AEC will be achieved and strengthened. 

In practice, the AEC has several regulations that must be followed to ensure its successful implementation. These regulations include: to enhance trade, the AEC established the ASEAN Single Window, the development of sustainable food production through the ASEAN Integrated Food Security, building long-term infrastructure to develop the capital market and the liberalization of ASEAN capital to achieve financial integration, improving physical connectivity in the region through the ASEAN Highway Network, ASEAN Power Grid, and the Singapore-Kunming Railway Link. Additionally, ASEAN initiated consumer protection, promoted tourism, fostered public-private partnerships, and worked to minimize regional development disparities. If these objectives are achieved, ASEAN will become one of the most competitive economic blocs in the international system.

However, in its implementation, by 2015, the goals were not fully achieved due to the differing conditions experienced by each member state. Each ASEAN member faces various domestic and international pressures, including challenges in balancing product standardization and efficiency, trade competition, the treatment of foreign and domestic investors, and the loss of domestic industry competitiveness to foreign industries. Moreover, the economic resources of each ASEAN member state are not the same, and this has contributed to the development disparities between member countries. 

In my opinion, the AEC in 2015 was not fully successful, and ASEAN seemed to rush its implementation, despite the fact that the member states have differing capabilities. As a result, development disparities became more pronounced. As we know, Singapore is the most economically advanced country in Southeast Asia, followed by Malaysia, Indonesia, and Brunei Darussalam. However, the other member countries do not share the same fate as the aforementioned nations. Singapore, being wealthier than the other members, did not consider the conditions of the other member states and maximized the benefits of the AEC to gain profits, as trade is its main source of revenue. Wealthier ASEAN countries became even wealthier, while the poorer ones became poorer, further widening the development gap between ASEAN countries. 

On November 22, 2015, ASEAN established the AEC Blueprint 2025 to move forward together with a commitment to sustainable economic integration. The vision of the AEC Blueprint 2025 is to: continue the positive economic development of 2009, articulate various aspirations, and strengthen the AEC with stronger regulations, greater focus on the people, and improved living standards for the citizens of ASEAN member states within a framework of sustainable development. The AEC Blueprint 2025 has the following characteristics: a) Adding elements of financial integration, financial inclusion, facilitating the movement of skilled workers, conducting business visits, and enhancing participation in the global value chain, b) Creating a more competitive, innovative, and dynamic ASEAN, c) Enhancing connectivity and sectoral cooperation in areas such as transportation, information and communication technology, e-commerce, food, energy, agriculture, forestry, tourism, minerals, and others, d) A resilient, inclusive ASEAN that is more people-oriented. 

Looking at the AEC 2025 framework, ASEAN has a strong spirit of economic integration. If AEC 2025 can be implemented well and maximally, ASEAN will become one of the competitive economic partners in the international system. However, if ASEAN does not consider the conditions of other member states, it will widen the development gap, just as it did with AEC 2015. If a development gap occurs, it will trigger disputes among member states due to envy over the unfair distribution of ASEAN funds, and force economically weaker member states to join AEC, which could worsen ASEAN's future conditions. 

A possible solution that could be adopted is that ASEAN should strengthen the mechanism of redistribution or ASEAN development funds to the less developed member states. The stronger ASEAN member states can provide technical assistance, infrastructure development, and strengthen economic institutions in the weaker ASEAN countries before the implementation of AEC 2025. Furthermore, ASEAN can adopt a gradual approach or policy differentiation, giving more time and adjusting to the natural resources possessed by weaker ASEAN member states before integration into AEC 2025, such as Cambodia, Laos, Vietnam, and Myanmar. These countries should be given more time and flexible policies to adopt AEC 2025 trade regulations. Lastly, ASEAN can create preferential policies in investment and trade so that the lagging member states will find it easier to attract foreign investors or access markets within the ASEAN bloc.