Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(17)

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia

They are Singapore and Indonesia in the maritime Southeast Asia. The two countries shouldn't be thought lightly of in any economic point of view in the region. Above all, Singapore has been acclaimed the most advance country with per capita GDP of 60,300 USD in 2017. 

In particular, Singapore is leading the region this year as it chairs the ASEAN summit and subsequent summits. In contrast with Singapore, Indonesia is ranked the first place in terms of the economic size. Indonesia has occupied as much as 40% of the regional GDP and has consistently beefed up its clout across Southeast Asia. 

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(16)

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia

Components of a national economy such as natural resource reserves, labor force abundancy, industrial structure and infrastructure condition are all dissimilar, more or less. This disparity inevitably results in economic gap among the ASEAN members. 

For example, in spite of the recent economic boost, CLMV countries (Cambodia, Laos, Myanmar and Vietnam) are estimated to possess only around 5% share of the overall ASEAN GDP (Growth Domestic Product). In this regard, this paper primarily concentrates on two countries. 

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(15)

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia

The graph below explains key milestones of the AEC and four pillars of the AEC. And a step further from the inauguration of the AEC, AEC Blueprint 2025 guiding the strategic direction of the regional economic integration for the next 10 years was additionally adopted at the 27th ASEAN Summit in November 2015. 

Though all the ASEAN members have been closely related with each other over history, each country shows different interests in the era of the AEC. This is mainly because 10 countries aren't in an identical economic situation. 

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(14)

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia

It is because the AEC's ultimate target is to become an Asian version of the EEC (European Economic Community), the precursor of the EU (European Union). Consequently, 10 member states have put considerable efforts to keep pace with the new economic norm envisioning a single market in the region. 

The goals of the AEC go with the interrelated four pillars upon which the AEC Blueprint is based. They are a single market and production base, a highly competitive economic region, a region of equitable economic development and a region fully integrated into the global economy.

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(13)

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia

The joint vision for an integrated future was adopted by leaders in November 2007 at the 13th ASEAN Summit and culminated in the ASEAN Economic Community (AEC) Blueprint. It is a blueprint that has served as a comprehensive master plan to chart the region's journey towards the formal establishment of the AEC. 

As projected by the AEC Blueprint, the AEC was finally launched on the 31th of December, 2015. The AEC has been perceived to open a new phase of more deepened economic integration in Southeast Asia.