Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(7)

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

In the final section, results of comparative examination on the impacts of the AEC on Singapore and Indonesia will be demonstrated. This study will be concluded with brief suggestions especially for the governments of the two countries in hopes of stalwart execution of the AEC in the near future. 

As widely known, the ASEAN consists of 10 member states. 5 countries including Myanmar, Thailand, Laos, Cambodia and Vietnam are located in the continental ASEAN. Remaining 5 countries, Malaysia, Singapore, Indonesia, Brunei and the Philippines are positioned in the maritime area.

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(6)

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

In this research, largely relied upon the papers from 'Achieving the ASEAN Economic Community 2015: Challenges for Member Countries & Businesses' by the ASEAN Studies Centre of the Institute of Southeast Asian Studies in Singapore and other publications of the ASEAN Secretariat in Indonesia, I will discuss the perception and response of two distinguishing economies in the region, Singapore and Indonesia to the formation of the AEC.

Singapore, the most advanced economy and Indonesia, the largest economy has led the ASEAN so far. My argument will move on to potential benefits and drawbacks the two countries may enjoy or suffer by performing SWOT analysis.

 

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(5)

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

Under this circumstance, it is no wonder that academic attempts to browse the era of the AEC have been carried out over the past decade. Researches prospecting the possible changes and impacts that AEC may bring to the region have been mainly addressed. 

However, country-level reports are not easily seen as most studies have been focused on the investigation and prediction of the region's overall economy in the wake of the AEC. In particular, comparison of the AEC's influence on individual ASEAN member states has rarely been made. My quest starts at this point. 

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(4)

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

The AEC has drawn huge attention from the global society ever since discussions over the formation of the new regional economic community became the talk of the town. It isn't too much to say that agendas of the AEC Blueprint 2015 such as elimination of tariffs, facilitation of skilled labor mobility, liberalization of investment have been greatly valued to the international community. 

In that more than 95% of intra-regional trades have been conducted free from any types of tariff, expectation for meaningful progresses of the AEC gets bigger and bigger.

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(3)

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

Along with the ASEAN Political-Security Community and the ASEAN Socio-Cultural Community, the concept of the AEC was first emerged in the ASEAN Vision 2020 articulated in 1997. Then in 2003, leaders of the ASEAN member states declared the formation of an ASEAN Economic Community by 2020 as an agreed goal of the regional economic integration. 

According to the AEC Blueprint 2015, a comprehensive masterplan accelerated the formal establishment of the AEC from 2020 to 2015, AEC rests on four pillars; a single market and production base; a competitive economic region; equitable economic development; and integration with the global economy.

 

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(2)

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

While Myanmar is still under international criticism for the massacre against its minority group, Indonesians witness social conflicts with controversy over the majority religious party's alleged attempt to exercise influences on the political sector. 

Though the ASEAN members are faced with their own weighty political or diplomatic issues, all countries pay close attention to one regional watershed in common. It is the AEC (ASEAN Economic Community) which marked the 3rd year of its ambitious inauguration 48 years after the establishment of the ASEAN in 1967.

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(1)

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

The ASEAN (Association of Southeast Asian Nations), the 7th largest economy in the world appeared quite noisy in the first half of 2018. Singapore seems advantaged with its efforts to raise its national reputation as the hub of neutral diplomacy after successfully hosting the historical summit between North Korea and the United States. 

Internal disorder in Malaysia triggered by the opposition party's recent victory on general election looms large as the new Prime Minister, the comeback kid at 92 has clarified his policy shift apart from the previous cabinet.

High Time for Digital Cooperation between Korea and Indonesia(7)

High Time for Digital Cooperation between Korea and Indonesia

Poor IT infrastructures in non-urban areas, shortage of high-skilled work forces and widespread financial illiteracy have taken roots in many parts of the nation. This is where digital cooperation between Korea and Indonesia can take a meaningful step forward. 

What Korea has experienced in the last 20 years in becoming a global digital leader can be valuable asset to the Indonesian journey heading for the digital society. Beginning with promising fields including the fintech and the education, now is the right time for young startups in both countries to join hands with each other and hit the digital road hard.

 

High Time for Digital Cooperation between Korea and Indonesia(6)

High Time for Digital Cooperation between Korea and Indonesia

In this regard, starting from the e-commerce field followed by sectors like the co-working space and the online travel, young and ambitious startups have been playing prime roles in taking initiatives to bring digital technology into reality. 

What COVID-19 has showed to the Indonesian society has served a wake-up call to this irreversible trend of the digital Indonesia. There are yet pending issues to tackle in startup fever in Indonesia.

 

High Time for Digital Cooperation between Korea and Indonesia(5)

High Time for Digital Cooperation between Korea and Indonesia

This favorable viewpoint has led to produce thousands of startups and 5 unicorns across the country. Against this background, it may not be too much to say that Indonesia will remain as a critical pillar of the regional digital ecosystem.

As the world's biggest archipelago with 17,000 or so islands, Indonesia has been comprehended to have little choices but to rely upon online or mobile platforms powered by ICT (Information and Communications Technology) to have more people advantaged from the convenience and efficiency of the digital economy.

High Time for Digital Cooperation between Korea and Indonesia(4)

High Time for Digital Cooperation between Korea and Indonesia

The fact that 9 out of 11 unicorns in Southeast Asia are headquartered either in Singapore or in Indonesia proves the significance of the two countries in the ASEAN digital economy. It seems that Indonesia has caught eyes of the global investment experts more actively than Singapore in the regional competition of startup waves. 

The potential for growth in the country's digital industry has made it attractive to investors and entrepreneurs alike. Actually, a growing number of venture capitals and startup accelerators have sensed exceptional business opportunities of Indonesia especially in terms of the market size.

High Time for Digital Cooperation between Korea and Indonesia(3)

High Time for Digital Cooperation between Korea and Indonesia

Consequently, as many as 11 unicorns, privately held startup companies valued at over $1 billion, have emerged from various industries such as the mobility, the e-payment and the online game. It is Singapore and Indonesia which has been spotlighted the most for the startup frenzy in Southeast Asia. 

The two countries have been in the forefront of the development of the digital economy in the region. Singapore has been recognized to incubate the advent of the digital era with its strong commitment to innovation while Indonesia has been viewed to beef up the digital fever based upon its presence as the most sizeable playground. 

High Time for Digital Cooperation between Korea and Indonesia(2)

High Time for Digital Cooperation between Korea and Indonesia

Digital cooperation spearheaded by startups in both countries can be a new topic of the time when the deadly COVID-19 pandemic has further spurred the necessity of the digitalization of the Indonesian society. In fact, startup boom deserves named as one of the hot issues in Southeast Asia since mid-2010s. 

Startup markets across Southeast Asia have been rapidly gaining momentums. Local leaders of the digital economy such as Grab in Singapore which acquired the Southeast Asian business unit of Uber in 2018 have been acclaimed for changing the conventional industrial map in the region.