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

Comparative Study on the Perception and Response of Singapore and Indonesia

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. 

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. 

 

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

Comparative Study on the Perception and Response of Singapore and Indonesia

In January 2007, at the 12th ASEAN Summit, the ASEAN leaders collectively agreed to accelerate the establishment of the ASEAN Community from 2020 to 2015. 

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.

 

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

Comparative Study on the Perception and Response of Singapore and Indonesia

The AEC Blueprint 2015 was initiated at the 38th ASEAN Economic Ministers Meeting (AEM) in Kuala Lumpur. The AEM agreed to develop a single and coherent plan progressing step by step to the AEC. 

In essence, this was undertaken by identifying the characteristics and elements of the AEC consistent with the Bali Concord II, involving clear targets and timelines for implementation, while taking into account the ASEAN member states' varying levels of development. 

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(12)

Comparative Study on the Perception and Response of Singapore and Indonesia

It was not until 2003, at the 9th ASEAN Summit, that the ASEAN leaders first declared the formation of an 'ASEAN Economic Community' as stated in the Bali Concord II. 

This was in line with the ASEAN Vision 2020, which aimed to transform the ASEAN into a stable, prosperous and highly-competitive region with equitable economic development, reduced poverty, and socio-economic disparities, progressing in tandem with the establishment of the ASEAN Political Security Community and the ASEAN Socio-Cultural Community.

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(11)

Comparative Study on the Perception and Response of Singapore and Indonesia

The first articulation of the concept of ASEAN economic integration is revealed in the Framework Agreement on Enhancing ASEAN Economic Cooperation signed in Singapore in 1992. The Agreement highlighted the importance of cooperation in the areas of trade; industry, minerals and energy; finance and banking; food, agriculture, and forestry; as well as transport and communications. 

This Framework Agreement eventually led to the establishment of ASEAN's earliest key agreements including The Agreement on the Common Effective Preferential Tariff Scheme for the ASEAN Free Trade Area in 1992.

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(10)

Comparative Study on the Perception and Response of Singapore and Indonesia

Experts have pointed out that the ASEAN's remarkable performance has been greatly attributed to its economic cooperation and integration initiatives picking up steam over the last two decades. In this context, taking a brief look at how the ASEAN economic integration has been developed and eventually led to the establishment of the AEC would be meaningful. 

A publication from the ASEAN Secretariat titled 'ASEAN Economic Community 2015: Progress and Key Achievements' describes the road towards the AEC. Summary of the report (p. 3-6.) can be introduced as below:

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(9)

Comparative Study on the Perception and Response of Singapore and Indonesia

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. Since its foundation slightly more than 50 years ago, the ASEAN has evolved into one of the most dynamic regions with speedy economic achievements.

 

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(8)

Comparative Study on the Perception and Response of Singapore and Indonesia

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. 

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.

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

Comparative Study on the Perception and Response of Singapore and Indonesia

My quest starts at this point. 

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.

 

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

Comparative Study on the Perception and Response of Singapore and Indonesia

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.

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

Comparative Study on the Perception and Response of Singapore and Indonesia

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. 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.

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

Comparative Study on the Perception and Response of Singapore and Indonesia

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. 

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.