Inauguration of the AEC and Its Impacts on Relation between Singapore and Indonesia(38)

Comparative Research on Relationship of Singapore and Indonesia in the AEC Aspect

Besides, awareness of the importance of the AEC is not only high in the business sector but also considerably widespread among the general public in Singapore. This phenomenon may be associated with the unparalleled development career of the Singaporean economy. 

Actually, Singapore has been spotlighted to reap the biggest pie of the AEC as the United States has benefited the most in the time of the North American Free Trade Agreement (NAFTA).

Inauguration of the AEC and Its Impacts on Relation between Singapore and Indonesia(37)

Comparative Research on Relationship of Singapore and Indonesia in the AEC Aspect

When it comes to the details of the perception of and the response to the AEC, however, Singapore is often evaluated ahead of Indonesia by and large. Proactive approach of Singaporean SMEs aiming the AEC may demonstrate Singapore's skyrocketed anticipation for the unprecedented common market. 

Most experts have been in the same boat that the AEC may serve Singaporean SMEs armed with regional competitiveness well to navigate tremendous business momentums in one single market with 650 million populations.

Inauguration of the AEC and Its Impacts on Relation between Singapore and Indonesia(36)

Comparative Research on Relationship of Singapore and Indonesia in the AEC Aspect

In addition, concerns of SMEs especially in Indonesia that they may be isolated from the far-reaching age of the AEC are getting greater. 

In spite of such negative voices raised, the Singaporean and Indonesian governments have been regarded to take necessary steps to realize their commitments to the AEC as ambitiously set out in the AEC Blueprint.

Inauguration of the AEC and Its Impacts on Relation between Singapore and Indonesia(35)

Comparative Research on Relationship of Singapore and Indonesia in the AEC Aspect

As identified above, Singapore and Indonesia may have been claimed to pour continuous efforts to deal with the era of the AEC. Both countries have concentrated on the emergence of the AEC and the impacts that the new regional economic community would bring to them. 

Nevertheless, there are yet complaints especially from the private sectors in both countries that incomplete information sharing and insufficient corporate engagement on the core agendas of the AEC has been left shortages.

Inauguration of the AEC and Its Impacts on Relation between Singapore and Indonesia(34)

Comparative Research on Relationship of Singapore and Indonesia in the AEC Aspect

Major players already have a good and comprehensive understanding about the AEC. The major players are large companies whose activities are related to export-import, foreign companies, and foreign affiliates or local companies that are involved in international production networks. 

In addition, in general, information concerning the AEC fails to reach most members of the business community largely due to the fact that both government and the ASEAN secretariat do not have a systematic mechanism to disseminate information.

Inauguration of the AEC and Its Impacts on Relation between Singapore and Indonesia(33)

Comparative Research on Relationship of Singapore and Indonesia in the AEC Aspect

Indonesia is one of the few countries in ASEAN that has promulgated a competition law and has established an independent agency in charge of competition policy – the Commission for the Supervision of Business Competition. 

Larger firms tend to have better knowledge about the existing FTAs and, in general, are more optimistic than smaller ones. This is true also with regard to the AEC.

Inauguration of the AEC and Its Impacts on Relation between Singapore and Indonesia(32)

Comparative Research on Relationship of Singapore and Indonesia in the AEC Aspect

To its credit the Indonesian Government has taken the necessary steps to incorporate its commitments to the AEC into the country's national economic development programs. 

Ever since Indonesia initiated trade liberalization in the mid-1980s, it has significantly reduced tariff rates, more or less across the board. In 2007, Indonesia introduced a new investment law aimed at making Indonesia more attractive to foreign investors.

Inauguration of the AEC and Its Impacts on Relation between Singapore and Indonesia(31)

Comparative Research on Relationship of Singapore and Indonesia in the AEC Aspect

Going forward, Singapore will focus on capacity building and human resource development in the ASEAN countries to help them prepare for the 2015 deadline. Results of SWOT analysis on the Singapore's perception of and response to the formation of the AEC can be diagramed as below. 

According to the papers by Hadi Soesastro and Raymond Atje (p. 72-77.) and Widdi Mugijayani and Pratiwi Kartika (p. 210-212.), Indonesia's major perception of and response to the formation of the AEC can be summarized as below.

Inauguration of the AEC and Its Impacts on Relation between Singapore and Indonesia(30)

Comparative Research on Relationship of Singapore and Indonesia in the AEC Aspect

The larger players, being more experienced, point out that whilst the ASEAN agreements are being help up as the way forward, delays or non-implementation of signed agreements are too common occurrences. 

A more basic reaction from businesses is tied to the process itself of drawing up the ASEAN economic agreements. An underlying concern is that the agreements are concluded without the involvement of or consultation with the private sector.

Inauguration of the AEC and Its Impacts on Relation between Singapore and Indonesia(29)

Comparative Research on Relationship of Singapore and Indonesia in the AEC Aspect

Thus, while Singapore acknowledges that some problems are faced by the ASEAN countries in implementing the AEC Blueprint, there is an urgent need to persevere in order for the region to remain competitive and relevant to the global economy. 

It is significant that SMEs tend to be in the more optimistic category in relation to regional integration. SME leaders in Singapore have urged fellow companies to expand within the region and to seriously consider investing in ASEAN neighbors for the many benefits that an integrated ASEAN economic community can bring.

Inauguration of the AEC and Its Impacts on Relation between Singapore and Indonesia(28)

Comparative Research on Relationship of Singapore and Indonesia in the AEC Aspect

According to the papers by Juliana Giam (p. 280-281.) and Ong Keng Yong (p. 132-133.), Singapore’s major perception of and response to the formation of the AEC can be summarized as below. 

Singapore remains committed and continues to work closely with the other ASEAN countries to achieve the goals of the AEC as set out in the AEC blueprint. Singapore believes that a strong and competitive ASEAN is important in the face of growing challenges posed, not just to the Southeast Asian economy, but the global economy.