As his country chairs the organisation for 2017, Ambassador of the Philippines Antonio M. Lagdameo discusses ASEAN at 50

Two months after I assumed my post as Philippine Ambassador to the Court of St James’s (for the second time), I was invited to speak about the Association of Southeast Asian Nations (ASEAN) at St Antony’s College at Oxford University. Together with the Ambassador of Indonesia, Rizal Sukma, we addressed and had a discussion with a crowd of Oxford dons, students, researchers and southeast Asia specialists.

The event provided a brilliant opportunity to talk about the process and progress of integration in our emerging regional grouping. The discussion on the ASEAN Economic Community (AEC) was timely and relevant considering that my country, the Philippines, is currently the Chairman of the ASEAN during its 50th anniversary this year.

Indeed, it was encouraging to see people at Oxford and other academic communities in the UK who have developed a keen interest in ASEAN affairs. Perhaps the current talks on Brexit and its implications for the future of the European Union have made people more curious about ASEAN.

EVOLUTION OF SOUTHEAST ASIAN INTEGRATION

The idea of regional integration in Southeast Asia first emerged when the Manila Accord was signed on 31 July 1963 by Philippine President Diosdado Macapagal, Malaysia’s Prime Minister Tunku Abdul Rahman and Indonesia’s President Sukarno. Upon the initiative of the Philippine President, the three leaders met in Manila and agreed to a confederation of the Philippines, the Federation of Malaya (now Malaysia) and Indonesia or the ‘Maphilindo.’

On 8 August 1967, the Association of Southeast Asian Nations or ASEAN was formally established with the signing of the ‘Bangkok Declaration’ by the founding Member States of ASEAN, namely: Indonesia, Malaysia, Philippines, Singapore and Thailand. Brunei Darussalam, Vietnam, Lao PDR, Myanmar and Cambodia would later join the group, making up the existing ten ASEAN Member States.

Today, ASEAN is considered to be the world’s greatest emerging economy, offering opportunities in the form of a huge market of over 620 million people. As a single economic community, ASEAN is the world’s seventh largest market, and home to 10 per cent of the world’s population. With a GDP expected to grow 5 per cent each year by 2018, it is now the third largest economy in Asia, and it is projected to become the world’s fourth largest economy by 2050.

ASEAN has attractive demographics to support and sustain growth. Around 60 per cent of ASEAN’s population today comprises of those under 35-years-old. Its emerging middle class population is estimated to be around 200million people, a figure expected to reach 400million by 2020.

PHILIPPINES’ CHAIRMANSHIP OF ASEAN

The Philippines is proud to be chairing ASEAN and hosting meetings in different parts of the country as the group celebrates its 50th anniversary. While ASEAN has grown to 10 members and several Free Trade Agreements (FTAs) have been created over the years, the Philippines has never wavered in its commitment to making ASEAN work for all its members, and become a significant player and driver in global trade.

Hosting ASEAN this year, we have adopted the thematic priority of ‘inclusive, innovation-led growth’ for the AEC. Our own government has made inclusive growth a priority and the Philippines is championing the micro, small and medium enterprise (MSME) mandate in ASEAN. MSMEs account for a large portion of the domestic workforce and output of many ASEAN Member States, representing 95-99 per cent of all business establishments and generating between 51 and 97 per cent of employment in many Member States. Their contribution to GDP, while significant, about 23-58 per cent, leaves plenty of room for expansion. Similarly, with their contribution to exports currently at 10-30 per cent, as a region, we need to ensure that the rules and programmes adopted within the AEC are responsive and relevant to the situations of MSMEs.

Therefore, helping to promote an environment that allows MSMEs to develop and internationalise is high on the Philippines’s agenda. For example, policies to ease the cost of and simplify the rules for doing business across the region, and programmes that will encourage trade and expansion as a path for growth.

The ASEAN Strategic Action Plan for SME Development 2016-25 lays down the operational framework to pursue goals of seamlessly integrating MSMEs with the AEC and regional value chains (2016-20) and transforming MSMEs to be globally competitive, innovative, inclusive and resilient. To ensure the delivery of these outcomes, the Strategic Action Plan will focus on the key areas affecting MSME growth: (1) promoting productivity, technology and innovation; (2) increasing access to finance; (3) enhancing market access and internationalisation; (4) enhancing policy and regulatory environment; and (5) promoting entrepreneurship and human capital development.

The Philippine priority deliverables span practical policies and support activities. The creation of a sound policy environment and the introduction of the right mix of support programmes are crucial to improve MSME’s capacity to expand and diversify. These initiatives will bring into greater focus PH’s concrete contribution to AEC, particularly in the achievement of equitable economic development.

ASEAN’S INTEGRATION INTO THE GLOBAL ECONOMY

The establishment of the ASEAN Economic Community (AEC) on 31 December 2015 was a significant milestone in the ongoing process of regional economic integration. The formal establishment of the AEC is not the end goal but rather a dynamic process that requires continuous efforts to maintain ASEAN’s relevance in an evolving global economy, while ensuring it contributes to the achievement of the development goals of each Member State. The vision for AEC 2015 rested on four pillars: 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.

These goals are inter-related and mutually reinforcing. And they are to be achieved in the context of 10 members in varying stages of development.

AEC BLUEPRINT 2025

With its huge economic potential, ASEAN Member States are working hard to implement the AEC Blueprint 2025. This Blueprint is aimed at achieving the vision of having an AEC by 2025 that is highly integrated and cohesive; competitive, innovative and dynamic; with enhanced connectivity and sectoral cooperation; and a more resilient, inclusive, and people-oriented, people-centred community, integrated with the global economy.

The current AEC is the embodiment of ASEAN’s vision of a stable, prosperous and highly competitive economic region characterised by the free flow of goods, services, investment, as well as a freer flow of capital, equitable economic development and reduced poverty and socioeconomic disparities.

Like other regional groups, ASEAN has its share of challenges and opportunities. Some analysts and investors might see differences in languages, cultures, legal systems and economic models among the Member States as challenges, but many of these were already there at ASEAN’s inception and ASEAN has thrived over its 50 year existence.

Overall, the strengthened economic fundamentals and internal resilience of ASEAN economies suggest the future outlook for ASEAN is bright.