The official ASEAN Economic Community (AEC)
Scorecard, published by the ASEAN Secretariat in March 2012, stipulated that
ASEAN had achieved 67.5 per cent of its targets for the 2008–11 period.
While
the fourth pillar of the blueprint, ‘integration into the global economy’, was
the best performer at 85.7 per cent, the first pillar on ‘single market and
production base’ was the worst performer, with 65.9 per cent over the same
period.
The
scores are not surprising. In the last few years, ASEAN has signed and implemented
five FTAs and has driven the expanded East Asia Summit and the ASEAN Regional
Forum to help tackle key security challenges affecting the region. In addition
to the leaders’ meeting, the organisation held summits with China, Japan, South
Korea, Australia, New Zealand, Russia and India. This raised the international
profile of ASEAN, especially in an era of East Asia-led global economic
recovery. But ASEAN faces several internal challenges related to non-tariff
barriers, sticky labour laws, lack of infrastructure and a development gap
among members.
A
regional economic scorecard is expected to serve as an unbiased assessment tool
to measure the extent of integration among its members and the economic health
of the region. It is expected to provide relevant information about regional
priorities and in this way foster productive, inclusive and sustainable growth.
Moreover, scores create incentives for improvement by highlighting what is
working and what is not.
The AEC
Scorecard is also a compliance tool that makes it possible to monitor the
implementation of ASEAN agreements and the achievement of milestones indicated
in the AEC Strategic Schedule. The Scorecard outlines specific actions that
must be undertaken by ASEAN collectively and by its member states individually
to establish an AEC by 2015. But how effective is this scorecard? Does it
provide incentives for improvement?
The AEC
Scorecard says the shortfall is mainly caused by delays in ratification of
signed ASEAN-wide agreements and their integration into national laws, as well
as delays in the implementation of specific initiatives. Yet the aggregate
scores fail to reveal the true rates of implementation for individual countries
because it does not give a country-specific break-down, and is too general to
be useful to the general public. This may hinder ASEAN in trying to obtain the
necessary resources at the appropriate time. If the public is to take an
interest in ASEAN matters, it is also important for ASEAN to share quality
information with them.
The AEC
Scorecard also lacks a degree of usefulness because it does not explain the
reasons for such delays. For example, ASEAN took more than two years to ratify
the ASEAN Comprehensive Investment Agreement, which is viewed as one of the
seeds for integration and is expected to enhance investment flows in the
region. The link between trade and investment, particularly through FDI, has
been extensively discussed in the literature. So even if ASEAN is lowering its
tariffs to increase intra-ASEAN trade, it will not obtain the potential
benefits of trade liberalisation with greater investment unless supported by a
broader enabling environment. Hence, delays in ratifying important agreements
contribute to a loss of momentum in integration, and these delays need to be
addressed.
In many
developing countries the existence of a policy does not necessarily imply it
has been fully implemented or that it is in use. Yet policy implementation and
use are both critical factors for a nation or a region to achieve its strategic
goals. It is important for ASEAN to convince all its stakeholders that policy
formulation and implementation are not necessarily consecutive processes, but
are in many cases parallel processes where policy design and revision can take
place even during the formal implementation stages of the policy initiative.
This may raise the confidence of concerned parties in ASEAN matters.
It is
often said that ASEAN suffers because domestic laws are not properly aligned
with regional initiatives. But if the political will exists, then what could be
the challenges for aligning these policies? Given ASEAN’s hope to continue to
be central to the evolving regional architecture, the association must deliver
on its promises. In order to do so, it needs to pay greater attention to member
countries’ domestic politics and needs to understand the interplay of
government agencies, business groups and labour unions in specific countries.
The AEC
Scorecard has demonstrated its importance as an instrument to support the
implementation of the AEC Blueprint; however, it is not entirely satisfactory
on its own. Instead, the scorecard needs to be complemented by other measures
that can trace the state, performance, and impact of trade and investment
liberalisation across the region.
The AEC
Scorecard needs to be transparent, detailed and readily available for private
sector use. It should be able to clearly translate an agreement’s benefits,
such as those relating to reduced costs and prices in the region. These issues
need more awareness and require the active participation of all those concerned
in the process, including the region’s business community.
Sanchita Basu Das
Sanchita
Basu Das is Lead Researcher for Economic Affairs at the ASEAN Studies Centre,
Institute of South East Asian Studies.
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