SINGAPORE – Can ten countries with different cultures, traditions, languages, political systems, and levels of economic development act in concert to expand their collective potential? That is the question with which the Association of Southeast Asian Nations (ASEAN) has been wrestling for decades. Judging by their leaders’ ambitious vision for cooperation, the answer may be yes.
What began as a straightforward push to reduce trade tariffs has evolved into a blueprint for a dynamic open market of 600 million consumers and a production base that can compete directly with the world’s largest economies. Once in place, the so-called ASEAN economic community (AEC) will transform Southeast Asia – and its role in the global economy.
ASEAN’s economic potential is undoubtedly impressive. Taken together, the group’s members – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam – would comprise the world’s seventh-largest economy. Moreover, ASEAN’s international trade has almost tripled over the last decade. And foreign-direct investment has been flowing into the region, with multinationals hoping to capitalize on its rapidly expanding middle class and strategic location at the intersection of China, Japan, and India.
The AEC plan aims to build on this momentum by removing barriers to the movement of goods, services, capital, and people throughout the region. The McKinsey Global Institute (MGI) estimates that, by implementing this integration strategy fully and capturing a larger share of global manufacturing, the ASEAN countries could gain $280-625 billion in annual GDP by 2030.