gE Blog Series: ASEAN Economic Community Part 3 - Economic Implications for the Region
In the third part of this week’s blog series on the ASEAN Economic Community (AEC), we will look at the many economic and investment opportunities created with the formation of the new economic bloc, along with some possible economic implications in the region. With a combined population of 625 million and a relatively low GDP per capita, many see the AEC as a region ripe for growth and opportunity. The economic community has the potential to significantly impact all ten participating countries, as a reduction in tariffs and freer trade could open new avenues for many businesses in the bloc, as well as foreign companies looking to expand.
ASEAN has several factors supporting growth in coming years, including its rich supply of natural resources. The region is the biggest supplier in the world of natural rubber and palm oil, and ranks third in both coal and natural gas production. The region also has a strong agriculture base and is second in the world in rice production. Another promising factor is the region’s growth since the turn of the century, which at 5.1%, ranks only behind China and India.
The potential for further growth and the many resources available make investment in the region intriguing, especially in light of the current economic struggles faced by neighbors China and Japan. If the community can unify and truly become a single economic entity, international companies will see a region in which they can easily move about. This in turn will allow companies to not only benefit from the large population, but also the many diverse benefits available in each specific country.
Along with increased foreign investment, many inside ASEAN are hoping the economic community will greatly strengthen the economic ties between member nations. Around one fourth of the region's exports are sent to fellow ASEAN countries, and the hope is this intra-regional trade will only increase with the new agreement. More trade within the bloc would help further unify and strengthen the bonds between member nations, which becomes very beneficial when attempting to create free trade agreements with other economies. To ensure this economic unity among its members, ASEAN still has much work to do, but the AEC is the first step toward a brighter economic future for the region.