In a globalized world, countries on the regional level tend to come together to boost their common interests. Regional countries tend to create what is called an economic or trade bloc ─ which is an intergovernmental agreement, often under the umbrella of a regional intergovernmental organization, where barriers to trade are either reduced or removed among the member states.
From the European Union (EU) to European Free Trade Area (EFTA), North American Free Trade Agreement (NAFTA), MERCOSUR (the customs union between Brazil, Argentina, Uruguay, Paraguay and Venezuela), and Common Market of Eastern and Southern Africa (COMESA), it seems to be a trend!
And, most importantly, there’s also the Association of Southeast Asian Nations (ASEAN).
What is ASEAN?
The Association of Southeast Asian Nations (ASEAN) is a regional intergovernmental organization comprising 10 member states: Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Laos, Myanmar, Cambodia and Vietnam. ASEAN has an observer status in the Asia-Pacific Economic Cooperation (APEC) ─ an inter-governmental group comprising 21 member economies in the Pacific Rim.
History of ASEAN
From 1967 to 2020, ASEAN has witnessed a number of historical milestones.
- ASEAN replaced the Association of Southeast Asia (ASA), which had been formed in 1961 by 3 countries: Thailand, The Philippines, and the Federation of Malaya (now part of Malaysia).
- In 1967, the ASEAN came into existence with the signing of the Bangkok Declaration. On day one, ASEAN consisted of 5 member states: Indonesia, Malaysia, The Philippines, Singapore and Thailand.
- In the 1970s, the region saw the end of the Vietnam war, which naturally changed the balance of power in Southeast Asia and thus granted a new cohesion to ASEAN. The organization, consequently, became strong enough to take a unified position towards the Vietnamese invasion of Cambodia in 1979. Equally important, ASEAN held a summit meeting in Indonesia in 1976, which ended with a Treaty of Amity and Cooperation and a Declaration of Concord among the member states.
- The 1990s, however, saw the end of the Cold War between the Soviet Union and the USA, resulting in ASEAN rising as a leading player on the regional economic and political levels. Politically, ASEAN adopted a declaration to resolve disputes in the South China Sea and established the ASEAN Regional Forum. A 1995 agreement created a nuclear-free zone in Southeast Asia.
- At the economic level, the member states created the ASEAN Free Trade Area in 1992 to cut intraregional tariffs and reduce restrictions on foreign investment. As a result, ASEAN total merchandise trade rose from $790 billion in 2000 to $2,574 billion in 2017.
- In 2007, the 10 member states signed the ASEAN Charter ─ announcing the organization’s commitment to democratic values, human rights and international diplomacy.
- In 1997, the establishment of the ASEAN Plus Three forum (which included China, South Korea and Japan) gave new momentum to the organization.
- In 2015, the region witnessed the creation of the ASEAN Economic Community (AEC), which envisages ASEAN as a single market with free flow of goods, services, investments and skilled labor, in addition to freer movement of capital across the region.
ASEAN Goals & Objectives
What about the strategic management model that evaluates the performance of any organization by defining its objectives ─ management by objectives? Why not judge ASEAN by ASEAN’s objectives? So, what are the goals and objectives of ASEAN?
- Politically, the organization has been aiming, from day one, to achieve and keep peace and stability in the region. Therefore, the member states have signed a treaty whereby they expressed their commitment not to develop nuclear weapons, with the majority of members adopting a counter-terrorism pact – which means their common obligation to share intelligence and ease the process of extraditing terror suspects.
- Economically, ASEAN aimed at the very outset to create a common market along the lines of the European Union. Their efforts resulted in the establishment, in 2015, of The ASEAN Economic Community (AEC), which is focused on and working towards the free movement of goods and services, investment and capital, as well as skilled labor.
To attract foreign direct investment (FDI) and promote growth among the region, AEC will also work on creating common standards in agriculture, financial services, intellectual property rights, and consumer protection.
ASEAN also aims to achieve social progress and cultural development in the region along with establishing collaboration among the member states through training and research facilities in the educational, professional, technical, and administrative spheres
The Economic Importance of ASEAN
To understand how important ASEAN is from an economic standpoint, let’s hypothetically regard it as a nation and see what it looks like on the world map.
- Economically, if ASEAN was a nation, it would be the seventh-largest economy across the globe, with a combined GDP of $2.6 trillion in 2014.
- Demographically, there are over 622 million people living in ASEAN, more than the European Union or North America. With respect to human resources, ASEAN has the third-largest labor force across the globe.
More Facts About ASEAN
Significantly, the entire Southeast Asian region is currently China’s third-largest trading partner, with an annual bilateral trade of USD 443.6 billion.
As for the South China Sea territorial dispute, ASEAN has discussed drawing up a code of conduct to be signed with China governing disputes in the South China Sea, and the future will definitely witness a settlement of this issue in a win-win-situation manner.
Last but not least, everything seems to be boding well for the 10 member states of ASEAN. To realize their full potential, the 10 countries are endeavoring to face the challenges of injecting large investments in infrastructure and human capital development. At the same time, they are focusing on job creation and achieving prosperity for their peoples,
Final note: By 2050 ASEAN is expected to rank as the fourth-largest economy in the world!