THE Asean economic integration can only be realised through concerted efforts by the Asean member states (AMS).
Towards this end, there is a need to increase awareness of stakeholders on the Asean Economic Community (AEC) measures, strengthen the domestic industries to participate in the global value chain, place importance on improving regional infrastructure and allocate additional financial and human resources towards regional integration.
Therefore, it is crucial for stakeholders to strengthen their collaboration to overcome the challenges towards making AEC 2025 a success, said the Economic Outlook 2019.
The AEC Blueprint 2025 charts the region’s economic integration landscape over the next decade while retaining the key vision of the AEC 2015. It emphasises the use of science and technology, development of human resources and enhancement of good governance as well as promoting connectivity.
In realising AEC 2025 through financial sector integration, the AMS needs to further collaborate by increasing the role of Asean indigenous banks as well as having more integrated insurance sector and connected capital markets.
The integration will be supported by a financial market infrastructure that is more connected, cost-efficient and safe.
Furthermore, financial inclusion accelerates financial integration and supports inclusive growth by targeting poor and unbanked households as well as micro, small and medium enterprises (MSMEs) to have greater access to finance.
The MSMEs will also be able to shift from informal to formal financial services and further expand their businesses.
The report noted that financial stability can be sustained through continuous strengthening of regional infrastructure to cushion against external economic volatilities.
Given the current global challenges, as Asean moves towards deeper and more cohesive economic integration, the interdependence of financial markets intensifies the risk of contagion.
Hence, AMS must undertake relevant measures including establishing necessary capacity building as well as pursuing sound and consistent macroeconomic policies. Other factors that may weaken Asean economic integration include global trade tensions, a slowdown in China’s economic growth as well as interest rates normalisation.
Trade protectionism through border measures to protect the domestic market of an economy may hamper regional economic integration and disrupt trade.
Notwithstanding the challenges faced by Asean, the AEC presents immense opportunities to the region.
The AEC Blueprint 2025 guides Asean’s transformation into a high performing trade region and an attractive investment destination focusing on financial sector integration benefits such as the free flow of trade in services, free flow of capital, integrated capital markets in Asean and harmonised Asean payments and settlement systems.