Association of Southeast

Asian Nations
Learning Outcomes:
Students will gain knowledge
about ASEAN, its operations
and pathway

ESTABLISHMENT AND
MEMBERSHIP
The Association of Southeast Asian Nations or ASEAN
was established on 8 August 1967 in Bangkok by the
five original Member Countries, namely, Indonesia,
Malaysia, Philippines, Singapore, and Thailand.
Brunei Darussalam joined on 8 January 1984
Vietnam on 28 July 1995
Laos and Myanmar on 23 July 1997
Cambodia on 30 April 1999

The ASEAN region has a population of about 500

million,
A total area of 4.5 million square kilometers
A combined gross domestic product of US$737 billion
A total trade of US$ 720 billion.

Goals of ASEAN
To accelerate the economic growth, social

progress and cultural development in the

region through joint endeavors; and
To promote regional peace and stability

through abiding respect for justice and the

rule of law.

Political Objective :
Promoting Peace
&
Stability

Through political dialogue and

confidence building, no tension has
escalated into armed confrontation
among ASEAN members since its
establishment more than three decades
ago.

ECONOMIC AND FUNCTIONAL

COOPERATION
When ASEAN was established, trade among the

Member Countries was insignificant

Thus, some of the earliest economic cooperation

schemes of ASEAN were aimed at addressing this

situation

The Framework Agreement on Enhancing

Economic Cooperation was adopted at the Fourth

ASEAN Summit in Singapore in 1992, which
included the launching of a scheme toward an
ASEAN Free Trade Area or AFTA.

 In 1997, the ASEAN leaders adopted the ASEAN Vision

2020, which aimed at forging closer economic integration

within the region. The vision statement also resolved to
create a stable, prosperous and highly competitive ASEAN
Economic Region, in which there is a free flow of goods,
services, investments, capital, and equitable economic
development and reduced poverty and socio-economic
disparities

In addition to trade and investment liberalization, regional

economic integration is being pursued through the

development of Trans-ASEAN transportation network
consisting of major inter-state highway and railway
networks, principal ports and sea lanes for maritime traffic,
inland waterway transport, and major civil aviation links

Today, ASEAN economic cooperation covers the following

areas: trade, investment, industry, services, finance,

agriculture,
forestry,
energy,
transportation
and
communication, intellectual property, small and medium
enterprises, and tourism.

ASEAN Tourism
To promote Southeast Asia as a single
tourism destination.

Integrating ASEAN

ASEAN Free Trade Area

Launched in January 1992

Eliminating tariff barriers among the Southeast Asian

countries
Integrating the ASEAN economies into a single production
base
Creating a regional market of over 500 million people
ASEAN cooperation has resulted in greater regional
integration.
Within three years from the launching of
AFTA, exports among ASEAN countries grew from US$43.26
billion in 1993 to almost US$80 billion in 1996

ASEAN Free Trade Area

Average tariff under AFTA
20
P
e
r
c
e
n
t

15

12.76%

10

2.39%

5
0

1993

2003

ASEAN GOAL:
ECONOMIC
INTEGRATION

EXTERNAL RELATIONS
ASEAN has made major strides in building

cooperative ties with states in the AsiaPacific region

Consistent with its resolve to enhance

cooperation with other developing regions,

ASEAN maintains contact with other intergovernmental organizations

EXTERNAL RELATIONS
Dialogue Partners

Australia, Canada, China, India, Japan, European Union, New Zealand, Republic of Korea,
Russian Federation, United States of America

EXTERNAL RELATIONS:
Outward-looking ASEAN

STRUCTURES AND
MECHANISMS
The highest decision-making organ of

ASEAN is the Meeting of the ASEAN Heads

of State and Government. The ASEAN
Summit is convened every year
The ASEAN Ministerial Meeting (Foreign
Ministers) is held on an annual basis.
Ministerial meetings on several other
sectors are also held
Supporting these ministerial bodies are 29
committees of senior officials and 122
technical working groups.

AEM: ASEAN Economic Ministers

AMM: ASEAN Ministerial Meeting
AFMM: ASEAN Finance Ministers Meeting
SEOM: Senior Economic Officials Meeting
ASC: ASEAN Standing Committee
SOM: Senior Officials Meeting
ASFOM: ASEAN Senior Finance Officials Meeting

ASEAN SUMMIT

 To support the conduct of ASEANs external

relations, ASEAN has established committees

composed of heads of diplomatic missions in
major capitals

The Secretary-General of ASEAN is appointed on

merit and accorded ministerial status. The

Secretary-General of ASEAN, who has a five-year
term, is mandated to initiate, advise, coordinate,
and implement ASEAN activities.

ASEAN has several specialized bodies and

arrangements promoting inter-governmental

cooperation in various fields

Towards an ASEAN Economic

Community
From ASEAN Free Trade Area to
an ASEAN single market and
production base characterized
by free flow of goods, services,
investment, labor, and capital
by 2020.

Regionalization: The Right Balance

Globalization

Regionalization

Localization
22

ICT has allowed wide information

access.
Goods and services can move cheaper
thanks to cheap transportation and ICT.
The world is more borderless.
In a flat world, competition searches for
lowest cost.
Convenience of flows of information,
goods, services, and people within the
region
Relatively similar psychology and
national interest within region
National borders still have economic
meaning.
National markets exist and are defined
by psychology and politics.
National economic and political
setbacks can threaten globalization.

ndia, where the world's workshop meets its offi

China

Attracts higher prices

Red tape, corruption, tough
labor laws and
bureaucracy all deter
investment
Woeful infrastructure
Lackluster primary
education system
Exclusive growth
environment to the rich
The privatization of key

Weaknesses

Weaknesses

Heavy reliance on low

prices
Weak financial system
Inefficient capital system
Slow population growth

Strong technology and service

industry
Relatively efficient capital
market
Strong private sector and legal
framework
Younger workforce
Growing population
Great university system
Strong entrepreneurial culture

Strengths

Strengths
23

Manufacturing giant with the

lowest prices
Hybrid communist-capitalist model
that enables development
Solid primary schools
Infrastructure that lures foreign
investment
Good distribution of wealth with
higher per-capita income

India

ASEAN Countries at a Glance

24

The First East Asia Summit Driven by ASEAN

Initiated by ASEAN, the first East Asia Summit held in Kuala
Lumpur, Malaysia, in December 2005, brought together leaders
of the former flying geese, with the objective to establish the
East Asia Free Trade Area by 2015 and moving towards the New
Asia.

25

(Observer
)

The Rising East: Threat or Opportunity?

Opportunity

Threat

Individual countries in
ASEAN are nothing
compared to Chindia

ASEAN
Integratio
n

ASEAN is the only region

capable of being in the
driver seat of the
Greater East Asia
integration*

* ASEAN is the first to seat ASEAN countries together with China, India,
Japan, South Korea, Australia, and New Zealand, as well as Russia (as an
26observer) in one table during the first East Asia Summit.

ASEAN in the Driving Seat of the Greater East

ASEAN

Neutral
Position
ASEAN is not
considered a threat to
China, India, Japan,
South Korea, Australia,
and New Zealand

27

High
Bargaining
Power
Attractive
Single
Regional
Market
Huge market
High
consumption
Less
competitive

Competitive
Regional
Production
Base
Smooth flow of
goods, services,
and people
under FTA
Abundance of
natural

What does ASEAN Integration Mean?

All barriers to the free

flow of goods, services,
capital, and skilled
labor are removed

The region will become

a more level playing
field

28

Tariffs will be eliminated and non-tariff

barriers will be gradually phased out
Rules and regulations will be simplified
and harmonized
ASEAN investors will be permitted to
invest in sectors formerly closed to
foreigners and the services sector will
also be opened up
Applicable international standards and
practices are followed, and policies on
intellectual property rights and
competition are put in place
Regional infrastructure will be more
developed with the expansion of
transportation, telecommunications and
energy linkages

Four Key Success Factors of ASEAN Integration

Rigorous Focus on
High-Impact
Sectors

Workable
Institutions

Continued Support
by ASEAN Leaders

More Effective
Public-Private
Collaboration

29
Source: McKinsey&Company, ASEAN Competitiveness Study, 2003.

orporate Trends Supporting ASEAN Integratio

Global trends in manufacturing indicate a shift towards
adopting flexible production techniques and integrated
production chains

30

It is no longer cost effective for all manufacturing activities to be

done in in-house or in a single country

MNCs are integrating their manufacturing activities across several

locations

MNCs are not only seeking large consumer markets but also
regional sites where they can establish efficient production
networks

Regional Production Base

Potential Cost Savings from ASEAN Integration

31

A Balanced Approach is Needed

Benefits to MNCs
Targeting more sales
volume in the
ASEAN market
Components
procurement on an
ASEAN-wide basis
More product
specialization to
achieve economies
of scale
Greater emphasis on
profitability using
ASEAN-wide
operations

32

Benefits to Local
Companies
More export
opportunities to
ASEAN market
ASEAN-wide
expansion
opportunity for
corporate growth
strategy
Technology and
financial support
opportunities from
MNCs
ASEAN-wide pool of
talent
A Balanced Approach