Benefits of Integrated ASEAN Economic Community

Mr Christopher de Souza asked the Minister for Trade and Industry how will an established ASEAN Economic Community attract investments, create jobs and help manage regional challenges within the ASEAN region in the next few years.

Mr Lim Hng Kiang: The ASEAN Economic Community (AEC) aims to create a single market and production base across ASEAN economies, with minimal barriers to trade and investment. The AEC has three elements. First, the liberalisation of trade in goods through the ASEAN Trade in Goods Agreement (ATIGA). Second, the liberalisation of services through the ASEAN Framework Agreement on Services (AFAS). And third, the liberalisation of investment through the ASEAN Comprehensive Investment Agreement (ACIA). Under these three Agreements, ASEAN members commit to facilitate and enhance trade in goods, services and investment flows in the region.

The benefits for Singapore companies are significant. For instance, with the elimination of import duties under the ATIGA, companies will enjoy greater price competitiveness for their products. Companies can also expand and establish stronger and wider presence in the region. As these commitments are enshrined within the Agreements, companies will also be able to operate in a more stable and predictable business environment.

Under the AFAS, companies will enjoy reduced barriers to services trade, such as the lowering of foreign equity limits and liberalisation of more services sectors. This will attract more investment, including from beyond the region. Investors in ASEAN will also benefit from stronger and pro-business investment rules present in the ACIA.

Fundamentally, a more economically integrated ASEAN will generate greater opportunities for its citizens, including for Singaporeans. ASEAN is a growing market of 620 million people, and make-up the third largest combined GDP in Asia – at US$2.3 trillion in 2013 1 , behind China and Japan. Closer economic integration within ASEAN will not only raise living standards but also contribute towards stronger regional stability. It is with this in mind that ASEAN countries remain strongly committed. Therefore, during their Summit in November 2014, ASEAN Leaders reaffirmed their commitment to expedite the implementation of the remaining measures in the AEC 2015 Blueprint so as to create a politically cohesive, economically integrated and socially responsible ASEAN Community.

Note(s) to Question No(s) 42:

1 Source: ASEAN Community in Figures 2013.