The State of Play: ASEAN Economic Integration

The future of ASEAN runs through regional and global trade. Here's why.

Earlier this month, I had the opportunity to share my thoughts on progress to date on the ASEAN Economic Community (AEC), along with distinguished panelists from various fields during the sixth ASEAN-EU Business Summit in Singapore.

Pullquote share icon. Share

Intra-ASEAN trade now accounts for only 23 percent of all ASEAN trade.

ASEAN is a critical part of the world for UPS, and we believe in the work of building a more interconnected and prosperous world together regardless of where political rhetoric takes us.

So we are certainly encouraged by recent developments such as the launch of the ASEAN Single Window earlier this year, as it reduces the time it takes for businesses to process customs clearance paperwork.

However, amid the push for greater economic integration, challenges remain, and much needs to be done to boost intra-ASEAN trade.

Here’s my take on what greater integration would mean for trade in ASEAN:

When it’s easier to trade, more trade happens

Intra-ASEAN trade now accounts for only 23 percent of all ASEAN trade, as compared to around 60 percent for intra-EU trade. The AEC allows businesses to gain more economic opportunities by connecting them to potential customers in new markets.

But to do so, we must first make it easier for businesses to understand the rules of trade and regulatory complexities.

When we simplify cross-border transactions, we will see more of them. ASEAN has made the most progress to date in terms of tariffs, which have been virtually eliminated, but other supply chain barriers such as complicated border clearance procedures remain.

Simplifying trade procedures, from documentation to clearance, can significantly reduce costs and delays that result in lost business opportunities.

SMEs will drive intra-ASEAN trade

The AEC will boost intra-ASEAN trade, particularly among SMEs that account for 96 percent of all enterprises in ASEAN. Initiatives like the ASEAN Self Certification Scheme will translate into lower business costs, while broadening their reach into new markets will help SMEs grow and gain the experience they need to become global players.

At the same time, larger businesses can also play an important role by supporting SMEs in their capacity building.

For instance, over the last three years, UPS along with public and private partners, have trained over 3,500 entrepreneurs across 10 ASEAN countries on how to join global supply chains.

Just commerce – plain and simple

 Suppliers, manufacturers, retailers and consumers are more interconnected than ever. As Ross McCullough, our Asia Pacific President often says, it’s high time to retire the “e” in e-Commerce. Omni-channel shopping is now the norm in Asia, and we’ll continue to see offline retailers expanding online, and vice versa.

Pullquote share icon. Share

UPS delivered 5.1 billion packages and documents around the world last year.

In an integrated ASEAN where goods can move freely across borders, shoppers are becoming increasingly impatient in terms of how long they are willing to wait to receive their purchases. The need for businesses to have cohesive supply chains to keep customers happy has never been more apparent.

To serve the needs of increasingly demanding consumers, companies will find themselves needing to leverage smart logistics networks to grow their businesses effectively.

UPS delivered 5.1 billion packages and documents around the world last year, and we are proud of the role we played in facilitating intra- and extra-ASEAN trade. Against a backdrop of global economic uncertainty, the deepening of regional economic integration is now more crucial than ever.

It is important that we continue to drive the momentum of AEC through a collaborative spirit and leverage each other’s strengths to realize deeper regional economic integration. With more than 600 million citizens and a burgeoning middle class, ASEAN represents a large consumer market.

We look forward to the scale and opportunities that will be generated for our customers as we come together as one economic community.

Top Photo: SF Express is a leading integrated express logistics service provider in China that offers high-quality logistics services to the full value chain, including production, supply, sales and distribution. Last year, UPS and SF Express announced a joint venture collaborating on exports.

You might also like:

Asia: The New Center of Gravity

How Free Trade Agreements Affect You

The Challenge of Transformation

Jim O'Gara President, South Asia District at UPS.

Click the RSS icon to subscribe to future articles by this author. RSS Feed