The ASEAN Economic Community of 2015 and Beyond

Abstract

Empirically, the phase of an Economic community is the longest among the EU’s formation phases, amounting to 20 years from 1967 to 1987, while other phases such as FTA, Common Market (CM), Single Monetary Union (SMU) and Single Currency of Euro (SC) took only 10 years to be completed. The Economic Community or also known as a Custom Union (CU) in theory covers both trade and investment integration and is an essential phase for any regional economic integration progress. Theoretical studies suggest that a CU is required which unfortunately ASEAN does not have. Yet it is plausible for AFTA to increase FDI inflows as long as it utilizes the open regionalism framework since ‘foreign investors favour liberalization in a region-wide market’ (Ravenhill 1995, p. 856). Can ASEAN achieve economic community without CU? This chapter attempts to answer this with the success story of the implementation of ASEAN’s open regionalism principle, which attracted FDI inflows from new non-members after they joined ASEAN. The framework is known as ‘ASEAN Plus’ Framework such as the ASEAN-China FTA (2010), ASEAN-Japan FTA (2008) and ASEAN-South Korea FTA (2008). This study features Indonesia’s private sector opinions on the AEC both from manufacturing and service sector firms. These opinions were obtained from a recent field survey conducted in Indonesia in 2014. It involved around 345 manufacturing and 187 service-sector firms in six big cities in Indonesia. Further, this chapter features an analysis based on a hypothesis that ASEAN can complete its economic community with the role of sub-regional economic cooperation based on infrastructure network cooperation from the study entitled ASEAN Economic Community : A Work in Progress edited by Das, Menon, Severino, Shrestha and published in 2013.