The effects of asean economic community

By providing new digital tools to its SMEs, at no cost through a unique business model, Germany recognizes that it can further solidify its global leadership in trade efficiency. The Canada SEA report findings revealed that by digitizing its global value chains, Canada can reduce its excess domestic and international trade costs by USD

Where Are We, Where Next? There are, however, downside risks they need to watch. The divergence in monetary policy settings among the G3 economies could pose risks to financial stability that could also potentially hurt growth. The anticipated normalisation of interest rates in the US against continuing quantitative easing in the Eurozone and Japan is already causing sharp movements in exchange rates and bond yields.

Banks in the region could face higher non-performing loans. But their liquidity and capital positions are generally sound and they should be able to weather this. It is the composition of that growth and demand. Rising incomes and the agglomeration effects of urbanisation will significantly expand the ranks of the middle class in ASEAN.

InASEAN will have a population of million, with about two-thirds attaining middle class status. In other words, the size of the middle class will swell by as much as three times over two decades.

This rapid expansion of the middle class in ASEAN will spur demand for a wide range of goods and services. Services such as telecommunications, education, healthcare, and banking and finance, have a high income elasticity of demand.

This means that The effects of asean economic community incomes rise and wealth accumulates, the demand for financial services — be it consumer credit, wealth management, or insurance — will rise more than proportionately.

This phenomenon is being demonstrated right now, as it has been over the last few years, and will continue to play out in the next few decades as ASEAN continues to grow.

The AEC, as you know, was adopted in by ASEAN Leaders as a blueprint to achieve a free flow of goods, services, investments, and skilled people within the region by We have achieved substantial progress in implementing the AEC Blueprint.

There are agreements in place to enhance protection for investors, liberalise sectors for investment, and provide greater transparency on investment rules. Financial integration is a strong complement to trade integration and a critical component of the overall AEC project.

It will support economic growth by helping to mobilise surplus savings more efficiently and channelling them to productive investment opportunities in the region.

It will strengthen resilience to external shocks by helping to deepen and broaden capital markets. It will promote financial inclusion by helping to expand the reach of financial services to a wider community that is currently under-banked and under-insured.

AFIF sets out the following key thrusts: In part, this is deliberate. In part, this is disappointing. The slower pace is deliberate in the sense that financial integration is more complex than trade integration and requires more time.

Liberalising access to financial services is not as straightforward as reducing numerical tariff rates on particular categories of merchandise.

Financial liberalisation involves addressing issues of harmonising regulatory standards, market conduct practices, disclosure requirements, and conditions of licensing.

More so than in trade integration, financial integration requires a certain degree of convergence in the development of financial markets in the respective economies.

Unlike the goods market and most services, financial liberalisation and integration must pay close heed to issues of systemic stability. A key lesson from past financial crises is that premature opening up of financial markets without strengthening domestic financial systems and establishing credible safety nets can have painful consequences.

While there are good reasons why financial integration has been slower than trade integration, one cannot help but think that progress could have been faster than what we have seen to-date. In that sense, the pace of financial integration is disappointing.

While the pace of financial integration has not been as fast as we would have liked, it is important that we recognise the progress that has been made and the opportunities that have been created.

Let me now touch on the progress and prospects for integration in banking, insurance, and the capital markets respectively. Banking liberalisation under the ABIF can be done on a bilateral basis and customised accordingly.

The banks who have been servicing these corporates in their home markets are well placed to follow their customers and support them as they regionalise. ABIF will provide them an enhanced vehicle to do so.

More importantly, ABIF will be a vehicle to help grow a group of strong pan-ASEAN regional banks with the scale and the capability to compete alongside the global banks. Looking ahead, a key priority for banking integration will be to help banking groups with operations in several ASEAN countries to share and transmit information across borders.

For banks with pan-ASEAN operations, the segregation of data and systems in multiple countries due to data on-shoring requirements may hinder effective group risk management and raise data security concerns.

We should harness technology to support the pooling of data in regional and global data centres. Data aggregation will help enhance consolidated risk management and ensure better protection of customer data. This move will help to lower the cost of insuring cross-border business risks and help to spur intra-ASEAN trade.

The next key steps will be to liberalise the catastrophe insurance and reinsurance markets.Estimating the Medium-term Effects of. the ASEAN Economic Community * OECD and Johns Hopkins University, SAIS-Bologna.

April Abstract. Consequences of the ASEAN Economic Community (AEC) are investigated using a dynamic computable general equilibrium (CGE) model. Quantitative assessments of the effects on welfareeconomic, trade. The ASEAN Economic Community (AEC) is the largest integration effort attempted in the developing world; if realized, it will create a single market with the free movement of goods, services.

This study aims to look at the impact of ASEAN Economic Community (AEC) on the intra-trade among ASEAN member countries at aggregate level. The gravity model . JSTOR is a digital library of academic journals, books, and primary sources. Nov 09,  · Once all agreements are in action, Singapore and Vietnam would be the only two ASEAN countries with access to Europe (via a free trade agreement), the US (through TPP) and Asia (through the AEC and the Regional Comprehensive Economic Partnership).

From the official report of May by the ASEAN, entitled “Thinking Globally, Prospering Regionally – ASEAN Economic Community ” the following table summarizes its very positive economic and demographic evolution between , and