Opportunities and challenges from Asean Economic Community to Vietnam

1. Role of AEC and necessity of establishment

Bangkok declaration is start for formation of ASEAN in 1967. After nearly 5 decades of existence and development, undergoing up and down changes of history, till now ASEAN is an regional cooperation organization, which is considered to be successful for small and medium developing nations.

Direction at construction of ASEAN community is the most important decision of ASEAN from establishment. ASEAN estimates to finish its targets in 2020, but agreed to speed time of execution at the end of 2015 in order to strengthen regional links and connection, to enhance effectiveness of cooperation, take ASEAN to become more closely connecting regional organization and to have important role and position in the region and in the world, contributing to maintaining peace, stability, dynamic socio-economic development of each nation in the region as well as of whole.

Overally ASEAN shall contribute to knowing more clearly regional relation of history and cultural – social relics, nations of ASEAN shall connect and attach with one another by general destiny and regional characters, which are strengthened. They protect, help and share with one another in social aspect, direct attention to people; speed up cooperation, connection, link for dynamic and equal economic project; making ASEAN  become a united market, a general production space, where goods, services and investment  are liberalized, circulation of capital resources and skillful labors are more free, etc. Relation between members bases on laws with general values and standards; they have general duties of protecting comprehensive security in order to create sustainable environment for self strengthening - connected region, where members live together in peace, stability, settle disputes in amicable ways, do not threaten or use forces, etc; concurrently member strengthen cooperation to cope more effectively newly emerged challenges of security, to develop and enhance central role of ASEAN in regional structure together process of expanding and deepening cooperation with outside partners for the world, which is more and more connected and depending one another.

ASEAN solidarity and consent are premise strength to build ASEAN community and develop decisive role of the association in settlement of important matters related to peace, security, stability and development in the region. This is one of the highest priorities together development targets of the association.

Complicated happenings of the world and region situation at present have been causing influence, even causing challenges in many aspects to development of the association. Thus, ASEAN need firstly to keep firmly and develop solidarity and consent to concentrate internal strength, agreement to cope with these challenges. To do such, following matters need to be focused: firstly countries need to comply with charters of ASEAN as well as general rules and standards of the association, among these always pay attention on respect and correct execution of wide consulting principles, speed up building consents in ASEAN, when there are general consents and viewpoint to one matter, it is necessary to comply these seriously; concurrently define focal general priorities of ASEAN and countries, then via that they can coordinate harmoniously national benefits and the ones of ASEAN and region.

Moreover, to develop pivotal role of regional mechanism, especially cooperation, ensuring peace, security and development, the most important is that ASEAN need to keep firmly and develop union and consents; propose direction, orientation and focal priorities and principles of Charters; to build network of forums, cooperation frameworks, take initiative to orient contents and priorities of these forums; concurrently to encourage partners to enhance duties, take part in actively and contribute to construction of  regional cooperation as well as to help ASEAN to build one general community, which together settle challenges just emerged in the region, share and comply with principles and codes of conduct existing for general target of peace, stability, project and prosperity in the region.

2. Achievements and restrictions of  ASEAN within 40 last years

2.1. Achievements:

a/. The most important and outstanding achievements of the association are to finish idea about ASEAN including 10 nations of Southeast Asia, leading to basic change of the association as well as to the regional situation.  

ASEAN-10 helped to terminate separation and confrontation between countries of Southeast Asia; created new relation with good quality between membership countries, basing on understanding, believing one another, cooperating comprehensively and more strictly both bilateral and multilateral aspects. Solidarity and cooperation of ASEAN are strengthened and enhanced time by time according to the motto of ensuring “unity in diversity”, basing on basic principles of the association, especially principle of consents and not interfering internal works of one another.

ASEAN-10 made the association to become a really regional cooperating organization, which is more dynamic and comprehensive; it is important facto to ensure peace, security and project of Southeast Asia and Asia – Pacific Ocean. ASEAN also formed ways of approach and methods of own specific settlement for matters of region and global, that is “ASEAN ways/methods”, of which attention and interest are paid on dialogues and cooperation, dynamics and flexibility in order to find general opinion and consents.

b/. Internal cooperation within the association is speeded up day by day both in depth and width; and achieving big results. Formation of ASEAN-10 internal cooperation results of 40 last years have supported actively members to develop society – economy, concurrently to create important material premise so that ASEAN can increase regional connection/link more deeply and widely in next period. 

+ About politics - security: This is the field with many outstanding cooperation activities and is the important factor to ensure peace and stability in the region. Firstly understanding and trusting one another between members of ASEAN are increasing through diversified activities, of which there is maintaining regular contacts between levels, especially between senior leaders.

ASEAN is active to propose and develop effects of many mechanisms, which ensure regional peace and security such as: Declaring Southeast Asia is the peace region, Freedom and Neutralism (ZOPFAN) in 1971, Treaty of Amity and Cooperation in Southeast Asia (TAC) was signed in 1976 and now becomes codes of conducts, which guide relations not only between countries in southeast Asia but also between countries of ASEAN and outside partners; The Southeast Asian Nuclear-Weapon-Free Zone Treaty (SEANWFZ) in 1995 ; concerned parties’ Declaration of conducts on Eastern sea (DOC) in 2002; these are important step to approach codes of conduct (COC) on the Eastern Sea in order to maintain peace and stability in the sea, etc.

ASEAN initiated to set up ASEAN region forum (ARF) to create rational framework so that ASEAN out side partners can discuss and cooperate security – political matters in Asia – Pacific Ocean. ASEAN is also active to speed cooperation with one another and with outside partners through many frameworks, forms and methods different, in order to cope with traditional and non-traditional security challenges such as in international terrorism, multinational criminals, natural disasters, epidemics, etc.  

+ About economics: this field has important progress step and now is a momentum to speed up region union process. Till now, ASEAN basically finish commitments about formation of ASEAN Free Trade Area (abbreviated as AFTA), with almost tax lines reduced to levels 0-5%. Next, ASEAN defined 12 fields of priorities for early integration to speed up trade within the association. Trade turnover of the internal association now gains about 300 billion USD and occupy about 25% total trade turnover of ASEAN.

Execution of agreement on ASEAN Investment Area (AIA) achieves important progress. ASEAN cooperation is also speeded up and expanded in many economic fields such as industry, agriculture, finance, transport, customs, telecommunications, information, quality measurement standards, etc. ASEAN also appreciate speeding up execution of targets of narrowing development space in  ASEAN, especially through launching Initiative for ASEAN Integration (IAI) on support of new members (Cambodia, Laos, Myanmar and Vietnam).

On the other hand, ASEAN is active to strengthen economic – commercial cooperation with outside partners, especially negotiation to set up free trade areas  (FTA) with almost dialogue countries of ASEAN as China, Japan, Korea, India, Australia and New Zealand , etc.

+ About culture and society:  these special cooperation activities are expanding day by day with many different programs/projects in fields pf culture, education – training, science – technology, environment, health care, drug prevention, sale of women and children, HIV/AIDS, epidemics, etc.

These cooperation activities helped members to enhance ability of settling relevant matters, concurrently helped to create regional cooperation habits, to raise awareness and consciousness of ASEAN community.  

c/. About foreign relation, ASEAN established cooperation relation in many aspects with many important partners in the world, initiated successfully and kept pivotal role in regional cooperation framework in Asia – Pacific Ocean. ASEAN cooperation are very diversified and complicated, not only narrow within Southeast Asia and 10 countries of ASEAN, but also foreign relations of ASEAN through cooperation frameworks in the regions set up and kept as decisive role by ASEAN such as ASEAN+1, ASEAN+3, East Asia Summit (EAS) and ASEAN regional forum (ARF). Furthermore ASEAN is also an important factor of regional and inter-regional cooperation frameworks such as Asia – Pacific Ocean Economic Cooperation Forum (APEC), Asia – Europe Meeting (ASEM) and The Forum for East Asia-Latin America Cooperation (abbreviated as FEALAC).

Via foreign relation, ASEAN take advantages of cooperation and practical support from outside partners, serving targets of security and association development; concurrently contributing importantly to speeding up and connecting region with many levels in Asia – Pacific Ocean.

2.2. Limits

+ Till now, ASEAN association is still rather loose, regional united-ness is still low, diversity especially about social – political mechanism and development level between members is still big.  

+ ASEAN proposed many programs and plans of cooperation but execution results are still limited; organization of apparatus and operation methods are cumbersome, less effective, especially in organization and supervision of commitment/pledge execution.

+ Maintaining solidarity and unity of ASEAN as well as decisive role of the association in the region meets a lot of difficulties and challenges due to influence of many different factors.   

+ Internal situation of some countries as well as relations between members usually happen complex matters influencing solidarity, cooperation and prestige of ASEAN.

3. Opportunities and challenges of Vietnam when joining Economic Community of ASEAN

    It can be seen that regional and international economic integration/union and specially within frameworks of ASEAN has become one of important policies of Vietnam. ASEAN economies as partners signed FTA of SEAN; they are important commercial partners of Vietnam and the momentum to help our economy to maintain growth and export rate during many last years. From 2003 to 2013, trade turnover between Vietnam and ASEAN increased 04 times from about 9 billion USD to nearly 40 billion USD in 2013.

     For companies, localities of Vietnam, AEC shall yield many benefits and opportunities and challenges also. The biggest opportunity given by AEC shall be ability of approach to information on not only ASEAN markets but also on markets of ASEAN’s partners FTA, in specific:

     a. It can approach wider markets of ASEAN with over 600 million people. After 31^st December 2015, almost imported goods within ASEAN shall receive priority of tariff 0%. Tariff and non-tariff barriers are removed; these shall facilitate companies to reduce import costs, reduce cost price of the products, to increase competition, to speed up export, etc.

Table 1

International trade of ASEAN countries in 2009

Sources: Statistics of Vietnam Chamber of Commerce and Industry, 2010 

                b. AEC is center of interference of many multilateral and bilateral trade agreements which ASEAN is realizing or participating in negotiation and discussion. Hence companies shall have opportunities to approach other big and developed markets such as China, Japan, Korea, New Zealand, Australia, India through FTA betwen ASEAN and above mentioned countries. Products with internal rate about 40% are considered as the ones of ASEAN region and shall receive priorities and preferential treatment when they are exported to markets where ASEAN signed FTA.

Table 2: Foreign investment  flows inside and outside ASEN 2007 – 2009

Unit: million US$ (value); % (market shares and difference)

Source: Database of statistics FDI ASEAN

                Besides opportunities, AEC also bring challenges, especially presure from imported goods, competition of services and bigger investment from more experienced and big companies about cost price and quality in the region. For example Vietnam electronic goods producing companies face danger of high competition with goods imported from Thailand and Singapore.

                To cope with this competition, the companies are required to improve continuously competitive ability through defining clearly items of goods/services which they have more competitive advantages in order to increase business ability, quality of products/services, advertise and build actively trademarks, etc. In specific Vietnamese companies need to pay attention on enhancing: innovation of management in the companies – innovation of finance management for effective use of capitals; innovation of equipment and technologies; development of markets, business network, relations with consumers; application of international standards in product management; and management as well as training of human resources.

               Time till when import tax is removed (rate 0%) is not much, in order to take the advantage of opportunities and to limit challenges, besides support policies of Government, initiatives and activeness of companies play decisive role.

4. Some hints of policies for Vietnam when participating in economic community of ASEAN

                Vietnam formed direction and participation of Vietnam in ASEAN from now to 2015 on active and responsible spirit, in order to speed up establishment of ASEAN community suitable to our benefits and basing on charters of ASEAN; to build ASEAN more connected and strong day by day, then contributing to increase of role and international position of Vietnam, creating the good strategic position for us in relation with outside partners, especially big countries.

                With these policies, last time, we are active to take part in contribution to planning and concretizing directions, orientation and important policies, contribution to speeding up cooperation, strengthening union, directing at successful execution of targets of building ASEAN community in 2015, active to propose ideas and action priorities for ASEAN, especially in the office term of ASEAN president 2010, at the same to realize responsibly duties and commitments in  ASEAN.

                In specific: 

                i) Contribution to maintaining solidarity, developing general voice of ASEAN for peace, stability and development in the region including matter of Eastern sea, then via that developing and enhancing central role of ASEAN in regional structure;

                ii) Contribution to speeding up realization of  ASEAN charters and itinerary of building ASEAN community in 2015 through construction of community targets basing on 03 mainstays: politics-security, economics and  society – culture; strengthening connection and union as well as narrowing development space; being active to speed up cooperation of ASEAN with partners to deal effectively with challenges newly emerged about natural disasters, climate changes, epidemics, cooperation about social and cultural matter, etc; to speed up development cooperation of Mekong delta sub-region in the comprehensive direction on  và với các đối tác nhằm ứng phó hiệu quả với các thách thức đang nổi lên về thiên tai, economic-social development, environment protection, sustainable use and management of water resource; connecting and inserting with contents and plans of ASEAN link, especially infrastructures; at the same time take the full advantage of cooperation with partners;

                iii) Active contribution to expanding and deepening relations with partners; encouraging partners to take part in contribution to focal and preferential targets of building community of ASEAN.

                ASEAN is in the important development stage, which is to speed up formation of Community in 2015 and to plan next development directions of ASEAN in next stages. Accordingly one of focal targets at now is giving priority to execution of schedule of building community of ASEAN on 3 mainstays including The ASEAN Political-Security Community (APSC), The ASEAN Political-Security Economic Community (AEC) and The ASEAN Social – Cultural  Community (ASCC), to try to finish remaining targets of building ASEAN community by December 2015.

                ASEAN markets are potential with 600 million people, GDP of the region is about 2,200 billion USD, scale is very big. When participating in ASEAN competition ability is not of mine but of whole association. ASEAN has rules of community requiring us to realize more quickly demands in order to make ASEAN to have institutions, which are rather united, harmonized with customs and have technical level  the same as other countries in the region. According to economic experts, general economic community of ASEAN, which will be established in 2015 is indispensable result of regional cooperation and union process. Taking full advantage of opportunities and overcoming challenges depend greatly State’s management ability and adaptation and effort capacity of companies.

                ASEAN is one open region cooperation organization; cooperation within the association still do not receive the highest priority from members, just gain certain level and effectiveness. ASEAN always have duality: both success and limit, opportunity and success, “centripetal” and “centrifugal” , etc. But overally this organization is rather dynamic and flexible, it always adjusts by itself economic policies to be suitable to new situation, to affirm existing value and international position.

                                                                                                                Dr. Nguyen Thi Minh Phuong

                                                                                                                Economic Faculty – Vinh University

                                                                                                                Email: minhphuongn78@yahoo.com

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