ASEAN Economic Community (AEC). Group Presentation during the "Political Economy of Asia-Europe Relations" class. April 2009

1. AsEAN Economic Community…TENTATIVE WAY FORWARD! Presented by: Amirul Haji Mohamad (IMSME) MaarhafizahMaaroff (IMAS) MohdZikryKholil (IMRI)

2. OUTLINE Introduction 1. Significance and Importance 2. Thesis Statement Body 1. Moving up the Value Chain 2. Managing Major Issues Conclusion

3. Significance and Importance Pincer Threat from China (present) and India (future)

4. Significance and Importance ASEAN having being established earlier than Mercosur and NAFTA, is now falling behind in terms of economic integration. Closer to home, the threat posed by China (present) and India (future) in replicating Japanese Regional Production Network

5. Thesis Statement ASEAN needs to upgrade to a competitive global production base due to rapid globalization. Hence, ASEAN needs to hasten the formation of the AEC by managing major issues.

6. Moving up the Value Chain

7. Developmental State Term used by international political economy scholars to refer to the phenomenon of state led macroeconomic planning Characterized as by having a strong state intervention as well as extensive regulation and planning. The term was first coined for Japan and the “Japanese Miracle”. It has also been referred to Malaysia, Thailand, Taiwan and Singapore.

8. Japan FDI in ASEAN Source*: Alfredo C. Robles, Jr. Article in ASEAN Journal of Political Science. December 2004 Source**: Alfredo C. Robles, Jr. Book Titled Interregional Cooperation, Regional Integration and European Union Foreign Direct Investment in ASEAN , 2001

9. Japanese Regional Production Networks VERTICAL INTEGRATION – Produce lower end components of finished goods; used to produce in Japan for Exports (E.g. TEC) HORIZONTAL INTEGRATION – Intermediate goods and components are produced by affiliates of a firm in different countries and then exchanged among affiliates (E.g. Toyota - Japanese Car Industry) ASEAN Regional Specialization Being Replicated in China

10. Regional to Global Aspirations Competitive Global Production Base (Bali Concord II - 2003) Japanese Regional Production Networks (Plaza Accord 1985)

11. Managing Major Issues

12. Two Major Issues Present status of ASEAN transformation towards AEC Whether the self imposed deadline of the AEC is achievable Present Scenario

13. Two Major Issues 1. ASEAN interest VS National Interests e.g. SINGAPORE! (ASEAN against bilateral Trade Agreement) ASEAN as opposed to Bilateral Trade Approach

14. Comparison of MFN and AFTA’s Preferential Tariff Rates Amongst ASEAN MS ASEAN as opposed to Bilateral Trade Approach Source: Complied from data in Dennis and Yusof (2003: 4-5)

15. Two Major Issues ASEAN as opposed to Bilateral Trade Approach ASEAN USA Indonesia Malaysia Philippines Singapore

16. Two Major Issues 2. Weak institutional foundation for ASEAN integration Give more authority to the ASEAN Secretariat and/or Dispute Settlement Mechanism (DSM’s) ASEAN is a weak institution

17. Conclusion In view of the potential threat posed by China (present) and India (future), ASEAN needs to hasten the transformation to AEC. This transformation can be expedited if the major issues can be managed.

18. THE END

19. FAQ: Timeline Formed in Bangkok in Aug. 1967 First ASEAN Summit convenes in Bali in Feb. 1976 First ASEAN-European Economic Community meeting held in Brussels in Sept. 1978 ASEAN establishes the ASEAN Regional Forum (ARF) in 1994 Vietnam joins ASEAN in July 1995; Laos and Myanmar join ASEAN July 1997 December 1997 - First meeting of ASEAN Plus Three and First ASEAN-China Summit Cambodia Joins in April 1999 First meeting of the ASEAN Plus Six Dec. 2005 ASEAN signs charter Nov. 20th, 2007 Towards ASEAN 2020