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CHAPTER 2
GROWING ASEAN MARKETS
2.1 ASEAN Economic Community (AEC)
ASEAN Economic Community (AEC) create a common market area where
the ten
ASEAN member countries are involved: Brunei, Cambodia,
Indonesia, Laos, Malaysia,
Myanmar, The Philippines, Singapore, Thailand, and Vietnam.
Single market creates a
market of over 600 million people and it will be competitive.
Thus it mean: free flow of
goods, services, investments, and labor. It include also tariff
reductions and renews in
certain procedures. Single market can offer a new opportunities
but it also mean
challenges. Runckel (2015)
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2.1.1 According to Bangkok Post
Scorecard of AEC shows at the moment that the region is behind
schedule, it achieved
just 73.6% of its phase 1 goals. AEC still offers a big
opportunities in ASEAN as it can
be seen as a large single market. On future this integration
helps it to increase ASEAN
competitiveness against big economies like: China and India.
Issues, what are delayed
are: agriculture, non-tariff barriers, integration of the
less-developed CLMV (Cambodia,
Laos, Myanmar (Burma), Vietnam) member countries, also financial
integration is one
thing what must to be worked out. Runckel (2015)
2.1.2 According to Us International Trade Commission
According to the US International Trade Commission report on
(AEC), the challenges
were seen in the area of importing and exporting which vary
widely among ASEAN
members. For example, procedures for trading are relatively easy
to complete in
Singapore, Thailand, and Malaysia, but very difficult in Laos
and Cambodia. The
quality of logistics services also varies among the ASEAN
members, such as customs
brokerage, freight forwarding, and express delivery. Logistics
services are world-class
in Singapore but poor in Laos, Cambodia, and Burma. In many
ASEAN countries,
restrictive regulations hamper the delivery of high-quality
logistics services.
Runckel (2015)
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2.2 Benefits of the ASEAN Economic Community (AEC)
Increasing regional cooperation improves: efficiency, dynamism
and competitiveness of
ASEAN members. AEC enables easier and faster movement of goods,
services,
investment, capital and people. It can offer many new ways of
coordinating supply
chains, or access to new markets.
All ASEAN countries have come more essential about the foreign
investors if they are
expanding in a single market of nearly 600 million people. The
ASEAN Free Trade
Agreement (FTA) will aim to zero tariffs including almost all
goods by 2015. ASEAN
vision is to be involved in the global economy. ASEAN has
agreements today, with
China, Japan, Korea, India, Australia and New Zealand.
Economic integration trends, Competitiveness on export, and
Inbound Investment for
Selected Industries. AEC is coming at situation when it is
recognized that investments
in growing markets are more competitive than in the US and
Europe. The investments
can bring badly needed capital for some of the member countries,
allowing them to
jump from the 20th century into the 21st in terms of
competition, like mature countries.
Runckel (2015)
2.2.1 SMEs
SMEs are 50-85% of domestic employment across ASEAN. Integrating
and supporting
SMEs in the initial period will be a challenge throughout ASEAN.
Government of
Singapore realize these challenges and opportunities that AEC
will set to SMEs.
On future the members of AEC must support their SMEs. Vietnam
and Thailand, are
starting to plan more effective system for SME integration and
support. In countries
like: Cambodia, Laos and Myanmar, plans aren't even this
stage.
Runckel (2015)
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2.2.2 Opportunities in Tourist Industry
Many kind of opportunities in tourist industry. Asians travel
more nowadays in the
region and amount of travelers from other countries has
increased. Governments are
investing to facilities, for other leisure attractions, and also
MICE facilities. MICE
tourism opportunities are particularly large and countries which
have experience in this
area such as Thailand and Singapore must give their assistance
to those which have only
weak MICE experience. Runckel (2015)
2.2.3 Internalization of Health Care
Internationalization of health care under the AEC. It will be a
big challenge, and it is
complicated, because of the popularity of Singapore and
Thailand's medical tourism.
On practice the patients are seeking better care at lower cost.
The legal and licensing
frameworks are still under work. Runckel (2015)
2.3 Current Situation
2.3.1 Development of AEC
Development of AEC have been criticized to be too slow.
Observers think that, the
issues have been avoided, which have a big importance.
Effectiveness can make the
success of the integration. Some specialists have commented
about the lack of the
leadership. ASEAN chairmanship is a role which is rotating
position and some of
officials from the poorest or less developed ASEAN countries
will be the chair of
ASEAN It means that leader is not experienced and it is less
interested to pushing ahead
forward to integration. Observers has note that the low
experienced official from poorer
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and less developed ASEAN countries just can follow. Those
leaders can't own same
kind of leadership skills, and experience or knowledge, than
skilled leaders have.
Runckel (2015)
2.3.2 Development of hard infrastructure
Development of hard infrastructure like: roads, ports, airports,
etc. and soft
infrastructure like human resource and training are under the
concentration. Hard
infrastructure: Governments have plans to upgrade the
infrastructure, like the plan
where three highways are linking ASEAN - the North/South one
linking South China
through Myanmar, Thailand, Lao and Vietnam; the East/West
Corridor linking
Myanmar, Thailand, Laos, and Vietnam; and the South/South one
linking Myanmar’s
Dawei deep seaport, Thailand’s Laem Chabang and Cambodia (link
to our infrastructure
article). Thailand's government has also been talking to China
about the high-speed
train project linking Laos and Thailand’s Nong Khai to the
southern border and
Malaysia. Runckel (2015)
2.3.3 Soft Infrastructure
Soft infrastructure, countries with better English skills in
ASEAN, such as Singapore,
Malaysia and the Philippines have an advantage over countries
like Thailand. Thailand
has established the ‘‘English Speaking Year 2012’’ program in
preparation for the AEC.
This is a step in the right direction but what is really needed
is not only a program but a
new mind-set. Thailand has not given enough attention to
improving English skills.
Runckel (2015)
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2.3.4 Banking Sector and Future
The banking sector must look on future, that Banks can
facilitate investors and support
their needs throughout the region. Singaporean and Malaysian
banks and telecoms, have
invested heavily in the region and those are ahead of the
others. Other member countries
must follow this development, if these countries are willing to
have more investments.
Runckel (2015)
2.4 Future of AEC
Inside of the AEC, managers will have sales opportunities across
the region. They must
focus on cost efficiency by integration in their operations
across the region. Lean
techniques, but also developing effective corporate
centralization. Countries like: US,
Canada and Europe are going to have to start paying better
attention to this new
opportunity. Many of them seem to have eyes for only China and
India. Asia is much
more than both of these two countries and western managers need
to study and better
understand the opportunities what the AEC can present.
Businesses must adapt an
international mindset, which gives willingness and ability to
make investments and
acquisitions inside of the region. Opportunity has been
established.
The work is still in progress. Some efforts will go faster on
practice, while others will
face more challenges and can be difficult to be implemented.
Anyway AEC offers clear
opportunities and challenges in businesses, so investors must
think the opportunities
what AEC can offer. Member countries still see each other as
competitors. On future
there is no lines between competitors and collaborators.
Runckel (2015)
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2.5 Fastest Growing Markets
Growing markets in Asia and Africa are still leading. Whole
world is expected to grow
3.2 percent in 2015 and 3.7 percent next year after growth 3.3
percent in each of the past
two years, according to a Bloomberg survey of economists. China,
the Philippines,
Kenya, India and Indonesia, which creates 16 percent of GDP,
aforesaid countries are
forecasted to grow more than 5 percent in 2015
China is still the fastest-growing G-20 nation, even the Asian
economy’s situation is no
longer at the stage it did a few years ago. China's economy
increased 7.3 percent in the
fourth quarter of 2014, a one year earlier, and it is expected
to decline to 7 percent in
2015. Against the slowdown, People's Bank of China policy makers
are boosting
monetary stimulus.
U.S. growth forecasts for 2015 are coalescing around 3 percent
even as the dollar value
could increase to its highest level in more than a decade.
Robinson (2015)
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Figure 1: All-Stars of the Global Economy 2015
Source: Robinson (2015)
2.6 Ease of doing business in ASEAN
Picture of ASEAN countries is positive when comparing to other
Asian developing
countries nearby. ASEAN creates opportunities for different kind
of businesses, traders
and investors. ASEAN countries must develop their
infrastructure, Except: Singapore,
Malaysia and Thailand. Transportation system have to develop
like: (road, rail, air,
sea...). A lot of to do for better communication and information
systems, water and
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sewage, and power supply and grids. Road network is one the
things what are needing
fix, or construction for new. Several things are also needed:
dams, reservoirs, sewers,
sanitation, waste disposal units, hospitals, clinics, fire
prevention facilities, schools,
other educational facilities. Agriculture remains the main
business in many ASEAN
countries (Cambodia, Indonesia, Laos, Myanmar, the Philippines,
Thailand and
Vietnam). It makes need for food processing and export systems.
Malaysia and Brunei
got huge forest resources. It means that there is demand to
processing forestry, timber,
wood and wood products, and for sustainable forest management.
Manufacturing has
increased in the area it has been major growth in it, but only
Singapore with Malaysia
are advanced in industrial sector. Opportunities exist in oil
and gas; petrochemicals and
plastics; aviation; automobiles and automobile parts; mining and
minerals; agro-
processing, including rubber, palm oil, and timber; electrical
and electronic products,
power generation; transportation; drugs and pharmaceuticals,
textiles and garments;
furniture and furnishing; building construction security and
defense; pollution-control
equipment; medical equipment; digital broadcasting; and
machinery and automation
equipment. (Balbir 2010, pp 185-187)
Table 1: Ease of Doing and Starting a Business in ASEAN
Source: Modified from: The World Bank 2014, Doing Business 2014,
World Bank,
pp.173-234
Ease of Doing and Starting a Business in ASEAN
Ease of doing business (rank) Starting a business (rank)
Procedures (number) Time (days)Brunei 59 137 15 101Cambodia 137 184
11 104Indonesia 120 175 10 48Laos 159 86 6 92Malaysia 6 16 3
6Myanmar 182 189 11 72Philippines 108 170 15 35Singapore 1 3 3
2,5Thailand 18 91 4 27,5Vietnam 99 109 10 34
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2.6.1 Open for Businesses
ASEAN countries are sending message that they are open for
businesses. Countries are
making progress in deregulation, liberalization and reducing
barriers from business
operations. Reforms are for make easier to start business by
simplifying business
application processes and make it quicker through better
processes. It makes easier to
get general trading licenses and business registration.
Improvements in legal
protections, contract enforcement and intellectual property
protection are under work.
Foreign Direct Investments (FDIs) has been the driver in ASEAN.
FDI inflows are
influenced by government initiatives designed to attract inbound
investment.
Governmental policies in each of the counties have long been
tailored for attracting FDI
with numerous incentives.
PWC (2012)
2.7 Asia's Growing Middle Class and Population
ASEAN has dramatically beaten the rest of the world on growth in
GDP per capita since
the late 1970s. Income growth has remained strong since 2000,
with average annual real
gains of more than 5 percent. Some member nations have grown
long time: Vietnam, for
example, took just 11 years (from 1995 to 2006) to double its
per capita GDP from
$1,300 to $2,600. Poverty is receding. In 2000, 14 percent of
the region’s population
couldn’t reach the international poverty line of $1.25 a day,
but on 2013, that share
decreased to just 3 percent. About 67 million households in
ASEAN are already part of
the “consuming class.”
Households with more than $7,500 in annual income (in
purchasing-power-parity
terms). That number can almost double to 125 million households
by 2025, making
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ASEAN will be a big consumer market on the future. It’s hard to
define the typical
ASEAN consumer, but some trends have emerged, like: a greater
focus on leisure
activities, a growing preference for modern retail formats, and
increasing brand
awareness
(HV, Thompson, Tonby, 2014)
Table 2: Number of Mid Year Population of ASEAN countries
1980-2013
Source: ASEAN (2015)
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Figure: 2 Population by Age in ASEAN
Source: ASEAN (2015)
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2.8 Natural resources of ASEAN
Asia’s stake in world markets has grown dramatically in the last
half-century. Today,
Asian countries rank as some of the top producers of many
agricultural, forest, fishing,
mining, and industrial products. This increased production has
brought extreme wealth
and negative environmental impacts to the continent.
National Geographic
Table 3: ASEAN Major Industries
Source: Modified from (Balbir 2010 p. 175)
Country Major IndustriesBrunei Oil and Gas, constructionCambodia
Germent, mining, construction
agriculture, tourismIndonesia Oil and Gas, electrical
appliances
, plywood, textiles, rubberLaos Mining. Timber, electric
power,
,consruction, garments
Malaysia Rubber, electronics, petroleumproduction, logging
Myanmar Tourism, gems, oil andforestry
Philipines Semiconductors, garmentspetroleum products,
copper
Singapore Electronics, chemicals, financial services,
petroleum
Thailand Tourism, textiles, agriculturalprocessing,
beverages
Vietnam Food processing, garmentsshoes, machine building,
mining
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Figure 3: Natural Resources of ASEAN
Source: aseanbicaraenergi.com
2.9 Great Mekong Sub-region (GMS)
(GMS) Mekong River economic area, covers 2.6 million square
kilometers and
population about 326 million. The GMS countries: Cambodia, the
People's Republic of
China (PRC, specifically Yunnan Province and Guangxi Zhuang
Autonomous Region),
Lao People's Democratic Republic (Lao PDR), Myanmar, Thailand,
and Viet Nam. It
was a year 1992 when, these six countries entered into a program
of ADB to start a sub-
regional economic cooperation, it was designed to empower
economic relations
between the countries which are mentioned above. ADB (2015)
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2.9.1 ADB's Support to Sub-region
With support from ADB and other donors, the GMS Program helps
the implementation
of high priority sub-regional projects in transport, energy,
telecommunications,
environment, human resource development, tourism, trade, private
sector investment,
and agriculture. Substantial progress has been achieved in terms
of implementing GMS
projects since 1992. Priority infrastructure projects worth
around $11 billion have either
been completed or are being implemented. Among these are the
upgrading of the
Phnom Penh (Cambodia) Ho Chi Minh City (Viet Nam) highway and
the East-West
Economic Corridor that will eventually extend from the Andaman
Sea to Da Nang
ADB (2015)
2.9.2 Natural Resources of GMS
The land its rich: timber, minerals, coal, and petroleum, water
what comes from many
rivers give support to agriculture and fisheries and produce
energy like hydropower.
There is a lot of coal reserve in the sub-region, the oil and
gas reserves notable. Most of
these are located in Myanmar, Thailand and Viet Nam. These
energy resources hasn't
used yet. ADB (2015)
2.9.3 Modernization and Industrialization
Modernization and industrialization are increasing because of
transition and
transformation. The Mekong countries are shifting now from
farming to more to open,
market systems with bigger diverse. This area is growing
relations between the six
countries. Increasing factors are: cross-border trade,
investment, and labor mobility. ,
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Natural resources, like hydropower, are beginning to develop and
used inside of the
region. ADB (2015)
The rich human and natural resources of the Mekong region have
made it a new place of
Asian growth. Mekong region got potential to become one of the
world's fastest
growing areas. ADB (2015)
Figure 4 GMS
Source: gms-dan.org
2.10 DAWEI Port of Myanmar
THE Burmese city of Dawei lies 350 kilometers (220 miles) west
of the Thai capital,
Bangkok. The two are separated by a stretch of mountainous
jungle and have never
been connected. But over the past five years, Thailand’s biggest
construction company,
Italian Thai, has cut a swathe through the jungle which, once
paved, will cost roughly
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$1m per kilometers of road. The plan is that it will connect
Bangkok with a $50 billion
industrial hub and deep-sea port at Dawei on the Andaman Sea.
The Economist (2013)
2.10.1 Scale of the Plan
The plan is epic in scale. At 205 square kilometers (80 square
miles), the project area is
the size of the Vietnamese capital, Hanoi, and nearly ten times
as big as Thailand’s
largest industrial area at Map Ta Phut. Thailand has a coastline
on the Andaman Sea,
but it is in the south of the country. Dawei’s proximity to
Bangkok and the cheapness of
Myanmar’s labor and land are attractive. And, crucially, the
port would be a long way
north and west of the potential chokepoint for shipping at the
Strait of Malacca.
Boosters of the project in Thailand suggest, somewhat
implausibly, that it will increase
annual Thai GDP by 2%. The hope is that the Thai middle class
could soon be driving
their Japanese cars over the mountains and through the jungle
into Myanmar. In
anticipation of a new gateway for international trade and
tourism into South-East Asia,
land prices in some parts of Thailand’s Kanchanaburi province
have already begun to
rise. The Economist (2013)
2.10.2 Biggest Problems of the Project
The project’s biggest problems, however, are financial. Japanese
investors have been
flying in by corporate jet for some time (no Chinese money is
involved), but it appears
that they cannot quite bring themselves to believe that Dawei
will really happen. And
besides, the Japanese have been focusing on developing a port
and industrial zone at
Thilawa, closer to Yangon, Myanmar’s largest city. A consortium
of Thai banks, many
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of them state-run, has been roped into providing $4 billion to
move things along at
Dawei. But ultimately, vast sums of private money will be
needed.
The Economist (2013)
Figure 4: Dawei Port of Myanmar
The Economist (2013)
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2.11 Business Investments
Indeed, it seems likely that ASEAN stands on the brink of a
multi-year investment
boom. Many ASEAN nations have significantly under-invested in
infrastructure and
other fixed assets in recent years, thanks to the fallout from
the Asia Financial Crisis of
1997 and 1998. During the years after the crisis, many companies
and governments in
the region concentrated on paying off debts and repairing
balance sheets rather than
investing in new projects. The resulting investment deficit has
created huge pent-up
demand for infrastructure, for housing, and for factories. This
pent-up demand will
drive high levels of investment activity for many years, fueling
economic growth in the
short-term through construction activity, as well as in the
long-term by raising the
region’s future productive capacity. Economist Corporate Network
(2013)
2.12 Business Attractiveness
Impressive rates of economic growth. For the period between 1999
and 2012, the
ASEAN region grew in real terms by an annual average rate of
5.5%, so doubling in
size in just 13 years. South-east Asia is expected to grow at a
similar pace for the
foreseeable future.
Economist Corporate Network (2013)
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Figure 5:
Figure 6
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2.13 Taxation
Table 4: Taxation in ASEAN
Source: ASEAN Briefing (2014)
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2.14 Security of Property
2.14.1 (IPR) Intellectual Property Rights
It’s still issue for ASEAN, but not such a big problem than in
other Asian countries.
Foreign companies feel that laws are up to date, but enforcement
doesn’t work well.
Countries has started to strength and improve the enforcement on
protection,
administration, legislation, and tracking of IPR public
records.
When companies are expanding to ASEAN one of the major
consideration will be how
to protect intellectual property. (IP) AEC is working the need
for cohesive IP Laws in
the region. However, the concepts of IP are tackling in ASEANS's
developing states.
Investors are likely to focus on countries where IP is
protected. Singapore, has high
positioning in IP protection and it has advantage in it because
Singapore has developed
its laws and regulations. From a tax perspective IP is one of
the important things of
value. The location of IP affects to company's tax position.
KPMG (2013)
2.15 Legal Issues, Laws, and Regulations
The Legal system inside of ASEAN member countries varies very
much. Diversity is
influenced by history of the each country, most of the laws are
originated by
colonization. Some jurisdictions are influenced by Roman and
Napoleonic systems and
adapted some Dutch continental law, there are also Muslim Syria
Courts
(Malaysia and Brunei). Singapore, Malaysia and Brunei follow the
common law system
inherited From the British system. Thailand has civil law
structure and Philippines has a
hybrid system. Legal system in Indonesia is based on Dutch
system. Institutions like
World Bank and the Asian Development Bank (ADB) have launched
law reform
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projects in the ASEAN countries. Projects hasn't succeed. ASEAN
countries are
working for harmonization of laws and regulations. A key issues
are protection of
intellectual property and administration of contracts. (Balbir
2010, pp 177-178)
2.16 Investment protection
The AEC Blueprint makes numerous references to efforts to
achieve free and open
investment. Further it called for a review of the two existing
investment agreements, in
order to realize a more comprehensive investment agreement that
would increase
investor confidence in ASEAN. The new agreement is the ASEAN
Comprehensive
Investment Agreement (ACIA) signed in 2009, brought in to effect
2012, which is based
on international best practices.
While the ACIA focuses on promoting foreign direct investment,
an important feature is
the protection given to intra- ASEAN investment with
non-discrimination provisions. In
particular, national treatment offer an ASEAN investor the same
ability to invest as a
local investor in other ASEAN member states. Further, the ACIA
maintains most
favoured nation provisions, where preferential, treatment
granted by any member state
must be extended to all other member states.
THE ACIA is a step forward in promoting intra-ASEAN investment
and an important
indication of the region's commitment to AEC. Anyway less
supportive, barriers to
intra- regional investment, ACIA is a positive sign that the
required steps to achieving
an integrated region are underway.
KPMG (2013)
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Table 5: ASEAN Economy and Legal Systems
Source: Modified from (Balbir 2010 p. 175)
2.18 Business Culture of ASEAN
Each country have a unique blend of ethnicities, religions, and
languages. Region’s
geography affect the culture directly. Conflicts must be avoided
even it can aim
consequences. ASEAN have the largest, and universal religions in
the world, including:
Hinduism, Buddhism, Confucianism, Islam and Christianity.
Integration of the region’s
economies has grown by ASEAN, and it take cultures closer.
Respect and trust are the
basic things, which can lead to good relations, patience is an
asset. In negotiations must
be calm, and undermine or causing embarrassment must avoid.
Group consensus is
important like in all social relationships, people are
collective. Individuals identify
Country Economy Legal SystemBrunei Free Market British common
lawCambodia Free Market French Civil Code
Indonesia Free Market Customary Law, Dutch Colonial Law,
national Law
Laos Free Market French legal norms, andprocedures, socialist
practices and traditionalpractices
Malaysia Free Market English common law
Myanmar Central British LawPlanning
Philipines Free Market Spanish and Anglo-American laws
Singapore Free Market English common law
Thailand Free Market Civil Law from British, JapaneseFrench and
German
Vietnam Free Market Legal theory, and French civil law
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themselves in groups and families. All countries willingness is
to improve their quality
of life and that’s why the investments are welcome and it open a
new business
opportunities. English is widely spoken, so it’s possible to
handle almost all the things
just using English, but it will help if can use a little bit
local language
(Balbir 2010. pp 179-181)
ASEAN people are more forward looking, operate by consensus and
have a strong
family values. Influence of family values can see at home only,
it affects to work.
Relationship building is important. Building a business the
partnership is better than
trying to do all alone. A partner have: connections, knowledge
of language, and
bottlenecks of the business and industry. A partner must be
treated well and evaluation
before choosing it is necessary, because afterwards it can be
very difficult to replace it.
Small misunderstandings at meetings where other side may lose
its face can bring
consequences. Patience is gold. Things can’t happen as quickly
to want it to happen. It
takes time to establish and develop the business. In Western
societies corporation matter
more, when ASEAN people and families are higher valued. 60% of
Asia’s companies
are family businesses. Decisions of management can be more
emotional than rational.
The Corruption problem is existing it depends on by low salaries
of government staff.
It’s good to have contacts within the industry as well as
government. All of the ASEAN
countries are trying to strength their political system to catch
up the developed
countries.
(Balbir 2010, pp 181-185)
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2.19 ASEAN VS EU
2.19.1 What ASEAN Can Learn from EU
ASEAN has started to form an economic union, What ASEAN can
learn then from EU
some of these things are positive, while the other are not. The
start of AEC will happen
on the last day of 2015, some of the principles are almost
similar like in the European
Union's single market.
Eliminating barriers of trade and investment in national scale
will increase growth and
living standards. Political stability across Southeast Asia will
increase also like in
Europe. It means cooperation with totally different countries
with different cultures,
political systems and income levels.
Asia can learn from EU's enlargement process in many ways, for
example how to
prepare countries which are not so developed, democratic and how
to put economic
institutions to a level that countries are better and able to
participate in regional
integration.
ASEAN is not going to launch the monetary union that has proved
so problematic in
Europe. Things like monetary union must be planned and organized
well before
implementing it.
Arnold, WSJ (2012)
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2.19.2 Eurozone Crisis
EU has met a few economic crisis, which have caused increasing
doubts about the
European integration process. The lack of efficiency and common
response against the
euro crisis. Has raised a question about the integrity of the
euro-zone, structural and
institutional problems have been revealed by the financial
crisis. These doubts affect
with dramatic changes in the global economic, as the decline of
the EU and United
States and the rise of Asia.
Cameron (2010)
2.19.3 Greece Debt
Germany and France EU’s biggest economies, are nominally the
most involved.
However, the influence would be greater of the areas, like
Slovenia and Malta, Spain
and Italy, these economies are more weak and fragile.
After Greece came under market pressure and entered a bailout
program in 2010,
foreign banks started to rapidly reduce their exposure to
Greece.
Euro area banks’ exposure to Greece, which had peaked at about
€128bn in 2008,
dropped to €12bn in September 2013. UK banks’ exposure was €13bn
in March 2008,
and dropped to €4.3bn by December 2012. US banks’ exposure,
which was about €14bn
in September 2009, was down to €2.5bn at the end of 2012.
Merler (2015)
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2.19.4 Why Greece Economy Can Affect Globally.
Greek’s economy has such a major effect on the global markets.
Fear of the unknown is
driving the markets up and down like a yo-yo. People in Greece
did not want to accept
the changes what the European Central Bank (ECB) has set for the
new bail out loan,
but the government thought that it is the only way out of that
situation instead of
collapse. The major components are: 1) Greece defaults on the
bailout loans that they
have already been given. 2) Greece goes out of the currency.
Considering the coming problems what would occur, if Greece
defaults, and how it can
affect to lender countries. German Banks, France and England
have supported Greece
with loans. Greece is not an insignificant economy and its
failure would affect
throughout the world. The European Union (EU) links even more.
Biggest fear is that if
Greece defaults, other members might default as well and it will
be ultimately affect to
many economies.
This is not just problem for the EU, Many of the large American
banks issued default
insurance to the banks that were lending to Greece and other
struggling nations. If
Greece will default, then these major US banks will have to pay
out billions to cover the
losses. World Financial Watch (2015)
2.19.5 Too Much Regulations (For Example)
The EU and its supporters say the banning a products will
improve the energy
efficiency, environmental friendliness and health standards.
European Commission Regulation No. 1677/88, "Class I" and "Extra
class" cucumbers
are allowed a bend of 10mm per 10cm of length. "Class II"
cucumbers can bend twice
as much. Any cucumbers that are curvier may not be bought or
sold.
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"The bureaucracy has went out of control. Outcomes of this new
law does is to create a
job for new civil servants, paid for to move mountains of papers
round all day, while
forbidding with the right of people to grow what they want, and
charging fees for the
use of plants that were domesticated and grew by the public over
thousands of years of
small-scale agriculture." — Ben Gabel, Director, UK-based Real
Seed Catalogue.
Kern (2013)
Table 6: Difference Between Regional Agreements
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2.20 Future of ASEAN
Southeast Asia can address its productivity challenges and find
new catalysts for growth
by carving out its own unique opportunities from three global
megatrends which are
several below: Mc Kinsey & Company (2014)
2.20.1 Interconnection with Global Economy
Global economy is interconnected with: huge volumes of goods,
services, capital,
people, and data. Southeast Asia can capitalize on this
phenomenon by accelerating
implementation of the AEC integration plan to create a single
market of 600 million
people and consumer. It also can build a more competitive
manufacturing sector which
could attract additional production from multinational companies
while labor costs are
rising in China. These opportunities could create about $280
billion to $615 billion in
annual economic value by 2030. Mc Kinsey & Company
(2014)
2.20.2 Riding the Urbanization Wave.
The booming cities of Southeast Asia makes 65 percent of the
region’s GDP today, and
90 million and more are going to move to the urban areas by
2030. This movement will
support continuing growth of the consumers. Amount of these
consumers can double to
163 million households by 2030 and Southeast Asian's market on
future are for different
kind of companies and industries. Sustainable growth and cities
with a high quality of
life will demand, $7 trillion investments in infrastructure,
housing, and commercial
space. By 2030, the growth of cities could rise about from $520
billion to $930 billion
to the region’s annual GDP. Mc Kinsey & Company (2014)
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2.20.3 Deploying Disruptive Technologies.
Related technologies are: mobile internet, big data, internet of
things, the automation of
knowledge work, and cloud technology. Aforesaid modernize the
sectors across the
economy and works as driver for the major productivity
improvements. In many field of
industries, the trend is on digitalization which by they can cut
expenses and be more
effective. Estimation about disruptive technologies shows that
it could produce $220
billion to $625 billion in annual economic impact for Southeast
Asia by 2030, but the
region will need to prioritize building the infrastructure to
achieve this opportunity.
Global flows, urbanization, and technology are already moving
the region. But if policy
makers and businesses prioritize the opportunities associated
with these trends, the
results could be transformative. Southeast Asia could make a
major strides in economic
development to increase the possibilities for what the
integration can achieve.
Mc Kinsey & Company (2014)
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Table 7: Economic Opportunities