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14 - Achieving the AEC 2015: Challenges for the Malaysian Private Sector

from Part II - Challenges For The Private Sector

Published online by Cambridge University Press:  21 October 2015

Mahani Zainal Abidin
Affiliation:
Institute of Strategic and International Studies, Malaysia
Loh Geok Mooi
Affiliation:
Institute of Strategic and International Studies, Malaysia
Nor Izzatina Abdul Aziz
Affiliation:
Institute of Strategic and International Studies, Malaysia
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Summary

In January 2007, heads of ASEAN governments declared their strong commitment to accelerating the establishment of the ASEAN Economic Community (AEC) to 2015 as envisioned in the ASEAN Vision 2020. The ASEAN Economic Community Blueprint which comprises four thrusts was adopted. Out of the four thrusts in the AEC Blueprint, more progress has been made in the first, third, and fourth thrusts which aim at fostering (1) a single market and production base, (3) a region of equitable economic development, and (4) a region fully integrated into the global economy, compared with the second thrust (2) on making ASEAN a highly competitive economic region. Ministers have been tasked to implement the AEC Blueprint and report to the Council of the ASEAN Economic Community on the progress of its implementation.

Since then significant progress has been made on the free flow of goods under the first thrust via the removal of tariffs through the ASEAN Free Trade Area (AFTA). Except for Sensitive and Highly Sensitive Unprocessed Agricultural Products, ASEAN Six, which includes Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, have eliminated the import duties on 99.65 per cent of traded tariff lines since 1 January 2010, while Cambodia, the Lao PDR, Myanmar, and Vietnam (CLMV) have 98.86 per cent of their traded tariff lines reduced to 0–5 per cent.

While AFTA has fostered intra-ASEAN trade since 1992 when it was first established, recent numbers since 2007 show little improvement in trade. This could be due to the unavoidable contraction in trade as a result of the global financial and economic crisis, especially since a significant portion of ASEAN's trade comes from supplying to the advanced economies that were affected by the global crisis. Intra-ASEAN trade rose by 13.6 per cent to US$458 billion and comprised 26.8 per cent of total ASEAN trade in 2008.

Type
Chapter
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Achieving the ASEAN Economic Community 2015
Challenges for Member Countries and Businesses
, pp. 224 - 248
Publisher: ISEAS–Yusof Ishak Institute
Print publication year: 2012

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