1. ASEAN BUSINESS SYSTEMS

2. ASEAN BUSINESS SYSTEMS
According to Warner, business systems in any region can be comprehended based
on three key components. These are: the culture that prevails in the society or
region, the institutional framework on which firms in the region operate, and the
nature of policies that guide the coordination of firms in the region.
Association of South-East Asian Nations (ASEAN); an association whose aim is to
encourage the economic growth, social progress, and cultural development of
southeast Asia. Its members are Indonesia, Malaysia, Thailand, Singapore,
Vietnam, Brunei, Laos, Cambodia, Myanmar, and the Philippines.

3. Economics Development in ASEAN Region
Overview The Association of Southeast Asian Nations (ASEAN)
• The ASEAN economies has grown into an important player in the world economy.
• The combined population of the 10 member states in 2014 is 622 million, which is
the third largest in the world following China (1,367 million) and India (1,259
million).
• The combined GDP in 2014 is US$2.5 trillion, which has almost doubled from
US$1.33 trillion in 2007
• With this high growth rate, the population is estimated to grow from 300 million
in 2015 to 400 million in 2020. The member states combine, therefore, to form
the world’s most important emerging
consumer market

4. Economics Development in ASEAN Region
Overview The Association of Southeast Asian Nations (ASEAN)
SEAN has two advantages as a production base.
• First, ASEAN is well placed between two huge consumption markets:
China and India.
• Second, ASEAN has a large and diverse labor force comprising both
skilled workers and diligent low wage labor.

5. Economics Development in ASEAN Region
The ASEAN Economic Community (AEC)
• The ASEAN Economic Community (AEC), formally established on 31
December 2015, is a framework of regional economic cooperation to
facilitate regional growth through free trade and market integration.
• The concept of AEC was first stated in 2003 at the 9th ASEAN Summit.
The AEC Blueprint 2015 was initiated in 2007 with the following four
strategic goals.

6. Economics Development in ASEAN Region
The ASEAN Economic Community (AEC)
Single market and production base: free flow of goods, free flow of
services, free flow of investment, free flow of capital, free flow of skilled
labor.
Competitive economic region: competition policy, consumer protection,
intellectual property rights, infrastructure development, taxation, e-
commerce.
Equitable economic development: small and medium enterprise (SME)
development, support to less developed member states.
Integration into global economy: comprehensive free trade and economic
partnership agreements (FTAs/EPAs), enhanced participation in global
supply networks.

7. The ASEAN Economic Community (AEC)
ASEAN’s GDP has doubled from US$1.3 trillion to US$2.6 trillion, just in the seven
years from 2007 to 2014 (The ASEAN Secretariat, 2015b)
SEAN’s 625 million population has created strong bargaining power so that the
establishment of the AEC drew considerable attention from the world.
One of the major goals of AEC was to eliminate regional tariffs on goods. As
of February 2015, 96.0 per cent of goods had been successfully liberalized as a
whole, with 99.2 per cent liberalized in ASEAN-6 countries (Brunei, Indonesia,
Malaysia, the Philippines, Singapore, and Thailand), and 90.8 per cent in CLMV
countries (Cambodia, Laos, Myanmar, and Vietnam).

8. • According to the AEC scorecard as of 31 October 2015, the four pillars
of economic integration in the AEC blueprint were almost achieved.
• The scorecard shows each achievement ratio as follows: (a) single
market and production base (92.4 per cent), (b) a highly competitive
economic region (90.5 per cent), (c) a region of equitable economic
development (100 per cent), and (d) a region fully integrated into the
global economy (100 per cent) (The ASEAN Secretariat, 2015d, p. 9)

9. ASEAN integration Opportunities and challenges
• Sound economic growth
ASEAN enjoyed 4.6 per cent economic growth in 2014, which was
higher than the 3.4 per cent world average in the same year (The
ASEAN Secretariat, 2015c, p. 1). ASEAN’s GDP doubled in just the
seven years from 2007 to 2014 (The ASEAN Secretariat, 2015b).
According to a JICA study, the ASEAN economy will continue to grow
to US$4628 billion by 2025, which is 1.56 times larger than the 2015
estimation of US$2963 billion (JICA et al., 2014). These robust
numbers strongly show the dynamic growth of the ASEAN economy.

10. • Large and promising population structure
ASEAN’s 625 million population accounts for 9 per cent of the world
population (Financial Times, 2015), and forms the 3rd largest market in
terms of population
It is larger than that of the European Union (504 million) and
that of the United States (319 million). Besides, more than half the
population is under 30 years old

11. • Expansion of middle and upper income classes
(increase in consumption market)
The number of middle and upper class households will
more than double from 71 million in 2010 to 156 million in 2030. This
change will bring about the maturity of the consumption market. The
consumer market in ASEAN will expand around four times, from
US$1098 billion in 2010 to US$4425 billion in 2030.

12. • Infrastructure network
According to the Asian Development Bank (ADB), infrastructure development
has shown significant progress, especially in the Mekong region (see Figure
2.1). The 900 km-long South Economic Corridor connects Ho Chi Minh City,
Phnom Penh, and Bangkok, while the 1500 km-long East-West Corridor
connects Da Nang (Vietnam) and Mawlamyaing (Myanmar), via Laos and
Thailand.
If regional infrastructure continues to be developed, regional integrity will
be highly enhanced, with the entire area
becoming like one country.

13. Development of infrastructure in Mekong region
Source: ADB

14. • Supply chain network
As ASEAN has a stable and safe society in general, and a relatively
cheap and abundant labor force with a certain level of education, this
supply chain network propels ASEAN along the path to becoming one
of the most effective production hubs in the world .
•

15. Challenges
• Demographic trends