AEC 2015 - The Final Lap

05 September 2015
(Click THE STAR Online for original post)

THE chair of Asean Economic Ministers (AEM), Datuk Sri Mustapa Mohamed, and his officials at the Ministry of International Trade and Industry (Miti), are to be congratulated for organising such an open and engaging series of meetings on the Asean Economic Community (AEC) 2015 last week.

The discussions also covered the post-2015 agenda of course, but a lot of time was allocated to what can and should be done before the end of this year.

The final lap is important to achieve an AEC of some import even as attention has to be given to the post 2015 economic community to ensure its further progress. The critical factor now is implementation of what was decided last week in the next few months.

Asean leaders will launch the SME Masterplan at the November summit, an important roadmap for the development of SMEs in the region. A more specific initiative will be the launch of a Asean SME Growth Accelerator Platform which will help improve SME access to finance and also facilitate better SME linkages. This is a private sector initiative championed by Asean-BAC.

It is heartening that the AEM endorsed this initiative. It will be a good start and many other platforms will surely be set up. Let a hundred flowers bloom.

There will be more and more attention on SMEs as we move towards the end of 2015 and beyond.

Another specific will be the launch of the Asean Young Entrepreneurs Council (AYEC). This is another initiative of Asean-BAC, which has acted as a kind of incubator, to give young entrepreneurs a platform from which to voice their concerns and interests. It is my view they should make their case directly to Asean ministers and leaders, even if they should just keep Asean-BAC, as the mandated private sector body, informed.

With 60% of the Asean population under 35, it is only right that their participation in the AEC process is direct, enhanced and sustained.

The other major decision taken last week was to prioritise the removal of the more identifiable non-tariff measures and barriers (NTMs and NTBs) in two or three chosen sectors. Logistics, healthcare, agri-food and retail (with an emphasis on e-commerce) are the sectors which will come under close examination in the next couple of months.

These are sectors which are close to the people and which should be promoted in a “people-centric” Asean.

Of course NTMs and NTBs are a big issue. But this kind of prioritisation will help. On a recent trip to New Zealand to give a talk on the AEC (on the occasion of 40 years of the Asean-New Zealand relationship), I advised New Zealand counterparts – who are most concerned about NTMs and NTBs – that they should take a pragmatic rather than principles-based approach exclusively.

One very important step that must be completed before the end of 2015 is to put in place a more robust consultation process with the private sector. The dialogues at leaders and ministerial level are well and good, and give good recognition to the private sector, but the private sector has also to work smart to make a difference in policy formulation as well as implementation.

In this regard, a structure should be put in place before the year is out where important private sector participation takes place at strategic points in the Asean decision-making process. The Asean Business Club, for instance, has proposed a financial services and capital markets (FSCM) expert group be engaged at the secretariat to provide inputs and feedback on FSCM integration.

It might, however, be more apposite for such a group to interact consistently with the committee of deputy finance ministers and governors, the central bank governors forum and the Asean Capital Markets Forum.

The thing is, the private sector should pick the most relevant and effective committees, working groups or special study panels and – after consultation with Asean senior officials – spread its expert resources to participate in the AEC process to make its progress better and faster.

This takes commitment, coordination and organisation. In the next couple of months the identification of the committees and working groups has to take place and, from my discussions with private sector counterparts from across the globe and in the region, the experts can be sourced.

In the run-in to the end of the year, this small plate of matters has to be addressed and implemented so that when the year ends, there will some specific things to talk about when the AEC is pronounced.

It would be good as well if some of the “low-hanging fruits” such as having Asean lanes at all major points of entry in the region, are put in place.

The private sector were told they were “owed an explanation” on why some of the seemingly simple proposals – like having the Asean Business Travel Card – were not capable of implementation. Yes, it would be good if the private sector could be taken into confidence as the public-private partnership gets better established to drive the AEC forward.

Tan Sri Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.