ASEAN Economic Community – What will it Mean for SMEs?

ASEAN Economic Community – What will it Mean for SMEs?

The ASEAN Economic Community (AEC) is aiming for regional economic integration by the end of 2015 for all ASEAN countries – how will this affect small and medium-sized enterprises and local governments throughout the region?

Free movement of goods, services, investment and skilled labour as well as a freer flow of capital are all part of the envisaged AEC. The goal is to come to a single market and production base which would make the region more competitive, especially compared to other regional blocs, such as the European Union, and would encourage equitable economic development throughout ASEAN. Ultimately, this would help ASEAN as a region to be fully integrated into the world economy.

A recent survey of DELGOSEA members has shown that the majority views this development positively and welcomes the opportunities that closer regional cooperation will bring. However, many also felt that their particular local government was not yet well prepared for this step; particularly SMEs were worried as well as excited about the impact open markets would have and did not always seem to be fully aware of the implications for their businesses.

It is certainly true that, while closer integration provides many opportunities for SMEs, such as making it easier to deliver goods across borders and recruit staff from other countries, there are also particular challenges for SMEs and the municipalities they are situated in. These challenges are related to various aspects of intensified competition not just domestically, but now also on the regional level. SMEs have to learn to deal with such increased competition by staying innovative and flexible, ready to take advantage of new markets that are opening up while at the same time ensuring that they remain successful with their original customer base.

Local governments play an important part in helping SMEs to prepare for these new challenges by providing a positive regulatory environment and by intensifying information campaigns on the consequences of the AEC for local businesses. Government agencies are often seen as not offering enough support and guidance on the local level and it would be a much appreciated step forward if there was some consistent information on issues such as investment and service liberalisation, the reduction of non-tariff barriers as well as rules of origins and single standards for ASEAN products.

DELGOSEA will focus increasingly on the preparedness of local governments and local government associations (LGAs) for the coming AEC and showcase best practices for helping SMEs prepare for growing integration.

For more information on the upcoming AEC on

DELGOSEA Members Optimistic about the ASEAN Economic Community

Hanoi Workshop: Local Economic Development in a Time of Change for ASEAN