Ready or Not? – A DELGOSEA Debate about the ASEAN Economic Community

Ready or Not? – A DELGOSEA Debate about the ASEAN Economic Community

The latest DELGOSEA workshop, which took place in Hanoi on 2 December 2015, focused on how prepared Southeast Asia was for the ASEAN Economic Community (AEC).

The AEC, allowing freer movement of people, goods and services throughout the ASEAN countries, is just around the corner – but how prepared are local governments across the region? It is, after all, on the local level that an influx of people from neighbouring countries, increased competition for local businesses and an increased demand for services will be felt most immediately; more than 50 DELGOSEA members and friends from eight countries discussed how local governments plan to deal with these challenges. 

Dr Alvin Ang, Professor at Ateneo De Manila University, set the scene with his presentation on the challenges and opportunities the AEC presented for local government units (LGUs). Looking first at the history of ASEAN integration, he discussed the achievements so far, which have lead to an impressive growth rate across all ASEAN countries. Focusing more closely on the different sectors, Dr Ang outlined that, for example, in the services sector, integration has already progressed far, with ASEAN concentrating on key priority sectors such as air transport, e-ASEAN, health, tourism and logistics. For LGUs, the focus is on inclusive growth initiatives and SME development to help narrow development gaps within and between member states. 

Homing in on small and medium-sized enterprises (SMEs), that are the main concern of local governments, Dr Ang analysed their role in the ASEAN economy – in most countries they make up the majority of companies, but only have a small share in regional trade; the challenge for them will be the increasing competition from other ASAN countries, and only the efficient and innovative ones will benefit. LGUs face the challenge of providing a conducive environment for economic growth of the SME sector, such as streamlining procedures for business start-up and operation and having a sound legal system for business transactions. To sum up: LGUs in the region have to ensure that they understand the rules and requirements of ASEAN integration, they should prepare programmes that will assist in employment sustainability in the midst of increased competition and they should invest in capacity building and training.

The following roundtable discussion between DELGOSEA members from four countries, Vietnam, Thailand, Cambodia and the Philippines, focused on the situation on the local level; how well prepared were LGUs, what were the problems they faced and their plans for the coming year? A mixed picture emerged, with all countries showing awareness and supporting local initiatives, especially in border regions, but all also feeling that more support from central government was needed than was necessarily available. Regulation, usually coming from the national level to be implemented on the local level, was still lacking, a point that was keenly made by Mr Prasong Sriwatana, the mayor of Nongrue Municipality in Thailand, who was eloquently describing the limitations local governments were experiencing. His experience struck a cord with the other participants who aired their own grievances with the lack of guidance and regulations from the national level in their countries during the following question and answer session. 

However, Mr Keang Sengky, the Vice-President of the National League of Communes/Sangkats in Cambodia (NLC/S), gave cause for optimism when he outlined the measures that are being taken by the Cambodian government to create both a positive investment climate and to enable LGUs to deal with the challenges on the local level: support to SMEs will be scaled up and there will be investment in information services and human resources. Dr Marion Fischer, a research associate with the Konrad Adenauer Foundation in Vietnam gave some concrete examples of work that is planned with municipalities in Vietnam to support regional integration, focusing directly on setting up local level cooperation between municipalities in Vietnam and neighbouring countries. Such practical steps found great interest in the audience and will be shared as good practices through the DELGOSEA network’s communication channels.

DELGOSEA’s communication manager shared the results of two surveys amongst the network’s membership into the preparedness for AEC; most respondents felt that their local communities were not as well prepared as they should be at this stage and also that not enough information on the AEC was easily available to them. This chimed with the experiences of the workshop participants – clearly, much work is still needed on all levels of government to ensure that the closer integration of the ASEAN economics will be a success. 

For more information on the AEC on 

Second DELGOSEA survey on AEC Preparedness

ASEAN Economic Community – What will it Mean for SMEs?

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