SINCE its founding in 1967 with five nations (Indonesia, Malaysia, Philippines, Singapore and Thailand),Asean has grown to today’s 10-member association and is one of the fastest-growing regions, promising strong growth momentum and potential.With a population of 625 million people, aggregate gross domestic product of US$2.4 trillion (Bt81 trillion) and average GDP growth of 4.5 per cent in 2014, this economy is the 7th largest in the world and the 3rd largest in Asia. We are excited about its future – Asean’s population is set to grow to 690 million by 2020. Rapid urbanisation will drive the growth of the middle class and consuming class. Foreign investors are taking notice of this and foreign direct investment has grown by leaps and bounds. In 2013, Asean overtook China as the single largest recipient of FDI. The Asean Community was first established for the purpose of peace and harmony for the region. Today, we are moving into forging economic integration with the Asean Economic Community (AEC) and ultimately a common Asean identity and the realisation of the potential of this region as a collective to the rest of the world.So while political and business leaders gathered in Jakarta at the 24th World Economic Forum (WEF) on East Asia to share insights on closer collaboration and greater integration in the region, one wonders if the idea ofAsean and the AEC actually matters to the local businesses and people across the region. And why hasn’t it taken off in a big way yet?A.G.R.E.E. to make it workLet’s focus on the task at hand – economic integration and the AEC, which aims at a single market with a freer flow of capital, services, products and skilled workers across borders, to facilitate trade and integrate the region into the world economy with the hope of rivalling the European Union in 10 to 15 years time as suggested at the WEF. We believe that by growing the economic pie, all member states of Asean will benefit. Closer economic integration could improve the cost competitiveness for business, adding to the attractiveness of Asean and greater integration could lift the region to the next level of growth.To realise the potential of the AEC promise, everyone has to agree to make it work. Amongst the people in Asean, however, there are those who believe in the benefits of the AEC, some are sceptical and others who know little about the AEC.AwarenessSo the first area we need to focus on is to raise awareness amongst those who do not know what the AECmeans and its benefits. Larger companies are well set to engage; the more important challenge is to get small and medium-sized enterprises (SMEs) – which generate around 90 per cent of domestic employment and contribute between 30 per cent and 50 per cent of the local markets’ GDP – to buy into the idea of the AECand be active participants in the economic integration process.To do so, we need to create awareness among SMEs of what the AEC means, as there is too little understanding of the opportunities it brings. A survey by the Asian Development Bank and the Institute of Southeast Asia Studies revealed that less than one-fifth of Asean businesses are prepared for the new trading environment. While there are currently various programmes for the SMEs in each market, we need a pan-Asean framework for governments to support SMEs, directing some of the benefits towards smaller businesses.We believe that private-sector companies also have a role in helping local businesses and individuals understand the AEC. As the only international bank with a presence in all 10 Asean member states, Standard Chartered is in a strong position to do so. We have been working with the Asean Secretariat and participating in forums such as the WEF. And through interacting with our clients and partners, we share information about the AEC and promote the benefits of economic integration.Greater goodFor Asean, the whole is greater than the sum of the parts, so integration will generate employment, attract investment, grow wealth and improve the lives of citizens.Wealth is growing across Asean: Nielsen predicted that the middle class of 190 million as of 2012 in theAsean region, defined as people with disposable income of US$16-US$100 a day, will more than double to 400 million by 2020. We forecast increased female employment, a younger working population, and a better-educated workforce. All will drive demand for high-quality consumer products and services.As Asean’s population becomes urbanised, it will drive demand for housing, cars, information and communications technology, education, healthcare, consumer durables and financial services. The AEC will also open doors for cross-border trade in these areas. The governments are pushing for it, but some Asean members are trying harder than the rest. Perhaps a different way of looking at it is to change the mindset a little. Instead of pitching national agendas againstAsean agendas, which lead down the road of protectionism, why don’t we focus on the greater good of theAsean community? Let’s be realistic. There will never be absolute trust even between the closest political allies. But as long as every member state focuses its energy on achieving greater efficiencies, enhancing the ease of doing business across borders, improving the lives of the people in Asean, I am sure we can reach consensus and common grounds much more effectively.Rules and regulationAsean presents a diverse historical, cultural, political and economic landscape. There is much help needed for businesses venturing cross borders to make sense of the vastly differing administrative policies and diverse legal and regulatory standards across Asean countries. With over 625 million people across 10 countries, Asean can be a daunting prospect for businesses looking to expand. It is so complex and varied that it can be easier to pursue opportunities elsewhere. For example, it takes four days on average to clear goods being imported into Singapore, 14 days for Malaysia, and 23 days for Indonesia.This demands multi-pronged marketing strategies and an ability to offer differentiated products and services, which can be hard for businesses used to operating in one market. Asean is not a one-size-fits-all market, and we need to eliminate the speed bumps by next focusing on a more consistent set of regulations and rules for operating across the markets here. Banking partners such as ourselves, who can provide good local support and have deep access to the different Asean markets, can help businesses ease into unfamiliar markets.Entry barriersThe AEC is all about improving the flow and movement of goods, services, capital and people across borders in Asean. However, there are many barriers that are hindering the entry of businesses across borders, with tariffs being the most obvious. While the low-hanging fruits of tariff elimination have been reaped, the reduction of non-tariff barriers to trade and investment in the form of standards, regulations, and compliance measures is proving to be a more elusive goal. While part of the problem may be traced to domestic pressures, another reason could be the lack of familiarity with the process of standards harmonisation, in particular with standards and practices that are being used internationally. To address this problem, Asean nations have adopted a trade facilitation framework. I believe there is a proactive role that the private sector can play to catalyse and shape this process by working closely with key government stakeholders such as the regulators, central banks and trade authorities, and by facilitating the sharing of best practices from other parts of the world. In fact, the business community is already doing that via private sector channels such as the Asean Business Club and the Asean Business Advisory Council. I believe more can be done to eliminate barriers to entry.End pointThis was mentioned quite a few times at the WEF discussions – that the AEC integration is a journey rather than an end goal. I agree totally that it will take time for differences to be sorted, to reach common grounds and to achieve a oneAsean identity. However, if we keep telling ourselves that it is a journey, it may take much longer than it should.I am very clear about the end point that I have in mind for the AEC – an Asean that allows businesses and people to move with ease (it may not be absolute freedom) across borders, a region that speaks in a collective voice to the rest of the world, and a power house that generates growth and prosperity, bettering the lives of the people across Asean. Success begets success, and the more the AEC’s achievements are celebrated, the more we will expect to follow. The day will come when even the man in the street will be aware of the Asean story and the promise of a collective Asean power.So let’s work on agreeing to make Asean’s economic integration a reality, sooner rather than later. By LIM CHENG TECKSPECIAL TO THE NATIONThe post Making the Asean economic integration a reality appeared first on Asean Investment | Marc Djandji Blog.