Monday, June 9, 2014

Low Awareness of AEC in Singapore

A survey by the Institute of Southeast Asian Studies found that 55 per cent of some 380 firms polled across the region were not aware of the AEC. And Singapore companies had the highest level of ignorance - at 86 per cent.

The numbers in a separate survey by the Singapore Business Federation were less staggering. About 38 per cent out of some 1,000 of its members polled were ignorant - with a higher percentage for small- and medium-sized enterprises than bigger firms.

Singapore Business Federation chief executive Ho Meng Kit said: "When you ask the small companies what it (AEC) is, even asking them to identify the 10 ASEAN countries, they may have difficulty (doing it). "So you need to educate (them). You need to put it in layman terms (such as) 'what does it mean for you if you are a manufacturer of goods?' 'What does it mean for you in terms of your market access in specific country?'"

The main reasons for the relatively low awareness of the AEC in Singapore (as per the two surveys) are related to the AEC’s initial focus on creating a single production base first rather than the single market.  Most small and medium sized businesses in Singapore are either involved in trading/distribution or services.  When the AEC more fully develops the single market for consumers, these companies will benefit from greater access in other ASEAN countries.  Until then, the AEC’s more developed integration in trade in goods is of lesser relevance.

That is not to say that companies in Singapore are not already participating in the AEC.  Larger companies involved in global supply chains, and those Singaporean companies still manufacturing in the city-state are well aware of the AEC and participating in the formation of the single production base.  However, given their smaller numbers (numerically), they are going to show up in lower percentages in these surveys.

Irregardless, efforts to increase awareness of the AEC in Singapore and other ASEAN members are vital to spreading the benefits of the ASEAN Community to all aspects of society in Southeast Asia.  But what will be even more important is actually forming the single market, a task that will require strengthening the ASEAN institutions beyond their current state.  Hopefully progress will be made on this issue as Malaysia prepares to take over as ASEAN Chair.