From the sidelines of this
week’s ASEAN Economic Ministers’ meeting in Naypyidaw, the
Nation reports that US companies are still bullish on Southeast Asia, but
bearish on the ASEAN Economic Community (AEC):
As 2015 and
the Asean Economic
Community approaches, US companies are keeping a close eye for opportunities
offered by regional economic integration, although most respondents don't
believe that the goals of the AEC will be
reached until 2020 or later.
This
comes from the 2015 ASEAN Business Outlook Survey published by the American
Chamber of Commerce and US Chamber of Commerce, and available here.
In
the survey, 66% of respondents from the American business community expected
ASEAN to be more important to their companies’ business operations within the
next two years, and 89% expected to increase their investments in ASEAN during
the next two years. However, only 4% of respondents said that ASEAN
would reach its AEC goals by end 2015, a drop from 23% who said this in
last year’s survey. Furthermore, 52% of respondents said that the AEC goals
would not be reached until 2020 or later, an increase from 31% who said
this last year.
Americans
are therefore bullish on Southeast Asia, but bearish on ASEAN. I posted
on this split opinion in the American business community last year:
What this reflects is confidence in the
Southeast Asian economy but less confidence in the ASEAN institutions.
But it also reflects the focus of American companies in the region on services,
rather than manufacturing. As I have written elsewhere, the AEC will create
both a single market in Southeast Asia and a single production base. The
single production base is much more developed than the single market. In
fact, as I have suggested, we already have
an AEC in Southeast Asia, only it is focused on the single
production base and dominated by the Japanese automotive and electronics
companies that have been long present in the region. In other words, the
AEC can be likened to a glass of water, and the Japanese see a half-full
glass.
American companies, on the other hand,
are less involved in manufacturing and emphasize services such as legal,
financial and distribution. These are more interlinked to the development
of the single market in ASEAN. Yet, as noted elsewhere, non-tariff
barriers to trade in goods, services and investment are much more difficult for
the ASEAN members and the ASEAN Secretariat to deal with. Hence
the relative pessimism of American companies towards the AEC, because they are
looking at a half-empty AEC glass of water.
Thus, the Amcham/US Chamber poll
accurately reflects American corporate sentiments in the region, because
American companies have a different outlook on Southeast Asia. Improving
that sentiment will be difficult for ASEAN members, but will result in much
greater economic welfare for all of ASEAN’s citizens, not just those involved
in the single production base. In other words, if American
companies become happier with the AEC, everyone will be happier with the
AEC.
This year’s survey shows
that this half-empty, half-full view of the AEC is more prevalent than ever in
the American community. Major reforms to the ASEAN institutions, along
with concrete actions to implement AEC commitments, will be needed to improve
these bellwether indicators of confidence in the AEC.
