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World Bank Document ASEAN Integration ASEAN Integration Monitoring Public Disclosure Authorized Monitoring Report Report ‐ A Joint Report by the ASEAN Secretariat and the World Bank A Joint Report by the Public Disclosure Authorized ASEAN Secretariat and the World Public Disclosure Authorized Bank “One Vision, One Identity, One Community” “Working for a World Free of Poverty” Public Disclosure Authorized ASEAN World Bank ASEAN Integration Monitoring Office East Asia and Pacific Region Supported by the Australian Government through the ASEAN-Australia Development Cooperation Program Phase II ASEAN Integration Monitoring Report A Joint Report by the ASEAN Secretariat and the World Bank ASEAN Integration Monitoring Office, ASEAN Office of the Chief Economist, East Asia and Pacific Region, The World Bank The Association of Southeast Asian Nations (ASEAN) was established on August 8, 1967. The Member States of the Association are Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. The ASEAN Secretariat is based in Jakarta, Indonesia ©ASEAN 2013 The ASEAN Secretariat 70 A Jalan Sisingamangaraja Jakarta 12110 Indonesia Telephone: 62-21-724-3372 Internet: www.asean.org © 2013 International Bank for Reconstruction and Development / International Development Association or The World Bank 1818 H Street NW Washington DC 20433 USA Telephone: 1-202-473-1000 Internet: www.worldbank.org This report was printed by The World Bank Printing & Multimedia Department using only FSC certified paper and environmentally sustainable water based inks. This work is a product of the staff of The ASEAN Secretariat and The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of ASEAN or its Member States, The World Bank, its Board of Executive Directors, or the governments they represent. ASEAN or the World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of ASEAN or The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because ASEAN and The World Bank encourage dissemination of its knowledge, this work may be freely quoted or reprinted, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202- 522-2422; e-mail: [email protected]. Foreword Since the adoption of the ASEAN Economic Community (AEC) Blueprint in 2007, ASEAN has undertaken various efforts to monitor its implementation. Building upon the AEC Scorecard, this inaugural ASEAN Integration Monitoring Report (AIMR) assesses the progress in four AEC-related dimensions: merchandise trade, trade facilitation, services trade and investment. It focuses on policy and market integration outcomes achieved in ASEAN Member States (AMS), as part of the first pillar of the AEC formation process. Released by the ASEAN Integration Monitoring Office (AIMO) of the ASEAN Secretariat, together with the World Bank - East Asia Pacific Region, the Report is the first component of the ASEAN Community Monitoring and Evaluation Program (AECMEP). It is expected to be released annually to provide a regular update on the state of integration in ASEAN. In this regard, we would like to extend our appreciation to the World Bank for assisting in strengthening ASEAN’s monitoring and analytical capacities as well as the ASEAN-Australia Development Cooperation Program (AADCP) II for its support in implementing the AECMEP. The AIMR shows that ASEAN’s broader economic agenda has brought significant gains to AMS. As a trade-creating block, together with the improvement of trade facilitation, ASEAN integration has led to an increase in intra-ASEAN trade, parallel with an increase in ASEAN’s trade with the rest of the world. ASEAN also had modest contributions to the development of the services sector and the enhancement of foreign direct investment (FDI), both for extra- and intra- regional inflows. Finally, AEC efforts also help in narrowing the development gap and accelerating development in CLMV countries, whose share of GDP in ASEAN grew from 3.5% in 1990 to nearly 10% in 2011. This is further reflected in the implementation rate of 79.7 % of the AEC Scorecard as of August 2013. Despite these achievements, there remain several areas where implementation has been limited. Although ASEAN’s gains came from enhancing trade facilitation, services and investments, efforts are still needed in these critical areas as well as in the transport sector. Domestic regulatory reforms, enhanced capacities, strong internal coordination and sufficient budgets are imperatives in order to address the implementation challenges. The AIMR further suggests priorities for future actions for the effective implementation of the AEC 2015 goals. To complement the AIMR and further enhance ASEAN’s monitoring capabilities, the AECMEP will also develop the components of integration of trade in services: the ASEAN database of trade in services and the ASEAN-World Bank Services Regional Integration Report. We hope that this Report will be a useful document for ASEAN officials and policy-makers, serving as the key monitoring report used to track AEC’s progress, at both regional and national levels, to ensure its timely realization by 2015. Le Luong Minh Secretary General Association of South East Asian Nations Foreword The Association of Southeast Asian Nations (ASEAN) is a community of more than 600 million people living in ten countries in one of the most dynamic regions of the world. Consistent with this, ASEAN’s share of world GDP and world trade has sharply increased over the past decades. In 2003, ASEAN’s regional integration agenda was significantly deepened when ASEAN Member States adopted the ambitious goal of forming an ASEAN Economic Community (AEC) by 2015. These goals were crystallized in the highly specific targets set for creating a “single market and production base” in the ASEAN Economic Community Blueprint of 2007, signed by the Heads of the Governments of the ASEAN countries. As the global economy is still recovering from the deep financial and economic crisis of 2008 ASEAN’s regional integration agenda has become even more important. It is clear that as the world economy recovers, the high income economies of North America and Western Europe will need to undergo significant fiscal and structural changes, including lowering consumption and import growth. As a result they will not be the same robust destination markets for manufacturing exports as they were in the past. Emerging and developing economies will have to rely more on South-South and regional trade. Beyond the need to sustain trade in goods, it is also clear that the high and middle economies of ASEAN and in other parts of the developing world will now need to focus more on boosting their productivity through diversifying into high end manufacturing and services. The ASEAN Economic Community’s bold vision of achieving the free flow of goods, services, investment, and skilled labor in the region is precisely what is needed to achieve higher productivity growth and economic diversification. It is in this context that I am delighted with the collaboration of the ASEAN Integration Monitoring Office of the ASEAN Secretariat and the World Bank’s staff from the East Asia and Pacific region and the Trade and the Research departments on this ASEAN Integration Monitoring Report. The report has also benefited from several rounds of presentations, consultations and reviews involving the officials of the ASEAN Member States. The report provides some important findings and guidance on going forward. The report finds that the ASEAN economic integration agenda has already provided important benefits to the Member States by boosting regional trade flows without adversely affecting the global integration agenda. Integration efforts have also helped to improve trade logistics, lower aggregate trade costs and significantly increase regional investment flows. Progress in services integration, however, has been modest. It is also clear that the potential gains from further integration in all these spheres remain large. The report highlights important pending challenges to achieving the AEC 2015 goals that lie in implementing the services integration agenda as well as the dangers posed by the use of non-tariff measures. It identifies a number of policy and institutional measures that ASEAN can take to address these issues. Lastly, let me note that this report is the first of a series of outputs under the ASEAN Economic Community Monitoring and Evaluation program that is being carried out jointly by ASEAN Secretariat and World Bank staff. We thank the government of Australia for funding most of this work through their technical assistance program for ASEAN. We are hopeful that this program will only be the first of many such collaborative programs in the future. Regional Vice President East Asia and Pacific Region The World Bank ACRONYMS AND ABBREVIATIONS AADCP II ASEAN-Australia Development Cooperation IGA ASEAN Agreement for Promotion and Protection of Program Investment
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