**AEC 2015 – Can Asia Really Work Together? **
By the next time we celebrate New Year, the ASEAN Economic Community will be open, providing an integrated, standardized single market with free flow of goods and investment capital. To mark the event, Hotelintel.co takes a look at what we can expect from the implementation of AEC.
Will it work?
Opinion is divided as to whether the AEC will have an immediate and positive impact, or whether it will simply fizzle away to business as usual. On the negative side, the US Chamber of Commerce reckons the December 31st 2015 deadline may be too soon, and member states just won’t be ready in time. This view ties in with the original ASEAN plan to open the AEC in 2020. The example set by Europe also suggests that establishing an economic community is a slow process, even when you have institutions in place to enforce compliance. ASEAN doesn’t, but boldly brought the starting date forward to 2015.
The AEC Scorecard – a measurement tool to assess readiness – revealed the good news that around 60-70% compliance had been achieved by member states by 2012, yet critics claimed that only the easiest targets had been met. On balance, political necessity looks set to ensure the ASEAN ten will be ready to varying degrees, and the community will continue progressing gradually towards its goals. The lack of a single governing body and fiscal unity, along with the group’s non-interference doctrine, have been cited as weaknesses, but may yet lend flexibility to the march of progress.
Will it make a difference?
For hoteliers, AEC most definitely will have an impact, since many of the AEC objectives will directly create new opportunities. Freedom of movement, fewer investment restrictions and the presentation of a single regional market to the global economy are projected to boost economic growth, although the details contain both caveats and specific benefits.
The open skies policy for the aviation industry is one such case. The granting of fifth freedom rights to regional carriers is likely to expand the range of destinations served while offering lower fares to travelers. Emerging tourist locations within ASEAN will receive a timely boost, while established travel hubs will also see an increase in traffic. The laggard may be Indonesia, which is reluctant to expose its own aviation industry to foreign competition and may therefore miss out.
The advantages also extend beyond ASEAN’s borders as the AEC seeks greater global integration for the region, so investors will perceive ASEAN as an alternative to China and India. Full protection and security is offered to investors along with equitable treatment and the ability to freely transfer funds, while the legal framework will be strengthened along with arbitration procedures to resolve disputes. This will ensure that foreign investors are free to operate across several ASEAN states with confidence and consistency, while ASEAN companies will have even greater access to other ASEAN markets.
One final boost will likely come from the increase in awareness of the region’s potential, as both outside visitors and locals will see more AEC-themed promotions such as Air Asia’s ASEAN Pass. Cross-border travel for ASEAN citizens has already been simplified, so the heightened media interest in neighboring destinations will stimulate tourist traffic along with MICE and business travel.
There remains a long way to go before the AEC can approach the integration levels seen in Europe, but the signs of change are evident. Taking full advantage, however, will require a determination to seek out the latest rules and initiatives, which are often presented only in English and downplayed locally, in order to stay abreast of the incremental opportunities coming our way..