Danial Norjidi
A new study has provided insights into the ongoing sentiment of ASEAN indigenous enterprises towards the implementation of the ASEAN Economic Community (AEC) Blueprint 2025.
The ASEAN Business Sentiment Study 2020/2021 was conducted by the ASEAN Secretariat with the support of the ASEAN-Australia Development Cooperation Programme Phase II and Ipsos Strategy 3.
According to a press statement, the study involved 1,250 indigenous enterprises operating in financial, distribution and tourism sectors across all ASEAN member states. It delved deeper into the sentiment on trade in services liberalisation, focussing on these three key sectors.
The study shared four key messages, the first of which is that indigenous enterprises in general have a positive outlook on the AEC. “They acknowledged the positive impact created through various AEC trade liberalisation initiatives which supported their business growth and performance.”
According to the study, indigenous enterprises have a fair level of awareness on AEC and its objective. “They are appreciative of the AEC integration agenda. They acknowledged realising the benefits of specific interventions via AEC for the expansion of their businesses, which include tariff elimination, simplification of customs procedures, and harmonisation (standards and regulation) across ASEAN member states.”
“The indigenous enterprises believe that AEC policies has played a catalytic role in supporting their business growth in ASEAN. Free trade agreements (FTAs) and other agreements implemented via AEC have paved the way for regional business expansion. They aspire to get better insights on the specifics of the agreements which will allow them to understand better the operational implications to support the implementation in a meaningful way.”
A second message in the study is that the majority of indigenous enterprises are pleased with the current integration level and opined that they look forward for further enhancement and expansion of the integration initiatives. It said that additional measures to minimise or eliminate barriers in total that affects the trade-in-services liberalisation are in their wish list.
“The various AEC initiatives have supported the expansion of the indigenous enterprises. However, there is still room for improvement to address some of the indigenous enterprise’s pain point especially those involved in services sector. There is low participation of indigenous enterprises in trade-in-services.
“The following business operational aspects such as taxation, fiscal and non-fiscal incentives, customs regulation and procedures, and harmonisation of regulation are seen as areas where further improvement is desired to support their integration journey. Trade dispute settlement is another aspect that needs attention in the current economic integration setting by the relevant authorities.”
“Varying level of taxes and tariffs barrier across ASEAN, coupled with differences within individual country regulations pose a challenge to the development of regional strategies.”
Key message number three is that indigenous enterprises desire to have better access to the comprehensive information repository of AEC policies and programmes. “They are poised to support and increase their regional investment participation if they have better comprehension of the prospects and opportunities to be derived through AEC.”
The study notes that indigenous enterprises are no strangers to cross-border trade, but that the degree of involvement varies. “They indicated good awareness on AEC’s broad agenda and intent, but lack knowledge on the specifics of the programmes, activities, and benefits that they can gain if they embark on the integration journey. There is still a level a scepticism shown by the indigenous enterprises on the impact and value to be gained through the liberalisation effort and regional market expansion.”
“Access to the knowledge repository and convoluted information made available are some of the common issues raised. This led to lack of interest to pursue the integration journey by some of the indigenous enterprises in general. Indigenous enterprises from Singapore, Thailand and Vietnam however have recorded better level of awareness,” the study said.
“There is a need to strengthen the communication channels and level of engagements at the respective AMS to improve the information dissemination amongst the industry players and stakeholders. Right information and proper engagement is crucial to get the buy-in from the enterprises and this will lead to higher level of participation and improve the outcome of AEC integration.”
The fourth and final key message in the study is that indigenous enterprises in the services sector wish to see more improvements in the standardisation of regulations and procedures.
It adds that enterprises from developed ASEAN member states have better advantage compared to the less developed ASEAN member states.
“Participation of indigenous enterprises from more developed ASEAN member states are gaining traction and benefitting from trade in services through expansion into Singapore, Malaysia, Indonesia, and Thailand. The rest of the ASEAN member states remain less attractive to ASEAN indigenous enterprise”.
The study said that the “majority of indigenous enterprises, especially from medium and smaller enterprises, are in the view that the present regulation frameworks and procedures are still too complex and challenging for them to expand into another ASEAN market”.
It was also shared that ASEAN indigenous enterprises in the services sector responded positively to the objectives achieved by ASEAN integration efforts. The majority are partially or fully agreeing that ASEAN integration has: driven standardisation and better access to business-related; regulations; reduced restrictions to trade and investment in services sectors; and provide better accessibility to different ASEAN countries for companies in the services sector.
“Country specific implementation of AEC framework is seen as an area where improvements are required. Holistic approach is needed to cater for areas that are deemed to pose as a barrier to drive a successful integrated implementation.”
The study also provides some key recommendations, where it shares what it describes as a key action plan that is needed to be taken to further liberalise the trade-in-services in general across ASEAN, based on the overall input and insight acquired throughout different activities.
One recommendation is to improve direct engagement of ASEAN and AEC programmes with indigenous enterprises.
A second is to develop a comprehensive single portal for ASEAN businesses environment information that is search optimised and able to provide: fast and seamless access to AEC and other ASEAN programmes/framework; integration with other ASEAN member states’ regulation; dedicated point of contact at ASEAN Secretariat and ASEAN member state level for further consultation; and clear and precise articulation of business opportunity for the indigenous businesses in other ASEAN member states.
Another recommendation is for standardisation and harmonisation on: financial sector regulations; certification for tourism business and seamless human resources mobility across ASEAN member states; labour/workforce regulations; and tariffs and customs procedure that postulates more benefit for intra-ASEAN trades and services instead of other regional or country level partnership.
Fourth is to develop a common law and dispute settlement framework for cross-border intra-ASEAN interaction, while fifth is for the introduction of ASEAN wide accepted immigration procedure on cross border people mobility related to jobs across ASEAN member states.
In addition, the study shares the following recommendations based upon the sector inputs: development of a comprehensive digital blueprint and infrastructure as an impetus for the integration in financial services sector; development of a single ASEAN tourism branding which integrates the various ASEAN member states tour destinations and offerings; and the introduction of an ASEAN wide recognised and accepted standard COVID-19 vaccination certificate that will ease the opening of cross border travel.