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Economic Community

ASEAN Economic Community, Belt and Road initiative to complement each other: Malaysian expert

APD | Wed,2015-11-18

The ASEAN Economic Community (AEC) can work well with China's Belt and Road initiative, as the two complement each other in enhancing regional and world prosperity and harmony, a Malaysian expert has said.

Oh Ei Sun, senior fellow at the S. Rajaratnam School of International Studies of Singapore Nanyang Technological University, made the comments during a recent interview with Xinhua.

Oh said ASEAN is scheduled to launch the AEC during the Kuala Lumpur summit this month, adding that the economic pillar of ASEAN Community is the area where ASEAN thus far has been progressing fastest.

He said AEC, comprised primarily of consolidating the existing bilateral and multilateral free trade agreements among ASEAN members, is relatively easier to handle compared with the much more challenging Trans-Pacific Partnership (TPP) negotiations, in which some ASEAN countries such as Malaysia, Singapore, Vietnam and Brunei are participating.

"According to at least one estimate, ASEAN countries have reached agreements on more than 95 percent of free trade items," Oh said.

Believing AEC to be the first step toward an eventual ASEAN Community consisting of not only economic but also political security and socio-cultural aspects, Oh added that the opportunities associated with AEC are wide ranging.

"The removal or reduction of tariffs among ASEAN countries over goods will almost certainly improve trade among ASEAN members, at a time when internal ASEAN trade is only one-third of external ASEAN trade volume," he said.

He added that a single ASEAN market and production base will also become an even more attractive foreign direct investment destination, and help better integrate ASEAN economy with the global economy.

While seeing the enormous opportunities made by the AEC, Oh didn't underestimate the challenges lying ahead.

"The main challenge for AEC remains the unequal development needs among ASEAN members, with the CMLV (Cambodia, Myanmar, Laos and Vietnam) countries requiring special assistance to catch up with the rest of ASEAN," he said.

Regarding these opportunities and challenges, Oh said that the Belt and Road initiative proposed by China could make unique contribution to the building of ASEAN Community, while the AEC would also help the implementation of China's proposal.

He said AEC can align well with the Belt and Road initiative in at least two aspects.

First, Oh said, it enables China to engage even more closely and easily with its closest neighbors as a whole when China carries out the Belt and Road initiative.

AEC would need large amounts of connectivity in land, on sea and in air to succeed, and the Belt and Road initiative can complement these efforts, he added.

Second, AEC as a whole can become a super hub for the Belt and Road initiative as China attempts to engage with countries as far as South Asia, the Middle East and East Africa, he said.

Most ASEAN countries are culturally diverse and used to handling trade and business in multicultural settings, so AEC can be of tremendous value to the Belt and Road initiative as the latter ventures afar.

With sufficient logistic capability with the help of China, AEC can also facilitate the Belt and Road initiative's physical movements of goods and services, Oh said.  Enditem