NGUYEN Minh Anh & DINH Thao Nguyen

Abstract

This proposed research focuses on the economic integration of the Southeast Asian community within the context of globalization. It aims to enhance ASEAN’s economic integration by evaluating the effectiveness of current ASEAN strategies and policies while identifying the challenges member states face in this integration process. The research also examines the relationship between strengthening ASEAN’s economic integration and promoting overall economic development. Additionally, it presents new initiatives to sustain and reinforce economic integration among ASEAN countries amid the challenges of economic globalization.

Keywords: ASEAN, globalization, trade liberalisation, economic growth, intra-regional trade, institutions, initiatives.

Résumé

Le principal objectif de cette recherche proposée est l’intégration économique de la communauté d’Asie du Sud-Est dans le contexte de la mondialisation. Elle vise à renforcer l’intégration économique de l’ASEAN en évaluant l’efficacité des stratégies et politiques actuelles de l’ASEAN en matière d’intégration économique, tout en identifiant les défis auxquels sont confrontés les États membres dans ce processus. La recherche explore également le lien entre le renforcement de l’intégration économique de l’ASEAN et son développement économique global. De plus, elle propose de nouvelles initiatives visant à soutenir et à renforcer l’intégration économique des pays de l’ASEAN face aux défis de la mondialisation économique.

Mots-clés : ASEAN, mondialisation, libéralisation du commerce, croissance économique, commerce intra-régional, initiatives.

    

Recognizing that globalization has spurred unprecedented economic development, ASEAN has seized this opportunity by establishing a fundamental vision. It aims to position itself as a single market fully integrated into the global economy, fostering high competitiveness and equitable economic growth among its member countries. One of its most notable strategies has been to strengthen economic cooperation between member countries and non-members, as well as to facilitate economic integration into the dynamic global economy through the establishment of free trade areas.

We support ASEAN’s key economic integration strategy and see substantial economic potential for ASEAN in the context of globalization. In recent years, ASEAN has emerged as one of the fastest-growing and most open economic communities, benefiting from the advantages of economic globalization, including increased trade, foreign investment, and exchanges in information and technology. Additionally, this community aims to promote trade, investment, production, and a consistent flow of goods, actively engaging with the global economy. Nevertheless, ASEAN faces both internal and external challenges that could impede its progress toward becoming a highly integrated, cohesive economy in an era of globalization. For instance, regional economic integration within ASEAN is not as robust as external economic integration, and non-tariff barriers continue to limit the flow of imports and exports.

Given these challenges, maintaining and strengthening economic integration is essential for ASEAN’s economic development in the globalized context. While global economic integration allows ASEAN members to access international goods, services, capital, technology, and knowledge with fewer trade barriers, regional economic integration within ASEAN promotes regional economic equity and shared prosperity.

Acknowledging the importance of both global and regional economic integration, we aim to propose supportive initiatives to help ASEAN achieve its economic integration and development vision amid globalisation.

1. ASEAN Economic Integration and Its Role in Regional Development

1.1. ASEAN Economic Integration

Economic integration is an arrangement among nations that typically involves reducing or eliminating trade barriers and coordinating monetary and fiscal policies. Its goal is to lower costs for both consumers and producers and to increase trade between the countries participating in the agreement.^[1] Economic integration is also sometimes referred to as regional integration, as it often occurs among neighboring nations.

ASEAN is a regional organization that brings together disparate neighbors to address issues in general and problems relating economic in particular. ASEAN is more outward-looking (engage more with non-ASEAN members), as emphasized by the Indonesian economist Hadi Soesastro (2006). This is rare, particularly for a group of developing countries.^[2] ASEAN is more market‑driven (through trade and FDI) rather than government-driven (different from the EU).

PTAs strategies first emerged when ASEAN states’ sought to reinforce their solidarity as an economic group and later engaged with extra-ASEAN states on multiple fronts to construct a web of interdependence. ASEAN states have turned to both Southeast Asian and Northeast Asian neighbours through the formation of AFTA, ACFTA, and AJCEP. These developments occurred when economic ties within signatories seemed less promising. ASEAN states also aimed to keep their external economic linkages as diversified as possible by forming PTAS with other regions.

1.2. Economic Integration’s Pivotal Role in ASEAN’s Development

Economic integration is crucial for ASEAN’s economic development in the context of globalization. First and foremost, economic integration can help ASEAN members reap the fruits of economic globalization. One of the main benefits of globalization is forging connections with other countries. By participating in economic integration with other members and non-ASEAN countries, ASEAN states can form and deepen economic ties with different states by agreeing upon common policies and regulations, such as limiting or removing trade barriers. Economic integration also allows access to the global market and foreign markets of countries that are parties to a regional or an FTA negotiation.

Economic integration can also impel ASEAN countries to embark on and strengthen domestic reforms. Joining free trade agreements can motivate ASEAN members to improve the conditions necessary to attract investment and boost economic growth. Such conditions range from transparent and non-discriminatory policies and laws, tariff liberalization, business environment, environmental and sustainable values, investment climate, labour quality to administration, governance, and socioeconomic and political stability. Not only can economic integration instigate and promote the implementation of structural and fundamental reform but it also unlocks a country’s potential, capitalize on their strengths, ignite the labour force’s innovation and creativity, and improve people’s lives. Vietnam’s achievements after joining FTAs serve as a great example. New-generation FTAs necessitate legal reforms and restructuring in Vietnam since they set out much deeper and broader commitments than WTO regulations and aim to build an equal, fair, and transparent competitive environment.^[3] According to the Ministry of Industry and Trade, total import-export turnover in 2023 was estimated to have reached 683 billion USD, of which exports were estimated to have reached 354.5 billion USD, and imports were estimated to have reached 328.5 billion USD.^[4] In 2023, the trade balance continued to see a trade surplus for the 8th consecutive year with an estimated surplus of 26 billion USD.^[5] FTAs have also positively impacted the industrial sector by contributing to shifting the structure of Vietnam’s export goods, increasing the export proportion of processed goods, and reducing the proportion of raw and semi-processed goods^[6]. For the agricultural sector, participating in FTAs has spurred trade growth, thus creating conditions for developing domestic production, creating jobs, and increasing farmers’ income.^[7]

Regional integration increases ASEAN’s competitiveness and affirms group positioning in the international arena. This can be proven by the establishment of AFTA. By establishing and fostering AFTA, ASEAN can speak with one voice, represent smaller countries, take a more assertive stance, and garner greater attention. This represented ASEAN’s fundamental evolution of ASEAN from an association primarily focused on ensuring stability and peace in the region to a true community that is also dedicated to strengthening regional economic ties. This is a testament to ASEAN’s willingness and determination to represent the voice of ASEAN nations, envision, and realise ASEAN’s future of a “highly integrated, competitive, innovative, and cohesive economy”. ASEAN states must have acknowledged the difficulty of forming trade agreements and leading negotiations with Western countries. Generally, smaller countries have less strategic leverage than large countries in trade negotiations and face sharper reductions in trade flows with larger partners.^[8] Therefore, ASEAN, as a group, has more bargaining power in arranging agreements with big FTA partners such as the United States, Japan, China, etc. Since 2003, ASEAN has successfully secured free trade agreements with East Asian countries (China, South Korea, Japan) as well as India, Australia, and New Zealand. ASEAN’s most recent success is initiating the Regional Comprehensive Economic Partnership (RCEP), which helped establish one of the largest free trade areas of the world with the aforementioned dialogue partners (with the exception of India withdrawing from the agreement). With ASEAN playing a central role in RCEP ^[9] and actively taking part in future trade deals, ASEAN is much more likely to maximize benefits, acquire better trade terms, and send strong signals of ASEAN’s trade openness to attract attention in the international market.^[10] Emerging as a dynamic economic hub has also cemented ASEAN’s position on the global stage, particularly in numerous leading international discussions, namely the Asia‑Europe Meeting, the Asia-Pacific Economic Cooperation Forum, and the World Economic Forum.

Engaging in economic integration encourages ASEAN countries to expand their trading opportunities, thus reducing their reliance on traditional export markets. Many Southeast Asian states saw an increased sense of vulnerability as their economies became more reliant on trade and focused on the US market or Japanese investment.^[11] Southeast Asia was burdened by fluctuations caused by the policy preferences of major trading partners on whom they relied.^[12] The business cycles and structural economic instability of those external markets put ASEAN states in a state more vulnerable to external economic shocks. For example, although Japan had been the largest investor, its investment flows reached a peak by the mid-1990s because of an economic slowdown known as “the Lost Decade”. Due to Japan’s stringent policies in an attempt to curb the effects of economic stagnation, Japanese bank lending and FDI in Southeast Asian states drastically decreased by the second half of the 1990s.^[13] The recurring downturn in the US market also had an impact on the growth of exports from ASEAN states. As a result, concerns were raised by several ASEAN members over the US’ ability to import goods from other countries, especially in the event of a recession in the US economy.^[14]

Since businesses are economic actors, economic integration would benefit them since it facilitates and liberalises trade. A free trade area or a single market provides local and international firms the opportunity to expand their production networks and sources of goods; therefore, ASEAN states can have stronger links in global value chains. Regional economic integration will expand existing markets as well as creating new markets for regional and local businesses to engage in trading. Additionally, it enhances the mobility of capital and production factors, thus boosting trade openness and trade efficiency.

Economic integration can enhance people’s welfare in the region. The establishment of regional trade agreements spurs the expansion of market access. With a larger market in the region, it is likely that businesses gain access to a larger consumer base. An increase in the size of the market and consumer base leads to greater demand for goods and services, leading to higher production levels. This, in turn, can boost job creation as firms employ more workers to meet the growing demands. Economic integration also helps foreign companies to discover other countries’ development, which can result in the expansion of their business, particularly through establishing branches or representative offices overseas or investing in sectors that can yield economic benefits. In the case of ASEAN, it has attracted a substantial amount of foreign investment thanks to its efforts in integrating economically with developed economies as well as emerging countries. FDI inflows into Southeast Asia have increased ninefold over the past two decades ,^[15] with the US being ASEAN’s largest foreign direct investor.^[16] FDI has not only contributed considerably to employment and capital flows but also to sustainable development in Southeast Asia.^[17]

Additionally, economic integration in the region is crucial for ASEAN to effectively address internal and external challenges. It promotes dialogues and discussions between member states, thus laying the ground for addressing both emerging regional and global issues that hinder regional economic integration and growth such as balance between economic growth and sustainability, economic inequality between ASEAN countries, digital transformation, protectionism, geopolitical dynamics, environmental degradation, etc. It also facilitates cooperation between member states to strengthen regional research and technological capacity, as well as to address the shortage of skilled workers and the lack of high-quality infrastructure.

The progression of globalization has led ASEAN to be one of the most highly-integrated regional organizations in the world. It helps ASEAN to enhance trade and foreign investment, increase information and technological exchange, and extend employment opportunities thanks to foreign investment and economic openness. As a result, ASEAN has become the fourth-largest exporting region in the world, trailing only the European Union, North America and China/Hong Kong. As its member states have developed more sophisticated manufacturing capabilities, their exports have diversified.

2. ASEAN’s Strategy and Policy to Navigate Through Economic Globalisation and Bring About Regional Economic Development

By establishing the ASEAN Economic Community (AEC), ASEAN is committed to empowering businesses to fully capitalize on the region’s potential as a unified and cohesive investment hub. Rather than navigating 10 separate economies, ASEAN is shaping a single market that provides investors with access to a combined population of 600 million. In comparison, accessing only one ASEAN country’s market would reach a population ranging from as few as half a million to a maximum of 240 million.

2.1. ASEAN’s Strategy and Policy

At the 27th ASEAN Summit in November 2015, ASEAN leaders released the Kuala Lumpur Declaration on ASEAN 2025: Forging Ahead Together. They also endorsed the AEC Blueprint 2025, which aimed to strengthen the implementation of unfinished elements from the 2015 Blueprint and introduced new areas of cooperation in response to shifts in the regional trade landscape. The AEC Blueprint 2025 is built upon five interconnected and mutually reinforcing pillars:^[18] (a) a highly integrated and cohesive economy, (b) a competitive, innovative, and dynamic ASEAN, (c) enhanced connectivity and sectoral cooperation, (d) a resilient, inclusive, people-oriented, and people-centered ASEAN, and (e) a global ASEAN.

While there are similarities with the pillars of the old AEC Blueprint, the new blueprint focuses on more difficult areas of reform. As a whole, the AEC 2025 provides a more concrete and comprehensive, but less ambitious, work plan and M&E framework for the economic integration of the region.^[19] To be specific, first, the AEC Blueprint 2025 is less ambitious and more realistic than the 2015 Blueprint. As an example, the primary objective of AEC 2015, which aimed to establish a single market and production base facilitating the free movement of goods, services, capital, and skilled labor, evolved into a vision of a “highly integrated and unified regional economy fostering sustained high economic growth through enhanced trade, investment, and job opportunities” in the AEC 2025. Second, the AEC Blueprint 2025 reinforces and broadens commitments outlined in goals 2 to 4 of the 2015 Blueprint, which include establishing a competitive economic region, promoting equitable economic development, and integrating into the global economy. For example, under goal 2, “a competitive, innovative and dynamic ASEAN”, the AEC 2025 Blueprint introduces fresh commitments regarding governance and the establishment of efficient, coherent, and responsive regulations, along with adherence to good regulatory practices. This adjustment was prompted partly by the necessity to align with improved international standards.^[20] Third, the AEC 2025 incorporates brand new objectives promoting enhanced connectivity and sectoral cooperation across 9 key sectors: transport, ICT, e-commerce, energy, food agriculture and forestry, tourism, healthcare, minerals, and science and technology.^[21] Lastly, the AEC 2025 includes robust implementation and monitoring and evaluation (M&E) frameworks absent from the 2015 Blueprint.

The AEC Blueprint 2025 sets out strategic actions corresponding to each of the five characteristics of AEC 2025. To put the Blueprint into action, these strategic actions will be further detailed and executed through the action plans of various sectoral bodies within ASEAN. These sectoral plans will undergo periodic review and refinement to maintain their relevance and efficacy. Collaboration with the private sector, industry groups, and broader communities at both regional and national levels will be actively pursued and nurtured to ensure an inclusive and participatory integration process. Institutions will be fortified, and improved methods for monitoring and public engagement will be developed to bolster the successful execution of the Blueprint.

2.3. Significant Achievements in ASEAN’s Economic Integration Process

ASEAN has made considerable progress in the implementation of the Asean Economic Community (AEC) Blueprint 2025, said Minister of International Trade and Industry, Datuk Darell Leiking.^[22]

Despite the impact of COVID-19 pandemic, ASEAN’s integration efforts continue to bear fruit.^[23] The implementation of trade-related initiatives, such as the ASEAN Trade in Goods Agreement and the ASEAN Trade in Services Agreement, for instance, have contributed significantly to ASEAN trade growth. With a total trade of more than USD 3 trillion in 2021, ASEAN has become the fourth largest traders in the world, behind only the EU, China, and the US.

More than 90 per cent of ASEAN countries’ tariff lines have a preference margin of zero, where preferential tariffs are no lower than the MFN rate. More than 70 per cent of intra-ASEAN trade is also conducted at MFN rates at zero. ASEAN rarely uses preferences because there are hardly any preferences to use. Multilateralization has minimized trade diversion effects and in part accounts for the stubbornly low intra-ASEAN trade shares. These low shares are a sign of success, not failure.^[24]

Additionally, the ASEAN Comprehensive Investment Agreement has enhanced the region’s business climate and increased ASEAN’s attractiveness to global investors. In 2021, ASEAN attracted a total of USD 175 billion in Foreign Direct Investment (FDI) inflows, making it the third-largest FDI recipient globally, after the US and China. Progress in other key sectors has further deepened regional cooperation and strengthened collective resilience. Ongoing initiatives, such as infrastructure development for physical and digital connectivity, the promotion of sustainable agriculture to enhance food security, fostering innovation in science and technology, and the integration of Micro, Small, and Medium Enterprises (MSMEs) into the global market, are among ASEAN’s notable achievements. Recognizing the importance of the global market, ASEAN, along with China, Japan, the Republic of Korea, Australia, and New Zealand, also launched the Regional Comprehensive Economic Partnership (RCEP), the world’s largest Free Trade Agreement, which entered into force earlier this year.

3. Challenges to ASEAN’s Regional Economic Integration

3.1. Uneven Economic Growth among Member States

The ASEAN community is facing disproportionate economic growth among its members, often referred to as the “two-tier gap”. The first group comprises higher-income countries such as Brunei, Malaysia, and Singapore while the second group includes lower-middle income countries like Vietnam, Myanmar, Cambodia, and Laos.^[25] These disparities in economic development are evident not only in the gap in national income among ASEAN members but also in factors such as the number of highly skilled workers, infrastructure and technological development, institutional capacity, and competitiveness indices. Consequently, the benefits of economic globalization are not equally felt by all ASEAN members. Lesser-developed states in ASEAN lack the resources needed to integrate into the global market and capitalize on its opportunities as effectively as more developed countries.

These economic disparities hamper the process of ASEAN’s regional economic integration. They create challenges in harmonizing economic policies, trade mechanisms, and international standards that are crucial for regional trade. Each member’s policies and regulations vary based on their political and institutional regimes as well as their levels of socioeconomic development. As a result, differences in regimes and development levels require tailored priorities and approaches to policy-making. Balancing the diverse needs and interests of member countries while promoting regional integration necessitates extensive coordination and negotiation, which is often complicated by the development gap and differences in national interests.

There are also large differences in economic structure among ASEAN nations, reflecting both the levels of economic development and factor endowments^[26] (resources used for a country’s economic activities). Laos, Cambodia, and Myanmar are still agrarian economies, with one-third or more of GDP derived from agriculture.^[27] Regarding their national workforces, agricultural workers make up a majority of the labour markets there. On the contrary, more prosperous economies in ASEAN have shifted out of agriculture to a great extent.^[28] Several economies in ASEAN have experienced rapid industrialisation over the recent decades, with industry and service accounting for a large portion of GDP in Singapore, Brunei, Malaysia, Indonesia, and Thailand. Middle-income countries like the Philippines and Vietnam have also seen impressive growth in the industry and service sectors. However, economic restructuring in those two countries and the economic region has not yet reached its full potential^[29] due to the lack of high-quality labourers.

The development gap also leads to trade imbalance within ASEAN. ASEAN members with more advanced economies such as Singapore tend to have higher-skilled workforces, stronger industrial bases and communication systems, higher productivity levels, and more modern infrastructure. These factors enable them to produce goods of higher quality and export a wider range of goods and services. On the other hand, lesser-developed states often face difficulties meeting the standards of more developed trade counterparts, resulting in trade deficits.

3.2. Non-Tariff Barriers

The second challenge is that the prevalence of non-tariff barriers (NTBs) in the ASEAN region hampers the free flow of goods. Although the community has made admirable progress on tariff liberalisation thanks to the establishment of AFTA and the signing of ATIGA, this progress has been marred by the rise of NTBs .^[30] NTBs are trade barriers other than customs tariffs that may take the form of licenses, quotas, a variety of regulations, and requirements such as rules of origin, sanitary conditions, packaging, and labelling standards, etc. NTBs are often misconstrued as NTMs. NTMs cover a broader set of measures than NTBs. NTBs are considered to be discriminatory, while NTMs do not necessarily hinder trade movement.^[31] While customs tariffs have a direct and certain effect on trade, the enforcement of NTBs is ambiguous. There have not been internationally accepted criteria for appropriate levels for imposing NTBs on foreign goods and services. As a result, the employment of NTBs is inconsistent and varies across countries. For example, NTBs are not applied uniformly among trading partners.^[32] They can also include unjustified and/or inappropriate application of sanitary and phytosanitary (SPS) measures and other technical requirements.^[33] This practice inadvertently raises the overall cost of production for goods destined for foreign markets. This can put foreign businesses at a disadvantage as they have different sets of standards for the quality of goods and services. Less-developed countries are even at a greater risk because they lack the capability to comply with stringent requirements enforced by developed states.^[34] In addition, NTBs are ever-changing as they can take on new forms when they are targeted or dismantled.^[35] As a consequence, NTBs can put a limit on exporting goods, thus undermining free trade and economic integration in ASEAN. It is crucial that ASEAN members make a cohesive effort to address NTBs and regulate their imposition so as to boost regional economic integration and realise the AEC’s targets.

There are challenges in monitoring the use of NTBs in the region. ASEAN has made limited progress in defining, identifying, and classifying NTMs and NTBs. The lack of commonly accepted approaches to differentiate between NTMs and NTBs is due to conflicting stances on the definition, classification, and measurement across ASEAN members. Since NTMs and NTBs are multifaceted, unlike ordinary tariffs, their characteristics can vary depending on the wide variety of economic interests and purposes of importing countries and other factors such as laws, policies, regulations, practices of the private sector, etc. Likewise, there is little information on the legitimacy of NTMs and the scope of their implementation, such as whether they are uniform across member states and industries, which poses a challenge to identifying which NTM is a barrier to trade.^[36] Although NTMs do not always manifest as trade impediments (in some cases they even boost trade), they can discriminate against foreign goods and induce additional production costs due to poor design and enforcement. Further, ASEAN has struggled to assess the impacts of both NTMs^[37] as well as their implementation in the region despite commitments to eliminate trade‑ impeding barriers. It is important to effectively assess NTMs in order to determine if they limit trade or have the potential to cross over and change into NTBs. What’s more, while ASEAN has made efforts in transparency towards NTMs (which means that ASEAN members inform both members and non-members about import regulations), regulations and policies regarding foreign goods are overlooked by businesses in ASEAN .^[38] This is largely due to the fact that they are uninformed of the practices of other member countries and non-members.

3.3. An Imbalance between Regional Economic Integration and External Economic Integration

An imbalance between regional economic integration and external integration also poses a risk to ASEAN’s regional economic integration. While economic globalisation has provided ASEAN countries with the opportunity to build and strengthen economic ties with nations outside Southeast Asia, the region’s internal economic integration remains less vibrant than its external relations. In fact, ASEAN members increasingly depend on trade and investment from non-ASEAN countries rather than engaging in intra-regional trade.^[39] From 2001 to 2016, less than a quarter of foreign direct investment (FDI) flowing to ASEAN members originated within the region.^[40] The share of ASEAN’s intra-regional trade has stayed at a low level and plateaued at around 20%-25% for almost two decades.^[41] The reason intra-ASEAN trade has not increased is the expectation and need to expand trade with non-ASEAN states, especially great powers such as China. For instance, trade with China increased 4.4 times from 89.2 USD billion in 2004 to 391.5 USD billion in 2018.^[42]

The lack of intra-ASEAN trade is best discerned by the low utilisation rate of AFTA. The following factors that contribute to low utilisation of AFTA are: (i) low margin of preference between MFN and CEPT; (ii) the prevalence of NTBs; (iii) complicated procedures and protracted issuance of acceptance forms, especially pertaining to rules of origin; (iv) small and medium businesses’ lack of information on how to apply for tariff preferences; (v) businesses’ lack of awareness of non- tariff requirements, especially the ones from developing countries.^[43]

While relatively low intra-regional trade compared to extra-regional trade is not a threat to ASEAN states’ economic development, nor it should be construed as a failure, it can hinder economic integration in the region. Intra-regional trade is an integral part of ASEAN’s economic integration and overall economic growth. Owing to being integrated with the global market, ASEAN, along with other countries in the world, is not immune to external shocks, such as COVID-19, economic recession periods, geopolitical dynamics, etc. However, ASEAN may be more vulnerable to global uncertainties because it is still a developing region that is most dependent on exports.^[44] Therefore, increasing intra-regional trade can strengthen members’ economic resilience when facing external shocks. For instance, ASEAN states can engage in trading activities with each other in case there are hindrances to trading with their non-ASEAN partners.

3.4. Institutional Problems

ASEAN’s existing institutional base needs to be strengthened and reformed so that its members can address current challenges as well as ones that may arise in the future in the process of regional integration. Institutions can be known as governance mechanisms, including sets of norms, rules, policies, procedures, and organizational structures for aiding collective and cooperative actions in politics, security, economics, cultures, welfare and justice.^[45]

In this context, we focus on the effects of ASEAN’s current institutions on its economic integration and economic growth. An ASEAN concern is delayed decision-making and limited implementation of economic integration mechanisms owing to the need for consensus-building and slow progress in required domestic reforms in areas such as laws, policies, business and investment environment, rights of business owners, labour rights, trade and price liberalization.^[46] For example, ASEAN governments initiated both the AEC and AFTA because they recognized opportunities to spur national economic growth by strengthening ASEAN’s competitiveness and economic potential in the international area.^[47] Nonetheless, the extent of their commitment to regional economic integration is still limited by the need to consider national socioeconomic and political priorities. Having to balance AEC’s economic integration and national interests, the governments in ASEAN have traditionally favoured relatively limited institutional structures that lack the power to enforce stronger discipline on member governments to adhere to the timelines, action plans, and commitments that they themselves had previously established.^[48] As a consequence, implementation of these commitments has faced obstacles, with member states occasionally requesting adjustments to initial targets or exemptions from them, as well as failing to reach set targets.^[49]

It is evident that ASEAN members prefer non-intrusive institutional structures and mechanisms that emphasize consensus, inclusivity, and flexibility.^[50] These institutions allow ASEAN governments to have sufficient autonomy in deciding which sectors to deregulate, liberalize, or reform to what extent and at what speed.^[51] While this may be necessary to give ASEAN states autonomy in policymaking, it also results in collective decision-making processes based on the lowest common denominator.^[52] Consequently, member states occasionally diverge from economic cooperation in favor of fulfilling the goals of their national interests.

The ASEAN Secretariat has also been criticized for its lack of a proactive role in promoting economic integration in the region. The role of the Secretariat is constrained by the limited mandate “providing for greater efficiency in the coordination of ASEAN organs and for more effective implementation of ASEAN projects and activities”.^[53] In addition, it is criticized to lack inadequate human and financial resources. It only employs about 300 staff,^[54] which is diminutive compared to other regional organizations of similar size and missions.^[55] However, we do not believe the lack of staff is a significant hindrance to the Secretariat’s work. It is more efficient and sustainable to augment the Secretariat’s function. This could be done by expanding the Secretariat’s scope and authority outlined in the existing mandate. This would prompt the Secretariat to strengthen its research capacity and advisory role that supports ASEAN states strategically and administratively. Although there is a demand for ASEAN countries to align their policies and regulations with the association’s goal of making the region an economically integrated hub, there is no need for ASEAN to depart from its traditional ways of centrality and intergovernmentalism. Likewise, the Secretariat does not need to transform into a supranational and overarching institution. Whilst ASEAN does not follow an EU-like institution and secretary, it is still important to have adequate, competent staff work as well as a stable financial state that can unite ASEAN states in the process of economic integration.

4. Strategic Recommendations for Enhancing ASEAN’s Economic Integration

In order to efficiently deal with the uneven economic growth among members, first, each country will have to address its own specific needs and take opportunities to strengthen growth and achieve its goals. To enhance their resilience, these nations must allocate greater funds towards fundamental social services, social safety nets, and essential infrastructure. Additionally, efforts to increase the income of impoverished populations are vital. Prioritizing intra-regional trade and investment, particularly to support landlocked developing nations, is crucial. This necessitates initiatives to foster integrated markets, reduce both tariff and non-tariff barriers, invest in physical infrastructure, establish reliable transportation networks and information systems, and implement more effective regulatory frameworks. Therefore, less developed countries can strengthen their economies inclusively, narrow the economic gap with those more developed countries, and more developed countries can consolidate their economy as well.

Developed ASEAN countries should support developing ASEAN countries in the economic aspect. Backing the economic development of less affluent ASEAN nations contributes to overall regional stability, shared prosperity and inclusive growth across the region. By narrowing the economic gap between developed and developing nations, ASEAN countries can foster a more equitable and sustainable economic environment for all member states.

Another sphere ASEAN needs to address is the quality of its available economic and social data so that it can effectively measure economic integration progress.^[56] The absence of comprehensive development data remains an issue not only within the region but globally as well. This deficiency may stem from irregular data collection or insufficient disaggregated data. Member states must allocate greater resources to improve the accessibility, accuracy, and disaggregation of data. Inadequate development data will hinder member states’ ability to establish distinct policy objectives, impeding the ASEAN community from formulating a unified action plan across nations, particularly in advancing economic and social inclusivity.

By improving the quality of the data, ASEAN can enhance accountability and transparency. Transparent and reliable data enhances accountability among governments, institutions, and stakeholders. It allows for the evaluation of performance ensures that actions taken align with stated goals and objectives, and enables ASEAN to make informed decisions regarding economic and social policies. Without quality data, policymakers may implement ineffective strategies or overlook critical issues. Then, member states monitor the progress. High-quality data allows for the monitoring of progress towards development goals and targets. It helps ASEAN to track trends over time, identify areas of improvement, and measure the effectiveness of interventions and policies.

It is unlikely that ASEAN will depart from core institutional structures and values, namely centrality and flexibility since they guarantee each member’s national autonomy. As a result, consensus-building, intergovernmentalism, and strict adherence of the principle of non‑interference will remain as key practices .^[57] Nevertheless, uncertainty as a result of ASEAN states’ flexible approaches to the implementation of AEC goals regarding economic integration still needs to be minimised. At the regional and intergovernmental level, the importance of regional economic integration and the necessary reforms required to accomplish AEC goals need to be included in the discussions of high-level decision-makers.^[58] ASEAN could also provide precise action plans that are time-bound with detailed schedules and clear end dates.^[59] Mechanisms such as “negotiated flexibility”, “in-built flexibility” or even “ASEAN-X” should be limited or thoroughly supervised.^[60] It should not be the impetus for ASEAN’s decision-making concerning economic integration as well as issues that threaten regional security. On the other hand, it would be more productive to incorporate those models into deferred implementation plans with time constraints, which include explicitly defined schedules or premeditated dates for the completion of specific stages in the economic integration process.^[61]

Enhancing individual members’ commitment to economic integration could also benefit from the use of monitoring and feedback.^[62] Regarding the monitoring of NTMs in ASEAN, such progress must be maintained so that businesses can be more aware of trade barriers that can hamper their business and fulfill requirements for foreign goods set out by countries of destination. Besides publicizing the use of NTMs and NTBs transparently through an open database, ASEAN countries should adopt and promote feedback and analysis mechanisms. Under these mechanisms, ASEAN members can conduct cross-reviews of the effects of NTMs that each member enforces and identify whether NTMs can evolve into NTBs. In addition to analyzing the impacts of NTMs, ASEAN states can assess the process of economic integration in the region and propose what approaches should be considered when tackling obstacles in achieving ASEAN’s goal of a single market. In addition, assessment should also cover the social and socio-economic costs of economic integration so that groups facing or being at risk of dislocations as a result of integration or globalisation can become better integrated into the regional market.^[63] Effective feedback mechanisms could help ASEAN overcome limitations caused by its members’ preference for flexibility and national policy autonomy.^[64]

To enforce compliance with regional economic goals, ASEAN could introduce and implement the following means. Besides cross-evaluation carried out by ASEAN governments, there is a need for a freestanding assessment task force that evaluates ASEAN’s progress in economic integration and AEC implementation as well as proposing solutions.^[65] Assessment shall be conducted by people within ASEAN or among ASEAN’s stakeholders in the region.^[66] For instance, the assessment body should consist of prominent individuals such as leading experts or scholars in the field from ASEAN states.^[67] Regarding ASEAN’s stakeholders, research institutes such as the Economic Research Institute for ASEAN and East Asia (ERIA) could provide ASEAN members with valuable knowledge and recommendations on regional integration.^[68] Similarly, universities and businesses can also participate in the undertaking, particularly through research and innovation networks, informal and formal discussions, and educational programs organized on relevant platforms. The lack of compliance can also be addressed by establishing a system to ensure responsibility for members who do not comply with regional standards.

Balancing regionalism and globalism in economics requires navigating the tension between promoting regional integration and engaging in the global economy. ASEAN should embrace the concept of “open regionalism” which encourages regional integration while remaining open to global trade and investment. Regional blocs should aim to complement, rather than replace, global trade agreements and frameworks.

To begin with, ASEAN members need to enhance their regional activities and strengthen intra‑ASEAN trade. This will allow the economies of ASEAN member states to integrate more effectively while also better connecting them to global markets. At the same time, ASEAN should adopt a flexible approach to regional integration that preserves member states’ autonomy in their economic policies and decisions, avoiding rigid models that may limit flexibility and hinder adaptation to global economic shifts.

Furthermore, ASEAN member states should negotiate trade agreements at both the regional and global levels that promote free and fair trade, while addressing the diverse needs and priorities of each country. Harmonizing trade rules and regulations will facilitate seamless integration into both regional and global markets, ensuring that ASEAN remains competitive in an increasingly interconnected world.

Since aligning national interests and economic policies among ASEAN members is a hindrance to regional economic integration, these states shall strive for collective action and harmonization of national interests and policies. One major challenge that should be addressed is the ASEAN Secretariat, which possesses rather limited functions and authority. Its mandates are stated ambiguously, thus leaving the Secretariat in a normative, rigid state rather than transformative.^[69] Therefore, ASEAN is advised to grant the Secretariat more implementation authority across the three pillars of the ASEAN community, including AEC goals; and ensure that it is not influenced by conflicting national priorities among member states^[70]. Regarding financing, ASEAN should change the formula determining the financial contributions of its member states to the Secretariat.^[71] The current budget framework, which relies on “equal annual contributions”^[72] of each state is not feasible because it is based on the lowest common denominator and does not specify the monetary value of those contributions.^[73] Amendments should hence be made to the budget structure, through stipulating either an equal portion of each country’s yearly expenditure or an equal allocation based on each country’s economic development.^[74] These measures could empower the Secretariat to act as a central institution that possesses an inclusive and comprehensive vision of regional economic integration.

Coordinative measures should be taken to tackle the prevalence of NTBs in ASEAN. Since there is an absence of definition and classification of NTMs and NTBs, ASEAN states need to work together on this matter. ASEAN governments can rely on definitions laid out by international treaties like TBT agreements or those provided by international organizations and agencies such as WTO and UNCTAD. While they are useful, the interpretations certainly do not represent the will and interests of ASEAN countries. In addition, they can be inadequate since they cannot cover all possible situations, due to the ever-changing attributes of NTMs.^[75] Instead of solely depending on international standards, ASEAN members can combine them with their own interpretations within the framework of a standardized institutional mechanism, whilst taking into account domestic conditions and region-specific situations^[76] and strictly adhering to ASEAN’s NTMs guidelines. Regarding an institutional mechanism, each government can establish a council or body specialized in international trade and ASEAN’s trade liberalization.^[77] Its task is to review existing NTMs circulating in the region^[78] and speculate if new NTMs can arise or whether current NTMs can become barriers in the future, as well as tracking the elimination of NTBs. Additionally, the council should be given the power to develop trade and investment policies, laws, and regulations as well as revising them. These initiatives could help reduce NTBs in the region and further advance toward trade liberalization.

To enhance transparency regarding the implementation of Non-Tariff Measures (NTMs) and Non-Tariff Barriers (NTBs), businesses should be given the opportunity to voice their concerns about trade-impeding measures and propose business-oriented legal and institutional reforms. ASEAN should establish effective mechanisms that allow businesses to inform their governments about the impacts of NTMs on their operations and request necessary changes in their enforcement. For example, each ASEAN government could create an online platform dedicated to collecting firms’ requests regarding NTMs and NTBs. In addition, private sector representatives should be invited to participate in ASEAN working committees that focus on the use and regulation of NTMs and NTBs across the region. This would ensure that businesses’ voices are heard in decision-making processes. Furthermore, the private sector could collaborate with both governmental and intergovernmental bodies to identify areas most impacted by NTBs, helping to prioritize efforts to address these barriers. This cooperative approach would facilitate smoother trade flows and contribute to the overall goal of reducing trade impediments within the region.

Conclusion

ASEAN has made significant strides in regional economic integration, as evidenced by the establishment of initiatives like the ASEAN Economic Community (AEC), ASEAN Political‑Security Community (APSC), ASEAN Socio-Cultural Community (ASCC), and the adoption of the AEC Blueprint 2015 and AEC Blueprint 2025. However, the Southeast Asian community has yet to fully realize the goals of the AEC, particularly in achieving a single market and production base. This delay is largely due to four main challenges: uneven economic development, the proliferation of Non-Tariff Barriers (NTBs), the imbalance between intra‑regional and extra-regional trade, and institutional limitations.

To overcome these obstacles, ASEAN must implement fundamental reforms in its institutional structures and take concrete actions to reduce NTBs in the region. By enhancing coordination and fostering a collective commitment to economic integration, ASEAN can better position its member states to integrate into both the global and regional economies. Ultimately, with continued efforts, ASEAN can drive economic development and establish itself as a leading economic region in the future.

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