The Association of Southeast Asian Nations (ASEAN) was established in 1967 to accelerate cultural development, economic growth and social progress throughout the region. It also aimed to promote regional peace and stability by using laws and principles of the United Nations Charter. Since 1967 it has grown to include ten countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
On 22 November 2015, these countries came together to sign The ASEAN Economic Community (AEC) Agreement, which aims to create one of the largest single market economies in the world. The AEC works towards four main objectives: the creation of a single market and production base, becoming a competitive economic region, economic development, and integration into the global economy.
- Secretary-General: Lim Jock Hoi
- Total population: 630 Million
- Largest country: Indonesia
- Smallest country: Singapore
- Top ASEAN exporter 2015: Singapore
- Fastest growing ASEAN exporter: Myanmar
- Combined FDI Investment to ASEAN: $136.2 billion
ASEAN is a strategic region, where economic growth and development are expected to exceed the global average for the foreseeable future. With a wealth of natural resources, low-cost skilled labour, and ASEAN’s Free Trade Agreement, the region’s great diversity of markets and opportunities are attractive across a full range of sectors including infrastructure, oil and gas, mining, and information and communications technology.
The global economic downturn has not had the same effect on ASEAN as on Europe and the West. Steady growth combined with investor-friendly government policies has attracted businesses keen to explore the vibrant new domestic markets that are emerging in ASEAN countries. The needs and demands of ASEAN countries are incredibly diverse; for example, Myanmar and Cambodia are among the world’s 35 low-income countries, as classified by the World Bank, while Singapore is the third-richest country in the world measured by GDP per capita.
However, rapid GDP growth does not in itself guarantee a sharp rise in high net worth individuals, but rapidly growing economies do provide excellent opportunities for large scale wealth creation. ASEAN currently attracts more foreign inward investment than China and will be the third fastest-growing region after India and China. Therefore, entrepreneurs in ASEAN are seizing the opportunity. Southeast Asia’s economic dynamism is substantially enhancing the buying power of a growing middle class that is driving new consumer demands for luxury products.
By 2030, ASEAN’s economy is predicted to eclipse Japan’s and be the world’s 4th largest ‘single market’ after the EU, US and China. The Asian Development Bank (ADB) predicts that the size of the middle class in emerging Asia will increase from 24% of the population in 2010 to 65% in 2030. All of this leads to a ‘Community of Opportunities’.
It is important to remember that ASEAN is comprised of ten independent countries. There are diverse socio-cultural differences as well as different legal and regulatory environments. An increasing number of businesses are looking to do business with ASEAN as well as to set up offices there; it is vital for them to understand those differences to ensure that business runs smoothly.