Noel Clehane , Global Head of Regulatory & Public Policy Affairs
2017 will be a year of anniversaries! It is the 60th anniversary of the founding of the European Economic Community (later the European Union), the 50th anniversary of the establishment of the 10-nation Association of South-East Asian Nations (ASEAN) as a regional bloc, and the 40th anniversary of formal EU-ASEAN relations. Oh and it also marks the 70th anniversary of the commencement of operations by the IMF and the 100th anniversary of the Russian Revolution but I won’t delve further into those two anniversaries!
ASEAN is often compared to the EU, an observation which, on the surface, makes a certain amount of sense. These trading blocs are arguably the two most closely integrated regional organisations in the world, and both emerged amidst regional conflict and insecurity. Despite these apparent similarities however, beneath the surface these two organisations possess very different characteristics, requiring businesses to carefully calibrate their approaches to each market.
The signing of the Treaty of Rome in March 1957
Over these past few decades, both the EU and ASEAN have grown closer economically. Today companies from the EU make it ASEAN’s largest foreign investor and its second largest trading partner. Two EU FTAs have been negotiated and concluded pending signing, with Singapore and Vietnam, and negotiations with Indonesia, Malaysia and the Philippines are ongoing.
The signing of the Bangkok in August 1967
These deepening commercial ties are spurred on by ASEAN’s huge market and enormous growth potential. ASEAN has a population of over 620 million and a collective GDP of over $2.6 trillion. While the global economy has been sluggish, in 2015 ASEAN’s annual GDP growth rate was 4.7%, well above the global growth rate of 3.1%. By comparison, the EU’s combined GDP grew by only 1.9% in 2015. ASEAN is already the world’s seventh largest economy, around the size of France – but by 2050, it is projected to be fourth on that list, overtaking Japan. It is already therefore, one of the largest economic blocs in the developing world and its importance in the global economy will likely only grow in the coming decades as economic, military and political might shifts from ‘the West’ to the Asia-Pacific region. As Christine Lagarde, MD of the IMF said recently, “…Asia and ASEAN have the potential to continue to be a key engine for global growth."
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