Geographies in Depth

ASEAN is 50, and it’s come a long way. Here’s why you should care

Kayakers take in the last of the day's light as they paddle past a ship anchored off Cape Town, May 1, 2011. REUTERS/Mike Hutchings (SOUTH AFRICA - Tags: IMAGES OF THE DAY SOCIETY) - RTR2LVIK

ASEA will celebrate its fiftieth birthday in August. Image: REUTERS/Mike Hutchings

Alex Gray
Senior Writer, Forum Agenda
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ASEAN

The Association of Southeast Asian Nations (ASEAN) is a political and economic organization aimed at promoting economic growth and regional stability among its members.

It was established in August 1967 with just five members – Indonesia, Malaysia, the Philippines, Singapore and Thailand. Since then, it has made extraordinary progress.

 Member countries ASEAN
Image: ASEAN

As ASEAN turns 50, here are some key facts about the economic bloc:

Today there are 10 member states: Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Laos, Myanmar, Cambodia and Vietnam. ASEAN has biggest population of any geo-political bloc totalling more than 600m people (nearly 10% of the world’s population). Its member states have combined GDP of $2.5tn, up from $1.3tn seven years ago. The bloc has seen a 76% increase in GDP per capita during the same period.

In 2014, ASEAN’s economy was the 3rd largest in Asia, and the 7th largest in the world. More than half its population is under 30 years old.

 Image 2
Image: ASEAN

This chart shows how its economy compares to others in the region. Only China and Japan have larger economies.

 Image 3
Image: US ASEAN

Diversity

Although comparisons with the EU are tempting, ASEAN is very different, and does not aspire to be the Asian EU. It does not get involved in the internal affairs of its members; its focus is on promoting rapid and sustained economic growth and modernization.

But it is also far more diverse. Its member states are mostly small to medium-sized economies, with vast differences in living standards between rich members like Singapore and poor ones such as Laos and Myanmar. The GDP per capita of Myanmar for instance, at US$1,246, is tiny compared to that of Singapore, which is US$52,000. Populations also vary widely, ranging from 417,000 people in Brunei to 255m in Indonesia. The land masses are very different – Indonesia and the Philippines are groups of islands, while Lao PDR is land-locked.

 Image 4
Image: ASEAN

Competitiveness rankings

According to the World Economic Forum’s Global Competitiveness Report 2016–2017, competitiveness trends in Asia have been mostly positive. However, there are wide variations between countries.

Behind Singapore (2nd), the five largest members ASEAN - Malaysia (18th), Thailand (32nd), Indonesia (37th), the Philippines (47th), and Vietnam (56th)—all rank in the top half of the overall GCI rankings.

With the exception of Thailand, all five have improved their showing since 2007, most notably the Philippines, which has leapfrogged 17 places. Although ranked much lower, the three other ASEAN members - Lao PDR (83rd), Cambodia (90th), and Myanmar (131st) - all moved up the ladder.

 ASEAN 5
Image: World Economic Forum

If ASEAN were one country

If ASEAN was a nation state it would rank number one in terms of crude palm oil and rubber production, and second in the value of foreign investment flows. It would rank third in terms of overall population and mobile phone subscriptions, and is the world’s fifth largest market for cars.

 If it were a country
Image: Economic Intelligence Unit

Economic prosperity

To assure its future prosperity the members created the ASEAN Economic Community in 2015, an initiative designed to boost trade within ASEAN nations and to improve transport and infrastructure networks.

It will allow the free flow of goods, services, investment, capital and skilled labour between nations, and implement policies to make it a more competitive economic region. Not only will this help ensure equal economic development, but also further integration into the global economy.

 Economic community
Image: ASEAN

Future challenges

The disputes over who controls the South China Seas and islands within it involve many of the countries in ASEAN. In October last year the organisation announced that it would focus on a code of conduct to ease tension in the disputed waters.

One of the region’s main challenges is to bring its infrastructure and IT capability up to date so that it can take advantage of new technology. According to the World Economic Forum’s competitive report, most countries have a gaping infrastructure deficit because investment has not kept up with rapid growth in this area. “For middle-income countries, innovation capacity remains limited, which poses a risk to their growth in the long run.”

The different geographical make-up of the region means that support for physical infrastructure like highways, airports and rail links, power grids and gas pipelines is essential.

But in the words of the CEO of SapuraKencana Petroleum in Malaysia, Shahril Shamsuddin, speaking at the 25th World Economic Forum on ASEAN: “How can you not be optimistic when you have 630 million and more than half of them are young people – creative, connected and collaborating to create value for the region?”

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Related topics:
Geographies in DepthFinancial and Monetary SystemsEconomic Growth
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