ASEAN stands at the centre of a dynamic economic tapestry in Asia and Oceania. Flanked by the industrial powerhouses of China, Japan and the South Korea, Asean has been playing a pivotal role in fostering regional economic integration.
The three countries and Asean, with the help of the Regional Comprehensive Economic Partnership (RCEP) agreement, are facilitating the economic development of South-East Asia through trade, investment, technological innovation, and supply chain integration.
Asean’s journey, starting with five countries – Indonesia, Malaysia, the Philippines, Singapore and Thailand – toward regional integration began in 1967 with a focus on promoting peace and stability.
Recognising the inter-connectedness of economic prosperity and regional security, the Asean member states embarked on initiatives such as the Asean Free Trade Area (Afta) in 1992.
The Afta was formed to eliminate tariffs on most goods traded among the Asean member states, facilitating the movement of products and boosting intra-regional trade by about 222 times by 2016 compared with 1967 levels.
Asean now has 10 members, and the Afta has not only spurred economic growth among them but also created an attractive market for external investors, particularly from the North-East Asian economic giants.
The economic growth of Japan, South Korea and China has been a significant driver of the region’s long-term growth and integration.
The three countries’ robust appetite for raw materials and their position as manufacturing powerhouses have fuelled trade with Asean.
China is Asean’s largest trading partner, with bilateral trade exceeding US$722bil, and Japan is the third exceeding US$268bil after United States’ US$420bil, South Korea is the forth with around US$223bil in 2022.
The United States, incidentally, is Asean’s second-largest trade partner with a two-way trade volume of US$420bil.
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