09 August 2023
While we often focus on the APAC region when it comes to Far East economies, trading arrangements and investment, the Association of Southeast Asian Nations (ASEAN) is mighty. In this article, we will look at the history of the ASEAN trading bloc and its standing on the global stage.
Before we take a look at the history of the ASEAN community, it is vital to identify precisely what it stands for. This is a community with ten members:-
· The Philippines
The combined population of the ASEAN countries is 662 million, with a gross domestic product of $3.2 trillion. While there is much focus on the likes of Hong Kong, it is essential to note that the ASEAN community contains some of the fastest-growing economies in the Far East and the world.
The history goes back to 1967 when the five founding members of Indonesia, Malaysia, the Philippines, Singapore and Thailand recognised the value of their combined strengths. A formal agreement was signed in 1976, the Treaty of Amity and Cooperation in Southeast Asia, which focused on mutual respect and non-interference in member country affairs.
Between 1984 and 1999, Brunei, Vietnam, Laos, Myanmar and Cambodia joined to double the membership of the ASEAN trading bloc. It was in 1997 that the ASEAN community faced its first real challenge, the Asian financial crisis. This began in Thailand, although the ASEAN members came together to arrange currency support from others in the Far East. While the crisis was damaging, much of the impact was limited by the cumulative power and cooperation of the community.
In 1992, members formalised the ASEAN Free Trade Area (AFTA) with the ultimate aim of creating a single market. This would encourage trade and investment between member countries and work for the benefit of the wider region, attracting more foreign investment. To put this into perspective, in 1996, the average tariff between ASEAN member countries was 7%; today, it is zero.
As the power of the ASEAN bloc began to grow, its influence in the region led to the signing of the Regional Comprehensive Economic Partnership (RCEP) with Australia, China, Japan, New Zealand and South Korea. Signed in November 2020, this arrangement had been in the pipeline since 2012 and rubberstamped the growing power of the ASEAN community.
Since inception, the ASEAN bloc has signed additional free trade agreements with:-
· Australia and New Zealand
· Republic of Korea
· Hong Kong
While no formal agreement has yet been reached, the United States is ASEAN's fourth largest trading partner behind China, the EU and Japan. There has been talk of a more formal arrangement with the US, but discussions were side-tracked to a certain extent by the Covid pandemic.
As we have covered in some of our recent articles, over the next few years the ASEAN region is forecast to show the strongest economic growth in the Far East. This has caught the attention of many domestic and international investors who had overlooked the potential for the ASEAN bloc, instead preferring to look at the broader APAC region. Interesting times ahead!Back to News