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The Potential Opportunities and Threats of the AEC 2015

10 August 2012

The Opportunities and Challenges of Entrepreneurs in the ASEAN Economic Community (AEC) 2015 seminar, organized by the Federal Thai Industries and Department of Trade Negotiation, provided not only the policies surrounding the Free Trade Agreement (FTA) that comes with the AEC, but also the opportunities and threats it brings.

At present, the combined population of the AEC countries exceeds 600 million. The idea of the AEC is akin to the concept of the EU.

The AEC includes the 10 ASEAN countries: Singapore, Philippines, Malaysia, Thailand, Indonesia, Vietnam, Laos, Cambodia, Brunei, and Myanmar.

Arguably, the two most interesting AEC member countries for the Thai entrepreneur are Vietnam and Myanmar. The former enjoys a rapid growth in human resources and the latter has abundant natural resources that are enticing to international investors.

Many Thai businesses have previously invested in ASEAN countries. For example, Mitr Phol Sugar invested in alternative plants (bio-energy farms) in Myanmar, Laos, and Cambodia. The owner of Black Canyon Café, Prawit Jitnaraphong, has vocally expressed his enthusiasm in Burmese markets, saying, “Burmese are conservative and religious but they love Thai products!”

With Thai businesses having previous experience in expanding their business abroad, it can be said that the Thais are well prepared come the introduction of the AEC. However, some threats and opportunities need to be pointed out.

Firstly, AEC members will face a free trade market. Various goods can be and will be sold without any additional tax in different countries, effectively creating a single market entity for all ASEAN countries. This will allow Thai firms to benefit from the single market, allowing more products to be sold, which could generate increased revenues.

Secondly, labor migration will happen at a massive scale. People living in countries that provide a relatively low minimum wage will migrate to work in a place where conditions are reasonable and pay is higher. This could be both beneficial and disadvantageous.

Thirdly, the enlarged market will benefit the investor, as they are able to select the smart choice to invest their money.

Fourthly, many countries outside of the AEC, like Australia, Japan, China, India, New Zealand, South Korea, have shown their excitement to the project, potentially creating the largest potential market in the world.

Fifthly, the AEC will drive the world economy by investing in infrastructure projects in developing countries such as Laos, Myanmar, Cambodia, and Vietnam.

Lastly, logistics are one of the important factors of the AEC infrastructure and investment potential.

By using the EU as a model, we are able to learn from their problems and possibly mitigate them before they occur. The AEC will offer opportunities for ASEAN to be the right choice to investors worldwide.

Peerapat Teerawattanasuk

Marketing Executive

peerapat@broadgatefinancial.com