Muchammad Febrian Ibrahim 6511040048

ASEAN Economic Community (AEC)

ASEAN Economic Community (AEC) is one of the three pillars of ASEAN Integration concepts mutually agreed by the Heads of State of the 10 members of ASEAN meeting in Bali in 2003 which was inaugurated by the Declaration of ASEAN Concord II, known as Bali Concord II. The main concept of the AEC is to create ASEAN as a single market and production base unity where there is free flow of goods, services, factors of production, investment and capital as well as the elimination of tariffs for trade between ASEAN countries are then expected to reduce poverty and economic inequality among countries member countries through a number of mutually beneficial cooperation. Through the realization of the AEC, ASEAN's major bargaining power in the global economy becomes more robust. Then other opportunities to see the declared purpose of the AEC through the Bali Concord II, the ASEAN economic region creating a stable, prosperous, highly competitive and where there is free flow of goods, services, investment and capital, equitable economic development and reducing socioeconomic inequalities in year 2020. Through the free flow of investment, funding imbalances in ASEAN countries are expected to overcome, with stronger bargaining position ASEAN as an integrated economic community expected foreign direct investment (FDI) will be channeled into ASEAN in which all members can benefit from these funds is not only a state only if each move by themselves on behalf of their respective countries. In this case the

beneficiaries are developi ng countries, and of course poor countries within ASEAN because ASEAN has been divided economy as experiencing in some in terms of the

group 1) Countries transformed

"Significantly

economies" that can be compared with developed countries, namely Singapore, 2 ) Countries with "Emerging Economies", namely Indonesia, Malaysia, Philippines, Thailand and VietNam, and 3) Countries that belong to the "poorest nations" in the world such as Laos, Myanmar and Cambodia. The challenge in the realization of the free flow of goods and services within the AEC is because there are still trade tariffs among ASEAN countries despite six ASEAN countries including Indonesia have agreed to significantly reduce trade tariffs within ASEAN for a number of items included into the Inclusion List (IL) to a maximum of only 5 %. The following table lists a number of ASEAN trade tariffs for intra-regional trade. So this essay we will discuss the causes and effects of formation of ASEAN Economic Community (AEC). The ASEAN region has a strategic value in economic geography. It can be seen from the ASEAN countries are geographically located between two continents and two oceans that allow each trade through the ASEAN countries. ASEAN countries has a number of populations and natural resources is enormous, especially Indonesia. So with a large population, abundant natural resources and strategic location, ASEAN has great potential to attract the world market. Lack of harmony among the ASEAN countries is one reason for the need for ASEAN economic community such as a conflict between Indonesia with malaysia, malaysia to singapore, singapore with Indonesia, and many others. The point on the border of any country's borders and conflicts often affect bilateral relations. Thus the need for a program to strengthen relations between ASEAN countries and one way is by ASEAN economic community. The low standard of living in ASEAN. ASEAN countries is a regional that have standard of living is still relatively low. Although there is a rich country, including per capita income of USD 60,500 is singapore. However, when compared to other ASEAN countries that value is still too far. Especially when compared to the Cambodians who only had revenue

of USD 2100 it was happening inequality. For those with the ASEAN Economic Community is expected to equalize incomes or living standards in all countries in ASEAN. The low of skilled labor in ASEAN that can compete internationally. Unskilled labor in ASEAN is also the reason why the formation of the ASEAN Economic Community. Since there are many people from ASEAN countries to work abroad just to be rude employee. And low skills of a country can be seen from the number of unemployed a country and a country's level of education. The more unemployment then be able to define that a country has a population with low skills. For those with the ASEAN Economic Community is expected to spur the spirit of any country or any people to want to learn to face stiff competition. And in the future can also fighting poverty. According to Trade Minister Mari Elka Pangestu, collectively, ASEAN's total trade with the world in the three years begin 2008 untill 2010 has increased. Which reached 1.89 trillion U.S. dollars in 2008, in 2009 had dropped to 1:53 trillion dollars and increased again to 2:04 trillion U.S. dollars in 2010. Of the total number of intra-ASEAN trade worth 470 billion U.S. dollars in 2008, 376 billion U.S. dollars in 2009, and 519 billion dollars in 2010. The increase in trading volume is positive symptoms. But we also can not disbelieve that the development of the above tends to be slow and volatile. Ambitious effort to realize the vision of ASEAN is under severe test and threatened to fail. There are at least two indicators (factors) that gives a logical reason anticlimactic threat of the ASEAN Economic Community. First, the Internal Factors. In terms of internal economic readiness of ASEAN Countries in value is still weak. There are economic disparities among ASEAN countries, which are too far away, so that economic integration even more to make the economy more unequal. Take the example of Indonesia. After one year passing of the ASEAN-China Free Trade Area, Indonesia considered to have failed in increasing the volume of external trade. China imported goods flooding the domestic market forcing employers, especially small-medium enterprises have gone out of business, unable to compete with China, which has large capital, high productivity and low prices. Or the most heartbreaking, in July 2011 only Indonesia has to import 298 925 tonnes of salt from China, India and Australia.

In terms of security. Investment, trade or any economic activity in desperate need of stability and security. ASEAN is a region highly prone to conflict both internal and international. Indonesia and Malaysia are still bersetegang around the border and employment settings. Thailand and Cambodia border still shootout two countries. Austaralia, Timor Leste and Indonesia also conflict in a dispute over the Timor Gap. Examples of cases in the increasingly make us pessimistic view of ASEAN integration opportunities materialize 2015. Second, the external factor. Pessimism is growing stronger when found international political-economic developments that tend conflictual past few months. International situation like flash floods that could not be predicted where and where its mouth upstream. North Africa trapped in uforia democracy gave birth to the civil war. Europe in the maze of financial crisis that is threatening the integrity and sustainability of the European Union. Japan suffered a catastrophic nuclear meltdown followed Sunami coupled with a budget crisis due to the mounting national debt. Has not stopped there. America as one of the granaries of the world economy was on the ropes. U.S. debt has now reached 16.30 billion U.S. dollars, exceeding the gross domestic product (GDP) is only 14.6 billion U.S. dollars. The immediate budget crisis for the effect of the U.S. and global economy, given the U.S. dollar has been used as an economic barometer of world trade. However, if the ASEAN countries to implement the AEC it well, they will get a lot of benefits. The first is the creation of a stable economic area in ASEAN. It can be seen from the amount of income each country is high and not going far enough differences to other developed countries. When the ASEAN countries are quite advanced and stable so they will not be reliant on a large country like the United States, China, Australia, and others. Because in ASEAN already has a single market that can meet their own needs. If the income of a country is higher and less dependent to other country, so automatically economic growth will be increased. In addition, if the AEC can be implemented it well, so the trade between countries become very easy. We are free to sell in other countries and other people selling freely in our country. If we are able to trade well, indirectly it can reduce the level of poverty due to the

increasing number of jobs in ASEAN. Not only that, with the AEC it will create a lot of skilled labor in the ASEAN. Workforce ready to compete internationally. And everyone will get the spirit to improve its ability for high competition demands. But if there is a country that is not ready to be the AEC, the country only be worse off because cant compete with other countries. It took quite a long time and a good preparation of all ASEAN members to compete in the ASEAN economic community. The better preperation in ASEAN country the better result for the future.