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CERTIFICATE
Class:- S.Y.B.FM
This is to certify that Roll no:- 32 has Satisfactorily Completed the Case study in Financial System, as prescribed by University of Mumbai for the year 2011 to 2012.

______________ _______________ Teacher-in-charge

___________________ Degree College Incharge Principal

Date:-___________

COLLEGE STAMP
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Association of Southeast Asian Nations

INTRODUCTION It is a geo-political and economic organization of ten countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Since then, membership has expanded to include Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam. Its aims include accelerating economic growth, social progress, cultural development among its members, protection of regional peace and stability, and opportunities for member countries to discuss differences peacefully. ASEAN covers a land area of 4.46 million km, which is 3% of the total land area of Earth, and has a population of approximately 600 million people, which is 8.8% of the world's population. The sea area of ASEAN is about three times larger than its land counterpart. In 2010, its combined nominal GDP had grown to US$1.8 trillion. If ASEAN were a single entity, it would rank as the ninth largest economy in the world.

Definition: ASEAN (Association of SouthEast Asian Nations) is an organization of 10 Asian nations that promotes the economic growth of the member countries. Members include: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. The group intends to form an EU-type common market by 2015. ASEAN has begun a five-year plan of action with China to expand free trade in information and communications technology. Tariffs were lowered in 2005, increasing trade by 24% to a total of $160 billion.

The multilateral trade agreements between ASEAN and its neighbors lessen these countries need for the World Trade Organization (WTO). Communication among these long-standing enemies in the name of trade means that these countries realize the preeminent importance of economic prosperity for all, regardless of ancient grudges and even democratic principles. A single-minded focus on economic goals will lead this region into continued prosperity for the long-term. (Source: ASEAN web site, Channel News Asia web site, China People s Daily web site) <h3>Facts about ASEAN</h3> The 10 ASEAN countries are small: their total 2005 GDP was only $884 billion, compared to China s $2.2 trillion, Japan s $4.6 trillion, the U.S. $12.5 trillion and the EU's $13.5 trillion. However, their GDP growth rates were forecast by the IMF to be in the 5-6% range for 2007, vs. 2-3% for the U.S.

History

ASEAN was preceded by an organisation called the Association of Southeast Asia, commonly called ASA, an alliance consisting of the Philippines, Malaysia and Thailand that was formed in 1961. The bloc itself, however, was established on 8 August 1967, whenforeign ministers of five countries Indonesia, Malaysia, the Philippines, Singapore, and Thailand met at the Thai Department of Foreign Affairs building in Bangkok and signed the ASEAN Declaration, more commonly known as the Bangkok Declaration. The five foreign ministers Adam Malik of Indonesia, Narciso Ramos of the Philippines, Abdul Razak of Malaysia, S. Rajaratnam of Singapore, and Thanat Khoman of Thailand are considered the organisation's Founding Fathers.[11] The motivations for the birth of ASEAN were so that its members governing elite could concentrate on nation building, the common fear of communism, reduced faith in or mistrust of external powers in the 1960s, and a desire for economic development; not to mention Indonesia s ambition to become a regional hegemon through regional cooperation and the hope on the part of Malaysia and Singapore to constrain Indonesia and bring it into a more cooperative framework. Papua New Guinea was accorded Observer status in 1976 and Special Observer status in 1981.[12] Papua New Guinea is aMelanesian state. ASEAN embarked on a program of economic cooperation following the Bali Summit of 1976. This floundered in the mid-1980s and was only revived around 1991 due to a Thai proposal for a regional free trade area.

ESTABLISHMENT

The Association of Southeast Asian Nations, or ASEAN, was established on 8 August 1967 in Bangkok, Thailand, with the signing of the ASEAN Declaration (Bangkok Declaration) by the Founding Fathers of ASEAN, namely Indonesia, Malaysia, Philippines, Singapore and Thailand. Brunei Darussalam then joined on 7 January 1984, Viet Nam on 28 July 1995, Lao PDR and Myanmar on 23 July 1997, and Cambodia on 30 April 1999, making up what is today the ten Member States of ASEAN.

AIMS AND PURPOSES As set out in the ASEAN Declaration, the aims and purposes of ASEAN are: To accelerate the economic growth, social progress and cultural development in the region through joint endeavours in the spirit of equality and partnership in order to strengthen the foundation for a prosperous and peaceful community of Southeast Asian Nations; To promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries of the region and adherence to the principles of the United Nations Charter; To promote active collaboration and mutual assistance on matters of common interest in the economic, social, cultural, technical, scientific and administrative fields; To provide assistance to each other in the form of training and research facilities in the educational, professional, technical and administrative spheres; To collaborate more effectively for the greater utilisation of their agriculture and industries, the expansion of their trade, including the study of the problems of international commodity trade, the improvement of their

transportation and communications facilities and the raising of the living standards of their peoples; To promote Southeast Asian studies; and To maintain close and beneficial cooperation with existing international and regional organisations with similar aims and purposes, and explore all avenues for even closer cooperation among themselves.

FUNDAMENTAL PRINCIPLES In their relations with one another, the ASEAN Member States have adopted the following fundamental principles, as contained in the Treaty of Amity and Cooperation in Southeast Asia (TAC) of 1976: Mutual respect for the independence, sovereignty, equality, territorial integrity, and national identity of all nations; The right of every State to lead its national existence free from external interference, subversion or coercion; Non-interference in the internal affairs of one another; Settlement of differences or disputes by peaceful manner;

ASEAN COMMUNITY

The ASEAN Vision 2020, adopted by the ASEAN Leaders on the 30th Anniversary of ASEAN, agreed on a shared vision of ASEAN as a concert of Southeast Asian nations, outward looking, living in peace, stability and prosperity, bonded together in partnership in dynamic development and in a community of caring societies. At the 9th ASEAN Summit in 2003, the ASEAN Leaders resolved that an ASEAN Community shall be established. At the 12th ASEAN Summit in January 2007, the Leaders affirmed their strong commitment to accelerate the establishment of an ASEAN Community by 2015 and signed the Cebu Declaration on the Acceleration of the Establishment of an ASEAN Community by 2015. The ASEAN Community is comprised of three pillars, namely the ASEAN Political-Security Community, ASEAN Economic Community and ASEAN SocioCultural Community. Each pillar has its own Blueprint, and, together with the Initiative for ASEAN Integration (IAI) Strategic Framework and IAI Work Plan Phase II (2009-2015), they form the Roadmap for and ASEAN Community 2009-2015.

ASEAN CHARTER The ASEAN Charter serves as a firm foundation in achieving the ASEAN Community by providing legal status and institutional framework for ASEAN. It also codifies ASEAN norms, rules and values; sets clear targets for ASEAN; and presents accountability and compliance. The ASEAN Charter entered into force on 15 December 2008. A gathering of the ASEAN Foreign Ministers was held at the ASEAN Secretariat in Jakarta to mark this very historic occasion for ASEAN.

With the entry into force of the ASEAN Charter, ASEAN will henceforth operate under a new legal framework and establish a number of new organs to boost its community-building process. In effect, the ASEAN Charter has become a legally binding agreement among the 10 ASEAN Member States.

Key Role For ASEAN in Asia Pacific s New Security WITH recent shifts in the Asia Pacific s geopolitical landscape, the multilateral forums of ASEAN play a key role in maintaining a stable balance in the region.Speaking at the opening of the 3rd Asia Pacific Security Conference, Singapore s Minister for Defence Teo Chee Hean said ASEAN must play a central role in shaping how the regional security architecture evolves to maintain peace, stability and growth.New strategic landscape.The emergence of China and India as regional powers has been much debated and sometimes listed as a concern. This can be attributed to, as Mr Teo said, the fact that the rate and scale of the growth of both giants taking place concurrently is inevitably giving rise to both strategic and economic consequences on a global scale, both in impact and in reach. The Minister added that how China and India conduct themselves and engage others consequently will determine the complexion of the security landscape in the Asia Pacific. At the same time, Japan is set to take on a more active role in the region. Mr Teo noted how Tokyo is seeking to move beyond peace-loving to peacesupporting . Japanese efforts in Iraq s reconstruction and Aceh tsunami relief, as well as naval support of coalition operations in the Indian Ocean areindicative of changes in Japan s security outlook.Therefore, as the Minister said, A rising China and India, and a revitalised Japan, all seeking larger and more active roles, together with a pre-eminent United States these are the defining geopolitical realities of our region today.

Benefits from AFTA: (ASIAN FREE TRADE AREA) The elimination of tariffs should result in product price reductions throughout ASEAN - Encouraging higher market competition - Help ASEAN countries' products gain access to a regional market that incorporates many substantial advantages, e.g. a population of more than 580 million, $1.5 trillion gross domestic product, convenient transport systems, huge international trade worth $1.7 trillion a year, and foreign investment of $60 billion - Consumers will benefit from cheaper prices of goods given lower tariffs on a host of raw materials used by the region's producers. - Some of processing factories are expected to enjoy cheaper imported raw materials in the face of the tariff elimination, cutting their production costs - ASEAN will be integrated into a single market which is an important point because the market will be stronger and larger with a high population - the export and investment sectors will generate higher potential in the long term Negative and Positive Effects: Import tariffs will fall to zero for a wide range of agricultural goods, such as onion, garlic, tea, sugar, rice, soybeans, palm oil, and other farm products tariffs are now eliminated as of January 1, 2010. The tariff lines under CEPTAFTA also cover a wide range from finished consumer products such as airconditioners; food products such as chili sauce, fish and soya sauces; intermediate materials such as motorcycle parts and automobile cylinders; and other products such as iron and steel, plastics, machinery and mechanical equipment, chemicals and prepared foodstuffs, paper, cement, ceramics and glass. Some countries, such as, Thailand, have their products on the countries' sensitive lists. Those are to carry a 5% tariff and include coffee beans (down

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from 20%), copra (from 15%), potatoes (from 10%) and cut flowers (from 10%). Thailand is concerned about the impact on some key agricultural products such as rice and palm oil. However, a number of Thai sectors should gain substantially from the free trade due to a decline in production costs. They include textiles and garments, leather products, food products, gems and jewelery, vehicles and parts, mineral products, and electronics. The four less developed members of the regional, such as Cambodia, Laos, Burma and Vietnam will have until 2015 to reduce their tariffs to 0-5% under their AFTA commitments. For Vietnam, its lower production costs and rising output of rice are expected to be competitive with Thailand and affect Thailand s rice market share. Thailand expects to lose a 0.5% share of the rice trade, or around $13 million, to Vietnam. For Malaysia and Indonesia, their palm oil price are more expensive than that produced from Thailand. The loss of palm oil market share to Malaysia was forecast at 2.6% or US$46 million because Malaysia is the world's largest producer and highly efficient. Malaysian producers' expansion to Indonesia will further lift their productivity. Therefore, AFTA expansion could affect the Thai economy both negatively and positively. "But the good would far outweigh the bad", said Thailand's Prime Minister Abhisit Vejjajiva, according to Bangkok Post newspaper. He announced that the government had mapped out assistance measures funded by various ministries and also pledged stringent import regulations to ensure the quality of farm goods, as well as to protect Thai consumers. The governments will lose income from tax collections but in the long term the chances for exports are wider when compared with countries outside ASEAN. Thus, the nation will benefit overall. Experts suggested that for Thailand, the challenge continues to be upgrading skills and developing products to serve consumer demand, which will help

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increase brand awareness, add value and competitiveness to Thai products in global markets. Mr Dhanin Chearavanont, a leading food exporter and the Chairman of Charoen Pokphand (CP) Group, also said recently that the the zero tariff scheme under the ASEAN Free Trade Area would attract more foreign investors to Thailand. When compared to other ASEAN nations, Thailand's business environment remains attractive. He explained that the zero duty on agricultural products under the AFTA would benefit the country as a whole in the long run because 95% of products are not taxed. In the short term, some Thai products would be hit by higher competition from trade liberalization. Mr Dhanin called on the government to prepare measures to help affected producers.

Advantages of the ASEAN Free Trade Agreement Formed in 1967 by the governments of Thailand, Singapore, Malaysia, the Philippines and Indonesia, ASEAN (Association of Southeast Asian Nations) is an intergovernmental organization that now includes Cambodia, Vietnam, Laos, Myanmar (Burma) and Brunei. The combined population of ASEAN is 576 million (equal to 8.7 percent of the world population), with a combined GDP of $1.28 trillion (U.S. figure) in 2007. The organization's goals are to promote development in Southeast Asia while providing a peaceful forum to settle differences.

Elimination of Tariffs Established in 1992 as one of the main pillars of the ASEAN Free Trade Agreement, AFTA set a timeframe for all ASEAN members to eliminate trade tariffs amongst member-states as a means to make the trade bloc more internationally competitive. The earliest signatories (Thailand, Malaysia,

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Indonesia, Singapore, the Philippines and Brunei) saw a 99.11 percent drop in tariffs after the treaty went into full force in 2003. Rural Development and Poverty Eradication Certain ASEAN member states, such as Laos, Cambodia and Myanmar, are defined by the United Nations as "least developed nations," while others, such as Singapore and Brunei, are considered fully developed by international standards. One of the stated goals of the ASEAN Free Trade Agreement is to reduce poverty while bringing member states into a state of full development. For example, ASEAN encourages the proliferation of information and computer technology (ICT) in rural, underdeveloped communities. Preserving Peace and Stability An an annual forum consisting of all the ASEAN members, plus other observers from Asia and the Pacific region, aims for "promoting peace and security through dialogue and cooperation." Intended to provide a venue for multilateral and bilateral discussion, this forum works to reduce tension amongst member states while preserving the Free Trade Agreement. Protecting the Mekong ASEAN formed the Mekong Basin Development Cooperation as a cooperative effort to sustainably develop the Mekong Basin. The Mekong River, which flows through five of the 10 ASEAN member states, is a fragile ecosystem that could be easily damaged by the actions of a single member state (runoff from pesticides in Thailand, for instance, can have ramifications for Cambodia's fish stocks). By developing the Mekong Basin Development Cooperation, ASEAN aims to reconcile conservation efforts with economic development while living up to the promises of the Free Trade Agreement. Women's Rights Originally established in 1976 and re-established in 2002, the ASEAN Committee on Women focuses on incorporating the roles of women into free trade-oriented social and economic development. ASEAN's work on women's rights is guided by two main documents: The Work Plan for Women's Advancement and Gender Equality (2005-2010) and The Work Plan to

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Operationalise the Declaration on the Elimination of Violence against Women (2006-2010).

Disadvantages of Asean: Western countries have criticized ASEAN for being too "soft" in its approach to promoting human rights and democracy in the junta-led Myanmar. Despite global outrage at the military crack-down on peaceful protesters in Yangon, ASEAN has refused to suspend Myanmar as a member and also rejects proposals for economic sanctions. This has caused concern as the European Union, a potential trade partner, has refused to conduct free trade negotiations at a regional level for these political reasons. International observers view it as a "talk shop", which implies that the organization is "big on words. During the 12th ASEAN Summit in Cebu, several activist groups staged antiglobalization and anti-Arroyo rallies.[68] According to the activists, the agenda of economic integration would negatively affect industries in the Philippines and would cause thousands of Filipinos to lose their jobs. They also viewed the organization as "imperialistic" that threatens the country's sovereignty. A human rights lawyer from New Zealand was also present to protest about the human rights situation in the region in general. ASEAN has agreed to an ASEAN human rights body which will come into force in 2009. The Philippines, Malaysia, Indonesia and Thailand want this body to have an enforcement capacity, however Singapore, Viet Nam, Burma, Laos and Cambodia do not.

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Development Cooperation Development is by definition a process by which a societal problem is to be solved by implementing a systematic and well-defined change process. An approach of addressing issues and solving problems through development activities is often referred to as carrying out development intervention . Outcomes of a development intervention are typically measured by the impacts that it produces in providing solutions to the problem being addressed. In ASEAN development cooperation, the same basic philosophy is used. Regional development activities carried out under ASEAN cooperation are always aimed at addressing regional problems and issues through development interventions which are best carried out at the regional level. As ASEAN represents the interest of its Member Countries as a group, development intervention carried out at the regional level would naturally have to suit the needs of the group without duplicating efforts that can be better implemented at the national or local levels. In this context a regionality criteria has become very useful in checking if an idea for a regional development intervention is truly regional. There are two primary criteria that can be used to examine if a given problem is truly regional:

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The problem or need is regional, and not national by definition: which means that the problem exists above the national level. An example of a regional problem according to this criteria would be a question of: How should import tariffs in all Member Countries be adjusted and coordinated as to allow more flow of goods among them taking advantage of the larger market size of all the Countries combined? More flow of goods in a larger market would make production more efficient and make the region more competitive. But, to achieve it each country cannot act alone or even in pairs, but would have to work together as a group. The solution to the problem would be for all Member Countries to jointly develop regional trade scheme and coordinate the implementation of consistent import tariff structures for the scheme. The development intervention would be to carry out exercises to initiate the chain or sub-chain of processes from the development of the tariff scheme, development of harmonized tariff nomenclature, translation of the scheme into binding agreements, and implementation of the agreement in the field. The problem or need requires regional cooperation in order to bring about a solution. An example of a regional problem which requires regional cooperation to solve would be a question of: How to improve the efficiency and use values of the natural resource products from ASEAN countries by eliminating trade of illegally harvested low-priced commodities? More efficient use of ASEAN s natural resources would ensure longer-lasting comparative and competitive advantages of the region. The solution to the problem would be for all Member Countries to apply consistent trade regime to prevent the sale of illegally harvested products, and to share the benefit together. The development intervention would be to carry out exercises to initiate the chain or sub-chain of processes from the mutual recognition of the legally harvested products, applying consistent and sharing the cost of enforcements against illegal products, spreading the production and market incentives for trading legal products only.

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In the actual project development stage, some regional problems would often come to a surface as a result of the lack of options to solve the problems at national or local levels. Problems such as trans-boundary haze from land fires, or pressures against regional currencies, for example, cannot be effectively dealt but through regional cooperation.

Purpose Examples of regional problem provided above demonstrate that by nature the bulk of physical development activities remain at the national level. At the regional level the needs are mostly related to policy and institutional harmonization, and for strengthening the compliance to the harmonized regional policy. Naturally, the bulk of the development resources in the form of funds would be more available for national development activities than for regional programmes. However, the smaller amount of available and required resources does not reflect the lesser importance of regional development programme. In fact, successful development intervention at the regional level can create much bigger impact relative to the financial cost of implementing it. Because development resources available for addressing problems at the regional level are smaller by availability and needs, their uses need to be carefully planned and thoroughly followed up. In this regard, ASEAN development cooperation can be considered as serving the following two main purposes: To address development issues that are truly regional and contribute to ASEAN regional integration, and

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To synergize national development efforts which run parallel to and would accelerate the ASEAN regional integration processes.

The modality by which ASEAN development cooperation activities are designed and implemented basically follows the following principles: Regional resources is complementary to national development resources,

Development objectives are referred to the Hanoi Plan of Actions (HPA) goals particularly those which cross-cut the sectoral plans of actions and priorities, and

Project activities are always open to innovations and new ideas which would enhance ASEAN regionalism.

Current Development Cooperation Programmes To provide a holistic view to the structure of current ASEAN Development Cooperation Programmes, it is important to recognize the generic steps through which a regional cooperation evolves. These generic steps are: General exchanges aimed at enhancing the professional cohesion among ASEAN Members and with the Dialogue Partners,

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Provision of strategic policy options for ASEAN bodies and Member Countries to accelerate the ASEAN s greater and deeper integration, Implementation of relatively larger-scale and multi-year activities in the form of programme stream or flagship projects, and Provision of continued support to implement small prototype project to further advance the more progressive initiatives. At present the above four generic steps have been fully reflected in the ASEAN development cooperation programmes as follows: The general exchanges are supported by the various funding schemes such as the ASEAN Fund, Science and Technology Fund, Cultural Fund, as well as a number of exchange and cooperation funds jointly established by ASEAN and its Dialogue Partners, The provision of policy options is implemented in the three major policy programmes, namely: ASEAN-Australia Development Cooperation Program-Regional Economic Policy Support Facility (AADCP-REPSF), ASEAN-EU Programme for Regional Integration Support (APRIS). Programme stream and flagship projects are currently implemented in the two programmes, namely: ASEAN-Australia Development Cooperation Program-Program Stream Component, and ASEAN-German Forestry Programme. The provision of continued support for smaller-scale prototype projects is currently being implemented in the ASEAN-Australia Development Cooperation Program-Regional Partnership Scheme (AADCP-RPS).

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Functions of ASEAN 1. The Department of ASEAN Affairs, Ministry of Foreign Affairs, acts as the ASEAN National Secretariat and the focal point for pursuing all ASEAN activities relating to Thailand . 2. The Department cooperates and maintains contact with other ASEAN member countries, the ASEAN Secretariat, government agencies, private sectors, dialogue partners and international organization (UNDP). 3. The Department analyses and reports activities and other relevant issues relating to ASEAN to the Ministries concerned, the Cabinet and the Prime Minister.

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