Opportunities and challenges of ASEAN after 50 years of formation and development

2017 marks the 50th anniversary of the establishment and development of the Association of Southeast Asian Nations (ASEAN) with proud achievements, recognized by the world as one of the most successful multilateral organizations. The road ahead for ASEAN is still full of obstacles and challenges, but also opens up many opportunities for the youth of ASEAN countries to seize the opportunity to develop.

EU Trade Commissioner Cecilia Malmstrom (6th, left) and ASEAN Economic Ministers at a conference in Manila, Philippines on March 10. (Source: EPA/VNA)

Sharing about ASEAN turning 50, the Jakarta Globe recently published an analysis by author Justin Wood titled: “ASEAN 50 Years: Youth, Technology and Growth.” This is also the theme of the annual ASEAN Economic Forum Summit taking place in Phnom Penh (Cambodia) this May. The author believes that this event will be an opportunity for ASEAN to think about the future of the bloc. Each idea raised in the Summit theme raises important questions for the future of the region.

Economic growth is crucial to increasing the income and prosperity of member countries. In recent years, ASEAN has achieved remarkable results, with the bloc’s economy growing by about 5% per year and creating a large middle class. In early 2016, ASEAN became the 7th largest economy in the world, and just one year later, in early 2017, ASEAN “jumped” one more place to 6th place. It is forecasted that by 2020, ASEAN will become the 5th largest economy in the world.

Despite such impressive growth, ASEAN could still accelerate its growth rate to 7% per year. The difference between 5% and 7% may seem small, but its impact will be felt deeply. At 5%, ASEAN would double its income every 15 years, while at 7%, that would be reduced to 10 years.

According to analyst Justin Wood, to achieve the 7% growth target, the region must focus on many individual national issues such as infrastructure and education. Currently, ASEAN also has significant advantages to improve economic growth, most notably the establishment of the ASEAN Economic Community (AEC) and is actively completing legal procedures to become a single market with integrated production facilities. If they fail to adapt to the AEC environment, local businesses will have difficulty achieving scale and global competition, and consumers will have to pay more for products and services.

Just as important as the rate of growth is the quality of growth. Of particular concern is the rising inequality in many ASEAN countries. The World Economic Forum’s (WEF) Global Growth and Development Report, released in January 2017, outlined policies that governments can implement to ensure more equitable outcomes.

Youth is also an important factor that countries in the region need to consider. With a current population of about 630 million, most of whom are very young (except Singapore and Thailand), a “golden moment” in the country’s economic development journey promises a strong demographic shift. An increase in the working-age population will boost regional spending, while attracting businesses to invest to take advantage of this labor force.

However, the young population is only temporary. It is estimated that by 2025, the population structure in most ASEAN countries will begin to age. Governments and policymakers must ensure that they pursue the right demographic policies to respond to the aging process. Governments need to identify issues that need to be addressed as the population shifts from young to old, such as environmental issues, pension funds, healthcare, etc.

ASEAN was established in 1967, just two years before the advent of the Internet. As such, ASEAN’s impressive growth coincided with the Third Industrial Revolution, which was brought about by the advent of computers and information technology.

And now, as ASEAN celebrates its 50th anniversary, the world is on the cusp of a Fourth Industrial Revolution powered by artificial intelligence, robotics, mobile internet and advances in genetics, materials science and low-cost hyper-automation. ASEAN is now the world’s fastest growing internet market. A recent report by Google and Temasek estimated that the ASEAN population going online is growing by 124,000 people every day and will continue to grow at this rate for the next five years.

If ASEAN is to succeed in the next 50 years, it must address difficult questions about how to navigate the pace of technological change and digital disruption. On the one hand, the Fourth Industrial Revolution could bring huge benefits to the region, spurring financial development, access to affordable healthcare, new forms of education, and the creation of new companies and service industries.

However, technology can also bring many challenges. ASEAN countries need to equip their people with information technology skills as well as achievements of science and technology to be able to master machines and operate modern technologies. Governments can build a suitable environment for connectivity, allowing the Fourth Industrial Revolution to thrive.

After half a decade of development, the future of ASEAN is still wide open, promising many opportunities and also many challenges for the countries in the bloc. In this important period, ASEAN member countries need to unite and work together to narrow the development gap and raise ASEAN's position in the international arena./.

According to Vietnam+