Southeast Asian Integration

What to expect from ASEAN and the AEC?

Dear Marijn,

I’m a music teacher from Sweden and have been living in Vietnam for five years now. Lately I’ve been hearing a lot about the Association of Southeast Asian Nations (ASEAN) and the ASEAN Economic Community (AEC)—is this something like the EU of Asia? And does it mean that I can soon work in all ASEAN Member States and travel within Southeast Asia without a visa?

I have also heard ASEAN mentioned quite a lot in the news recently. One of the reasons for this increased attention from the media was the establishment of the AEC at the end of last year. The European Union (EU) is also getting its fair share of media attention, but for completely different reasons. Let’s see whether there are any other similarities to be found.

The European integration project started after World War II with the establishment of the European Coal and Steel Community in 1951 by six European countries. One of the ideas behind the project was that European integration could help prevent another war on the continent. Via the European Economic Community (EEC) and Euratom (European Atomic Energy Community), in 1992 the EU was formally established with the Maastricht Treaty. Today, the EU has 28 Member States and is arguably the largest economy in the world, and the project has reached relatively high levels of economic and, to some extent, political integration. Obvious examples of such integration include the establishment of a single market, the common currency and the Schengen visa Area.

ASEAN, on the other hand, was created in 1967 by five Southeast Asian countries at a time of growing political unrest in the region. These countries were looking for more economic development, and were hoping to be in a stronger position when united. Currently, ASEAN has 10 Member States (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam), and is estimated to be the seventh largest economy in the world. ASEAN is well-known for doing things the “ASEAN way.” This approach, which is also the name of its official anthem, is characterized by consensus-based decision making, non-interference in the internal affairs of other Member States, quiet diplomacy, and the lack of institutions such as a parliament, a central bank or a single currency.

The establishment of the AEC in 2015 was an important step in the direction of creating a single market, and it showed that the process of economic integration in ASEAN is still very much alive. And foreign investors are more and more interested in exploring the opportunities that the AEC could offer, for example in the fields of manufacturing and trading. However, economic integration in ASEAN will probably never reach the same level as in the EU. One of the facts that could explain ASEAN’s modest ambitions in this regard is that there are big differences between the Member States in terms of development. To give you a better idea, the estimated GDP per person in ASEAN’s richest Member State—Singapore—is more than 50 times higher than that of its poorest Member State—Cambodia.

Now, let’s go back to your question about the freedom to work in other ASEAN Member States. One of the most important goals of the AEC is to create a single market, among other things, through the free movement of business persons, skilled labor and talents. The ASEAN Agreement on the Movement of Natural Persons (2012) and the so-called “mutual recognition arrangements” have been put in place to achieve this goal. However, ASEAN wouldn’t be ASEAN if this project was not implemented the “ASEAN way.” In practice, it means that different Member States apply different rules—that the free movement of skilled labor only applies to a limited number of professions, and that foreign workers often have to meet very strict requirements (e.g. language, experience, residency, qualifications) in order to work in another Member State. In this regard, ASEAN could learn something from its big brother in Europe, who is still miles ahead on this topic. Similar to the EU, and probably more relevant to your question, the free movement of skilled labor in ASEAN, unfortunately, only applies to ASEAN nationals.

You also inquired about traveling without a visa with the ASEAN countries—for ASEAN nationals there is already a visa-free policy. Depending on the domestic policies of the Member States and on their bilateral agreements, the duration of the visa-free period ranges from 14-30 days but only applies to ASEAN nationals. But here is the good news: earlier this year ASEAN launched a tourism plan for the 2016–2025 period. And guess what: one of the main goals is to create a single visa for ASEAN, comparable to the Schengen visa in Europe. The single visa is intended to be launched sometime in 2020… so you have approximately four years to plan your trip!

Every month, Marijn Sprokkereef answers legal questions from Oi readers. If you have any legal questions you want answered, send them to legal@oivietnam.com.

BIO: Marijn Sprokkereefis an associate of Audier & Partners, an international law firm with offices in Vietnam (Ho Chi Minh City and Hanoi), Myanmar and Mongolia. Audier & Partners provides advice to foreign investors on a broad range of legal issues.

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