INTRODUCTION

After two and a half decades in the making, since the Asian Financial Crisis, ASEAN has achieved significant progress in its economic cooperation efforts under the ASEAN Economic Community (AEC). The region is now collectively the fifth largest economy and the second largest foreign direct investment (FDI) recipient globally, after the US. At 8 per cent of global exports, it is also a trade powerhouse.

While critics have pointed out stagnating growth in the share of intra-ASEAN trade of around 20 per cent compared to corresponding values for the North American Free Trade Agreement (NAFTA) and the EU which stand at 60 per cent, many ASEAN economies have been successful in integrating into the Northeast Asia value chains. This underlines the fact that any form of regional cooperation among a small number of countries such as ASEAN can facilitate greater trade and investment activities with the global economy. Others have pointed out AEC's perpetual status of “work in progress”, which in itself can be considered a positive sign that it remains effective and relevant despite the ever-changing context of the global economy.

Since the 1970s, ASEAN Economic Community building has been a dynamic undertaking. It started with industrial cooperation and preferential trade cooperation in its early days; the former did not yield significant results while the latter soon called for a more holistic approach to regional economic integration. This led to the establishment of the ASEAN Free Trade Area in 1992.

However, the first consolidated efforts towards the AEC came only as the region emerged from the Asian financial crisis, in the face of competition in attracting FDI from big economic neighbours such as India and China. Coming together was now essential for ASEAN to offer economies of scale and to be globally competitive.

The commitment to establish the AEC by 2020 was reflected in the 2003 Declaration of ASEAN Concord II. The first AEC blueprint was adopted in 2007, aimed at establishing the AEC by 2015. It had four key characteristics: (i) a single market and production base, (ii) a highly competitive economic region, (iii) a region of equitable development, and (iv) a region fully integrated into the global economy. After eight years of implementation of the AEC Blueprint 2015, the AEC was formally established in 2015 as part of the ASEAN Community. But that was not the end of the journey.