ASEAN Economic Issues (September 2024)Trade & Investment Unit, ASEAN-Korea Centre

1. Korea’s Trade to ASEAN Countries (as of August 2024)

Unit: 1 million (USD)

Country/Region	August 2024			August 2023	2023
	Export	Import	Total	Total	Total
Total (Korea)	57,834	54,065	111,899	102,883	1,274,977
ASEAN	9,788	7,151	16,939	16,234	187,179
Brunei Darussalam	2	109	111	41	466
Cambodia	52	51	104	78	1,052
Indonesia	737	1,203	1,940	1,865	21,287
Lao PDR	10	12	22	29	194
Malaysia	925	1,261	2,186	2,095	25,005
Myanmar	27	41	68	88	1,240
Philippines	900	356	1,256	1,157	13,654
Singapore	1,419	911	2,331	2,370	29,937
Thailand	638	618	1,256	1,185	14,942
Vietnam	5,078	2,589	7,667	7,345	79,428
China	11,341	11,483	22,824	22,181	267,662
Japan	2,520	3,915	6,434	6,027	76,676

Reference: Korea Customs Service

2. Summary of the ISEAS’s Webinar on “ASEAN Economic Community (AEC) 2045: The Next Phase of Regional Economic Integration” (5 September 2024) (Link)

The ASEAN Economic Community (AEC) aims for a highly integrated and innovative regional economy by 2025, with significant milestones achieved since the AEC 2025 Blueprint’s launch in 2016, including the Regional Comprehensive Economic Partnership (RCEP) in 2020 and the initiation of the ASEAN Digital Economy Framework Agreement (DEFA) negotiations in 2023. Recent global disruptions have prompted a renewed focus on economic resilience and sustainability, leading to initiatives like the Roadmap for ASEAN Sustainable Capital Markets.

At this juncture, the webinar explored the main challenges facing the ASEAN economy and key priorities under the AEC 2045 strategic plan. Mr. Allen Ng, Dr Ahmad Zafarullah Abdul Jalil, and Mr. Raymond Yee shared their insights on the AEC Blueprint 2025. The session was moderated by Ms. Kristina Fong, Lead Researcher (Economic Affairs) of the ASEAN Studies Centre.

Mr. Alle Ng, Group Head and Principal Economist at the ASEAN+3 Macroeconomic Research Office (AMRO), provided a comprehensive, long-term analysis of ASEAN’s economic landscape, highlighting both progress and challenges. He noted that while ASEAN is poised to contribute significantly to global economic growth by 2030, it faces slowing growth and productivity, partly due to pandemic-related investment impacts. Key structural challenges include an aging population, shifts in global trade and investment patterns, and rapid technological changes. Mr. Ng suggested that the aging population issue could be addressed by adopting a “prospective” approach, potentially reintegrating 93 million people into the workforce by 2050. He emphasized the need for policies that maximize the benefits of a healthier, longer-lived workforce. Regarding global trade, he positioned ASEAN as a valuable intermediary between the USA and China, urging increased regional cooperation, market diversification, and services trade liberalization to maintain competitiveness amidst global economic uncertainties. On technology, Mr. Ng acknowledged the varying levels of innovation capacity among ASEAN+3 countries. He stressed that with appropriate policies leveraging frontier technologies, these economies could better address aging issues, foster new industries, expand markets, and tackle climate change challenges.

Dr. Ahmad Zafarullah Abdul Jalil, the Director of ASEAN Integration Monitoring Directorate at the ASEAN Secretariat, an overview of the AEC 2025 Blueprint’s progress and future. He highlighted key achievements, including the ASEAN Single Window mechanism and the upgraded ASEAN-Australia-New Zealand FTA. Looking towards AEC 2045, Dr. Zafarullah emphasized decarbonization and sustainable development as primary focus areas. Below refers to ASEAN’S strategic sectors and their global presence.

Recognizing the projected growth in new technologies’ value, ASEAN intends to leverage technological drivers while maintaining flexibility to adapt to regional needs. The AEC 2045 vision is being drafted to be adopted in 2025, seeking to transform ASEAN into a single market characterized by a highly skilled workforce, innovation-driven growth, and sustainability across value chains. To achieve this, the ASEAN Economic Community Strategic Plan (2026-2030) will be implemented in five-year cycles, focusing on six strategic goals as below:

Development of ASEAN Community Vision 2045 and its Strategic Plans

Final Draft of the ASEAN Community Vision 2045

We envision a prosperous ASEAN as a single market with highly-skilled and inclusive workforce, productivity and innovation-driven growth, and incorporating sustainability across and along the value chain.
Noted in-principle by the ASEAN Leaders at the 43^rd ASEAN Summit (2023), to be adopted by the ASEAN Leaders at the 46^th ASEAN Summit (2025)

Strategic Goals of the ASEAN Economic Community Strategic Plan 2026-2030

1) Strategic Goal A. An Action-Oriented Community
Realizing an integrated single market and production base with new sources of competitiveness

2) Strategic Goal B. A Sustainable Community
Engendering and mainstreaming climate-responsive elements and policies in all dimensions

3) Strategic Goal C. An Enterprising, Bold, and Innovative Community
Enhancing sectoral cooperation, attuned to emerging trends and developments

4) Strategic Goal D. An adaptable and Pro-Active Community
Strengthening Global ASEAN Agenda

5) Strategic Goal E. A Nimble and Resilient Community
Empowering the AEC and ASEAN peoples, withstanding shocks, stresses, crises, and volatility

6) Strategic Goal F. An Inclusive, Participatory, and Collaborative Community
Leaving no one behind, charting people-centered ASEAN

Mr. Raymond Yee, the Vice President for Customs and Regulatory Affairs for DHL Express covering Asia Pacific (excluding China), shared insights into the ASEAN Economic Community (AEC) from a business perspective. He acknowledged the AEC’s success in eliminating tariffs through the ASEAN Trade in Goods Agreement but highlighted several implementation challenges. These include difficulties with the ASEAN Single Window, slow progress in modernizing e-customs, and issues with operationalizing mutual recognition agreements. Mr. Yee emphasized the need for stronger institutional structures to enforce AEC commitments and address non-trade barriers. He expressed concerns about the slow growth of intra-ASEAN trade and the feasibility of meeting AEC objectives due to lack of harmonization and persistent trade barriers. Mr. Yee also noted the impact of US-China trade tensions on regional supply chains. Looking ahead to AEC 2045, he advocated for a simplified, stable, and predictable regulatory environment to promote efficient production, economic development, and resilient supply chains amidst geopolitical uncertainties. Yee stressed that such improvements would make ASEAN more attractive for businesses and investments in the face of global economic shifts.

After these presentations, Q&A session was conducted. It focused on priorities for ASEAN’s economic integration and the movement of people within the region. Mr. Raymond Yee emphasized the importance of executing existing agreements rather than making new announcements, highlighting the challenge of aligning national regulations with regional commitments. He stressed the need for discipline among policymakers to follow through on regional agreements, noting that this is crucial for businesses to confidently adjust their supply chains. On the topic of labor movement, Dr. Ahmad Zafarullah Jalil acknowledged the potential benefits of freer labor mobility within the region, citing examples like Singapore and Malaysia’s reliance on foreign workers. He mentioned existing initiatives like mutual recognition arrangements for professional sectors but noted implementation barriers. He also highlighted the paradox that it’s often easier for people from outside ASEAN to work in the region than for ASEAN citizens to move freely within it, indicating that addressing these issues is a priority for ASEAN’s post-2025 agenda, despite the challenges involved.

3. ASEAN Economic Issues

▷ Malaysian auto sales close in on ASEAN leader Indonesia (Link)

Malaysia’s car sales in the first half of 2024 increased 6.13% year-on-year to 384,086 units, close to Indonesia’s robust consumer spending. Indonesia’s car sales in the first half of 2024 decreased 19.4% year-on-year to about 410,000 units, and Thailand’s decreased 24% year-on-year to 308,000 units.

▷ The 3^rd Korea-Philippines Joint Commission for Trade and Economic Cooperation (Link)

The Ministry of Trade, Industry and Energy (MOTIE) of the Republic of Korea held the Korea-Philippines Joint Commission for Trade and Economic Cooperation Meeting via videoconference with the Philippines’ Department of Trade and Industry on September 12 to discuss the Korea-Philippines Free Trade Agreement (FTA) and progress on the Indo-Pacific Economic Framework for Prosperity (IPEF), for which they have engaged in cooperation since its initial launch. By leveraging the Philippines’ archipelagic advantage and Korea’s shipbuilding competitiveness, the two sides are aiming to seek collaboration prospects across various areas such as offshore wind power and ship maintenance, as well as expanding cooperation in eco-friendly vehicles. The first ASEAN country with which Korea established diplomatic relations, the Philippines is currently home to approximately 300 Korean firms that are locally operating on the islands and contributing to bilateral economic cooperation.

*Korea-Philippines’s trade volume (million, USD): (’20) 10,212, (’21) 13,553, (’22) 17,484, (’23) 13,654

▷ Korea and Singapore Cooperation on Startup and SMEs (Link)

The Ministry of SMEs and Startups (MSS) of the ROK has renewed a MOU on startup cooperation with the Accounting and Corporate Regulatory Authority of Singapore (ACRA) in order to strengthen cooperation with startups and SMEs with Singapore, a central hub for Asian investment and finance. At the “K-Innovation Day in Singapore” held on August 26, a total of 380 billion KRW of global funds was formed between Korea Venture Investment Corp. and regional investment companies in ASEAN. Of this, more than 23 billion KRW is expected to be mandatorily invested in Korean companies, and it is anticipated that Korean startups will become more active in entering the ASEAN market through investment attraction via the fund. Singapore is a key partner in startup cooperation of the ROK MSS, and has been actively cooperating in various fields, including the operation of accelerating programs for mutual entry of startups every year and participation in startup events (Korea-COMEUP, Singapore-SWITCH).

▷ Google plans to set up a “hyperscale” data centre in Vietnam (Link)

Google is weighing setting up a “hyperscale” data centre close to Ho Chi Minh City, and its power consumption will be similar to that of a large city. Although the specific timing of the investment has not been confirmed, the establishment of the centre is expected to be completed by 2027 (expected construction costs range from $300 million to $600 million). Google announced that it has formed a local team to support Vietnam’s digital transformation and better serve local advertisers, and if Google builds a data centre in Vietnam, it will be Google’s first investment in Southeast Asia.

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ASEAN Economic Issues (September 2024)

1. 2024년 8월 수출입 동향

단위: 백만 불

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