Following the World Economic Forum on ASEAN 2018 that was held in Hanoi, Vietnam last week, there is an urgent need to bring up some points to understand for ASEAN as an intergovernmental organization in the region to better handle the future challenges.
The official site of World Economic Forum lists 7 challenges for ASEAN to note, to prepare a better ASEAN.
- Stability
When it comes to a discussion on stability, the matters related to this is how ASEAN strengthen its regional relationships within members, besides geopolitical stability. Tracing back to the history of ASEAN, the organization was formed based on mutual aims to create peace, stability, and cooperation.
Given its strategic geographical location, ASEAN is prone to dispute. About this first point, the most problematic dispute ASEAN has been experiencing is overlapping claims of South China Sea. In this case, ASEAN is not alone, since the disagreement opens a possibility for ASEAN members contesting with global powers outside of the Southeast Asia region. To restore regional and geopolitical stabilities, this is among many tasks, and challenges ASEAN should work on.
-
Business Challenges
One may easily find many business players in any forms in the region. From conglomerates such as Salim Group in Indonesia, Thailand’s Central Group, etc. Not only conglomerates, but small- and medium-sized enterprises (SMEs) are also dominating around 89% of business activity in Southeast Asia.
High rates of crony capitalism, paired with corruption will only harm small enterprises. ASEAN somehow requires independent civic institutions to prevent corruption. Therefore, a fair competitive business climate would be created. Furthermore, the anticipated Fourth Digital Revolution era in the future is hoped to bring more transparency in stimulating economic growth in the region.
-
New Business Models
With more than 600 million consumers in ASEAN, the market in the region is considered rapidly growing. Not to mention that the total GDP per capita of ASEAN (Singapore was not calculated since its economy is already advanced to begin with) is around $6,500 and this figure is more than India’s, even still less than China’s. Â
The type of consumers in ASEAN are seen as demanding, as well as price-sensitive and it affects the local business to have low margins and reduce the cost of labors. In this condition, the various business model should be stimulated. In preparing for a more globalized era with high penetration in mobile technologies, governments in the region must encourage and support the business to innovate and create more specific demands; only by minimizing the cost of burden of potential failure, can this strategy work in the future.
-
Transformation in Demographics
With most of its population consist of the young generation, ASEAN should require its governments to help prepare young people to deal with future demands in a more integrated economic. This effort can be implemented through educational strategies such as training. Currently, what ASEAN already has is a condition where young people in major cities possibly can add more pressure to existing job markets and infrastructure. More innovative approaches must be taken into account, such as low- cost housing and affordable public services. In realizing this, it is the time for governments to gear up with other stakeholders like non-profit organizations and private sectors.
-
Inclusive growth and sustainable development
Income levels of ASEAN people ranging widely. You can find those who live under global poverty rate until those who categorized as one of the richest families in the world in the region. The wide gap found in ASEAN however reflects a need to for investment in many areas like financial institutions, infrastructure, as well as strategic planning.
-
Digital Economy
Global-wise, the rate of internet users in Southeast Asia are considered growing that give an opportunity to adopt more technologies and innovation. However, the utilization of technologies and innovation itself must also be accompanied with proper internet infrastructure in ASEAN, so that new industries related to internet use can be initiated and developed.
-
Economic Integration
The establishment of ASEAN Economic Community (ACE) in 2015 initially aims to create a more integrated group by fostering a single market and industrial output capacity, intensify healthy competition, promote inclusive growth, and further incorporate the region into worldwide economy.