ASEAN Economic Community: What is in it for us?

ASEAN Economic Community: What is in it for us?
PHOTO: Reuters

Under the ASEAN Economic Community (AEC), a Singapore-based manufacturer relying on raw materials from, say, Indonesia or Vietnam, would benefit from more affordable goods as tariffs come down.

He would also find it easier to export his goods, and at lower cost too, with lower tariffs and simplified Customs procedures. Meanwhile, service providers should gain easier access to ASEAN countries as barriers to markets are lifted.

These are among the benefits for Singapore firms and businesses, highlighted by the Ministry of Trade and Industry (MTI) in its recently published guide to the AEC.

Not only traders and service companies stand to gain. Investors could also benefit through more transparent regulations and eased restrictions on foreign ownership.

Skilled workers in certain sectors can find more job opportunities in the region.

The consumer is set to gain too, with a wider choice of goods and services that are cheaper.

But there are challenges ahead, says Mr Kurt Wee, president of the Association of Small and Medium Enterprises. For one thing, local businesses and workers have to be more competitive.

Fortunately, Singapore has a reputation for quality and good service, and local brands, such as shoe retailer Charles & Keith and electronics firm Flextronics have shown that firms can succeed abroad.

But Mr Wee says local businesses should have branched into the region "since yesterday", to be large enough to compete with players serving larger home bases such as Indonesia and Thailand. "We may be better in quality, in brand, in service, but in business, size and weight matter," he adds.

"If our SMEs don't fight for a slice of the overseas domestic markets, you can run into a situation where, in the next few years, you'll find overseas counterparts have come in and swallowed up your market and our SME people can become just business managers."

SMEs are a major player in ASEAN. They account for more than 96 per cent of all enterprises and 50 to 85 per cent of employment in member states.

MTI noted that, with continued liberalisation of investment in ASEAN, Singapore companies will gain from more opportunities to take part in sectors previously restricted in some countries.

Local healthcare providers, for example, can have the assurance that they can fully own investments in medical and dental services in Vietnam. In Indonesia, when the next round of services liberalisation enters into force, consultancy services providers in engineering can also enjoy full ownership of their investments.

Singapore might also attract global multinationals or regional conglomerates to site offices or sign contracts here, creating opportunities for local legal and accountancy firms.

But the converse is also true. Foreign professionals can be expected to continue competing for local jobs, as jobs here pay better.

There is, however, cause for cheer. As Mr Wee sees it, there is regional demand for Singaporean professionals, who have a reputation for being trustworthy and dependable.

He advises those who want to give the regional job market a try to start by picking up regional knowledge about their industries, language skills, and an understanding of foreign business cultures and not just industry-specific skills.

"Mobility cannot be just about your job in Singapore: It has to be about your job within the region," he adds. "You have to bring your professional abilities to new levels, to bring that value-add and compete, whether it's in Singapore or abroad."

This article was first published on November 22, 2015.
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