The Association of Southeast Asian Nations (ASEAN), including Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam, is rapidly approaching a new milestone; the implementation of the ASEAN Economic Community (AEC) at the end of 2015.
The AEC fundamental freedoms are becoming a point of increased focus for international business. The AEC sets the foundations of a single market and production base allowing for the free movement of goods, services, investment, capital and skilled labor. In addition, the ten member countries of the ASEAN are aiming at jointly realizing the development of a competition policy, the protection of intellectual property, the facilitation of e-commerce, and the introduction of a more comprehensive investment protection and dispute resolution system.
The AEC is expected to have far-reaching economic consequences, by significantly promoting intra-ASEAN trade and investment and strengthening the global importance of the ASEAN as an economic block. Apart from the reduction of tariffs, ASEAN tax coordination is limited to the elimination of certain withholding taxes and the completion of the network of double tax treaties among all ASEAN countries. This leaves increased tax competition between ASEAN countries in order to attract foreign direct investment promoting further regional and global integration of businesses.
In this rapidly changing environment, global businesses need to closely monitor the ASEAN developments and consider their trade and investment opportunities further optimizing their global supply chains.
Five fundamental freedoms leading to real business impact
The principles of AEC provide for fundamental freedoms relevant for international business, to ensure a single AEC market and opening of an AEC single production base.