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The AEC 2015 is ACE economic community and what it basically says is that we will create an internal market for ten Asian members. An internal market means that there’s a free flow of investment, of capital, of people and of services across the border inside those ten member states.
The impact from a business perspective is that if you are, for example, a Thai company and you want to explore your opportunities in the Indonesian market that you can go there, invest there, get on the ground and basically be treated the same way as an Indonesian company. So it means basically an introduction of a non-discrimination principle where companies from Thailand should be treated the same in Indonesia like an Indonesian company.
There are definitely challenges for starting the AEC because we have a wide diversity of economies. Of the ten member states that are there – for example Laos, Myanmar, Vietnam, Cambodia – are of course in a different stage of economic development than for example Malaysia or Singapore. So there’s a tradeoff in protectionism on the one hand and liberal markets on the other hands.
What the economic impact data shows of the European experience is that the formation of an internal market for the EU member states has led to two percentage points extra GDP growth per year for the EU member states. So opening up the markets, reduction of customs duty barriers, and liberalization of investment flows truly leads to economic advantage.
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