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Making ASEAN as a Significant and Important Market for the Global Economy in the Future

13 Mar

Ence Ramli Al Rashid

Paramadina University

Faculty of Economy, Management and Business Department

Jalan Gatot Subroto Kav 97 Jakarta, Indonesia

ence.ramli@students.paramadina.ac.id

ramlialrashid@live.com

Riana Linda

Paramadina University

Faculty of Economy, Management and Business Department

Jalan Gatot Subroto Kav 97 Jakarta, Indonesia

riana.linda@students.paramadina.ac.id

Abstract

The world economy is currently in the process of structural shift. Asia became the motor of world economic growth especially in the new era of globalization, because it is a region with the fastest economic growth rate compared to other regions. Hence, Asia should prepare to become one of the key vital wheel in the future world economy. And motor of economic growth will be concentrated in Asia, especially Southeast Asia or ASEAN because ASEAN’s population growth projections will reach 30% to 750 million inhabitants in 2050. There are three main factors to watch out for the Asian community in order to deal with rapid changes in the era of globalization: first, the world’s attention in the future will focus on environmental discourse. Asia is one of the area’s most vulnerable to environmental changes; therefore the Asian community would have to be part of an effort to resolve these barriers. Second, growth in Asia will increase very rapidly, exceeding the growth of world growth. Rapid growth means encouraging the acceleration of industrialization and urbanization of Asia and this acceleration will significantly impact the availability of food, energy and natural resources. Therefore, it should be active participation from various parties to complete. Third, technological developments, especially broadband networks, mobile phones and the internet will provide a forum for interaction and the emergence of new communications devices that have an impact on the occurrence of rapid social change. This paper will discuss in depth how ASEAN could become a potential market and important for the global economy.

Keyword: Global Economic, Econnomic Growth in Asia, Pupolation Growth in ASEAN, Three Asian Challenges

INTRODUCTION

Era of Globalization in the whole world has been growing, both within Europe, the Americas region, as well as in Asia. For in the ASEAN region, member – member states who joined in the ASEAN has entered the globalization era in which every individual member, have a relationship of cooperation such as trade relations, investment, and culture with other ASEAN members. Over time, the challenges of globalization in ASEAN will be even greater. ASEAN can be said to experience significant growth, due to increased growth of ASEAN’s pretty good, the motor of economic growth in Asia will be concentrated in the ASEAN region, and this challenge will make ASEAN a significant and important market for the world economy in the future.

Willingness Indonesia along with 9 other ASEAN countries to form the ASEAN Economic Community (AEC) by 2015, of course, is based on belief in the benefits which conceptually would increase economic growth in Indonesia and the ASEAN region. Economic integration in realizing the AEC in 2015 through the opening and the formation of a larger market, drive increased efficiency and competitiveness, and the opening of employment opportunities in the ASEAN region, will improve the welfare of all countries in the region.Then the realization of the AEC in 2015 will position ASEAN as a region to the 3rd largest market in the world supported by a number of 3rd largest population (8% of world population) in the world after China and India. In 2008, ASEAN has reached a population of 584 million people (ASEAN Economic Community Chartbook, 2009), with a growth rate of population increase and the age of majority is in the productive age. Economic growth of individual ASEAN countries also increased with ASEAN macroeconomic stability is quite awake with inflation around 3.5 percent. The population of Indonesia is the largest in the region (40% of the total population of ASEAN), of course, is a huge potential for Indonesia became a productive and dynamic economy that can lead the ASEAN market in the future.

LITERATURE REVIEW

1. ASEAN Economic Community

  • The ASEAN Economic Community is the realisation of the end-goal of economic integration as outlined in the ASEAN Vision 2020, to create a stable, prosperous and highly competitive ASEAN economic region in which there is a free flow of goods, services, investment and a freer flow of capital, equitable economic development and reduced poverty and socio-economic disparities in year 2020.
  • The ASEAN Economic Community is based on a convergence of interests among ASEAN members to deepen and broaden economic integration efforts through existing and new initiatives with clear timelines.

The ASEAN Economic Community shall establish ASEAN as a single market and production base, turning the diversity that characterises the region into opportunities for business complementation making the ASEAN a more dynamic and stronger segment of the global supply chain. ASEANs strategy shall consist of the integration of ASEAN and enhancing ASEANs economic competitiveness. In moving towards the ASEAN Economic Community, ASEAN shall, inter alia, institute new mechanisms and measures to strengthen the implementation of its existing economic initiatives including the ASEAN Free Trade Area (AFTA), ASEAN Framework Agreement on Services (AFAS) and ASEAN Investment Area (AIA); accelerate regional integration in the priority sectors; facilitate movement of business persons, skilled labour and talents; and strengthen the institutional mechanisms of ASEAN, including the improvement of the existing ASEAN Dispute Settlement Mechanism to ensure expeditious and legally binding resolution of any economic disputes. As a first step towards the realization of the ASEAN Economic Community, ASEAN shall implement the recommendations of the High Level Task .orce on ASEAN Economic Integration as annexed.

  • The ASEAN Economic Community shall ensure that deepening and broadening integration of ASEAN shall be accompanied by technical and development cooperation in order to address the development divide and accelerate the economic integration of Cambodia, Lao PDR, Myanmar and Viet Nam through IAI and RIA so that the benefits of ASEAN integration are shared and enable all ASEAN Member Countries to move forward in a unified manner.
  • The realization of a fully integrated economic community requires implementation of both liberalization and cooperation measures.  There is a need to enhance cooperation and integration activities in other areas. These will involve, among others, human resources development and capacity building; recognition of educational qualifications; closer consultation on macroeconomic and financial policies; trade financing measures; enhanced infrastructure and communications connectivity; development of electronic transactions through e-ASEAN; integrating industries across the region to promote regional sourcing; and enhancing private sector involvement.

2. Connected – Credible – Creative Phenomenon

2011 is the first year in the second decade of the third Millennium. In Indonesia, 2011 will be recorded as one milestone in the history of marketing. The reason, consumer behavior will change dramatically to be more consumptive well as encouraged by the increasing prosperity as well as by the increasing number of marketing approaches that lead to consumption. World of marketing in Indonesia also has entered a new era of digital marketing era. The era of marketing that combines psychological factors, humanism, anthropology, and technology to produce a new effectiveness with a large capacity, interactive and multimedia. The combination of interaction between consumers, the media and producers synergized into a new form of digital contacts, namely through the internet.

MarkPlus Insight survey conducted in eight major cities in Indonesia shows that one out of three people in an urban family is Netizen. It is also found that many have confessed that they have never used the internet, altought they are already very active in Facebook and Twitter. Blackberry has become quite and fenzy in Indonesia because it can accelerate chatting via GPRS does not need 3G. The Minister of Communication and Information also explained that Indonesia could be a number of Netizen has reached 45 million people. And is not uncommon for people to buy a new mobile gadget once every three months. People Indonesia began to enjoy the “connected” with others and the world via the Internet. And this phenomenon is a potential market for the marketer to win the competition in the Indonesian market in the Third Millennium era. The People of Indonesia began to enjoy the “connected” with others around the world via the Internet. And according to the survey Indonesia will increasingly feel the trend of 3-C that is increasingly connected his Indonesian society because of the encouragement of technology, the more credible his Indonesian position

Figure.1

in the world, and the more creative-market its premises (see Figure 1)

And towards the end of 2011, according to MarkPlus Consulting will be seen that the Indonesian market will become more “creative”. Therefore as a marketer, it would certainly have to start preparing for the trick and strategy to be able to focus on Indonesian market shifts that become more creative with the development of urban consumers, middle class, and youth-women-Netizen.

Figure.22

In addition, today’s political-legal aspects in Indonesia are increasingly considered to be stable compared with its neighboring countries. Although in the first year of SBY-Budiono regime occurred many problems, but all political parties seem to have a consensus to maintain this government until 2014. Therefore the government would be more stable when it starts to become chairman of ASEAN for the next year. Likewise, government policies, particularly with emphasis on Indonesia connectivity through infrastructure, energy and stabilization of industrialization.

Figure.32

In the field of economy, Indonesia will soon reach a GDP per capita of USD 3000 which will make the market become more excited (see Figure 2). Even the chairman of the National Economic Committee, Chairul Tanjung, said that Indonesia could have been ranked 13th among the countries that sit in row G-20. In 2011, the third expected the world’s leading rating agencies will follow his colleagues from Japan to enter Indonesia into the Investment Grade.

While in the field of social-culture, it would seem that democracy in Indonesia has reached a level of no more demonstrations dekstruktif kematangan.Tidak supported the people. Freedom of the press also has reached a new equilibrium point in terms of national responsibility. This is a situation in which Indonesia would enter the “credible condition” politically, economically, and socially (see Tables 3 and 4).

3. Indonesia in ASEAN’s Potential Lead

Indonesia’s strategic position in the region of Southeast Asia countries increasingly prominent. In various international events, the Indonesian delegation is always present and involved intensive in it. Background that is the trigger of Indonesia is ready to accept the challenge in leading the ASEAN in 2011 after officially appointed the organization’s leadership at the ASEAN Summit in Hanoi on October 30.

In 2011 an important milestone for ASEAN, particularly Indonesia as a leader, in strengthening political commitment to implementing the Blueprint for Political Security, Economic, Social and Cultural towards ASEAN Community 2015. That is one of the substance of the event Socialization Results of the 17th ASEAN Summit. In the lead ASEAN in 2011, Indonesia has launched the activities of ASEAN meetings which consisted of meeting heads of state / government of ASEAN and related meetings and ministerial meetings..

Plan the time and place of execution of the 18th ASEAN summit in Jakarta last week’s third-April 2011 and the 19th ASEAN Summit to be held in Bali in October 2011 the fourth week. In addition, a series of ministerial meetings of ASEAN 44th planned in July 2011. At the 17th summit in Hanoi had agreed that the United States and Russia formally became a member of the Conference of East Asia (EAS) that consists of 10 ASEAN countries, with Japan, South Korea, China, Australia, New Zealand, India, the United States and Russia. ASEAN groups Brunei Darussalam, Indonesia, Philippines, Cambodia, Laos, Myanmar, Malaysia, Singapore, Thailand and Vietnam. Vietnam is the chairman of ASEAN before. Furthermore, with the merger of the United States and Russia, the Conference of East Asia will be stronger and develop in advance the region in Southeast Asia for six other countries are also members of the G20 which is expected to build a level of prosperity in Southeast Asia. It makes sense if Indonesia prepares itself into the ASEAN leaders in times to come.

First, the geographical position of Indonesia is very strategic, capable of connecting the all the countries in Asia, especially Southeast Asia. Second. Indonesia has a base of wealth natural resources , a complete comparison with neighboring countries. Many primary commodities in the agriculture and mining into the ASEAN countries from Indonesia. Thus, actually the ASEAN countries have relatively high dependence on Indonesia.

Third. Indonesia has the largest population in ASEAN, namely 235 million inhabitants. This is certainly a large and lucrative market for Indonesia itself and its neighboring countries. Economically, the market potential is huge if the number of people with skills or a greater purchasing power. Here, along with economic growth is always positive, has increased the purchasing power of the people of Indonesia.

Fourth Indonesia has a long historical experience with various challenges and obstacles that it faces. Since 65 years ago, Indonesia had been confronted with complex issues both within their own country and across countries (e.g Malaysia, Timor Leste, and the Netherlands). Fifth, the membership of Indonesia in international forums likes the International Monetary Fund (IMF), Asian Development Bank (ADB), Islamic Development Bank (IDB), the G20 and G33 with an increasingly significant role. Even in the G33, Indonesia occupied the position as one of the chairman. For the G20, Indonesia does not lose its strategic position compared to South Korea, China, Japan, U.S. and European countries are relatively more advanced than the economic, social, cultural, and political security.

Sixth. Indonesia successfully manages its economy properly so as to remain positive growth on average six per cent since the Asian crisis in 1998. This success must be one that rational considerations to put Indonesia as the ASEAN leaders. And that we need to realize, with the position as leaders of ASEAN, Indonesia must always be pioneers in strategic decision making in the ASEAN regional level. Any existing economic and political issues involving a fellow ASEAN country, Indonesia should look at the front to finish.

Outside the context of ASEAN, Indonesia also must appear to defend the interests of ASEAN in international forums to fight for equal rights and voice. Often the interests of developing countries which are actually the ASEAN countries marginalized in the absence of a strong and authoritative leader at the ASEAN level. If it is true Indonesia hopes to become future leaders of ASEAN, the proper preparation and careful should have been done since now. Strategic plans have been arranged neatly so that it is run on behalf of ASEAN, Indonesia is ready to run.

As the leaders of ASEAN, the Indonesian leader, whoever he is, must be able to establish relationships and good communication and continuing with the high leaders of developed countries (US. Europe. China, Japan) as well as with leaders of international institutions (World Bank, IMF, ADB. IDB). Ability to establish good relationships and communications with world-class leaders such as Nobel prize winner for a variety of fields, world-class business people (Warren Buffet, Donald Trump), a world-class investors (George Soros), hero of the world (The Dalai Lama, Nelson Mandela) and so also must be raised to build the power of a positive impression.

Ability to establish global relationships that will strengthen the position of leader of Indonesia as the ASEAN a respected leader, respected and legitimized as it is considered authoritative and credible. Hopefully with the strategic position of Indonesia as the ASEAN leaders, the future will give maximum benefits to the nation of Indonesia and the whole society in Southeast Asia.

RESEARCH METHOD

The research method used in this research is descriptive analysis, which is a way to create an overview and analysis of various symptoms and situations that are part of the problem under study. This type of research uses a qualitative analysis method based on library research, i.e. research conducted by collecting data and other information using various sources such as literary books, journals, articles, seminar papers, and tracking additional data via the Internet.

RESULT AND DISCUSSION

ASEAN is a region with tremendous potential with a total population of 580 million and total GDP reached USD 1.5 trillion. ASEAN market potential of the more promising with the declaration of the ASEAN Economic Community to be held in 2015 that will make ASEAN market into one single market and production base.

Southeast Asia is the fifth-largest trading partner for the U.S. Although Southeast Asia experienced economic stagnation since 1997-1998, the U.S. saw Southeast Asia still can continue to survive and solve the crisis. So that Southeast Asia is believed to be the area that has long-term prospects for U.S. economic interests and other developed countries in the future.

In 1993-1997, Southeast Asia is a destination for U.S. exports are quite important after China and Japan in the region Pasifik. But U.S. exports to Southeast Asia fell by around 20% when this region experienced a financial crisis, but the trade re-calculated when Southeast Asia started to rise from crisis. Asia also as a region U.S. direct investment destination, even more than Japan and Brazil in 1997. Development of Southeast Asia experienced economic crises since 1998 greatly affect the ability of U.S. imports. Even in mid-2002, U.S. exports to ASEAN dropped by 7% compared with a year earlier. Among ASEAN countries, only Laos, Malaysia and Vietnam that enhances the purchase of U.S. products in 2002. While Malaysia showed an increase of U.S. exports by 12%, other ASEAN countries actually lost ground. Singapore decreased -7%, -9% Indonesia, Philippines and Thailand fell -11% -29% compared to a year earlier.

U.S. import-export activities with the ASEAN countries did experience a decrease in volume between 1997-1999 due to the crisis experienced by this region. But slowly showed an increase between 2000-2001. But the events of 11 September 2001 back to disrupt the stability of world economy, making trade cooperation has decreased again in 2002. The significant population of Southeast Asia is one of the factors that support this area of potential for marketing the products of U.S. and European industry, including the service industry.

Southeast Asia is also the main place of U.S. foreign investment and European countries. This can be measured from the value of U.S. investment into ASEAN countries are very large compared with other investor countries. The diversity of the investment sector in ASEAN that is available to increase the economic significance of this region for these countries. Cooperation-economic cooperation with the U.S. and other countries continues to increase. Although foreign investment in its development in this region are generally somewhat lagging compared with the East Asia region. But in some sectors, economically, politically and strategically important Southeast Asia remains. Southeast Asia is a potential market for industrial products and services, and as a major area of natural resources is important, including oil and natural gas.

One other important investment sectors in Southeast Asia is a natural resource. ASEAN countries collectively is the region with energy sources, and great natural wealth of the world, such as tin, copper, gold, and resources that can renewable such as rubber, coffee, and various woods. Crops such as oil and gas are also counted in the amount not less. In Indonesia for example, U.S. investment not less than 20 billion dollars for gold mine in Papua. While the oil industry in Aceh, namely Exxon and Mobil.

After all the countries of Southeast Asia’s economic growth one of which rely on foreign investment. Thus, economic prosperity, social, educational improvement and poverty reduction programs, are also dependent on foreign investment. The financial crisis experienced in the previous decade led to stimulation of movement in the production of textiles, food industry, pharmaceuticals, machinery equipment, and electronics. In 1999 to 2000 a decline is quite obvious, in which the financial crisis and that is not conducive security situation in Southeast Asia caused U.S. investors to switch to China.

The existence of a pipeline of development planning projects for natural gas pipeline that will cross the Southeast Asian countries increase the importance of this region for U.S. investment. Although APEC has yet to respond to U.S. proposal for the pipeline, new channels have been planned to be built among the ASEAN countries. For example the plumbing Indonesia from the Natuna islands to Sumatra, Singapore and Malaysia pipeline, and pipelines linking Burma and Thailand. Growing gas needs to give this pipeline development trends will continue to grow, maybe even get to the South China region.

The position of Southeast Asia lies at the intersection of two lines of the world’s largest ocean. The first is the East-West lines, which lines that connect the Indian Ocean with the Pacific Ocean. Both are North-South route, which connects the East Asian region with Australia and New Zealand and surrounding islands. Three “entrance” Southeast Asia: Straits of Malaka, the Sunda Strait and the Lombok Strait are a key milestone in the world trading system. Become as important as political and economic disputes concerning sea route across the archipelago in the South China Sea Spartly. Strait of Malaka itself is a strait that connects the Indian Ocean with the Pacific Ocean, as well As Objectionable shortest path which lies between India, China and Indonesia, the strait is therefore regarded as “chokepoints” of Asia.

Southeast Asian geopolitics is crucial not only for U.S. national interests, but also globally. Sea lane that crosses the Southeast Asian region has functions that are vital to the economies of Japan and the Republic of Korea, China and the U.S. including his own.

Strait of Malaka, across Singapore, Indonesia and Malaysia is one of the world’s busiest sea lanes. More than 50,000 vessels per year transit the Strait of Malacca, while the width of the strait is only 1.5 miles with a depth of 19.8 meters. Indonesian communications Attaché Yuri Gunadi estimated that every day around 10,000 ships that cross the entrance to the Singapore straits of Malaka, among 4000 merchant ships from Indonesia. Ships passing through the Malacca Strait are a third part of world trade. Based on the record the Energy Information Administration (EIA), which brought oil tankers via the strait of Malaka (2003E) is 11 million barrels per day.

Location of Southeast Asia is very strategic based on this path, of course puts Southeast Asia as a very important area of economy and security. Therefore, developed countries like the United States has interests to free and open access route in Southeast Asia, for both economic interests (prosperity) and military (national security).

CONCLUSION

ASEAN is a region with tremendous potential with a total population of 580 million and total GDP reached USD 1.5 trillion. ASEAN market potential of the more promising with the declaration of the ASEAN Economic Community to be held in 2015 that will make ASEAN market into one single market and production base.

Southeast Asia is also the main place of U.S. foreign investment and European countries. This can be measured from the value of U.S. investment into ASEAN countries are very large compared with other investor countries. The diversity of the investment sector in ASEAN that is available to increase the economic significance of this region for these countries. Cooperation-economic cooperation with the U.S. and other countries continues to increase. Although foreign investment in its development in this region are generally somewhat lagging compared with the East Asia region. But in some sectors, economically, politically and strategically important Southeast Asia remains. Southeast Asia is a potential market for industrial products and services, and as a major area of natural resources is important, including oil and natural gas.

Three “entrance” Southeast Asia: Straits of Malacca, the Sunda Strait and the Lombok Strait are a key milestone in the world trading system. Become as important as political and economic disputes concerning sea route across the archipelago in the South China Sea Spartly. Strait of Malaka itself is a strait that connects the Indian Ocean with the Pacific Ocean, as well As Objectionable shortest path which lies between India, China and Indonesia, the strait is therefore regarded as “chokepoints” of Asia.

And the benefits of the ASEAN region is supported by the potential possessed by Indonesia as the ASEAN leaders of Indonesia’s geographical position is very strategic, capable of connecting the all the countries in Asia, especially Southeast Asia. Then Indonesia has a base of wealth natural resources, a complete comparison with neighboring countries. Many primary commodities in the agriculture and mining into the ASEAN countries from Indonesia. Thus, actually the ASEAN countries have relatively high dependence on Indonesia.

Indonesia has the largest population in ASEAN, namely 235 million inhabitants. This is certainly a large and lucrative market for Indonesia itself and its neighboring countries. Economically, the market potential is huge if the number of people with skills or a greater purchasing power. Here, along with economic growth is always positive, has increased the purchasing power of the people of Indonesia.

Besides, Indonesia has a long historical experience with various challenges and obstacles that it faces. Since 65 years ago, Indonesia had been confronted with complex issues both within their own country and across countries (e.g Malaysia, East Timor, and the Netherlands). Indonesia’s membership in international forums like the International Monetary Fund (IMF), Asian Development Bank (ADB), Islamic Development Bank (IDB), the G20 and G33 with an increasingly significant role. Even in the G33, Indonesia occupied the position as one of the chairman. For the G20, Indonesia does not lose its strategic position compared to South Korea, China, Japan, U.S. and European countries are relatively more advanced than the economic, social, cultural, and political security.

And in real Indonesia successfully manage its economy properly so as to remain positive growth on average six per cent since the Asian crisis in 1998. This success must be one that rational considerations to put Indonesia as the ASEAN leaders. And that we need to realize, with the position as leaders of ASEAN, Indonesia will be able to become a pioneer in strategic decision making in the ASEAN regional level. And able to make ASEAN as an important and significant market for the global economy in the future.

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