Tackling economic shortfalls in Asean

The Sun

28-05-2025

AS Malaysia hosts the 46th Asean Summit, 2nd Asean GCC-Summit and Asean-GCC-China Summit, a significant milestone has been announced: the Asean Economic Community (AEC) Blueprint 2025 has reached a 97%
implementation rate.
While commendable, this figure marks not an end but a critical juncture to reflect, recalibrate and reimagine Asean's economic trajectory in a complex global environment.
Formally launched in 2015, the AEC represents Asean's most ambitious
push towards regional integration.
Grounded in five interconnected pillars – economic cohesion, competitiveness and innovation, sectoral cooperation, inclusivity and resilience, and global engagement – the blueprint has guided the region through significant transformation.
Asean now stands as the fifth-largest global economy and the second-largest recipient of foreign direct investment.
Intra-Asean trade, long criticised for its modest share of overall trade, has nonetheless grown substantially in value, increasing from US$353 billion (RM1.49 trillion) in 2007 to over US$856 billion by 2022.
Tools like the Asean single window initiative have further facilitated cross-border trade, enhancing regional supply chain integration.
Yet, these achievements have obscured persistent structural gaps.
Intra-regional trade remains proportionally low compared to blocs like the European Union or US-
Mexico-Canada Agreement, reflecting fragmented regulations and non-tariff barriers that continue to undermine the promise of a truly unified market.
Even as Asean becomes more globally connected, the integration of
its markets still falls short of potential, revealing a paradox that demands urgent resolution.
Progress under the AEC's second pillar, which is fostering a competitive and innovative region, has also been uneven.
All 10 Asean countries now possess competition laws and regulatory authorities, up from just five in 2014. However, innovation capabilities remain concentrated in a few member states such as Singapore, Malaysia and Vietnam. Others lag in research capacity, digital adoption and skills readiness, highlighting widening disparities that could threaten the region's collective competitiveness in an era shaped
by technological disruption, green transition demands and intensifying geopolitical tensions.
Without convergence in regulatory standards and innovation ecosystems, Asean risks falling behind.
Connectivity, both physical and digital, has improved markedly but access remains unequal. While major infrastructure and logistics upgrades have reduced costs and streamlined processes, the digital divide continues to disadvantage marginalised populations and less developed economies.
Bridging this gap requires not only expanded broadband access and affordability but also harmonised data governance, cybersecurity standards and digital economy frameworks. Without these foundational reforms, Asean's ambition to become a global digital hub will remain aspirational.
As the AEC Blueprint 2025 nears completion, Asean must look beyond the percentage of goals fulfilled. The Asean Post-2025: Reimagining the Asean Economic Community report
by the ISEAS – Yusof Ishak Institute, rightly points to a shifting context, one marked by climate volatility, inflationary pressures, geopolitical realignments and vulnerable supply chains.
In such a world, resilience must become the cornerstone of the AEC's next chapter. That means integrating climate risk into economic planning, embedding equity and social protection into regional frameworks and developing agile institutions capable of collective crisis response.
Institutional reforms, particularly in monitoring and dispute resolution, are essential to repositioning Asean as a proactive, credible and responsive economic bloc.
Equally important is reaffirming Asean's people-first ethos. Economic integration must deliver tangible benefits to workers, small businesses and communities, not just corporations or state actors.
This calls for deeper cooperation in skills recognition, labour mobility and digital upskilling, alongside expanded access to economic opportunities across all segments of society.
Sustained prosperity will depend not only on growth rates or trade volumes but on how inclusively Asean can unlock the potential of its people.
Externally, Asean must continue to play a constructive role in shaping global trade and investment flows. Its central role in initiatives like the Regional Comprehensive Economic Partnership offers an avenue for reinforcing multilateralism and stabilising regional architecture. But this outward posture must be matched by inward cohesion.
Asean's credibility abroad will increasingly rest on its ability to deliver at home. From blueprint to breakthrough, the AEC has evolved from a set of frameworks into a platform of real consequence. But implementation alone is no longer sufficient.
The challenge now is to build a bolder and more coherent vision – one that enhances integration, deepens trust and places people at the centre. Asean must move beyond box-ticking and towards building a resilient, inclusive and future-ready regional economy.
Ahmad Faiz Yazid is an executive trainee at Permodalan Nasional Berhad and part of the secretariat under Yayasan Sukarelawan