Customs & Financial Infrastructure: Challenges for ASEAN Economy

Top two challenges for ASEAN economic integration

Despite ASEAN implementing the AEC (ASEAN Economic Community) pact since 2015, it’s undisputed that ASEAN still faces economic challenges. At the end of a two-day meeting in Chiang Rai, Thailand, which was attended by ASEAN finance ministers and central bank governors, the two challenges they stated that prevents the region to fully integrate economically are customs cooperation and financial infrastructure.

One reason for this is because one of the main goals of the bloc is to have an efficient, fast, and paperless customs-transit system that can boost trade and investment in the region. As such, by improving these two aspects, the region will be able to strengthen their economic integration and improve the redistribution of economic well-being. 

What is ASEAN Single Window?

One initiative spearheading ASEAN economic integration is ASW (ASEAN Single Window). This project aims to use electronic solutions to lower logistics costs, raise productivity in private and public sectors, and improve border customs by expediting processes in border customs checkpoints. By doing so, customs procedures, tax claims, goods in transit, and licensing approval can be completed more efficiently. 

According to Thai Minister of Finance Apisak Tantivorawong, there are five to six countries in the region that are ready to link their own national single window with other countries in the region and expect all 10 countries to enter ASW by year-end. 

Other initiatives to drive ASEAN integration

To further drive regional economic integration, the bloc had deliberated on several initiatives — including common inspection of goods and leveraging digital payment solutions.

The idea of having common inspections of goods at border points is so that goods won’t need to be inspected twice by the exporting and importing country, thus reducing the time required to inspect the goods and lowering logistics cost. As of now, only Thailand and Laos have joint inspections at the border. 

Similarly, Thailand is seeking to promote a QR-code payment system in the region. In Thailand itself, people can use mobile apps to conduct financial transactions and bank accounts can be linked to phone numbers. Other countries in ASEAN, such as Cambodia, Laos, and Indonesia, are looking favorably at this idea.

Indonesia is expected to introduce new measures to stimulate GDP growth as Jokowi’s second term starts soon – which includes labour, infrastructure and tax reforms.
Due to economic slowdown and strengthening baht, Bank of Thailand had cut its benchmark interest rate to 1.5%. Thailand economy forecasts Thai GDP to grow by 3.3%.
The digital economy in ASEAN is expanding faster than predicted, with the e-commerce market value to exceed Google’s forecasted US$200 billion by 2025.
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