South-East Asia is on the path to become a single market. The world should take note of it

The EU regards the formation of the single market – which guarantees that goods, services, people and capital can move freely throughout the bloc – as one of its greatest achievements. Other regional groupings have similar aspirations. The GCC countries have long been building a common market in pursuit of economic integration . And where I live, the 10-country Association of South-East Asian Nations declared itself an “Economic Community” in 2015, with the aspiration that its combined population of more than 670 million would also become a single market. Malaysia was chair of Asean that year, and as a senior fellow at the Institute of Strategic and International Studies Malaysia at the time, I can remember there was real excitement in our discussions about the summits. It felt as though the host country was going to give the association, always criticised for not doing enough, a decisive push forward. A former head of the foreign ministry even suggested we rename the group the “Asean Community”, in a possible nod to the EU’s original name, the European Community. Enthusiasm for, and identification with, Asean may have been wider among political, academic and business elites than general populaces, but quite a lot of work towards creating a single market had already been achieved by 2017, when I was researching an essay to mark the association’s 50th birthday. Tariff barriers between the countries had gone a long way to being eliminated, for instance. The problem was that non-tariff barriers and measures – other ways in which trade can be restricted – had been rising dramatically. One example was often raised: when would the day come when a lorry driver could set off from Vietnam, and drive through Laos, Cambodia, Thailand and Malaysia, all the way to Singapore, with just one set of papers? I asked Firdaos Rosli, then a colleague at the Institute, now the chief economist at the AmBank group. “That’s going to take a long, long time,” he replied. “Also, ad hoc rules and regulations sometimes just appear out of nowhere. And some of our own rules are not even clear to our own people.” As it happens, a system to enable that very scenario was set up in late 2020, but private sector demand to apply for the permit has been very low, partly because the Asean single customs declaration was set up during the Covid-19 pandemic when there were all sorts of travel restrictions, while some companies have reported confusion over the applicability of local regulations and lack of information from their own countries’ transport authorities. All of which makes a recent initiative all the more significant. A few days ago, a new freight train service – the Asean Express – completed its inaugural return journey from Kelana Jaya inland depot in Malaysia’s Selangor state to its destination in Chongqing, China, and back. “This service is not just about connecting Malaysia, Thailand and Laos with China, but also strengthening trade ties across the entire Asean region,” said Malaysian Transport Minister Anthony Loke, who noted that the time from Malaysia to China was nine days, compared to 14 to 21 days by sea. “With investments and expertise – with China and Malaysia both playing our roles – the dream to complete the Pan Asian Railway network is entirely possible within a decade.” Also known as the Kunming-Singapore railway, this is a long-planned concept to connect China and Singapore with all the countries in mainland South-East Asia – and even farther. For as Mr Loke said at an Asean meeting last month, “once you reach Kunming, you can reach Central Asia and even Europe”. Asean has been behind this idea for decades (the new express train is not an official Asean project, but a collaboration between the national railway companies), and this kind of improved connectivity is a key part of creating a single market. It is also completely aligned with China’s Belt and Road Initiative. Some persist in imagining the BRI is a plot, but this is a perfect example of the “win-win co-operation” that Beijing frequently talks about. Funnily enough, if we go back to the declaration of the Asean Economic Community in 2015, analysts have noted that the US at the time was expected to play a major role in the creation of an integrated Asean powerhouse, through the Trans-Pacific Partnership Agreement. In fact, the then US Trade Representative’s Office called the TPP “a high-standard, ambitious, comprehensive, and balanced agreement that will promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in our countries; and promote transparency, good governance, and enhanced labour and environmental protections”. But then Donald Trump withdrew the US from the TPP in one of his first actions in the White House. American politicians focussing evermore closely at the Asia-Pacific region should take note, and if they are wise, look not for a threat, but an opportunity. If Asean were a single state, it would already be the fifth-largest economy in the world, and it is predicted to be the fourth largest by 2050. With its tradition of consensus and non-interference in other countries’ internal affairs, Asean may never be politically unified (hence the lack of action over Myanmar). That should not obscure the fact that the group is more than capable of making progress on the economic front. And as far as most members are concerned, it’s not either the BRI or US President Joe Biden’s Indo-Pacific Economic Framework for Prosperity. They’ll take both, thank you very much, if they help with the dream of making an Asean Economic Community and a single market a reality. Whether it be one railway or one port at a time, the focus is on connectivity and trade. Isn’t that a better path than talking about “taking sides” all the time?