ASEAN ECONOMIC COMMUNITY 2015 ASEAN Business & Investment Summit 20 November 2015, Kuala Lumpur, Malaysia 1

OUTLINE OF PRESENTATION 2 OUTLINE OF PRESENTATION I. ASEAN Economic Integration – An Overview II. AEC - what we set out to do III. AEC - where are we now IV. AEC Scorecard Report & ASEAN Integration Report 2

ASEAN ECONOMIC INTEGRATION – AN OVERVIEW 3 ASEAN ECONOMIC INTEGRATION – AN OVERVIEW 1992 Framework Agreement on Enhancing ASEAN Economic Cooperation 1997 ASEAN Vision 2020 1998 Hanoi Plan of Action 2003 Declaration of ASEAN Concord II 2007 ASEAN Economic Community Blueprint AEC 2015 and Beyond

AEC - WHAT WE SET OUT TO DO 4 AEC - WHAT WE SET OUT TO DO ASEAN ECONOMIC COMMUNITY STRATEGIC SCHEDULE OF THE AEC BLUEPRINT (2008-2015) Pillar 1 Single Market & Production Base Free flow of goods Free flow of services Free flow of investment Freer flow of capital Free flow of skilled labor Priority Integration Sectors Food, agriculture and forestry Pillar 2 Competitive Economic Region Competition policy Consumer protection Intellectual property rights Infrastructure development Taxation E-Commerce Pillar 3 Equitable Economic Development SME development Initiative for ASEAN Integration Pillar 4 Integration into the Global Economy Coherent approach towards external economic relations Enhanced participation in global supply networks 4 4 HUMAN RESOURCE DEVELOPMENT RESEARCH AND DEVELOPMENT

AEC - WHERE ARE WE NOW IMPLEMENTATION RATE 5 2007 AEC Blueprint Launched * 316 measures 2008-2014 * Regular review to ensure measures are relevant * Addition/deletion of measures 2015 * 506 measures * As of end Oct, 469 out of 506 measures implemented (92.7%) AEC - WHERE ARE WE NOW IMPLEMENTATION RATE

AEC - WHERE ARE WE NOW LOW HANGING FRUITS 6 AEC - WHERE ARE WE NOW LOW HANGING FRUITS Tariff Elimination Rules of Origin ASEAN Single Window Self Certification ASEAN-6 99.2% CLMV 90.86% 40% local content Change in tariff subheading Scale down pilot project concluded Full-fledged pilot project commenced Certified manufacturer and trader to decide 2 pilot projects in place

AEC - WHERE ARE WE NOW LOW HANGING FRUITS 7 AEC - WHERE ARE WE NOW LOW HANGING FRUITS One Standard, One Test, Accepted Everywhere Harmonization of Standards & Technical Requirements EEE (121) AU (15) PF (5) TMHS (17) PM (7) MD (15) RB (46) Accreditation & Conformity Assessment EEE 16 Testing Laboratories & 5 Certification Bodies GP 4 inspection services Mutual Recognition Arrangement Implemented EEE / GP Development Auto Products / Food Hygiene Building & Construction Harmonization of Regulatory Regime EEE / CS / MD PF / TMHS AU – Automotive CS – Cosmetic EEE – Electrical & Electronic Equipment GP – GMP Inspection of Manufacturers of Medicinal Products MD – Medical Device PF – Prepared Foodstuff PM – Pharmaceuticals RB – Rubber Based TMHS – Traditional Medicine & Health Supplement

Financial Integration Movement of Natural Person 8 AEC - WHERE ARE WE NOW LOW HANGING FRUITS .C National Trade Repository Tariff /MFN Preferential (FTA/CEP) ROO / NTMs Trade & Customs Law/Rule Services 8 packages concluded (WTO Plus) 9th package being finalized 10th package being negotiated Financial Integration 6 packages of financial services concluded (WTO Plus) ASEAN Banking Integration Framework ASEAN Exchanges Movement of Natural Person MRA Concluded Architecture, Accountant, Engineer, Dental, Medical, Nursing, Surveyor, Tourism Professional Operationalized Architect / Engineer

Intellectual Property Right 9 AEC - WHERE ARE WE NOW LOW HANGING FRUITS 9 AMS have consumer protection law in place Complaint and redress mechanism ASEAN Patent Examination Cooperation ASEAN TM View 8 AMS have competition law in place Strategy and Tools for regional competition advocacy Liberalization Facilitation Promotion Protection Annual Peer Review Investment Policy Review Investment Consumer Protection Competition Intellectual Property Right

Agriculture, Fishery and Forestry 10 AEC - WHERE ARE WE NOW LOW HANGING FRUITS Agriculture, Fishery and Forestry Energy Minerals ICT Best practices – GAP, GAqP, GAHP, ASOA Regional reference framework on phased approach tp forest certification 8.5% reduction in energy intensity 25% renewable energy share in installed power generation Reduction of International Mobile Roaming Rate ICT skill standard and certification framework developed ASEAN Minerals Database ASEAN Minerals Trust Fund

AEC - WHERE ARE WE NOW LOW HANGING FRUITS 11 AEC - WHERE ARE WE NOW LOW HANGING FRUITS Air Transport ASEAN Open Sky for both cargo and passenger services Greater air connectivity with China Land Transport Designated roads and highways linking ASEAN Highway Network physically connected Regional Road Safety Strategy put in place Sea Transport Implementing Strategy for ASEAN Single Shipping Market formulated Prioritized routes for ASEAN RO-RO Shipping Network and Short Sea Shipping identified Tourism MRA on Tourism Professional Concluded ASEAN Community-Based Tourism Standard Established

AEC - WHERE ARE WE NOW LOW HANGING FRUITS 12 AEC - WHERE ARE WE NOW LOW HANGING FRUITS Entry Into Force Size of Market Size of Economy ($) Total Trade ($) ASEAN 1992 0.622 B 2.57 T 608 B ACFTA (China) 2005 1.990 B 12.93 T 366.5 B AKFTA (Korea) 2007 0.673 B 3.98 T 131.5 B AJCEP (Japan) 2008 0.749 B 7.17 T 229.1 B AANZFTA (Aus-Nzl) 2010 0.651 B 4.22 T 81.1 B AIFTA (India) 1.898 B 4.63 T 67.7 B AHKFTA (Hong Kong) Jul 2014* 0.630 B 2.89 T 99.4 B RCEP May 2013* 3.472 B 22.63 T 1,484 B 12 12 * Commencement of Negotiations US$ 2.53 T

AEC - WHERE ARE WE NOW UNFINISHED AGENDA 13 AEC - WHERE ARE WE NOW UNFINISHED AGENDA eLimination of non-tariff barriers integration of SME inTO regional production networks and global supply chain enhancement and development of existing/new infrastructure to support sustainable growth narrowing development gaps within and between ASEAN Member States conclusion Of ON-GOING FTA negotiations to serve as a building block to region-wide FTA

IMPACT ON ASEAN ECONOMIC PERFORMANCE 14 AEC – WHERE ARE WE NOW IMPACT ON ASEAN ECONOMIC PERFORMANCE THIRD LARGEST ECONOMY IN ASIA SEVENTH LARGEST ECONOMY IN THE WORLD 622 MILLION PEOPLE (53% BELOW 30 YRS OLD) 2007 2014 GDP US$ 1.325 T US$ 2.574 T GDP PER CAPITA US$ 2,343 US$ 4,135 TRADE US$ 1.61 T US$ 2.53 T INVESTMENT US$ 85 B (5% OF WORLD FDI) US$ 136 B (11% OF WORLD FDI)

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