Few changes in ASEAN Economic Community

Although the ASEAN Economic Community (AEC) is slated to begin in 11 months, it appears that the initial impact will be something of a damp squib. The AEC is essentially a free trade region of 10 Asian countries of which Thailand is a partner and due to commence on December 31, 2015. But many economists say that the real changes are far down the road because of protectionist policies still in force which will continue into the new era.

The biggest myth about the AEC is that there will be a free flow of labor across the region. But the whole point is that only highly skilled labor will be able to move – engineers, nurses, doctors, dentists, architects, surveyors and accountants – and even they will have to pass the licensing test of any ASEAN country of which they are not a passport holder. Moreover, any professional intending to work in Thailand must collaborate with a local business and not be independent, yet another reason why the free flow of labor is a myth.

The Thailand Development Research Institute believes that there is no political will to change the regulations any time soon. “Most ASEAN countries, including Thailand, won’t want statutory changes at the beginning. Only Singapore is trying to promote the free flow of skilled labor. Many Thais are afraid they may lose their jobs to foreigners as the service sector opens up, but that won’t happen in the early years.” The Institute adds that there are sound economic reasons for opening up these markets, for example Thailand already has a shortage of nurses, but governments are very reluctant to disadvantage their own populations at this time.

Thailand has far to go in preparing its own people for the medium-term impact of the AEC. Little has been done in improving the skills of the workforce or providing better products and services. The common language of the AEC is scheduled to be English, but Thailand has not been active in offering language courses outside of the tourist industry. Although it is likely that the AEC will encourage more cross-border visits by tourists, the vast majority will still need a work permit, as in the past, if they wish to take up employment. Some believe that the May 2014 military coup in Thailand has caused AEC reforms to be placed on the back burner as the government currently has other preoccupations.

As regards Thai professionals who could work abroad, for example nurses and doctors, they do not necessarily want to take up employment in other ASEAN countries. They may prefer the United States for example or Canada or countries of the European Union where salaries are very much higher than in most of Asia. Many observers are of the view that the shortage of professionals in ASEAN countries has much to do with the wish to practice their profession outside of the Southeast Asian region.

Nor will the advent of ASEAN automatically boost non-ASEAN tourism, at any rate in the early years. Thus all foreigners from the United States or Europe will still need visas for most ASEAN countries, for example Cambodia or Laos or Myanmar, and long stayers will also need them for Thailand as now. “In other words, the advent of the AEC does not in itself change immigration policies in any way,” comments the Institute, “although there has been some progress in offering joint visas for Thailand and Cambodia.” Additionally, the existence of ASEAN will not affect at all the policies worldwide affecting visa regulations for Thais and other ASEAN nationals travelling abroad. For example, Thais wishing to visit the US, the UK and Australia will still face the same visa bureaucracies as now.

The AEC is all about increased competition and liberalization in the 10-member countries. But that will take years to work out across the region and voluntary codes will need to become statutory ones in lengthy parliamentary processes in each individual country. For the moment, it appears that the expectation that matters will change immediately and dramatically from December 31, 2015 is overblown hype.

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