ASEAN Toward Global Market Integration: Enhanced Connectivity & External Relationship


Arrizka Permata Faida

Best 10 Author of Call for Essay: ASEAN Community Post 2015

The establishment of the ASEAN Economic Community (AEC) in 2015 is a major milestone in the regional economic integration agenda in ASEAN.  With population over 622 million people and a nominal combined GDP of US$2.6 trillion in 20142 is fast becoming a major economic force in Asia and a driver of global growth. ASEAN has become the third largest economy in Asia and the seventh in the world. ASEAN become more influential, with widening markets regionally and globally. This essay focus on AEC fourth pillar3 refers to integration with the global economy to become strength as a region in economy and sustainable in needs to respond to global trends and be proactive in seizing new opportunities toward global market integration.


Following the successful implementation of the AFTA, the ASEAN Leaders adopted the ASEAN Economic Blueprint as a master plan guiding the establishment of the ASEAN Economic Community 2015. The stated goal is a regional economic integration – a single market and production base and the free movement of goods, services and labor. ASEAN economic integration effort contributed fundamentally to the regional economic foundation, ensuring the continuing strong performance of our national and regional economies.

External Economic Relationship

In globalization era, the forms of external relations have become more important. ASEAN possesses immense growth potential and is a notable global hub of manufacturing and trade, as well as one of the fastest-growing consumer markets in the world.

AKFTA is focusing to strengthen economic, trade and investment cooperation by progressively liberalizing and promoting trade in goods and services as well as create a transparent, liberal and facilitative investment regime. 4

In  trade of goods and service, imports  from  ASEAN to Korea make  up  about  10%  of  Korea’s  total  inbound  shipments, the top items imported from ASEAN have a much higher share compared to world  imports  in  terms  of  amount.  It is possible to assess that ASEAN is an important trade partner. Korea stood at the 7th largest trading country, and ASEAN represents an important trading partner (for Primary Products as table above) for Korea. Korea’s total trade volume with ASEAN in 2014 amounted to $138 billion USD, making ASEAN Korea’s second largest trading partner, after China at $235.4 billion USD. Out of Korea’s total 2014 trade volume of $1,098.2 billion USD, ASEAN’s share was 12.6%, only after China at 21.4%.

Figure 1. Korea’s Import Item from ASEAN by Industry (1990~2009)


The EU was ASEAN’s second largest trading partner after China in 2013. With the portion for around 13% of ASEAN trade. ASEAN is the EU’s 3rd largest trading partner outside Europe (after the US and China) with more than €246 billion of trade in goods and services in 2014.5 The EU is by far the largest investor in ASEAN countries accounting for 22% of total FDI (Foreign Direct Investment) inflows in the region. EU companies have invested an average €19 billion annually in the region (2012-2014). The main imports from ASEAN to the EU are machinery and transport equipment, agricultural products as well as textiles and clothing.

Figure 2. EU-ASEAN Negotiations History


The EU makes a negotiations with individual ASEAN Member States in different year, but also cooperates with the ASEAN region as a whole.6 EU and ASEAN as two leading regional integration initiatives partnering in integration and connectivity.7

The US is the 3rd largest trading partner for ASEAN. ASEAN investment in the US has grown over 1,400% and US investment in ASEAN has increased 169% since 2001. US investment in ASEAN is almost $190 billion exceeding all other destinations in Asia, while ASEAN investment into the US exceeds $27 billion. The importance of America’s current and future relationship with ASEAN mutually beneficial growth will require greater investments in America’s political, economic, and diplomatic engagement with ASEAN. Recognizing its geostrategic importance, the US cooperates with ASEAN and its member states on a multitude of initiatives ensuring security and stability in the region. ASEAN investment in the US is growing much faster than the investment coming from other regions.

Figure 3. US-Asia Direct Investment,through 2012


Participation in global supply networks

 ASEAN requires an integrated approach to connectivity. To enhance participation in global supply networks by:

  • Adoption of international standards and regulation in production and distribution
  • Developing a comprehensive package of technical [efficient logistics and distribution services] to upgrade industrial capabilities and productivity. 8
  • Optimize their production process (from raw materials to finished products) through outsourcing and offshoring of activities at competitive cost and quality.


A competitive economic region is a connected region. ASEAN is one of the largest economic zones in the world; a growing hub of consumer demand. Process toward global market integration has shown. Global market integration could potentially combine to produce opportunities and generate challenges,that is higher costs, or complicated regulations to ASEAN countries. That will help to improve the living standards of the ASEAN population through economic development. ASEAN also intends to improve global supply networks, as well as expand trade, and improve transportation and infrastructure.


Burnson, Patrick. ASEAN is Refining Supply Chain Networks. Accessed on October 29.

Cheong, Jaewan. Korea’s Intermediate Goods Trade with ASEAN. Accessed on October 28.

European Commission. Association of South East Asian Nations (ASEAN). Accessed on October 28.

European External Action Service. The EU-ASEAN relationship in twenty facts and figures. Accessed on October 29.

Supply Chain Asia. Building Resilient ASEAN Supply Chains. Retrieved on October 29.

The East-West Center. ASEAN MATTERS FOR AMERICA/ AMERICA MATTERS FOR ASEAN. Retrieved on October 28.

Vinayak HV, Fraser Thompson, and Oliver Tonby. Understanding ASEAN: Seven things you need to know. Retrieved on October 28.

AEC                           ASEAN Economic Community

AFTA                         ASEAN Free Trade Agreement

AKFTA                     ASEAN-Korea Free Trade Area

ASEAN                     Association of Southeast Asian Nations

EU                              European Union

1  : Student at Department of Management, School of Business and Management, Bandung Institute of Technology

2 : ASEAN. ASEAN Economic Community. Accessed October 26,2016.

3 : The 4 pillars are a single market and production base; a competitive economic region; equitable economic development; and integration with the global economy.

4 It also aims to explore new areas and develop appropriate measures for closer economic cooperation and integration; facilitate more effective economic integration of the new ASEAN Member States and bridge the development gaps; and, establish a cooperative framework to further strengthen economic relations among the countries. Retrieved from :

5Data retrieved from: European Commission Website.

6 Framed by a biannual ASEAN-EU Trade and Investment Work Program

7 In February 2014, the ASEAN Connectivity Coordination Committee visited the EU.

8 To achieve this requires support for physical infrastructure as well as improving cross-border agreements and institutional connectivity.