With the arrival of the new year, Southeast Asia has finally embarked on an important new journey that has been years in preparation. The hope is that the Asean Economic Community (AEC) will bring a new era of growth, though many say there won't be conspicuous changes for some time yet.
Expectations run high as the 10 Asean member states solidify their presence as one, obliging them to establish a single market and production base where traded goods move freely on a tariff-free basis, where there is better flow of capital and investment, and where workers can enjoy visa-free movement to work anywhere in the region.
That is the beautiful picture the promoters of the AEC have been painting, but the less attractive reality is that only a small part of it has been completed. Many obstacles remain to completing the integration blueprint, from limited investment in both hard and soft infrastructure to widespread political fragmentation and regulatory confusion.
Despite slow progress on the administrative side, Asean still presents businesses with abundant, untapped opportunities. The region is home to 625 million consumers making it the world's sixth largest economy with total gross domestic product (GDP) of US$2.57 trillion.
Asean's global share of GDP is only 3.2%, while its population makes up 8.7%, but analysts believe it can become the world's fifth biggest economy by 2018, thanks to strong growth by an annual average of 5.6% forecast for the next five years.
In the midst of a global slowdown, the direction has been very conducive to Asean growth. The positive demographic feature of a young workforce, coupled with significantly low wages, enhances the region's attractiveness for manufacturing investment, as China becomes more expensive. As well, Asean is already the world's fourth biggest exporter.
"Southeast Asia now is the most dynamic market in the world. We need to capitalise on that," says Bambang Brodjonegoro, Indonesia's finance minister. "The way we capitalise is not through a mere single country. If one country tried to push itself, I don't think it would be recognised. But Southeast Asia is really recognised.
"Anything that happens in Southeast Asia is Southeast Asia's matter, not just an individual country's matter. This is how the global environment looks to us. We are too small as an individual country, but as a community, it's quite significant."
Asia Focus spoke to other experts on Asean who agree that the region has come a long way relative to where it was before its establishment in 1967, but that a very long journey remains before it can achieve its ultimate goal of a single market and production base.
Asean was created originally to promote peace and stability, and accelerate economic growth during turbulent military and political times, and its role evolved over time as conditions improved.
"I think it's amazing that in 2007 we embraced the concept of one Asean community and in 2015 we launched it. Although I have been critical of the pace of economic integration, it is only because a lot more was anticipated," said Nazir Razak, Malaysia's representative and co-chair of the Asean Business Club and chairman of CIMB Group.
"The AEC can only boast of near-zero tariffs. Intra-regional trade remains low at about 24% because non-tariff barriers remain very high. Also, many initiatives to bring down barriers or ease cross-border flows of trade and investment have not got very far."
The fact that non-tariff barriers remain high, he said, was a symptom of the fundamental tension between economic integration and national sovereignty. The much-lauded "Asean Way" is about unanimous decision-making, but it's also been about obsession with national sovereignty and reluctance to empower any supranational body.
"Integration will be extremely slow unless we have an empowered body to drive it, and governments need to accept that some decisions that are in the best interests of Asean, as a whole, may not be in the best interests of every Asean country," Mr Nazir explained.
However, "The important point is that every country will ultimately be better off with regional economic integration."
With the launch of the AEC, this is supposed to be a stimulating year for the region, but "I am not optimistic about 2016", Mr Nazir said.
First, he added, most governments will be distracted by the need to manage global economic headwinds. Second, now that the AEC has finally been launched officially, there will be a natural tendency to take our "foot off the pedal", he cautioned.
Chia Shuhui, a risk analyst for Asia at BMI Research in Singapore, says Asean in 2016 will continue to try to stand up to China over the South China Sea issue, and to sort out the technical difficulties that come with implementing the AEC, and persist with ongoing negotiations on the Regional Comprehensive Economic Partnership (RCEP), a huge pact linking Asean with India, China, South Korea, Japan, Australia and New Zealand.
Different political systems across various countries, she said, were likely to impede attempts at a solution to greater economic cooperation despite strong commitments to improving trade ties. Each country tends to pursue divergent foreign policies in line with its specific economic interests, which could undermine Asean unity and weaken its ability to bargain with larger trading partners.
"There are 10 countries in Asean, each at different stages of economic development, which means that they need to pursue different economic policies regardless of what they have agreed to do under the AEC," Ms Chia said.
Lack of harmonisation of standards appears as a drawback to creating the free-flowing Asean that people wish for. For that reason, she is "not confident" that the region is strong enough to achieve a single-market plan.
The low level of real integration has resulted in tepid intra-regional trade, in spite of the fact that Asean remains the fastest growing region in the world. Intra-Asean trade has contracted each month since July 2015, and has also underperformed global trade since June 2013, according to the Financial Times.
"With most intra-regional trade consisting of intermediate products that are ultimately headed to the EU, China, and the US, there is not much that the region can do to increase intra-regional trade," Ms Chia said.
"The harmonisation of customs processes to speed up transit time for customers and lowering of tariffs will provide some help."
In terms of goods, Ms Chia said, product certification will be a problem as different countries have different standards for certification. In the area of electronic products, for instance, different countries use different voltages and standardising this "will be difficult", she said.
"The nature of services, where not all services are exportable, will also mean that a single market will not be possible," she added.
Labour also poses the biggest problem with countries wary of bringing in too many foreign workers because of potential social tensions. Standard certification of labour qualifications is also lacking across Asean and this will further hinder the flow of labour across borders as qualifications may not be regionally recognised, said Ms Chia.
Financial liberalisation is another critical issue, in her opinion, to foster AEC regionalisation, but Asean's banking integration framework will not be implemented until 2020. Some countries are more reluctant than others to allow foreign investment in their banking sectors.
The Asean-6 countries -- Indonesia, Malaysia, Thailand, Singapore, the Philippines and Vietnam -- would see greater improvement after the AEC, but the other four countries might be at risk of losing out because of underdeveloped financial services.
The next phase of Asean integration will continue to be directed toward consolidating the Asean community vision 2025 blueprint aimed at sustaining Asean centrality that is politically cohesive, economically integrated and socially responsible.
However, Mr Nazir said, with the launch of the Asean 2025 framework, "I worry that it now becomes a 10-year project and there will be little pressure for significant progress in year one. And finally, we are still waiting for the new implementation plan, so again, things will slow down.
"I hope I will be proven wrong because I truly believe in the need for, and huge potential of, an integrated Asean economic community."
THAILAND'S TIME
A key feature of the AEC, especially where Thailand is concerned, will be enhanced cross-border trade. This is to be made possible by streamlined customs, inspection and licensing procedures among other reforms, though changes have been slow to materialise in some areas.
As trade grows across borders, investment tends to follow. The AEC could also be an important stimulus to generate more regional investment. Intra-Asean investment, especially to Cambodia, Laos, Myanmar and Vietnam -- collectively known in Asean-speak as the CLMV markets -- has been growing steadily since 2009, and the pace is expected to continue.
Thailand is in an especially good position because its products are already well-known and accepted in the four less developed Asean member countries.
"For Thailand, the opening up of the AEC will only be a benefit because it can boost exports, in line with the country's desire for a stronger export sector," said Suthad Setboonsarng, former deputy secretary-general of the Asean Secretariat.
Currently, Thai exports to Asean countries account for about 25% of total exports, the highest relative to other destinations. "The rapid pace of growth of the CLMV markets in particular will only be advantageous to Thailand's recovery," said Mr Suthad.
Foreign direct investment to Thailand, he said, was likely to be slower, but investment outflows from Thailand should accelerate exponentially, especially to the CLMV economies.
"Investing outside [of Thailand], despite causing capital outflows, will contribute positively to our economy," Mr Suthad said.
One reason is that going abroad means Thai businesses will be exporting more goods that have a competitive advantage. This eventually generates a return on investment and profits that go back to the home country, which helps promote more stable long-term economic growth.
"Only those who spread their investment throughout the region will benefit from being in Asean. We have to go out to get what Asean is meant for, or we will lose," he said.