What the ASEAN Economic Community Will Mean for Businesses: A Look at the Case of Myanmar, Studies in Trade and Investment No. 86

Book28 Dec 2015

With the ASEAN Economic Community (AEC) coming into effect, the main purpose of this publication is to serve as a resource to businesses, particularly in Myanmar and the other CLMV countries, in navigating the coming changes. The guidebook is divided into three main parts: the introduction provides the background and context of the AEC’s development; Section I outlines the main AEC policies and attempts to explain the real-world outcomes of such policies; and Section II then analyses how the policies of the AEC will affect businesses, with a greater focus on SMEs, as they make up the vast majority of businesses in Myanmar and other CLMV countries. The central conclusion of this guidebook is that despite the numerous opportunities the AEC will provide to the private sector, the reality for most CLMV businesses is that they will need to focus, at least initially, primarily on remaining competitive domestically in a more open and regionally integrated environment. This is due to several disadvantages they face in comparison to companies from the more economically powerful countries in the region. This includes underdeveloped domestic and cross-border infrastructure, less competitive human resources, lower quality technology and equipment, and a more challenging business environment. Thus, while some CLMV businesses may be able to benefit from the opportunities to export or link to more efficient production networks, the majority should place greater emphasis on being able to compete against foreign-based businesses expanding into their domestic markets. Although the ASEAN Economic Community has often been discussed as “AEC 2015”, it has become increasingly clear that many reforms will not be in place by the official launch date, and that the year 2020 would be a more realistic target for full implementation of the agreement. Consequently, CLMV businesses still have time to prepare for the advent of the AEC by, for example, increasing training of their employees, focusing on product and process innovation, and incorporating more advanced technologies and processes. There is time, too, for CLMV governments and development organizations to address the main impediments to the private sector, such as lack of access to finance, corruption, and insufficient infrastructure.