Economic competition in the international community is then international organizations show their role importance in regulating the course of economic activity between countries to maintain economic stability.
Maintaining economic growth is considered a long-term problem for every country. There are various factors that hinder economic growth for the country, one of which is the inability of the country to meet domestic needs. Therefore, countries need cooperation in special forums to discuss how each country can meet its national needs through cooperation with other countries (Cahyanti, 2017).
In an effort to improve the regional economy, countries tend to join regional organizations. In Southeast Asia, ASEAN is a regional organization empowered to assist the region. ASEAN stands for (Association of Southeast Asian Nation) a regional organization as a forum for cooperation between countries in Southeast Asia (ASEAN, 2020).
ASEAN was founded on August 8, 1967 in Bangkok, Thailand. The founding countries are Indonesia, Malaysia, Singapore, Philippines, Thailand. ASEAN creates cooperation in the fields of trade, investment, employment, alleviating people from poverty, and reducing development gaps in the region. ASEAN has an important role in growing the economy of the Southeast Asian region with several strategies such as the establishment of AFTA and MEA (ASEAN, 2020).
The ASEAN Free Trade Area (AFTA) as well as the ASEAN Economic Community (MEA) function as a cooperation forum to encourage economic growth in countries in the region, with the aim of encouraging national economic growth for each country involved in regional cooperation by creating cooperation in the field of trade, investment, employment, alleviating people from poverty, and reducing development gaps in the region (Riyad, 2012)
The role of AFTA and AEC in Southeast Asian Economic Improvement
When viewed, ASEAN member countries are developing countries or known as Third World Country. In general, developing countries have the same problems, especially in the economic field. So it requires a way to meet national needs between countries. This encourages the state to negotiate the right way to advance the economy together (Riyad, 2012).
In realizing this goal, the ASEAN region has made several focuses that contain the pattern of activities carried out by the international community in ASEAN, including:
- ASEAN Free Trade Area (AFTA). AFTA was established and approved at the 4th ASEAN Summit in 1992, in Singapore, however, its activities were only implemented in 2003, which aims to make ASEAN a competitive place of production, so that ASEAN products have strong competitiveness in the market. global.
- The ASEAN Economic Community (AEC) or better known as the ASEAN Economic Community, started running in 2015, but has been initiated since 1997, at the II ASEAN Summit, in Kuala Lumpur. The creation of this economic integration area is formed so that differences in economic background between countries in the region do not become an obstacle for the international society to increase the economic growth of its country. Therefore, in the ASEAN Economic Community, economic activities run freely. Such as freeing customs between countries within the ASEAN region and freeing people to work from one country to another within the ASEAN region (Riyad, 2012).
Free trade in its regional area creates a pattern of export-import activities that can encourage the economy of each member and its region to increase further. The Trade Area also increases cooperation from outside the region. It can be seen that the growth of several countries increased in 2011, such as Indonesia whose GDP increased by 11%, Singapore 9%, Thailand 8%, Malaysia, the Philippines and Vietnam by 5%, Brunei 4% (Rezki, 2011).
Impact on Members in the Southeast Asia Region
The efforts to increase economic growth in ASEAN certainly have an impact, both positive and negative impacts. the enactment of the MEA (ASEAN Economic Community) has a positive impact on ASEAN member countries. Southeast Asia region has good economic prospects. This area is an area that has the second largest economic growth in the world. From an economic and demographic perspective, Southeast Asia is the region with the fastest economic growth, and the economic consumption growth rate reaches 4% per year compared to the world’s only 1.8% (Rezki, 2011).
Meanwhile, the ASEAN Economic Community (AEC) has a role to play in realizing economic integration in the region by assisting and supervising all ASEAN member countries to conduct trade cooperation such as goods, services, investment, free skilled labor and freer flow of capital, as outlined in the ASEAN Economic Community. ASEAN has four pillars, which play a role in regulating activities among its regional members, namely; ASEAN as a single market and based on a single production supported by free analysis, ASEAN as a region with high economic competitiveness, ASEAN as a region with equitable economic development through the growth of small and medium enterprises.
The role of the Free Trade Area (AFTA) and the ASEAN Economic Community has a positive influence on the international society to develop its business without fear of obstacles. If economic activities continue to run well, the economic growth of each country will also increase. As previously explained, after the AFTA, especially in 2011, there was a 11% growth in Indonesia’s capital, 9% in Singapore, 8% in Thailand, Malaysia, the Philippines, and in Vietnam 5% (Rezki, 2011).
