Source :Wikipedia

The Association of Southeast Asian Nations is a political and economic

organisation of ten countries located in Southeast Asia, which was formed on 8
August 1967 by Indonesia, Malaysia,
thePhilippines, Singapore and Thailand. Since then, membership has expanded
to include Brunei, Cambodia, Laos, Myanmar (Burma) and Vietnam. Its aims
include accelerating economic growth, social progress, sociocultural
evolution among its members, protection of regional peace and stability, and
opportunities for member countries to discuss differences peacefully.
ASEAN covers a land area of 4.46 million km, which is 3% of the total land area
of Earth, and has a population of approximately 600 million people, which is
8.8% of the world's population. The sea area of ASEAN is about three times
larger than its land counterpart. In 2012, its combined nominal GDP had grown
to more than US$2.3 trillion. If ASEAN were a single entity, it would rank as the
sixth largest economy in the world, behind the US, China, India, Japan and
Germany.

ESTABLISHMENT AND MEMBERSHIP

It was established on 8 August 1967.
In Bangkok by the five Countries namely Indonesia, Malaysia, Philippines,
Singapore, and Thailand.
-Brunei Darussalam joined on 8 January 1984
-Vietnam on 28 July 1995
-Laos and Myanmar on 23 July 1997
-Cambodia on 30 April 1999

Goals of ASEAN
To accelerate the economic growth, social progress and cultural
development in the region.
To promote ,Regional peace ,Stability ,Southeast Asian studies &

Active collaboration and mutual assistance on matters of common

interest in economic, social, cultural, technical, scientific and
administrative fields.
To provide assistance to each other in the form of training and research
facilities in the educational, professional, technical and administrative
spheres.
To collaborate more effectively for greater utilisation of their agriculture
and industries, expansion of their trade, improvement of their
transportation and communications facilities and raising of the living
standards of their peoples.
To maintain close and beneficial cooperation with existing international
and regional organisations.

ASEAN Surveillance Process

To prevent a recurrence of the financial crisis, the ASEAN finance ministers
agreed in October 1998 on a framework for closer consultations on economic
policies called the ASEAN Surveillance Process.
ELEMENTS: Monitoring of global as well as regional and national economic and
financial developments.
To keep track of the recovery process
To detect any sign of recurring vulnerability in the ASEAN financial s
ystems and economies.
Provides a forum at which ASEAN finance ministers exchange views and
information on developments in their domestic economies, including
policy measures carried out and the progress of structural reforms.

ASEAN + 3 Financial Cooperation

In recognition of the financial interdependence in East Asia, ASEAN has
stepped up its cooperation with China, Japan and the Republic of Korea.

The Chiang Mai Initiative

In May 2000, the ASEAN+3 finance ministers agreed to establish a regional
financing arrangement called the Chiang Mai Initiative. It consists of two
components: an expanded ASEAN Swap Arrangement and a network of
bilateral swap arrangements among ASEAN countries, China, Japan and the
Republic of Korea

Opportunities of ASEAN
ASEAN is observed to be an evolving economic powerhouse and has been
gaining lot of attraction with the international investors and enterprises.
Amidst the growing economic uncertainty in the well developed markets, the
regional association comprising largely of developing nations is brimming with
opportunities in all sectors. It is especially important for companies operating
in the infrastructure sector.
ASEAN Business Outlook Survey 2011, conducted by The American Chamber of
Commerce in Singapore in collaboration with many other related associations
and chambers, revealed that American companies expect the ASEAN market to
become increasingly important for their businesses.
The survey polled 327 senior executives from US companies in Cambodia,
Indonesia, Malaysia, Singapore, the Philippines, Thailand and Vietnam.
73% of the survey respondents said they expect ASEAN's importance to their
business will increase over the next two years, with 85% of them planning to
expand their business in ASEAN.
Trade accounts for nearly 100% of aggregate gross domestic product across
ASEAN the region lives or dies on the dynamism of trade and depends on
investment to fuel growth. ASEAN has made significant progress in this area by
implementing the ASEAN Free Trade Area (AFTA) and reducing over 95% of
tariffs to 0-5% across member countries. To compete for investment,
technology and entrepreneurism ASEAN knows it must follow through on
similar pacts to liberalize investment rules, trade in services and tear down
non-tariff barriers

ASEAN has a significant commodity and natural resources sector. Malaysia and
Indonesia combined produce 85% of the worlds crude palm oil, the major
edible oil consumed in China and in India. ASEAN countries are also responsible
for about 80% of global rubber production. Malaysia and Indonesia have oil
reserves of 9bn barrels. Indonesia has coal reserves of more than 4,000mn
tonnes and has become one of the key suppliers of thermal coal to both India
and China, two of the world's fastest growing energy markets. Its geographic
location, close to both countries, gives Indonesia a competitive advantage in
terms of the costs of transporting coal.
ASEAN GDP projected to grow from US$1.7 trillion in 2010 to US$4 trillion in
2025
Demographics are positive, with a rising share of population in the working-age
bracket
Singapore poised to benefit from growth of Asias high-net-worth population
ASEAN is exciting in part because its a melting pot of different types of
economies. On the one hand, you have a developed economy like Singapore;
on the other hand you have emerging economies, such as Vietnam and
Indonesia, that offer very exciting growth opportunities.
If you look at Indonesia, for example, it has the largest population in the
region, with 238mn people, and at the same time it is very rich in agriculture
and commodity resources, which feed very nicely into growing markets like
China and India. Or Thailand agriculture for instance. Thailand is also a major
exporter of auto parts and large trucks for the region.

Example

The India ASEAN Free Trade Agreement (FTA) was signed in Bangkok on August
13, 2009, and came into effect from January 1, 2010 with Malaysia, Thailand
and Singapore. It is expected to be in place with all member countries by 2016.
The FTA collectively covers a market of nearly 1.8 billion people and proposes
to gradually slash tariffs for over 4,000 product lines.
Currently the FTA is restricted to trade in goods while negotiations for a similar
agreement for services are currently under way
Benefits of FTA
Increase in Incomes/Growth: An FTA expands trade volumes among member
countries and tends to increase incomes/growth of the members. Intuitively,
starting from a situation of tariff-distorted trade, the elimination of tariffs
allows each member to specialize in the production of the goods in which it
has acomparative advantage and trade those goods in exchange for imports of
other goods from fellow members.
Achievement of Economies of Scale: An FTA, by eliminating tariffs, expands a
member countrys export market thereby allowing it to expand its scale of
operations and lower its average cost of production.
Reduction of Monopoly Inefficiencies: If inefficient monopolies exist in the
domestic market, then increased competition from foreign products dampen
domestic monopoly inefficiencies, if not eliminate them altogether.
Availability of Greater Product Variety: The opening up of free trade increases
trade flows and expand the variety of products available to consumers in the
home country.