Southeast Asian nations have been urged to engage stakeholders and formulate a framework that eases cross-border investment to take utmost advantage of the ASEAN Economic Community (AEC).

Former trade and industry and tourism minister Mari Elka Pangestu said on Monday that to move ahead, the regional grouping had to engage stakeholders in the face of growing global challenges.

Speaking at a seminar to commemorate The Jakarta Post’s 33rd anniversary, jointly organized with the Pacific Economic Cooperation Council (PECC), Mari noted that ASEAN was undoubtedly important, constituting the third-largest population in the world and accounting for 7 percent of global trade and 11 percent of foreign direct investment in 2014, the first time investment figures surpassed those of China. A major production but also a growing market itself, it has been forecast that ASEAN will be the world’s fourth-largest economy by 2050.

Global challenges, however, are immense, Mari added, with financial crises slowing down the world’s gross domestic product (GDP) and trade growth and technological developments disrupting the global value chain.

“We need to move faster, deeper, broader [...] because of the global challenges and opportunities facing each ASEAN member country as well as ASEAN itself. New diversity in growth and productivity will have to come from structural reform and an increase in economic integration,” Mari said.

“Some people thought that at midnight on Dec. 31, 2015, a gate would open up and there would be floods of goods and workers. Of course, that is not the case. ASEAN is a process.”

Among issues to be addressed, Mari said, are the low utilization rate of lowered trade tariff barriers, both within the region and with key partners. “Within the region the rate is 50 percent while with China, for example, it is about 20 to 25 percent,” she said.

Mari said information dissemination also needed improvement, noting that only 60 percent of those surveyed in the region knew what the AEC was.

Meanwhile, Kartika Wirjoatmodjo, the CEO of Bank Mandiri, Indonesia’s largest lender by assets, said there were still challenges to opening up financial integration in ASEAN. While capital liquidity is reasonably fluid — it is relatively easy for a company to acquire Singaporean listed debts and foreign denominated loans from Malaysian banks, for instance — Kartika said it was difficult to set up branches in other ASEAN member countries, which are protectionist in retail banking.

“The banking industry is the most heavily regulated industry all over the world,” he said.

“But in the next five years, if we do open up and create a big capital market in ASEAN, we will enable the market to grow even faster and create huge benefits for consumers.”

A banking regulatory framework will be completed in 2020, but the mutual framework is now being agreed among authorities, said Kartika, adding that there remained much to do to align regulations, and that a comprehensive regulation should also include stipulations for financial products.

Even for highly deregulated industries, such as aviation, businesses agree that a more comprehensive standard is needed.

ASEAN’s Open Skies Policy came into effect last year, aiming to liberalize the region’s aviation industry. While it opens unlimited opportunities, there are still issues to be addressed, with increasing rivalry from airlines outside the region eyeing ASEAN as lucrative market, flag carrier Garuda Airlines CEO Arif Wibowo said, listing safety, service and human capital as major issues.

“These issues have to be part of the standards among the airlines in ASEAN countries,” he urged.

Tony Fernandes, Group CEO of Malaysian-based low cost carrier Air Asia, said that ASEAN had great potential.

“With countries separated by water, ASEAN has great potential, with the number of aircraft in the region less than half of those in continental Europe,” he told the seminar.

“People in Europe have other ways of means of traveling, such as by car or train.”

Fernandes also pointed to the need to strengthen the ASEAN Secretariat as a one-stop center for investment and to simplify policy formulation, such as common safety standards.

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