The increase in nontariff barriers (NTBs) had offset the gains in intraregional trade achieved by the Association of Southeast Asian Nations through the removal of tariffs, according to experts from the Asian Development Bank (ADB).
In an Asian Development Blog, ADB Lead Economist for Trade and Regional Cooperation Jayant Menon and Economist Anna Fink said the while intraregional trade has continued to recover, reforms are needed especially in addressing the rise of NTBs.
The region, the ADB economists said, is also faced with challenges, particularly those coming from Fourth Industrial Revolution (4IR) that could potentially widen inequality in the region.
“The 4IR, therefore, provides an opportunity for the Asean to meet its goal of greater inclusion by integrating micro, small and medium enterprises [MSMEs] into global value chains,” Menon and Fink said. “But it also presents a challenge to the region to invest in human capital to continue to trade and attract investment, and to enable innovation-driven economies.”
The ADB economists said embracing the 41R, and inclusive, innovation-led growth will be essential to securing another 50 years of peace in the region.
The 4IR could mean job losses due to automation, particularly through advanced robotics and artificial intelligence. This also means low-skilled jobs, such as assembly line workers, will be most at risk, and service jobs, such as those in business-process outsourcing, will also be threatened.
The Asean, the economists said, must respond by enabling greater mobility of unskilled workers, which would cut unemployment in sending countries.
The economists said this will require Asean member-countries to start increasing their investments in human capital today. This means that workers’ skills must go beyond technical capabilities to include creativity and “innovative” problem-solving.
Citizens of Asean countries, they said, will also need adult training and lifelong learning.
Further, the introduction of “disruptive technologies’ will empower MSMEs. More than 90 percent of enterprises within the Asean are MSMEs and they provide most of the employment in member-states.
They also said block-chain technology has the potential to dramatically increase the security of cross-border financial transactions and logistics even in countries where these services are relatively underdeveloped. This technology has could benefit the smallest firms in the poorest countries of the Asean.
Image credits: AP/Dinh Hoang