 Chapter 4
The State and Issues of the ASEAN Economy
Ryuichi Ushiyama
Principal Economist, Japan Center for Economic Research
Key Points
The scale of ASEAN’s GDP has expanded to around 40% of that of Japan. The
value of exports from ASEAN is already of a magnitude exceeding that of Japan, and
it is becoming a globally powerful trade entity. It has many countries having
continued population expansion, and is an appealing destination of businessexpansion to Japanese corporations.



While furthering trade liberalization from the 1990s, ASEAN has strengthened its
trade ties. Behind this lies an expansion in trade of intermediate goods. ASEAN issourcing much of the intermediate goods it needs from within the region, and there is
the likelihood that autonomy is increasing in this area.

Regarding the future of the ASEAN economy, the discussion over the“middle-income trap” among international organizations stands out. Among the
middle-income countries in the region that are Malaysia, Thailand, Indonesia, andVietnam, there is a widening movement to aim to increase productivity throughtechnological development, strengthening the cultivation of human capital, and thelike. However, difficulties lie ahead.

ASEAN has closer trade relations than the EU, or NAFTA(changes in trade intensity index)

Note: The EU is 25 countries.
Source: Produced from the IMF, Direction of Trade

Japan Center Chapter
for Economic
Report4 │ TheResearch
State and 2012
Issues“Asiaof the Research”
ASEAN Economy
61

Introduction

ASEAN is a major player in the surging emerging Asian economies.

The middle class is rising

rapidly due to high growth, the launch of an economic community in 2015 is drawing closer, a free
trade agreement (FTA) network is extended among Japan, China, South Korea, India, and the like,and the least developed countries in the region, the CLMs (Cambodia, Laos, and Myanmar), arestarting to stir. The ASEAN economy is drawing attention for a variety of aspects.
In this chapter, the major sources for companies to expand revenue and the state of the ASEAN
economy that is hoped for will be confirmed once more. Specifically, statistics for past growth
rates, GDP magnitudes, trade, investment, population, and the like will be examined. Based onthat, there will be a detailed analysis of the trade statistics, the degree of integration of the ASEAN
economy will be examined, and the “presence” of ASEAN in the production networks in East Asia
will be discussed. Furthermore, in light of the fact that there is a debate among internationalorganizations and the like pertaining to the “middle income trap,” for which ASEAN is a major
subject, the mid- to long-term issues that each country needs to overcome will be mentioned, andinitiatives in each country towards overcoming issues will be introduced. Finally, the nature of
the economic relationship between Japan and ASEAN, with its abundant growth potential, will betouched upon.

1. The overall condition of the ASEAN economy

An economy 40% the size of that of Japan
Looking at the changes in the real economic growth rate of ASEAN 1 across more than the past
20 years, there was marked negative growth in 1998 due to the effects of the Asian Currency Crisis,but overall there has been steady growth. The average growth rate since 1990 has been 5%(excluding 1998, it is 5.7%).

Although this is not as high as China’s 10% and India’s 6.5%, theglobal average is 3.4%, and this exceeds the 2% value for the G7, which comprises advanced
nations including Japan, the US, and Europe.
Looking at the ASEAN member countries individually, the major countries of Singapore,
Thailand, Malaysia, and Indonesia had enjoyed high growth until around 1997 when the currency
crisis struck.

In the decade up to that year, Malaysia had a growth rate of at least 9% eight times,

while Singapore and Thailand each did at least six times. Within this, Thailand achieved adouble-digit growth rate for three years running in 1988-1990.
1

Here, ASEAN comprises the five countries of Malaysia, Thailand, the Philippines, Indonesia, and Vietnam.

Japan Center for Economic Research “Asia Research” Report62After entering the 2000s, the growth rate of the primary ASEAN countries slowed overall, from
5.3% in Thailand in the 90s to 4.0%, and from 7.2% in Malaysia to 5.0%. 2 However, Vietnam
maintained its value from the 1990s of 7%, and Cambodia and Laos accelerated their growth fromthe 6% level in the 1990s to the 7-8% levels (Figure 1).

It is difficult to apprehend the state of theeconomy in Myanmar, but after the announcement of the new administration in March 2011, areform and opening policy was being spurred on, and so high growth is expected in the future.

Figure 1: Changes in average real GDP growth rate for each ASEAN country□1980’s ■1990’s ■2000’s（％）

Singapore

Malaysia Thailand Philippines Indonesia

BruneiVietnam

Cambodia

Laos

Note: The value for the 2000s is the average through 2011. There is little raw data for Brunei and
Cambodia during the 1980s, and so these are not calculated here. Myanmar is not included.
Source: Produced from IMF statistics.

Compared to the stagnant Japanese economy, the energy of the ASEAN economy is clear.

The

ratio of ASEAN’s nominal GDP total to Japan’s nominal GDP rose from about 13% in 2000 toabout 37% in 2011.

This is expected to exceed 50% in 2016 (Figure 2.)

There are evenprojections that, with the increase in income level, individual consumption by value in the ASEAN
region will rise to $2.22 trillion in 2020, an increase by a factor of 2.6 compared to the 2008
performance. 3

The ardent gaze by the corporations of the world at ASEAN are for no other reason

than growing expectations for the internal demand of the region.

2

Specifically the average growth rate for 2000-2011.
Cambodia, and Laos.
3
Ministry of Economy, Trade and Industry. (2010)

The same is true for the growth rates below for Vietnam,

Chapter 4 │ The State and Issues of the ASEAN Economy
63

Figure 2: Ratio of ASEAN and India to Japan's nominal GDP
60%
50%

ASEAN
40%
30%
20%

India
10%
0%

Source: Produced from IMF data.

ASEAN’s exports rank “fourth in the world”
Next, the direction of trade in goods will be examined. Exports from ASEAN have been
growing almost completely consistently for the past two decades, but exports from China jumped in
the 2000s triggered by the country’s membership in the World Trade Organization (WTO) andsurpassed ASEAN in 2004. However, amidst China’s rise to become the top exporter in the world,
ASEAN’s share of the total value of exports for the whole globe has not decreased, remaining at the
6% level for the 2000s and rising to a record high of

Figure 3: Global export ranking
Rank Country

Exports
Share($billion)

Average growthrate 2005-11(%)

about 7% in 2010, 2011, and 2012.
In the export rankings of the world based on
WTO statistics (2011), four ASEAN countries

1

China

1,899

10.4

16

2

US

1,481

8.1

9

appear in the top thirty places: Singapore at 14th,

3

Germany 1,474

8.1

7Thailand at 24th, Malaysia at 25th, and Indonesia at

ASEAN

1,244

7.0

11

26th. The total value of exports in the same year for

4

Japan

823

4.5

6

the ASEAN-10 exceeded $1.2 trillion , exceeding

5

Neth.

660

3.6

8

6

France

597

3.3

4

7

ROK

555

3.0

12

8

Italy

523

2.9

6

In 2011, the FDI introduction (international

9

Russia

522

2.9

14

balance of payments basis, net) of ASEAN was

10 Belgium

476

2.6

6

Note: ASEAN refers to all 10 members.
Source: Produced from WTO and UN statistics

Japan, and reaching 4th place in the world after
China, the US, and Germany (Figure 3).

about $116.5 billion, which was nearly the samelevel as China (about $123.9 billion) and about fourJapan Center for Economic Research “Asia Research” Report
64

times the value for India.

By ASEAN country in decreasing order, these were Singapore (~$64

billion), Indonesia (~$18.9 billion), Malaysia (~$11.9 billion), and Thailand (~$9.6 billion), thesefour constituting about 90% of the total value of FDI introduced to ASEAN overall.
The population of ASEAN, seven times Japan in 2050
According to UN population statistics, the total population of ASEAN (2010) was about 600
million people, or 8.6% of the global total (~6.9 billion). 4 Although this is an increase from the
6.8% of 1950, it is of course smaller than the East Asian giant of China, at 23% or 1.34 billion, andthe South Asian giant of India, at 25% and 1.22 billion.
However, the multiplication factor of the ASEAN population compared to Japan’s population has
consistently risen from 2.1 in 1950 to 3.1 in 1980, and then 4.7 in 2010. In ASEAN there arecountries in which the decline in birthrate is accelerating, like Singapore and Thailand.

It ispredicted that the total ASEAN population in 2050 will be about 170 million more than it is atpresent, and reaching a scale seven times greater than Japan.

2. Analysis of the ASEAN economy based on trade data

In this section, the current state of the ASEAN economy will be examined in detail on the basisof trade statistics.

The subject of analysis here is ASEAN intra-regional trade.

Below, whether

or not the ASEAN countries have strengthened their trade ties amidst the progress in liberalizationof intraregional trade since the first half of the 1990s will be examined first. Next, ASEAN
intraregional trade will be analyzed by item, and the current state of ASEAN as a “production base”
will be sought.

2.1

Analysis of ASEAN intraregional trade

ASEAN has engaged in liberalization of intraregional trade since the first half of the 1990s.
Have the ASEAN countries strengthened their ties in the area of trade alongside this progress intrade liberalization?

Looking at the changes in intraregional trade by value, it has increased nearlysevenfold from when AFTA started in 1993 to 2011, but intra-regional trade by value as a share of
the overall trade of ASEAN (intra-regional trade rate), has not risen much, and has recently beenstagnating around the mid-20% level (Figure 4).

4

The values that appear later are all based on the UN population statistics.

Here, ASEAN includes East Timor.

Chapter 4 │ The State and Issues of the ASEAN Economy
65

These figures give the impression that trade ties in ASEAN are weak despite the progress of
AFTA, but it is not possible to draw a hasty conclusion. According to Lapadre (2006), thispercentage naturally grows higher the larger the scale of trade in the region is, and so it does notnecessarily explain the degree of closeness in terms of trade. 5

For example, the higher

intra-regional trade rate in the EU compared to ASEAN is obvious considering the larger total valueof trade of the EU to begin with, and so it would be improper to compare the two on the basis of
this rate. 6

Figure 4: Changes in intra-regional trade rate

Note: The EU is 25 countries.
Source: Produced from the IMF, Direction of Trade

Based on these points, the “degree of closeness” in the trade relations within the ASEAN region
will be measured using the “trade intensity index.” This index is calculated using the following
formula:𝑇𝑖
𝑇𝑖𝑖
Trade intensity index of region i＝ � � /( )𝑇𝑖𝑇𝑤

Where Tii is the intraregional trade value of region I, Ti is the total value of trade of region I, andTw is the total value of trade of the world.

When the trade intensity index exceeds 1, the trade relations in the region are considered to be“close,” and if it is lower it is determined that the trade relations are “not close.”5Lapadre (2006) notes that as a defect of “intra-regional trade rate,” the more countries are included in the region,
the higher the rate.
6
The EU is a powerful trading partner to the world, and so naturally is a powerful trading partner to itself (i.e. has ahigh intra-regional trade rate). However, this is not sufficient to make the argument that trade relations within the
EU are close-knit.

Japan Center for Economic Research “Asia Research” Report66Figure 5 depicts the changes in trade intensity index from 1990-2011 for ASEAN, the EU,
NAFTA, and ASEAN+3. The index exceeds 1 for all four regions, and among them ASEAN
consistently has the highest value.

Since the launch of AFTA in 1993, the trade intensity index has

generally followed an upward trend, peaking in 2007.
Meanwhile, looking at the other three regions, although NAFTA rose during the 2000s, it did notreach the level of ASEAN. The EU does not exhibit a clear upward trend, and ASEAN+3 isstagnating. From these results, it can be understood that ASEAN had closer trade relations thanother regions to start with, but has further increased in degree of closeness since the 1990s when
AFTA was introduced. 7

Figure 5: Changes in trade intensity index

Note: The EU is 25 countries.
Source: Produced from the IMF, Direction of Trade

2.2 Analysis of trade in intermediate goods in the ASEAN region
What lies behind the increased closeness in the trade relations of ASEAN?
Next, the answer to this will be sought from the structure of intra-regional trade. Figure 6
classifies the goods traded in the ASEAN region by production step into the three categories of“raw materials,” “intermediate goods,” and “final goods,” and shows the changes in breakdown byvalue since the 1990s for each category.
The category with the highest percentage was “intermediate goods,” which rose from around
60% at the beginning of the 1990s to about 70% at the end of the 1990s, and then continued to
7

The meaning here is that there is an overlap between the time following the introduction of AFTA and the time
during which the trade intensity index rose. It is not possible to judge whether AFTA itself caused the rise in theindex. Also, it must be kept in mind that after peaking in 2007, the index has been decreasing.

Chapter 4 │ The State and Issues of the ASEAN Economy
67

trend at the same level after that.

Also, the contribution rate of intermediate goods to the increasein ASEAN intra-regional trade from 1990-2010 was high at around 70%, truly illustrating how thedriving force behind the expansion in intra-regional trade was an increase in trade in intermediate
goods.

Figure 6: Breakdown of ASEAN intraregional trade by item type

Note: ASEAN is configured from the 8 countries of Singapore, Malaysia, Thailand, the Philippines,
Indonesia, Brunei, Vietnam, and Cambodia.
Source: Produced from the RIETI-TID2011.

Intermediate goods are broadly classified as “processed goods” or “parts and components.” 8
ASEAN intra-regional trade (2010, import value basis) comprised 56% of the former and 44% of
the latter. Parts and components were more common until 2005, but since 2006, processed goods
have taken the lead. The top three processed goods in order are “petroleum and coal products,”“chemical products,” and “iron and steel, nonferrous metal and metal products,” and the top item of“petroleum and coal products” constitutes over 30% of all processed goods. Meanwhile, in the
breakdown of parts and components, “electrical machinery” related goods stood at constituting
about 70% of the total. The most common component among these is integrated circuits (ICs).
The value of ICs traded in the ASEAN region (2010) ranked second among all traded items, after
petroleum products.

The production centers for ICs are concentrated in Singapore and Malaysia,

and these countries are leading IC suppliers.

8

The names for the component classification below is based on RIETI-TID.

Japan Center for Economic Research “Asia Research” Report68As seen above, ASEAN has been increasing its imports of intermediate goods every year, andmoreover the fact that much of this is being supplied from within the region indicates that thedemand for intermediate goods within ASEAN is swelling, and that the supply capacity forintermediate goods is also increasing. As discussed in the following chapter, intra-regional andextra-regional corporations have been actively augmenting their production bases in various
industries including automobiles, electrical/electronics, food, and the like in ASEAN in recent years,
and it is believed that this pushed up demand for intermediate goods. Also, as exemplified by theThai automobile industry, manufacturers of raw materials and parts are investing one after anotherin lockstep with the finished product manufacturers in the region, and supporting industries that
supply intermediate goods are also maturing. Accordingly, looking at the supply and demand ofintermediate goods, it can be said that ASEAN is increasing its autonomy in the East Asian
production network. 9

3. Issues in the ASEAN economy

Even while being visited with the currency crisis, ASEAN has continued to expand the scale ofits economy in largely a steady manner.

It has expanded intra-regional trade centered onintermediate goods, and has strengthened mutual ties.

ASEAN can be described as having

matured both quantitatively and qualitatively, but regarding future prospects, a variety of issues canalso be noted. These can be broadly divided into what ASEAN as a unit will face, and what eachcountry within ASEAN will need to handle. The latter will be discussed below.

3.1 The warning of international organizations
With regards to the future of the ASEAN (or Asian emerging countries including ASEAN)
economy, a number of international organizations have expressed concerns while at the same timenoting the high growth potential.

The common keyword here is “middle-income trap.”

In a report primarily analyzing the East Asian middle-income countries, specifically China,
Indonesia, Malaysia, the Philippines, and Thailand, the World Bank (2007) 10 notes the situation of
being “squeezed between the low-wage poor-country competitors that dominate in matureindustries and the rich-country innovators that dominate in industries undergoing rapid

9

Although ASEAN’s share as the origin of imports of intermediate goods has stagnated since the 2000s, it has risencompared to the beginning of the 1990s before the launch of AFTA. However, further analysis is required
regarding how much of the final goods produced using intermediate goods sourced from within the ASEAN region
are being shipped to ASEAN, in other words, ASEAN’s position and the size of its role as a final area of demand.
10
Report by Intermit and Kharas (2007) presented by the World Bank.

Chapter 4 │ The State and Issues of the ASEAN Economy
69technological change.” It also states, “During [the last 50 years], outside of Europe, only ahandful have gone from low-income [through middle-income] to high-income status. The part of
the world that has been most disappointing is Latin America, where many countries reachedmiddle-income levels and then, essentially, stopped growing.” The report calls on East Asia to
avoid this “middle-income trap.”
The ADB (2011) predicted that if Asia 11 continues its steady growth, its share of global nominal
GDP would rise from 23% in 2010 to more than half at 51% in 2050, giving rise to an “Asian
century.” However, it warned that middle-income countries such as Malaysia and Thailand are“facing the risk of being trapped.” In the “trap” scenario, Asia’s share of GDP in 2050 would be
32%, nearly 20 points lower than the “Asian century” scenario.

3.2 The “middle-income trap”
What exactly is the “middle-income trap”? Ono (2008) divides the stages of economic
development of a country into a “first stage (low-income)” during which foreign-capitalized
manufacturing industries arrive, and simple work and simple labor is performed, a “second stage(middle-income)” during which foreign-capitalized corporations accumulate, and supporting
industries such as parts manufacturers are formed, a “third stage (middle-/high-income)” during
which acquisition of technology progresses, and it becomes possible to manufacture high-quality
products unassisted, a “fourth stage (high-income)” during which the country becomes a global
industry leader with the ability to innovate, and the like, and explains that the barrier between thesecond and third stages, namely when transitioning from middle-income to high-income, is the“middle-income trap.” 12
Taking into account the World Bank (2007) report mentioned above as well, the following
explanation is possible.

Namely, a least developed country actively introduces foreign capital andtakes advantage of its own abundant natural resources and inexpensive labor force to become a
middle-income country relatively easily.

However, in order to then transition to a high-income

country, a new growth pattern is called for, including raising productivity, promoting heightened
added value of industry, and the like.

If this is not achieved, the country falls into the“middle-income trap,” and the risk of stagnating growth heightens.
Based on the World Bank classification, ASEAN has six middle-income countries (Malaysia,
Thailand, Indonesia, the Philippines, Vietnam, and Laos), and one low-income country (Cambodia).
1112Here, “Asia” is the 49 countries of Asia and Oceania. This includes the 10 ASEAN member countries.
If these levels of development are matched to the Asian countries/regions, Vietnam would be at the first stage,
Thailand and Malaysia would be at the second stage, South Korea and Taiwan would be at the third stage, andJapan, the US, and Europe would be at the fourth stage.

Japan Center for Economic Research “Asia Research” Report70Thus, it can be understood that a majority of ASEAN countries are not unconnected to the risk of
the “trap.”

3.3

Initiatives of each ASEAN country

Amidst continuing discussion about the “middle-income trap,” as seen above, the ASEAN
countries are attempting to strengthen their policy efforts to avoid the “trap.” Below, the twocountries of Malaysia and Thailand are examined.

Malaysia: A sense of crisis over the “middle-income trap”
This country announced a mid- to long-term economic policy called the “New Economic Model”(NEM) in 2010.

At that time, the government indicated the awareness of the situation that

Malaysia had achieved middle-income country status by 1992, but “the steps after that have beensluggish” 13 and that “we are caught in a ‘middle-income trap’” and “future growth prospects are
extremely severe.” 14

Malaysia has the large goal of becoming a high-income country by 2020. 15

To this end, the NEM was announced to break through the current state of suffering in the “trap,”
and to add momentum to meeting the goal. Malaysia is clearly aware of the “trap,” and can besaid to be the country that has the strongest sense of risk about future prospects among the ASEAN
countries.
As reasons why growth has become sluggish, the NEM cites: 1) low value added industries, 2)stagnating productivity growth (Figure 7), 3) lack of human capital, 4) insufficient innovation, 5)difficulties of doing business, and the like.

It indicates a policy for, in the future, promoting: 1)

the re-energizing of the private sector, 2) the reduction in the reliance on (low wage) foreign labor,
3) the strengthening of the cultivation and development of human resources, 4) the management of
the economy in a manner that is transparent and puts importance on market mechanisms, and thelike. Regarding this series of policies, Oizumi (2011) explains that they shift the policy goals from
“capital accumulation” to “increasing productivity,” from being “government-led” to being“private-led,”

and

from

“favoring

specific

industries/corporations”

to“favoringindustries/corporations having high technological abilities.”
For promoting the NEM, the Malaysian government also put together an investment promotion
plan called the Economic Transformation Program (ETP) in 2010. The plan invests a total of 1.4
13With Malaysia’s real GDP growth rate viewed as a line graph from the IMF statistics, the average for 1980-1997 is
7.4%, and the average from 1999-2011 is 5.1%, and so the growth rate slowed with the boundary year being 1998,
when the value was negative 7.4% due to the effects of the Asian Currency Crisis.
14
National Economic Advisory Council (2010).
15
The numeric target is for the income level per capita to become $15,000-20,000 (in 2010 it was about $8,400) by
2020.

Chapter 4 │ The State and Issues of the ASEAN Economy
71trillion ringgit by 2020 in 12 key areas including finance, electronic/electrical, health/medical,
education, infrastructure in the capital zone, and the like. It “aims to renew the industrial structure,
which had been dependent on [labor-intensive] manufacturing, and to cultivate a high value-added
service industry and the like.” Of the 1.4 trillion ringgit, about 90% is for businesses, and theremainder being envisioned for government funds. Almost 30% of the former is allocated forinvesting in foreign businesses.

The necessary business investments until 2020 are an average of

130 billion ringgit per year, a scale double the pre-ETP 2009 actual spending value (65 billion
ringgit).

Figure 7: Average growth rate in labor productivity by country in Asia

Source: Produced based on National Economic Advisory Council (2010).

Thailand: Emphasizing “developing people with knowledge and skills”
A 5-year plan for 2012-2016 was developed called “The Eleventh National Economic and Social
Development Plan.

In it, there is the analysis, “In the past, the country’s economy relied mainly

on foreign investment and exports based on financial capital and low-wage labor that then became
constraints for increasing competitiveness.” Amidst the rise of least developed countries having
lower-cost labor forces, a policy was indicated that, similar to Malaysia, puts energy into increasing
productivity and increasing the value added of industries.

Specifically, there is the numeric goalof raising the growth rate of total factor productivity (TFP) to at least 3% 16. Also, it states that16

According to Asian Productivity Organization (2012), TFP growth of Thailand was 1.1% during the period of
2005-2010.

Japan Center for Economic Research “Asia Research” Report72

“the public and private join together and put energy into promoting technology” and indicates theintention towards creating a legal framework pertaining to competition policy and intellectual
property protection, tackling the strengthening of infrastructure and distribution systems, andimproving the business environment overall.
Thailand experienced unprecedented wide-scale floods in the fall of 2011, which had major
effects, including damage to Japanese corporations many of which had expanded to Thailand, andthe severing of the supply chain.

In response, the Thai government released a “Strategy for

Reconstruction and Future Development” in January 2012, and in addition to reconstruction aid dueto the flood damage, indicates the idea of promoting structural reforms for increasing thecompetitiveness of the Thai economy.

This strategy cites “enhancing the competitiveness of the

production and service sectors” and maintaining the international competitive level and leadershipas an important future strategy.

As a specific plan for production, it describes “encouraging

development based on innovation” in order to further develop industries that are strengths for
Thailand such as automobiles, electrical/electronics, food processing, and the like, and for theservice industry, it indicates the idea of “providing tax and financial supports to par withcompetitors, [and] searching and penetrating new potential markets.”

A common aspect to the economic strategies of both countries above is aiming to “increase
productivity.” Both aim to turn to a growth pattern putting emphasis on quality instead of quantity,
to reduce the risk of the “trap,” and to pursue further development. However, it is unclear whether
these attempts will proceed as intended. This is because structural reforms are accompanied by
opposition and backlashes from vested interests.

For example, Malaysia is continuing the“Bumiputra [meaning son of the land in Malay] Policy,” which economically favors the majority
Malay people and businesses.

Also, if the “management of the economy that places importanceon market mechanisms” in the NEM is to be accomplished, a revision would be unavoidable, but
the Malay opposition would be deep-rooted, and success would be difficult. It is necessary tocontinue to be watchful about whether or not each country will be able to produce policies that canbe implemented.

Conclusion

This chapter surveyed the current state of the ASEAN economy from the perspectivs of growthrate, economic scale, trade, FDI, population, and the like, and the fact that to Japanese corporations,
ASEAN is an attractive destination for business expansion was seen. Furthermore, the economic

Chapter 4 │ The State and Issues of the ASEAN Economy
73

relationship of the ASEAN countries was analyzed from the perspective of intra-regional trade, andit was observed that the degree of closeness is increasing through an expansion in trade ofintermediate goods, or put another way, the situation was observed that ASEAN is firming up thefoundation as a regional economic zone.

Based on this, the fact that there is discussion about the“middle-income trap” was mentioned in regards to the future of the ASEAN economy, and the midto long-term economic strategies of multiple countries were surveyed.

The “middle-income trap”

is a major problem to the ASEAN countries, in order to reduce its risk, international organizations
note that it is necessary to increase productivity, increase the value added of industries, strengthen
human resources by expanding higher education and job training, promote R&D, develop
distribution infrastructure, and the like.

Quite a few of these are areas where the Japanese

government and Japanese corporations can make a contribution through public assistance andinvestment activities. The achievement of sustained high growth by ASEAN would certainly bedesirable to Japan, which has deep economic connections, including trade and investment, to thearea. Japan should further assist the efforts by the ASEAN countries to overcome challenges.

References

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Najib Administration challenges the ‘middle-income trap.’” Business & Economic Review.
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Ono, Kenichi (2008) “Betonamu no susono sangyo [Vietnam’s supporting industries].” Presented at
Seminar on Action Plan for Development of Supporting Industry in Vietnam.
Asian Development Bank (2011)“ASIA 2050 Realizing the Asian Century”
Gill, Indermit and Kharas, Homi (2007)“An East Asian Renaissance: Ideas for Economic Growth”,
The World Bank
Lapadre, Lelio (2006)“Regional Integration Agreements and Geography of World Trade Statistical
Indicators and Empirical Evidence”In P. De Lombaerde, ed. Assessment and Measurement ofRegional Integration. London, UK: Routledge.
National Economic Advisory Council(2010）“New Economic Model for Malaysia”
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Japan Center for Economic Research “Asia Research” Report74