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Page 1: ASEAN Community - s3.amazonaws.coms3.amazonaws.com/zanran_storage/ fileBPS - Statistics Indonesia Department of Statistics,Lao PDR Department of Statistics,Malaysia Central Statistical
Page 2: ASEAN Community - s3.amazonaws.coms3.amazonaws.com/zanran_storage/ fileBPS - Statistics Indonesia Department of Statistics,Lao PDR Department of Statistics,Malaysia Central Statistical

ASEAN Community

progress monitoringsystemPAN-ASEAN INDICATORS

measuring progress towards the ASEAN Economic Community and the ASEAN Socio-Cultural Community

FINAL REPORT

VOLUME 1

2007

AASSSSOOCCIIAATTIIOONN OOFF SSOOUUTTHHEEAASSTT AASSIIAANN NNAATTIIOONNSS

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The Association of Southeast Asian Nations (ASEAN) was established on 8 August 1967.The Members of the Association are Brunei Darussalam, Cambodia,Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore,Thailand and Viet Nam.The ASEAN Secretariat is based in Jakarta, Indonesia.

For inquiries, contact:Public Affairs OfficeThe ASEAN Secretariat70A Jalan SisingamangarajaJakarta 12110IndonesiaPhone: (62.21) 724-3372, 726-2991Fax: (62.21) 739-8234, 724-3504E-mail: [email protected]

General information on ASEAN appears on-line at the ASEAN Website: www.asean.org

Catalogue-in-Publication DataASEAN Monitor 2007 – Progress towards and ASEAN CommunityJakarta:ASEAN Secretariat, June 2008

xx pages; xxxx cm

ASEAN – StatisticsEconomic indicators – ASEAN – StatisticsSocio-cultural indicators – ASEAN – StatisticsPolitical indicators – ASEAN – Statistics

xxx

ISBN xxx-xxxx-xx-x

Printed in Indonesia

The text of this publication may be freely quoted or reprinted with properacknowledgement

©Copyright ASEAN Secretariat 2008All rights reserved

The views expressed in this book are those of the authors and do not necessarily reflect the views and policies of the ASEAN Secretariat or the governments they represent.

The ASEAN Secretariat does not guarantee the accuracy of the data included inthis publication and accepts no responsibility for any consequence of their use.

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Progress Monitoring System Volume 1 3

Foreword

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4 ASEAN Community4 ASEAN Community

Acknowledgements

This report is based on data compiled by the followingagencies in cooperation with the appropriate ministriesand departments:

Department of Statistics, Brunei Darussalam

National Institute of Statistics, Cambodia

BPS - Statistics Indonesia

Department of Statistics, Lao PDR

Department of Statistics, Malaysia

Central Statistical Organisation, Myanmar

National Statistical Coordination Board, Philippines

Department of Statistics, Singapore

National Statistical Office,Thailand

General Statistics Office,Viet Nam

And the contributions of the following people:

Ms Marilyn Linggi Teo, Mr Heang Kanol, Mr Seng Soeurn, Mr WynandinImawan, Mr Bounmy Vilaychith, Mrs Phonesaly Souksavath, Ms ZubaidahIsmail, Mr San Myint, Ms Fe Vida N Dy-Liacco, Mr Candido J Astrologo, Jr,Ms Pek Hoon Sally Tay, Mr Teck Wong Soon, Ms Pakamas Rattanalangkarn,Mr Hj Omar Hj Md Tahir,Mr Yuvaroath Tan,Mr Bahrum Hj Kadun,Ms Ny Net,Mr Raymond Atje Homau, Mr Erwin Situmorang, Mr Togarisman Napitupulu,Mr Achmad Tavip Syah, Mrs Nur Amiaty TD, Mr Sihar Lumbantobing,Mr Hariyadi Agah, Ms Shafizaermawaty Shafei, Mr Savankhone Razmountry,Mr Vixay Santivong, Mr See Chee Kong, Ms Afiza Idris, Mr Wan Azhar WanMokhtar, Ms Marlar Aung, Ms Brenda R Mendoza, Mr Raymond Balatbat,Ms Estrella V Domingo, Ms Minerva Eloisa P Esquivias, Ms WashareeIthiavatchgula, Ms Saowaluck Inbumrung, Mr Thalerngsak Vongsamsorn,Mr Do Trong Khanh, Ms Nguyen Thi Chien, Dr Fatimah Abdul Hamid, Mr SanSy Than, Mr Rusman Heriawan, Dr Samaychanh Boupha, Ms Normah MohdAris, Mr Shu Kyein, Dr Romulo A Virola, Ms Carmelita N Ericta, Ms Wong Wee Kim, Mrs Thananoot Treetipbut, Dr Le Manh Hung, Ms Kuy Phala,Ms Bussarakum Siratana, Mr Oarawan Sutthangkul, Ms AnongkasiriKulkumthorn, Mr Piniti Ratananukul, Mr Yavang Vachoima, Mr ThongdengSingthilath, Mrs Lina V Castro, Ms Ng Siew Siew, Mr Bahrum Haji Kadun,Ms Omi Kelsom Binti Hj Elias, Mr Aung Myint Than, Mrs Hla Hla Myint,Ms Pyone Pyone Kyi, Mrs Nguyen Thuy Huong, Ms Fauzana, Mr NoorYudanto, Mr Minot Purwahono Ms Usmanati Rohmadyanti, Mr AchmadDjatmiko, Mr Mohammad Benyamin Scott Caradi, Ms Indah Anggoro Putr,iMr Johanes de Britto Priyono, Mrs Harmawanti Marhaeni, Ms MasdaraSiregar, Mr Michael Ward, Dr Celia Reyes, Professor Peter Lloyd, Dr AlfonsPalangkaraya,Dr Jongsay Yong,Ms Anne Leahy, Associate Professor ElizabethWebster.

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Progress Monitoring System Volume 1 5

The ASEAN CommunityProgress MonitoringSystem Report...............

The Association of Southeast Asian Nations (ASEAN) Community ProgressMonitoring System report is divided into three volumes:

Volume 1: Progress towards the ASEAN EconomicCommunity and the ASEAN Socio-Cultural Community:Pan-ASEAN indicators

Volume 1 highlights and summarizes the progress towards two pillars ofthe ASEAN Community namely the ASEAN Economic Community (AEC) andthe ASEAN Socio-Cultural Community (ASCC) based on a limited set of pan-ASEAN indicators for 2003 and 2005. It also discusses steps that have beentaken to measure progress towards the third pillar, namely the ASEANPolitical and Security Community (APSC).

Volume 2: Progress towards the ASEAN EconomicCommunity and the ASEAN Socio-Cultural Community:Country indicators

Volume 2 provides the full list of indicators disaggregated by country.These indicators have been selected for their ability to succinctly captureprogress towards the AEC and the ASCC,as well as on the basis of data avail-ability. Under the AEC, there are 21 indicators across the four sub-pillars ofthe community, namely single market and production base (15 indicators),competitive economic region (2), equitable economic development (1),and integration into the global economy (3). Under the ASCC, there are 26 indicators spread over the areas of poverty and income distribution (4 indicators), health (5), education (5), labour market (3), environment (7)and ASEAN identity (2).

Volume 3: Indicators and Tools for Monitoring the ASEANEconomic and Socio-Cultural Community

Volume 3 details the rationale for the selection and construction of the indi-cators, the treatment of missing data, and the steps taken to ensure compa-rability across countries and consistency over time. It also includes theoriginal data provided by the national statistical offices and the source ofdata for each indicator. This volume describes the overall consultationprocess in developing the ACPMS.

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6 ASEAN Community6 ASEAN Community

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

The ACPMS Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Acronyms and abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

List of charts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

List of tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

The policy context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

The AEC pillar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

The ASCC pillar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

The APSC pillar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Consultation process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

ASEAN Economic Community . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Single market and production base . . . . . . . . . . . . . . . . . . . . . . .13

Free flow of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Free flow of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Free flow of investment . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Freer flow of capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Free flow of skilled labour . . . . . . . . . . . . . . . . . . . . . . . . .16

Competitive economic region . . . . . . . . . . . . . . . . . . . . . . . . . .16

Equitable economic development . . . . . . . . . . . . . . . . . . . . . . . .17

Integration into the global economy . . . . . . . . . . . . . . . . . . . . . .17

ASEAN Socio-Cultural Community . . . . . . . . . . . . . . . . . . . . . . . . .19

Poverty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Income distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Labour market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

ASEAN identity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

ASEAN Political and Security Community . . . . . . . . . . . . . . . . . . .25

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

Contents

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Progress Monitoring System Volume 1 7

Acronyms and abbreviations..

ACPMS ASEAN Community Progress Monitoring System

AEC ASEAN Economic Community

AFTA ASEAN Free Trade Area

AHTN ASEAN Harmonized Tariff Nomenclature

AFAS ASEAN Framework Agreement on Services

AMS ASEAN Member States

ARF ASEAN Regional Forum

ASCC ASEAN Socio-cultural Community

ASPC ASEAN Political and Security Community

ASEAN Association of Southeast Asian Nations

ASEAN 6 Brunei Darussalam, Indonesia, Malaysia, Singapore,Thailandand the Philippines.

BPS Badan Pusat Statistik

CEPT Common Effective Preferential Tariff

CFC Chlorofluorocarbon

CLMV Cambodia, Lao PDR, Myanmar and Viet Nam

FDI Foreign Direct Investment

GDP Gross Domestic Product

HIV/AIDS Human Immunodeficiency Virus / AcquiredImmunodeficiency Syndrome

HS Harmonised System

MDG Millennium Development Goals

MFN Most Favoured Nation

MRA Mutual Recognition Arrangement

NIS National Institute of Statistics

NSO National Statistical Offices

ICT Information and Communications Technology

IMF International Monetary Fund

PDR People’s Democratic Republic

PIS Priority Integration Sector

PPP Purchasing Power Parity

ROW Rest of the World

SARS Severe acute respiratory syndrome

SEANFZ Southeast Asian Nuclear Weapon-Free Zone

SME Small and Medium Enterprise

TAC Treaty of Amity and Cooperation

US United States

WTO World Trade Organization

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8 ASEAN Community8 ASEAN Community

List of charts

Chart 1: GDP per capita and its annual change, 2003 and 2005 (PPP$ and %)

Chart 2: Tariff rates for intra-ASEAN imports by sector, 2003 and 2005 (%)

Chart 3: Share of intra-ASEAN trade (exports + imports) in all ASEANcountries combined, by sector, 2003 and 2005 (%)

Chart 4: Percentage of sub-sectors by type of commitment

Chart 5: Foreign Direct Investment flows to ASEAN from ASEAN, 2003and 2005 (%)

Chart 6: Dispersion in average wages across occupations, 2003 and2005 (US$ per worker per month, constant prices)

Chart 7: Distribution of tariff rates on imports from outside ASEAN,2003 and 2005 (%)

Chart 8: Percentage of poor population using international poverty lineby region

Chart 9: Population living under $1 a day

Chart 10: Population living under $2 a day

Chart 11: Proportion of poor population based on national poverty lines

Chart 12: Gini coefficient

Chart 13: Life expectancy at birth by region

Chart 14: Infant mortality rate per 1000 live births

Chart 15: Under-five mortality rate per 1000 live births

Chart 16: Adult literacy rate by region

Chart 17: Adult literacy rate,ASEAN

Chart 18: Combined enrolment rate,ASEAN

Chart 19: Unemployment rate by country

List of tables

Table 1: GDP per capita in US$ and PPP$, 2003 and 2005

Table 2: Selected indicators on environmental sustainability by region

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ASEAN Economic CommunityLow per capita income countries grew slightly faster than higher per capitaincome countries during the two years from 2001 to 2003, indicating atendency towards economic convergence in the region. However, by 2005this tendency had almost disappeared due to faster labour productivitygrowth in the more advanced member countries of Malaysia, Singapore and Thailand. In addition, during the period 2003 to 2005, the most inte-grated sectors, as measured by intra-industry trade index, became moreintegrated while the least integrated sectors registered little change in theirlevel of integration.

Single market and production base

There was a clear reduction in intra-ASEAN tariffs in the priority integrationsectors between 2003 and 2005.However,while average tariff rates fell andtariff structures became more transparent, the relative damage done to theASEAN economy by tariff spikes may have increased. This reduction intariff restrictions was also mirrored, albeit to a lesser extent, by reductionsin non-tariff barriers. The combined effect has been a rise in intra-ASEANtrade for all priority integration sectors, with the exception of textiles andhealthcare products.

In the service sector,the restrictions on cross-border supply and consumptionabroad decreased in the market-access portion of healthcare and e-ASEAN.Little progress was made in air transport. Similarly, more restrictions on thecommercial presence and the presence of natural persons were removedin healthcare and e-ASEAN than air transport.

Intra-ASEAN direct investment in the sectors which are closely aligned withthe priority integration sectors, increased significantly between 2003 and2005. By comparison there were reduced investment flows in non-prioritysectors such as mining,quarrying and construction.Cross-country variationin real interest rates declined slightly between 2003 and 2005, suggesting aslight increase in capital market integration.

Consistent with the growing gap in labour productivity mentioned above,there was an increase in the average wage dispersion of skilled workers(professional and technician) between 2003 and 2005. However, only oneMutual Recognition Arrangement was signed during the same period,suggesting that skilled labour markets across the region may not havebecome more integrated.

Competitive economic region

Over the period 2003 to 2005, a positive growth in the number of scienceand technology graduates per capita was recorded for all countries exceptCambodia and Thailand. In addition, there was strong growth in patentingactivity by ASEAN inventors in the US and ASEAN patent offices. Both indi-cators suggest stronger innovative capacity within ASEAN.

Equitable economic development

The gap between the ASEAN 6 and Cambodia, Lao PDR, Myanmar and VietNam as a group (the CLMV group of countries) fell slightly between 2003and 2005 in both nominal US dollars and US dollars in PPP terms. Onaverage, per capita US dollar incomes in the ASEAN 6 countries are aboutfive times higher than in the CLMV countries. In contrast to the increaseddispersion of average wages for skilled workers, the dispersion of averagewages for unskilled workers decreased during the period.

Integration into the global economy

Non-ASEAN direct investment into the service sector rose between 2003and 2005, while for most priority integration sectors, the dispersion inexternal tariffs rates decreased. Furthermore, all countries except Myanmar

Highlights

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and Viet Nam recorded a rise in extra-ASEAN trade. Interms of direct investment from outside ASEAN, theservice sector, in particular trade and commerce aswell as finance, registered significant increases in FDIflows during the period.

ASEAN Socio-CulturalCommunity................Between 2003 and 2005, there was a general rise inliving standards across the ASEAN community. Thisgeneral rise has been revealed through declining ratesof poverty, enhanced life expectancy and higher rateof literacy. However, disparities across countries arestill significant.

Poverty

Poverty rates have declined in almost all countries as aresult of the higher economic growth and the povertyreduction programs implemented by the countries.An estimated 33.7 million or 6.9 per cent of the pop-ulation are living below $1 a day in 2004, a consider-able reduction from the estimated 40.1 million poorpeople or 8.4 per cent of the population in 2002.

Income distribution

While poverty is generally falling, the pattern in thedistribution of income or expenditure is mixed.Several countries experienced small reductions in the Gini coefficient while a few countries experi-enced increases.While there has been a convergencein the Gini coefficient across the 10 ASEAN countries,the median Gini has increased. Greater efforts may benecessary to achieve the goal of equitable societies.

Health

Between 2003 and 2005, there was almost a one-yearincrease in life expectancy. On average, an ASEANresident born today is expected to live up to 69 years.Women are expected to live up to 72 years while menare expected to live up to 67 years.

Despite the general improvement in the health status,theregion still has to confront an increased prevalence ofdiseases such as malaria, tuberculosis, and HIV/AIDS.Greater cooperation in the area of public health is neededto control communicable and infectious diseases.

Education

The increased access to formal education has led to asteady increase in the literacy rate. In 2004, 90 per centof the population were literate. This is 1 percentagepoint above the 2000 rate.However,some countries stillhave literacy rates below 75 per cent.While combinedprimary, secondary and tertiary enrolment rates haverisen, primary school enrolment rates decreased insome countries. This is likely to have implications in thefuture for the countries’ability to provide skilled labour.

Labour market

With the exception of Indonesia, all ASEAN countriesexhibited a decrease in their unemployment ratesbetween 2003 and 2005. This suggests that in all coun-tries, except for Indonesia, employment opportunitiesoutpaced the growth of the labour force.While womenare becoming more engaged in the labour market, theproportion of young people (aged 15–24) participatingin the labour market is declining. The latter may reflectgreater engagement with education and training.

Environment

ASEAN has been active in addressing global environ-mental issues. The region has been successful inreducing consumption of ozone depleting CFC,but notas successful in reducing carbon dioxide emissions.

ASEAN is committed to providing its population withaccess to safe drinking water and sanitation facilities.In 2004, 82 per cent of the population had access to asafe water source. Nonetheless, while all, or almost all,of the population in Singapore, Malaysia, BruneiDarussalam and Thailand have access to safe drinkingwater, only about half of the Cambodian and Laopeople have access to safe drinking water.

The proportion of the ASEAN population with access tosanitation facilities is 67 per cent.However,while peopleliving in Singapore, Thailand and Malaysia have almostcomplete access, less than one-third of the population inCambodia and Lao PDR have access to sanitation facilities.

ASEAN identity

Countries have incorporated ASEAN history andculture in school curricula to ensure that the ASEANpopulation is aware of ASEAN history and culture.Allcountries have at least one school that incorporatesASEAN history and culture in the curriculum; BruneiDarussalam, Singapore and Thailand require that allschools offer such courses.

10 ASEAN Community

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This report is the first part of a three-volume report on the ASEANCommunity Progress Monitoring System (ACPMS). In the report as a whole,a set of 47 indicators are used to measure advancement towards an ASEANCommunity during the period from 2003 to 2005. This volume deals onlywith the ASEAN Economic Community and the ASEAN Socio-CulturalCommunity. In addition, it also explains steps that have been taken tomonitor the ASEAN Political and Security Community. Both of the first two‘pillars’ play an independent but reinforcing role in promoting the well-being of ASEAN citizens.The second volume provides country specific indi-cators, while the third presents details on data sources and methodology.

By highlighting progress towards the overarching goals of the ASEAN community, this report is targeted at policy makers rather than technicalspecialists. Thus, technical discussions are avoided except when they aredeemed necessary. Since the ASEAN Community’s aims are long-term andstructural in nature, this report does not monitor specific and short-termprograms or intermediate goals. The chosen indicators are commonlyoutcome-based rather than process-based, since a single outcome figureshould capture the effects of many processes or programs. The chosen indi-cators must be recorded consistently across all countries and be availableat least biennially. In some cases, however, processes are so important thatthey are included in the list of indicators, as in the case of tariffs. In thisreport most data presented are for 2003 and 2005, while data closest tothese years are substituted when the desired data are missing.

The policy contextASEAN was created in 1967 primarily as a security alliance. The foundingmembers were Indonesia,Malaysia,Singapore,Thailand and the Philippines.In the subsequent years Brunei Darussalam,Viet Nam, Lao PDR, Cambodiaand Myanmar joined. Today (2008) the ten-nation ASEAN contains a popu-lation of about 600 million.

During the mid-1970s, ASEAN felt a need to expand its activities and cooperation beyond its original security raison d’être. Thus, at the Bali Summit in 1976 ASEAN leaders adopted two landmark treaties which ushered in greater economic cooperation: The Treaty of Amity and Cooperation in Southeast Asia, 1976 and the Declaration of ASEANConcord, 1976. Both treaties essentially called for active promotion andcooperation in the economic field, including the adoption of regionalstrategies for economic development.

The ASEAN Economic Community (AEC)

Efforts toward ASEAN economic integration did not begin in earnest untilthe birth of the ASEAN Free Trade Area (AFTA) in 1992.1 The ultimate objec-tive of AFTA is to increase ASEAN’s competitive edge as a production basegeared to the world market. Stimulating intra-ASEAN trade is considered tobe one way of enhancing the competitiveness of the ASEAN region.

While AFTA’s initial progress was slow and limited, the pace of integrationquickened in the immediate aftermath of the Asian financial crisis of 1997.The policy of ASEAN economic integration expanded to other areas,notably services, and the ASEAN Vision 2020 was created, in which it wasdeclared that ‘The ASEAN Economic Community shall establish ASEAN as asingle market and production base’. The goal of an ASEAN EconomicCommunity (AEC) was established during Bali Concord II on 7 October2003. The main rationale for the AEC is to aid overall economic well-beingthrough accessing the dynamic and static gains from trade in goods andservices. This includes gains acquired through economies of scale and spe-cialisation based on comparative advantage; the gains through technology

Introduction

1 AFTA was established by The Singapore Declaration of 1992 and the Framework Agreement onEnhancing ASEAN Economic Co-operation, 1992.

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transfers and the gains from the free flow of labourand capital. However, the economic pillar alsoincludes subsidiary goals, some of which involve trade-offs with the primary rationale; examples are the goalsof equitable economic development and integrationinto the global economy.

The ASEAN Socio-Cultural Community (ASCC)

The ASEAN Socio-Cultural Community envisionsASEAN as ‘a community of caring societies’—a senti-ment expressed as early as the Bangkok Declaration of 1967 (ASEAN’s founding document) and reiteratedin the ASEAN Vision 2020 of 1997. However, whilecross-border security and economic integration clearlyrequire multi-lateral negotiations and agreements,eradicating poverty and enhancing social justice—themain thrusts of the socio-cultural pillar—are usuallyaddressed by nation-specific policies that often do notrequire the cooperation of neighboring countries.2

Nonetheless, the nations of ASEAN have taken theview that bringing social justice goals under theauspices of ASEAN, rather than leaving them asdomestic concerns, will expedite matters, that is, it isconsidered that the achievement of equity andequality of opportunity will be faster if this goal isreviewed within a multi-nation framework.

Although justice per se is the prime motivation for the Socio-Cultural pillar, four parallel secondary objectives coexist. These objectives are: first, toenhance the gains from economic integration throughinvestment in formal skill development, informalcultural knowledge and social risk management;second, to efficiently control trans-border health (e.g.SARS) and environmental (e.g. air pollution) eventswhose costs are not contained within national bound-aries; third, to minimise or monitor any negative falloutfrom the integration and restructuring implied by theeconomic pillar; and fourth, to support regionalsecurity through the eradication of extreme poverty,inequality of income and opportunity, and otherinequities (perceived or real).

The ASEAN Political and SecurityCommunity (APSC)

Regional security has been a primary concern of ASEANsince its inception in 1967.ASEAN member countriesrecognised from the early days that regional securitywas closely intertwined with economic and socialdevelopment—peace and security are essential foreconomic prosperity and social-cultural development,while prosperity and development create commoninterests among countries and increase mutual depen-dence, which in turn enhances regional security.

During the first ASEAN summit in 1976,member coun-tries signed the Treaty of Amity and Cooperation inSouth-East Asia (TAC), which committed membercountries to peaceful settlement of disputes and non-interference in the internal affairs of member coun-tries. Under the treaty, a ‘High Council’ consisting ofministerial-level representatives was also set up to take

account of disputes or situations likely to disturbpeace and harmony, and recommend appropriatemeans of settlement to the parties in dispute. TheASEAN Summit in Bali in 2003 further set forth fiveareas of political and security cooperation under theso-called Bali Concord II. These five areas are: (1)setting of new norms; (2) maintaining maritimesecurity; (3) keeping the region free of weapons ofmass destruction; (4) countering terrorism andtransnational crime; and (5) enhancing defence coop-eration. The central question is how effective havethese efforts been in maintaining and enhancing thesecurity of the region.

With the signing of the ASEAN Charter in 2007, theprinciples and policies underlying ASEAN’s approachto issues of regional security were set forth. These prin-ciples and policies include the peaceful settlement ofdisputes, the renunciation of the use or threat of forcein resolving differences, respect for the sovereignty ofnations, non-interference in countries’ internal affairs,and enhanced consultations on matters seriouslyaffecting the common interest of ASEAN.

Consultation processThe ACPMS report is a continuation of efforts to measurethe progress of ASEAN member countries towards themain goals of the ASEAN Community. It refines andupdates an earlier report, the ASEAN Baseline Report(ABR).3 The ABR provided the 2003 baseline situationfor the three pillars of the ASEAN Community.

Work for this report was undertaken by a team of consultants from the Melbourne Institute of AppliedEconomic and Social Research at the University ofMelbourne (Associate Professor Elizabeth Webster,Dr Jongsay Yong, Dr Alfons Palangkaraya, ProfessorPeter Lloyd); Dr Celia Reyes from the Philippines; anda team from the ASEAN Secretariat (Dr Agus Sutanto,Mr John de Guia, Ms Lia Emalia, Mr Fathur Rachman,Mr Raditya Kusumaningprang).

While the format and content of the report are basedon the ABR, revisions and modifications were madeafter consultations with stakeholders in each country4

and a regional meeting in Bangkok. Four representa-tives from each country were invited to the latter. Anominated focal person from the national statisticaloffice in each country acted as a conduit for informa-tion between the research team and the local interestgroups. Following the regional meeting in Bangkok, aseries of national workshops were held in eight of theten member countries to discuss the purpose of thereport,data requirements and other issues. The first ofthese workshops was attended by either Dr Reyes, DrSutanto, Mr de Guia or Ms Emalia. Subsequent revi-sions and updates were made at a regional meeting inJakarta and the Eighth ASEAN Heads of StatisticalOffices Meeting in Phnom Penh, Cambodia inDecember 2007. Work for this report began in June2007 and concluded in March 2008.

12 ASEAN Community12 ASEAN Community

2 An exception is when there is a common revenue sharing arrangement.However, unlike the European Union, ASEAN does not have a commonbudget which is large enough to heave an impact on the redistribution ofincome across the region.

3 See ASEAN Secretariat (2006a and 2006b).4 During the project, stakeholder consultations were undertaken via

personal visits to each member country by at least one of the consultants.See Volume 3 for details of these consultations.

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Single market and production baseBefore we assess the progress in each specific area under the AEC pillar, itis instructive to look at the progress at the overall level. As markets inASEAN become more integrated,average income levels across countries areexpected to converge. For such convergence to occur, the lower incomecountries must grow at a faster rate than the higher income countries.Chart 1 depicts the relationship between the average income levels ofASEAN countries and growth in income levels during the two-year periodfrom 2003 to 2005. The steeper the downward slope of the lines in Chart1, the greater is the tendency towards convergence

As shown in Chart 1, the relationship between income level and the growthrate is downward sloping in both years; that is, there is a tendency towardsincome convergence in the region. However, the rate of convergencedeclined between the two years. The flatness of the slope indicates that thespeed of the convergence process, if any, is quite low.

Chart 1: GDP per capita and its annual change, 2003 and 2005 (PPP$ and %)

Source: Computed using IMF World Economic Outlook Database April 2007.

Lower income countries will only grow at a faster rate than the higherincome countries if they have a higher rate of labour productivity growth. Accordingly, another overall indicator of market integration islabour productivity, one specific measure of which is the ratio of total gross value added to total employment. A comparison of average value added per worker across member countries in the agriculture,manufacturing and service sectors reveals two tendencies. First, valueadded per worker is much lower in the agriculture sector compared with the manufacturing sector. Second, the dispersion of productivity inboth manufacturing and the service sector increased between 2003 and2005. Taken together, these developments suggest little tendency towardsconvergence.We find the increased dispersion in average worker produc-tivity comes from the relatively faster rate of productivity growth in themore advanced member countries such as Malaysia, Singapore andThailand. In particular, growth in labour productivity was not experiencedby all countries.

The third and final indicator of overall integration is the degree of intra-industry trade. As countries become more integrated their consumptionand production patterns become more similar and they tend to trade in a broader variety of goods within a given industry. The Grubel–Lloyd intra-industry trade index is an indicator designed to capture this relation-ship. It is an outcome indicator of market integration. As economiesbecome more integrated, the value of the intra-industry trade index wouldbe expected to increase.

Across the ASEAN countries we find that certain sectors such as electron-ics and ICT have already shown high levels of intra-industry trade, whileother more traditional sectors such as textiles, agro-based and wood-basedindustries show much less integration. In addition, we find that the integra-

ASEANEconomicCommunity

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tion level in terms of trade appears to have increasedin some sectors, notably in textiles and electronics,while in other sectors it appears to have decreasedduring the period.5

In sum, at the overall level, progress towards theASEAN Economic Community appears to be slow.While there are indications of modest convergence in average incomes, this process slowed between 2003 and 2005. Part of the explanation for this is that the productivity gap between the lower andhigher income countries appears to have increased.In addition, certain sectors that have traditionally been integrated appear to have become even moreintegrated, while those with previously low levels ofintegration show little sign of increasing integration.

Free flow of goods

According to economic theory, a single market isrealized when the law of one price holds. This,however, requires the abolition of all border andbeyond-the-border restrictions, as well as harmoniza-tion of standards.6 The elimination of border restric-tions such as tariffs and non-tariff measures is neces-sary in ensuring the free flow of goods. Thus,monitor-ing the extent of reduction in these barriers and theeffect on trade flows can be valuable. It should benoted, however, that such outcomes are affected bythe flows of trade with the rest of the world.Furthermore, the observed relationship betweenreduced barriers and the flow of trade may not belinear. For example, an increase in trade within theregion may lead to an increase in trade with the rest ofthe world so that in relative terms intra-ASEAN trademay actually decrease.

Chart 2 presents the average tariff rate for intra-ASEANimports. It is computed as the weighted average ofpublished Common Effective Preferential Tariff (CEPT) rates, with the total value of intra-ASEANimports used as the weights. This measure approxi-mates the total amount of duties collected on importsfrom ASEAN member countries divided by total value of these imports. Thus, if the tariff rates forcertain commodities are reduced but the actual value of imports of those commodities is zero, thereduction in tariffs would not appear in the computedaverage tariff rates. This methodology is used tocapture the real economic effects of lower borderrestrictions resulting from tariff reductions, ratherthan simply the extent of ‘paper’ reductions in borderrestrictions.

Overall, the priority integration sectors registered aclear reduction in intra-ASEAN tariffs. However, thepattern was not consistent across countries. CEPTtariff rates rose in Brunei Darussalam, Cambodia,Malaysia, the Philippines and Thailand while MFN rates rose in Brunei Darussalam, Indonesia, Lao PDR,Myanmar, Malaysia and the Philippines. However, ascan be seen from Chart 2, the overall (weighted)ASEAN tariff rates fell.

Chart 2: Tariff rates for intra-ASEAN imports by sector,2003 and 2005 (%)

Source: Computed based on ASEAN Secretariate’s Tariff and Trade Databases.

Other indicators of the distortionary effects of thetariff structure include the percentage of non-advalorem tariff lines (i.e. tariff lines with specific ornon-proportional rates) and the prevalence of tariffspikes.7 These indicators are useful since a rise in theproportion of non-ad valorem tariffs and tariff spikeswould indicate that the misallocation of resourcesacross the economies has worsened, even thoughaverage tariff rates may have been reduced and theirstructure become more transparent.

In addition to the abovementioned restrictions, thereare also a wide range of non-tariff measures that canbe applied by any country and which result in areduced flow of trade in goods. These non-tariffmeasures include quantity control restrictions (non-automatic licensing, quotas etc.); technical restrictions(technical regulations, pre-shipment inspection,special customs formalities); and other restrictions(para-tariff measures such as customs surcharges,additional taxes and charges, price controls such asadministrative pricing, voluntary export restraints,and many others).We find that the reduction in tariffrestrictions is also mirrored, albeit to a lesser extent,by the reductions in non-tariff barriers. Most of thesereductions in non-tariff measures occur through

14 ASEAN Community14 ASEAN Community

5 This finding is consistent with the findings of earlier and more detailedstudies such as Austria (2006) using 1997–2001 data and Oktaviani et al(2007).

6 See Lloyd (2005) for a more detailed discussions.

7 A tariff spike occurs when an ad valorem tariff rate is more than threetimes the national average.We use CEPT rates and MFN rates to computethe extent of tariff spikes.The computation includes tariffs for commoditiesnot in the inclusion list (i.e. it includes commodities flagged as E:exclusionlist, G/GE: General Exception list, S/SL: Sensitive List and HSL: HighlySensitive List).

Chart 3: Share of intra-ASEAN trade (exports + imports)in all ASEAN countries combined, by sector, 2003 and2005 (%)

Source: Computed based on ASEAN Secretariat’s Trade Database.

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reductions in technical restrictions. Quantity controlrestrictions have generally shown little change exceptin relation to agro-based and fishery trade.

The impact of these changes on intra-ASEAN tradeflows in goods is shown in Chart 3. Intra-ASEAN tradereflects the growing importance of within-ASEANtrade (and openness to trade) as markets becomemore integrated across member countries. It iscomputed as the total value of ASEAN imports andexports divided by the total value of all exports andimports, and by the total value of GDP based onnational accounts figures converted to US dollars.According to Chart 3, there was a rise in intra-ASEANtrade for all sectors, with the exception of textiles andhealthcare products, between 2003 and 2005.

Free flow of services

In comparison with goods trade, the range of availablestatistics measuring the free flow of services is morelimited. Nonetheless, the underlying measurementconcept is the same. In a single market there shouldnot, for example, be any residency or local-presencerequirements, quotas, or economic need tests, or addi-tional establishment licenses imposed on foreignservices providers.One of the better statistics on tradein services is the extent of a country’s commitmentsunder AFAS. A country’s commitments to marketaccess and national treatment for each sector can beclassified according to four levels of commitment:

1 Commitments without limitations;

2. Commitments with limitations;

3. Unbounded commitments; and

4. No commitment.

Each country and sector can be measured based onthis classification.8

Chart 4 presents the levels of commitment in fivepriority integration service sectors in 2004 and 2006.9For Mode 1 – Cross-border supply,significant reductionsin the ‘no commitments’ percentage were made inhealthcare (market access only) and e-ASEAN.Little progress was made in air transport. For Mode 2 –Consumption abroad, significant reductions weremade in healthcare (market access only) and e-ASEAN.As with Mode 1, the least progress appears to havebeen made in air transport. For Mode 3 – Commercialpresence, the pattern is similar to that for modes 1 and2: most progress has been made in healthcare (marketaccess only) and e-ASEAN, with air transport being thelaggard. Finally the same pattern also emerges forMode 4 – Presence of natural persons.

The potential outcome of these reductions appears tobe reflected in the large increases in the volume ofcommercial service trade both into and out of theASEAN region. The figures obtained from the WTOdatabase show a significant increase in the value ofboth exports and imports of commercial services as awhole. Exports were lower in value than imports fortransport and other services in both 2003 and 2005,

Progress Monitoring System Volume 1 15

8 See Ochiai (2006) for more detailed discussion and for other possible indicators.

9 These years correspond to the fourth and fifth package of commitmentsunder AFAS submitted by each AMC.

Chart 4: Percentage of sub-sectors by type of commitment

Mode 1 – Cross-border supply

Mode 2 – Consumption abroad

Mode 3 – Commercial presence

Mode 4 – Presence of natural persons

Source: Computed based on the fourth and fifth AFAS commitment package.

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but the reverse is true for travel services. Ideally, amore precise indicator should be constructed toassess such a link by restricting the focus to within-ASEAN trade in commercial services. However, thedata are yet to be made available.

Free flow of investment

A single ASEAN market requires the free flow ofresources within the region. An increase in intra-ASEAN direct investment flows will occur if impedi-ments to such movements, such as domestic contentand minimum capital requirements, are removed.Chart 5 shows that for the broad industries involvingmost of the priority integration sectors (manufactur-ing and other services), intra-ASEAN direct investmentincreased significantly between 2003 and 2005, espe-cially compared with the reduced investment flows innon-priority sectors such as mining and quarrying,andconstruction.

Chart 5: Foreign Direct Investment flows to ASEAN from ASEAN, 2003 and 2005 (US$ million)

Source: Computed based on ASEAN Secretariat’s Statistics of Foreign DirectInvestment in ASEAN.

Freer flow of capital

As capital markets become more integrated, there is atendency for real interest rates to converge. Realinterest rates are national currency denominatednominal interest rates adjusted for domestic inflation(using changes in CPI) and changes in exchange rates.We compute real interest rates for commerciallending, time deposit and treasury bills using the IMF’sFinancial Statistics database. For all of these threerates, the cross-country variation in real interest rates,as shown by the standard deviation values, declinedslightly between 2003 and 2005. This observation isconsistent with increased capital market integration.

Another potentially useful indicator of economic integra-tion is the statutory company tax rate.A uniform set ofcompany tax rates across ASEAN would encourage inter-national companies to locate according to the fundamen-tals of a location—the skill base, access to transport andinfrastructure—rather than the size of its administrativelevies such as taxes. Statutory company tax is one of themajor taxes that companies face and is therefore likely tobe a factor in determining where to locate. ASEANmember countries’corporate tax rates range from 20 percent (Lao PDR) to 35 per cent (Philippines). However,there was no change in the spread of statutory companytax rates between 2003 and 2005.

Free flow of skilled labour

When people and resources are able to move more freelywithin a single market, average wages are expected tobecome less dispersed. The average salary of each occu-pation is computed as total salary or wages paid in anoccupation divided by total employment in that occupa-tion.Dispersion is measured by the standard deviation ofaverage wages across the ASEAN member countries.

Chart 6 shows the standard deviation of averagenational wages within ASEAN across four broad occu-pational groups. It reveals that the extent of variationin average wages is large amongst professionalworkers, and relatively small amongst elementaryworkers. The dispersion in the average wages (in USdollars) of skilled workers shown in the chart indi-cates a divergence in the ‘price’ of skilled labourwhere ‘skilled workers’ can be defined as those withinthe professional and technician and/or associate pro-fessional occupations. This trend is consistent withthe above finding that labour productivity appears todiverge slightly over time.

Chart 6: Dispersion in average wages across occupations,2003 and 2005 (US$ per worker per month, constantprices)

Source: Submitted country data.

This rise in dispersion may be the direct result of slowprogress in implementing programs to enhance thefree flow of skilled labour.For example, there was onlyone Mutual Recognition Arrangement (MRA) signed(in the engineering services sector) between 2003 and2005. Three more MRAs have been signed since then,however these are not reflected in the data.10

Competitive economicregion...........................In order to be competitive in a global economy, aregion needs to have sustained growth in productivity.Changes to the skill base and the innovative capacity ofa nation are the main sources of this competitiveness.11

The output of new science and technology graduatescan be an indication of both changes to the skill base

16 ASEAN Community16 ASEAN Community

10 It should be noted that a more intensive study on the scope and the depthof signed agreements is necessary in order to get a better understanding ofthe liberalisation process. In addition, there might be bilateral MRAsbetween two AMSs which are not included in Table 8.

11 See, for example, Porter et al (1999).

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and national innovative capacity. Positive growth inthe number of university graduates majoring inscience or technology per 1000 of the population wasrecorded between 2003 and 2005 for all countriesexcept Cambodia and Thailand.

The number of patent applications and grants isanother well recognised indicator of the number ofinventions originating from a given country. To begranted a patent, an invention must embody a consid-erable advance over existing technology anywhere inthe world. Two measures of this exist in relation toASEAN: the first is ASEAN applicants filing at the USpatent office, and the second is ASEAN applicantsfiling at one of the existing ASEAN patent offices. Bothtypes of patent data show a strong growth in patentapplications between 2003 and 2005 by the six activecountries—Indonesia, Malaysia, the Philippines,Singapore,Thailand and Viet Nam.ASEAN applicationsto the US patent office grew by over 10 per cent a yearand resulted in an increase in the ASEAN share of allUS office applications. While there was a fall in thenumber of grants over the same period, this may bedue to the considerable time lag (of several years)between application and the grant decision that iscommon amongst patent offices.

The differential patterns in patenting are also reveal-ing. There are a large number of Indonesian inventorsapplying to ASEAN offices compared with smallernumber of Indonesians applying to the US office. Bycontrast, there are relatively few Malaysian applicantsfiling within ASEAN as compared with the numberfiling with the US office. Since people and companiesconventionally file for a patent in the markets theyintend to sell into, this difference in behavior mayreflect a greater ASEAN focus by Indonesians and amore US-oriented export focus by Malaysians. Moreimportantly, not only is the absolute number of ASEAN applications more than four times larger than the corresponding number filing in the US office,but the growth rate of ASEAN applications is alsogreater.

Equitable economicdevelopment...........The third thrust of the Economic pillar of the ASEANCommunity focuses on the desire to ensure equitableopportunities for small and medium-sized enterprises(SMEs) within the member countries. Unfortunately,due to the lack of suitable and comparable statisticson SMEs across member countries, we are not able toprovide any such indicator in this report. As a result,we examine economic development inequality bycomputing the ratio between the population-weighted average of GDP in the ASEAN 6 countriesand the CLMV countries.

Table 1 shows that the gap between ASEAN 6 and theCLMV group fell slightly between 2003 and 2005 innominal US dollar and PPP dollar terms. On average,per capita incomes in US dollars in the ASEAN 6 coun-tries are about five times higher than that in the CLMVcountries.

Table 1: GDP per capita in US$ and PPP$, 2003 and 2005

Another indicator of equitable economic develop-ment is the average income of non-skilled workers.As shown in Chart 6 above, the disparity of wages forelementary workers declined slightly between 2003and 2005, but the average for the lowest skilled grouphad increased.

Integration into theglobal economy......Greater trade compatibility with the rest of the worldand subsequently greater participation in global pro-duction represent two important ways the ASEANcommunity pursues the goal of improved materialwell-being in the region. The indicators used tomeasure global integration comprise the level of tariffson imports from the rest of the world, and the impor-tance of trade and FDI between ASEAN and the rest ofthe world.

Non-ASEAN direct investment in the service sectorrose between 2003 and 2005 and the dispersion inexternal tariff rates for most priority integrationsectors decreased. All countries except Myanmar andViet Nam recorded a rise in extra-ASEAN trade.At thesectoral level, most sectors registered a decline ininter-country tariff rate dispersion with healthcare andICT showing the smallest variation. Rubber-basedproducts, textiles and the automotive sector had thelargest dispersion. In terms of direct investment fromoutside ASEAN, the service sector, in particular trade,commerce and finance, registered significant increasesin FDI flows. FDI from outside ASEAN into mining,quarrying and manufacturing, however, fell during thesame period.

Investors are more likely to be attracted to the ASEAN region and treat it as a single production baseif its external tariffs are relatively low and moreuniform across member countries. Chart 7 shows the distribution of external tariff rates—that is, the distribution of tariff rates faced by exporters from outside ASEAN who sell their products into theregion. The smaller the range, the closer each priorityintegration sector is to having a uniform externaltariff. Among the priority integration sectors, health-care and ICT have the smallest variation in tariff ratesand thus are closer to having more uniform externaltariffs. Sectors that registered high variation in externaltariffs include rubber-based products, textiles and, inparticular, the automotive sector. Nevertheless, many

Progress Monitoring System Volume 1 17

GDP per capitaUS$ PPP$

Country 2003 2005 2003 2005Mean (weighted by population)ASEAN 6 1,413.1 1,488.8 5,004.8 5,743.7CLMV 301.8 328.7 2,153.8 2,658.2Gap ratio = 4.7 4.5 2.3 2.2Note: The values in US$ are obtained by converting constant price (2000) value innational currency. The PPP$ are in current international dollar. Thailand submitteddata are in US$. Source: Submitted country data and International Financial Statistics for US$ andIMF World Economic Outlook Database April 2007 for PPP$.

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sectors registered a decline in dispersion between2003 and 2005.

Finally, the extent of ASEAN trade with the rest of the world reflects the openness and integration of the ASEAN community into the global economy.This indicator is computed as the share of exports to and imports from the rest of the world in total value of GDP. There was a considerable rise overall in extra-ASEAN trade recorded between 2003 and2005 for all countries except Myanmar, Philippinesand Viet Nam.

18 ASEAN Community18 ASEAN Community

Chart 7: Distribution of tariff rates on imports fromoutside ASEAN, 2003 and 2005 (%)

Source: Computed based on ASEAN Secretariat’s Trade and Tariff.

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The ASEAN community has been characterized by declining rates ofpoverty and enhanced human development in recent years. Overall human development in terms of income and health status have steadily improved over time and there has been some reduction in genderinequality. Remarkable progress has been made in infant and child mortality, malnutrition and the prevalence of disease. While there havebeen increases in literacy rates, there has been an uneven pattern ofimprovement in school participation rates. Large disparities across coun-tries continue to exist.

Poverty Poverty in the ASEAN region as a whole has been continuously decliningsince 1993.As can be seen from Chart 8, the proportion of the populationliving on less than the ‘$1 a day’ poverty rate was lower in ASEAN in 2004than in South Asia, Latin America, the Caribbean and Africa. During theperiod 2002 to 2004, the ASEAN region’s poverty rate declined by 1.53 per-centage points to a level below that of the Latin America and the Caribbean;the number of poor people has also been declining in absolute terms. In2004 there were roughly 33.7 million people living on less than ‘$1 a day’—6.4 million fewer than in 2002.

Chart 8: Percentage of poor population using international poverty line by region

Note: Data are not available for Brunei Darussalam, Myanmar and Singapore. Note that the World Bank estimates use unit record household data whenever possible, while PovcalNet uses grouped distribution (deciles orcentiles). As a result of this difference, there are some small discrepancies between online replications and theBank’s estimates, such as in the WDI. There are also some concerns about the 1993 PPP consumption data for Viet Nam.Source: World Bank ProvcalNet.

Chart 9: Population living under $1 a day

Note: Data are not available for Brunei Darussalam, Myanmar and Singapore.Source: World Bank PovcalNet.

Mill

ions

ASEANSocio-CulturalCommunity

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Chart 10: Population living under $2 a day

Note: Data are not available for Brunei Darussalam, Myanmar and Singapore.Source: World Bank PovcalNet.

There has also been a decline in the number of peoplein ASEAN living on less than ‘$2 a day’. In 2002, 43.6per cent of the population were poor on this measure,compared with 38.9 per cent in 2004. Consequently,the number of ASEAN nationals living on less than ‘$2a day’, in the seven countries with data, fell from 208million in 2002 to 190 million in 2004.

In terms of the poverty incidence based on nationalpoverty lines, there has also been a general improve-ment. Cambodia, Indonesia, Lao PDR, Malaysia,Thailand and Viet Nam all recorded declines in theincidence of poverty. Meanwhile, Myanmar does nothave such a recent estimate and the Philippinessuffered a reversal in its downward trend, recording ahigher poverty rate in 2006 than in 2003 (Chart 11).

Chart 11: Proportion of poor population based on nationalpoverty lines

Note: In many cases, the reference period refers to the one closest to the year hereinindicated. Data not available for Singapore. Sources: Asian Development Bank, Key Indicators 2007 unless otherwise specified; UN Statistics, MDG Indicators (Viet Nam 2002); Myanmar HouseholdIncome and Expenditures Survey (Myanmar 2003); ASEAN, Statistical Yearbook2004 (Indonesia 2003); ASEAN Stat. Yearbook 2005 (2000 figures for Indonesia,Thailand, Viet Nam, Malaysia, Lao PDR, Cambodia and Myanmar); and NationalStatistical Coordination Board for Philippines.

Income distributionIncome or expenditure inequality across ASEANmember countries shows varying trends in recentyears. According to the Gini coefficient, the distribu-tion of income/consumption improved in Malaysia,and the Philippines, while inequality increased inIndonesia, Singapore and Thailand. The distributionwas unchanged in Brunei Darussalam and Viet Nam.

%

%

The data for Singapore are not comparable as theyrefer only to monthly income from work per house-hold member among employed households. Chart 12shows the range of the data for the seven countrieswith data for the two years (Lao PDR, Myanmar andSingapore are not included). The gap between the dotsindicates that income/consumption disparities havebeen reduced. Unfortunately, the chart also shows thatthe minimum Gini coefficient in the region has goneup,as reflected by the larger distance of the band fromthe horizontal axis.

Another way of monitoring inequality is by looking at the share in income or consumption of the poorest20 per cent of the population. In the ASEAN region,the income/consumption share of the poorest quintileof the population ranges from a low of 4.4 per cent in Malaysia to a high of 9 per cent in Viet Nam (estimates range from 1997 to 2004). Unfortunately,data to assess changes in equality for the ASEAN as awhole are unavailable.

Chart 12: Gini coefficient

Sources: Brunei Darussalam: MDG’s 2005 (1997/98 HES); Cambodia, CSES 2004;Malaysia: Department of Statistics; Myanmar: Household Income and ExpenditureSurvey, 2001; Philippines, Family Income and Expenditure Survey (FIES), NationalStatistics Office; Thailand: National Statistical Office; Singapore, General HouseholdSurvey (2005); June Labour Force (2003), Singapore Department of Statistics;Indonesia, Analisis Dan Penghitungan Kemiskinan 2006, BPS; Lao PDR, LaoExpenditure and Consumption Survey (LECS) 3 (2002/03), National StatisticsCentre(NSC); Viet Nam, Viet Nam Households Living Standards Survey (VHLSS).

HealthVarious health indicators show that the overall healthprofile of the ASEAN region has been improving.The average life expectancy at birth for an ASEANnational rose from 65.0 in 1995 to 69.4 years in 2005; this is slightly lower than that of the LatinAmerican countries (73.0 years), but higher than thatof the South Asia (63.8) and Sub-Saharan Africa (49.6)(Chart 13).

Moreover, the infant mortality rate has declined inmost ASEAN member countries, though it remainsvery high in countries such as Cambodia and LaoPDR—in 2005 about 70 out of 1000 infants born alive in these two countries died before their firstbirthday. Chart 14 shows that the maximum infantmortality rate has fallen. Moreover, the shorterdistance between the dots reveals a reduction in thedisparities among countries (refer to Chart 14). Thedecline in the mortality rate of children of less thanfive years of age has been remarkable in most coun-

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tries (see Chart 15). It also indicates that the disparities across the countries have been reduced significantly.

Chart 13: Life expectancy at birth by region

Note: Weighted average of country figures (using mid-year population as weights).Source: UNDP Human Development Reports, ASEAN Stat. Pocketbook 2006,ASEAN Statistical Yearbook 2005 and Lao PDR National Statistics Centre.

Chart 14: Infant mortality rate per 1000 live births

Sources: Brunei Darussalam, Ministry of Health, Dept of Immigration and NationalRegistration; Lao PDR, NSC website; Philippines, 2003 National Demographic andHealth Survey (NDHS) and Family Planning Survey, NSO; Indonesia, BPS LaporanPerkembangan Pencapaian MDG; Singapore, Immigration & Checkpoint Authority(ICA); Department of Statistics (DOS), Administrative Records; Thailand: NationalStatistical Office; Malaysia: Department of Statistics; Myanmar, based on VitalRegistration System, CSO; Cambodia, First Revision Population Projections forCambodia 1998-2020, NIS/UNFPA; Viet Nam: General Statistics Office.

Chart 15: Under-five mortality rate per 1000 live births

Source: See Chart 14.

On top of the notable decline in mortality rates, theproportion of underweight children has also declinedin all countries where data are available. This indicatesan improvement in the nutritional status of children inthese countries.

In terms of the percentage of underweight childrenaged below 5, all six countries that reported data haveshown declining rates showing improvement in nutri-tional status in the region.

In 2005,ASEAN countries devoted between 3 and 14per cent of total government current expenditures tohealth programs, although the situation varies bycountry. Cambodia, Malaysia and Thailand increasedthe share of health spending in total governmentexpenditures between 2003 and 2005, while BruneiDarussalam, Singapore, Philippines, Myanmar and VietNam reduced the health budget share.

The prevention and control of diseases such asmalaria, tuberculosis and HIV/AIDS are current globalconcerns. In the ASEAN region, the prevalence ofmalaria has been declining but that of tuberculosisworsened between 2003 to 2005. There are consider-able disparities between ASEAN countries. Forexample, while only about four out of every 100,000people in Brunei Darussalam contracted malaria, thecomparable figure for Cambodia is 600.

Aside from malaria and tuberculosis, the prevalence ofHIV/AIDS has been increasing globally. In contrast tothe declines recorded in ASEAN countries such asMyanmar, Cambodia and Thailand, HIV/AIDS hasincreased in prevalence in Viet Nam, Philippines and Singapore. It nevertheless remains very high inCambodia and Indonesia, at 600 and 1000 respectivelyper 100,000 of population. The number of denguefever cases has also increased in a majority of countries,with the result that the rough estimate for the ASEANregion has risen from 0.37 per 1000 of population in2003 to 0.47 in 2005.

Severe acute respiratory syndrome (SARS) was not athreat in 2005, with no cases of SARS reported. This situation contrasts with the situation in 2003, whenSingapore and Viet Nam reported 238 and 63 SARScases respectively. The recent trend may indicate thatefforts in the region to contain SARS have been suc-cessful.Meanwhile, the available data suggests that theregion has been less successful in containing Avian flu—in 2005 four countries reported cases of Avian flu,with Viet Nam reporting the highest number.

EducationNine out of every ten persons in the ASEAN region areable to read and write. Literacy rates have beensteadily increasing, from 90.8 per cent in 2003 to 91.5per cent in 2005. While disparities are significantacross countries, the gaps are decreasing. The overallASEAN literacy rate is higher than the world averageand is the same as that for Latin America (Chart 16).However, the disparity between males and females isquite significant. The average literacy rate of the malepopulation is almost 6 percentage points higher thanthat of females. Nevertheless, the literacy rate offemales improved significantly during the period 2000to 2005 (Chart 17).

The trend in primary school enrolments varies fromcountry to country. Only half of the ASEAN countriesimproved their primary school enrolment rates, with

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Brunei Darussalam,Lao PDR,Philippines, Thailand andViet Nam all experiencing declining primary schoolenrolment rates between 2003 and 2005.

A further indicator of access to education is thecohort survival rate – as measured by the percentageof first grade enrollees who complete the final grade.As with enrolment rates, the cohort survival rate variessignificantly across countries. Brunei Darussalam,Singapore and Malaysia have very high cohort survivalrates,while Cambodia,Lao PDR and Myanmar have rel-atively low cohort survival rates. Females tend to havehigher cohort survival rates than males.

Chart 16: Adult literacy rate by region

Chart 17: Adult literacy rate, ASEAN

Note: 2005 data obtained from the Human Development Report 2007/2008 used national estimates from censuses and surveys conducted between 1995 and 2005.Sources: Brunei Darussalam: (2003) Population Census 2001, Dept. of EconomicPlanning and Development; Indonesia: BPS; Malaysia: Department of Statistics;Myanmar: Dept. of Education Planning and Training; Philippines: FunctionalLiteracy, Education, and Mass Media Survey (for 2003); Singapore: Dept. ofStatistics; Thailand: (2005) Bureau of Policy and Strategy; Viet Nam: GSO; UNDPHDR 2005 and 2006 for Cambodia, Lao PDR, Thailand (2003 data), Philippines(2005), Brunei (2005); Cambodia data by sex: ASEAN Stat. Yearbook 2006 andCambodia Socioeconomic Survey 2004; Thailand data by sex: UNDP HumanDevelopment Reports.

Significant variations also exist across countries interms of the dropout rate from primary to secondarylevel. While Malaysia, Brunei Darussalam, Philippinesand Singapore report very low dropout rates, Indonesiareports that about one out of every five students whofinish primary school do not continue on to secondarylevel, and Myanmar reports even higher dropout rates

at 27 per cent.As shown in Chart 18, there is no con-sistent pattern regarding disparities between males andfemales in the combined enrolment rate. Because ofthese variations, it is difficult to say whether the ASEANregion as a whole has performed better with respect toeducation in recent years.

Chart 18: Combined enrolment rate, ASEAN

Sources: UNDP Human Development Report 2005 and 2007/2008, Singapore:Ministry of Education and Singapore Department of Statistics.

Labour marketBetween 2003 and 2005 the ASEAN unemploymentrate increased by about half a percentage point, withthis overall change being dominated by the (large) sizeof the labour force in Indonesia.A more disaggregatedview shown in Chart 19 reveals that there was adecline in the unemployment rate in five out of theseven countries (for which data are available). Therewas a rise in the unemployment rate in Indonesia.There was no change in the unemployment situationin Myanmar in the two years.

Chart 19: Unemployment rate by country

Note: ASEAN estimate does not include Cambodia, Lao PDR, Myanmar and VietNam due to unavailability of basic data.Sources: Brunei Darussalam, Dept of Economic Planning and Development;Cambodia, Cambodia Socio-Economic Survey 2004 (CSES2004); Indonesia, BPS; Lao PDr, Population and Housing Census 2005, NSC; Malaysia: Department of Statistics; Myanmar, Labour Force Survey, Dept of Labour; Philippines, LaborForce Survey (LFS) October round, National Statistics Office(NSO); Singapore,Labour Force Survey; General Household Survey 2005; Thailand, The Labor Force Survey, National Statistics Office(NSO); Viet Nam, NGKT2006 (Statistical YearBook 2006).

Between 2003 and 2005 there was a rise in femalelabour market participation as shown by the femaleemployment-to-population ratio, which refers to the

0 5 10

Unemployment rate (%)

Viet Nam

Thailand

Singapore

Philippines

Myanmar

Malaysia

Lao PDR

Indonesia

Cambodia

Brunei Darussalam

20032005

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number of employed females as a proportion of thefemale population within the same age range.Indonesia, the Philippines, Singapore and Thailand allshowed increases in female participation ratios.Unfortunately the ASEAN-wide level figure cannot becomputed, due to the difficulty in obtaining raw data.

While the female population is becoming moreengaged in labour markets across ASEAN, the partici-pation of young people in the labour market is declin-ing. The youth employment-to-population ratio refersto the number of those aged 15–24 years who areemployed, as a percentage of the total population inthis age range. The decline in this ratio occurred forboth male and female youth. Meanwhile, a greater pro-portion of male youth are employed compared withfemale youth. This ratio varies widely across coun-tries, from a low of 30.8 per cent in Singapore to ahigh of 74.7 per cent in Cambodia.

EnvironmentAll ASEAN countries, with the exception of BruneiDarussalam, have ratified or acceded to the UnitedNations Framework Convention on Climate Changeand the Kyoto Protocol, which aims to reduce green-house gases in order to address global warming. TheThird ASEAN State of the Environment Report notedthat while the total amount of carbon dioxide emis-sions in the region is very much lower than mostdeveloped and other regions, it is increasing at anaverage annual rate of 6 per cent. Between 2003 and2004, these emissions increased by 4 per cent, from1022 million to 1063 million metric tons. Between2003 and 2004 total carbon dioxide emissionsincreased in all countries in the region exceptCambodia and Indonesia.

The ASEAN Countries are committed to addressingglobal environmental issues, including climate change.All ASEAN countries have ratified or acceded to inter-national protocols to protect the ozone layer. Therehas been a significant decline in consumption ofozone-depleting CFCs (as measured in terms of ozonedepleting potential) in the nine countries. The regionas a whole experienced a decline of 42 per cent, from9,752 to 5,680 metric tons, indicating the success ofgovernment policies and programs to reduce CFC con-sumption. Singapore reported zero consumption inboth years.

One of the more immediate environmental problemsfaced by the ASEAN region is the transboundary hazepollution. Transboundary haze pollution is caused byuncontrolled land and forest fires. These are often theresult of clearing forests by open burning for planta-tion crops and agricultural activities by farmers. Thespread and intensity of fires are compounded byoccurrences of El Nino and drought.

Land and forest fires affected the southern part of theregion in mid-August 2005. Brunei Darussalam andThailand were affected by transboundary haze—Brunei Darussalam experienced 8 days of haze, whileThailand experienced 36 days of haze in 2005.Singapore reported that in both 2003 and 2005 there

were no days when the Pollutants Standard Index wasin the unhealthy range due to transboundary haze; thePollutants Standard Index is a measure of daily levelsof air pollution.

ASEAN has been active in promoting protected areasto ensure environment sustainability. The success of these efforts is shown by the fact that from 2003 to 2005 there have been increases in the ratio of protected area to total area in some countries, whilefor the other ASEAN countries for which data is available no declines in the protected area have been recorded.

Preservation of forests is critical for environment sustainability. Brunei Darussalam has the highest percentage of forest area within ASEAN. ExcludingSingapore, which is a highly urbanized state, thePhilippines has the lowest percentage of forest area. Unfortunately, however, these percentages havebeen declining over time. Deforestation could havedire consequences for the environment and societiesin general. As for the region as a whole, ASEAN hasalmost the same percentage of forested area, 45.5 percent, as Latin America and the Caribbean, and wasabove the world average of around 30 per cent in2005 (Table 2).

Table 2: Selected indicators on environmental sustainabilityby region

ASEAN is committed to providing its population withaccess to safe drinking water. The population withaccess to an improved water source in the region in 2004 is estimated to be around 451 million or 82 per cent of the total, compared with South Asia’s 85 per cent and Latin America’s 91 per cent. All, oralmost all, of the population in Singapore, Malaysia,Brunei Darussalam and Thailand have access to safedrinking water. In Viet Nam, the Philippines, Indonesiaand Myanmar this figure is around 80 per cent. At least 49 per cent of Cambodian and Lao people do not have access to safe drinking water. Greater efforts are needed for these countries to meet theMDG target of universal access to safe drinking waterby 2015.

The proportion of the ASEAN population with accessto sanitation facilities has been generally increasingover time. Singapore,Thailand and Malaysia have 100per cent or close to 100 per cent access, while inCambodia and Lao PDR this figure is considerablylower. The regional percentage as a whole is above theworld average at 67 per cent.

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Population Populationwith access with access Forest Areato improved to improved as % ofwater source sanitation total land

Region (%), 2004 (%), 2004 area, 2005ASEAN 82 67 45.5Latin America 91 77 45.9South Asia 85 37 14.2Sub-Saharan Africa 55 37 26.8World 83 59 30.3Note: Estimates do not include Brunei Darussalam; computations are based on themidyear population collected from the ASEAN Statistical Yearbook 2006 and 2005 andUN Population Division and land area data from ASEAN Secretariat website.Source: Human Development Report 2007/08 (for ease of comparison amongregions).

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ASEAN identityASEAN has been actively promoting ASEAN identityand culture. More and more television programsproduced in one ASEAN country are being shown inother ASEAN countries. All countries are able to viewprograms from other ASEAN countries. For example,Brunei Darussalam, Myanmar and Singapore reportedthat a significant number of television programs fromother ASEAN countries are being shown on their localchannels.In line with efforts to promote ASEAN cultureand identity outside the region,ASEAN documentariesare being broadcast to non-member countries as well.

Incorporating ASEAN history and culture in schoolcurricula will help ensure that the ASEAN populationis aware of ASEAN history and culture.While all coun-tries have at least one school that incorporates ASEANhistory and culture in the curriculum, BruneiDarussalam, Singapore and Thailand require that allschools offer such courses.

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The overarching goal under the ASEAN Political and Security Community isto maintain and enhance peace and security in the South-East Asia region.The Political and Social Community encompasses the following:

• institutional and procedural aspects of political actions that lead to theprotection of the population against external dangers, such as poten-tial transnational,non-military threats (drug and arms trafficking,moneylaundering as forms of organised crime, international terrorism, prolif-eration of weapons of mass destruction);

• defence policies including the protection of the territorial integrity ofa state against external attacks carried out by force of arms; and

• all areas of foreign policies which aim at bilateral, regional, multilat-eral or global cooperation on security matters, including conflict res-olution and the prevention of organised violent acts.

As a multilateral organisation,ASEAN faces several important and challeng-ing security issues. These include territorial disputes among member coun-tries, terrorism and transnational crime affecting the region, relations withlarger powers in the region, tensions resulting from a regional arms raceand the proliferation of nuclear weapons. Through the years ASEANmember countries have actively engaged with each other and also withnon-member countries through peaceful means—either bilaterally, throughsub-regional dialogue or through multilateral forums under the ASEANplatform. They have also played an important role in bringing the largerpowers together to increase dialogue between countries through specificforums such as the ASEAN Regional Forum (ARF).

In terms of ASEAN’s external relations, the ARF has become one of the mostinfluential institutions in enhancing regional security in South-East Asia.The ARF was established in 1994 to foster constructive dialogue and con-sultation on political and security issues of common interest and concern.It provides a forum under which dialogue can take place to help reducetensions between countries and defuse the reciprocal perception of threat.In addition, ASEAN has committed to maintaining a nuclear weapons-freeSouth-East Asia through the South-East Asia Nuclear Weapon-Free Zone(SEANFZ) treaty. These treaties and agreements have played an instrumen-tal role in preventing potential conflicts.

From a regional security perspective, there is no doubt that the existenceof institutions such as the ARF facilitates political engagement and helpsfoster a sense of community,which in turn enhances security in the region.The crucial but difficult question is how to measure their effectiveness andisolate the extent of their contribution in enhancing peace and security.

The most significant achievement of ASEAN as a political and security community is the absence of armed conflicts between member countries.While this achievement is a worthy one, progress should not be measuredby the lack of armed conflicts, but rather in terms of the reduction in theprobability of armed conflicts. In other words,one can reasonably concludethat there is progress if it can be shown that the chance of armed conflictbetween countries in the region has been lower because of ASEAN’sefforts. To this end, we can distinguish two types of statistical indicators.The first, referred to as process indicators, attempt to enumerate the effortsexpended by ASEAN member countries in maintaining and enhancingpeace. The second type of indicators, called outcome indicators, face thegreater challenge of demonstrating the effectiveness (or the lack thereof)of these efforts in maintaining and enhancing regional peace and security.

Process indicators attempt to answer the question: What have ASEAN countries done to maintain and enhance peace? This question can berephrased as a series of smaller questions relating to the types and natureof institutions created, dialogues and political engagements taking place,security-related agreements entered into, and bilateral or sub-regionalsecurity-related cooperation that has taken place. In addition, the develop-ment of norms and institutions is also of great importance in the formationof a security community. These norms and institutions must be strongenough to generate “mutually reliable expectations of peaceful change”

ASEANPolitical and SecurityCommunity

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(Deutsch et al., 1957). Unfortunately, quantifying thedevelopment of norms in a community using statisti-cal measures is not an easy task.

The outcome indicators,on the other hand, attempt tomeasure the effectiveness of various political andsecurity related efforts in maintaining and enhancingpeace in the region. This group of indicators couldperhaps include measurement of perceptions ofsecurity threat, the degree of belief that disputesbetween member countries can be resolved throughpeaceful means, and actual events of security inci-dences such as the number of armed confrontations.

It should, however, be cautioned that statistical indica-tors only provide an incomplete view of progress inregional security and political development. Forexample, the signing of the ASEAN Charter has been amilestone event that took many years of negotiationand preparation.Yet the progress in this event couldnot possibly be completely quantified and reflectedusing statistical indicators. Likewise, in many othercases the use of statistical indicators can measure theoccurrence of events, such as the ministerial meetingon transnational crime, but not the effectiveness ofsuch events in enhancing security. This difficulty isclosely related to the subjective nature of security—whether one feels secure as a member of a community

is largely a subjective assessment and such a feelingdoes not easily lend itself to objective measurement.

With the subjective nature of security in mind, we rec-ommend that statistical indicators be supplementedwith a subjective assessment of security via an opinionsurvey. There are clearly many issues to be consideredif a survey is to be conducted. Questions relating tothe questionnaire design, persons to be sampled, fre-quency of the survey and choice of organisation toconduct the survey are but a few issues that wouldneed careful consideration. We would argue that thesurvey should be designed to elicit views of individu-als who are familiar with ASEAN security issues, hencea random sampling survey approach is not recom-mended. Rather we would suggest that the survey par-ticipants be restricted to ASEAN security experts, intel-lectuals and informed individuals. In regard to surveymethods, we suggest that a combination of mail-,email- and web-based survey be considered. Inaddition, for the survey to form part of the ACPMS, werecommend that the survey be conducted every twoyears and that as far as possible the same participantsshould be surveyed each time. Lastly, we suggest thatan independent organisation, impartial to any partiesin ASEAN, be entrusted with the task of conductingthe survey.

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ReferencesAcharya,A. (2001) Constructing a Security Community in Southeast Asia:ASEAN and the Problem of Regional Order, London: Routledge.

ASEAN Secretariat (2006a) ASEAN Baseline Report Volume 1 – Part 1 Analysis,ASEAN Secretariat, Jakarta.

ASEAN Secretariat (2006b) ASEAN Baseline Report Volume 1 – Part 2 Systemof Indicators, ASEAN Secretariat, Jakarta.

Deutsch, K.W., S.A. Burrell and R.A. Kann (1957) Political Community andthe North Atlantic Area: International Organizations in the Light ofHistorical Experiences, Princeton, NJ: Princeton University Press.

Lloyd, Peter J. (2005) “What is a single market? An application to the case ofASEAN”, ASEAN Economic Bulletin, 22 (3), 251–265.

Ochiai, R. (2006) “An investigation into the measures affecting the integra-tion of ASEAN’s priority sectors (Phase 2): Overview: impediments totrade in the priority services sectors, REPSF Project 06/001a, FinalReport, December 2006.

Porter,Michael E.,Scott Stern and the Council on Competitiveness (1999) TheNew Challenge to America’s Prosperity: Findings from the InnovationIndex, COC:Washington.

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