Over the past decade, Chinese economic dominance has overshadowed the emergence of another global economic force. The 10-nation strong Association of Southeast Asian Nations (ASEAN) is collectively the seventh largest economy in the world, trailing closely behind India.
The region’s combined GDP has doubled since 2007, growing at an economic rate of 5% annually in the past years, to a US$2.8 trillion record high. This steady growth suggests that the world is witnessing the rise of a new economic powerhouse.
To sustain this growth, the members of the ASEAN have devised a master plan dubbed ASEAN Connectivity that seeks to connect the region’s 620 million inhabitants into a network of thriving trading routes powered by new infrastructure.
Under the ASEAN Connectivity plan, the bloc will consolidate their efforts to improve the quantity and quality of roads, ports, and railways in the region through radical and robust trade agreements.
In 2015, the ASEAN Economic Community was established for this very reason, seeking to remove trade barriers within the region to facilitate the free movement of goods, services, capital, and skilled labor within the bloc.
Many key players are benefiting from these regulatory reforms, with plans to improve, expand and develop new and existing infrastructure.
“The aim for the key players in the sector is to overcome road and port traffic congestion, meet labour shortages, and end inefficiencies at border crossings, thus freeing up the movement of vehicles both within the region and outward to global trading partners,” says Datuk Kumar Prabakaran, Managing Director of Giga Shipping.
The AEC has brought with it many reforms that aim to improve efficiency at customs, and the private sector has swiftly followed suit.
Datuk Kumar of Giga Shipping says the company has “invested significantly in technology and applications that improve our efficiency. As part of customs reforms for the AEC agreement, automation has also been vital to speeding up the customs clearance process and reducing administrative costs.”
Beyond traditional logistics, digital innovations within the logistics industry will also play a pivotal role in ensuring ASEAN’s place in the world economy.
Digital innovation is an integral part of the ASEAN Connectivity road map, with a defined objective of supporting the adoption of new technologies to improve financial access and enhance data sharing and management.
Sweeping innovative changes can be seen in the sub-sector of e-commerce within the logistics industry in recent years. Many regional companies have made the necessary shift into this rapidly growing industry, but it doesn’t come without challenges.
“In the last two years KGW has entered the e-commerce logistics industry. This means that we have to get a courier license, so KGW can clear all the e-commerce products coming into the country without going through traditional channels. This courier licence is different from normal logistics licence and it falls under the MCMC (Malaysian Communications and Multimedia Commission), but there is no uniformity yet about ASEAN licensing,” says Dato’ Roger Wong, Managing Director of KGW.
The road to seamless logistics is anything but seamless, but with progressive reforms enacted by the newly established AEC, the region is firmly resolute on creating a thriving network of effective and efficient trade routes.