What are the roles of “Complement & Competition” in ASEAN economic integration?

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The countries making up ASEAN, are fast integrating their economies. The argument, is that a single market will create new opportunities for businesses, as trade and investments becomes border-less with ASEAN.

But there is a great deal of fear and reservations, with some quarters in ASEAN, as a borderless trading block, would increase competition, that could hurt selected sectors of each ASEAN countries.

For example, Citi Group, the large USA banking group, issued research that said Singapore would benefit from ASEAN economic integration, however, the threat is that Singapore’s “ASEAN Hub” concept, could be challenged by other ASEAN countries, emerging as hub for certain areas.

The following article from the Star, argues for ASEAN to “Complement” each other, and not  “Compete.” Is that viable?

Many of my socialist friends, argues against capitalist economic concept that that competition, lead to the most efficient resource allocation. In fact, they may be correct, from looking at the widening gap between the rich and poor. Looking at this gap, clearly, there is a problem with the concept of “Competition” as a tool to allocate resources. However, looking at countries under socialism, such as the former Soviet Union, clearly the track record of resource allocation, is also anything but successful, with shortages of basic goods and few choice, a major problem.

Then there is the concept of Entrepreneur, part of the Captalist system, but not exactly:

Wikiperdia says; The term entrepreneur (i/ˌɒntrəprəˈnɜr/) is a loanword from French and was first defined by the Irish-French economist Richard Cantillon as the person who pays a certain price for a product to resell it at an uncertain price, thereby making decisions about obtaining and using the resources while consequently admitting the risk of enterprise. The term first appeared in the French Dictionary “Dictionnaire Universel de Commerce” of Jacques des Bruslons published in 1723.

Over time, scholars have defined the term in different ways. Here are some prominent definitions.

  • 1803: Jean-Baptiste Say: An entrepreneur is an economic agent who unites all means of production- land of one, the labour of another and the capital of yet another and thus produces a product. By selling the product in the market he pays rent of land, wages to labour, interest on capital and what remains is his profit. He shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.
  • 1934: Schumpeter: Entrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new products, new services.
  • 1961: David McClleland: An entrepreneur is a person with a high need for achievement [N-Ach]. He is energetic and a moderate risk taker.
  • 1964: Peter Drucker: An entrepreneur searches for change, responds to it and exploits opportunities. Innovation is a specific tool of an entrepreneur hence an effective entrepreneur converts a source into a resource.
  • 1971: Kilby: Emphasizes the role of an imitator entrepreneur who does not innovate but imitates technologies innovated by others. Are very important in developing economies.
  • 1975: Albert Shapero: Entrepreneurs take initiative, accept risk of failure and have an internal locus of control.
  • 1975: Howard Stevenson: Entrepreneurship is “the pursuit of opportunity without regard to resources currently controlled.”[1]
  • 1983: G. Pinchot: Intrapreneur is an entrepreneur within an already established organization.[note 1]
  • 1985: W.B. Gartner: Entrepreneur is a person who started a new business where there was none before. [2]

The fact is, under ASEAN, there will be a great deal of both “Complementing” and “Competing.” Possible, the ASEAN secretariat, will have a top down approach of spurring “Complement” while the private sector focus on “Competition.” Then there will be opportunities for entrepreneurs.

  • The following is from the Star:

Don says Asean member countries should complement, not compete

By LIZ LEE

lizlee@thestar.com.my

KUALA LUMPUR: With Asean forging ahead with its Asean Economic Community (AEC) plans, member countries of South-East Asia should seek to create a synergy based on their strengths rather than out-do each other.

University of Hull vice-chancellor Prof Calie Pistorius (pic) believed that every member country in the region should position itself for the opening up of the regional economy to complement each other rather than compete against each other.

“If you have a common economic area, the total is greater than the sum of parts,” he told StarBiz, noting that the value and benefits lay in working together.

“Each will have competitive advantages either based on resources or geography and you need to find the synergy among the competitive advantages the countries have. Everyone should play to their strengths but with a view of the broader Asean region,” he said.

Given Malaysia’s strategic location in the region, Pistorius pointed out that the logistics industry could be developed to complement the growth of Asean.

“Logistics will be an obvious choice for Malaysia,” he said, “Malaysia is well-positioned to be the logistics hub because of its geographical advantages as well as its world-leading expertise in the industry.”

Pistorius, who was in town for a meeting with a private corporation, also cited political stability and being less prone to calamities as notable advantages of the country. However, he believed that preparedness for the unexpected, especially natural disasters, is key for the region.

On what Asean, in becoming a single economy, should look at to be successful, Pistorius said: “Focus in the first instance on the complementarities, on how you can complement one another.”

Pistorius also foresees fundamental changes to the rules that govern the economy and advised Malaysia to brace itself for the new system.

He recommended Malaysia to position itself in a role that allows it to contribute to shaping the rules and adapt to the new economic needs.

“If you are the top football team, it doesn’t mean you are the top rugby team,” he shared an analogy. “If you think that with a major change like the Asean regionalisation, you’re going to play with the same old rules, it is not going to work at all.”

“One of the first things you learn in the innovation game is when rules change, everything changes. There will be new players, new leaders; the entire ecology of the industries changes,” he said.

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