Competition laws in ASEAN: opportunities and obligations for SMEs

Abstract

The ASEAN (Association of South East Asian Nations) Economic Community (AEC), formally established at the end of 2015, brings about a single market and production base in the region and provides for free movement of goods, services, investments, skilled labour and free flow of capital. With a combined population of about 625 million and a combined gross domestic product of US$2.4 trillion, it offers a tremendous growth opportunity for the private sector. Small and medium enterprises (SMEs) are the backbone of ASEAN, and SME development is vital to achieve long-run and sustainable economic growth. SMEs account for more than 96% of all enterprises and 50 to 85% of domestic employment. The contribution of this sector to GDP is between 30 and 53%, while its contribution to exports is between 19 and 31%. Regionalisation means lower barriers to entry and convergence across industries due to the reduction of trade barriers within the region, resulting in increased international competition. While liberalisation is good for an economy, it may harm local SMEs who are unprepared for international competition. SMEs need to be well placed to take advantage of these opportunities. Businesses need to be more entrepreneurial, competitive and resilient to withstand the increased competition within the region, or they may lose out to foreign players. This report considers the ASEAN competition laws, their implication for SMEs, how the laws have been applied to SMEs in ASEAN to date and how the laws should encourage businesses to innovate and improve their production capabilities. Finally, it addresses the compliance issue, providing a brief insight into how SMEs could prepare for the introduction of competition laws across the region