After the Asean Economic Community (AEC) was officially incepted this week, analysts have been evaluating the potential trade value of the 10 member state grouping.

Signed in Kuala Lumpur, the agreement aims to turn Asean into a single market and production base, removing tariffs and instilling uniform standards. However, after waiting 12 years to reach this stage, the consensus is that the benefits will take up to a decade to come into effect.

Leaders are now aiming to implement all of the tenets of the AEC by 2025. While many trade barriers have already been removed between the states, it is expected to usher in a new era of low-cost production and GDP creation. The flow of capital and people will be galvanised, as will trade flows. With some 600 people in the union, and combined GDP of US$2.6tn, some are tipping the AEC to become one of the most significant trading regions in the world.

“It will start a lot of economic movement in the region: trade flows, human flows, capital flows and that’s exactly what we need these days when the world seems to be moving apart from each other, when the world seems to be closing their doors and putting up barriers with each other. Having a few more AEC and similar things will be a very necessary and valuable trade gain to the world economy,” Nicholas Kwan, the director of research at the Hong Kong Trade and Development Council told GTR in Beijing.

The AEC can expect a slew of investment, as uniform standards and regulatory harmony make it easier to pump money into the bloc. European and Japanese investors are currently the top spenders in Asean and will continue to keep a strong interest.

However, the simultaneous progression of the Trans-Pacific Partnership (TPP), the 12-nation free trade agreement that includes most of Asean members as signatories, is likely to usher in investment from Latin America to the AEC.

“Vietnam appears to be the biggest winner after the establishment of the AEC and after the TPP comes into effect,” Eugene Lim, Baker & McKenzie

In pure trade terms, Vietnam is expected to benefit most – as is the case with its membership of the TPP.

“Vietnam appears to be the biggest winner after the establishment of the AEC and after the TPP comes into effect,” Eugene Lim, head of Asia Pacific trade and commerce practice at law firm Baker & McKenzie tells GTR. “Besides the TPP and the AEC, Vietnam has been very active in negotiating and signing free trade agreements with other trading partners, including most recently with South Korea, the EU, the Customs Union of Russia, Kazakhstan, and Belarus, and the European Free Trade Association [EFTA: Switzerland, Norway, Iceland, and Liechtenstein]. All of these give major competitive advantages to Vietnamese exports as well as inflow of trade and investments in Vietnam.”

Ministers were keen to point to the aspirational potential the AEC presents. Asean is currently the world’s seventh-largest economy and is expected to grow to a combined GDP of US$4.7tn by 2020.

Malaysia’s Prime Minister Najib Razak said: “We now have to ensure that we create a truly single market and production base, with freer movement of goods and services. For that – with common standards, far greater connectivity, and the removal of the barriers that make our borders a hindrance to growth and investment – will be one that is primed to expand exponentially.

“It is also about all of us being Asean, recognising that something special binds us, and making our citizens feel that Asean courses through their veins. We have now raised the bar and the expectations of our people. We are charged with meeting the aspirations of our younger generations, and of those to come.”

Meanwhile, HSBC has forecast that the AEC will lead to a huge GDP boost for Singapore, which is likely to be the financial hub of the bloc, with its few remaining production facilities set to be relocated to low-cost centres. The bank predicts that the city state’s GDP will grow by an additional 9.5% by 2030 as a direct result of the AEC.