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Mar. 10, 2015 - Updated 04:16 UTC



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ASEAN at 50

Aug. 8, 2017

The Association of Southeast Asian Nations marked the 50th anniversary of its founding on Tuesday. The regional block, with more than 600 million people, has become a significant engine of global growth, after early decades of conflicts and severe economic disparities.

A ceremony for the anniversary took place in Manila, as the Philippines chairs ASEAN this year. It was led by the nation's President Rodrigo Duterte.

"Today, 50 years since, we remain firmly convinced that we will prevail against the new and emerging challenges we now face as an ASEAN community. As we stand at the center of the future of ASEAN Pacific region, we remember our responsibility to fully realize the dreams and aspirations of our people."
-Rodrigo Duterte, Philippine President

ASEAN was founded in August 1967 by the governments of the Philippines, Indonesia, Malaysia, Singapore and Thailand. Initially, it was widely regarded as a bulwark against communism.

But after the Cold War, the picture has drastically changed. Other member states such as Vietnam, Cambodia and Myanmar have joined, and ASEAN has matured into a community focused on economic integration and growth.

NHK World's Kozue Hamamoto joins Newsroom Tokyo anchor Aki Shibuya from Manila, Philippines.

Shibuya: What are some ASEAN milestones over the past 50 years?

Hamamoto: Some call ASEAN a political miracle, particularly as far as economic growth is concerned. Its economy has grown 5-fold in the past 2 decades and is now the world's 6th largest. This fact alone, unimaginable 50 years ago, shows how far the region has come.

And in 2015, the 10 countries launched the ASEAN economic community, or AEC. It has boosted economic activity by largely reducing tariffs and barriers to goods and services within the region.

We now have a story from a town on the Thai-Cambodian border, which illustrates the AEC's effect on the local economy.

Trucks carry all kinds of commodities across the Thai-Cambodian border.

At a Thai customs site, imports from Cambodia have increased around 3-fold over the past 5 years. What's more -- industrial products used to be just a small fraction of those imports. Now, they're about 20 percent of what's being brought in.

One of the reasons for the increased traffic is that more and more Thai businesses are setting up production facilities in Cambodia.

A factory that has been making components for home appliances since January relies on manual labor.

Factory management says labor costs in Cambodia are lower than in Thailand. So moving labor-intensive production lines from Thailand to Cambodia has cut production costs by nearly half. The loss of jobs in Thailand isn't seen as a big deal because the country is dealing with a labor shortage thanks to an aging population.

"If we transfer our production lines that need manual labor from Thailand to Cambodia, we hope that combining young and abundant workers will help us expand our business in both nations," says Noriya Mifune of Sumitronics Manufacturing, Cambodia.

Also giving a boost to trade is upgraded transport infrastructure. On top of new roads between countries, a new railroad link is being built. It will connect the Cambodian border city of Poipet and Bangkok.

"It will be tremendous and then you can gain a lot of economic benefits in term of, shorter term and also less fuel needed and also the best of all, save the money," says Somkiat Tangkitavanich of the Thailand Development Research Institute Foundation.

Other industries are also eyeing the increase in the border business, hoping there's a spillover effect for their bottom line as well.

Shibuya: Is the integration of the ASEAN economy spurring member countries to do more to attract foreign investors?

Hamamoto: Each member country promotes itself as a gateway to the huge ASEAN market. Let's look at how Malaysia is attempting to establish stronger economic ties with its western neighbor.

In April, Malaysian Prime Minister Najib Razak visited India, mainly to lure investors from the rising Asian giant. He signed an investment agreement with Indian Prime Minister Narendra Modi worth US$36 billion -- the biggest ever between the 2 nations.

"I'd like to thank Prime Minister Modi for this invitation and I am confident that this visit will elevate our bilateral relations to a higher level," Najib said. There's one community that Najib hopes will bring the 2 countries closer -- Malaysians of Indian origin. They make up about 7 percent of the country's population.

Of all overseas Indian communities, the one in Malaysia is the largest. Many of the original members came as plantation workers from the southern Indian state of Tamil Nadu.

Manikandamurthy Velayoudam runs a digital billboard business in Kuala Lumpur. He says the Indian connection is one reason he chose to invest in Malaysia. "When it comes to the relationship between India and Malaysia, especially southern Indian and Tamil-speaking Indians, Malaysia and Singapore is our natural choice, it is like our home. The food, the culture, religious practice, everything is like home."

He set up a company in Malaysia in late 2002 as a way to expand his business, which he started in India. "The government has very friendly business policies, without that definitely we will not be doing what we are doing today," he says.

His firm is now doing so well, he has brought his whole family over from his native town to live with him. Manikandamurthy says he’s now planning to take his company public, while also looking to venture into other ASEAN markets.

But the chairman of the consortium of Indian businesses in Malaysia, Umang Sharma, says the country's government must try harder to appeal to Indian investors.

"A lot of things are happening in India. Unless we sell our Malaysian story to India, they will not come out here, they will be looking within India because there are so many opportunities there itself. But there are a lot of opportunities here also. Unless we showcase them, you know things may not improve, or get better so quickly." Malaysia's government body responsible for bringing in foreign investment says it is optimistic about boosting inflows from India.

"Going forward, Malaysia and their partners are negotiating the ASEAN Free Trade Area. Malaysia and India are also members. Although there are many opportunities in India, there are also Indian industries that are looking for our expansion. So, we aim to seize these going opportunities," says Azman Mahmud of the Malaysian Investment Development Authority.

Modi's "Act East" policy was upgraded in 2014 from the "Look East" policy that had been in place since the 1990s. It serves as a platform for strengthening India's relationship with ASEAN.

Sandwiched by India and China -- Asia's rising giants -- ASEAN will be looking to leverage its geopolitical advantages in its pursuit of greater prosperity.