Services and GVC Activities in ASEAN and ASEAN Economic Community: Next Stage of Growth in Global Value Chain

This paper explores the development of ASEAN Economic Community (AEC) based on the AEC 2025 Blueprint. The paper identifies the key challenges for ASEAN to shift its regional and domestic economy to the next stage of growth in the global value chain. The issues of intra- and extra-ASEAN trade and investment are discussed. The paper observed the decline in intra-ASEAN trade in recent years, and this poses key challenges for core manufacturing and service activities in manufacturing and services within ASEAN. The paper identifies the shift in extra-ASEAN activities as part of the market-driven GVC activities (production fragmentation) that could lead to productivity and efficiency improvements for ASEAN. However, there are still challenges in terms of ASEAN centrality as intra-ASEAN trade declines in ASEAN trade and investment activities.