Why should CMLV be integrated into ASEAN?

The integration of CMLV countries into ASEAN is due to rapidly changing

socioeconomic global landscape showed the sense of urgency in the group to meet the
challenges. The older ASEAN members felt that they need to assist the less developed
nations to ensure effective economic integration and to cope up with the competition due
to globalization. CMLV accounts for more than one-fourth of the ASEAN population; this
shows the importance of these markets for the growth of ASEAN countries. CMLV
countries are driven by garment exports, agriculture, tourism and construction
The share of agriculture in G.D.P for all these countries is very high.Huge opportunities
in key growth industries such as agri business, automobile, construction,renewable
energy and manufacturing.
The CMLV countries are strategically located, having borders with India, China and
remaining ASEAN countries. Only Laos is land-locked country. Thus the location of
these countries plays a major role in the economic flow of goods and services across the
nations.
They share border with countries like India, China and Thailand whose economy is
growing at a rapid pace and these countries have become the geo-political power
centres.
Structural constraints that hinders the integration
The political stability and long term economic growth could only be attained if they all
cooperate.
F.D.I inflows are very low due to low openness to business.
There are structural constraints like infrastructure gap, institutional gap, income gap
which makes the integration of the CMLV countries into ASEAN difficult.
There are still widening income inequalities and depleting natural resources. Government
should tackle economic policies that are more inclusive and sustainable to stamp out high
poverty rate, large income gap and low production base, and inadequate human resources.
The structural issues hindering the integration of CMLV into ASEAN include:
Difference in stage of development creates gaps in economic structure
CLMV are just at early stage of industrialization process and the agricultural sectors account for
23% to 52% of the GDP
Large gaps in economic structure between the groups of older ASEAN members and that of the
new ones, which would generate potential domestic conflicts among different interest groups
and industries during the process of deeper and wider ASEAN integration
Poorly developed infrastructure in the CLMV countries, transportation system and utilities are
barriers to factor mobility and technological transfer into the new ASEAN members, which in
turn would widen the development gaps between the ASEAN-6 and the CLMV groups
All the ASEAN-6 members have accessed to the WTO for long, while the CLMV are approaching
this overarching international institution on world trade, with the accession of Cambodia and
Vietnam only recently. The ASEAN-6 have been experienced in participating in various regional
and global economic arrangements, whereas the CLMV have just made their very first moves in
regional and international integration within the last decade.

 The CLMV are all transitional economies, which have been undergoing a dual-shift from
centrally-planned to market-oriented economies and from an agricultural to an industrialized
ones
The capital markets of the ASEAN-6 are more finance-based, while those of the CLMV are more
dependent on the banking system.
Differences in financial deepening levels and the development of financial markets could also
lead to asymmetric effects in terms of intra-regional financial market integration. Monetary and
exchange rate policy, therefore, is difficult to coordinate
There exist large gaps among member countries in terms of public administration, law
enforcement and governance effectiveness, which would hinder the deeper integration among
ASEAN economies.

To fully realise the benefits of these changes, the middle-income ASEAN countries,
China and India will all need over time to foster the progressive transformation of
their manufacturing industries towards more sophisticated and demanding activities
with higher productivity and greater dependence on technology. Individual countries
face specific challenges that differ according to their stage of development and
intrinsic comparative advantages