This paper provide not only an information about the Association of Southeast Asian Nations (ASEAN), but also examines the performances and challenges witch it has faced by its existence. The founders of the ASEAN were only five countries namely: Indonesia, Malaysia, the Philippines, Singapore and Thailand and signed the ASEAN Declaration of 8 August 1967. Thirty-two years later, on 30 April 1999, ASEAN encompassed all ten countries of Southeast Asia by admitting Cambodia. (Brunei Darussalam had been admitted in 1984, Viet Nam in 1995, and Laos and Myanmar in 1997). A stated goal of the Bangkok Declaration and many of the succeeding ASEAN pronouncements was to accelerate economic growth...through joint endeavours and to promote active collaboration and mutual assistance on matters of common interest in the field of economics; little concrete action was taken to promote economic cooperation. In fact, until 1977, regional Economic Ministers failed to meet on a regular basis; ASEAN had rotated around the annual meeting of its Foreign Ministers. Yet, despite the neglect, the ASEAN economies have all prospered. Confidence in ASEAN economic cooperation is growing. Yet, data suggest that ASEAN is fighting an uphill battle in its attempt to form a free trade area. In spite of the modest growth, much seems to be going more and less against it. First, data illustrates that, intra-ASEAN trade has been insubstantial. In 1988 it accounted for just over 18 per cent of total ASEAN exports. This figure was actually lower than the 21.4 per cent of 1970. In spite of that, the intra-ASEAN trade has increased to up to 22 per cent in 2001. Although intra-ASEAN trade is high relative to the intra-regional trade of other developing country groups. If Singapore-a large center for trade-is excluded, the share of intra-ASEAN trade drops to only 4 percent of the region's total exports. Second, the ASEAN-4 countries (excluding Brunei, Singapore and the new four members) have relatively similar production structures and compete for the same export markets. There is a greater degree of complementarity between the ASEAN economies and the industrial and newly-industrialized economies, than between the ASEAN countries themselves. It was afraid that since most ASEAN economies (with the exception of Singapore) are basically agricultural economies (at least until the end of the 1980s anyway), the trade creation benefits from forming economic grouping to trade more freely among one another would not be that great. This, however, has been proven wrong. The rapid industrialisation of ASEAN countries in the last two decades have brought about different manufacturing as well as processed agricultural products so that during the last one and half decades trade among ASEAN partners expands substantially. The gains from trade are obvious from industrial restructuring and more efficient industrial production. What is clear is that the real changes that have taken place in the international arena and within ASEAN have altered the calculus of national interest for countries in the region. The evolving nature of the costs and benefits associated with economic cooperation has undoubtedly affected the support being lent to AFTA by member countries. The first of these changes is embodied in the transformations sweeping through the ASEAN economies. The ASEAN leaders have been compelled to adopt economic reforms as a result of hardships suffered from external circumstances in the 1980s. General liberalization policies, as well as the adoption of outward-oriented industrialization strategies, have strengthened the economies in ASEAN. Domestic industries have gained significantly from international competition and trade, and many officials are dedicated to enhancing these gains. Furthermore, ASEAN liberalization policies have been predicated on the assumption of an open international market. ASEAN solidarity as exemplified in AFTA-especially now that a general commitment has been made-will allow the group to have a greater say in the international community and to address its concerns over the trading system. The second change is related to the growth strategies adopted by the ASEAN governments in the 1990s. These policies stress the need to attract foreign direct investment (FDI), which has already contributed to the economic growth and the relatively rapid rates of industrialization in ASEAN. In light of the competition from Indochina, China, Eastern Europe, and Mexico for increasingly scarce capital, an effort has been made to maintain these inflows. A multitude of incentives have been offered to foreign investors throughout the region. Incentives, however, are not the primary factors influencing the decisions of foreign investors. The general investment climate is a far more important determinant of an economy's attraction. This climate is not only positively affected by sound macroeconomic management, economic growth, a developed infrastructure, and political and economic stability, but also by the size of the market. The establishment of AFTA will form a single enlarged market with 500 million people, instead of ten individual markets. This undoubtedly will be attractive to foreign investors who are looking to gain from economics of scale by producing for the region, or by manufacturing truly regional products for export. Officials involved in the negotiations leading up to the summit meeting in Singapore admit that this capability of attracting foreign investment was one of the most compelling arguments for the free trade area. Today the ASEAN region stretches across three time zones and incorporates a key part of Asia's continental landmass and several archipelagos. Economically, it belongs to the developing world, but some of its member countries have joined the world's top 20 most competitive economies. Its population of about 500 million constitutes a huge, increasingly middle-class market, half the size of China's.
