The Latest: Malaysian leader hosts East Asia Summit

KUALA LUMPUR, Malaysia (AP) - Ten Southeast Asian heads of state and nine world leaders, including President Barack Obama, are meeting in Malaysia to discuss trade and economic issues. Terrorism and disputes over the South China Sea are also on the agenda. (All times local.)

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12:25 p.m.

Malaysian Prime Minister Najib Razak says his country is honored to host an annual gathering of leaders from 18 Asia-Pacific countries including the United States and Russia.

Najib says he's also very encouraged that all members of the East Asia Summit have been actively involved since last year in strengthening the organization.

He says the EAS is a leading organization to promote a "rules-based order" in the region, which feels out-muscled and overwhelmed by China.

He adds that the group will encourage deeper dialogue on political and strategic issues to promote trust, saying "this could not come at a more critical time."

The prime minister commented Sunday as he opened the summit in Kuala Lumpur.

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10:50 a.m.

The leaders of 10 Southeast Asian nations have formally created the ASEAN Economic Community at a summit in Kuala Lumpur, Malaysia.

Eight years in the making, the AEC, as it is known, seeks to make the diverse region economically and politically better integrated with hopes of competing with the Asian powerhouses China and India.

Still, there is a long way to go before the AEC becomes fully functional after becoming a legal entity on Dec. 31. It falls short in more politically sensitive areas such as opening up agriculture, steel, auto production and other protected sectors.

There are also other hurdles, such as corruption, uneven infrastructure and unequal costs of transportation and shipping.