Saturday, April 30, 2005

Challenges Ahead for ASEAN*

The Edge
September 2-8, 2002

By Thang Nguyen

The foreign ministers from the 10-member Association of Southeast Asian Nations (ASEAN) in Brunei last month and confirmed the appointment of Ong Keng Yong, who is currently Press Secretary to Prime Minister Goh Chok Tong, as the new Secretary-General.
Ong will undoubtedly have a challenging job ahead of him, and ASEAN—which groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam—needs to do more to consolidate itself and achieve its ultimate goal of regional integration.

On the economic side, ASEAN should accelerate its trade-liberalisation process. Like the EU and North America, ASEAN countries have formed their own trade bloc, the ASEAN Free Trade Agreement (Afta). Afta’s key goal is to reduce tariff rates among its members to 0-5 % by 2002. The key instrument with which to hit this target is the Common Effective Preferential Tariff (CEPT). As of this writing, only Singapore has a 0-category tariff rate. Malaysia is well on track with its tariff reductions with approximately 96 percent of its quota in the list under the CEPT schemes. It is unclear as to where other members are with their tariff-reduction schedules.
In addition to reducing tariffs, ASEAN also needs to find ways to increase intra-ASEAN trade. Last year in Brunei, ASEAN leaders discussed the ASEAN+3 proposal, a plan to set up a free trade zone that would include the Association’s 10 member countries, China, Japan and South Korea. ASEAN+3 is a fine plan; however, before achieving this ambitious goal, it may be wise for ASEAN members to focus on and increase intra-ASEAN trade.

There is a notion that the group's economies are too similar to one another and, therefore, can not benefit from trading their comparative advantages. If one examines the different characteristics of ASEAN's economies, however, one will see that industrialised member countries like Singapore, which has almost no natural resources, can export value-added goods and services to and, at the same time, import such primary commodities as rice, timber, and even oil from their neighbors like Indonesia or Vietnam.

Recently, many commentators and trade analysts have warned that China, with its long-awaited entry into the World Trade Organization (WTO), takes away foreign investment from the rest of East Asia and thereby endangers its neighboring economies. While there is some truth to this argument, there is another side to it: China can put a healthy pressure on ASEAN countries to make their economies more competitive, and this can enhance the region’s economic growth.
Another issue is the income divide between the organisation’s member countries. The economic structure of ASEAN is one with two tiers.

The new member countries of Cambodia, Laos, Myanmar and Vietnam—classified as Southeast Asian transitional economies (SEATEs)—are still behind in the development race, whereas the six original member countries (Singapore, Thailand, the Philippines, Malaysia, Brunei and Indonesia) are newly industrialized economies (NIEs). This gap needs to be bridged if ASEAN is to grow together as a group.

On the political side, ASEAN can do more to ensure peace and stability in the region. One of ASEAN’s founding principles is non-interference: that all ASEAN nations shall not interfere with matters that are considered to be a member country’s domestic affairs. While this is a respectable principle in itself, the rest of ASEAN should respond positively when a member country is in an economic crisis or take a collective initiative when its political instability puts the group’s peace at risk.

In addition, ASEAN countries should work closely together on such issues as piracy, human trafficking, drugs trafficking and, more than ever before, terrorism. Even though the US has shown itself to be a coöperative partner to East Asia, self-reliance remains the key to success for ASEAN in these areas. The organisation should encourage member countries to share more financial, immigration and other related intelligence among themselves and establish ways in which national law enforcement forces work together side by side.

Besides the upcoming replacement of its secretary-general in November, ASEAN has recently experienced a transition in its leadership. Among the group’s leaders, Dr Mahathir Mohamad, Prime Minister Goh Chok Tong and Sultan Hassanal of Brunei have been ASEAN’s most senior leaders. With Dr Mahathir’s resignation by October next year, ASEAN’s core group of leaders will shortly be left with two.

Together, these transitions of ASEAN’s leadership suggest that the new secretary-general and the leaders of all member countries have a lot of work cut out for them in the near future. To take ASEAN forward, they will have to collaborate with and trust one another to ensure stability. But most importantly member countries, such as Singapore, Malaysia and Brunei, who are economically better off should do their utmost to help their fellow other member countries, who also need to do their best to help themselves, improve their economies. This is the way the group can grow and enjoy prosperity together. After all, ASEAN’s mission statement is: “To bind [member countries] in friendship and co-operation and, through joint efforts and sacrifices, secure for their peoples and for posterity the blessings of peace, freedom, and prosperity.”

*Frank-Jürgen Richter contributed to this article.

1 Comments:

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