Dec 7, 2012

Malaysia - A look at ASEAN multilateralism

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The induction of China’s fifth generation of leaders has observers around the world anticipating how the Xi-Li administration will govern and what effect their new policies will have.

For ASEAN, it is likely that policy and attitude will stay the course. Equally significant is the United States’ re-election of President Obama. Within two days of his victory, the White House announced a four-day visit to Southeast Asia, with the anchor being the East Asia Summit (EAS). The president’s attendance of the US-ASEAN Leaders’ Summit and visits in Thailand and Myanmar reaffirmed America’s commitment to ASEAN and reflects its strategic Asia pivot.

ASEAN countries have substantial trade ties with the US and rely on the sheer firepower of the US Navy in the ongoing maritime dispute while it continues to benefit from China’s growth. Therein is the underlying issue in this trajectory of economic and security strategy of ASEAN countries. 

This arrangement may be functional now, but the status quo is not static. What is painfully missing from the equation is the ASEAN community. The institution of ASEAN exists because the fates of these countries are tied together. History has shown this and the future will bear a striking resemblance. What is predictable is security destabilisation or financial crises will have regional effects. It will not always be in the interest of the United States to confront ASEAN’s rivals, nor can ASEAN always trust China to be a responsible international stakeholder.

What exists is a 45-year old institution that has successfully maintained peace and liberalised trade among 10 countries. What is becoming more clear is that there are two ASEANs. One ASEAN is caught between the US and China rivalry, the other is making its own decisions; one ASEAN worries about foreign-made goods, the other is buying out its competitors; one ASEAN looks inward while the other takes a regional view.

Malaysia is ASEAN’s blue chip member; its oversubscribed IPOs, newly-opened Tun Razak Exchange, and million-dollar Iskandar project in Johor is turning heads. But it has not taken a leadership role in ASEAN since the end of former Prime Minister Tun Dr Mahathir Mohamad’s tenure. Prime Minister Datuk Seri Najib Razak, the man who preaches “moderation” in conflict resolution, has adopted the Chinese mantra and agreed not to multilateralise the South China Sea affair. 

Its commitment to regional trade is also questionable as the government continues to use subsidy programmes. Indeed, chief executive Shamsul Azhar Abbas of the state-owned oil and gas company Petronas has consistently called for the government to refrain from using Petronas’ earnings to fund its projects. The use of subsidies for welfare programmes and megaprojects renege on Malaysia’s commitment to ASEAN investors. In the long term, it hinders the development of local businesses including that of Petronas and builds a culture of entitlement.

In Indonesia, ASEAN’s boom town, L’Oreal’s built a US$130 million (RM396 million) plant, which will serve as its Southeast Asia production and distribution hub, while Toyota is doubling its capacity through a US$1.3 billion investment plan over the next five years. These multinationals understand the advantage of regionalism, but Indonesia’s politics and foreign policy do not. Instead, protectionist mining laws are being passed based on inclinations from powerful interest groups ahead of the 2014 elections. And although Foreign Minister Marty Natalegawa’s shuttle diplomacy managed to reconcile some of the differences after the breakdown at the July Summit, it is questionable as to why Jakarta did not step up earlier.

Thailand, which received visits both from Obama and Chinese Premier Wen Jiabao in November, is poised to use its status as a pivot state to enforce ASEAN centrality. Instead, Bangkok is distracted with its domestic affairs from the anti-government Pitak Siam’s recent street rally to Prime Minister Yingluck’s no-confidence debate. Thailand seems unable and unready to take on the regional role.

Myanmar, ASEAN’s biggest attraction, stands to gain greatly from regional co-operation. President U Thein Sein and Aung San Suu Kyi now share the top spot in Foreign Magazine’s 100 Global Thinkers for their reforms and Suu Kyi’s iconic status and tour of the west substantially raised the country’s international profile. But neither the government nor Suu Kyi herself have taken action against the glaring ethnic violence and apartheid-like conditions that its own people are perpetrating against the Muslim minority; and a much-anticipated foreign investment law that will provide the proper channels for investment continues to be delayed.

In many ways, ASEAN is a bastion of growth; it does not suffer from an overwhelming debt burden or unmanageable unemployment, but this condition is not a permanent fixture and global uncertainty and shocks are imminent. But given this opportunity, the leaders and people in these 10 countries have a crucial choice to make: advocate and commit on further integration or become pawns in the new Great Game in Southeast Asia. 

While pros and cons of the ASEAN+6 trade pact, the Regional Comprehensive Economic Partnership (RCEP) and the US-led Trans-Pacific Partnership are being assessed, it is the ASEAN Economic Community Blueprint that should take centre stage. Negligence of the ASEAN agenda will have detrimental effects in the long run for member states. Leaders must reprioritise the national agenda and invest in a regional foreign policy. ASEAN unity will continue to be tested and it is only through further regionalisation and staunch support for multilateralism, can the nations prosper.

Chayut Setboonsarng

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