Asia News Network looks at how Asean countries are preparing for
economic integration in 2015. With only two years to go, what are the progress
so far and what remains to be done?
When Asean leaders gathered at a posh hotel in
Singapore in 1992, they knew the time had come to get their act together to
accelerate the grouping’s economic integration and compete with the rest of the
world. They agreed to the establishment of the Asean Free Trade Area among the
six members after years of foot-dragging.
But the members’ different levels of economic
development and progress made this scheme unattractive at first. Nonetheless,
the leaders decided to move ahead knowing fully well that forming a single
production base for the grouping was the way to go in a globalised economy.
The free trade zone within Asean, the leaders
envisioned, would take time to materialise so the first time frame was set for
2020. This was later revised to 2010.
As time passed by—with a new regional environment
emerging after the collapse of the Berlin Wall and the relationship between the
former Indochina and Asean countries was no longer adversarial—Myanmar,
formerly Burma, also wanted to join Asean. Under a new peaceful environment
came cooperation among all countries in Southeast Asia.
From 1995-1999, Asean added four new members,
fulfilling the founding fathers’ dream of having all 10 countries under one
roof.
In 2007, Asean adopted the blueprint of the Asean
Economic Community (AEC), Asean Political and Security Community (APSC) and
Asean Socio-Cultural Community (ASCC). These three pillars are key components
of the Asean Community (AC).
Implementation of blueprint
At the Asean Summit in Brunei Darussalam in October
2013, Asean leaders expressed satisfaction over the health of Asean’s overall
economy. Against the weak global economy, Asean economic growth last year was
5.6 per cent with total direct foreign investments of US$108.2 billion coupled
with a total volume of trade worth $2.47 trillion.
To sustain such an impressive level of economic
growth, continued economic integration is needed.
By the end of September 2013, Asean has implemented
279 measures related to AEC or a score card of 79.9 per cent. There has been
progress in the implementation of the Asean Single Window, custom integration
and the process of harmonising standards and conformance procedure.
Asean leaders also acknowledged that there are still
areas that member countries need to do more in terms of facilitating trade and
investment and reducing barriers. Under Brunei’s chairmanship, special effort
has been given to financial literacy among the members. In addition, member
countries still have to ratify agreements and ensure full compliance in order
to accelerate economic integration further. There is also a need for amendments
or enactment of domestic laws that would align with the region’s regulations
and frameworks.
For the time being, Asean members have paid most of
their attention to AEC. However, without sufficient progress in the
political/security and socio-cultural pillars, the economic integration in
Asean would be further delayed.
Out of 667 actions under the AC roadmap, 345 of them
fall under ASCC. A report on the mid-term review released in October 2013
showed that while overall assessment was positive, there were areas that member
countries need further political will, especially those related to social
justice and rights.
Some Asean members still do not share information on
this issue.
the implementation of political and security pillar
has been uneven. Asean members have done generally well on external relations
with the 10 dialogue partners. Now there are 75 ambassadors from non-Asean
countries and organisations accredited to the Jakarta-based Asean Secretariat
and 37 Asean Committees in third countries.
The US, China, Japan and Australia have established
their permanent representative offices for Asean in Jakarta. India will soon
set up a similar mission. Signatories of the Treaty of Amity and Cooperation
have increased to 32.
In 2011, Asean has been instrumental in bringing in
major powers to take part in the leaders-only forum known as East Asia Summit
comprising leaders from 18 countries: Asean, China, Japan, South Korea, India,
Australia, New Zealand, US and Russia.
Truth be told, at least 32 out of 143 action plans as
of July 2013 that have not been implemented by Asean members belong to the
security cooperation that involves conflict management and prevention. Other
common security schemes such as peace-keeping and quick response to crisis
remain untouched. These are considered sensitive issues as they involve
sovereignty and go against the principle of non-interference.
Balancing act
When Asean leaders agreed in November 2011 to begin
the negotiation on the Regional Comprehensive Economic Cooperation (RCEP), it
was spurred by various economic developments in the region and shifts of
relations among major economic powers.
Asean realises that the maintenance of economic growth
in Asean must be linked to broader economic communities both near and far. The
grouping views the Trans-Pacific Partnership (TPP)—the US-led trading block—as
a powerful external factor that could dilute the leading role of Asean.
As a precautionary measure, Asean then proposed the
Asean-led RCEP to mitigate possible implications from the fast-moving TPP. So
far, the RCEP negotiation has gone through two rounds in Bandar Seri Begawan
and Brisbane. Representatives from 16 East Asian countries have agreed to the
2015 deadline for the framework’s conclusion. This time frame is pivotal as it
would provide further impetus in deepening economic integration within Asean.
The main RCEP objective is to achieve a comprehensive,
high-quality and mutually beneficial economic partnership among the members. In
more ways than one, the RCEP negotiation is very mindful of the TPP and its
objectives.
Asean leaders also want to make the RCEP a distinctive
regional joint effort. Due to the different economic development among member
countries, the RCEP will take into consideration provisions on special and
differential treatment to least-developed members like Laos, Cambodia, Myanmar
and Vietnam. TPP does not have these provisions.
Given the current tension among the three East Asian
economic giants—China, Japan and South Korea—over their territorial disputes,
future RCEP negotiation is in jeopardy. In the past, economic matters were
given priority and were immune to political interference. That is no longer
true today.
The China-Japan tension over overlapping claims in
Diaoyu or Senkaku Island has already caused great concern within the region.
Asean leaders fear that this longstanding conflict would affect economic
integration in broader East Asia. Asean has maintained excellent relations with
both countries without choosing either side. However, both China and Japan are
pressuring individual members of Asean to display bias toward them over
specific issues such as maritime security cooperation and air defence zone.
Myanmar and the Asean chair
According to Myanmar’s Than Than Lin, under Myanmar’s
chairmanship, Asean will give priority to technical cooperation and capacity
building.
She reiterated that these measures will help new Asean
members integrate with Southeast and East Asian economies. It is also hoped
that in the long run, RCEP would be a high-level FTA in terms of trade and
investment liberalisation. In other words, RCEP should be attractive and
efficient enough to compete with TPP.
At the moment, it is too premature to predict the
nature of RCEP’s final framework but suffice it to say, the future
comprehensive cooperation must be focused on Asean as well as East Asian
characteristic especially the vast production networks that help to strengthen
the economic interdependence within the region.
Asean economists believed that RCEP will eventually
replace the current Asean free trade agreements with various dialogue partners.
As such, it would serve as a role model for regional economic integration among
countries at different level of development.
Implementation of RCEP will also contribute to global
free trade.
Myanmar took up the Asean chair after 17 years of
joining the grouping in 1997. To ensure the success of its first chairmanship,
Naypyidaw adopted a comprehensive slogan to signal what the chair plans to work
for the rest of 2014.
“Moving forwards in unity towards a peaceful and
prosperous community” is the theme which Myanmar believes would shape the
grouping’s agenda. The chair has made clear that as a new Asean member, its
focus would be on capacity-building in all relevant areas, in particular
efforts to integrate with AEC and other business practices.
Naypyidaw has also paid special attention to the
development of small- and medium-sized enterprises (SMEs) inside the country. A
new legislation on SMEs is pending in the National Assembly and the Ministry of
Industry has recently established a SME Development Centre.
According to Dr Ei Shwe Sin Tun of the Ministry of
Industry’s SME Department, SMEs registered in the country represented 92 per
cent of enterprises, which in turn contributed 80 per cent of the gross
domestic product.
Officials working on the economic agenda are also
discussing further reforms in the areas of competition as well as industrial
policies. Several capacity-building seminars on intellectual property rights
and consumer production have been held in Naypyidaw in the past several months.
Asean Post-2015 vision
As the deadline of the Asean Community approaches,
leaders must display their leadership to ensure that the blueprint detailing
action plans in the three pillars—economic, political and security, social and
cultural—are fully implemented.
Without political will, measures related to sensitive
economic areas such as services and investment will remain “sensitive” and
“untouchable”.
Further actions in political and security as well
social and cultural fields would require similar decisiveness from Asean
leaders, especially areas related to the enhancement of civil and political
rights and democratisation. Furthermore, there is an urgent need to adopt a
comprehensive campaign to inform private and public sectors on the outcome of
economic integration. All stakeholders must understand changes that are taking
place and affect their environment.
When Malaysia chairs Asean in 2015, the leaders must
also take up new agendas that go beyond 2015. For Asean to remain competitive
and relevant to the international community, it must adopt new strategies that
encompass effective measures bridging development gaps among member countries,
promote economic integration world-wide as well as ability to form common
positions on key global issues. These measures include the strengthening of the
Asean Secretariat, promoting compliance of all agreements, facilitating faster
decision making-process while maintaining consensus among members and forging
larger mandate for the role of the Asean Secretary General and its good office.
Engagement with major powers, especially the US,
China, India, Japan and Russia, will remain the top priority of Asean external
relations. With increased economic interdependence with these countries, Asean
centrality is also at risk. In times of crisis, Asean would find itself in
limbo to stay united with common positions and policies. In the past, Asean was
able to balance its relations overall with major dialogue partners without
difficulties.
However, growing tensions among key dialogue partners
like China, the US and Japan have already impacted on broader cooperation
within various Asean-led frameworks, especially schemes related to economic
integration in East Asia. Asean needs to map out a comprehensive strategy to
deal with the increased volatile external environment.
In confronting crises, Asean has responded
collectively well during the financial crisis in 1997, the pandemic in 2003,
the Indian Ocean tsunami in 2004 and Cyclone Nargis in 2008. However,
calamities and human losses suffered by Filipinos due to Supertyphoon Haiyan in
November 2013 showed the inadequacies of Asean decision-makers and
organisations to respond to disaster and humanitarian crises.
Two years ago, the Asean Coordination Centre for
Humanitarian Aid was set up to respond to these new threats but its role is
still limited. So far, existing Asean institutions can only monitor and
coordinate work among members. In response to the Philippine disaster, Asean
Secretary General Le Luong Minh managed to activate his mandate without any
further delay as coordinator of humanitarian aid.
It is imperative that Asean in the near future agrees
on the so-called principle of automaticity to facilitate the role of the Asean
Secretary General and his good office. This principle could further be
broadened to cover the whole gamut of crisis confronting Asean.
As such, the leaders—as well as concerned
authorities—would be able to respond quickly and effectively to emerging
threats that require high-level decisions for sustainable actions and policy
options. At this juncture, Asean senior officials are responsible for the
leaders’ agenda.
Finally, given the changing power dynamics in the
region and a multipolar world, Asean cannot rest on its laurels. There are many
crossroads ahead. Asean will carry diplomatic weight only when it can maintain
its centrality and act collectively and proactively both in time of progress
and crisis.
Kavi Chongkittavorn
Asia News Network
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated
in Singapore since 1994.
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