KUALA LUMPUR -- Since
the ASEAN Economic Community (AEC) is currently front and center in the development
plans of the ASEAN Community's three pillars, and the ASEAN Community in
general is supposed to be achieved by 2015, the AEC can expect to be watched
closely in the months ahead. It is also likely to be taken as a measure of the
progress and prospects of the ASEAN Community as a whole. However, popular
perceptions so far are not as positive as they ought to be.
Independent media and business circles have signaled
their skepticism if not cynicism toward expectations that the AEC can be
achieved by 2015. This situation is as prevalent in Malaysia as it is elsewhere
in ASEAN. The general pessimism is not without reason, but it should avoid
discouraging continued efforts to expedite the establishment of the ASEAN
Community. If the prospects of abiding by the 2015 deadline do not seem bright,
that should be even greater reason to redouble our efforts.
At the same time, policymakers and others with inputs
or interests in the process should identify and acknowledge the reasons why
these prospects do not seem so bright. They should then rectify or resolve
those problems to facilitate a timely realization of the AEC. At the same time,
the development of the ASEAN Community's political security and socio-economic
pillars should not be held up just because AEC happens to be delayed. Each
pillar should be independent enough of the others to enable us to forge ahead
wherever possible.
Among policy researchers, a general optimism may be
observed, with some even saying that there are good reasons for optimism. If
that sense of expectant hope is less than justified however, it may be that the
AEC policy research community needs to be geared more closely to the “street”
in the region, or it may indicate that a disconnect between researchers and
policymakers persists. A significant problem is the lack of connectivity
between the key players: government, industry, academia, media and civil
society groups.
To a degree, the public and private sectors tend to
blame each other for delays and bottlenecks. No side is blameless, and it takes
both contributing actively as well as cooperating imaginatively for success. A
realistic outlook is essential from the outset, and this would include an
honest assessment of any obstacles and weak spots.
In late October of this year, Group Managing Director
and CEO of CIMB Group Nazir Razak expressed serious doubts that AEC would be
established by the end of 2015 as planned.
Speaking at the World Capital Markets Symposium in
Kuala Lumpur, the brother of Malaysian Prime Minister Najib Razak was skeptical
that ASEAN would achieve a single production base with free movement of
capital, investments, skilled labor and goods and services within another 27
months. Among other challenges, he noted that ASEAN had yet to establish the
master plan and banking framework for AEC.
Nazir also observed that the ASEAN Secretariat still
lacked the necessary legal framework and infrastructure for AEC. Evidently, the
available indications are that AEC is behind schedule. Nonetheless, Nazir
prefers to maintain the 2015 deadline while cautioning that there should be no
more unrealistic projections or expectations.
As a senior corporate figure in the region, he is more
concerned with ASEAN realities and possibilities than with political spin or
rhetoric. He was also expressing the hard-nosed concerns of the business world,
adding that unrealistic expectations can backfire by damaging the integrity and
credibility of community building itself.
At the government level however, a similar sense of
urgency seems absent. There are reports that while ASEAN generally looks to
Indonesia to show regional leadership on AEC, the government of ASEAN's biggest
economy had only lately realized the enormity of the task. Furthermore, the
Indonesian corporate sector is looking to the country's 2014 election to
determine a new president, who — enjoying both national approval and regional
consensus — would spearhead the drive for AEC. But given AEC's 2015 deadline,
that only spells delay and dismay.
A
Need for Clear Plans
One
outstanding need is for ASEAN to articulate a clear trajectory to 2015 and
beyond. For example, is the goal of AEC a common market, a customs union or
something else? In coming after the EU, with all its known challenges and flaws,
the ASEAN Community should take care in avoiding the same mistakes. A sound
perspective of the 2015 challenge also helps: it should be understood that AEC
was never meant to be “completed” by 2015, but fundamental aspects of it should
at least be in place by then to enable a steady evolution thereafter.
Promise
SMEs, Promise a Successful AEC
Small
and medium enterprises (SMEs) are also the prime cornerstone of national
economies in the region. In Malaysia they account for up to 97 percent of
output. SMEs therefore need due recognition as productivity powerhouses, with
efforts to promote their interests and status. An AEC of promise is also one
that promises SMEs. Singapore and Malaysia have well-developed SMEs and are in
turn well-developed economies in ASEAN.
Much
still remains to be done in several sectors. The automotive sector for example
is plagued with policy anomalies that add up to obstacles and challenges. It
has been said that little has been achieved in this sector other than tariff
removals. Other industries such as foodstuffs, palm oil and timber also lack
policy coordination and harmonization. Specific timelines to serve as
milestones are still undeveloped or non-existent.
Among
ASEAN member states in general, a crucial sense of regionalism is also lacking.
Individual countries still seem disproportionately concerned with national
interests relative to other ASEAN countries. Two key points should be
remembered by all: a better realization of AEC will benefit all countries,
regardless of whether some countries benefit more than others; and a weak or
unfulfilled AEC will hurt all countries, whatever the degree of harm suffered
by each.
Another
problem is that the region's private sector remains underdeveloped in policy
terms, with little relation to plans, programs and projects in the public
sphere. They compare unfavorably with their counterparts in Japan, Europe and
North America that are more pro-active in providing inputs for policy. The
business sector in ASEAN countries needs to provide more in terms of thinking,
proposals and advice to policymaking circles at national and regional levels.
Also
lacking in this region are consistent technical and professional inputs from
the private to the public sector. Institutions like the ASEAN Chamber of Commerce
and Industry should step up and offer more suggestions. This lack is compounded
by a general shortage of resources. For example, better funding for the ASEAN
Secretariat would help. But since individual national contributions are
uniform, improving the Secretariat's cash flow and reserves is likely to remain
a serious challenge.
In a
state-centric ASEAN, of course much has been done at the
government-to-government level. However, this contrasts sharply with the still
minimal role of the private sector in helping to shape policy. Nonetheless,
private sector tie-ups in the region do show promise in developing regional
production networks and can be developed further. Due cognizance should be
taken of these realities to avoid further difficulties while maximizing
opportunities.
Other
concerns that need addressing include production moving up the technology
ladder, providing a clear cost-benefit analysis of deeper regionalization that
favors production-line development, the growth of China that makes the region
both more complementary and competitive and getting all sectors fully on board
with AEC. With those foundations in place, the other two pillars of the ASEAN
Community would also be more assured.
Cultivating
greater involvement by business as well as civil society groups has become a
prime requirement. More than before in ASEAN's history, involving more
non-state actors should now be a high priority. It does not mean the role of
governments has diminished, but it does mean that ASEAN must be equated with a
community of nations founded on the commonalities of their people. As a
contemporary reality, this befits the current evolution of ASEAN in a highly
competitive world.
The AEC
may not be developing as quickly as it should or as smoothly as it could, but
the fact of its development is certain and its direction is unquestioned. Since
there is always room for improvement, it is then for all parties in the ASEAN
nations to contribute to the process. Instead of carping or petty, cynical
criticism, concerned groups and individuals should do their part in ensuring
AEC's timely realization. Once in its formative stages it would be easier to
shape and ameliorate, whereas continual self-doubt and endless questioning will
only make it a perpetual nonentity.
Certain
steps have already been taken to establish ASEAN capital market integration,
for example. In early October, it was announced that Thailand's Securities and
Exchange Commission, Malaysia's Securities Commission and the Monetary
Authority of Singapore signed a Memorandum of Understanding to set up an ASEAN
CIS (Collective Investment Schemes) framework. Once in operation from early
2014, investors in the three countries will have a broader menu of investment
choices. From this collaboration between three original ASEAN members, others
may also join in when they are ready to help the process evolve.
Such
efforts, although slower and later than they could or should have been, are at
least careful and steady. As considered measures taken with the consent of all
the stakeholders at each stage, they are at least less hobbled by glitches than
they might otherwise have been. In practice, that means ensuring minimal or
zero imperfections in operation for swifter growth and development. As soon as
other ASEAN countries have the capacity to join the process, they can get on
board very quickly.
Already,
a set of common standards has been established for a cross-border offering of
ASEAN CIS. A certain professional standard for fund managers has also been set,
with a sense of industry best practices. The process helps professionalism,
competitiveness and ultimately the health of investments. With such efforts,
development of AEC and of the ASEAN Community more generally becomes assured.
Other,
perhaps more modest, measures that are people-centered can also facilitate
establishment of the ASEAN Community in general and the AEC in particular. The
purpose is to promote a sense of “ASEAN ownership” by ASEAN nationals when they
travel between member nations. Several years ago, Indonesia proposed a
privileged travel document between ASEAN countries for ASEAN officials, and
Thailand experimented with ASEAN Lanes at airport immigration counters, but the
response in both cases was discouraging. The time may now be right to revisit
such efforts, given the clearer direction afforded by the ASEAN Charter and the
push to establish the ASEAN Community in two years.
Such
goals as ASEAN connectivity, integration and community cannot succeed without
better people-to-people exchanges and cross-border bonding. That means agreeing
to, permitting, encouraging and assisting ASEAN community-building efforts by
non-state actors. ASEAN officials need enough faith in their fellow citizens to
make ASEAN less officious and more people-friendly. Once community building by
people becomes a powerful reality, it can contribute immensely to inter-state
functions.
ASEAN
itself may remain an inter-state body, but its growth and development as a
community with a distinct ASEAN identity can be realized only with greater
participation by the people of ASEAN. As it has defined itself, ASEAN is after
all an “association of Southeast Asian nations,” not of governments. Nations
are composed of a broad range of private groups and individuals, not just
official government bodies. If ASEAN governments are still not fully cognizant
of the power and capacity of their people to build a strong, healthy and
vibrant ASEAN Community, the sooner they realize it the better it will be for
all.
Bunn
Nagara
The
Star/Asia News Network
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated
in Singapore since 1994.
