MANILA,
Philippines – If the United States is a
reluctant superpower, then the Association of Southeast Asian Nations (Asean)
is a reluctant economic bloc, said a panelist in this year’s Asian Business
Conference “2015 Approaching.”
Paulius
Kuncinas, Asia regional editor of the Oxford Business Group on June 26 said the
Asean is “a very efficient and very ambitious trading bloc but it somehow got
stuck in the path of reaching a full economic integration.”
The
research economist and writer said this is because the idea of the Asean
integration, which seeks to create a single market and production base through
the free flow of goods, services and finances by 2015, has yet to become
popular.
Divergence
Kuncinas
said two factors hampering the transition are the divergence of cultures a
major factor in the shift and the inability of the “elite” to sell or explain
the benefits of the integration to other stakeholders.
Nalinee
Taveesin, former trade representative and minister of
Thailand, said the monetary union of Asean nations is an issue that is still
far from being resolved “because of the development ranges that we have.”
“Different
economies in the Asean have different economy sizes and GDP (gross domestic product),”
said Diosadado Banatao, founder and managing partner of Tallwood Venture
Capital.
Cecilia
Reyes, chief investment officer of Zurich Insurance Group said that it is
difficult to imagine how integration could happen in a region that includes the
mature economy of Singapore and least developed countries like Laos and
Myanmar.
Nevertheless,
she said it is achievable.
“This
diversity could be an advantage for the region,” Reyes said, adding that the
countries could bank on each of their strengths.
Laurent
Jacque, professor of international finance and banking at the The Fletcher
School in Tufts University, was also optimistic, saying great benefits await
those who are willing to push forward.
However,
“There is a lot of work that goes in coordination to harmonization to
integration,” he said.
He also
agreed with Ralph Sorenson, director of Whole Foods Market and professor at the
College of Business and Administration at the University of Colorado, who
pointed out that while people want a level playing field, there is a need to
maintain cultural diversity.
“You
don’t all want to become alike from a cultural point of view. How do we
preserve each of these countries’ culture?” Sorenson said during the plenary
session held at Makati Shangri-La.
Jacque
added that national identities should not melt away as Southeast Asian
countries integrate their economies.
Comparative
advantage
But the
bigger challenge faced by Singapore, Thailand, Philippines, Vietnam, Malaysia,
Indonesia, Myanmar, Cambodia, Brunei and Laos, is how they can compete in a
global market.
“What
happens if we cannot do it, if we cannot compete, we just invited the rest of
the world to use us as a 600M population market,”
All of
the panelists said each of the Asean member states should come up with their
own flagship products or services.
“The
countries that trade with each other don’t fight each other. I would encourage
each of the countries to think what their comparative advantages are going to
be,” Sorenson said.
He
enumerated the strengths of each of the 5 Asean countries: Indonesia with rich
natural resources such as natural gas and textile, Thailand with automobile and
assembly, Singapore with banking, Malaysia with rubber and the Philippines with
business process outsourcing.
The
professor, however, warned the Philippines to look after its agriculture sector
which he described as “to a certain extent endangered.”
Sorenson
said it would be difficult for such industries to compete in a common market
because of the lower cost and prices of products from the other countries.
Manuel
Salak III, head
of clients and corporate finance of Asia ING Bank, said the problem is that
people often look at the Asean integration as an opportunity for multinationals
to enter the market and benefit from it but small and medium enterprises (SMEs)
are also important players.
Reyes
argued that “SMEs form the backbone of the economy of the Asean region.”
“Ninety-six
percent of enterprises in the region are SMEs. They contribute 20 percent to 50
percent of the GDP of the region,” she said.
Because
of this, a lot of support must be given in the form of trading and development.
They
should “embrace the opportunities of the common market rather than seeing it as
a threat,” Reyes said.
Salak
said banks could work together to perhaps provide SMEs with cross-border
guarantees allowing them to expand outside their country.
In
agreement with most of the panelists, he said there needs to be an overseeing
regional body that will support the financial goals of the integration.
In the
end, Salak said that while Asean is still “a little far off from a total
integrated community,” the stakeholders and the rest of the world are “seeing
pockets of success.”
The
Asean integration is an initiative of the Asean member states in their bid to
reduce disparity in the region.
The
Initiative for Asean Integration was first launched in 2000 with the end goal
of creating an Asean Economic Community (AEC) by 2015.
During
the World Economic Forum (WEF), Asean trade ministers said the region is
nearing removing all tariff barriers.
Other
aspects of the AEC include free flow of labor and talents and connectivity in
terms of macroeconomic and financial policies, infrastructure and
communications and regional sourcing.
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