Is the Asean way getting in the way of closer
economic integration?
Next
Thursday, a ceremony will be held in Nay Pyi Taw where Myanmar will symbolically
hand over the Asean chair to Malaysia, represented by Prime Minister Datuk Seri
Najib Razak. Malaysia officially assumes the role on Jan 1.
Myanmar
will also be hosting Asean heads of government for the 25th Asean Summit as
well as other regional meetings, one of which will see US President Barack
Obama attending. Top on the agenda will be Asean’s ongoing economic integration
besides other matters including geopolitical issues.
On Nov
19, another ceremony will take place in Kuala Lumpur where Myanmar will hand
over the chair of the Asean Business Advisory Council (Asean BAC) to Tan Sri Dr
Munir Majid, the current chairman of the Malaysian chapter of the Asean BAC.
Munir
also officially assumes his role on Jan 1.
Asean’s challenges
Being the
chair next year, Malaysia is tasked with sheperding the regional grouping to a
significant milestone in its 47-year history, the formation of the Asean
Economic Community (AEC), which comes into being on Dec 31, 2015.
However,
this significance is likely lost on most Malaysians largely because of Asean’s
remoteness from their lives. Asean is the world of summits and meetings, of
government leaders, policymakers, think tanks and their ilk.
Aptly,
Malaysia has chosen the theme “A people-centric Asean” for next year but not
much is known as yet about what programme or plans will flow from this theme.
What is
known is that Malaysians have the lowest levels of awareness of Asean matters
among the regional grouping’s citizens, according to findings carried out by
the Asean Foundation earlier this year.
The
findings belie Malaysia’s trade links with her neighbours.
Trade
with Asean has risen by leaps and bounds, with members accounting for 28.1% of
exports last year while they accounted for 26.7% of Malaysia’s imports.
How can
Asean create awareness about itself and the fruits of regional integration?
Munir, whose Asean BAC represents the private sector’s lobby group to the Asean
Secretariat, suggests the implementation of simple measures to create such
awareness.
“Why
can’t we have an Asean line at airport immigration counters or why can’t we
have business travel cards among member countries so that we don’t have to
apply for visas? These are the low hanging fruits that create awareness,” he
tells StarBizWeek.
The Asean way getting in the way
Economic
integration is the best way forward to deeper regional ties with the AEC being
one of three pillars forming the Asean Community.
In fact,
given that the region already has deepening trade and investment ties, the AEC
will pave the way for integration under the Asean Political Security Community
and the Asean Socio-Cultural Community pillars.
However,
dithering over trade in services and free movement of labour is holding back
more meaningful integration. Those who follow Asean issues often refer to the
grouping’s penchant for concensus through more meetings and forums as the
“Asean way”.
Munir
points out that there is a wide gap between what the AEC has achieved and the
realities on the ground. “There are national sensitivities that must be
navigated.
“It takes
a long time to negotiate,” he says.
The AEC
envisions a single market and production base, a highly competitive economic region,
a region of equitable economic development, and a regional economy fully
integrated into the global economy.
“Its not
going to be perfect, which is likely to be the case, and while there has been
genuine progress in economic integration, there’ll be shortfalls and at the
same time there’ll be new initiatives to drive the AEC forward,” Munir says,
referring to the Dec 31, 2015 deadline.
Even
where agreements have been signed, there will still be obstacles as signatories
have to amend legislation and that takes a long time.
Munir
says the reality is that the enabling legislation in the domestic jurisdiction
is not always followed through. Indeed, observers say that Asean needs to be
restructured to be more nimble in carrying out its duties to integrate the
region.
While
barriers for trade in goods are almost all gone, there are still non-tariff
barriers to contend with. Also, not all sectors and industries are opened to
foreign investment. Malaysia’s automotive industry comes to mind.
Furthermore,
progress on the economic integration blueprint, which uses a scorecard system
to chart compliance, does not give the full picture of realities on the ground.
Critics argue that this is an imperfect system.
One
critic notes that the scorecard does not assess how well or effectively
obligations are being implemented, it just assesses whether these regulations
are in place.
Munir
says while the scorecard has its uses, the Asean private sector prefers to know
more about immediate concerns such as how to operate in different
jurisdictions.
“For
example, I’m interested in the banking/financial services industry and its
operating environment,” Munir, who is also Bank Muamalat Malaysia Bhd chairman,
says. He prefers to see Asean integrate project by project and sort out the
issues as they come up. “If you go on the basis of having everything in place
first (the enabling legislation), nothing will get done. Build around these
projects, solve the problems arising from these projects, then percentages of
compliance doesn’t matter anymore,” Munir says.
He adds
that when benefits of working across borders are seen for a project, there will
be more momentum for integration.
Forward Asean
Munir
says globalisation, liberalisation and competition are already happening. “The
AEC focuses our minds ... liberalisation and competition will happen even
faster and more with the AEC,” he says.
Inevitably,
there will be winners and losers as well as a period of readjustment but it
will not be a zero-sum game. “It will be dynamic and competitive, consumers
will gain, businesses will gain and the economy will benefit,” Munir says.
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