KUALA
LUMPUR: In integrating Asean as one
single market, the most important thing Asean needs to do is to readjust its
mind map of where it sits in the world, said The London School of Economics
professor Danny Quah.
“Asean
needs to realise that it is in a better place location. We think we are part of
a global supply chain, where the East is involved in the manufacturing and
assembly, while the product is sold to Western consumers.
“In the
example of the manufacturing of the Apple Iphone, Asia's contribution of the
entire value chain is just 4% of the value-added created,” said Quah.
“To
continue with the Iphone analogy, this would mean that the rise of Asia has
only been made up from 4%. If this were true, then Asia' success of the global
supply chain would be very fragile.
“At the
best of times we make 4%.
“In the
worst of times, we would be making negative returns,” said Quah.
Quah
said there had been auxiliary evidence to show that growth continued to happen
in Asia, particularly in China and East Asia, despite Europe and the United
States slowing down.
Over
the last two financial crises, China and East Asia have continued to grow.
Germany,
for instance, which used to export to other parts of Europe, continues to
double its exports without these European countries exporting from it.
It has
now been replaced by developing Asia, with China taking up a third of these
exports, he said.
This is
also seen in the Gulf, Kuwait and the Emirates. Their major export markets used
to be the US and Western Europe. Exports in these countries have either not
grown or declined.
However
their export volumes have now increased by five times, and it is to developing
Asia.
“So if
we really held on to that 4% theory, this would not be possible. If the West is
not consuming, then who is?
“The
decoupling is actually going on in the world. Asia has a momentum in its
economic trajectory that is independent of the troubles of the West,” said
Quah.
“The
missing link is that we think we make up the 4%. There is a shift in economics
eastward, it is real and will continue.
“We
must adjust our mental mind map. We must take greater responsibility. We need
to be more innovative and develop domestic demand in our own markets,” said
Quah.
Apart
from the readjustment of one's mind mapping, Quah said there needs to be a
harmonising of regulations and a liberalising in trade and protective markets.
While
Quah is optimistic about the integration of Asean, he admits that the idea is
still a huge distance away .
Reforms
will take time. And this is especially so with Asia's way of making decisions
that are deliberate, non-confrontational and consensual in nature.
TEE LIN
SAY
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