Despite painful lessons from Europe,
integration should generate more opportunities than risks to East Asian
countries if they are pursuing growth to spur domestic economies, agreed
panellists at World Economic Forum on East Asia 2012.
During
the opening plenary on May 31 on "East Asian Models for Transforming the
Global Economy", Gerard Mestrallet, chairman and executive officer of GDF
Suez and co-chair of the forum, noted that even in Europe, the integration has
helped sustain peace in the region for 50 years. Even when fiscal rules disrupt
the process, he foresees deeper integration rather than disintegration.
Eswar
Prasad, professor at Cornell University, noted that for a single currency, a
better institution is necessary to ensure smooth integration. For Asean,
integration is still an answer.
"The
integration will not only draw capital but also strengthen domestic
resilience," he said, adding that these countries may not strengthen
integration for capital, but they still need to deal with what comes with the
capital.
Indonesia’s
Trade Ministr Gita Wirjawan wished Europe show decisiveness like what Asian
countries demonstrated during the 1998-1999 following the financial crisis. He
also raised doubt whether the situation would be the same if the International
Monetary Fund (IMF) is led by an Asian chief.
"We
need a stronger Europe. We fear its weaknesses less than we fear its
strengths," he said.
Thailand’s
Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong added that
integration will strengthen Asean as a whole, "but we’d not go as far as a
single currency".
While
lauding the strengths of Asean nations, the panellists expressed grave concerns
over the widespread corruption in the region.
To
Kittiratt, there is a strong will of Asean leaders to deal with graft, aside
from pressure from global investors.
Wirjawan
of Indonesia is hopeful that reforms of the tax system, whereby only 10 million
of 245 million population are paying taxes, would make Indonesia more
attractive. Coupled with greater education, this will lead to more jobs and the
less corrupted society.
"Corruption
is a long-term game, as it took Hong Kong 30 years. In 5-10 years, there could
be fewer corrupted people in Indonesia," he said.
Some
government efforts bear fruits, as Indonesia which just adopted the democratic
ruling 14 years ago is showing the low unemployment rate of only 6 per cent.
Wirjawan expected that to fall to 4-5 per cent in the next few years.
Meanwhile, the country has witnessed a sharp growth in investment in the last 2
years.
"Asean
is still a low per capita region... (On integration), we’ll get there, but not
in a grandiose way as we thought 10 years ago," he noted.
To
Kittiratt, integration is a way to achieved the necessary economic rebalancing
given severe external shocks. Integration would boost the purchasing power of
people in the region and then boost regional trade.
Mestrallet
noted that Asean is one pillar of the world economy with capital, population,
growth and resources. Yet, the region faces four challenges concerning economic
sustainability, environment, energy and rural development.
He
praised for the regional cooperation in energy but urged the countries to put
in place stronger rules on water and air quality. Still, just as Europe is
going green, Asean need not go too quickly. He noted that Europe is doing that
at a price.
"(In
dealing with the challenges), you have to avoid the European and US mistakes
(given their excessive public debt)," he said.
The
return of Asia to the global economic stage will define this century, but the
region's rising prominence and influence must be underscored by a willingness
to avoid protectionism, eliminate trade barriers and deepen regional
integration, Pascal Lamy, Director-General, World Trade Organisation (WTO),
told participants.
"This
region is doing better than the rest of the world, but it is not immune.
Economic uncertainty in the United States and Europe and a slowing economy in
China will impact this region. This biggest risk is protectionism; it is a
serious risk and a growing risk," warned Lamy.
With a
combined GDP of US$3 trillion, a wealth of natural resources and a demographic
dividend, the ASEAN region has all the assets to become a global economic
pillar, but sustained regional growth hinges upon an increasingly intertwined
ASEAN.
"The
main action, which has been going on for several years, is ASEAN
integration," noted Lamy. "That is the strong comparative advantage
of this region. The more this happens, the more resilient the region will
be."
In
light of the goal to form a single ASEAN market by 2015, Kittiratt Na-Ranong
said he was optimistic that a regional consensus would be achieved. He
emphasised the need for countries to strike a balance between driving domestic,
regional and global economic growth and creating a buffer for external shocks.
"East
Asia and South-East Asia have for too long been focused on export-led growth
and we forget that we have room for improvement in our own economies,"
said the Thai Deputy Prime Minister. "These days, the key word is balance.
It is our job to help ourselves so we can help other economies, too."
Focusing
on domestic growth in combination with an openness to deepen regional
integration, argued Kittiratt, would be advantageous to individual economies,
the broader region and the ailing markets in the US and Europe. He also called
for lower logistical costs within the region to better facilitate trade ties
and ensure logistical connectivity.
Acknowledging
the logistical challenges of an archipelagic nation, Wirjawan, Minister of
Trade of Indonesia, concurred that an intra-economic ASEAN economy would
bolster the region from externalities despite tendencies to resort to
protectionist policies in times of economic turmoil.
In the
context of an increasingly volatile external market, deeper trade integration
not only boosts growth but also increases vulnerability. Key to ensuring broad
support for increased intraregional connectivity, argued Eswar Prasad, Professor,
Cornell University, USA, is to eradicate the "toxic combination" of
corruption and inequality.
"ASEAN
has to make sure that greater openness is not only benefiting the elite, as
inequality and corruption will erode broader support for future reform,"
he told participants.
Empowering
ASEAN's population by increasing purchasing power and productivity and moving
up the value chain was perceived as the best way to spread the economic
benefits more broadly.
Taking
note of beleaguered Western economies, avoiding currency integration and
embracing decisive actions were viewed as the key lessons for ASEAN nations.
More
than a decade after Asia faced an economic crisis of its own, Wirjawan called
for patience and long-term commitment to a united ASEAN, a region comprised of
countries of greatly varying levels of wealth and development.
"The
point of connectivity is that we are getting there," he explained.
"It may not be as ambitious and grandiose as we want it to be, but we will
get there. We are clear where the problems are and they can't be fixed
overnight, but it is happening."
Achara
Deboonme
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