The induction
of China’s fifth generation of leaders has observers around the world
anticipating how the Xi-Li administration will govern and what effect their new
policies will have.
For ASEAN, it is likely that policy and attitude
will stay the course. Equally significant is the United States’ re-election of
President Obama. Within two days of his victory, the White House announced a
four-day visit to Southeast Asia, with the anchor being the East Asia Summit
(EAS). The president’s attendance of the US-ASEAN Leaders’ Summit and visits in
Thailand and Myanmar reaffirmed America’s commitment to ASEAN and reflects its
strategic Asia pivot.
ASEAN countries have substantial trade ties with
the US and rely on the sheer firepower of the US Navy in the ongoing maritime
dispute while it continues to benefit from China’s growth. Therein is the
underlying issue in this trajectory of economic and security strategy of ASEAN
countries.
This arrangement may be functional now, but the
status quo is not static. What is painfully missing from the equation is the
ASEAN community. The institution of ASEAN exists because the fates of these
countries are tied together. History has shown this and the future will bear a
striking resemblance. What is predictable is security destabilisation or
financial crises will have regional effects. It will not always be in the
interest of the United States to confront ASEAN’s rivals, nor can ASEAN always
trust China to be a responsible international stakeholder.
What exists is a 45-year old institution that has
successfully maintained peace and liberalised trade among 10 countries. What is
becoming more clear is that there are two ASEANs. One ASEAN is caught between
the US and China rivalry, the other is making its own decisions; one ASEAN
worries about foreign-made goods, the other is buying out its competitors; one
ASEAN looks inward while the other takes a regional view.
Malaysia is ASEAN’s blue chip member; its
oversubscribed IPOs, newly-opened Tun Razak Exchange, and million-dollar
Iskandar project in Johor is turning heads. But it has not taken a leadership
role in ASEAN since the end of former Prime Minister Tun Dr Mahathir Mohamad’s
tenure. Prime Minister Datuk Seri Najib Razak, the man who preaches “moderation”
in conflict resolution, has adopted the Chinese mantra and agreed not to
multilateralise the South China Sea affair.
Its commitment to regional trade is also
questionable as the government continues to use subsidy programmes. Indeed,
chief executive Shamsul Azhar Abbas of the state-owned oil and gas company
Petronas has consistently called for the government to refrain from using
Petronas’ earnings to fund its projects. The use of subsidies for welfare
programmes and megaprojects renege on Malaysia’s commitment to ASEAN investors.
In the long term, it hinders the development of local businesses including that
of Petronas and builds a culture of entitlement.
In Indonesia, ASEAN’s boom town, L’Oreal’s built a
US$130 million (RM396 million) plant, which will serve as its Southeast Asia
production and distribution hub, while Toyota is doubling its capacity through
a US$1.3 billion investment plan over the next five years. These multinationals
understand the advantage of regionalism, but Indonesia’s politics and foreign
policy do not. Instead, protectionist mining laws are being passed based on
inclinations from powerful interest groups ahead of the 2014 elections. And
although Foreign Minister Marty Natalegawa’s shuttle diplomacy managed to
reconcile some of the differences after the breakdown at the July Summit, it is
questionable as to why Jakarta did not step up earlier.
Thailand, which received visits both from Obama and
Chinese Premier Wen Jiabao in November, is poised to use its status as a pivot
state to enforce ASEAN centrality. Instead, Bangkok is distracted with its
domestic affairs from the anti-government Pitak Siam’s recent street rally to
Prime Minister Yingluck’s no-confidence debate. Thailand seems unable and
unready to take on the regional role.
Myanmar, ASEAN’s biggest attraction, stands to gain
greatly from regional co-operation. President U Thein Sein and Aung San Suu Kyi
now share the top spot in Foreign Magazine’s 100 Global Thinkers for their
reforms and Suu Kyi’s iconic status and tour of the west substantially raised
the country’s international profile. But neither the government nor Suu Kyi
herself have taken action against the glaring ethnic violence and
apartheid-like conditions that its own people are perpetrating against the Muslim
minority; and a much-anticipated foreign investment law that will provide the
proper channels for investment continues to be delayed.
In many ways, ASEAN is a bastion of growth; it does
not suffer from an overwhelming debt burden or unmanageable unemployment, but
this condition is not a permanent fixture and global uncertainty and shocks are
imminent. But given this opportunity, the leaders and people in these 10
countries have a crucial choice to make: advocate and commit on further
integration or become pawns in the new Great Game in Southeast Asia.
While pros and cons of the ASEAN+6 trade pact, the
Regional Comprehensive Economic Partnership (RCEP) and the US-led Trans-Pacific
Partnership are being assessed, it is the ASEAN Economic Community Blueprint that
should take centre stage. Negligence of the ASEAN agenda will have detrimental
effects in the long run for member states. Leaders must reprioritise the
national agenda and invest in a regional foreign policy. ASEAN unity will
continue to be tested and it is only through further regionalisation and
staunch support for multilateralism, can the nations prosper.
Chayut Setboonsarng
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Health care and Life Science with expertise in ASEAN 's area. We are currently changing the platform of www.yourvietnamexpert.com, if any request, please, contact directly Dr Christian SIODMAK, business strategist, owner and CEO of SBC at christian.siodmak@gmail.com. Many thanks.
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