TEN INTO ONE
Asean is moving closer to integration but challenges remain, such as mobilising capital to serve regional development needs. By Umesh Pandey in Kuala Lumpur
“There are so many global issues needing a decision by each of our sovereign nations, but frankly, we would do better deciding as Asean rather than as individual nations”
KORN CHATIKAVANIJ Former Thai finance minister
Asean is well on track toward achieving its goal of integration, although some hiccups still need to be resolved by the end of this year, say senior regional leaders.
The Asean Economic Community (AEC) originally was scheduled to be formed on Jan 1, 2015 but the date was pushed back to the last day of the year. Member countries had accomplished a lot in terms of harmonising standards and lowering barriers to the free flow of goods, services, investment and skilled labour. However, the final few details were proving the most difficult to resolve.
“As we approach the establishment of the Asean Economic Community by the end of 2015, I am very pleased to note that the regional integration efforts are on course, with the private sector increasingly playing a more active role in unlocking the tremendous promise that the region offers,” said Najib Razak, the prime minister of Malaysia the incumbent chair of Asean.
Speaking at the recent World Capital Markets Symposium in Kuala Lumpur, Mr Najib said his government “remains firmly convinced of the value of a single market and production base which allows all 10 members to benefit from a streamlined intra-regional flow of goods, services and capital”.
Mustapa Mohamed, the minister of international trade and industry of Malaysia, said Asean members had already achieved 91.5% of the tasks they had set for themselves.
“The remaining 8.5% are the challenging ones and these take time to be sorted out, but we remain confident that we will be able to achieve them by the end of the year,” he added.
This theme was echoed by the former finance minister of Thailand, Korn Chatikavanij, who said member nations needed to work together as a single regional entity rather than as individual nations to extract greater value from Southeast Asia’s participation in the global economy.
“There are so many global issues needing a decision by each of our sovereign nations, but frankly, we would do better deciding as Asean rather than as individual nations,” said Mr Korn, a senior member of the Democrat Party.
“I think the most important point [for sovereign nations] is the need for leadership … committed to Asean.”
Mr Korn added that Asean members needed to address issues beyond their shores and find ways of sharing resources, drawing capital from global funds and being able to trade in each other’s capital markets.
At the same time, he questioned the logic of having certain types of competing projects that resulted in duplication of effort and investment, as the capital might have been put to better use somewhere else. He gave the example of the Dawei deep-sea port in Myanmar, which is moving ahead at the same time as plans for new ports in Thailand and other countries.
Speakers at the symposium also expressed concern about the trend in Indonesia, Asean’s largest economy, where the administration of President Joko Widodo was increasingly looking inward and playing up economic nationalism.
“We are going to have the AEC in a few months and if at that time there is an inward process [in Indonesia] it would be a shame as this has been a decade-long process,” said Marty Muliana Natalegawa, the former foreign minister of Indonesia. “Leaders should show leadership and not move to regress and be inward-looking.”
Mr Marty, who was one of the most outspoken proponents of Asean integration while serving in the government of former president Susilo Bambang Yudhoyono, said it was in Indonesia’s best interest to have a strong Asean. “This is the cornerstone for Indonesian policy,” he said.
Mr Korn agreed, saying that “a strong Asean is in Indonesia’s vital interest”.
He said that he hoped that the Indonesian government recognised that it “can whistle and walk at the same time”, meaning it could develop its domestic and Asean capacity at the same time.
Mr Marty cautioned that Asean members also needed to look at what needs to be done beyond 2015, as there needs to be more than just economic integration.
Panelists from across the world at the symposium were unanimous in their call for Asean to move forward, saying it needed to create deeper reserves of internal strength in order to avoid being affected by global turmoil.
“An economically strong Asean would have the ability to generate its own internal growth momentum, having the capacity to finance its own growth, using its own capital and reducing its collective vulnerability to external fluctuations,” Mr Najib said.
The Malaysian premier’s comments were a starting point for wide-ranging discussions at the Kuala Lumpur forum, which attracted senior executives and regulators from the financial industries of many countries. As they charted the post-2015 outlook for the capital markets, they resolved to take steps to enable the vast pool of capital of Asean to be aggregated and mobilised into financing the region’s development.