‘BREXIT’: LESSONS FOR ASEAN
The defeat of the “remain” in the United Kingdom June 23 referendum on its EU membership leaves lessons for ASEAN — despite the fact that it does not follow EU’s model of regional economic integration. Unlike EU, the ASEAN has not allowed for harmonized fiscal and monetary policy, and the free movement of labor and capital. Neither does it have selective equivalents of Schengen visas, euro currency, etc., although it allows an ASEAN minus x formula for certain projects. What can ASEAN gather from the “Brexit” success?
ASSESS PERCEIVED VS ACTUAL NET BENEFITS CONTINUOUSLY
Membership in any grouping is always subject to the rationale of benefits exceeding costs. It behooves leaders to continuously study their constituents changing the calculus of such perceptions. This is the sentiment of one “remain” supporter in the British Parliament and others in the EU who were surprised by the vote.
Many in ASEAN do not communicate these citizen sentiments regularly except for occasional reports to mark milestones. All are content to say the ASEAN Community is a work in progress, even by end-December in 2015 when it was supposed to have been launched.
These net benefits perceptions are in contrast to the reality of solid numbers behind economic
ties — the flow of people, things, and money — necessary for starting public debates but not sufficient to win people to one’s side.
Three contemporary EU and UK concerns — migration, terrorism, and Russia — have been intertwined with the weak recovery of the world economy since the great financial crisis of 2008 — inevitably impacting all economies. London, a key financial center of the world, Northern Ireland, and Scotland voted to remain in the EU, but lost to the rest of the UK whose people must have been overwhelmed by their feeling of a net negative position by remaining in the EU.
In this regard, more granular and detailed survey questions should be designed to probe the minds and hearts of citizens of the new century. Big data should be mined, but new questions must be asked. Traditional survey firms may miss the nuances of smaller groups and how they interact with other smaller groups on various political, economic and social issues , the key to understanding the present world.
RECOGNIZE VARIOUS TYPES OF CHAOS IN THE NEW CENTURY
The 21st century is a chaotic or VUCA (volatility, uncertainty, complexity, and ambiguity) world — we may know little or a lot of citizen’s feelings in a socially networked world, and similarly for the predictability of the actions of leaders faced with problems. Combined, we are worse off not knowing where we are on either side of the governance market.
This was exactly how those who campaigned for the “remain” side of the referendum felt — a close vote which in hindsight could have been made favorable to their cause had they changed strategies. The cold logic of economic numbers no longer cause people to behave rationally.
An investment downgrade and a probable economic slowdown may not have been seen as probable or bad by the “leave” voters. Indeed, their perception of job security may no longer be just a case of outsourcing fear but domestic economic malaise that may result to jobless growth in certain regions.
Indeed, policy makers in the UK, EU, and ASEAN will have to deal with different generations as we face longer life spans: younger people postpone marriages, live longer with parents and impact on housing demand; productive workers and entrepreneurs are more globally mobile ( geographically and electronically); retirees’ pension plans and medical benefits are eroded by inflation and various expectations thus redirecting certain types of consumer spending.
KEEP ECONOMIES AND MINDSETS OPEN
Open regionalism of ASEAN born in the late 20th century must be preserved vs EU’s fortress mentality that emerged from post-WWII. Both groups started largely as responses to avoid regional political conflict but economic linkages now define their raison d’etre.
As “Brexit” is a reality, a number of groups in EU are suggesting similar divorces. In South East Asia, the fear of pandemics, the Pacific Ring of Fire, and climate change could be the common enemy ASEAN should unite against. Indeed, the reason why intra-ASEAN trade is much smaller than that of intra-EU or intra-NAFTA trade is that it has adopted open regionalism as its philosophy, extending it to the Asia Pacific Economic Cooperation (APEC). Trading with other regions rather than a Fortress ASEAN insulated from other world markets is what has defined South East Asia. Yet ASEAN’s relative openness is far from EU’s in other areas, thankfully.
ASEAN has Mutual Recognition Agreements to allow for skilled labor movement – but it is in less than ten professions, and its implementation is constrained by national legislations and bilateral negotiations. Fear of massive migration from Indonesia to Singapore is solved with transient workers in one island, preserving the fiction of a single regional production base that is the goal of the ASEAN Economic Community by December 2015. The financial integration is not about to replace what some bankers argue already exists with technology innovations allowing for cross-border transactions.
Will “Brexit” inspire economic separatism? Singapore’s founder Lee Kuan Yew once deemed separation from Malaysia as death knell for its economy. But through the decades after its separation, its open economy was continuously repositioned to meet global market opportunities; that made Singapore among the top per-capita economies of the world today — and it remains loyal to ASEAN.
Sub- regionalism in ASEAN may in fact be the answer to prevent exits. A more robust BruneiIndonesia-Malaysia- Philippines East ASEAN Growth Area (BIMP EAGA) can be a better answer to the Mindanao challenge. In August 2017, it could be President Duterte’s 50th ASEAN Anniversary gift to the Filipino people. A more open mindset on ASEAN can design sub-regional growth as the key to avoiding its own “Brexits.”
(The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the M.A.P.)
Sub-regionalism in ASEAN may in fact be the answer to prevent exits.