ASEAN to-do list far from easy

An ASEAN-wide work permit, redoing the currency basket of ASEAN states, giving national treatment to ASEAN investors, beefing up ASEAN-based security venues, getting ASEAN states to comply with its own agreements – these are a few of the challenges that ASEAN faces as it celebrates its 50th anniversary.

These might seem ambitious or even fanciful thinking, but these concrete steps are among many that have emerged in discussions around ASEAN’s this year about how ASEAN can strengthen its core and build more resilience.

This would help make ASEAN more of a middle power that can survive better in today’s uncertain world, where multilateralism and globalisation/free trade – which have been crucial to ASEAN’s economic growth and regional stability – seem to have been thrown into reverse.

“The new normal in East Asia now is uncertainty,” said Jusuf Wanandi of the Jakarta-based Center for Strategic and Institute Studies Foundation.

In economic linkages, Jose Isidro Camacho, vice chairman of Credit-Suisse Asia-Pacific and a former Philippine secretary for energy and finance, says it is time for “the concept of an ASEAN citizenship,” where

ASEAN countries give favoured status to fellow entities. There should be a clear distinction between a person, company or investor being ASEAN or non-ASEAN, he told the ‘ASEAN at 50: The Way Forward’ conference in Manila earlier this month.

In geopolitical terms, an internally stronger ASEAN is one able to maintain its “strategic autonomy,” Aileen Baviera of the University of the Philippines’ Asian Center said. ASEAN has to be “innovative” in designing mechanisms that “keep the big powers engaged but also as is ASEAN’s tradition… to maintain the region as a neutral ground and as a region that is most concerned with maintaining the strategic autonomy of South East Asia itself.”

Stronger core

However one calls it, strengthening its political and economic core must rank high on ASEAN’s to-do list if it is to mature into a more solid community after 50. Ideas for these range from creating more visible signs of being ASEAN, to unlocking barriers to real integration, to pushing regionalism at the level of presidents and prime ministers.

Camacho proposes a much more radical push to integrate the other aspects of the ASEAN Economic Community (AEC) – services, labour, capital – by which the business sector has been largely unimpressed.
“It is about time that each member country commits to adapt the concept of an ASEAN citizenship that will have a favoured status in our respective jurisdictions. This should allow an ASEAN neighbour to be distinguished from a non-ASEAN person, on nationality issues in areas like foreign ownership limits, or labour, or professional services, and many others,” he said.

 Camacho added: “Unless we are prepared to formally incorporate these in our respective laws and regulations, ASEAN will be merely describing our geographic proximity instead of our political, social, cultural and economic tradition.”

While AEC aims to allow the free flow of goods, services, capital and skilled labour, business people say progress has been paltry in the integration of services in air transport, health care, tourism and logistics. ASEAN ownership of up to 70% in the service sector was to have been accomplished by 2010, Camacho adds.

ASEAN finance ministers agreed on a road map for a more integrated capital market in 2009, but “very little has been accomplished”, he said.

Testing ASEAN’s resolve

How about an ASEAN-wide work permit, as proposed by former Thai energy minister Narongchai Akrasanee? But the ASEAN Community’s skills mobility mechanism covers a limited set of skilled professions, and some countries have put in more restrictions on foreign labour after the AEC was set up.

University of Tokyo’s Masahiro Kawai asked, What if ASEAN gave “much more substance” to its economic community by becoming a customs union after tariffs are all but eliminated? As it is, ASEAN countries remain challenged by non-tariff barriers, though officials regularly say tariffs are almost at zero.

To deepen financial integration, Kawai suggested that ASEAN work to have a more stable intra-ASEAN exchange rate by basing it on a basket of currencies that gives predominant weight to the currencies of ASEAN countries and those of Japan, Korea and China, rather than those of non-Asian states.

Concluding the ASEAN-led Regional Comprehensive Economic Partnership (RCEP) would help ASEAN maintain and protect the open economic environment it has thrived in, and prevent over-reliance on any one economy.

Thus far, it has been five years and 19 meetings since the start of negotiations on what would be the world’s largest free-trade bloc, which groups ASEAN and the six countries with which it has free-trade accords – China, India, Japan, South Korea, Australia and New Zealand. 

The target for completion is this year or by the November ASEAN summit, but few are holding their breath.

RCEP is projected to lift incomes by 2 percent to 9pc. “Without RCEP, you’re going to end up a world of bilaterals, which is dangerous because you are small, compared to big. If you’re ASEAN, you have more bargaining power,” said Mari Elka Pangestu, former Indonesian minister of tourism and creative economy.

Economics and political weight

“The benefits of RCEP are not just confined to the economic but are also in the political and security areas,” Pangestu said. “If RCEP can be used to make sure that ASEAN’s central role is maintained, then there’s an important political and security benefit versus all the regional tensions and managing relations that we have with the big powers like China, Japan and India, and also those outside the region, such as the US and Europe.”

In ASEAN centrality, experts have suggested strengthening one or all of these forums – the ASEAN Regional Forum, the East Asia Summit, and the ASEAN Defence Ministers’ Meeting-Plus (ADMM-Plus).

The ARF and ADMM Plus remain key security venues. For instance, North Korea is part of ARF, and ADMM-Plus has seen 18 member countries hold combined military exercises. But they face challenges given that ASEAN is being pushed or pulled by the bigger powers. The 27-nation ARF is now 23 years old and still grappling with how to go beyond confidence-building.

These institutions’ “historical achievement” has been to provide a regular venue for ASEAN to consult with external powers, See Seng Tan of the S Rajaratnam School of International Studies wrote in the Contemporary Southeast Asia journal in August. “However, the post-Cold War strategic compact that enabled this exceptional development has considerably weakened in the face of growing rivalry among the Great Powers, which has led to pressures on ASEAN member countries to take sides and fomented disunity within ASEAN itself,” he added.

The 16-country East Asia Summit has been around for 12 years, but did not develop much political weight due to reasons that include the suspicion or disinterest of some powers.

Walking the talk

Much of ASEAN’s relevance depends on how much importance it gives to itself and how far its leadership commits to it.

 “The next generation of leaders should also be strong politically, because for them to adapt to an ASEAN integration program, there would have to be certain give-ups in order to achieve the kind of integration we would like to see some day,” said Manuel Pangilinan of the telecommunications giant Philippine Long Distance Telephone Inc. “If we address the matter of integration purely from a country perspective, we will never get there,” he said.

“We (must) focus on execution (of ASEAN’s deliverables). We spend too much time talking,” said Camacho.

Source: Myanmar Times