A personal perspective by Surin Pitsuwan
Former Secretary-General of Asean, Former Foreign Minister of Thailand
Asean Media Forum, Sofitel Hotel, August 4, 2017, Manila, Philippines
Asean at 50 can take pride in its considerable achievements.
From its humble birth in 1967, it has expanded and fulfilled a dream of having 10 family members. Despite some ups and downs, it has evolved into a regional platform, which has allowed major players to discuss political and security issues, helping bring stability and peace to a region once described as “the Balkans of Asia.”
Asean has also contributed greatly to the vast improvement in the living standards of people in the region. Over half of Asean’s 620 million people now enjoy middle-class status with rising purchasing power and sustainable growth, contributing to total GDP of $2.5 trillion. The region has also benefitted from the relocation of many global industries, along the way creating lucrative markets for imported consumer goods. Combined trade volume has reached US$2.6 trillion, while Foreign Direct Investment (FDI) has been hovering around US$130-150 billion a year.
But Asean does not exist in isolation. As member countries pursue greater integration through shared political, economic, social and cultural goals, globalisation and regional changes will increase pressure on Asean to achieve its aims. Global power plays will also inevitably impact the region.
The challenge for Asean is whether it is willing, capable and ready to play a larger role. All indications are that the regional grouping will need to enhance its capacity, streamline its decision-making process, reconfigure its working processes and adopt a new mindset from its passive “Asean Way” of the past 50 years. It’s inevitable that more pro-active engagement will be needed to deal with the new challenges.
In the past, emerging economies opposed globalisation and multilateralism for fear of domination by, and dependency on, what American economist Paul Krugman calls the “core countries”. These are the wealthy, industrialized Western nations, which stood to benefit most from it. But Asean states learned to adapt, and eventually benefited from waves of globalization in the form of open trade, free flow of investment, relocation of manufacturing, effective transfer of technology and development of human resources.
In short, Asean member states tailored the force of globalization to their advantage. Over half of Asean’s population is now in the middle-income category, with a higher quality of life and the ability to consume goods and services from abroad. Asean member states have become export-oriented economies and some of the “core countries” have found themselves on the losing end of globalization.
Now they want to rewrite the rules of the game.
This is evidenced in the withdrawal of commitment to global trade deals, the redirection of investment to domestic Western economies, a rise in protectionist policies and an emphasis on a “my country first” philosophy. All these developments are potentially damaging to the Asean approach of welcoming and accommodating trade and foreign investment. As a result, FDI is likely to shrink and markets are showing signs of fatigue for foreign goods. It seems the global goodwill for Asean products is reaching a ceiling.
There are now unmistakable signs from the United States, a major dialogue partner, that the rules of the game will be changed. Preference will be given to one-on-one bilateral negotiations, rather than the “Asean Way” of collective bargaining. Major powers will pick and choose whether they engage with Asean as a group, or with member states on an individual basis. This is potentially damaging to the group’s traditional collective-bargaining power, and represents a formidable challenge to the future of Asean.
In recent years, prior to the recent US shift, a more assertive China has also undermined the basic assumption that ASEAN has always been solid when it comes to external relations. In the late 1990s and early 2000s, China was courting Asean’s trust and goodwill. Asean reciprocated with its own olive branch, welcoming the peaceful rise of China. Maritime disputes with some member states were kept under wraps while economic relations developed in leaps and bounds.
China has become the second largest economy in the world and all Asean countries have become dependent on the Chinese market. Having replaced the EU, Japan and the US as Asean’s largest trading partner, China has now chosen to reconfigure its relations with its southern neighbors. In doing so, Asean’s agenda has been frustrated, its normal practices altered, and, its traditional solidarity undermined.
The next 50 years
On top of the rapidly changing global landscape, Asean faces fierce competition from other emerging economies. India, Africa, Latin America and China have been attracting foreign investment away from the region in recent years, and the trend will continue. For the Asean Community to face the global challenges and survive increased competition, member states need to tackle a number of key issues.
First, deliver on the agreed commitments. Asean has prided itself on achieving most of the legal instruments it set out to establish the 2007 Asean Charter, and the blueprints to make the Asean Community a reality. But what is lacking is the will to implement those instruments at the national level of each member state. In the past, we made do with accommodation and collegial compromises. This “Asean Way” of procrastination and evasion of responsibility will not work in the future. The global community would like to see delivery on the promise.
Of the three pillars, achieving economic integration and making the region attractive under the Asean Economic Community blueprint is the most daunting. Connectivity is crucial. Asean has embarked on a Connectivity Plan to facilitate the transport of goods and people across the region, increasing the need for infrastructure financing.
The funding solution could lie in the creative mobilization of the combined foreign exchange reserves of all the Asean member states is almost $1 trillion. If the member states want to show commitment to the much-touted Asean Community, a mere 10 percent of the combined reserves would go a long way towards bridging the Connectivity Plan funding gap.
This could be in the form of concessionary loans to member states, which need to finance their own parts of the Connectivity Plan. Great strides could be achieved if each country agreed to put a portion of its foreign exchange reserve into a fund managed by the Asian Development Bank (ADB). This would be in addition to the delayed, and far too small, “Asean Infrastructure Fund,” the ADB has agreed to help manage. There is no risk involved, there is much to be gained, and Asean would be less dependent on external funding for its own Connectivity Plan and infrastructure development.
As the new anxiety over globalization and multilateralism takes hold, the impact on the region can’t be ignored. Free trade will be curtailed, foreign investment will shrink, and most of Asean’s traditional markets will look inwards and turn away from foreign imports. The region will have to rely on itself. This is why expanded regional economic integration with larger nearby economies is crucial to our success and survival.
The Regional Comprehensive Economic Partnership (RCEP) with six trading partners: China, Japan, South Korea, India, Australia and New Zealand must be concluded urgently. We are talking about turning existing bilateral trade agreements with these countries into one trading bloc. As protectionist tendencies grow in distant markets, it is only prudent to consolidate an economic community closer to home. There is no room for delay or procrastination, it is a matter of survival for the entire region.
There is also an urgent need for solidarity in Asean’s dealing with external partners. Whether in strategic and security matters, trade negotiations or global issues, Asean needs a common and solid front more than ever. If Asean is unable to develop a strong united stand, it will succumb to the strategic power plays of major nations. Asean will risk losing the global trust and confidence it has carefully cultivated over the past five decades.
Asean should also rethink and broaden its definition of its “security and strategic”interests to reflect changes in the global arena. The grouping has been proud of its “centrality” and enjoyed its leadership role in the consultative processes of the larger Asia-Indo-Pacific region. The East Asia Summit (EAS), born in 2005 with Asean plus six states as participants, has been billed as “the leader-led political, security and strategic platform” of the region.
The US and Russia were included in 2010, but the EU has been kept at arms length, largely because of the traditional perception that it has no geographical interest in the region and no capacity or desire to project force. But the reality is that the EU has been a major force for trade and investment in Asean for many years, and one of its top trading partners in recent decades. A seat for the EU on the EAS should be reconsidered by Asean.
Last, but by no means least, member states will have to better listen to a wider range of voices and concerns from their own people. Under its charter, Asean promises to be a “people-oriented organization” with adherence to the principles of democracy and respect for human rights. But so far, Asean has been driven by political leaders and diplomats, who draw power from the profile of the regional grouping. But as individual states evolve and transform, people from all levels of society want to play a greater role in setting the future course of the regional body.
They will find out sooner or later that some states are benefiting more than others from the Community. They will also inevitably discover that for them to benefit as much, it will require reforms in political governance and economic management. Without such reforms, and some will be painful, inequality among member states will remain. This will lead to a demand for change and reform at the national level, which will be best managed by a more open democratic system. However, many of the Asean member states are still resisting this growing demand for change from the grassroots of their countries.
Asean has survived many challenges to its resilience and existence over the past 50 years. But the next few decades will be filled with formidable challenges from the changing global landscape. The only prescription for survival is more cohesiveness within its community and greater innovation in managing its impressive past accomplishments. Dealing with competing external powers will demand a high degree of solidarity and courage among the Asean member states. Only its combined resources and strength will help it survive in the uncertainty of a fractured world.
Much has been accomplished, but so much more needs to be done. The second half of the first century of Asean will require full ownership, active participation and meaningful contributions from all of its people. From its inception, Asean has prospered and flourished from a “collective will” and the common aspirations of its people. It was always intended to be a democratic construct. Over the next 50 years Asean will have to be truer to its sacred path as aspired by the Founding Fathers.