INSIGHT: Challenges of unity as ASEAN turns 50

We often forget the important role that ASEAN unity has played in ensuring regional stability and peace, which has enabled ASEAN economies to pursue economic development and cooperation through various free trade agreements (FTAs).

There is the ASEAN Economic Community (AEC); FTAs with six East Asian countries (China, Japan, Korea, Australia, New Zealand and India); and the current negotiations of the East Asia Regional Comprehensive Economic Partnership (RCEP) to consolidate all those agreements.

As a result, most intra-ASEAN trade is at zero percent and a significant portion of ASEAN trade with the six East Asian countries is also already at zero. We can also travel visa-free to each other’s countries. ASEAN is the eighth-largest regional organization in the world with 600 million people, growing at an average of around 5 percent.

Intra-ASEAN trade accounts for 25 percent of trade and investment, and intra-East Asia trade accounts for two-thirds, while intra-ASEAN tourism accounts for 46 percent and intra-East Asia tourism accounts for two-thirds of tourist travel.

While ASEAN economic integration has been criticized as being too slow and not ambitious enough, it is at least still an ongoing process compared to what is not happening in other regional agreements or even at the World Trade Organization (WTO). Furthermore, international commitments including under the AEC have shaped and continue to influence national reform programs and in the growing antiglobalization and anti-elite world, there have at least been no major reversals.

We cannot take this unity for granted if ASEAN does not resolve the challenges it faces as it approaches 50 years in 2017. What are the changes and innovations needed going forward? As Eisenhower fellows meet in Bali this weekend, these are some of the questions they are pondering.

The challenges are first the slow recovery in the global economy, and especially important for ASEAN is the impact of the slowdown and structural changes in China. Second is increased antiglobalization, anti-immigration and anti-elite sentiments, peaking with Brexit, and the political stance adopted across the globe including in the US and evident in ASEAN.

In turn these tendencies have affected the appetite for bold reforms and international cooperation on various issues that need international collective action such as climate change, trade policy and international investment. Third, disruptive technologies that on the one hand increase efficiency and inclusiveness can lead to a loss of jobs and impact traditional industries.

Fourth is ASEAN’s increased urbanization and demographic shifts. There is aging in Northeast Asia and Thailand on the one hand, and on the other hand a demographic bonus in the rest of ASEAN and India of young productive people who will need jobs.

What changes are needed? To remain relevant, ASEAN must be able to speed up and widen the scope of regional economic integration, including addressing technological disruptions and the freer flow of people that will be beneficial to all members. At the same time it must be able to address the anti-openness movement with concerns rooted in the perceived lack of spread of the benefits of economic integration between and within countries.

Various surveys in ASEAN show that less than 50 percent of businesses have heard of the AEC. The utilization rate of FTAs is only around 40 percent and only a small percentage of small and medium enterprises (SMEs) participate in international trade.

Young people in ASEAN probably also do not have any idea about the ASEAN community, even though they enjoy the outcomes: We can find J.CO donuts in Singapore and Extra Joss in the Philippines.

In fact, they could be seen as similar to their European counterparts. A recent survey of millennials in Europe by the Foundation for European Progressive Studies (FEPS) found that millennials saw their future in globalization and the continued importance of the EU, but did not trust that the elites or politicians could deliver the right kind of globalization for them — of quality growth (health and environment being important) and inclusiveness.

Therefore, change is needed not just in what ASEAN should do, but also in the way ASEAN operates and communicates. Political leaders need to be in tune with the needs of the people, including of youth, and to be able to truly discuss these challenges openly at ASEAN summits. At the same time to be truly people-oriented and inclusive as the vision of the ASEAN community states, the process must be made open, inclusive and participatory from the beginning — not at the end of the process of shaping the ASEAN community.

Alongside innovations are needed to make the process more open and to have more transparent evaluations of impacts. One example is the AEC Scorecard, which could be made more transparent or have an independent evaluation.

Innovation through the role of technology in terms of structural changes that need to happen, the way to communicate messages as a means for inclusiveness and delivering digital dividends so that the benefits of economic integration are more widely spread are also key. For innovation and creativity to thrive, there has to be supporting physical connectivity, soft infrastructure of talent, a conducive innovation climate and access to networks, finance and industry.

In turn this will allow SMEs and “creative-preneurs” to be integrated. The outsourcing of many services and tasks to a wide range of clusters all over ASEAN could be a new method. An innovative approach is also needed to manage disruptive technologies so that there is net job creation and the creation of new industries and opportunities.

These changes and innovations are just a glimpse of what needs to be done. It is the beginning of a serious conversation that must happen from political leaders down. Let’s not lament the loss of ASEAN unity when it is too late or when it is gone. Let’s get going on the changes and innovations that we must make to ensure ASEAN unity — otherwise we will be living in an unthinkable world without ASEAN.

The writer served as trade minister from 2004 to 2011, and as tourism and creative economy minister from 2011 until October 2014

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