Lessons from ASEAN

Wednesday, 4 April 2012 00:03 -     - {{hitsCtrl.values.hits}}

When trouble strikes, it’s best not to be alone. The European Union has proved this and ASEAN is taking a leaf from its book and insists that it is “on track” to greater integration by 2015. This places greater challenges on the South Asian Association for Regional Cooperation (SAARC) to move forward to deal with the global and regional challenges on development.

At the 20th ASEAN Summit in Cambodia, there is a strong desire to push forward reforms to bridge the member countries and present a bulwark against global economic issues including higher oil prices, the Eurozone crisis and a tenuous US recovery.

ASEAN Chairman Cambodia renewed its push for greater integration within the regional body on Tuesday, with its Prime Minister insisting that stronger financial cooperation was needed to promote economic growth to tackle global issues. Cambodian Prime Minister Hu Sen told leaders of the 10 member countries at the 20th ASEAN Summit opening ceremony that many challenges still remained for the bloc to tackle.

The main agenda is to ensure that Southeast Asia is on track to meet an ambitious goal of transforming in three years into a European Union-like community. This includes moving towards a single market and production base, where people and goods can travel seamlessly. However, a common currency is not being considered. Sen has insisted that more concentration of political will is needed to ensure legislation for migrant workers, loosen trade barriers, develop infrastructure and narrow economic growth gaps in the 600 million strong population of ASEAN.

ASEAN is also moving strongly to strengthen mechanisms for financial stability within the region. The Chiang Mai initiative is expected to double its resources from US$ 120 billion to US$ 240 billion at this summit, providing an alternative to organisations such as the International Monetary Fund (IMF), which has already stated that 80% of its funds this year will be used in bailout packages to European countries.

Also on the economic front, EU and ASEAN trade continues to grow, with business between the two regional bodies reaching US$ 208 billion in 2010, accounting for 10.2 per cent of ASEAN’s total trade that year. In terms of investment, the EU had been ASEAN’s largest investor, pouring around US$ 17 billion into the region in 2010, covering more than 23 per cent of total Foreign Direct Investment (FDI). Discussions ahead of the summit in Cambodia were aimed at ensuring that the relationship continues to grow.

ASEAN has not had a smooth progression. Implementation of legislation on trade barriers, infrastructure and development in individual countries has been delayed for many years. There is also division on how to interact with renewed US interest and China’s powerful presence, especially in relation to the South China Sea issue that is shared by four members of ASEAN. There is also increasing tension over presenting a unified stance on key international issues such as North Korea and a fast-changing Myanmar. Yet, for all that, the vastly diverse region is making progress.

There is much SAARC and its member countries can learn from ASEAN. As Sri Lanka struggles to maintain its economic growth, there is increased need for strong multilateral relations and South Asia as a whole needs to end mutual distrust and move into a new era or be left behind.