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Princes, Ambassadors and the Future of Southeast Asia: ASEAN, 2015 and Free Trade


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The politics of the time was wonderfully complex – the Chinese community in Sarawak rejected Sarawak’s incorporation into Malaya after Sarawak’s improbable and originally British ‘white Rajahs’ ceded their nominally independent Kingdom to the His Britannic Majesty in just 1946 – while, in parallel, Communism seemed on the rise across Southeast Asia. Writing as a Brit myself, I am also aware that almost exactly forty years ago, in Jakarta, the Indonesians burned down our embassy; largely in protest at Britain’s corralling a hotchpot of British Imperial possessions in Southeast Asia to become the Malay Federation.

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Princes, Ambassadors and the Future of Southeast Asia: ASEAN, 2015 and Free Trade

  1. 1. Let A Hundred Flowers Bloom! Introducing ASEAN; Changes in 2015; & Free Trade ‘what it means’
  2. 2. ASEAN nearly 30% of China’s 10 countries $2.4 trillion GDP600 Million people
  3. 3. 199919971995199719841967 How ASEAN came about Bangkok Declaration 5 ASEAN founding members - Indonesia, Singapore, Philippines, Malaysia and Thailand – in a display of solidarity against Communist expansion in Vietnam and communist insurgency across the region Brunei joined Myanmar joined Vietnam joined Laos joined Cambodia joined Southeast Asia is a post World War II political concept as much as a geographic one An example of Jaw-jaw to prevent war-war – e.g. Indonesia/Malaysia conflict 1963- 1966 ASEAN Secretariat is in Jakarta, Indonesia
  4. 4. What ASEAN is not ASEAN is not a Southeast Asian EU and never wants to be: EU is about limiting national sovereignty and obliging compliance with directives determined by Qualified Majority Voting (with some opt-outs) The ASEAN way:  Legally-binding decisions on members, yes. But based on unanimity.  Means decision-making runs at the pace of reaching consensus  Fierce preservation of national sovereignty
  5. 5. An Association of Unequal Equals • Indonesia & Thailand are Premiership • Malaysia; Vietnam and Philippines 1st division ASEAN is a GDP success but it’s relative Singapore’s financial sector far outweighs its real economy and population size While a tad larger than India’s economy, across 10 countries it is expensive and complex to access the ASEAN market
  6. 6. DEMOGRAPHIC BONUS • Compared to other Economic regions ASEAN benefits from a young population: • good for macro-economics (bigger workforces to support seniors) • good for companies selling to consumers in terms of medium-long term demand growth • posing unique challenges for higher and technical education / training, in terms of both infrastructure and teaching resources
  7. 7. ASEAN Population There are other significant differences between ASEAN members: • Life expectancy ranges from a high of 80.7 years in Singapore, to a low of 62.3 and 62.7 years in Cambodia and Myanmar respectively • UN Human Development Index scores rank from a high (Singapore) of 0.85 out of 1.0, 27th in the world, to lows of 0.45 (132nd); 0.49 (124th) and 0.50 (122nd) for Myanmar, Cambodia and Laos respectively • Healthcare spending/GDP is low: • USA 17.5% • OECD average 9.5% • China >5.5% • Asian average 4.5% • ASEAN <4% • Indonesia <3% before „leakage‟ • Malaysia <4% Indonesia, 244. 47 Thailand, 64.38 Malaysia, 29.46Singapore, 5.41 Philippines, 95.8 Vietnam, 90.39 Myanmar, 63.6 7 Brunei, 0.4 Cambodia, 15.2 5 Laos, 6.38 In millions of people, by country IMF 2012 estimates
  8. 8. ASEAN Connectivity ASEAN Economic Community 2015 ASEAN Connectivity is a three part initiative - physical - Institutional - People
  9. 9. ‘CONNECTIVITY’ MEANS – Regional power transmission grid – Single maritime and aviation market (& ATC coordination) - Development of end-to-end road/rail/port transportation networks: “I put my exports from my new low-cost factory in Cambodia on a train; and it goes to Singapore via Thailand and Malaysia – no customs; no tariffs – and gets shipped to the US from Singapore‟s container port” - Mobility for high-skill labour (but not free-movement of labour) - Corporate „passporting‟ between members states (registration; licensing; contracting and investment capital)
  10. 10. ASEAN Economic Community 2015 10 ASEAN countries have the potential to be a manufacturing and trade market as big as India - Singapore‟s financial market - Indonesia‟s raw materials - Thai manufacturing • 600 million consumers Raw material sourcing; manufacturing base to export worldwide BUT - Some areas of national protectionism and Non-Tariff Barriers (NTBs) - A democratic deficit? Most ASEAN citizens don‟t know about 2015 - ASEAN is a purely „top-down‟ national leadership issue: who will control ASEAN in the future? • Single supply-chain • Single Market
  11. 11. Current pan-regional FTA negotiations • RCEP is the ASEAN-led plan (a „twentieth century solution to a twenty-first century challenge‟), due 2015 • TPP – a ‘space age solution’ within, but separate to, APEC • TPP - extensive regulatory alignment over labour law, environmental and intellectual property protection. • RCEP „sets the bar low’
  12. 12. Reach of Free Trade Agreements RCEPTPP ACFTA
  13. 13. APEC World’s Biggest Trade Bloc 44% global trade 21countries 40% world’s population 54% world GDP
  14. 14. China & ASEAN ACFTA (aka CAFTA) ASEAN China free trade agreement • $400bn in 2012 • $850bn by 2020 China wants $1 trillion by 2020 MARKET of 2 BILLION people 90% of ASEAN exports to China are tariff-free $500m fishing, environment & maritime fund 150,000 scholarships to China by 2018 Trans-Asian Railway project to link China, India & ASEAN
  15. 15. The Paradox at the heart of ASEAN’s future • “Southeast Asia is not a country and ASEAN is not an Asian EU” • The „ASEAN way‟: consensus & unanimity for legally- binding outcomes, but ASEAN‟s WTO-like dispute mechanism has never been triggered • ASEAN “must prepare for the establishment of the ASEAN Community with robust mechanisms to support a rules-based community” • “[ASEAN] must wake up from its archaic top-down approach & begin building strong institutions…” What impact will the centrifugal force of the ASEAN Economic Community, from 2015, have on an Association that has member state sovereignty at its core? 2015
  16. 16. Engaging with ASEAN • Because of the sovereignty enshrined in the ASEAN Charter, for detailed policy dialogue it is recommended to engage with member states. • So too engaging with countries with a track record of detailed policy engagement with ASEAN especially the „+3‟ (China, Korea & Japan) • Although quite siloed – which can make internal mapping complex – so much can be learned from the ASEAN Secretariat as it manages the work-flow of member states‟ committees e.g. ASOMM – the ASEAN senior Officials Meetings on Minerals - amongst very many • ASEAN is not the EU: the Secretariat (unlike the EU Commission) doesn‟t drive policy development or have its own policy agenda
  17. 17. Engaging with ASEAN • The ASEAN business advisory council is not so much directly influential on policy thrust as it is a superb way of getting collective member state „temperature‟ on policy issues. Its events have excellent networking potential, including with high-level policy-makers • The ASEAN Foundation works on ASEAN awareness amongst member state populations; poverty reduction; capacity building and education. More MNCs are working with the Foundation as part of their CSR programs. Needs more ambitious reach?