1. T I T L E S T O R Y
SOROTAN 2011/310
@AamMuharam
DR. Surin Pitsuwan, the
ASEAN Secretary General
at his Jakarta office.
2. I N T E R V I E W W I T H D R . S U R I N P I T S U W A N
As economic power shifts eastward, Asian nations are
faced with new strategic challenges including the ASEAN
Economic Community. Many say it follows the EU integration
model? Do you agree? Where do you see the differences between
EU and ASEAN?
The origin of ASEAN and EU is very different. We began
with a group of small –medium size countries and we
worked among ourselves for more than three decades and
we tried to improve the rest into the ASEAN process, not as
members as the EU has experienced, but as dialogue partners to
work together, to coordinate, to corporate and to support each
other. In a way it has become a more integrated and coordinated
region than before, but not on the same level as the EU.
We call ourselves the ASEAN Community, the ASEAN centrality,
the ASEAN driving force, but we are not aiming for the same
thing as the EU. The EU is a unit, while ASEAN cannot be a unit
due to the diversity among our member states. We can only
become a community; we can bring other players from other
territories such as Japan, India, Korea, Australia, NZ, and China,
but not as ASEAN member states, but as dialogue partners. The
bottom line is that the EU remains an inspiration for ASEAN,
not a model.
During your opening remarks at the ASEAN-EU Business
Summit last May, you said that living standards in ASEAN
are improving as it provides more opportunity for foreign
investors? How so?
In the last four decades ASEAN has made steady
improvements in its own per capita income. Today,
GDP per capita income of ASEAN households have reached
nearly US$ 7000 from US$ 3700 in 2003. That’s a big jump!
In fact, it is very impressive. For that very reason foreign
trading partners and potential investors are very interested in
us. However, it is not properly distributed; poverty is still here
and the gap between the rich and the poor is still very wide.
But the purchasing power of the middle class is rising, in fact
it’s expanding. 68 percent of Foreign Direct Investments (FDI)
went towards the Services Sector; namely healthcare, education,
tourism, financial institutions and telecommunication. This may
be a signal that the demand for consumption of quality products
and services is on the rise. The overall growth of income has
certainly increased; therefore it is very attractive as a market.
There are 600 million people in ASEAN and the middle class
can reach an average of 150 – 200 million people. Here in
ASEAN, the middle class is consuming more and demanding
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SOROTAN 2011/3 11
We are living in what’s already been dubbed the Asian Century. The Association of
Southeast Asian Nations (ASEAN) is facing profound changes in the global economic
climateaswellasundergoinganewphaseinitsdevelopmenttowardsdeeperintegration.
The global economic environment post-2008 crisis is characterized by weakened major
economic prospects in major advanced countries and the growing economic might
of China and India. Despite its differences, whether in cultures, values, governances,
religions and histories, the member states of ASEAN are determined to achieve the so
called 2015 ASEAN Community as a means to enhance its competitiveness and generate
new impetus for growth.
Interview: Maria Gracias
Differentfrom EU
We are
“EU remains an inspiration for ASEAN, but not a model.”
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3. more services to the quality of life and whatever makes life
easier and more comfortable; electronic goods, automobiles,
education, health, and telecommunication. The bottom line is:
we in ASEAN can buy and consume more. That’s a very clear
indication of ASEAN’s rising purchasing power. And that is why
the investors come.
ASEAN’s share of global foreign direct investment (FDI) inflows
increased to 3.6 percent in 2009, from 2.8 percent in 2008.
This demonstrates ASEAN’s attractiveness as an investment
destination, despite the lower overall value of FDI inflows of
US$ 39.6 billion in 2009. Preliminary figures show that total
FDI flows to ASEAN in 2010 reached close to US$ 60 billion,
up 51.5 percent from US$ 39.6 billion in 2009. Currently, the
main sources of FDI in ASEAN are its Dialogue Partners, 88
percent share to ASEAN’s total FDI in 2010. EU-27 has a share
of 23.2 percent, the United States 12.6 percent and Japan 7.4
percent (ranked 3rd
). Inflows from sources within the Member
States accounted for 12 percent of ASEAN inflow last year,
maintaining ASEAN as the third largest source of investment
in the region.
How far does corporation with China and India as the two
fastest growing economies in Asia go? Are we actually
competing with them?
ASEAN has continued to maintain strong trade relations
with its Dialogue Partners. China remains as ASEAN’s
largest trading partner in 2010 with a share of 11.6 percent,
followed by Japan with 10.6 percent and EU-27 with 10.0 percent,
USA and ROK with 8.9 percent and 4.9 percent respectively.
However, we are not competing with them directly. We are
trying to benefit from the synergies between them and synergies
between us. As China grows, we want to grow with it. As India
grows, we want to grow with it and our connectivity with China,
in this matter FTA with China or India, are the instruments that
we can use to expand or trade with and establish corporation
with; Certainly, with China we are investing in the area of the
economic corporation, while with India we have also done
an agreement in FTA, but we still have to deepen the areas of
corporation. But we benefited from the dynamism of both and
I think we are in a position to connect them and to bring the
larger market into the region through our connectivity. That is
why all of our partners would like to come through ASEAN
and to benefit from our connectivity with other partners. The
dynamism and the synergy that has been generated between us
and amongst us have made the ASEAN region very attractive to
the world. We would like to consolidate ourselves through our
own ASEAN FTA, but mind also the fact that we can expand
them to connect with us.
How to compete with China in terms of labor cost?
Somememberstatesarenotlookingonlyforthelowestlabor
cost, but the quality of the labor and the accommodation.
This includes environment, social-environment, and culture.
If you ask some of the countries, they are also looking for
political openness, higher quality of human resources, rules and
regulations that are transparent. There are many factors that are
relevant to the decisions to come to invest in ASEAN and the
member states need to learn how to attract the language of their
market in ways where we can be competitive, advantages, and
more accommodating. The industry and investments will go to a
place where things will not go wrong, and where all the facilities
and support are provided.
The member states need to speak the language of their
own market. What does this mean?
We talked about bridging the gap. We talked about member
states helping new member states. The fact that all the
ASEAN states have come this far in their economic development-
T I T L E S T O R Y
12
Southeast Asia’s Growth has Outstripped Many Developing
Regions Trends in PPP per capita income
Note: Polynomial trend lines fitted to GDP per capita, constant US$ at 2005 PPP,
1984=100.
Source: Author’s estimates based on World Bank data (excludes Myanmar for which
data are unavailable).
Southeast Asia
Middle East &
North Africa
Sub-Saharan Africa South Asia
Latin America
ASEAN
ECONOMIC
COMUNITY
single market
& production
base
integration
into the global
economy
competitive
economic
region
equitable
economic
development
Major keys of AEC
SOROTAN 2011/3
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4. whether Indonesia, Malaysia, Thailand, the Philippines and
Singapore- is because we have restructured, reformed and
opened ourselves up to accommodate foreign investments. Our
successful development did not come because of foreign aid in
infrastructure. We have learned to accommodate the interest of
potential investors and economic partners from our sides. The
rest of ASEAN will have to move up, reform and accommodate
foreign investment.
My line is to learn to flip the language of the market. People
come in to invest because they want profit. There is nothing
wrong with profit. It is up to you to negotiate how much
profit you want to gain and how much you want it to remain
in your country or how much can be limited to outside your
country, but you cannot avoid opening the country up and
accommodating the interest of investors or potential investors.
They come in because the market is open to them. They set up
their factories here because there are still competitive advantages
in our economy, namely the labor costs, raw materials, and the
strategic geographical location. Right now people are talking
about relocating Japanese industries into ASEAN which has
been done in the past, and we have to position ourselves to
welcome the industries to be located in ASEAN. We need to
be more prepared and willing to give our protection as well as
incentives to attract them. So that is the market force.
How do you see ASEAN - EU relations progressing in the
future, particularly with Germany?
EU has been a very large market to us, ranked the fourth
trading partner of ASEAN and we are ranked third for EU.
Statistics show that our export-import as well as our trade and
investment are doing quite well. In 2010 we recorded a strong
rebound of ASEAN’s trade with Germany. Total trade jumped by
19.8 percent, from US$ 39.3 billion in 2009 to US$ 47 billion in
2010. Export to Germany exceeded that of the level amounted
in 2008, before the global economic downturn, to US$ 23 billion
in 2010. An increase of almost 30 percent compared to 2009. So
we have already exceeded our export level before the crisis. That
is a very good sign.
Germany constitutes slightly over 11 percent of ASEAN’s
trade with the EU-27 in 2010. Foreign direct investment from
Germany to ASEAN dropped significantly since, from US$ 650.6
million in 2008 to negative US$ 207.6 million. In 2010, FDI from
Germany to ASEAN totaled negative US$ 81.6 million with
significant outflow from Indonesia. The German Federal Office
has also supported the process of regional integration in the
ASEAN region through InWent-Capacity Building International.
In 2008-2010, projects were developed and implemented in
accordance with the three pillars of integration process and
with focus on the three components; Strengthening ASEC’s
administration and management; Supporting ASEAN’s economic
cooperation and integration; and raising the awareness about
ASEAN through media.
The EU itself has been the largest source of investment flows
to ASEAN and remains so. About 20 percent foreign direct
investments into ASEAN come from the EU countries, mainly
from Luxembourg and the United Kingdom, with a record of
US$ 14.7 billion, an increas of 61.6 percent compared to 2009.
So, I believe EU will remain a very important partner to us.
So, is it possible for ASEAN to be the next economic
powerhouse?
If ASEAN were a single country, it would be the world’s
19th
largest economy, the 3rd
most populous country, one of
the world’s largest trading powers, and rank among the world’s
top 10 in terms of FDI inflows. Over the last decade, ASEAN’s
economic growth (1998-2009) of 5.7 percent far exceeded
that of the global economy of 3.4 percent and the advanced
economies of 2.1 percent, as well as other regional groups such
13SOROTAN 2011/3
I N T E R V I E W W I T H D R . S U R I N P I T S U W A N
Value (US$ Million)
2006 2007 2008 2009 2010*
Export 17,784 19,661 21,562 17,768 23,062
Import 19,516 23,110 25,764 21,488 23,954
Total 37,300 42,771 47,326 39,256 47,016
Growth (%)
Export 10.6 9.7 -17.6 29.8
Import 18.4 11.5 -16.6 11.5
Total 14.7 10.7 -17.1 19.8
Countries 2007 2008 2009 2010
Brunei Darussalam - - - 8.6
Cambodia 23.3 12.1 2.3 4.8
Indonesia 335.5 199.4 (88.8) (862.1)
Lao PDR - 1.0 - -
Malaysia 282.0 356.4 244.7 (124.7)
Myanmar - - 0.1 -
Philippines 0.5 18.3 2.9 4.7
Singapore 597.1 288.8 (446.4) 951.3
Thailand 97.8 (261.7) 39.5 (75.6)
Viet Nam 72.9 36.3 38.1 11.5
ASEAN 1,409.1 650.6 -207.6 -81.6
Table 1: ASEAN Trade with Germany 2006-2010 Table 2: Foreign Direct Investment
from Germany to ASEAN Member States
(Value in USD million)
* Data as of July 2011
Source: ASEAN Statistics
Source: ASEAN FDI Database (*indicative figures)
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5. as Central and Eastern Europe (3.5 percent), Middle East and
North Africa (4.5 percent), Sub-Saharan Africa (5 percent),
and Western Hemisphere (2.9 percent). Over the years, ASEAN
performed well economically, including the ability to improve
macroeconomic fundamentals, enhance economic flexibility,
implement key macroeconomic reforms, increase regional
complementarities, and deepen economic integration.
ASEAN has the economic resilience brought about by years of
undertaking key structural changes in individual economies.
Unlike in the 1997/98 financial crisis, the risks of currency
and banking crises in the region today are totally negligible.
ASEAN banks and corporations are better capitalized, with
higher returns and lower non-performing loans compared to
a decade ago. The much improved fundamentals of ASEAN’s
banking and financial systems will enable the region to
withstand external shocks. But nonetheless, ASEAN remains
vigilant against potential risks arising from significant re-
pricing of liquidity and credit risks, and increased risk aversion.
Thus, it is critical for policy makers to ensure that the banking
and financial systems in the region continue to perform their
intermediation function quite effectively. In addition, a series
of policy reforms undertaken over the last ten years has given
most ASEAN countries greater policy space and flexibility to
implement necessary economic adjustments. For example,
macroeconomic framework in the region is in much better shape
as evident in prudent fiscal management in many countries as
well as generally responsive monetary tools available in ASEAN
central banks. These reforms have undoubtedly strengthened
14 SOROTAN 2011/3
T I T L E S T O R Y
the capacity of the region to deal with the global financial crisis,
and I think, will continue to underpin ASEAN’s increasing role
in global economy. Surely there’s a chance if we act together
and we take the advantage of the opportunity which is now
open to us, bringing down all the tariffs and also the non-
tariffs, barriers between us so we can really consolidate, really
integrate. All of these are very important to our economy, if we
can cross borders and if we can cross into each others market it
would be very beneficial.
Four years from now, the AEC is expected to be in place. It
will transform ASEAN into a region with free movement
of goods, services, investment, skilled labour, and free flow of
capital. What about the implemetation?
That is the challenge. Every member state has ratified most
of the economic agreements, but the challenge doesn’t stop
at the ratification, meaning that the member states would have to
act according to the national compliance. As a nation we are not
only committed to comply with the ASEAN agreement, but the
implementation as well; enabling the legislation; reform of rules
and regulations at the working level, at the very departemental
level of customs, immigration, and export-import department.
We have to work not only on a national commitment level,
but also on national implementation at every level of ASEAN
governmental structures. I think that is the challenge.
We are away of the need to be presistent in pushing all the
implementations in the components with all the agreements. It
Indicator
Value
Year-on-year
change (%)
Share to ASEAN
(%)
Rank in 11 DPs
2008 2009 2010* 2009 2010* 2009 2010* 2009 2010
ASEAN exports to EU (US$ bil) 116.2 93.0 115.0 (20.0) 23.6 11.5 10.8 1 1
ASEAN imports from EU (US$ bil) 92.1 78.7 88.0 (14.5) 11.8 10.8 9.2 3 3
Total trade with EU (US$ bil) 208.3 171.3 203.0 (17.6) 18.2 11.2 10.0 2 2
Trade balance with EU (US$ bil) 24.1 14.3 27.0
Foreign direct investment inflow
from EU (US$ bil)
7.0 9.1 14.7 0.3 61.5 19.1 23.2 1 1
Basic indicators on EU
Gross domestic product (GDP) at
current prices (US$ bil)
18,387.5 16,447.3 16,106.9
GDP annual rate of change (in percent;
based on national currency)
0.9 (10.68) (1.88)
GDP per capita in US dollars 37,068.4 33,051.6
GDP per capita at international dollars
(PPP)
30,742.8 29,729.3
Population (in mil) 496.0 497.6
* preliminary data
ASEAN-EU Economic Data
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6. is not easy because of the diversity of our governance structures
and the differences in the way in which we make our decisions.
Some countries can make decision very quickly, and then
transmit the changes down to every level of governmental
structure, while other countries are more participatory and
democratic, needing time to reach an agreement and, to make a
decision. The more open and the more participatory a country is,
the more difficult it is to reach a decision. But again this is part
of democratic challenges.
Where do you see Indonesia in the midst of the ASEAN
Economic Community; as participant or spectator?
Indonesia is pretty much in the league in trying to help
direct and push ASEAN forward. I think it is yet to be
decided, but Indonesia can definitely benefit from the ASEAN
platform and the country can rely on the ASEAN process to
advance its own interests. As one of the founding members of
ASEAN and the largest economy in ASEAN, through ASEAN
and with ASEAN Indonesia can advance and protect its interest.
Furthermore Indonesia can use the ASEAN platform to assert
its own goals.
Indonesia is a country with its own attractions and its own
profile as a large democracy, vibrant economic unit, member
of G-20 and very active in the global agenda. President Susilo
Bambang Yudhoyono told me that there are more than 40
governmental institutions scheduled to visit Indonesia this year,
and this is partly because of Indonesia’s involvement in ASEAN.
Many visits, coorporations and consultations with Indonesia
arose because Indonesia is the chairman of ASEAN. I think there
is no doubt that Indonesia is very committed to ASEAN and on
the flip side ASEAN is very beneficial for Indonesia.
What would like you see from the integration of ASEAN
Community, in your capacity as the Secretary General?
My first five year term has been along side the five years
of the chapter. I hope that the mechanism works and that
the major instruments of the integration will be in place. But
I think we have laid down the foundation of governmental
integrations, political coordination, social-cultural exchanges
and corporations. As for economy, the structure of the pillar
has been in place; it is a matter of improvements, refinance, and
trying to perfect the structure.
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I N T E R V I E W W I T H D R . S U R I N P I T S U W A N
15SOROTAN 2011/3
Biography of DR. Surin Pitsuwan,
Secretary-General of ASEAN
D
R. Surin Pitsuwan, born on 28 October 1949, is a native
of Thailand. He was awarded the American Field Service
exchange scholarship and was a high school exchange
student in Minnesota, USA, in 1967-1968. He returned to
Bangkok, Thailand and attended Thammasat University for
two years before winning a scholarship from Claremont Men’s
College, Claremont, California, to complete his B.A. in Political
Science in 1972. He received M.A and Ph.D in in the field of
Political Science and Middle Eastern Studies from Harvard
University in 1974 and 1982 respectively. His entire Harvard
career was supported by the Winston S. Churchill Association
and Rockefeller Foundation Fellowships. He also spent a year
and a half studying Arabic and conducting his research at the
American University in Cairo, 1975-1977, while concurrently a
fellow at the Higher Institute of Islamic Research, Cairo, Egypt.
He worked as a columnist for the Nation and the Bangkok Post,
the two leading English daily newspapers in Bangkok, from
1975-1992.
He joined the American Political Science Association’s
Congressional Fellowship Program in 1983-1984, when he
interned in the Congressional Office of US Representative
Geraldine A. Ferraro (D-New York), who later became the Vice
Presidential Candidate for the Democrat Party in 1984, and
worked for the Senate Republican Conference in the later half
of 1984. He taught Southeast Asian Affairs at the American
University in Washington, D.C. during that same year.
He has been returned to Parliament eight times since 1986.
As an MP, he was appointed Secretary to the Speaker of
the House of Representatives (Chuan Leekpai), Secretary
to Deputy Minister of Interior, Deputy Minister for Foreign
Affairs during 1992-1995 and Minister of Foreign Affairs
from 1997 to 2001. He served as Chair of the ASEAN
Ministerial Meeting and the Chair of the ASEAN Regional
Forum (ARF) in 1999-2000. In September 1999, while the
ASEAN Chair, he led the efforts to get Southeast Asian
governments to help restore law and order and that
joint undertaking, with the support of the UN and the
international community, brought about peace in East
Timor.
Upon leaving the foreign affairs portfolio in mid-2001,
Dr. Surin was appointed a member of the Commission on
Human Security of the UN until 2003. He also served as an
advisor to the International Commission on Intervention
and State Sovereignty from 1999-2001. In 2002, he
concurrently served on the ILO’s World Commission on
the Social Dimension of Globalization until 2004. He is
currently on the Advisory Board of the UN Human Security
Trust Fund; the Advisory Board of the International Crisis
Group (ICG); a member of the International Advisory Board
of the Council on Foreign
