ASEAN needs more vim and vigour

7 December, 2013
As appeared in TheStar.com.my

Region’s private sector must play its part

IT takes a long time for reform to take place.

In the over 45 years of Asean existence, meaningful reform only took place after 40 when the Asean Charter was adopted in December 2008 which gave the cooperative organisation legal personality. Established in 1967, it was not until 1976 before the secretariat was established. Before that administrative matters had been managed by a standing committee in member state foreign ministries.

If we waited for formal reform to expedite Asean processes, we will be waiting for a long time. The “Asean Way” of non-interference, mutual respect and consensus results in the association falling short even of agreed objectives. Exceptions are asked from decisions already made, and they are granted. So, many say Asean is a failure. But, usually Asean gets there, in time, however frustratingly.

But is that good enough? Especially in a fast-moving world. Even as Asean pursues the AEC (Asean Economic Community) up to however many percentage points of objectives by end of December 2015, already postponed from Jan 1, 2015, the RCEP (Regional Comprehensive Economic Partnership) is also being negotiated with other East Asian states, as well as the TPP (Trans Pacific Partnership) in the Asia Pacific. There are overlaps and distinctions which could be complicating. Business interests from outside Asean could trump the Asean private sector if it does not get moving.

At the same time, the geopolitics of the region are also changing swiftly, informed by a contest for primacy between the US and China. The South China Sea disputes and the intercession of outside interests provide a precursor of more that is to come and Asean is already in some disarray in addressing the situation.

The AEC is only one of the three pillars of the Asean community being constructed for the end of 2015. The other two, Political-Security and Social-Cultural Communities, are even further behind than the AEC.

So there is plenty of work to be done in so little time left. But the mantra is, never mind, Asean will get there eventually. Better late than never. This, however, will only work if there is no disturbance to rip Asean apart, or a different regional order is established which undermines Asean centrality, even if just among its members states.

There is thus an urgent need to ensure Asean stands together at a minimum level to ensure its meaningful survival. It cannot be assumed the benefits of the Asean community are appreciated. The level of Asean awareness in the region is abysmal, certainly when measured against the lofty objectives. So how can they be realised if they are not to be swept away?

Even with respect to the AEC, less than one fifth of Asean businesses, it has been estimated, have made any plans for the end of 2015. What more, or less, state-centric political-security machinery or the common folk who do not get even to queue in an Asean line when arriving at a regional airport.

Greater awareness in the region on matters which are no more than what have been agreed at Asean leaders summits is an urgent imperative. The Asean private sector needs to up its efforts, not only to create awareness among its business parts of the benefits and challenges of the AEC but also among the people of the region who are the ones that will consume its goods and services. It has a vested interest, therefore, to raise the regional awareness level.

The ABC (Asean Business Club), started by CIMB Group chief executive Datuk Seri Nazir Razak and other interested Asean business leaders about two years ago, is thus an important initiative to get the private sector actively involved in shaping the reality of AEC. Strangely enough, also when at CIMB, I had started the Asean Institute with Indonesia’s Aburizal Bakrie at the end of the 1980s to develop the regional business constituency, but the effort seems to have dissipated when I had to leave it at the end of 1992 to set up the Securities Commission.

I am, therefore, delighted to be involved in the ABC, and its significant “Lifting-the-Barriers” (LTB) project Nazir and his fellow business leaders have initiated. The LTB shows the Asean business constituency working together, not only to identify shortcomings that will cause the AEC to fall short of proclaimed objectives, but also to offer solutions to address this.

The Asean private sector is thus doing something positive. But there is so much to be done in the two years to proclamation of AEC. As we have noted, the Asean private sector itself is not well prepared to take advantage of the AEC, unlike for instance American companies who are 54% sensitised, with 84 per cent expecting profits to increase in 2014 just in the run-in to the end of 2015.

The LTB proposals not only have to be followed through but have to be drilled down to realize targets that will bring AEC rhetoric closer to business reality. Even the 80% often bandied about as the level of achievement of AEC objectives is an overstatement. There are far too many exceptions and exclusion lists. The LTB is about the Asean business community working together to push the boundaries. There is much work to be done, especially in the six sectors identified.

Beyond this there is also work to be done to get the business juggernaut to see the benefits of greater economic integration and to move in its direction. Powerful monopolies can be short-sighted and seek to protect immediate interests which in any case will be swept aside by globalisation. They need to think of the growth potential of a 600 million people economy and of how that growth can be the springboard for growth further afield in Asia Pacific and the world. A short-sighted view will see Asean companies overwhelmed.

However, business should not stop at business measures alone. The Asean private sector should also come up with plans to raise general awareness not just of the AEC but of Asean among the peoples of the region. As we know, the Asean secretariat has a ridiculously limited budget, estimated this year at about US$13mil for a region of 600 million people with a GDP in excess of US$2 trillion, eighth in the world if Asean was one economic entity.

When Laos joined in 1997, the contribution of each member was REDUCED to US$1mil each in keeping with the principle of equality among member states. It is, however, not the purpose here to get into the politics of the inadequate secretariat budget, but to recognise that there are avenues through special projects that can augment it to further objectives already agreed upon by Asean leaders.

In this regard, the ABC should engage the secretariat to establish how it can help to raised the level of awareness about Asean among its peoples which, after all, falls under the third pillar of integration – social and cultural.

One effective way is to propose and to fund communication platforms to reach out. The technology available has really not been availed sufficiently for this purpose. The Asean web-site, for example, could be made more lively and interactive.

It emphasises history and presents itself essentially as a document of record which, while necessary, is not sufficient. The ABC can offer to fund to enhance it with ideas to engage Asean’s young population.

The ABC can also encourage the region’s private sector to have Asean pages on company web-sites. Not just to promote business interests, but also to engage, have questionnaires to find out what citizens and consumers want, especially the young who will make the future. Gamification, for instance, has been found to be a devise which really encourages involvement and the attention span. All this would begin to make Asean real to the people.

The initiatives of the ABC and these other suggestions are only some of the steps the private sector can take to invigorate the AEC objective and to give people-content to the Asean reality which is falling short of often grand pronouncements. The Asean private sector must respond to the official refrain they must make meaningful contribution in the pursuit of Asean integration. It is, after all, ultimately in the interest of Asean businesses that integration objectives, such as under the AEC, are meaningfully achieved.