ASEAN Community on sail, despite headwinds

ASEAN Community on sail, despite headwinds

World attention is drawn to the Indonesian resort island of Bali this month as ASEAN leaders will review the progress of the ASEAN community-building in the 19th ASEAN Summit and related Summits from Nov. 17 to 19 following a series of back-to-back ministerial preparatory sessions.

Since the start of this year, the Association of Southeast Asian Nations (ASEAN) has been confronted with dual challenges of contagious Europe debt crisis and a slew of natural disasters. But analysts believed the improved cooperative mechanisms, deepening cooperation among ASEAN nations and the leaders' strong political will to boost regional economic integration could underpin the ASEAN Community, especially the process of building an integrated economic community.

PERFECT STORM

The sputtering world economy dented by the 2008 financial crisis was dealt a further blow this year by the European debt crisis triggered by Greek sovereign debt debacle, thus the impact on ASEAN countries closely linked to the external economy is unlikely to be shallow.

ASEAN countries are mostly export-driven economies reliant on the demand of the external economy and foreign capital. The economy of ASEAN's main trading partners including that of the European Union, the United States and China all slowed down in varying degrees due to the debt crisis. Experts believed the negative impact of the extended crisis on ASEAN economies will last for at least six months to one year, the economies with a large exposure to world markets bearing the brunt, such as Singapore, Malaysia, Indonesia and Thailand.

According to an evaluation report issued by Moody's Investors Services in October, the worsening external environment weighed on the growth path of ASEAN. Moody's put the average economic growth rate of the ASEAN region at 4.8 percent, and said it might experience slower growth in the year to come.

The weakened domestic economy, not the least hindered export growth have driven the national debt of the ASEAN countries to a somewhat high level, increasing the difficulty of economic regulation and deficit management, thus casting a pall over the ASEAN's efforts to coordinate fiscal policy and deepen economic integration.

The serious tropical storms and flooding afterwards engulfed the Southeast Asian region since July. Many countries have been suffering unprecedented floods like Thailand, Vietnam and Myanmar, dragging down the ASEAN economies already rocked by the financial storm. As a consequence, the economic forecast of the flood- ravaged countries was downgraded by international rating agencies. The Asian Development Bank lowered the economic growth rate of the Philippines and Thailand to 4.7 percent and 4 percent respectively, and revised down Thai economic outlook in 2012 from 4.8 percent to 4.5 percent. The International Monetary Fund predicted that Vietnam's GDP growth this year would slacken to 6.25 percent.

RIDING OUT THE STORM

The ASEAN integration process has been inexorably encumbered amid financial turmoil and natural calamity. But as experts pointed out, its relatively robust economic performance, huge potential and elevated regional connectivity could help ASEAN weather the storm, while spurring the economic recovery of the Asia-Pacific region, even the world at large.

Deputy Minister of Trade and Industry of Indonesia Mahendra Siregar said at a symposium in October that opening to the outside world and building the ASEAN Economic Community has brought about tangible benefits to all the ASEAN countries. In the face of global economic gloom, ASEAN should not backpedal, but adhere to and support the integration roadmap. The ASEAN countries shall expand and utilize both domestic and regional markets, and take advantage of each other's strengths to enhance the overall competitiveness of the ASEAN, he said.

Surin Pitsuwan, the Secretary-General of ASEAN, said at the 43rd ASEAN Economic Ministers Meeting held in Manado of Indonesia in August, 2011 that as of July this year, ASEAN has fulfilled more than 73 percent of the tasks laid out in the ASEAN Economic Community Blueprint enacted from 2003.

During the last decade, ASEAN members have made significant progress in reducing trade and investment barriers to boost the building of the Economic Community. By the end of 2010, 99.11 percent of the taxes among Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand were eliminated, and 98.86 percent of the taxes among Cambodia, Laos, Myanmar and Vietnam were cut to less than 5 percent.

The ASEAN countries are also involved in all-dimensional, multi- level and wide-ranging cooperation with main trading partners through Ten Plus One and Ten Plus Three, the main cooperative channels within the East Asia economic rim. Their efforts to strengthen the Free Trade Area mechanism with China, Australia, South Korea and New Zealand made ASEAN more appealing to foreign investment. In 2010, the amount of foreign investments to ASEAN totaled 75.8 billion U.S. dollars, doubling that of 2009. Direct investments among ASEAN countries jumped by a handsome 131 percent in 2010 on a yearly basis.

To effectively combat recurrent natural disasters, ASEAN has devoted substantive resources in recent years to synergize the strengths of its members and other countries in the Asia-Pacific region in a bid to ensure the safety of the public, thus minimizing the implication of disasters.

The ASEAN Agreement on Disaster Management and Emergency Response signed in 2005 went into effect in 2009, providing ASEAN countries with a legal framework for regional disaster relief cooperation. As the headquarters of disaster management in the region, the ASEAN Humanitarian Assistance Center is expected to be launched by the end of this year. Moreover, according to the joint statement issued by the ASEAN Finance Ministers Meeting in April 2011, the officials in charge of insurance affairs and the relevant industry of the ASEAN countries will study and set up the "Risk Financing Mechanism" to develop a proactive response capability to mitigate the burden on government budget.

A broad range of issues will be on the table at the current 19th ASEAN Summit, and the impact of Europe's debt crisis on ASEAN and the East Asian region, and how to better deal with natural disasters are set to top the agenda. During the meeting, the ASEAN countries are expected to reaffirm their commitments to regional integration and the target of establishing an ASEAN Community by 2015 and adopt several outcome documents, including the Bali Declaration on ASEAN Community in a Global Community of Nations.

Editor: Xiong Tong

English.news.cn   2011-11-17 10:39:21 FeedbackPrintRSS
Backgrounder: ASEAN Community's building process

by Xia Ziyi

BALI, Indonesia, Nov. 17 (Xinhua)