The Asean grouping is all talk and zero bite

The Asean grouping is all talk and zero bite
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First Published: Thu, Jun 19 2008. 01 50 AM IST
Updated: Thu, Jun 19 2008. 01 50 AM IST
Davos paid its annual visit to Asia this week to put a spotlight on the globe’s future. What the World Economic Forum did instead was crystallize the biggest impediment to Asia reaching that potential.
Simultaneous crises in credit markets and food and oil prices would be less destabilizing if Asia had a backbone of sorts. The reference here is less to courage than strong, regional institutions to coordinate responses.
Many Asian leaders think they have just that in the form of the four-decade-old, 10-member Association of Southeast Asian Nations (Asean). They should think again.
Malaysian entrepreneur Tony Fernandes can tell you as well as anyone how Asean is more about creating the illusion of cooperation than actually achieving that lofty goal. Fernandes founded AirAsia Bhd, South-East Asia’s largest iscount carrier. He also personifies Asean’s biggest flaws.
We caught up briefly in Kuala Lumpur, where Asia’s Davos took place, musing about the title of a panel discussion on which he was about to appear: “Collaborating While Competing: Is There an Asian Model?” The answer is that Asia can’t collaborate because it’s too busy competing.
AirAsia has been a remarkable success, and yet Malaysian politicians have thwarted efforts to expand to protect national carrier Malaysia Airline System Bhd. All Malaysia has done in picking a national champion is reduce its chances of becoming an Asian travel hub.
Or ask foreign executives with high hopes for South-East Asian growth. Companies from United Parcel Service of America Inc. to Adidas AG to Toyota Motor Corp. need to grapple with a dizzying array of conflicting and confusing rules on everything from foreign ownership to customs to regulations to accounting to taxes. Executives must devise differing strategies for Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam—never mind China, India, Japan and South Korea. Asean is a nice concept, but not one that works very well for many of the businesses looking to create jobs here.
Among the things keeping Asean from the greatness to which it aspires is the group’s preference for non-interference in each other’s affairs. It prefers carrots over sticks, hollow pronouncements over substance and collegiality over formality. It means Asean is all bark and zero bite.
The group that formed the core of the 21-member Asia-Pacific Economic Cooperation (Apec) forum has its accomplishments. It has reduced trade barriers, increased intra-regional commerce, produced an impetus for economic change and helped maintain regional peace.
After 40 years, though, one might expect bigger achievements. No one seriously expected the disparate nations of South-East Asia to emulate the European Union, the euro or world-class bond markets by now. Yet Asian governments are so busy competing with neighbours that they are finding little time to coordinate. China has been a big agent of change, and its emergence has come partly at Asean’s expense. The region might have gotten away with half-hearted attempts to open economies and financial sectors if not for the arrival of an economic superpower.
Asean’s annual summits have become photo-ops meant to perpetuate the fiction that Asia is coming together. Most of the recent credit for bringing Asia closer goes to the Asian Development Bank. Rajat Nag, the bank’s managing director-general, was on hand in Kuala Lumpur to encourage Asia’s leaders to keep faith in economic integration. His call for leaders to join hands to weather the effects of surging food and oil prices served as a reminder of how far apart Asean can be.
Asia’s to-do list is a long one and includes reducing poverty, improving infrastructure, fostering innovation and riding out the food crisis. Nationalism too often gets in the way, holding the region back. Look no further than Asean’s failure to shame Myanmar into accepting more foreign assistance for cyclone victims.
The point here isn’t to criticize Asean gratuitously. If the group didn’t exist, Asia would now be creating something like it. Yet, Asia’s Davos exposed the worrisome lack of political will in a region that has rarely needed it more. There’s no time to lose. Asia as a region must get its act together to thrive and reduce inequality.
This region has growth rates the US and Europe can only dream of, young populations, expanding cities and emerging markets. That won’t mean much if leaders don’t embrace bold, forward-looking strategies. Asia isn’t lacking in vision, but leaders with the confidence to trust and work with neighbours. The private sector can only get so far with government-linked companies enjoying so much influence. It’s often hard to know where Asia’s public sector ends and its private sector begins. That hurts shareholder value and inhibits foreign investment. It’s going to require considerable political will to change things.
“This argument of complementarity in Asia is a good one—the idea that we will all work together,” says Musa Hitam, chairman of Sime Darby Bhd., the world’s largest palm-oil producer. “Of course, that never worked out. We need to get coordinated—not just talk about it.” Bloomberg
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First Published: Thu, Jun 19 2008. 01 50 AM IST