Plenary Session VII: The Future of ASEAN: Opportunities and
Challenges
Comments by
Jayant MenonOffice of Regional Economic Integration
Asian Development Bank
The 8th Asia Economic ForumPhnom Penh, 17-18 March 2012
The views expressed in this presentation are those of the author and do not necessarily reflect the views and policies of the Asian Development Bank, or its Board of Governors or the governments they represent.
Presentation Outline
Introduction Towards 2015 - AEC – how likely?Beyond 2015- Centrality of ASEAN- Development divide
Introduction
ASEAN the most durable regional association in the developing world. Defining characteristics include:
a) Diversity – greater than any other major regional grouping. History, language, politics, and especially economics (50:1 GDP/cap), population, resource endowments.
b) Generally rapid economic development, with sharp reductions in extreme poverty
. - But ASEAN membership no guarantee (Myanmar)
Introduction
c) Avoidance of strong supra-national organization; deliberately under-powered secretariat; the ‘ASEAN Way’ – strengths & weaknesses. d) Model of ‘open regionalism’, among original members.
Major contribution has been non-economic – undervalued intangibles - increased regional harmony and understanding, while remaining globally connected.
Does it need to be more than that? If so, in what direction, to 2015 and beyond?
Towards 2015 - AEC
Increasingly being recognized that 2015 target for AEC is too ambitious
Not only for new but also original members
Critical issue of labor mob remains Whatever happens, bound to be
declared a success come 2015! ASEAN way of admitting this is to start
talk about “beyond 2015” Process rather than destination
Beyond 2015–centrality of ASEAN Much is made about preserving
“centrality” of ASEAN – economic and political – now and beyond 2015
ASEAN+3, +6, +8, TPP, ASEAN+1 and other bilateral FTAs etc – pulling in different directions?
Maybe worth conceding ground to ASEAN+3, for eg., to avoid duplication
- Why ASEAN Surveillance process when CMIM and AMRO in place? Pragmatism over symbolism
Beyond 2015 – development divide
Future survival of ASEAN will depend on cohesiveness - bridging the “Development Divide”, especially between original and new members
One measure is narrowing gaps in income per capita (economic convergence)
Currently, CLV countries per capita incomes as a share of Thailand’s ranges around 20-25%.
Significant inter-country income inequalities within Southeast Asia
Theil T and L Indices of Inequality in Southeast Asia Source: Chongvilaivan (2011)
Beyond 2015 – development divide
Cannot rely on transfers alone – either intra or extra regional
Trade and investment liberalization and facilitation, and freeing up labor flows-> sharp increases in flows -> rapid increase in growth -> narrowing of development divide
But within country income inequality could rise even further
Initial Year
Final Year
% Change
Malaysia 47.7 1992 46.2 2009 -3
PRC 40.7 1993 41.6 2005 2Philippines 42.9 1994 44 2006 3
Viet Nam 35.7 1993 37.6 2008 5Pakistan 30.3 1993 32.7 2006 8Indonesia 34.4 1993 37.6 2007 9
Mongolia 33.2 1995 36.6 2008 10India 32.9 1993 36.8 2005 12Thailand 46.2 1992 52.5 2004 14Sri Lanka 35.4 1996 40.3 2007 14Cambodia 38.3 1994 44.4 2007 16
Bangladesh 28.3 1989 33.2 2005 17Lao PDR 30.4 1992 36.7 2008 21Nepal 37.7 1996 47.3 2004 26
Beyond 2015 – development divide
Must avoid replacing inter-country differences by increasing intra-country inequality
Current pattern of rapid growth will do this - eg. Laos
To avoid rising inequality and domestic social instability, future growth must be more inclusive.
Beyond 2015 – development divide
Pro-poor growth + addressing access and opportunity to increase participation in growth process
No longer growth first, and deal with consequences (inequality) later.
Context in which growth occurs matters – ‘Land grabbing’ in Cambodia good example of how growth and prosperity (for some) can leave the vulnerable worse off when governance fails
Conclusions To survive and indeed thrive in the future,
ASEAN should avoid mistakes or failures by setting unrealistic goals
ASEAN should not emulate Europe, but pursue its own type of open, market-driven, institution-light, regionalism
Regionalism should be a means, not an end, in and of itself
Means to increase global connectedness – CLMV should follow original members and pursue multilateralization of preferences
Conclusions Instead of single currency being a long-
term objective, should it be an objective at all, if conditions cannot be met?
Solution couched in terms of “more integration” – may be true, but avoids the underlying issue of why there isn’t “more integration”
No real political appetite to give up sovereignty, nor economic basis
ASEAN has shown that sometimes less is more, and this should continue!
Thank you!Thank you!For inquiry or comments, please
contact:
Jayant Menon Telephone: (63-2) 632-6205Email: [email protected]