Multilateralism key to Asean's success

The induction of China's fifth generation of leaders has observers around the world anticipating how the Xi-Li administration will settle and what effect its new policies will have. For Asean, it is likely that policy and attitude will stay the course.

Equally significant is the United States' re-election of President Obama. Within two days of his victory, the White House announced a four-day visit to Southeast Asia. Mr Obama's attendance of the US-Asean Leaders' Summit and visits to Thailand and Myanmar reaffirmed America's commitment to Asean and reflects its strategic Asia pivot.

Asean countries have substantial trade ties with the US and rely on the sheer firepower of the US Navy in the ongoing dispute in the South China Sea, while they continue to benefit from China's growth. Therein lies the underlying issue in this trajectory of economic and security strategy of Asean countries.

This arrangement may be functional now, but the status quo is not static. What is painfully missing from the equation is the Asean Community. The institution of Asean exists because the fates of these countries are tied together. History has shown this and the future will bear a striking resemblance. What is predictable is that security destabilisation or financial crises will have regional effects. It will not always be in the interest of the US to confront Asean's rivals, nor can Asean always trust China to be a responsible international stakeholder.

What exists is a 45-year-old institution that has successfully maintained peace and liberalised trade among 10 countries. What is becoming more clear is that there there are two Aseans. One is caught between US-China rivalry, the other is making its own decisions; one worries about foreign-made goods, the other is buying out its competitors; one looks inward, while the other takes a regional view.

Malaysia is Asean's blue chip; its oversubscribed IPOs, newly opened Tun Razak Exchange, and million dollar Iskandar project in Johor is turning heads. But it has not taken a leadership role in Asean since the end of Dr Mahathir's tenure.

Prime Minister Najib Razak, the man who preaches "moderation" in conflict resolution, has adopted the Chinese mantra and agreed not to multilateralise the South China Sea affair. Its commitment to regional trade is also questionable as the government continues to use subsidy programmes. Indeed, chief executive Shamsul Azhar Abbas of Petronas, has consistently called for the government to refrain from using the state-owned oil and gas company's earnings to fund its projects. The use of subsidies for welfare programmes and megaprojects reneges on Malaysia's commitment to Asean investors. In the long term, it hinders the development of local businesses and builds a culture of entitlement.

In Indonesia, Asean's boom town, L'Oreal has built a $130 million plant, which will serve as its Southeast Asia production and distribution hub, while Toyota is doubling its capacity through a $1.3 billion investment plan over the next five years. These multinationals understand the advantage of regionalism, but Indonesia's politics and foreign policy do not. Instead, protectionist mining laws are being passed based on inclinations from powerful interests groups ahead of the 2014 elections. And although Foreign Minister Marty Natalegawa's shuttle diplomacy has managed to reconcile some of the differences after the breakdown at the July summit, the question is why Jakarta did not step up earlier.

Thailand, which received visits both from Mr Obama and Premier Wen Jiabao in November, is poised to use its status as a pivot state to enforce Asean centrality. Instead, Bangkok is distracted by its domestic affairs _ from the recent anti-government Pitak Siam street rally to Prime Minister Yingluck's no-confidence debate. Thailand seems unable and unready to take on a regional role. Myanmar, Asean's biggest attraction, stands to gain from regional cooperation. President U Thein Sein and Daw Aung San Suu Kyi now share the top spot in Foreign Policy magazine's 100 Global Thinkers for their reforms. Mrs Suu Kyi's iconic status and tour of the West substantially raised the country's international profile.

But neither the government nor Mrs Suu Kyi herself have taken action against the glaring ethnic violence and apartheid-like conditions that its own people are perpetrating against the Muslim minority; and a much-anticipated foreign investment law that will provide the proper channels for investment continues to be delayed.

In many ways, Asean is a bastion of growth; it does not suffer from an overwhelming debt burden or unmanageable unemployment, but this condition not a permanent fixture and global uncertainty and shocks are imminent.

But given this opportunity, the leaders and people in these 10 countries have a crucial choice to make: advocate and commit to further integration or become pawns in the new Great Game in Southeast Asia. While the pros and cons of the Asean+6 trade pact, the Regional Comprehensive Economic Partnership (RCEP) and the US-led Trans-Pacific Partnership are being assessed, it is the Asean Economic Community blueprint that should take centre stage.

Neglecting the Asean agenda will have detrimental effects in the long run for member states. Leaders must reprioritise the national agenda and invest in a regional foreign policy. Only through further regionalisation and staunch support for multilateralism can Asean prosper.


Chayut Setboonsarng is a policy analyst at the CIMB Asean Research Institute. He can be reached at chayut@cariasean.org.

About the author

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Writer: Chayut Setboonsarng
Position: Writer