VIEWS: 190 PAGES: 10

              FUTURE OF THE REGION

                          CHAN HENG CHEE
                            24 JUNE 2004

          ASEAN is a regional organisation of ten countries in Southeast
Asia.    It includes Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, Philippines, Singapore, Thailand and Vietnam. When ASEAN
was first formed in 1967 there were 5 members. This grew to 6 then 7,
and eventually 10 in 1999. A great deal has been said about ASEAN,
what it has done and not done. ASEAN has its share of admirers as well
as critics. In most discussions with critics of ASEAN I detect a sub-text
in their comments - an implicit comparison of ASEAN with the European
Union, and wishing ASEAN to go the same route.             But that is not
necessarily the most fruitful path forward. A better way to understand the
role of ASEAN is to look back at the origins of ASEAN to better
appreciate its contributions and to project its potential in shaping the
political and economic future of the region.

          ASEAN was formed in 1967 as a vehicle to normalise relations
between Indonesia, Malaysia and Singapore after a conflict. Indonesia
had just ended Sukarno's policy of Confrontation against Malaysia and
Singapore and Malaysia and Singapore had just separated amidst hostility
and great tension. It was an idea floated by Indonesia with Malaysia and
Singapore. Singapore bought in early. Thailand always interested in
regional organisations joined in the project. So did the Philippines.

          ASEAN was thus a mechanism to help normalise relations
between countries in Southeast Asia after a period of conflict. It was an
organisation designed to bring the countries together.          It did so
remarkably by keeping the peace between the countries in the first 10
years of its existence.

          ASEAN stepped into this role again when Vietnam joined
ASEAN at the end of the Cambodian conflict.             Although ASEAN
opposed Vietnam for 10 years in international fora at the end of the
conflict, we were able to integrate Vietnam into the regional grouping and
in the region, normalising relations without skipping a beat.

          In fact looking over the last 30 years, no member of ASEAN
has been at war with another ASEAN member. There have been ups and
downs in intra-ASEAN relationships and there have been serious
discordant quarrels and disagreements between members, but the peace
has been kept. Because ASEAN members try to solve disputes without
the recourse to use of force, you find that Indonesia and Malaysia chose
to go to the International Court of Justice (ICJ) to settle the claims of
Sipadan and Ligitan.       Singapore and Malaysia have gone to the
International Tribunal for the Law of the Sea and ICJ on reclamation
issues and Pedra Branca respectively. Thus one of ASEAN's major roles
and a very important role is the creation of a political community out of
diverse Southeast Asian countries. The political community is still a
work in progress and will be so, not only among the newer members, but
also among the older members.        But the larger political context of
ASEAN is changing. It now operates in a post cold-war world. The most

salient features of today's world are the collapse of the bipolar system, the
reconfiguration of the international system and the rise of China and
India. ASEAN took the initiative to create new multilateral forums to
bring countries together in the Asia-Pacific.        ASEAN created new
confidence building mechanisms and participated in what was mooted by
others. The ASEAN Regional Forum (ARF) was created in 1994, ASEM
in 1996, ASEAN + 3 in 1997. ASEAN joined APEC in 1989. You will
recall that an antecedent of the ARF was proposed by Japan earlier. It did
not take off. Nor would it have taken off if led by the US, Russia or
China.    There are uses for smaller countries or groupings whose
ambitions are less open to question.       Smaller countries can propose
initiatives which are more easily embraced by others. I will return to
each of these multilateral forums later. But first let me discuss the future
directions of ASEAN and the agenda of ASEAN.

Future Directions and Agenda of ASEAN

          We have enlarged and we have initiated new multilateral
forums. What next?

          Notwithstanding the immediate transnational threats of
terrorism and epidemiological diseases, ASEAN countries remain
focussed on 2 immediate tasks: (1) to achieve deeper integration between
the newer and the older members of ASEAN and (2) to continue to
strengthen ASEAN's linkages with important key players.

          In an ever changing world, ASEAN faces longer term
challenges, politically, economically and recently in terms of security.
There is a realisation within ASEAN that in an increasingly globalised
world we need to remain engaged and ahead of the curve. We need to get
our act together to stay unified and focused on the approaches we take.

          At the ASEAN Summit in Bali in October 2003, ASEAN
leaders adopted the Bali Concord II which built on the Bali Concord I of
1976 - a major charter document for ASEAN at that time. Bali Concord
II envisages 3 key elements in ASEAN's move towards ASEAN Vision
2020. The 3 elements/pillars are:

(i)       ASEAN Security Community
(ii)      ASEAN Economic Community
(iii)     ASEAN Socio-Cultural Community

ASEAN Security Community (ASC)

          The ASEAN Security Community is envisaged to bring
ASEAN's political and security cooperation to a higher plan to ensure that
countries live in peace in the region and with the world at large. It is a
good and timely idea and shows a certain level of comfort within ASEAN
and comes at a time when ASEAN has to rethink its role in the wider
regional community such as ARF, APEC, ASEM and FEALAC - Forum
for East Asia and Latin America Cooperation.

         ASC brings together existing mechanisms and principles such
as the Treaty of Amity and Cooperation (TAC), the Southeast Asia
Weapons Free Zone (SEANWFZ) under one umbrella. It recommits
members to peaceful means in the settlement of intra-regional
differences, recognises the sovereign right of each country to pursue its
own foreign policy and defence arrangements, highlights dealing with
counter-terrorism and transnational crimes and works towards a Southeast
Asia that is WMD free. It also recognises maritime issues that should be
addressed. Indonesia was responsible for preparing the Action Plan that
was presented to the ASEAN Ministerial Meeting.

ASEAN Economic Community (AEC)

         The AEC is a critical part of ASEAN's push towards greater
economic integration. AFTA was realised in 2003. 95% of tariff lines
are down to 0-5%. 48% down to 0%. AEC aims to create a single
market and production space of ASEAN where there is a free flow of
goods, services, investment capital and skilled labour. When realised
AEC will move for a more dynamic and competitive ASEAN economic
region, far better to deal with China's and India's economic competition.
A McKinsey study estimated that an integrated ASEAN could increase
the region's GDP by at least 10% and reduce operational cost by up to
20%. This amounts to an additional US$50 billion for ASEAN.

         In Bali, the leaders endorsed a Plan of Action for AEC. As a
first step towards the realisation of the AEC, ASEAN will strengthen its
current economic measures in the area of trade in goods and services.

There is in place a clear programme for the removal of all Non-Tariff
trade barriers and establishing a non-politicised and legally binding
dispute settlement mechanism to promote greater certainty and
predictability in the ASEAN business environment.

          ASEAN leaders introduced a new principle to work joint
projects stalled by lack of agreement.        For speeding liberalisation
ASEAN countries will now adopt a 2 + X approach proposed by Thailand
and Singapore. If 2 countries agree, they can move the project. If a third
joins so much the better - building upon successful integration. The first
concrete example was the liberalisation of cargo air services among
Brunei, Singapore, and Thailand, signed in February 2004. In April 2004
the ASEAN Economic Ministers agreed on 11 priority integration sectors
for liberalisation and country coordinators. They are:

     Indonesia       -    wood based and automotive products
     Malaysia        -    rubber based products and textiles and apparels
     Philippines     -    electronics
     Singapore       -    e-ASEAN and healthcare
     Thailand        -    airtravel and tourism

These policies may hopefully strengthen ASEAN's competitiveness in
this dynamic period in the region.

ASEAN Socio Cultural Community (ASCC)

          ASEAN seeks to forge one community which is outward
looking and bounded by a sense of partnership and a caring society and
living in peace and stability.

          ASEAN has launched the Initiative for ASEAN Integration
(IAI) where the more developed countries of ASEAN are offering
assistance to the less developed.

          Let me say a few words about reaching out to other and the
multilateral forums created.

ASEAN Regional Forum (ARF)

          ARF continues to play an important role to enhance external
linkages with key regional players. Since its inception in 1994, ARF
remains the only forum bringing together 23 countries in the Asia Pacific
including the US, China, Russia, Japan and India to discuss security
issues in common. Pakistan will be a new member this year. To date, it
is important that China and India have signed the TAC.           This year
Pakistan, Japan, Russia are signing TAC. This is a commitment to a code
of conduct for the region. This code of conduct includes a commitment
to non-interference in the internal affairs of each other and the non-use of
force to settle disputes. Critics describe ARF as a talk shop but over the
last 10 years the discussion between member states have expanded to
sensitive issues - the Korean Peninsula, South China Sea, nuclear non-
proliferation and other transnational issues with security implications.
ARF has moved to cover South China Sea, Cambodia 1999, East Timor,
Terrorism, SARS, people smuggling, piracy and drug trafficking.

            Post September 11, ARF has become the key rallying platform
for countries to galvanize counter terrorism efforts. A series of Counter-
Terrorism (CT) workshops have sprung up as a cogent and practical
response.      ARF Ministers have discussed border security, counter-
terrorism and transnational crises and cooperation against piracy and
other maritime threats.


            ASEAN's fate cannot be separated from Northeast Asia. What
happens in Northeast Asia inevitably impacts on Southeast Asia. Even
before the creation of ASEAN + 3, East Asia was integrating as a
economic region but not exclusively. The United States and Europe
remain important markets and sources of capital and technology for all
the countries. This was so before the financial crisis with Japan as the
leading economic force in the 80s and 90s. The Summit of the Americas,
the Free Trade of the Americas and talk of the Trans Atlantic Free Trade
Area sparked off other regional bloc formations. ASEAN + 3 have made
good progress since the Joint Statement in East Asia cooperation issued
in 1999. Cooperation has broadened in breadth and scope. There are a
wide range of issues of cooperation in finance, development cooperation,
agriculture,    environment,   IT,   science   and   technology,   tourism,
transnational crime, SARS and Avian Flu.


          It is appropriate for me before this audience to end with some
comments on the ASEAN-US relationship.            The United States is a
dialogue partner of ASEAN and in many ways because of the
preponderance of the US, the US interacts with ASEAN at many levels.
ASEAN-US economic ties are strong and continues to expand. The US
has US$88.4 billion of investments in ASEAN, much larger than its
investments in China, Mexico, Brazil and even Japan. Two way trade
between US and ASEAN in 2002 totalled $118 billion. US exports to
ASEAN reached US$46 billion, making ASEAN the 3rd largest overseas
export market for the US. 18% of ASEAN exports go to the US. 15% of
ASEAN's total trade is with the US. The US has deepened its economic
links in the last year further with ASEAN. By concluding its first FTA in
Asia with Singapore, the US has sent a strategic signal to the entire region
of its desire to further reinforce ties with ASEAN. Thailand is about to
begin negotiations for an FTA. US signed TIFAs with Brunei, Indonesia,
Malaysia and Philippines and and supported Cambodia's accession to
WTO and will support Vietnam's accession. It is now going to work
towards NTR with Laos.

          US political and defence cooperation in the ASEAN region is
clear and the degree varies with individual countries. The US has two
longstanding allies in ASEAN - the Philippines and Thailand and a
defence friend in Singapore. There is good defence cooperation with
Brunei, Indonesia and Malaysia and it is beginning a dialogue with
Vietnam. The war on terrorism has also deepened engagement of the US
with countries in the region.

         At the end of the cold war, APEC and ARF was as much
designed to keep the 2 sides of the Pacific together as it was to promote
the peace and prosperity of the region. It was to ensure that the US
presence would remain in the region.

         Let me end by saying that the United States is very much part
of the Asia Pacific and in ASEAN we value the United States as a strong
ASEAN partner.



To top