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Friday, March 29, 2024

Asean the global player

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Ahead of the 31st Association of Southeast Asian Nations summit in Manila next week, the Philippine capital is abuzz with the kind of anticipation that attends gatherings of such importance. More than 20 world leaders are expected to attend the summit and related meetings, including US President Donald Trump, European Council President Donald Tusk, and United Nations Secretary General Antonio Guterres, attesting to the increasingly global significance of the region.

And for good reason. Two decades after the devastating 1997 Asian financial crisis and two years after the formal institution of the Asean Economic Community, the bloc continues to flex its newfound economic muscle. As we speak, the ten nations that make up the AEC has a combined Gross Domestic Product of $2.4 trillion, the third fastest growing in Asia after China and India and the fifth largest in the world.

Its young, educated demographic and largely untapped markets buck global trends, and the potential to grow even more is unparalleled by any region elsewhere. The goals of the AEC include further reducing, if not removing, many trade barriers within the region en route to a seamless movement of goods, services, investment, and skilled labor among the member-states. After the creation of a single customs window, regional agreements to facilitate the movement of Asean nationals within the bloc are already in the pipeline.

This bodes well not just for the young and bustling Asean population but for the rest of the world as well. The region is simultaneously one of the world’s fastest-growing markets and one of the least well known. It currently has five regional free trade agreements: with Australia and New Zealand, China, Japan, South Korea, and India. However, only financial powerhouse Singapore has free trade agreements with both the US and the European Union.

This is critical in light of concerns regarding stagnant growth outside Asia and Africa. While China, for good reason, remains the epicenter of emerging markets, right on its doorstep are the ten dynamic markets that constitute Asean, all of which, despite being at different stages of development, share key growth potential not only in manufacturing and trade but also as a consumer market.

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It is precisely the devastation wrought by the 1997 Asian financial crisis that, 20 years on, gave the region the resiliency that enabled it to survive the 2008 global financial crisis relatively unscathed, a testament to the robust macro-economic fundamentals that its governments had put in place and which had translated to a stable fiscal position.

This is interesting given Asean’s roots in the geopolitics of 1960s Cold War. From a security-oriented community, the bloc has shifted its focus to economic cooperation, culminating in the establishment of the Asean Free Trade Area in 1992 and the AEC in 2015. Considering where the region now stands economically and despite the unique “Asean way” of achieving cooperation, the transition seems to be ultimately worth it.

The emergence of China as an often brazen global power—economically and, increasingly, militarily—only serves to emphasize the continuing importance of cooperation among the Asean countries, all of which are puny compared to the Asian goliath. And it is a cooperation that has to mobilize the same solidarity from the rest of the world—the US, EU, and Japan, notably—and invoke the rule of law in its engagement of rising China.

This new and complex global configuration is the subject of a conference on “Asean Leadership amid a New World Order” hosted by private think tank Stratbase ADR Institute on Nov. 8 at the Makati Shangri-La. Featuring leaders in security, economics, and international affairs, the gathering seeks to stress the viability of Asean as a model of regionalism and to reflect upon its purpose as a global player.

“In view of Asean’s 50th anniversary and the dramatic changes that its member-states have undergone during that period, the conference will feature insights on Asean’s ability to make use of its strengths and capture its potential as a global platform for cooperation,” said professor Dindo Manhit, president of Stratbase.

The uncertainties surrounding global trade and China are relevant for the bloc, Manhit said, even as the demand for meaningful cooperation is more urgent than ever.

“As Southeast Asia more closely integrates with the rest of East Asia and the broader Asia-Pacific region, the causes and consequences of our countries’ actions have also broadened. In an ever-more integrated world, the Philippines and its neighbors share their challenges, whose political, economic, and socio-cultural aspects transcend country borders and link together 600 million people.”

Titans of the Philippine economy will provide their perspectives on the changing international landscape, and weigh in on what they see to be the risks and opportunities for the Southeast Asian business community as it takes advantage of and adapts to these new realities.

The sage insights from this rare gathering will prove very useful for our government leaders and policy makers in designing the Philippine’s strategy amidst developing events in the region.

 

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