As the new year begins, Southeast Asia is undoubtedly the place to be. Amid a host of studies of the region’s economic prospects, a study by the Organization for Economic Cooperation and Development clearly suggests reasons for optimism. The six major Asean countries have rebounded from the global economic crisis with medium-term growth prospects returning to pre-crisis levels, the OECD Development Center says in its 2010 Southeast Asian Economic Outlook.
Given the economic recovery underway across the region, it adds, GDP growth will average 6 percent annually across the Asean-6 countries (comprising Indonesia, Malaysia, the Philippines, Singapore, Brunei and Thailand) over the 2011-2015 period, which is about the same level as for the period 2003-2007.
However, Kiichiro Fukasaku, an economist at the center, notes that growth in the future will need to be more balanced across the region. He believes that the global financial crisis offers Southeast Asian countries an opportunity to rethink the growth strategies that they employed in the past and to define new development objectives.
Both regional integration and national efforts would contribute to promoting more balanced growth in the region.
Regional economic integration is an essential component of the wider political and strategic role that Southeast Asia should continue to play in 2011.
Buoyancy and resilience across the region will give it the wherewithal to position itself as the third leg of an Asian triangle that already includes Northeast Asia and South Asia.
Asia’s ability to not only rebound from the 2008 crisis but to actually drive global recovery has much to do with Chinese demand, which powers growth in the rest of the region.
Testimony to the vital relationship is borne by the China-Asean Free Trade Area, the world’s largest free-trade area embracing developing countries.
The FTA covers a population of 1.9 billion and involves about $4.5 trillion in trade volume.
India’s growth is a second engine for Asia.
As the country continues to liberalize, its economic and high-end human resources are becoming regional assets as well.
Thus, the Asean-India Trade in Goods Agreement was signed in Bangkok in August 2009 after six years of negotiations.
It paved the way for the creation of one of the world’s largest FTAs — a market of almost 1.8 billion people with a combined GDP of $2.8 trillion.
The FTAs dramatize Asean’s fortuitous role as the overlap in China’s and India’s immediate areas of economic influence.
The agreements also give the two Asian powers a genuine stake in the economic future of the region that lies between them.
Unfortunately, the same can hardly be said about the strategic environment in which Asean operates.
China’s economic and cultural charm offensive in Southeast Asia had an unnerving encounter with strategic reality last year when Beijing declared the South China Sea to be a core interest, implying not so subtly that Beijing’s maritime claims had the same national status as its relations with Taiwan and its ownership of Tibet.
What was involved was an issue of sovereignty, which is nonnegotiable by definition and is underpinned by the availability of force and the readiness to use it if deemed necessary.
Beijing made matters worse by saying it was a fact of life that there are large countries and small countries.
Whether that brusque declaration was a diplomatic faux pas or a Freudian slip remains to be seen, but Asean could not but take note of the new tone in China’s voice.
While the claims and counterclaims in the South China Sea continue to be debated exhaustively, what worries Southeast Asia is a Chinese assertiveness that puts a question mark over Beijing’s constant reminders that China’s development is peaceful.
China has exercised damage control by assuring its Asian neighbors that, as “a member of the Asian community, China sees all countries, big and small, as equals.”
This is a welcome statement to whose spirit and letter small Asean countries will hold big China. The new year will see how China lives up to its promise.
Ironically, Beijing helped to unify Asean countries — including those that are not claimants in the South China Sea dispute — by its linguistic show of force.
The speed with which these countries turned to the United States revealed yet again America’s irreplaceable position in the Asian hierarchy: As security guarantor of last resort.
The prompt and firm American response to the Chinese stance buttressed Washington’s credibility in Asia in the aftermath of its bruising experiences in Afghanistan and Iraq.
Looking ahead, it is important to note that while realpolitik-driven developments will continue to occur, Asia needs more coherent multilateral institutions to build confidence among its members and create new codes of conduct that sustain the peace.
Here, the expansion of the East Asia Summit process to include the United States and Russia would widen a circle of prosperity, stability and security that now embraces the 10 Asean member states and China, Japan, South Korea, India, Australia and New Zealand.
However, Asean’s centrality must be preserved in the new institution if the great powers want a relatively small and certainly nonthreatening group of nations to mediate in an emerging Asian balance of power between global heavyweights, led by the United States, and the emergent or emerging regional heavyweights of China and India.
If this rebalancing occurs peacefully, Asean’s economic integration will find fulfillment in the creation of a larger Asian sphere of prosperity and security.
By Derwin Pereira who heads Pereira International, a Singapore-based consulting company. Jakarta Globe
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