Comment - Tan Sri Dr Munir Majid

Saturday, 12 August 2017

Asean: Due credit and formidable challenges

FIRST, let us give credit where it is due: 50 years of continued existence in half a century of challenge and change is a feat of achievement. Asean can consider that the cup is half full.

The problem with Asean is that not enough is known about it. And what is known is usually about where it has failed, like its failure to take a common stand or to propose creative cooperation in the South China Sea disputes.

Or its pusillanimity in removing non-tariff barriers (NTBs) which are seriously hindering Asean economic integration and establishment of a single market and production base.

The fact that so many things – the half-full cup – are happening on the ground, is lost. Taking just the Asean Economic Community (AEC), how many Malaysians, for instance, appreciate there are over 1,000 of our companies all over Asean, taking advantage of regional growth against the frustrations of investment laws and domestic bureaucracies?

How many are aware of huge Thai companies like Charoen Pokphand (one of the largest private conglomerates in the world, employing 500,000 people across the globe) with big plans to make Malaysia its halal food hub?

Just imagine, Buddhist Thailand working in Muslim Malaysia to propel a fast-growing industry forward – despite whatever halal certification problems it might face in Indonesia, for instance – for its food products. Charoen Pokphand will find a way, as it has all over the world, since its establishment in 1921.

The point is, what is heard are the complaints. Inevitably, as these are louder than what is quietly achieved, with whatever difficulty, by the likes of Sime Darby or Gamuda Land or auto-parts company Ingress Corp Bhd.

AirAsia Bhd, however loud and incessant its complaints, is now the largest low-cost airline in Asia, truly well-established in Asean.

The other side of the story, of course, is – the glass is half empty. The loud, big, private sector push is for Asean to strive for optimality.

This is where the great divide begins. Old Asean hand Bilahari Kausikan of Singapore once famously said Asean is a cow which some people expect to be a horse. The suggestion is, it cannot.

However, why not? Even if it cannot, is the cow fully-milked?

Perhaps there should be a convergence between those who say the glass is half full and those who say it is half empty.

With respect to the AEC, there is great effort by the official Asean side to engage the private sector to forge cooperation, if not quite convergence. The AEC 2025 Blueprint clearly recognises the role of the private sector in the economic integration process.

In 2015, Asean Economic Ministers acknowledged there has to be concentrated effort to get NTBs reduced, and agreed with the Asean Business Advisory Council (Asean-BAC) that the way forward is by concentrating on a few people-centric sectors – agri-food, healthcare, retail and e-commerce, and logistics.

In the middle of 2016, the Asean Trade Facilitation Joint Consultative Committee (ATF-JCC) was revived, with part of its remit being to form working groups with expert private sector entities to address NTBs in those four sectors with, additionally, the tourism sector.

In January this year, the ATF-JCC met in Bangkok and Asean-BAC was called to discuss the way forward. Some progress in terms of customs procedures was made just recently on how intra-Asean trade could be facilitated. But work on the specific, prioritised sectors has yet to begin.

This is part of the reason why, while there is cooperation between the official and private sectors, there is not quite convergence. Rate of progress: the process is not just slow. It is long, grinding and exhausting.

Beyond the AEC, more generally, there is great need to raise the profile of Asean among the people at large, especially the young, whose knowledge of what it does is lacking. It is like a close-kept secret. The top-down approach among those of a certain age has to change.

Asean’s young population have to be brought into the whole process, to energise it and to form the future that will be theirs. If Asean wants to bring them along into that future, it is absolutely essential to form an Asean Youth Consultative body to hear from the young what they want of and for Asean.

If Asean does not do this, it will be wasting one of its most valuable assets – its demographic vitality. They can take on the digital world.

After we recognise credit should be given to Asean for what it has achieved, it is a totally pro-Asean thing to do to highlight the formidable challenges it faces going forward. The biggest is happening now: digitisation.

Asean has not quite addressed what is now popularly dubbed Economy 4.0. Asean talks about the opportunities of e-commerce and, correctly, intones that the trading platforms, payments settlement and connectivity have to be in place to drive it. But even as this being talked about – and inadequate progress is made – the sweep of the digital economy might have uncomfortable consequences for Asean if it does not prepare itself.

The fourth industrial revolution is more comprehensive than just e-commerce. There are vast opportunities for new industries and services, as well as for greater productivity. But there are also grave challenges to employment and skills development.

Asean needs to fashion clear policies on education and training – with emphasis on cognitive skills – and retraining, and on employment displacement. Yet the Asean mantra to attract investment remains low-cost of production. But will the manufacturing industries come to low-labour cost Indonesia or Myanmar in the new digital economy?

Unemployment and unemployability could seriously affect these countries, particularly their micro, small and medium enterprises sector. Serious socio-economic problems could scupper Asean economic integration, indeed threaten regional cohesion.

The time to act is now. Asean really has not that much time to celebrate its creditable 50 years.

Tan Sri Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.

Tags / Keywords: Tan Sri Munir Majid , columnist

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