EDITORIAL: The Straits Times says Asean’s opportunity amid crises

There are opportunities for Asean amid the Covid-19 pandemic and the US-China trade war, which have caused supply chain shifts. However, Asean needs to get its act together by stepping up on the economic integration that is central to its rationale as a regional organisation. In order to emerge as a growing market of end demand and a resilient base of production, it must position itself firmly in the larger Asian supply chain, offering itself as an Asian production region that is open to the rest of the world. This role held true, even before the emergence of the Sino-US trade conflict, but those differences have accelerated the need for sufficient regional ballast and momentum to enable Asean to seize a crucial moment in global economic transformation.

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The coronavirus pandemic has exacerbated divisive sentiments of economic nationalism. The disease revealed how easily the trusted logistical infrastructure of world trade and travel could be disrupted by a pandemic that has led to the swift closing of borders. Moving against the very spirit of globalisation, which requires open economic borders, Covid-19 drove countries to care for their populations first in the manufacture and distribution of essential medical supplies. Unfortunately, epidemiological necessity fed economic habit. Consequently, there now is the heightened likelihood of global supply chains in many sectors becoming shorter and less just-in-time, leading to the fragmentation of the trading system and the relocation of some production closer to home. While Covid-19 will pass, its economic repercussions will linger for a while. The fallout from the US-China trade conflict will also be felt far longer because it reflects profound structural changes in political and strategic relations between the world’s two largest economic powers.

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In such circumstances, Asean enjoys certain advantages. Its 10 nations do not belong exclusively to one or the other pole of geopolitical rivalry constituted by the United States and China today. Both Washington and Beijing know this, and tailor their policies towards South-east Asia accordingly. What this strategic freedom does is to give Asean room for economic manoeuvre between the two world powers. The threatened decoupling of the American and Chinese economies will not cut a destructive swathe through Asean collectivity.

South-east Asia can move forward on that basis, but only if Asean continues to broaden and deepen the pace of regional integration. Admittedly, Covid-19 has set Asean countries back economically. However, as they look beyond this dreadful phase in their unfolding history, members of Asean should consider closely how to build a more resilient supply chain within and keep up its access to other parts of the world. Open regionalism is the cornerstone of the multilateral order.