Top officials meet during the second ASEAN Finance Ministers and Central Bank Governors’ Meeting under Indonesia’s chairmanship in Jakarta on Aug. 25, 2023. (-/Finance Ministry)
The Jakarta Post
Versi Bahasa Indonesia
For all the talk of ASEAN cooperation these days, let us not forget that the ASEAN member states are competitors in many ways, for example, when it comes to attracting foreign investment in the automotive industry.
Competition itself can, of course, be a catalyst for cooperation, as all sides share an interest in preventing a ruinous race to the bottom, but while competition comes naturally, cooperation requires time and commitment.
There has been no lack of time. ASEAN has put decades into its vision of economic integration, but given that the results remain less than impressive, commitment may have been lacking.
Indonesia, as this year’s chair of the bloc, has vowed to change that, but achieving meaningful – that is, binding – agreements among countries that have very different economies and are at very different stages of development is no easy feat.
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Consider Indonesia and Singapore. One is heavily dependent on resource exports, the other a financial hub. One is an emerging economy, the other a mature economy; one has a young and growing population, the other an aging one with a low birth rate; one struggles to claw back forgone tax revenue, the other is a tax haven; one is a vast archipelago, the other a city-state.
Such contrasts make it difficult to find common ground on many economic issues. Indonesia arguably has much more in common with a country like South Africa: Both are emerging markets, have lots of coal and depend on it heavily, have a similar energy transition program, have poverty issues to deal with, need to improve public education and health care and have ample natural resources.
The list could go on. Suffice it to say that proximity alone is a weak foundation for shared interests.
While ASEAN is based on the idea of countries working together because they share a region, a forum like BRICS is based on cooperation around shared interests, such as the interest in developing downstream industries for locally sourced commodities.
A shared interest in amending global rules of trade to support their respective domestic agendas is precisely why BRICS can bring together countries that are locked in strategic competition with one another, such as China and India, or soon-to-be members Iran and Saudi Arabia.
ASEAN states, without a doubt, do share interests based on proximity as well, such as preventing an arms race in the region and defending their autonomy amid a rivalry between big powers. Both of those goals can only be reached if ASEAN members act in concert.
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Economically, too, there are some shared interests based on proximity, such as mitigating adverse weather and climate impacts on agricultural production or facilitating cross-border financial transactions.
It is no coincidence, therefore, that those latter two are the fields of cooperation member states have agreed to pursue under Indonesia’s ASEAN chairmanship this year.
Central banks of Indonesia, Thailand and Malaysia chose last month’s ASEAN Finance Ministers and Central Bank Governors’ Meeting (AFMGM) in Jakarta to announce an expansion of local currency agreements. The aim is not just to settle imports and exports or investments in local currencies, but also to allow for cross-border financial products and unified digital payment systems to be enjoyed by travelers.
While those are bilateral deals rather than an ASEAN-wide project, they do support the ASEAN agenda of financial integration. Reducing dependence on the United States dollar as a means of exchange also supports the goal of ASEAN centrality and the strategic autonomy of ASEAN member states.
Under Jakarta’s leadership, ASEAN has also made progress on regional standardization to remove nontariff trade barriers and facilitate the free flow of goods among member states through mutual recognition agreements signed in Semarang last month.
These are baby steps, but ASEAN lacks common institutions, such as those the European Union has, to integrate any faster. Given that limitation, Indonesia has wisely decided to aim for the achievable.
● Wed, September 6, 2023
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