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ASEAN Sets 'Bold' Cure, But Differences Remain

ByJohanna Son, IPS
15 December 1998

HANOI, Dec 15 (IPS) - South-east Asian leaders on Tuesday sought a common, strong dose of action to deal with the region's economic crisis, saying a weakened Association of South-east Asian Nations (ASEAN) risked becoming an irrelevant club without it.

Their common prescription is a series of "bold measures," to be formally issued at the close of the sixth ASEAN summit Wednesday in Hanoi, that aims to show that despite the pain of liberalisation member economies will hasten the tearing down of barriers to trade and investment.

A draft document on such measures says member economies will shorten by one year, to 2002, the period by which most tariffs will be cut to 0 to 5 percent under the ASEAN Free Trade Area.

The "bold" measures also grant ASEAN and external investors more "special privileges" for investments in manufacturing, in what members hope will draw more foreign funds and generate employment at home.

"Our immediate priority is therefore to demonstrate convincingly that we are seriously coming to grips with our present economic problems," Singapore Prime Minister Goh Chok Tong said at the opening of the summit Tuesday at the Bao Dinh Hall in Hanoi.

"If we cannot convince the world that we are united in our determination to repair our economies, it could lead the major powers to turn away from South-east Asia toward other more interesting regions," Goh said.

Calling 1998 a "most traumatic year" for ASEAN, he said faster tariff cuts send a "powerful signal that we will keep our markets free, that we will remain plugged into the global economy, and that we are determined to move forward with liberalisation".

South-east Asian economies have been hard hit by Asia's recession, resulting in negative growth of up to 15 percent this year in Indonesia and official recession for Singapore next year.

But though the nine ASEAN leaders stressed their commitment to reforms to lure foreign investments and strengthen financial systems, differences showed up on how exactly to proceed.

Just as prominent in Tuesday's speeches were calls to tame the ill effects of economic liberalisation. "Even as we embrace it (globalisation), we must be wary of the dangers which accompany it," said Malaysian Prime Minister Mahathir Mohamad.

His remarks carried a warning for economies pursuing programmes prescribed by the International Monetary Fund, which has given bail-out funds to Thailand and Indonesia.

Malaysia tried a "virtual IMF approach" earlier but "we discovered that these measures worsened the economic situation and failed to restore foreign investor confidence", Mahathir said.

"As the international community refused to do anything, Malaysia had no choice but to change direction," he argued, defending the capital and currency controls he ordered in September.

"Malaysia cannot afford to wait while the developed economies and international financial institutions dawdle," Mahathir said, stressing that beyond the controls "our economy is as open as before".

His remarks were echoed by Vietnamese Prime Minister Phan Van Khai, who said that just as stricken economies needed to undertake corrective measures, so did international financial institutions.

"Developing countries are often requested to foster foreign investors' confidence. That is a legitimate request and we are all doing out utmost to improve the investment environment, restore investors' confidence," Khai pointed out.

"In return, we expect foreign investors to reinforce our confidence in their commitment to long-term and mutually beneficial investments," he added.

Khai noted: "Clearly it is high time that we reformed international financial and monetary institutions, found ways to curb monetary speculation detrimental to many economies and the global economy as a whole."

Indonesian President Bacharuddin Jusuf Habibie says ASEAN has the opportunity "to make the workings of globalisation benefit not just a few, at the expense of the othes". Yet, Thai premier Chuan Leekpai said, "we can't simply build a wall around us".

ASEAN leaders also agreed on ways to ease the social impact of the crisis, with Philippine President Joseph Estrada saying "ASEAN must ensure the social dimension is never relegated to the sidelines ever again."

Despite the tough economic times ahead, the leaders of Singapore, Thailand, Brunei, Indonesia, the Philippines, Malaysia Vietnam, Laos and Burma gave themselves a bit of pep talk. They said the 'ASEAN way' that saw the group through the last three decades would help it again now.

They conceded though that ASEAN's image had lost its shine and as Mahathir put it, "relations between its members have come under some strain". Added Chuan: "Some have gone as far as to write us off" for failing to do much as a group against economic woes.

Whether the low-key ASEAN way of consultation and compromise will be enough remains to be seen. The group has just used it again in the ticklish case of Cambodia's admission: in a solution that offends no one, it said yes to Phnom Penh's entry but set no time frame for it.

At a dinner Tuesday, the leaders sought a middle path between host Vietnam's desire to have Cambodia join at this summit, and that of others like Singapore, Thailand and the Philippines who want to ensure the stability of the new Cambodian coalition government first.

They agreed that ASEAN will admit Cambodia at a "special ceremony" of their foreign ministers to be held in Hanoi -- but set no date. Diplomats said the admission rite could happen in few weeks or several months.

In true ASEAN fashion, the formula gave the appearance of accepting the host's position without rejecting the others'. But at an evening briefing, Vietnamese Foreign Minister Nguyen Manh Cam said "it can be considered, and everybody should consider (Cambodia) the 10th member".

Though Cambodian Prime Minister Hun Sen stayed on during the ASEAN summit, he did not address the session. But for Hun Sen, with or without the official ceremony, Cambodia is already an ASEAN "member". (END/IPS/ap-dv-ip/js/ak/98)

Origin: Rome//UPDATE/SOUTH-EAST ASIA/ ----

[c] 1998, InterPress Third World News Agency (IPS) All rights reserved

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