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ASEAN@50: Prioritising the Human Face for the Asean Economic Community 

May 27. 2017
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By CHEN CHEN LEE, SHANGARI KIRUPPALINI
SPECIAL TO THE NATION

The Association of Southeast Asian Nations (ASEAN) held its 30th Summit in Manila last month amid growing anti-globalisation sentiment in the West. As western markets become more inward-looking, intra-ASEAN Asian links will matter now, more than ever. 

During the Summit, ASEAN leaders reiterated the need to tap into intra-Asian links to build the region’s resilience to shocks in the global economy. ASEAN leaders looked beyond the current economic headwinds and sought to achieve a “modern, comprehensive, high-quality and mutually beneficial Regional Compressive Economic Partnership (RCEP) Agreement” by the end of this year. 

With the Trans-Pacific Partnership (TPP) currently in limbo, RCEP is the largest free trade agreement currently under negotiation. Singapore Prime Minister Lee Hsien Loong urged ASEAN to resist inward-looking sentiments and to tap on its intra-sources of growth by working towards a ‘credible and high quality’ Regional Comprehensive Economic Partnership Agreement. The successful completion of RCEP will link ASEAN, a market of approximately half a billion people, to its six partner countries, creating a market of 3.5 billion people. The trade pact will not only anchor ASEAN’s role in the global economy while strengthening Singapore’s trade relations within the East Asian and Southeast Asian markets, but also has the potential to be the new engine of global growth. 

Deeper economic integration will be the lynchpin of ASEAN’s strategy to be a global player, and maintain its outward-looking position and engagement with the rest of the world. Current ASEAN chair the Philippines has made it clear that ASEAN is ready to step up its role on the international stage in laying foundations for a new global economy. During the ASEAN Foreign Ministers’ Retreat in February last year, ministers discussed the need to build the bloc’s resilience, and to make Southeast Asia “a model of regionalism” and a “global player” among ASEAN’s six priorities for 2017. 

However, as ASEAN continues with its economic integration agenda, it must consider the “human face” of the ASEAN Economic Community (AEC). This is important as the AEC is neither a standalone initiative nor is it merely made up of facts and figures. The AEC is in fact an embodiment of an ASEAN Community that is made up of people – and more attention needs to be paid to them.

Defining the “human face” of the AEC

The “human face” of the AEC concerns two segments of the population. The first is a burgeoning middle class that is demanding more equitable growth and more transparent and cleaner governments. Modern-day technology and social media have amplified these voices and generated greater accessibility for the average person to policymakers. 

This is changing the style of governance in ASEAN member states, raising overall expectations of how governments should perform. Many traditional elites who have dominated governments and state power are struggling to deal with challenges of rising populism and how it can shape the future of governance in the region. 

In the Philippines for instance, public frustration over corruption and social issues propelled the rise of President Rodrigo Duterte from outside the traditional elite. In Indonesia, discontentment with corruption and uneven distribution of wealth encouraged the rise of President Joko Widodo, a political outsider. Such bottom-up factors are driving a rise in populism and galvanising change at the national level. These factors have the power to impact what ASEAN leaders collectively can and cannot do in implementing the AEC. 

The second segment of the population are the vulnerable groups in ASEAN. Despite International Labour Organisation (ILO) estimates that the AEC could boost the region’s economies by 7.1 per cent by 2025 and generate 14 million additional jobs, there is a growing fear that the gains from the AEC may not be evenly distributed among all ASEAN countries or its peoples. This is especially so for micro, small and medium enterprises (MSMEs), smallholder farmers, labourers working in the informal sector and undocumented or irregular migrant workers.

A more humane AEC is one that is inclusive and people-focused. Economic integration must help not just overall growth but be seen to deliver more and better jobs and benefits broadly across society. In this regard, ASEAN needs to adopt a cautious more targeted approach towards economic integration. 

Concerns over widening income gaps partly explain the rise of populist sentiments across a number of countries, which may threaten closer integration with the regional and global economy. As such it has become increasingly important for ASEAN leaders to ensure that the dividends of economic integration are distributed in an equitable and fair manner. By putting the people at the core of policymaking, the benefits of economic integration may be felt by the broader segments of the population. 

ASEAN’s priorities moving forward

First, promoting the development of small business MSMEs and SMEs can be the most effective and sustainable solution for creating more inclusive growth. SMEs form the backbone of key Southeast Asian economies, accounting for the majority of total employment and an integral source of economic growth. As opposed to foreign investment, which may be concentrated in a particular sectors or region, local SMEs and MSMEs create opportunities across geographic areas and sectors and employ much broader and more diverse segments of the labour force. Therefore, empowering SMEs is key in achieving a more humane AEC. 

ASEAN leaders have sought to create mechanisms and institutions to help promote competitiveness amongst SMEs as the region integrates more closely. However, the region’s infrastructure deficit still inhibits SMEs from gaining access to regional value chains. Moving forward, ASEAN must work together with national governments to facilitate the establishment and development of rural-urban value chains. Such an initiative will promote SMEs in rural areas with greater access to urban markets. In the long run, it will encourage rural transformation and enhance the well-being, livelihood and welfare of rural ASEAN populations. It is imperative that ASEAN leaders relook at MSMEs and SMEs, and create new mechanisms to help SMEs integrate them into global value chains. 

Secondly, ASEAN needs to adopt a multi-stakeholder approach and transition away from a top-down organisation with government leaders directing the association. A concerted effort to involve more voices into ASEAN’s decision making process, particularly that of the youth, private sector and civil society in necessary. 

The private sector in particular is a key stakeholder. ASEAN should aim to work alongside businesses to re-evaluate their strategies to prioritise Corporate Social Responsibility (CSR) initiatives that can complement ASEAN’s goals of sustainable, equitable and inclusive socio-economic development. This can encourage businesses to address social concerns while helping to bring local economic development plans to fruition. 

ASEAN can also do a better job at communicating its achievements, its vision, and its goals to her people. The level of awareness of ASEAN across different countries is patchy and the idea of a shared regional identity remains a distant goal for now. With little knowledge of the association, it becomes a challenge for ASEAN’s stakeholders to become part of the decision-making process, and ultimately drive the community building process.

ASEAN has enjoyed a relatively successful and prosperous first 50 years. The Kuala Lumpur Declaration on ASEAN 2025: Forging Ahead Together was a historic milestone. The next phase of its community building would be more challenging. In order to realise a people-centred and indeed a more humane community, ASEAN needs to transform itself from a process-oriented institution into an action-oriented one. To do this, the public sector needs to work in tandem with the private sector and civil society to help ASEAN better the lives of its people. 

Chen Chen Lee is director of Policy Programmes, and Shangari Kiruppalini is a policy research analyst, at the Singapore Institute of International Affairs.

 

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