As Jusuf Wanandi pointed out recently in Indonesian media, Asia is getting more motivated and better structured so it should be able to follow on from the October 2008 Western economic crisis and reinforce the role of the G20, effectively helping to replace the G8 rich man’s club of Western nations.
But constraints must be resolved, or the region could miss the bus to more rapid recovery, by going too slowly on global and regional economic change.
First, if Asean is to be the engine of Asian economic integration, then it needs more push and speed. Second, Myanmar is holding Asean back, a permanent spanner in the works. Neither Asean nor the EU or US can afford this any more. Third, despite the growing weight of G20 economies, Western nations still pack a disproportionate political punch in international economic institutions.
Several Asian countries are looking to recover from recession (Singapore, Thailand, Japan) while China, India and Indonesia maintained positive growth in 2009, at 8, 6 and 4.4 percent respectively.
In Indonesia Stock Exchange capitalization rose by 31 percent from January to May, the bond market is bouncing along and Indonesia has the highest figures for several years on consumer confidence.
Confirming the wealth of the Indonesian super-rich, sales of Ferrari California luxury cars costing up to US$500,000 each rose from 16 in 2007, to 30 in 2008, to 40 by June of 2009. And Indonesia is amazingly cutting unemployment now, holding it at below 8.3 percent, with further falls expected in 2009.
The main Asian regional and structural reactions to the global crisis are on the right lines, but the advantages come with implementation and consolidation:
First, to improve coordination of moves towards economic integration in East Asia, including free trade, trade financing and currency swaps, more steps to reduce dependency on the US dollar and on common currency possibilities.
Second, to strengthen strategic links between East Asia and the Pacific Rim (via APEC –the Asia Pacific Economic forum) and to make progress with the EU (via ASEM – the Asia-Europe Meeting, but moving onto the much-delayed trade agreement).
Third, to coordinate joint pressure to strengthen the influence of the Asean, Asian and G20 states in the restructuring of global economic institutions, notably the World Bank group (WB), the International Monetary Fund (IMF) and the World Trade Organization (WTO).
However Jusuf Wanandi also acknowledged that given the size of the crisis and the urgency, it really took a lot of time for Asean+3 to get its act together on trade financing and to support the Chiang Mai Initiative.
Five of the G20 powers are in Asia (China, Japan, Indonesia, South Korea and Australia). The 10 nation Asean group already regularly meets as Asean + 3 – along with China, South Korea and Japan. This group is moving towards an interconnected set of Free Trade Agreements (FTAs).
We are now on the way to Asean + 3 + 3 including Australia, New Zealand and India, as conceived by the Comprehensive Economic Partnership in East Asia (CEPEA), moving towards an Asean + 6 FTA, according to Mun-Heng Toh, writing May 15 in the East Asia Forum.
But Indonesia, with its strong consumer economy, state enterprises and state-backed measures can protect its domestic economic interests and still make progress on FTAs.
Asean should not fall into the trap of the Caribbean Community or other trade groupings in Latin America or Africa of doing too little too late and then wondering about lack of progress.
Exceptions, derogations and delays on specific measures are the staff of life of trade agreements. FTAs do not have to mean you throw out the baby with the bath water.
The Asean problem was summed by up Kavi Chongkittavorn in the New Nation of Bangkok, that Asean`s old members want the new Asean, while Asean`s new members still want the old one.
More rapid success by hard progress the new way, or failure by slow consensus the old way. That’s the choice now.
Terry Lacey is a development economist who writes from Jakarta on modernization in the Muslim world, investment and trade relations with the EU and Islamic banking.