Political turmoil affecting ASEAN economies

By Amit Baruah

SINGAPORE, MAY 2. The dramatic events of the last few days in the Philippines and Indonesia have once again placed the focus squarely on South-East Asia and the troubles in this region.

While Indonesia can be excused in some ways for its problems given the more recent transition to democracy there, the fragility of the democratic process in the Philippines is evident despite the fact that Ferdinand Marcos was deposed 15 years ago. With South-East Asia limping back to normality after the 1997-98 economic crisis, the issues and implications of transition from an authoritarian system of governance to democracy in key countries and political troubles in others have held up regional economic integration and investment.

The tiger economies, it would appear, have taken to grazing. While statistics tell a tale of relatively improved growth across the region, political developments have cast a pall of gloom. Countries like Singapore and Malaysia, which are heavily dependent on the United States as an export destination, worry about the ``slow down'' of the American economy. According to Ms. Melina Nathan, senior research associate at Singapore's Institute for Defence and Strategic Studies (IDSS), the ``big picture reinforces the perception growing in the last two years of political uncertainty, weak government and heightened economic risk'' in the region. Investors, she said, were turning to China - an area of concern to the Association of South East Asian Nations (ASEAN) - for some time now. ASEAN, Ms. Nathan argued, had suffered due to the internal problems faced by individual nations as well as the problem of enlargement following the entry of countries like Myanmar, Cambodia, Laos and Vietnam.

In his May Day message, the Singapore Prime Minister, Mr. Goh Chok Tong, said: ``The ASEAN economies are under severe stress...they have not fully recovered from the Asian financial crisis. In addition, several of them face domestic political problems....''

``The region's uncertain political and economic outlook will affect investor confidence and interest. Some companies invest in Singapore for the larger ASEAN market. Hence, while we may manage our politics and economy well, the negative assessment of the region will diminish investor interest in Singapore,'' Mr. Goh added. In a separate address, Singapore's Trade Minister, Mr. George Yeo, referred to China taking the lion's share of investment coming into East Asia. ``It used to be that China took 20 per cent of the total foreign direct investment coming into East Asia (excluding Japan), while ASEAN had 50 per cent, now, it is the opposite....'' the Minister said. ``This is the reason why we are the strongest proponent of ASEAN economic integration. Unless the countries of ASEAN combine their markets into a free trade and investment area of 500 million people, we will lose many investment projects to China,'' he added.

Yet another problem area for ASEAN is the distaste among most ASEAN members to discuss their internal problems. With Thailand at the head of ASEAN last year, Bangkok took a more ``activist'' role - in pushing ideas like the ASEAN ``troika'' for a consensus-based role. However, ever since Vietnam took over as chair of the ASEAN Ministerial Meeting (AMM) Standing Committee in Bangkok last year, little has been heard about the ``troika'' issue. In one case, where the Thais, under the then Prime Minister, Mr. Chuan Leekpai, pushed for the creation of a ``troika'', Vietnam rejected the idea. Economic, political and ethnic troubles are nothing new to the world. In the case of South-East Asia, the perception at one time was that stability of the authoritarian kind would deliver uninterrupted economic growth.

Like everyone else, ASEAN is watching the troubles of its individual components. While Foreign Ministers of the ASEAN- 10 met in an informal session in Yangon over the weekend, it is not known what exactly they discussed. Indonesia, described as the ``engine room'' of ASEAN, is unable to play the kind of role it played in the past. Its leadership has time only to look inwards. In Thailand, there is suspense whether the Prime Minister, Mr. Thaksin Shinwatra, will remain in office once the Constitutional Court hands down its verdict in a case of misdeclaration of assets.

Malaysia, too, is seeing a concerted challenge to its model of ethnic management. Malay unity is proving to be a myth while a big question mark remains over ethnic relations in the country. The challenges posed to these individual parts of ASEAN by the forces of democracy and change promise to be long drawn- out. No early end is in sight. It is time, perhaps, for ASEAN and its components to abandon looking at the region through the stability prism. Given the ground realities in the region, individual nations will have to deal with their own, daunting problems.

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