“ASEAN Economic Integration:
Prospects and Challenges
Keynote Address by
H.E. Dr. N. Hassan Wirajuda
At the Second Economic and
Business Students (EBS) Summit
Depok, 28 February 2008
Honorable Rector of the University of Indonesia, Prof. Dr. Gumilar Sumantri,
Dean of Faculty of Economics, Prof. Dr. Bambang Sumantri Brodjonegoro,
My Young Friends Participating in this EBS Summit,
Ladies and Gentlemen,
It is truly an honour for me to join you here at the Second Economics and Business Students (EBS) Summit and for this privilege I thank the organizers, the Faculty of Economics of the University of Indonesia.
When I agreed to speak before this audience on the topic, “ASEAN Economic Integration: Prospects and Challenges”, I realized that I would not only be speaking about the future but also to the future. In a very real sense, you do represent the future of ASEAN. For soon enough, many if not most of you will be assuming leadership positions in both the public and private economic sectors of your respective countries.
And when that time comes, I imagine with the finest anticipation that there will be in place in this part of the world an ASEAN Community resting on the pillars of politico-security cooperation, economic cooperation and sociocultural cooperation.
It will be an ASEAN with a legal personality, by virtue of an ASEAN Charter that was formulated last year and endorsed by ASEAN Leaders in Singapore last November. Thus it will be an ASEAN that has transformed itself from a loose association into a rules-based organization. No one will have any reason to doubt its fidelity to and capacity to fulfill its commitments.
It will also be a true organization of nations and not just of governments. It will be a people-oriented organization totally committed not only to the welfare of the peoples of the region but also to the participation of the ASEAN peoples in its decision-making processes.
The peoples of ASEAN will be so much more aware, knowledgeable and appreciative of one another in the light of their sense of common identity and their shared destiny. They will have a robust sense of ownership of the work of ASEAN and that “we feeling” that gives social cohesiveness to the region.
They will be familiar with one another through frequent contacts and joint initiatives at all levels. Cooperation will be intense not only among governments but also among business communities, civil societies, and the academe.
In brief, ASEAN will be truly a Sociocultural Community.
As it is today, the ASEAN region will remain firmly recognized as a Zone of Peace, Freedom and Neutrality, a region at peace with itself and with the rest of the world, and a bridge-builder and network-builder par excellence – as it was proven in the past 40 years.
It will then be a regional organization that has assumed full responsibility for its own security in the face of traditional and non-traditional threats to security. It will be fully committed to democratic values and to the promotion and protection of human rights. It will be a true Political and Security Community.
Finally—and this is what you may be particularly interested in—the region will be a full-fledged ASEAN Economic Community whereby ASEAN would become a single market and a single production base, with a free flow of goods, services, capital as well as labour. ASEAN Leaders have already endorsed a blueprint that contains short-term, middle-term and long-term strategic plans for its realization.
With an aggregate population of some 567.39 million and showing a 5.8 percent economic growth and total GDP of US$1.064 trillion in 2006, ASEAN even today is easily one of the most economically dynamic regions in the world. It will be so much more dynamic when it is fully integrated with the global economy.
When it becomes the ASEAN Economic Community, it will be fully mature as a free trade area and as an investment area—as a single market and single production base. It will then be an even more formidable global competitor.
The processes of investment and the production, distribution and consumption of goods and services will be so enlarged and speeded up in the region that any major economy or group of economies will naturally desire ASEAN as a trading and investment partner.
Thus today ASEAN is deeply engaged in negotiating towards free trade area arrangements with such dialogue partners as China, Japan, Korea, India, Australia together with New Zealand. In this manner, ASEAN is contributing in a very concrete way to the economic integration of the greater Asia-Pacific region.
The bottom line to the achievement of the ASEAN Economic Community is that there will be jobs aplenty. The incidence of poverty in the region will be so much lower than it is today. The outlook for our future generations will be so much brighter.
If I sound very optimistic that the envisioned ASEAN Community will deliver on its economic promise, it is not without basis. And my basis is that even as a loose association of governments without a Charter to give it legal personality, ASEAN has already managed to deliver unprecedented political, economic and social benefits to Southeast Asia.
When ASEAN was founded in 1967, Southeast Asia was an economic backwater. To make matters worse, they were embroiled in disputes with one another and were tormented by internal problems like rebellions and racial riots and communal violence. The Vietnam War was still raging.
But in a few years things began looking up for the region. This coincided with the consolidation of peace and the growth of cooperation in the region as a result of the initiatives of cooperation and the network-building carried out by ASEAN. By the decade of the 1990s, Indonesia, once regarded as among the world’s poorest countries, was showing economic growth rates of seven percent or more. Singapore was showing growth of ten percent year or more, year after year.
This phenomenal growth was disrupted brutally by the Asian Crisis of 1997-1998, which laid low many East Asian economies, including the ASEAN economies. Indonesia bore the brunt of that Crisis as it plummeted to a negative growth of 14.2 percent.
Instead of panicking, ASEAN intensified its economic integration in the face of the crisis. Moreover, it reached out to its more mature Northeast Asian partners –China, Japan and South Korea- and launched the ASEAN Plus Three process, which was instrumental in the recovery of the region from the Crisis.
That process gained so much momentum that it led to the launching of the East Asia Summit in Kuala Lumpur in 2005, this time involving an East Asia that is no longer defined as a geographic, racial and cultural entity but as a group of countries in this part of the world bound together by ties of habitual cooperation and consultation.
Thus ASEAN today is considered as one of the most successful regional organizations in the world. It stands to reason that when ASEAN finally has become a true Community, with a Charter that makes it more effective, efficient and enlightened, it should be able to deliver more benefits than it ever did before.
And when I say benefits, I do not mean just economic benefits. I also mean benefits in terms of the political maturation of the countries of the ASEAN region. I also mean benefits in terms of internal political, economic, and social reforms as a result of adherence to values enshrined in the ASEAN Charter. And, of course, I also mean benefits in terms of the enrichment of the national cultures of the ASEAN members.
But the ASEAN Community will not happen by itself. Its formally worded documents will not implement themselves. We the ASEAN peoples must make it happen. Everyone must get involved. That includes you, ladies and gentlemen of the EBS. Hence, the ASEAN Governments are called upon to ensure the broadest participation in the processes of ASEAN integration.
Therein lies a major challenge confronting ASEAN today: how to get everybody into the act and to contribute to the process. This is easier said than done, considering that member countries have different political and social systems and levels of development, not to mention “comfort levels.”
Another major challenge is how ASEAN can remain in the driver’s seat of the processes it has initiated in the East Asian region without losing its focus on ASEAN integration. This challenge is compounded by the fact that we have for as dialogue partners powerful nations with huge capabilities and different priorities.
We must therefore set our priorities right and try not to do too many things at once. It is true that we do not have the luxury of time in our drive towards attaining an ASEAN Community by 2015, but we still need to work in the way that brought us to our current success: step by well planned step.
I am confident that we will overcome these challenges. For the challenges that ASEAN overcame during its early years, are not too different from the ones we are facing today. The only difference is that ASEAN has grown more mature. ASEAN is stronger now. And even more reliable.
And with the greater participation of the peoples of ASEAN, with the growing interest and involvement of young professionals like yourselves, I don’t see how ASEAN can fail. It can only succeed and become what its founding fathers envisioned it to be: a Community of caring and self-reliant societies.