Development potentials and pitfalls of a fully integrated ASEAN

Heads of the member states of the Association of Southeast Asian Nations. Photo by: ASEAN Secretariat

When the 10 member states of the Association of Southeast Asian Nations announced in 2007 the intention to build an integrated regional economic community in less than a decade, the international community didn’t hold its breath.

And as expected by quite a few observers, seven years later the goal of establishing the ASEAN Economic Community by the end of 2015 is still far, and with only a year left to meet the deadline, pretty much all stakeholders — even the Asian Development Bank — agree it won’t happen, at least on time.

So what went wrong and what needs to be done to get back on track and speed up the integration process again? Aside from the usual and oft-discussed arguments of policy delays and gaps in development progress between member countries, the bloc’s dynamics, structure and capacity — or lack of — may have contributed to the delay and, to an extent, mishaps of the whole integration process, according to an ADB expert on ASEAN.

Jayant Menon, lead economist for regional economic integration at the Manila-based development finance institution, explained that while ASEAN continues to be one of the most dynamic regional political entities in the world, it remains in essence a toothless agenda-setting body for the member countries — even when faced with evidence of noncompliance with its own policies.

“ASEAN’s modality is binding, but without strict mechanisms for enforcement. What if someone does not comply, [so] what do you do?” he said. “The secretariat is highly under-resourced but deliberately underpowered. It is weak but it is designed to be weak.”

This weakness has undermined the 2015 AEC goal and can be clearly seen in examples like the failure of its dispute settlement mechanism, Menon pointed out. But why? According to the ADB official, ASEAN is weak and so are its institutions because they were set up that way.

“Nobody wants a strong secretariat because there’s no appetite to give up sovereignty to a central body,” he said. Fog of regionalism?

For some regional development experts, ASEAN has become a role model not just for developing nations but also for the rest of the world in pushing for an alternative model for regional cooperation that focuses on institutions, market forces and global connectivity, compared to the European Union’s inclusive but inward-looking view of cooperation.

But is it conclusive to say that the (apparent) gains of Southeast Asian nations are really the result of regionalism spurred by the ASEAN integration goal? For Menon, the real reason why ASEAN countries are posting stellar growth rates and enjoying rapid development has little to do with regionalism and much more with the national reforms these countries pursued on their own.

“[Development] gaps [between ASEAN nations] are narrowing because of national policies that the countries are pursuing … and not because of ASEAN. ASEAN is playing a role but a minor [one],” he said.

Given the dilemma of the bloc’s lack of teeth to enforce certain policies and measures, the argument makes sense. Much of the pillars outlined in the integration’s blueprint on policies and reforms require parliamentary approval in each member states. That’s why, Menon explained, ASEAN can only really provide some guidance, assistance and even motivation in pursuing these reforms.

“Regionalism has worked, but in a different and more useful way, [and that is to] open a way so they become regionally integrated but remained globally connected,” he said. Potentials and pitfalls

Despite probably not meeting the 2015 AEC deadline, ASEAN does deserve much credit in pursuing that ambitious mission, which has its own development potentials and pitfalls.

To maximize ASEAN’s role in spurring development progress across the region, Menon suggested to grant the body more financial and technical resources, and for member states to acknowledge ASEAN’s mandates and capabilities.

Second, the ADB expert recommended setting realistic goals and feasible timelines and measure them using the right indicators. One of the highlights of the joint communique issued after the bloc’s most recent summit in Naypidaw is a vision to establish a set of ASEAN development goals, much like the U.N. Millennium Development Goals, which some experts believe could put a different perspective to an otherwise trade-heavy integration narrative.

“Trade and investment has done more to help achieve these development goals than all the rhetoric about how we need to pursue all these goals,” Menon said. “No one’s [also] paying for that. No one is going to fund that.”

Lastly, ASEAN should know how to cope with the (good and bad) effects of trade liberalization and integration, while also knowing its place in the larger trade and development landscape once the process comes full circle.

The best way to deal with problems like vulnerability of some economies to the free flow of workers like within the European Union, Menon explained, would be to retrain workers from contracting sectors so they can acquire new skills that will make them fit for jobs in expanding sectors — something that only governments can effectively do to scale.