Economic News

22 Jul 2010
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Malaysia was back in the international spotlight this week after playing host to some major regional gatherings.

The ASEAN summit was in town, boosted by the ASEAN plus three gathering - when Japan, China and Korea joined the fray. The inaugural East Asia Summit also kicked off, with the heads of state of Australia, New Zealand and India travelling to Kuala Lumpur. As if that were not enough, Russia's President Vladimir Putin also joined the international all-star cast.

Nevertheless, the main event was still the meeting of ASEAN - Malaysia, Brunei, Cambodia, Indonesia, Laos, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

The group was born in 1967 amid inter-member security concerns, but has since driven integration in the region.

In this respect, the main institutions of regional integration are in place: a free trade agreement; agreements on security issues; and a forum for dialogue.

All these are now being seen by many analysts as vital if the member states are to compete with their emerging northern giant.

"I think economic integration will continue to accelerate so that ASEAN can face up to competition from China," says Michael Yeoh, CEO of the Asian Strategy and Leadership Institute. "With a combined population, they can do this. Individually, they don't have the weight."

Whilst Malaysia has played a leading role in this integration, 2005 saw the country also playing a leading role in the other side of the group's mission - namely to "promote regional peace and stability and abiding respect for justice and the rule of law".

The case in point concerned the status of politics in nearby Myanmar, scheduled to take the chair of ASEAN from Malaysia in 2006. Under pressure largely initiated by Malaysia, Myanmar has now agreed to defer its taking of office.

At the summit this year, the tough talk was stepped up too, with Myanmar agreeing to allow an investigative team from ASEAN to look into its political reforms, again under pressure lead by Malaysia.

Myanmar officials indicated the visit could happen as soon as next month and will be headed by Malaysian Foreign Minister Syed Hamid Albar.

The move involved the members deciding to go against one of their own directives though - namely, not to get involved in each other's internal affairs.

However, the motivation to deal with the issue in-house is thought to have been driven by a desire to ensure the US does not feel obliged to intervene, according to one diplomatic source who spoke to OBG.

With recent discoveries of natural gas off the coast of Myanmar there are no doubt economic reasons for bringing the nation in from the cold, too.

However, co-operation is needed in other areas as well, especially on what some dub "non-traditional challenges".

As Yeoh points out, these include "avian flu, cross-border crimes and HIV... In the last few years these have not been effectively addressed."

However, steps have been taken in this direction, principally over avian flu, which was addressed by the East Asian Summit in its first declaration. In this, members agreed to co-operate with and enhance international efforts to control and stem the spread of the disease.

This illustrates a wider point - that the challenges facing ASEAN are changing. The organisation will, however, likely continue to be a major engine of integration. Meanwhile, having put the foundations of a strong regional body in place, the real landmark at the summit was the provision made for drawing up the ASEAN charter, which is expected to give the group a firmer foundation for moving forward.

That this step comes when Malaysia holds the chair of the summit is indicative of the role the country wants to play in driving integration, which clearly is in the country's greater interest. With larger neighbours Thailand and Indonesia rapidly developing, ASEAN can act to ensure a larger regional framework for this, while also enabling - at least in principle - a more robust stance by smaller nations in an increasingly Chinese century. Balancing local and regional interests will not be easy, however, with many wondering how the organisation will cope in the years to come.

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