The Association of Southeast Asian Nations’ economic growth and development, "whilst very good”, writes Chris Humphrey, Executive Director of the EU-ASEAN Business Council, "is not as good as it should or could be”. Addressing an analogy by Mr Arsjad Rasjid, Chairman of the ASEAN Business Advisory Council 2023, Mr Humphrey outlines existing and new challenges that need to be dealt with and details the four key areas in which the EU-ABC and ASEAN BAC are “aligned in our approaches”.
|EU-ABC meeting with ASEAN BAC at the 2023 ASEAN Finance Ministers meeting|
IN A WORLD TROUBLED by economic uncertainties, geopolitical tensions, war, and increasing numbers of climate-change related disasters, Southeast Asia shines as a beacon of growth and hope. ASEAN has rebounded strongly from the pandemic: the region’s trade with the world has bounced back; FDI is flowing to Southeast Asia at record levels; and, GDP growth is at levels that much of the rest of the world can only dream about.
But ASEAN faces significant challenges, ones that need a whole of society effort to address. As Indonesia’s Finance Minister Sri Mulyani Indrawati said recently at the ASEAN Finance Ministers and Central Bank Governors meeting: “Economic growth has and will always be the story of ASEAN. To ensure that this will be continuous, we must strengthen ASEAN's capacity to respond to the previous challenges, but most importantly the current and new challenges that we are all seeing today, and the expected challenges in the next twenty years.”
I recently read an analogy by Pak Arsjad Rasjid, the Chairman of the ASEAN Business Advisory Council, in which the private sector was compared to a racehorse and the public sector its jockey. I echo his sentiment, but even the fastest, most nimble, and strongest thoroughbred will never win the race if it is handicapped by extra weight and a rider who is tugging at its reins.
"Intra-ASEAN trade as a proportion of total trade is falling; customs procedures are still seen as overly burdensome and slow; non-tariff barriers to trade are not being removed, resulting in higher costs to consumers and businesses, a loss of innovation, and reduced competition"
Whilst ASEAN is undoubtedly in a good position, it has the potential to be so much better off. Looking back, the excellent and well thought through objectives of the various ASEAN Economic Blueprints have not been fully implemented, and indeed in many cases are far from being so. The result is that intra-ASEAN trade as a proportion of total trade is falling; customs procedures are still seen as overly burdensome and slow; non-tariff barriers to trade are not being removed, resulting in higher costs to consumers and businesses, a loss of innovation, and reduced competition. All of which means that economic growth and development, whilst very good, is not as good as it should or could be.
Meanwhile, there are new challenges that need to be dealt with.
ASEAN needs to act faster on developing digital skill sets, to better equip its citizens for an increasingly technological world. The region also needs to put in the place the right enabling environment to allow for the digital economy to flourish, allowing all parts of society to have access to it – this means better and smarter regulation, improving the digital infrastructure. The planned ASEAN Digital Economy Framework Agreement takes on added importance in this area. Additionally, innovation from the private sector in developing new tools and digital services – helping the unbanked get banked, the uninsured to get insured, for example – needs to be accelerated.
On climate action and sustainability issues – there is a clear need to drive more sustainable finance to the region, to fund energy transition and energy efficiency, and to build infrastructure that are green and that can support clean technology. This will require changes in regulatory approaches, better project development and clearer definition by infrastructure owners, and financial institutions changing their approach and parameters. Efforts like the development of the second version of the ASEAN Taxonomy are welcomed, but there is a need to ensure complimentary between different taxonomies and greater simplification to allow private capital to flow to the region.
Southeast Asia is also facing becoming an aging society within the next 10 to 15 years - astonishing for a region that many of us think of as still being very young. This means that the provision of affordable healthcare becomes a leading concern for all countries. Increased focus on prevention (such as through vaccination programs, improved access to self-care) and on diagnostics (to help catch illnesses earlier and thus reduce treatment costs and times) are essential. Thankfully, these ideas are gaining traction.
And then there is issue of how to feed a growing region, improving the nutritional value of the food being produced, raising yields from farms to improve food security and help alleviate rural poverty, and doing so whilst not leading increased environmental degradation. Modern day farming techniques allow for this, with smart agricultural solutions. Again, regulators need to be more open in their approaches, and the private sector more forthcoming with the development of solutions.
The EU-ASEAN Business Council and ASEAN BAC are aligned in our approaches on these four key areas. Working together, and in collaboration with governments in the region and the ASEAN Secretariat, we can achieve positive outcomes for the benefit of everyone in ASEAN.
A just, equitable, and sustainable future is there to be had, but it requires true action; deeds not words; implementation and not leaving objectives gathering dust; the horse and jockey working in tandem, galloping in the same direction. Can it be achieved? It can, but only if the region works collectively, not individually.
The EU-ASEAN Business Council (EU-ABC) is the primary and sole voice for European business covering the ASEAN region. It is recognised by the European Commission and the ASEAN Secretariat and is an accredited entity under Annex 2 of the ASEAN Charter. Independent of both bodies, the Council has been established to help promote the interests of European businesses operating within ASEAN, and to advocate for changes in policies and regulations to boost trade and investment between Europe and the ASEAN region.