Bringing ASEAN into the “‘Pockets of Citizens”

Name: Bringing ASEAN into the “‘Pockets of Citizens”
Uploaded: 2023-02-06T04:00:40Z
Duration: 20 min 32 s
Description: The majority of the 53 points in the statement of the chair of the ACC and the ASEAN Foreign Ministers Meeting discuss welfare and the economy. Prosperity is difficult to achieve if the country or region is unstable.

The majority of the 53 points in the statement of the chair of the ACC and the ASEAN Foreign Ministers Meeting discuss welfare and the economy. Prosperity is difficult to achieve if the country or region is unstable.

KRIS MADA, LARASWATI ARIADNE ANWAR

· 7 minutes read

Many things become relevant as long as they are useful and their presence is truly felt. Relevance also means it is in accordance with the latest conditions and ready to anticipate the challenges in the future. As this year's rotating chairman, Indonesia's task is to bring ASEAN to fulfill all of that.

Over the past 55 years, ASEAN has provided many conveniences for its citizens. Mutual recognition of each other's driving license by ASEAN member countries, visa-free visits in almost all ASEAN countries and educational cooperation are some of the benefits of ASEAN.

However, questions remain about ASEAN's present and future relevance. By choosing ASEAN Matters: Epicentrum of Growth as the theme of its chairmanship, Indonesia is trying to answer questions about the relevance of ASEAN. Indonesia is also trying to give a practical answer to the question: Is ASEAN important?

When receiving ASEAN foreign ministers, Friday (3/2/2023), President Joko “Jokowi” Widodo emphasized the importance of growth. ASEAN needs to maintain regional peace, stability and security to make Southeast Asia a center of growth. The meeting was held before the ASEAN foreign ministers attended the ASEAN Coordinating Council (ACC) and the 2023 ASEAN Foreign Ministers Meeting (AMM).

Also read: Regional Dynamics Challenge Growth

The majority of the 53 points of the statement by the chair of the ACC and 2023 AMM discuss welfare and the economy. Poverty, growth, employment and the marine economy are also highlighted in these points. In addition, the statement discusses the issue of migrant workers.

"We underscored ASEAN's commitment to be an organization that is robust and agile, equipped with a strengthened capacity and institutional effectiveness to address the challenges in order to remain relevant and important for its people, the region and the world while continuing to serve as the epicenter of growth to take up opportunities for the prosperity of its peoples and beyond the region,” cited one of the statements.

Another paragraph discusses issues of security, disaster and geopolitics. As repeatedly stated by Foreign Minister Retno LP Marsudi, prosperity was difficult to achieve if the country or region was unstable, not peaceful and not safe.

Challenge

The President's message and the statement of the chair of the ACC and AMM indicate goals and challenges in realizing ASEAN's aspirations. The association wants its growth to benefit its citizens and residents outside the region.

As stated by the President, realizing prosperity and growth requires security, stability and peace in the region. The presence of the United States and China military bases and various assets in the region is a challenge to maintain regional peace, stability and security.

Internally, ASEAN is faced with the Myanmar problem. The crisis in Myanmar sparked a wave of refugees and, of course, violence.

Another challenge is that a number of institutions, including the International Monetary Fund, project that ASEAN's growth will slow down in 2023. Goldman Sachs senior economist for the Asia Pacific region Andrew Tilton said the global economic slowdown and rising interest rates were the main factors in ASEAN's slowdown.

Also read: Intra-ASEAN Trade Remains Stagnant

Countries that rely on exports and imports are the most affected. Meanwhile, countries that rely on the domestic economy, such as Indonesia and the Philippines, are not too affected. S&P Global and business consulting firm Dezan Shira & Associates have come to a similar conclusion.

Because it relies on raw materials, according to Tilton, Indonesia will find it difficult to increase revenue from exports. This is because commodity prices tend to be stable in 2023 in contrast to 2021 and 2022 when prices of various commodities soared.

Referring to data from the World Bank, Indonesia and the Philippines rank the lowest position in terms of export contribution to the gross domestic product (GDP). Indonesia’s export to GDP is at 21 percent and the Philippines at 28 percent. Singapore as an intermediary and Vietnam as a production base occupy the top positions in terms of export contribution to the GDP.

Regional trade

The impact of a global slowdown can be dampened if fellow ASEAN members support each other. Unfortunately, the economic structure and trade patterns of each member make it difficult for ASEAN members to rely on other members as their main trading partners.

ASEAN notes that only 23 percent of trade and 15 percent of investments are results from activities between its members. The rest come from the interaction of ASEAN members with countries outside the region. The World Bank and the UNCTAD also show similar data.

Indonesia's biggest trade partners are the US and China, rather than ASEAN countries. Except for Malaysia and Singapore, no ASEAN member considers other ASEAN members its three most important trading partners.

ASEAN is the type of family where each member is busy with their own affairs and does not take advantage of each other's potential to be strong together.

ASEAN's trade pattern is indeed different from the European Union or North America and Central America. In other areas, neighbors or regions are their main trading partners. Therefore, ASEAN's growth still depends on factors outside the region. If export destination areas slow down, ASEAN's economy will also be affected.

Low trade between ASEAN members shows low economic linkages with one another. If ASEAN is a family, ASEAN is the type of family where each member is busy with their own affairs and does not take advantage of each other's potential to be strong together.

Market access

ASEAN also notes that each of its members competes to be the most attractive partner with a country from outside the region. According to Dezan Shira & Associates' records, Vietnam has become the most aggressive in opening market access to various countries. This allows products made in Vietnam to receive competitive prices in a number of countries. The trade agreement has indeed removed various tariff and non-tariff barriers so that the costs of production, distribution and delivery of export products can be reduced.

With this provision, Vietnam becomes the choice of companies as a production base. This is because their products will not encounter various barriers to a number of markets.

The risk is that Vietnam must give its foreign partners broad access to its domestic economy. Hanoi was asked not to prohibit investments in various fields. This condition has made investors in a number of countries view Vietnam as an attractive investment location.

In return, the per capita gross national product (GNI) based on Vietnam's purchasing power grew by 65 percent in 2010-2021. In the same period, the GNI per capita based on Indonesia's purchasing power only grew 44 percent. In a number of countries, an increase in the GNI per capita based on purchasing power is one of the indicators for measuring welfare gains.

Also read: Restoring Myanmar’s Democracy

Another measure is the unemployment rate. From 2010 to 2021, the unemployment rate for Vietnam's productive age population has never been more than 2 percent. In the same period for the same population group in Indonesia, the lowest figure was 3.6 percent.

Jobs are available in Vietnam, because the industry is expanding widely. The industrial scale also makes Vietnam export more finished products than raw materials or semi-finished products as Indonesia does.

Foreign Minister Retno has repeatedly said that more and more people forget the importance of peace, security and stability for prosperity. However, for many people the measures of well-being include the availability of jobs and wage levels.

In order to be considered relevant by its citizens, ASEAN needs to focus on that. ASEAN will be considered "useful" if citizens know ASEAN's various efforts can make "their pockets deeper." (AFP/REUTER)

This article was translated by Hendarsyah Tarmizi

Editor:

SYAHNAN RANGKUTI

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