ASEAN Capitalization: Singapore Intense, Indonesia Moderate

ASEAN continues to grow and is promising. All countries in it compete to take advantage of it. Indonesia has homework to make optimal use of it.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Kapitalisasi ASEAN : Singapura Gencar, Indonesia Sedang-sedang Saja

KOMPAS/HERU SRI KUMORO

President Joko Widodo accompanied by ASEAN Secretary-General Kao Kim Hourn (left) and Foreign Minister Retno P Marsudi cut the tumpeng during the 56th anniversary celebration of ASEAN at the ASEAN Secretariat Building in Jakarta on Tuesday (8/8/2023).

JAKARTA, KOMPAS - The Association of Southeast Asian Nations or ASEAN, in its 56 years of existence, has transformed into a growing economic bloc with promising positive prospects. Indonesia, as the largest country in the region, has several tasks to be accomplished in order to optimally benefit from this development.

"ASEAN must be able to become the epicenter of growth which provides more benefits for the people in the region and the world. ASEAN has strong assets for that: economic growth, demographic bonuses, and world trust in ASEAN as the region with the best economic opportunities," said President Joko Widodo at the commemoration of ASEAN's 56th Anniversary at the ASEAN Secretariat, Jakarta, Tuesday (8/8 /2023).

The positive momentum, according to the President, must be utilized by the ASEAN community to make this economic bloc the future of the world. "As the chairman (in 2023), Indonesia wants to lay a strong foundation for ASEAN so that it can face challenges, respond to dynamics, and remain central," said the President.

Also read: ASEAN Can Become a World Anchor if it's Compact

At the same occasion, ASEAN Secretary General Kao Kim Hourn stated that realizing ASEAN's role in the global level is not only through politics, but also economy. The total population of ASEAN is 670 million with a gross domestic product of 3.7 trillion US dollars.

"In 2030, ASEAN will become the fourth largest economy in the world. The confidence of other countries or international organizations to invest in ASEAN is because the region is always stable," said Kao.

KOMPAS/HERU SRI KUMORO

President Joko Widodo, alongside ASEAN Secretary General Kao Kim Hourn and Foreign Minister Retno P Marsudi, posed for a photo with students from the Jakarta Independent School Association during the celebration of the 56th anniversary of ASEAN held at the ASEAN Secretariat Building in Jakarta on Tuesday (8/8/2023).

Promising

ASEAN is considered as one of the promising regions, with the indicator being the growing investment flows and trade value. Citing the ASEAN Investment Report 2022, ASEAN remains the top recipient of foreign investment among other developing regions. In 2021, ASEAN ranked second after China.

The portion of foreign investment inflows compared to the global market is also increasing. The annual average is 7 percent from 2011 to 2017. The figure increased to 11 percent in 2018-2019. In 2020-2021, it increased again to 12 percent.

The value of trade in ASEAN goods also continues to increase. Based on the 2022 ASEAN Statistical Yearbook, the value of ASEAN trade in goods has increased by 30 percent, from US$2.8 trillion in 2017 to US$3.3 trillion in 2021.

Read also: Through Economic Collaboration, ASEAN Tame the Conflicts of Superpower Countries

In the profile, Indonesia's achievement is not yet optimal. Out of the total value of goods trade in 2021, Indonesia ranked fifth after Singapore, Vietnam, Thailand, and Malaysia.

Based on the value of intra-ASEAN goods trading, Indonesia ranks fourth after Singapore, Malaysia, and Thailand. Meanwhile, in terms of the value of extra-ASEAN goods trading, Indonesia ranks fifth after Singapore, Vietnam, Thailand, and Malaysia.

This is in line with foreign investment realization. Indonesia ranks 2nd after Singapore in terms of the value of foreign investment realization. However, if Gross Domestic Product is included as a variable, Indonesia is below Singapore, Vietnam, Malaysia, and Thailand.

SUMBER: SEKRETARIAT ASEAN

The development of intra and inter ASEAN trade value from 2008-2021.

The Executive Director of the Center for Strategic and International Studies (CSIS), Jose Rizal Damuri, believes that ASEAN has already provided many benefits to Indonesia. The most basic benefit is regional stability as a prerequisite for economic development and economic integration.

"But maybe the benefits for Indonesia are not optimal because we ourselves haven't taken the lead or taken the initiative in ASEAN. This does not only refer to the government but also to the business world, the private sector," said Rizal.

According to Rizal, Singapore has many initiatives in the field of economy. In fact, Indonesia was the country that initiated the Regional Comprehensive Economic Partnership (RCEP). However, Singapore, Vietnam, and China are the countries that are most actively utilizing it.

Also read: Indonesia is not the belle of Chinese investment in ASEAN

“Why did this happen, there is a possibility that there is a big gap between the business world and the government. The factors of ministries and institutions that are not well coordinated are also a factor," said Rizal.

In addition, Rizal emphasized that Indonesia must be open and brave to compete. Competing in ASEAN is the first step to compete on a global scale.

AP/YONG TECK LIM

Residents were seen taking photos near the Merlion statue with the background of office buildings in the Marina Bay area, Singapore, on June 30, 2020.

Dare to competition

"If we are afraid to compete in ASEAN, how can we compete globally? Competitiveness and competition always go hand in hand. It is impossible for us to have good competitiveness if we do not compete. Fear of competition is what makes us uncompetitive," said Rizal.

The President, Rizal, emphasized the need to directly lead Indonesia's strategy and execution in utilizing ASEAN, stating that it should not just be rhetoric, but more concrete and not just ceremonial. For this reason, Indonesia must take a leadership role not only at the government level but also in the business world.

Also read: Digital Transformation Has the Potential to Increase the Value of ASEAN MSMEs

The Chairman of the Manufacturing Industry Department of the Indonesian Employers' Association (Apindo), Johnny Darmawan, considers that Indonesia actually has a lot of potential to utilize ASEAN as a market or business partner. Indonesia also excels in terms of abundant natural resources and a large population.

However, Indonesia often loses to neighboring countries in ASEAN due to inconsistent and unsustainable industrial and trade policies. "We are not losing in competition, but rather inconsistent. For example, we should have been doing downstreaming from the past," said Johnny.

Vice Chairman of the Indonesian Chamber of Commerce and Industry, Shinta W Kamdani, assessed that ASEAN's position as the epicenter of growth can only be utilized by Indonesia if it has a competitive business and investment climate in the region.

"If Indonesian business players are not equipped with good competitiveness, ASEAN will only become a growth epicenter that benefits other ASEAN countries except Indonesia. So, the key lies in continuously improving the competitiveness of the national business and investment climate," he said.

Also read: Southeast Asia Will Not Prosper if Superpowers Dictate

Shinta added that in addition to strengthening competitiveness, there needs to be more socialization and education regarding the utilization of free trade agreements (FTA) between Indonesia, ASEAN and ASEAN partner countries as stipulated in the Regional Comprehensive Economic Partnership (RCEP) Agreement.

According to him, all business sectors actually have the potential to benefit from ASEAN's influential position. However, without proper information, business actors may fail to take advantage of ASEAN as a center of growth.

"This can happen if we are inward looking, don't want to be open about exploring the potential of the ASEAN market and only focus on the domestic market," he said.