ASEAN OVERDUE FOR RETIREMENT

 

 

INFECTED BY MALAISE          

 

Why does Australia continue to waste diplomatic time with the ageing and impotent Association of Southeast Asian Nations? The question’s a regular, even asked in a book by former Indonesian Foreign Minister Dr Marty Natalegawa, Does ASEAN Matter?

He unconvincingly answered ‘Yes’, citing visa-free access and better trade opportunities for investors keen to tap a market of 662 million.  But that was before the pandemic accelerated a retreat into insularity and Myanmar became a military dictatorship killing citizens, untroubled by the entreaties of its horrified ASEAN colleagues.

What principled business would trade with this regime through an association which won’t expel its most evil member?

The realities of the collective’s inutility are now on show with the latest analysis by the Australia-ASEAN Chamber of Commerce (AustCham).  The advocacy group says its report arrives at a critical moment with a ‘general malaise’ apparent:

‘While this malaise was fermenting before the arrival of Covid-19, the pandemic has heightened the growing commercial concerns of Australian business … The bullishness that Australian businesses have long held about ASEAN’s commercial prospects now appears to be fading.’

ASEAN is supposed to be concerned with security and the ‘socio-cultural community’ though primarily an economic grouping.  This suggests an Asian version of the European Common Market, but that’s like comparing push carts with trucks.

Remembering how and why ASEAN was conceived also shows why it’s time to retire.

That won’t please Indonesians proud of helping create the cluster in 1967 with four near neighbours - Thailand, the Philippines, Malaysia and Singapore as an anti-communist block. The HQ is in Jakarta.

ASEAN is now ten strong and better known for what it doesn’t do than its successes. Two members are Red – Vietnam and Laos, with Cambodia sticking close to China.

There are four in some form of democracy (Indonesia, Singapore, Malaysia and the Philippines) two military dictatorships (Thailand and Myanmar) and one authoritarian sultanate (Brunei). Apart from the former Siam, all were once ruled by colonial powers. Now the only glue is recent history, geography and being Asian.  The language used in deliberations is English – the tongue of a former colonial power.

 

Occasionally it’s suggested Australia bids to up its status from ‘dialogue partner’ to a seat at the table. That idea is doomed as participants show no appetite for welcoming their southern neighbour, while proposers never muster enough energy to propel their agenda.

In 2018 President Joko Widodo responded to a journalist’s question saying Australian membership was a ‘good idea’.  Some thought this meant active encouragement.

Aaron Connelly, Director of the Lowy Institute’s Southeast Asia Project tweeted: ‘Reality check: Australia has not been invited to join ASEAN, and will not be invited to join ASEAN in our lifetimes. Jokowi (Widodo) was offering a ‘Javanese response’, trying to be polite.’

ASEAN’s rules insist on non-interference in each other’s internal affairs so  statements after each forum are gems of polished verbosity disguising ineptitude.

 

Critics get squashed by charges of cultural racism, lectured that clumsy Westerners don’t appreciate the ‘ASEAN Way’ of quiet consultation and resolution by consensus, but some Asians are getting brave.

 

Indonesian diplomat Bahana Menggala Bara – who works in the Bulgarian Embassy - wrote in The Jakarta Post: ‘The ASEAN approach tends to focus on the process instead of the result... As a regional grouping, ASEAN has four major weaknesses: The tendency to prioritize national over regional interests, weak leadership, ineffective bureaucratic structure and purely emulating the Western approach.’

Worries about ASEAN’s values and virtues pre-date the plague and focus on protectionism. Tariffs and other barriers run counter to the free trade agreement signed between Australia and NZ with ASEAN in 2010.

Concerns also depend on which country is being discussed.  At one end of the scale is Myanmar writhing in the crisis following the February coup engineered by the military (Tatmadaw) alleging irregularities in the 2020 general election won by the National League for Democracy.

At the other extreme is stable Singapore, ranked second by the World Bank for ease of doing business (NZ is just ahead), and third globally in Transparency International’s anti-corruption index. A key issue in the Lion City is pedestrian, not ideological - the cost of office space.

ASEAN’s biggest economy is Indonesia.  Here the hazard list includes bureaucracy, weak law enforcement, complex tax systems, unfair business practices – and corruption, a sickness in other countries including Malaysia. 

The Republic’s TI Index position is 73, not a figure exciting confidence.  Other problems are costs of labour and access to skilled workers.

These are issues only the national government can fix.  President Widodo says he wants foreign money and has pushed through some economic reforms.  However, the determination to destroy graft has waned.

This month The Jakarta Post editorialised on the performance of the Komisi Pemberantasan Korupsi   (Corruption Eradication Commission KPK) ‘once known as the most respected institution in the country’ but now suffering from a ‘tainted image’ and deepening ‘public distrust’.  The damnations follow exposure of alleged breaches of ethics codes by senior staff.

Indonesia’s so-called Omnibus Law cleans up some regulations hampering investments while the Job Creation Law is supposed to make hiring and firing easier.  However without an independent and vigorous authority overseeing the rules, in many cases it will be business as usual. Unions’ opposition to the legislation continues.

The AustCham report carried this caution: ‘Australia’s investment in and trade with Indonesia remains well below that of neighbouring, yet smaller, economies in Southeast Asia. While opportunities exist, Australian businesses need to assess their own capabilities and adapt them to effectively benefit from Indonesia’s market.’

The courageous focus on professional services, like education, health, the environment and marketing.  Most Australian businesses in the region have less than ten employees and an annual turnover below $1 million.  They also avoid trade and investment agreements.  In other words, they’re small shows and lone rangers.

AustCham: ‘The ASEAN Australian business environment has deteriorated over the last year, building on a trend first seen in the 2020 survey … the health of the ASEAN Australian business community is in decline.’

The 25-page report has much useful information and tries to see opportunities in the downturn, but overall it’s a depressing document.

The message to by-pass ASEAN isn’t new. Back in 2018 former FM Julie Bishop sent investors a nod-and-a-wink in a London speech damning ASEAN with faint praise according to Lowy Institute’s Euan Graham.

She described the association as ‘an example of regional multilateral institutions that do not impose obligations or commitments on … members who are free to negotiate their own arrangements.’

Australia doesn’t need to deal with ASEAN to access markets– an FTA was signed with Indonesia last year after a decade of haggling.  There are also bi-lateral agreements with Singapore, Thailand and Malaysia.

ASEAN is an old horse that’s been eating well in the pension paddock. He was sick long before 2019 and is getting worse.  Time for AustCham to call the vet.

First published in Australian Outlook, 10 September 2021:
https://www.internationalaffairs.org.au/australianoutlook/asean-infected-by-malaise/

. Duncan Graham is an Australian journalist and author living in Indonesia.