Keynote address by H. E. Rodolfo C Severino,
Secretary-General of the Association of Southeast Asian Nations,
at a conference on "ASEAN Into the New Millennium: The Road Ahead"
sponsored by the Indonesia Council on World Affairs
in cooperation with the Department of Foreign Affairs of Indonesia
and the ASEAN Secretariat

ASEAN Secretariat, Jakarta, 26 August 1999

During the one and a half years that I have been ASEAN Secretary-General, I have spoken to many audiences all around ASEAN, in Australia, in New Zealand, in Japan, in Hong Kong, and in the United States. I have talked about what ASEAN is and what it is not, what it aims to do and what it cannot do, about ASEAN's origins and accomplishments, what it has done, what it is trying to do and what it has failed to do, its hopes and its vision and the course that it has set for itself. I have talked about AFTA, AICO and AIA, ARF, TAC, ZOPFAN and SEANWFZ.

Surprisingly, however, aside from a talk that I gave to a private club in Jakarta more than a year ago, this is the first time that I am speaking before a largely Indonesian audience. I thank the Indonesian Council on World Affairs for giving me this chance to set aright this state of affairs, to speak before Indonesians in Jakarta, where ASEAN's headquarters is.

In this light, I wish today to speak about the place of Indonesia in ASEAN's history and about its role in ASEAN's future.

Ever since President Soeharto was replaced as Indonesia's leader in May last year, the media and others have often asked: Now that President Soeharto is no longer in power, and now that Indonesia is in transition, what will happen to ASEAN? President Soeharto, after all, was the last of ASEAN's founding fathers to leave office, and Indonesia under the New Order was perceived as ASEAN's leader.

My answer to such questions has been this: ASEAN is already a going concern. It no longer depends, if it ever did, on individual leaders. In the case of Indonesia, the policies and attitudes that Indonesia under Soeharto brought to ASEAN have been long in place. There is no sign that these are changing. At the working level, ASEAN has not missed a step as a result of the change of leadership in Indonesia. Indonesian participation in ASEAN has not diminished.

I have not had a chance to elaborate on this answer - until today.

Indonesia, indeed, has been and continues to be important to ASEAN, but not in the shallow and simplistic terms in which many commentators present it today, not in the superficial sense of Indonesia being ASEAN's leader because of its size and the qualities of its leader.

What Indonesia brought to ASEAN at the time of its birth was something that gave ASEAN weight, strength and direction, something indeed that made ASEAN possible. This was the transformation of policy and attitude that Indonesia underwent and that brought it in step, along with the rest of non-communist Southeast Asia, with the demands of the times. Indonesia, by 1967, had transformed its economic policies and its attitude toward its neighbors and the world at large. The new priority was development, and whatever it took to achieve it, domestically or internationally. A large dose of pragmatism was the order of the day.

From a statist, mercantilist, import-substituting economy, Indonesia's economy had started to move to one that was market-driven, export-oriented and open to foreign trade and investment. Its foreign policy had shifted from one that was confrontational toward its neighbors and defiant of the West to one that placed great value on cooperation with its neighbors and good relations with the world beyond, including the West.

Without such a transformation of economic and foreign policy in Indonesia, ASEAN as we know it would not have come about. If Indonesia had maintained a relatively closed economy, relying on commodity exports, resorting to import-substitution and dominated by state enterprises, the degree and kind of ASEAN economic cooperation and integration that we have today would not have been possible. ASEAN would not have been open to and plugged into the global economy the way that it is now. If Indonesia had kept to its narrowly nationalistic posture toward the world and retained its suspiciousness toward its neighbors, the level of mutual trust and regional identity that are the key to ASEAN's success could not have been attained.

Indonesia's Importance

This is the importance of Indonesia to ASEAN, rather than one man's leadership or Indonesia's size alone. There is no sign that this basic policy orientation of Indonesia or its fundamental commitment to regionalism has diminished despite the political changes that the country is undergoing.

At the same time, after the turmoil of 1965 and 1966, Indonesia made clear its continued adherence to a national policy of ethnic, racial and religious tolerance, of unity in diversity, that had kept - and continues to keep - the nation together. This had a reassuring effect on its would-be partners in ASEAN, all of whom, in one form or another, to one degree or another, were blessed with ethnic diversity and threatened by ethnic division. Any erosion of this policy of tolerance in Indonesia would have ignited fears of contagion in its neighbors, which might have led them to seal themselves off from Indonesian influence. Divisiveness in Indonesia might thus have led to unbridgeable regional divisions in Southeast Asia.

Moreover, Indonesia, in its wisdom, allowed itself to wield its already considerable weight in the world in the new context of ASEAN. In this way, ASEAN has been able to avoid the problem of some other regional associations, which are hampered and burdened by the dominance of their largest members. Instead, Indonesia's international influence, prestige and activism, magnified by its new internationalist posture, were to be placed in ASEAN's service - at the United Nations, in the Non-Aligned Movement, in the Group of 77, and in other international forums.

Indonesia and the ASEAN Way

In terms of style and approach, the Indonesian insistence on mushawarah and mufakat firmed up the preference of the other Southeast Asians for consultation and consensus as the mode for regional decision-making. Any other mode would have made agreement in ASEAN much more difficult, if not impossible, rather than easier and more quickly, as some superficial media and academic commentaries assert these days. This has come to be known as the ASEAN way, which has put its stamp on the ASEAN Regional Forum and APEC.

The Indonesian concept of national resilience and regional resilience reinforcing each other strengthened the Southeast Asian conviction about the close linkage between political stability and economic development at both the national and regional levels.

Thus, responding to the demands of development, the five founding members of ASEAN - Indonesia, Malaysia, the Philippines, Singapore and Thailand - gave primacy to economic considerations in their domestic and external policies. As a matter of basic economic policy, they opted for a stance that favored market forces, albeit with a significant measure of state intervention, an enlarged role for the private sector, the export of processed goods as well as commodities, the import of capital goods and industrial raw materials, openness to foreign investment, and an active quest of foreign grants and credits. They chose to advance the security of the region, as well as their own national security, by forging constructive relations, both among themselves and with the rest of the world, rather than by taking sides in the cold war or by a posture of confrontation. They decided that, for the sake of regional solidarity, they would isolate any bilateral disputes from their overall relations with one another. They sought economic progress and political stability in significant measure through regional cooperation and solidarity.

This was to be the basis for ASEAN's eventually robust viability, and it was made possible by Indonesia's reversal of its fundamental policy orientation prior to ASEAN's founding. Similar reversals were to open the way for the membership in ASEAN of other countries in Southeast Asia.

The road that ASEAN took led to a degree of success that even its founders dared not envision. ASEAN has been able to manage the immense diversity of Southeast Asia, with its host of bilateral disputes, so that conflict between its members has become all but unthinkable. The Southeast Asia Nuclear Weapons-Free Zone is now in effect, with consultations going on for the accession of the nuclear-weapon states to its protocol. The ASEAN Regional Forum is now a going concern.

ASEAN has achieved a substantial level of economic integration despite the skepticism of many through the years. For the six original signatories to the AFTA treaty, which are ASEAN's leading trading nations, the ASEAN Free Trade Area will be completed in less than two and a half years. ASEAN members have decided to open up their manufacturing sectors to ASEAN investments and to extend national treatment to such investments. They have agreed on a common set of incentives, in addition to their respective national measures, for investments from outside the region.

Over the years, ASEAN has developed networks of cooperation that have been increasing its capacity to deal with growing transnational problems involving the environment, transnational crime, human resource development, and the promotion of social safety nets. It has achieved a high degree of coordination in the councils of the world.

The recent financial crisis has put ASEAN to its severest test in decades, and for now ASEAN seems to have overcome the worst of it. Commentators outside and even in Southeast Asia, many of whom should have known better, predicted that ASEAN would fall into disarray, if not break up, as a result of the crisis. Contrary to these instant predictions, ASEAN has pushed forward the integration of Southeast Asia's economies. It has accelerated the completion of AFTA. ASEAN members have agreed to open up their economies further to ASEAN and other foreign investments. They have been cooperating closely on financial matters, particularly through the economic surveillance process. They have resolved to help one another to cushion their societies from the severest impact of this and future crises.

Deeper Integration, Closer Cooperation

ASEAN countries know that deeper economic integration and closer cooperation are essential for them to deal with the rest of the world from a position of greater strength, attract investments into the region, stimulate economic activity, and develop greater competitiveness in a globalized economy.

There is now a feeling of relief in ASEAN that the worst of the crisis is behind us. But there is also a feeling that, in the wake of the crisis, ASEAN will not be the same again. The crisis has exposed, in Indonesia most starkly, the need for ASEAN countries to undergo changes in the way they conduct certain of their affairs if they are to cope with the reality of globalization.

ASEAN is, of course, all too aware of the need to make changes in the way the international community conducts its financial affairs, and ASEAN has made known its position on this subject. But ASEAN countries also know that they themselves must now enter into a new stage in the development of their economies and their societies. The old ways of doing things, no matter how well they seem to have served ASEAN in the past, will no longer do.

As I said earlier, the ASEAN countries adopted in the 1960s domestic and external policies that were responsive to the needs of the times. But they also made available an environment in which business was conducted and wealth created largely on the basis of personal relationships and cozy networks of politicians, bureaucrats, tycoons, and financial establishments, with few institutional checks and a great deal of opaqueness. Despite growing discontent over the inequities that resulted from the system, this was tolerated and, in those sectors that benefited from it, accepted with enthusiasm, as long as it was fuelling rapid growth that somehow filtered down to enough people.

Changing the System

However, the crisis has shown that such a system will no longer do in an era of rapid technological advances, economic globalization, heightened competition, and capital flows of growing volatility. Doing business and promoting development now have to be both more rules-based and more market-driven. Therefore, institutions must be developed - political and judicial as well as economic.

This means that the private sector must be built up, and strengthened where it is weak. This also demands the development of the human resources to master modern technology and professional management, to navigate the straits and shoals of market forces, and to build and manage institutions to supervise and adjudicate financial and other economic transactions in a fair and objective way.

The development of the private sector and of human skills requires and reinforces two things -- the enlargement of the middle class and a certain degree of pluralism in society. In some cases, opening up the economy to the global or regional economy and to market forces may not be enough. Adjustments in the political and/or social order may have to be made, as is happening in Indonesia. Such adjustments could unsettle nations and societies, at least temporarily. Expectations of and pressures for change rise within the middle class that already exists and among people who are already politically aware. This is now taking place. But, in the longer term, greater openness, pluralism, a larger middle class, and a strengthened private sector would likely lead to greater national stability.

On the other hand, some leaderships, for any number of reasons, may resist the logical consequences of opening-up and reform and the lessons learned from the crisis. Or they may be unable to carry them out, because of political inertia or social sclerosis or some other reason. In such cases, the economy may bog down. In any case, the development of human resources and the building of institutions, including a private sector, take time.

Either way, the demands of our time, as shown by the crisis, have raised the pressures for political and social, as well as economic, change. Such a change could be unsettling, particularly in those countries where the road to a rules-based, rule-of-law, market-oriented, private sector-driven society is longest. The transition could bring about temporary instability, if long-term stability. But, the crisis has taught, if the transition is not made, the economy could stall. The gap between ASEAN nations could, as a result, widen further - the gap in development, in institutions, in human resources. This is a phenomenon that ASEAN is addressing, but it takes time and considerable resources.

Another Indonesian Transformation

In the regional context, a transformation in Indonesia is, once again, required, if ASEAN as a whole is to negotiate the transition. I do not foresee the exacerbation of the traditional inter-state differences between Indonesia and any of its neighbors as a result of the changes going on in Indonesia or in its neighbors. But, as in 1966-1967, how Indonesia manages its own transition and its own affairs could have a profound impact on ASEAN's future.

Some political and social untidiness can result from the opening-up and growing pluralism of Indonesian society. But Indonesia will likely emerge from it all a more stable nation. Only a stable Indonesia can continue to contribute significantly to ASEAN's steadiness and balance. Only a stable Indonesia can continue to play a leading role in international affairs, which has been one of Indonesia's principal contributions to ASEAN's international influence and prestige.

Indonesia will probably regain its steady growth, this time by building and re-building and strengthening its vital institutions - the legislature, the courts, the economic and financial supervisory bodies, the law-enforcement agencies, the political parties, the corporations, the banking system. How Indonesia gets back on the road of growth, and to what extent, will obviously influence the rest of Southeast Asia.

How Indonesia handles military-civilian relations and the role of the military in politics could have an influence, too, on parts of Southeast Asia and beyond. How Indonesia manages diversity and how it accommodates ethnic aspirations and regional interests in the national polity and in the national economy could have an impact, in unforeseen ways, on some of its neighbors, on the stability of the region, and on ASEAN itself. Others in the region will closely watch how Indonesia deals with issues of human rights and political participation.

What the crisis has taught is that Southeast Asia must enter upon a new stage of modernization, as Indonesia is trying to do. Southeast Asia must do so in its own way, of course. Indonesia, for one, has always been an advocate of development according to one's own circumstances, culture, national philosophy and history. But the way to development, whatever it is, must be effective in strengthening the nation, laying durable foundations for progress, and improving the lives of the majority of the people.

Nowadays, at the threshold of a new century, what this means in Southeast Asia is progress toward more open and more plural societies. Greater scope for private initiative. More and fairer competition in the marketplace. Government and management by law, rules and institutions. A larger measure of accountability on the part of governments, corporations and financial institutions. Greater transparency in political and economic transactions. The accommodation of human diversity and regional aspirations. The development of human skills and of the human potential.

Not least, it also means a strengthened commitment to regionalism. Once again, as in 1967, such a commitment is essential from Indonesia. Because today a hundred flowers are blooming and a hundred schools of thought are contending in Indonesia, it is no longer possible to take a continued Indonesian commitment to ASEAN for granted, as it was until the recent past. But I am confident that from the free contention of opinions will emerge a renewed Indonesian engagement in ASEAN and a revitalized spirit of regionalism in Indonesia.

This is because the Indonesian people know that a market of regional dimensions will more effectively attract investments back to the country. They know that only with ASEAN's weight behind it can Indonesia continue to exert its considerable influence in the world. Only with regional peace and stability can the Indonesian people negotiate the road of development, which is always arduous, but particularly so in these difficult times. Only through regional cooperation can they deal with many environmental and social problems, which are increasingly regional in scope.

The Indonesian people know, in their wisdom, that regional solidarity in a vigorous ASEAN is essential for its own stability and prosperity in an uncertain and fiercely competitive world.