Address by Rodolfo C. Severino, Secretary-General
of the Association of Southeast Asian Nations,
at Asialink, Melbourne, Australia, 19 June 2002
I have been in my current job for more than four years. I am halfway through my last year in it. One of the things that struck me most upon taking on the job was the remarkable degree to which the public perception of ASEAN had changed.
Just a few months before I took over as the head of the ASEAN Secretariat in Jakarta at the beginning of 1998, ASEAN was riding high in the perception of many people. The most successful regional association in the world next only to the European Union. A group of countries with economies roaring like tigers. An organization that provided a good environment for managing bilateral disputes between members. A force for stability in the region. An association that was fostering a regional identity in an area so recently divided by history.
By the time I took office, the perception had done a complete turnaround. Now, ASEAN was said to be in disarray. The association was ineffectual. It was irrelevant. Its ambition to create a regional free-trade area would inevitably collapse. Its members would be at one another’s throat. And so on and so forth.
This image reversal largely arose from three developments – the financial crisis of 1997-1998, the haze episodes arising from land and forest fires in Indonesia at about the same time, and the rapid expansion of ASEAN’s membership in the period 1995-1999.
I propose to take these three developments one by one. I will recall what the media and the commenting classes had to say about ASEAN in relation to them. I will then describe the role that ASEAN actually played and what it did to deal with them. I will, finally, suggest what else ASEAN could have done about those events and what it might be doing about their continuing effects.
First, the financial crisis. It is now common knowledge and conventional wisdom that the crisis was caused by a combination of two things -- the volatility of global short-term capital movements and the vulnerability of the so-called emerging economies to such movements. In hindsight, we now know that the crisis was silently building up. But at that time, partly because of confidence in the region’s economic resilience – a confidence that was, as it turned out, misplaced – ASEAN as an institution did not address the problem. But, of course, neither did others. Financial cooperation in ASEAN was limited largely to meetings among finance ministers and central bankers on the sidelines of the annual conclaves of the IMF and the World Bank and of the Asian Development Bank. ASEAN had a currency swap arrangement among the five original members, but it was small, at US$200 million, and it had been all but completely ignored.
Perhaps, ASEAN should have anticipated the crisis and should have done what it is doing now. But nobody else did – not the IMF, not the World Bank, not the ADB, not the United States, not the European Union, not Japan, certainly not the individual ASEAN member-states.
The quickness with which the crisis spread in Southeast Asia – from Thailand to Indonesia, the Philippines, Singapore and Malaysia, and also, indirectly, to ASEAN’s newer members – shows how integrated the ASEAN economy had become, at least in the eyes of fund managers and other portfolio investors. But then the crisis also hit Korea, Taiwan and Hong Kong, and leaped to Russia and Brazil.
The media and other commentators immediately castigated ASEAN as ineffectual, pointing to its feet of clay, because ASEAN did not foresee the crisis and failed to do anything to prevent it. The commenting classes, as far as I know, never specified what ASEAN should have done to prevent the crisis or how ASEAN could have anticipated it – or who, indeed, could have prevented or anticipated it.
Responding to Crisis
What ASEAN did do to help its member-states recover from the crisis and prevent similar crises from recurring was basically two things – deepen regional economic integration and expand financial cooperation among themselves and with China, Japan and Korea, even as individual members worked with the IMF and others as they saw fit.
The commenting classes, as you may recall, were proclaiming the death of the ASEAN Free Trade Area at the hands of the financial crisis. Such prophecies of doom were, of course, contrary to logic as well as the facts. The long-term safeguard against economic crises, ASEAN’s leaders knew, was to strengthen the region’s competitiveness by integrating its economy more swiftly and more deeply as well as undertaking internal economic reforms.
Thus, in 1998, the leaders advanced to the beginning of 2002 the date when tariffs on trade among ASEAN’s first six members and its leading trading nations would drop to 0-5 percent. They also set a target for eliminating tariffs altogether on most intra-ASEAN trade. They agreed to expedite the negotiations on the liberalization of trade in services. Under the new ASEAN Investment Area, investments in almost all sectors would move freely within ASEAN. ASEAN has just about finished drafting an agreement to ease the flow of tourists within and into ASEAN. We are streamlining customs procedures and harmonizing product standards. We are working on schemes to facilitate transport within ASEAN and on master plans for an ASEAN power grid and a trans-ASEAN gas pipeline network. As directed by the leaders, we are laying down a “road map” for the further integration of the ASEAN economy.
At the same time, ASEAN has significantly stepped up its cooperation in finance. The ASEAN swap arrangement has been expanded to include all ten ASEAN members and to raise the amount involved to US$1 billion. A network of bilateral currency swap and repurchase agreements is being built among ASEAN members, China, Japan and Korea. So far, six such agreements have been concluded, involving a total value of US$17 billion, with eight more in various stages of negotiation. ASEAN finance ministers conduct a peer review of the regional economy at least twice a year on the basis of a regular surveillance report put together by the ASEAN Secretariat with help from the ADB.
This is what ASEAN has been doing to deepen economic integration and cooperation, partly in response to the financial crisis, but largely on the basis of its members’ appreciation of their overall long-term interests. ASEAN should do more, of course. The removal of tariffs on intra-ASEAN trade should be done faster and sooner. The newer members should move more quickly in their tariff reductions. Member-states should view the liberalization of trade in services within ASEAN as critical to the integration of the regional economy rather than as a subject of bargaining a la WTO. This is particularly important in air services, telecommunications, financial services, and tourism. The peer review of the regional economy could be more trenchant. A regional mindset should be more intensively cultivated in the business community as well as among policy-makers.
However, to say that ASEAN should be doing more to strengthen the regional economy and buttress its competitiveness is not to say that ASEAN has done nothing about it.
Dealing with Haze
At about the same time as the financial crisis, several ASEAN countries suffered from episodes of haze pollution arising from land and forest fires, largely in the Borneo and Sumatra provinces of Indonesia. As was widely observed, the haze had a severe impact on health, tourism and agriculture, as well as the environment, in parts of Indonesia and the neighboring countries. The commenting classes insisted that ASEAN “interfere” in Indonesia, then in the throes of the economic, and consequent political, crisis. People called on ASEAN to make Indonesia stop the fires, even though some of the fires – not all – were due to natural causes, specifically the El Nino phenomenon. Again, the commentators did not say how ASEAN would do this or how Indonesia could suddenly do something in the circumstances.
In fact, ASEAN has done some pretty concrete things. First, let us put the land and forest fires in Indonesia in perspective. Going by what one read about this in the popular press, one might have thought that Southeast Asia is the only place where forests burn. Yet, we know that Brazil, California, parts of Canada, eastern Russia, Mongolia, parts of Africa and, of course, Australia have in recent years seen the burning of large tracts of forests. The difference is that the man-made causes in Indonesia seem to be on a larger scale than in the other places.
So, what has ASEAN done? ASEAN responded to this disaster, with its potential for recurrence, on a broad front, covering monitoring, prevention, and the mitigation of the effects of the fires that do occur. ASEAN quickly organized a haze technical task force that put together a regional action plan, which was supplemented by national action plans, to give direction to the ASEAN response. The entire effort is supervised by a special body of ministers that meets frequently. A dedicated unit was set up at the ASEAN Secretariat for this purpose.
To keep track of potential fires the ASEAN Specialized Meteorological Centre in Singapore has been strengthened. Its report is updated daily, and one can see it on a special Web site, Haze Action Online. ASEAN adopted a zero-burning policy and mobilized local communities in carrying it out. We also sought the cooperation of local governments, plantation owners and forest concessionaires in enforcing it. Fire-fighters in the region were trained and put on alert through the sub-regional fire-fighting arrangements for Sumatra and Borneo. The rapid exchange of information and many implementation measures are being coordinated at the ASEAN Secretariat. Studies are being undertaken on this immensely complex and difficult problem.
A Landmark Agreement
Last week, in Kuala Lumpur, the ASEAN environment ministers signed a landmark agreement on trans-boundary haze pollution committing member-states to cooperate in controlling sources of land and forest fires, establishing early warning systems, and exchanging information and technology. A country in which trans-boundary haze pollution originates is obligated to respond promptly to a request for information or consultations by a state or states that are or may be affected by the pollution. The signatories are to take legal and administrative measures to implement their obligations under the agreement, including their obligation to facilitate the transit through their territories of personnel, equipment and materials involved in fire-fighting, search and rescue, and similar activities.
In all of this, ASEAN has been helped by the Asian Development Bank, the UN Environment Program, the UN Development Program, the Global Environment Facility, numerous non-governmental organizations, and individual governments, including Australia’s. Unfortunately, while the problem of the haze has received much media attention, little coverage has been given to the solutions.
Clearly, at the national level, Indonesia bears much of the responsibility for preventing and controlling land and forest fires, but it is an enormous task. Indonesia is confronted with a problem that arises partly from global weather conditions, partly from the intractability of established practices, and partly from ingrained political-business relationships. The solutions will take time. But what Indonesia has going for it is ASEAN and international support as well as a renewed commitment to deal with the problem. At the World Conference and Exhibition on Land and Forest Fire Hazards which Malaysia and the ASEAN Secretariat organized in Kuala Lumpur last week, Indonesia recalled the successful prosecution of several people charged with open burning in that country.
ASEAN itself is now much better prepared to cope with this regional environmental and development problem. What needs to be done is to persist in carrying out the commitments in the regional and national action plans and comply with the ASEAN agreement just signed. This involves, centrally, the enactment and enforcement of national laws and national and regional leadership.
Expanding ASEAN
In the period when ASEAN was coping with the financial crisis and the haze pollution problem, it admitted to membership the four nations of Southeast Asia still outside the association – Viet Nam in 1995, Laos and Myanmar in 1997, and Cambodia in 1999. More potshots were taken at ASEAN, in this case for expanding too fast with the admission of countries with economies weaker than the six other members. Some of the criticism was aimed specifically at the admission of Myanmar, whose political arrangements and practices were objectionable to influential constituencies in a few countries outside the region.
In fact, the membership of the four countries was long overdue. In the Bangkok declaration of August 1967, the five founding members envisioned ASEAN as being “open to participation” of all Southeast Asian countries. The fulfillment of this vision was considerably delayed by the division of Southeast Asia, a division partly induced by the Cold War. That division ended with the political settlement in Cambodia, from which Vietnamese troops had withdrawn in 1989. It was a rare moment for the consolidation of Southeast Asia.
We are doing this through what ASEAN’s leaders have dubbed the Initiative for ASEAN Integration. It is a program that covers infrastructure, information and communications technology, human resource development, and capacity building for regional economic integration. A work plan of specific projects in each of these areas has been worked out and adopted by the newer members themselves, for endorsement by all of ASEAN next month. We will seek, at a forum in August, to form partnerships in various combinations for carrying out these projects. I hope that Australia will be a leading participant.
I believe that this is the only effective way of helping the so-called CLMV countries achieve a better life for their people through regional and international cooperation. It is the positive way, the constructive way. I believe that the way of confrontation and isolation is counter-productive. On the other hand, being part of ASEAN and its culture of economic openness and tight linkages with the rest of the world can lead to the further opening of the CLMV’s economies, the strengthening of the rule of law, and the development of the political structures for bringing these about. ASEAN has to keep at this, and the CLMV countries themselves will have to respond with the necessary policies.
I have discussed three examples of how ASEAN has acted on problems that confronted it in the past five years and changed ASEAN’s image in the process: on the economy, the after-effects of the 1997-1998 financial crisis; on the environment, the haze episodes; and in the political realm, the expansion of ASEAN’s membership.
I hope that in this discussion I have given an idea of what ASEAN has done, its approach to the issues, what it can do, and what it did not intend to be or do. I have also hinted at what else ASEAN should be doing and the promise that it holds beyond its already considerable achievements.
