Wanted: Sectoral groups to push Asean integration

To make further and meaningful progress in its community-building agenda, the Association of Southeast Asian Nations (Asean) must, in the run-up to the officially determined deadline of the end of 2015, fashion a bottom-up approach and engagement.

Building the Asean community has been an elitist construct.

Even with one of its pillars, the Asean Economic Community (AEC), the involvement of the private sector in the plans of action and their effectuation, is marginal.

The gulf between policy pronouncement and actual business experience has to be narrowed.

The private sector has to be engaged to close this gap and to expand economic community deepening in the next phase of the AEC’s evolution.

The building of communities is a long-term process, including a true economic community.

At a recent forum in Singapore, this point was acknowledged by the Asean Business Club (ABC).

It was also acknowledged that good progress has been made towards establishment of the AEC. However, gaps remain between official pronouncement and actual experience.

And future progress should involve the private sector in a more structured and effective manner.

Last year, the ABC produced a gap analysis called the Lift-The-Barriers (LTB) reports in six sectors.

It proposed measures to fill the gaps. Decision-makers were engaged to make the ABC case.

This year, progress in filling the gaps in the six sectors was reviewed while additional sectoral reports were considered: legal and tax; automotive and manufacturing; minerals, oil and gas; food and beverage; retail; as well as financial services and capital markets.

Progress in closing the gaps identified last year was not satisfactory.

And the gaps identified in the new sector reports, which will be finalized in the coming weeks after discussions at the forum, have to be similarly filled.

The recent ABC Forum came up with a specific structural solution to fill those gaps – the establishment of professional, objective and country-neutral sectoral groups in the Asean secretariat to propose measures to Asean leaders and decision-makers to close the gaps and to deepen economic integration.

These groups would be funded separately from the secretariat budget.

If it was not possible to have all sectoral groups operating, it would be eminently sensible to start at least with the financial services and capital markets sector which, after all, is the lifeblood of the real economy.

The secretariat is overwhelmed. It does not have the financial or human resources to drive the integration process, which gets complex as it is deepened.

While the secretariat may be able to deal with the macro issues and proposals, specialists are needed to take the lead in specialized sectors to feed into the decision-making process of Asean leaders.

Contribution to the budget for this enhancement should be separated from the overall secretariat budget.

A second significant recognition and proposal from the ABC Forum was the need to ensure that the small and medium enterprises (SMEs) are well prepared for the opportunities and challenges that come with the opening up [of economies] under the AEC.

SMEs form the backbone of the Asean economy.

In countries such as Indonesia, they employ well over 90 per cent of the working population.

Just imagine the socio-economic and political stress if they were not able to compete in the free and open market of the AEC, and the unemployment rate rises in Asean because of structural economic change.

It is incumbent therefore that they are efficient and competitive, not just to take on new competition but also to avail themselves of the opportunities the AEC opens up.

The situation, like in the United States, should not be allowed to occur where SMEs are in full retreat against the advance of large companies and conglomerates.

A focused SME specialist working group should therefore also operate through the Asean secretariat to find answers to SME concerns as well as ways to raise their level of competitiveness, such as access to finance, better management methods and use of technology.

While there is an established Asean SME working group, and the Asean Business Advisory Council also has its own working group, the situation of the SMEs on the cusp of establishment of the AEC—and other groupings such as RCEP and TPP—calls for a committed and consolidated effort to address their concerns.

In the coming weeks, the ABC LTB reports will be finalized and circulated to Asean decision makers and industry groups.

The lobbying and advocacy will follow with the hope in the run-up to the end of 2015 under Malaysia’s chairmanship of Asean that there will be better results to ABC efforts.

(The author is chair of CIMB Asean Research Institute, which organized the Asean Business Club Forum that was held in Singapore on Sept. 8-9. Dr. Munir was also appointed chair of the Asean Business Advisory Council, Malaysia.)