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ASEAN in turmoil



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ASEAN in turmoil

The Hindu (New Delhi)
November 22, 2000

 By V. Jayanth

WHEN SOUTHEAST Asian leaders hold their annual, informal summit later
this month in Singapore, they will have an array of problems to discuss.
Though the region's economic recovery was supposed to be ``well on
course'', there are no signs of the political upheaval abating. The
ASEAN, as the regional forum is known, deals basically with economic and
diplomatic issues. But at the bottom of it all lies the bedrock of
political cooperation and preventive diplomacy. During the last summit,
Indonesia remained the major concern. It appeared as though the
President, Mr. Abdurrahman Wahid, would overcome the problems and put
the archipelago on the road to political stability and economic
recovery. Being the largest economy and most populated country of
Southeast Asia, developments in Indonesia will have a major impact on
the whole region and unless the republic holds together and sorts out
the economic mess, there can be no real stability or recovery in the
ASEAN.

Officials in the ASEAN are more worried about Indonesia today than they
were a few months ago. Mr. Wahid has not been able to surmount the
problems effectively and his survival still seems to be a major concern.
As such, he may not be able to solve the other crippling issues
including the turmoil in Aceh, military atrocities in Timor and the
trial of the former President, Mr. Suharto, leave alone the economic and
political administration. His neighbours are worried that if Mr. Wahid
is unable to stem the rot forthwith, a new alliance headed by his
Vice-President, Ms. Megawati Sukarnoputri, could assume leadership,
sparking a fresh wave of uncertainty.

The latest worry for Southeast Asia comes from the Philippines. The
tussle between Manila and the Islamic militia on the southern Mindanao
island shows no sign of abating. Also an economic crisis seems to be
enveloping the Philippines, with its President, Mr. Joseph Estrada,
facing impeachment charges. He may be able to overcome the trial by
manipulating support, but regional and foreign investors may have lost
their confidence in the economy. The scandal over the gambling mafia and
the alleged payoffs to the President have shaken the confidence of
investors and the markets. Given the regional linkages, there could be a
spillover effect on other economies and markets if the problem is not
sorted out quickly.

Thailand, which was well on the road to economic recovery, may also be
in for a spell of uncertainty. Parliament has been dissolved and fresh
elections are slated for early January 2001. Till then, the Chuan
Leekpai Government has to manage not only the economy but curb
corruption and blatant abuse of the electoral system by various
political parties. Granted that the ruling coalition will hold together
for the polls, but Thailand is known for new pulls and pressures after
elections, for sharing the spoils of office. It remains to be seen
whether the Thai people will overcome the corrupt practices to elect a
popular and competent Government that can see the country through this
challenging phase and ensure its robust growth again.

At the time of the expansion of the organisation during 1995-96, the
ASEAN leaders were worried about the possibility of a two- tier regional
forum coming into effect. The concern then was mainly over Indochina and
then Myanmar. Vietnam, which was the first to join the forum, has
flattered to deceive. The communist leadership has not been able to
gather the courage to push ahead with economic reforms, which appeared
promising in the mid-1990s. After initial euphoria, there has been a
tapering off of interest in Vietnam. It is up to the ASEAN leaders to
reconvince Hanoi that there can be no going back on liberalisation at
this stage, when the regional forum has set a 2003 deadline for a Free
Trade Area. Of course, Vietnam has time till 2006 to fully integrate
with this process.

If Vietnam itself is a problem, the conditions in Cambodia, Laos and
Myanmar hardly need any elaboration. Though Mr. Hun Sen has firmly
established control in Phnom Penh, he has done very little to inspire
confidence in Cambodia's economy. Floods have played havoc, adding to
Indochina's woes. A land-locked Laos has been waiting for the benefits
of joining the ASEAN, but the Government there must have realised that a
lot of sacrifices have to be made before a member-state starts reaping
the profits. In Myanmar, the problems remain as they were, when the
military junta was invited to join the forum in the hope that
`constructive engagement' would lead to a change of heart and national
reconciliation. Instead, the Generals in Yangon have strengthened their
hold and tried to acquire credibility and legitimacy, at least at a
regional level. There has been no progress on the basic political issue
of returning to some form of democratic rule or even a limited dialogue
with the Opposition led by the Nobel laureate, Ms. Aung San Suu Kyi.

Though the basic fears about a two-tier economy concerned Indochina and
Myanmar, the ASEAN has now in effect become a multi-layer of economies
at different levels of growth and recovery. Singapore remains on top,
making all adjustments and changes as the region recovers. It is perhaps
the only economy to be relatively unscathed by the economic crisis,
though the City State also witnessed zero growth during the plunge in
1998. But it has bounced back.

Malaysia, which could have sunk into a deep recession, managed to hold
out and thanks to a series of controls and regulations, averted a major
crisis. On the face of it, Kuala Lumpur may have recovered from the
economic turmoil but analysts are convinced that much of the gains are
``window dressing''. Unless the Government implements sweeping reforms
in the financial, business and political spheres, the present recovery
could be a mirage. With a political transition in leadership on the
horizon, it is up to the ruling United Malay National Organisation to do
serious introspection and undertake the much-needed therapy. Even the
Sultanate of Brunei has been witnessing personal problems in the royal
family, affecting the business sentiment. The Sultan, Mohammed Hassanal
Bolkiah, has managed to avert a more serious crisis. But he still has a
host of problems to solve.

At a third level of the ASEAN are Thailand and the Philippines, which
are now facing political hiccups. They have to go through the upheaval
and return to their original levels of growth. The Indochina countries
and Myanmar could be grouped at the fourth stage, with Vietnam towering
above the rest. And at the bottom of the pile remains Indonesia - itself
in deep trouble and threatening to pull the region down with it.

The ASEAN leaders will have to review all these problems and still
provide a direction to their Ministers to maintain the momentum of
economic cooperation and integration. They need to revive confidence in
the region so that Southeast Asia could be heard as a voice of economic
power on global platforms - as it was heard till 1997, because of its
economic clout. The Governments found it easier to deal with the
challenges of economic liberalisation and reforms in the 1980s and early
1990s; but they have not been able to fully measure up to the
expectations of their people when it came to democratisation and giving
more political space to a new generation which has seen the world and
wants to breathe more freely. That will be the real challenge to
Southeast Asia and there are many lessons to be learnt from the
cathartic process that is still under way in Indonesia. If the ASEAN
wants to recapture its glory and help the less developed economies in
the region realise their potential and integrate with their neighbours,
it will have to address these challenges squarely. Otherwise, it will
run the risk of losing its voice on international fora, gained through
hardwork.


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<!doctype html public "-//w3c//dtd html 4.0 transitional//en">
<html>
<b><font size=+2>ASEAN in turmoil</font></b>
<p><b>The Hindu (New Delhi)</b>
<br><b>November 22, 2000</b>
<p><b>&nbsp;By V. Jayanth</b>
<p>WHEN SOUTHEAST Asian leaders hold their annual, informal summit later
this month in Singapore, they will have an array of problems to discuss.
Though the region's economic recovery was supposed to be ``well on course'',
there are no signs of the political upheaval abating. The ASEAN, as the
regional forum is known, deals basically with economic and diplomatic issues.
But at the bottom of it all lies the bedrock of political cooperation and
preventive diplomacy. During the last summit, Indonesia remained the major
concern. It appeared as though the President, Mr. Abdurrahman Wahid, would
overcome the problems and put the archipelago on the road to political
stability and economic recovery. Being the largest economy and most populated
country of Southeast Asia, developments in Indonesia will have a major
impact on the whole region and unless the republic holds together and sorts
out the economic mess, there can be no real stability or recovery in the
ASEAN.
<p>Officials in the ASEAN are more worried about Indonesia today than they
were a few months ago. Mr. Wahid has not been able to surmount the problems
effectively and his survival still seems to be a major concern. As such,
he may not be able to solve the other crippling issues including the turmoil
in Aceh, military atrocities in Timor and the trial of the former President,
Mr. Suharto, leave alone the economic and political administration. His
neighbours are worried that if Mr. Wahid is unable to stem the rot forthwith,
a new alliance headed by his Vice-President, Ms. Megawati Sukarnoputri,
could assume leadership, sparking a fresh wave of uncertainty.
<p>The latest worry for Southeast Asia comes from the Philippines. The
tussle between Manila and the Islamic militia on the southern Mindanao
island shows no sign of abating. Also an economic crisis seems to be enveloping
the Philippines, with its President, Mr. Joseph Estrada, facing impeachment
charges. He may be able to overcome the trial by manipulating support,
but regional and foreign investors may have lost their confidence in the
economy. The scandal over the gambling mafia and the alleged payoffs to
the President have shaken the confidence of investors and the markets.
Given the regional linkages, there could be a spillover effect on other
economies and markets if the problem is not sorted out quickly.
<p>Thailand, which was well on the road to economic recovery, may also
be in for a spell of uncertainty. Parliament has been dissolved and fresh
elections are slated for early January 2001. Till then, the Chuan Leekpai
Government has to manage not only the economy but curb corruption and blatant
abuse of the electoral system by various political parties. Granted that
the ruling coalition will hold together for the polls, but Thailand is
known for new pulls and pressures after elections, for sharing the spoils
of office. It remains to be seen whether the Thai people will overcome
the corrupt practices to elect a popular and competent Government that
can see the country through this challenging phase and ensure its robust
growth again.
<p>At the time of the expansion of the organisation during 1995-96, the
ASEAN leaders were worried about the possibility of a two- tier regional
forum coming into effect. The concern then was mainly over Indochina and
then Myanmar. Vietnam, which was the first to join the forum, has flattered
to deceive. The communist leadership has not been able to gather the courage
to push ahead with economic reforms, which appeared promising in the mid-1990s.
After initial euphoria, there has been a tapering off of interest in Vietnam.
It is up to the ASEAN leaders to reconvince Hanoi that there can be no
going back on liberalisation at this stage, when the regional forum has
set a 2003 deadline for a Free Trade Area. Of course, Vietnam has time
till 2006 to fully integrate with this process.
<p>If Vietnam itself is a problem, the conditions in Cambodia, Laos and
Myanmar hardly need any elaboration. Though Mr. Hun Sen has firmly established
control in Phnom Penh, he has done very little to inspire confidence in
Cambodia's economy. Floods have played havoc, adding to Indochina's woes.
A land-locked Laos has been waiting for the benefits of joining the ASEAN,
but the Government there must have realised that a lot of sacrifices have
to be made before a member-state starts reaping the profits. In Myanmar,
the problems remain as they were, when the military junta was invited to
join the forum in the hope that `constructive engagement' would lead to
a change of heart and national reconciliation. Instead, the Generals in
Yangon have strengthened their hold and tried to acquire credibility and
legitimacy, at least at a regional level. There has been no progress on
the basic political issue of returning to some form of democratic rule
or even a limited dialogue with the Opposition led by the Nobel laureate,
Ms. Aung San Suu Kyi.
<p>Though the basic fears about a two-tier economy concerned Indochina
and Myanmar, the ASEAN has now in effect become a multi-layer of economies
at different levels of growth and recovery. Singapore remains on top, making
all adjustments and changes as the region recovers. It is perhaps the only
economy to be relatively unscathed by the economic crisis, though the City
State also witnessed zero growth during the plunge in 1998. But it has
bounced back.
<p>Malaysia, which could have sunk into a deep recession, managed to hold
out and thanks to a series of controls and regulations, averted a major
crisis. On the face of it, Kuala Lumpur may have recovered from the economic
turmoil but analysts are convinced that much of the gains are ``window
dressing''. Unless the Government implements sweeping reforms in the financial,
business and political spheres, the present recovery could be a mirage.
With a political transition in leadership on the horizon, it is up to the
ruling United Malay National Organisation to do serious introspection and
undertake the much-needed therapy. Even the Sultanate of Brunei has been
witnessing personal problems in the royal family, affecting the business
sentiment. The Sultan, Mohammed Hassanal Bolkiah, has managed to avert
a more serious crisis. But he still has a host of problems to solve.
<p>At a third level of the ASEAN are Thailand and the Philippines, which
are now facing political hiccups. They have to go through the upheaval
and return to their original levels of growth. The Indochina countries
and Myanmar could be grouped at the fourth stage, with Vietnam towering
above the rest. And at the bottom of the pile remains Indonesia - itself
in deep trouble and threatening to pull the region down with it.
<p>The ASEAN leaders will have to review all these problems and still provide
a direction to their Ministers to maintain the momentum of economic cooperation
and integration. They need to revive confidence in the region so that Southeast
Asia could be heard as a voice of economic power on global platforms -
as it was heard till 1997, because of its economic clout. The Governments
found it easier to deal with the challenges of economic liberalisation
and reforms in the 1980s and early 1990s; but they have not been able to
fully measure up to the expectations of their people when it came to democratisation
and giving more political space to a new generation which has seen the
world and wants to breathe more freely. That will be the real challenge
to Southeast Asia and there are many lessons to be learnt from the cathartic
process that is still under way in Indonesia. If the ASEAN wants to recapture
its glory and help the less developed economies in the region realise their
potential and integrate with their neighbours, it will have to address
these challenges squarely. Otherwise, it will run the risk of losing its
voice on international fora, gained through hardwork.
<br>&nbsp;</html>

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