Indonesian state-owned energy company Pertamina is aiming to sign a joint venture deal with Russian oil giant Rosneft for the development of a new greenfield refinery in Tuban, East Java, by the end of this year, a company official said on Tuesday (05/09). (Antara Photo/Widodo S. Jusuf)

Asean's 50th Anniversary: Can the Bloc Sustain Strong Bargaining Power in the Years to Come?


AUGUST 09, 2017

Jakarta. Though member states of the Association of Southeast Asian Nations, or Asean, have enjoyed relative peace in recent decades and rapid economic growth, they have struggled to transform their bloc into one with strong bargaining power in an increasingly competitive world, analysts say.

Asean, a regional intergovernmental organization that has a combined GDP of roughly $2.5 trillion and a total population of 620 million people, commemorated its 50th anniversary on Tuesday (08/08).

"Sustained peace and sunny economic predictions are worth celebrating, but [Asean] can’t afford to ignore its problems," Miguel Chanco, the lead Asean analyst at the Economist Intelligence Unit (EIU), wrote in an emailed statement on Monday.

He continued that the bloc has achieved "a lot since 1967," but said that "one cannot help but feel it’s presently in the grip of a midlife crisis – seeking, but failing, to find a new sense of purpose and identity."

The bloc was first comprised of only Indonesia, Malaysia, the Philippines, Singapore and Thailand at its founding in 1967, but later grew to include Brunei, Laos, Myanmar, Cambodia and Vietnam.

Chanco highlighted some of the key issues the bloc faces, including what he calls the "half-baked formation of the Asean Community in 2015," which covers the Asean Economic Community, Asean Political-Security Community and Asean Socio-Cultural Community.

He criticized Asean member states for failing to implement real change in the areas above, saying the bloc’s response "has been to kick the can down the road – to 2025 – putting a stamp on new[ish] 'blueprints' for said community building," referring to a declaration signed by Asean leaders in 2015 that called for an elimination of import tariffs on goods and enhanced cooperation in counterterrorism operations, human rights protection, disaster response and combating transnational crime.

However, that declaration was criticized as member countries were not obliged to enforce the agreed-upon measures, and its impacts have been minimal.

"There are some structures in place to mitigate the yearly transboundary haze that engulfs large swaths of the region, but enforcement remains weak. Not surprisingly, Asean has taken a hands-off approach to a host of festering domestic issues that have regional consequences," Chanco said.

Separately, Philips J. Vermonte, the executive director at the Center for Strategic and International Studies in Jakarta, said on Friday that key member states like Indonesia, Malaysia, Thailand and the Philippines are apparently too busy addressing a series of domestic problems, leaving a vacuum of regional-minded leaders in the bloc.

"We all are preoccupied by domestic problems. Malaysia [is facing] a very contentious domestic political situation, while Thailand [is an] on and off democracy and they are heading to a possible election next year. In Indonesia, we have problems with the growing influence of conservative [Islamic groups]," Philips said during a panel discussion at the Asean Media Forum on Friday in Manila, the Philippines.

He said Asean needs leaders who think regionally to allow the bloc to achieve its goals.

South China Sea

While Asean member states continue to be preoccupied with domestic issues, a long-standing territorial dispute, in which China claims sovereignty over major parts of the South China Sea that overlap with other countries' exclusive economic zones, continues to test the bloc's leaders.

The foreign ministers of Asean and China on Sunday adopted a negotiating framework for a code of conduct in the South China Sea, though the plan has been criticized as allowing China time to consolidate its maritime power. The framework's goal is to advance the so-called Declaration of Conduct (DOC) first drafted in 2002, which has been mostly ignored by claimant countries, especially China, which has developed man-made islands in the contested waters.

Critics say the code of conduct failed to ensure signatory countries would abide by its measures.

A communique was finally agreed on Sunday that called for rapid militarization in the area to be avoided by claimant states and highlighted Asean members' concerns about about Chinese island-building.

"The midlife crisis also stems from Asean's inability to respond in a unified way to challenges both old and new. The territorial disputes between a number of member states and China in the South China Sea could be more quickly resolved, and to the greater benefit of claimants in Asean, if there was less bickering within the group about communiques," Chanco said.

Chinese structures are pictured at the disputed Spratlys in the South China Sea on April 21. (Reuters Photo/Erik De Castro)


Meanwhile, economic developments in the region have progressed rapidly over recent decades, lifting up Asean's middle class and bettering the quality of life for its combined 620 million citizens.

Surin Pitsuwan, former Asean secretary general and ex-Thai foreign minister, told journalists at the Asean Media Forum that the region has also benefited from the relocation of many global industries, which "along the way [have created] lucrative markets for imported consumer goods."

"Combined trade volume has reached $2.6 trillion, while foreign direct investment (FDI) has been hovering around $130-150 billion a year," he noted.

However, Pitsuwan warned that global power plays "will also inevitably impact the region," citing the recent change in US policy towards the region, with specific regards to dealing with Asean member states in one-on-one bilateral diplomacy, as opposed to making deals with the larger bloc.

"The challenge for Asean is whether it is willing, capable and ready to play a larger role. All indications are that the regional grouping will need to enhance its capacity, streamline its decision-making process, reconfigure its working processes and adopt a new mindset from its passive 'Asean Way' of the past 50 years," Pitsuwan said.

"There are now unmistakable signs from the United States, a major dialogue partner, that the rules of the game will be changed. Preference will be given to one-on-one bilateral negotiations, rather than the 'Asean Way' of collective bargaining. Major powers will pick and choose whether they engage with Asean as a group, or with member states on an individual basis. This is potentially damaging to the group's traditional collective-bargaining power, and represents a formidable challenge to the future of Asean," he said.

'Double-Edged Sword'

Though Asean member states are benefiting from rapidly growing economies, Chanco of the EIU warned that such growth might actually be a "double-edged sword, because such performance has bred complacency."

"Nothing of substance has been proposed at a regional level to respond to a slowing China and inevitable labor displacement through automation," he said.

Citing his previous remarks on how Asean member states still struggle regional challenges, Chanco said the bloc is facing a greater risk that it might start "to lose whatever faith has been placed in it being a responsive regional institution – and this vicious cycle will only worsen."

"The heads of Asean member states should not let the group’s 50th anniversary go to waste. It will mark yet another opportunity to undertake a wholesale rethink of how the region should manage its affairs," Chanco said.