Trade now paramount in new Asean
From a regional group ensuring mutual security, Asean has evolved into a trade-focused bloc as it moves towards the future, business leaders were told yesterday.
"Asean has come a long way from its beginnings," Sihasak Phuangketkeow, permanent secretary of Thailand's Foreign Ministry, told the Young Presidents Organization's Insights Asean Summit in Bangkok.
"It was born when Southeast Asia was in the midst of the Cold War. Even then, there were sceptics that doubted Asean would survive and thrive as it does today."
Asean formed in 1967 with five member countries — Thailand, Singapore, Malaysia, Indonesia and the Philippines — in a region sharply divided along ideological lines.
"Despite being in the same region, the countries had closer ties with outside nations and relied on them for security guarantees," Mr Sihasak said.
In the early stages, success for Asean was measured by how it met the security challenges of the times. But with peace prevailing, members turned to nation building and economic cooperation.
The Asean Free Trade Area (Afta) agreement in 1992 started a new chapter.
Mr Sihasak noted that even the 1997 financial crisis failed to halt the momentum of economic cooperation in the region.
One byproduct of the crisis was the promotion of financial cooperation within Asean and beyond — the genesis of the Asean+3 dialogue with China, Japan and South Korea.
The Regional Comprehensive Economic Partnership (RCEP) proposed by China would enhance existing FTAs that the bloc has signed.
"Many would argue the Trans-Pacific Partnership proposed by the US competes with the RCEP, but both are mutually enforcing," Mr Sihasak said.
Paul Gruenwald, managing director of Standard and Poor's Asia-Pacific, said free trade agreements did a lot of good at the regional level. Those who do not stand to benefit, however, tend to be concentrated and very vocal.
"The challenge for the region will be in infrastructure keeping up with growth and creating financial tools so that local small and medium-sized enterprises will not get left behind," Mr Gruenwald said.