Asean community – people and politics matter most

    So Asean community-building will come to nought if people’s concerns, whether in vulnerable economic enterprises and sectors or in exercise of legitimate political rights, are not genuinely addressed. A “people-centred” Asean cannot be just another piece of rhetoric.

    Published: Saturday March 28, 2015 MYT 12:00:00 AM
    Updated: Saturday March 28, 2015 MYT 9:08:57 AM
    by munir majid

    THE numbers, particularly of the AEC (Asean Economic Community), brim with powerhouse force.

    Combined GDP of US$2.756 trillion (Economist 2015 forecast); population 630 million, third largest in the world, after China and India, half of whom under 30 years of age, unlike most of the ageing major economies of the world, including China. Big demographic dividend. Consumer boom. Really, Asean, a major economy in the world. Seventh largest now, fourth largest in a couple of decades, after EU, China and the United States.

    What will make all this lip-smacking prospect not happen?

    People. If they are not brought onside. If they feel left out. If they feel disenfranchised. Certainly if they become unemployed. Almost certainly if they suffer injustice.

    Unemployed, against all those huge economic prospects? Yes, if the opening up of markets results in the annihilation of the MSMEs (micro, small and medium enterprises).

    Again, the numbers are big, just like with the prospects. Asean’s SMEs constitute 89%-99% of enterprises, employing across the region between 52% and 97% of the working population. If they fail and fall, a lot of people are going to be thrown out of work.

    While their output is only 23%-58% of Asean GDP, and just 10%-30% of exports, those numbers reflect the low productivity of the SMEs – which, again, point to why their needs must be attended to if they are not to be swept aside by incoming competitors.

    All this – numbers of people involved, overwhelming proportion of regional enterprises, their importance to Asean socio-economic life – means concrete things must be done to ensure the Asean applecart is not overturned.

    More plans and lip service won’t do. I have proposed as chairman of the Asean Business Advisory Council that an Asean universal, commercially-based MSME Bank be established. While not going into detail, the main points are that governments don’t have to do it but they must come out in support of it and undertake to enable it by removing policy and regulatory obstacles that stand in its way.

    I have also proposed, as discussed at the Asean Business Club Forum in Singapore in November 2014, that an expert group on financial services and capital markets be embedded in the Asean secretariat to actualise decisions already made as well as to propose how financial integration can be further advanced. Its first responsibility, however, would be to go into what would make for a viable Asean MSME Bank which is commercially-driven.

    If the private sector is allowed to do it, things will move faster, regulations allowing. Such a bank will not just offer traditional banking facilities but also a whole range of investment banking and innovative structured products.

    With first-class professional management – and no interference from government – SME private equity and even private debt funds can tap the pools of savings in the region seeking good return. When properly combined groups of SMEs can even be listed. Micro-finance can be provided. Crowd-funding sites could be set up. There are many, many ways through which finance can be made accessible to SMEs and MSMEs for them to become bigger and stronger, better managed and fully technologically linked.

    Asean leaders should not be timid about this. They make many statements about Asean being a third force between China and India, about Asean’s size and prospects, and about how SMEs are the backbone of the Asean economy. They must act with imagination and proactively if they do not want the backbone to be fractured, or to break.

    If that were to happen, there would be social turmoil and the Asean community would stand for nothing – as all that integration will be undone and rampant protectionism will rear its ugly head.

    They must act. China does, with so many financial initiatives. What does Asean do? There is a SME Strategic Action Plan that is to be launched, now in November, for the next ten years. Without immediate substance, it would be ten years too long. There would have been the RCEP, the TPP, removal of non-tariff barriers and measures (or is this also just talk?), and all manner of liberalisation in the meanwhile. The MSMEs must be prepared for all that.

    An Asean MSME meltdown will cause serious political destabilisation. People who already feel disenfranchised will rise against the various political orders. There is already a lot of dissatisfaction with how all this Asean community-building has not involved them, only gives attention to business, and indeed does not accommodate their concerns over workers’ rights, women’s rights, migrant labour rights and other socio-political issues.

    And already there are enough political problems in individual Asean countries. While a recent assessment that the only stable parts of Asean are a sultanate, two communist regimes and a thugocracy is an exaggeration, it points to a situation that all is not well.

    Here any proposition of what Asean can do as a grouping is difficult to make given jealous protection of political domestic jurisdiction. Nevertheless the kind of influencing, and not isolating, of Myanmar which is claimed to have contributed to the political change there in 2011, is still needed – not least in Myanmar itself which falls very short of treating all its peoples non-violently.

    What is the good of proclaiming Asean protection of human rights when so evidently they are being violated. It only diminishes Asean. The responsibility to protect is not only an international norm, but a matter in the interest of Asean itself, as we can see before our very eyes in the Middle East how ideologies and violent uprisings can spread, drawing support and engagement from our young population. The future which we now laud as our great economic potential could become a huge political liability.

    It would be complacent of Asean not to address these dark possibilities, especially as there are strong indications of the ideological magnetic pull and as there are situations in the region amenable to uprising.

    The Rohingyas look so utterly helpless but that could be the very reason why there might be external interventions by movements, first to correct injustice but going beyond to drive vengeance and a regime of hate. The situation in the south of Thailand remains unsettled, as in the south of the Philippines.

    For as long as they fester, they provide a venue for global terrorism. Resolving such situations is in the interest of the states of Asean.

    It is good that Asean defence ministers talk about working together and sharing intelligence against Isil, but the more effective way to keep it or its ilk out is to remove the causes that give it the opportunity to make the call to arms.

    Much is made of the opportunities of the globalised economy, but not enough attention is paid to the globalised politics of the world which can spread good as well as evil. Having a just order will afford stability which does not come only by stuffing the people with economic good. Certainly the disparity in incomes and opportunity can blow up the gravy train. And most certainly injustice and violent state order will sow the seeds of violent civil disorder.

    So Asean community-building will come to nought if people’s concerns, whether in vulnerable economic enterprises and sectors or in exercise of legitimate political rights, are not genuinely addressed. A “people-centred” Asean cannot be just another piece of rhetoric.


    Tan Sri Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute