Fri, Jun 12, 2009 - Page 9 News List

South Korea-ASEAN meet sets stage for Asia’s economic rebound

By Ray Ferguson

Southeast Asian leaders who converged earlier this month on the picturesque South Korean island of Jeju to mark the 20th anniversary of formal ties between ASEAN and South Korea no doubt had their lighter moments, appreciating the landscape, unique customs and rich maritime cuisine of the tropical volcanic island.

Despite the escalated tensions brought on by North Korea’s nuclear and military threat, South Korean President Lee Myung-bak and ASEAN leaders took the time to engage in extensive negotiations whose outcome will go a long way in reshaping Asia. The evolving ASEAN-South Korea partnership is but one of the numerous alignments through which Asian economies are cementing business, political and cultural ties. This is altering the geopolitical landscape of one of the world’s most dynamic regions.

This trend must be encouraged. The global economic turmoil can not be an excuse to retreat behind protectionism. Indeed, continuing to pursue bilateral and regional trade agreements and stronger financial partnerships will make Asia better prepared to gain from the global economic rebound when it comes.

Increased trade and investments within the region have the potential to generate millions of jobs, boosting purchasing power across Asia. That will help alleviate one of the world’s biggest imbalances — that of Asia’s under-consumption which has made the region’s economies excessively dependent on exports to the West.

In that sense, economies such as South Korea and ASEAN hold the key to help resolve one of the world’s most enduring economic challenges.

Asian countries began in earnest to bond together in the aftermath of the 1997 to 1998 Asian financial crisis when economies and currencies across the region collapsed in unison as capital fled on worries about high current account deficits and excessive foreign currency borrowings by local companies. The regional nature of the crisis gave Asian policy makers a sense of togetherness.

Since then Asian economies, led by China, have built up more than US$4 trillion in foreign exchange reserves, generated huge trade surpluses, largely against the US and Europe, increased trade among themselves and amassed vast public, household and corporate savings, giving the region enormous clout in the international community. The G20 meeting in London in April formally marked the arrival on the world stage of emerging economies, especially those from Asia — China, India, South Korea and Indonesia.

The G20 meeting was a milestone in the shifting balance of power from the West to the East as members of the G7 block of developed nations agreed to share decision making powers on a wide range of global economic and financial issues with the developing world. South Korea is at the forefront of this shift, with the country set to assume the chair of the G20 next year.

In many ways, the South Korea-ASEAN partnership epitomizes the evolving dynamics that is turning Asia into a global economic powerhouse. South Korea, a nation of almost 50 million people, GDP close to US$1 trillion and annual per capita income of US$22,000, has an economic and technological heft beyond what is afforded to the country because of its geographical and demographic size. It is the only Asian member of the prosperous group of OECD nations, besides Japan.

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