It has been billed as the world’s greatest emerging economy: a US$2.4 trillion Southeast Asian marketplace home to 620 million people poised to follow the EU’s lead and declare itself a single market this year.
However, as some in the 10-nation ASEAN anticipate lucrative benefits from deeper trade and economic integration, there are mounting warnings that some communities and even whole countries might lose out because of the risk of human rights being sacrificed to the imperatives of big business.
The EU-styled economic market aims to ease tariffs, increase investment flows and open borders by December across 10 countries: Burma, Brunei, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam — a move that has already attracted significant investment to the region.
Illustration: Tania Chou
The world’s seventh largest market and home to 10 percent of the world’s population, ASEAN is expected to grow 5 percent annually and eventually surpass well-established markets such as the US, EU and Japan by 2018. However, the scope of each individual country varies wildly, provoking skepticism that a single market can be fully merged by year’s end: In the poorest member state, Burma, three-quarters of the population still lack electricity after half a century of dictatorship; in the richest, Singapore, citizens are among the wealthiest in the world.
“The business community wants ASEAN to be integrated as one entity,” Malaysian Minister of International Trade and Industry Mustapa Mohamed said. “The fact is that there are border issues, customs, immigration and different regulations.”
Malaysia — a global exporter of electronics and electric appliances — is chairing the rotating presidency of the bloc, and has warned that free movement of goods and services should not be expected before 2020. Until then, the group would merely be “laying the stage for bigger things to come.”
While the vast differences in language, culture, political and economic models among ASEAN member states might make some investors wary, ASEAN is not likely to suffer the same debt concerns as the EU, primarily because the bloc has never planned to adopt a single currency or parliament.
However, the variance among its economies means certain countries already benefit more from the united marketplace than others, a report has found. Singapore remains the preferred regional base for 80 percent of multinational companies thanks to its international finance hub and open markets, according to recent findings by global law firm Baker & McKenzie. Up-and-coming economies with strong manufacturing pulls, such as Indonesia and Burma, are expected to profit as well, with companies naming them as their preferred factory locations over the next five years.
Once a highly competitive business hub, Thailand has lost out to the region’s more politically stable emerging markets where low-cost labor and favorable business regulations reign, IHS Asia-Pacific chief economist Rajiv Biswas said.
“Recent political turmoil has increased country risk and made some multinationals more reluctant to put new investments into Thailand,” Biswas said. “In contrast, foreign investment into Vietnam is showing a strong recovery, helped by the improving macroeconomic environment and the very competitive wage levels in Vietnam compared to coastal China.”
A budding middle class across the region also means healthy domestic markets, and as the cost of labor in China rises, the potential for ASEAN — and its pool of both skilled and unskilled workers — increases as well.
However, ASEAN’s focus on trade could ultimately prove problematic for the region’s 620 million citizens, said activists, who underline the tenuousness of the sociopolitical landscape in South East Asia, and how little the organization seeks to address regional challenges, such as religious extremism and human trafficking.
In a recent statement, the ASEAN People’s Forum — ASEAN’s largest civil society group — listed a number of problems in the region, among them grave human rights violations; corruption and poor governance; state-sanctioned land grabs; authoritarian and military regimes; police brutality, torture and enforced disappearances; modern-day slavery and lack of corporate responsibility and accountability.
Even more worryingly, the forum said, companies are profiting from investment-friendly protection measures at the expense of citizens — with certain member states allowing corporations to sue governments over local laws that might hinder their business.
“What’s potentially at risk in such an arrangement are national regulations protecting rights of local communities, extending protection to workers and stopping industrial pollution that make people near factories or mines sick,” Human Rights Watch’s Phil Robertson said. “This is a recipe for serious conflict between governments, companies and grassroots communities all over the region.”
While ASEAN’s move toward a united market has long been seen as a set date with set pros and cons, analysts on the ground said the move is likely to bring sustained growth and communication to the region, and should be welcomed rather than feared.
“I don’t see AEC [ASEAN economic community] integration as a date, rather a natural economic and cultural evolution which takes place over decades: a fusion of geographically close neighbors, now accelerated by globalization and technologies,” Burmese leading media entrepreneur Thaung Su Nyein said. “I think we should welcome change and see this as progress, and retool our economies, train our workers better and reorganize our businesses to be more competitive.”
(Editor’s note: The Guardian newspaper prefers to retain the designation Burma when writing about the country.)
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