Sun, Sep 09, 2018 - Page 7 News List

ASEAN must focus on the opportunities global disruptions offer

At a time when large powers and world trends are reshaping the regional environment, the only way for ASEAN countries to advance is by working together

By Borge Brende and Justin Wood

Is ASEAN resilient enough to thrive amid the regional and global transformations taking place today? While the global economy continues its broad-based expansion, disruptive economic, geostrategic and technological forces could threaten ASEAN’s gains of the past few years.

To survive, ASEAN members must make important decisions about the role of their community in regional affairs. With the right choices, the region could convert disruption into an opportunity for a resilient future.

ASEAN has undergone an impressive turnaround in the past five decades. A region of turbulence, disharmony and underdevelopment in the 1960s is today one of relative peace and economic success.

Much of the credit belongs to the community-building efforts of the countries under the ASEAN umbrella. Yet the region also benefited strongly from the post-World War II global architecture and institutions that promoted inward flows of investment and outward flows of exports.

Today, this global backdrop is in a state of profound transformation. The benefits of free and open trade are being questioned, international institutions are being challenged, new geopolitical powers are rising and — despite ups and downs — the global economy continues to tilt further toward emerging markets.

All of this creates an opportunity for new and competing visions of how the world should be organized and run.

Alongside rising geopolitical uncertainty, ASEAN countries must grapple with the fourth industrial revolution. The exponential development of technologies, such as artificial intelligence (AI), advanced robotics, precision medicine and autonomous vehicles, is transforming economies, businesses and societies.

ASEAN members are likely to feel the effects of the fourth industrial revolution acutely.

Consider the future of jobs. The working-age population in the bloc is increasing by 11,000 people daily and is expected to continue to grow at this rate for the next 15 years. This demographic expansion is happening just as many existing jobs face being substituted by intelligent automation and AI.

Systems of taxation that rely on labor income would come under pressure.

National budgets would be challenged at exactly the moment when ASEAN members must increase their investment in reskilling labor forces and developing infrastructure for this new age.

Or consider the future of manufacturing. Technologies such as 3D printing and cheap industrial robots are enabling products to be made in small, highly customized forms rather than large batches of uniform goods.

For ASEAN, the shift from centralized global supply chains to localized production systems could have a serious effect on export revenues and the investment by which it is driven.

Faced with these disruptive shifts, ASEAN must strengthen its community. Economically, regional resilience could be bolstered by building a genuine single market: ASEAN has 630 million citizens with rapidly rising spending power.

Fully implementing the ASEAN Economic Community would be key. With a strong regional market, ASEAN could drive its own economic destiny, rather than relying on demand from external markets, and would be better insulated against potential protectionist shocks.

Creating a single market for services would be critical. Here, especially, ASEAN members must respond to the fourth industrial revolution, tackling issues such as harmonization of rules governing the use of data. New technologies — including digital platforms, big-data analytics and cloud-based services — do not recognize national borders and function best when they operate at scale.

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