Members of the Association of Southeast Asian Nations (ASEAN) risk losing their competitiveness and investor confidence if they don't carry through painful structural reforms, Australian Foreign Minister Alexander Downer said in Singapore yesterday.
These reforms have taken on a greater sense of urgency especially after the 1997-1998 Asian crisis and China's pending entry into the WTO, Downer said while on a stopover en route to Hanoi where he will be attending the ASEAN Regional Forum.
Otherwise, it would be difficult for the 10-member regional grouping to become an effective bloc capable of building economic prosperity for the region's 500 million people in the era of globalization, Downer said.
"Commitment to structural reforms must be translated into action, no matter how painful that may be," he said.
"Those who implement reforms are restoring not only their competitiveness, but international confidence."
"In so doing, they boost the ability of ASEAN as a whole to compete successfully for capital inflows."
ASEAN's image as an economically vibrant group was thrown into doubt in the aftermath of the 1997-1998 crisis while that of China has risen substantially, Downer said. Already, China was drawing a lot of foreign investments that used to head ASEAN's way, he said.
"The trouble with ASEAN is that it doesn't have a sufficient reputation for being economically progressive at the moment, yet it had the history of being economically progressive," Downer said.
If ASEAN was to face up to the challenge from China, then it must not detract from pursuing much needed structural reforms and economic policies that encourages trade and investments.
"The need for further reform is still substantial. For some, it is daunting," said Downer.
"But an outward looking ASEAN, committed to structural reform, would be a compelling destination for long-term foreign investors," he said.
In his speech, Downer also urged the grouping to take on a more active role in regional affairs instead of adhering strictly to its policy of non-interference.
"A dual approach -- structural reforms by individual members and a more active ASEAN to shape the overall picture -- would help project a greater sense of regional recovery and restore investor confidence," he said.
ASEAN nations, which have a policy of not interfering in each other's affairs, have been criticized in the past for failing to take a stronger stand on a member's problems that could affect the entire region.
Recent events such as the regional crisis and the smog that blanketed the region four years ago showed that sticking strictly to the principle of non-interference was making the grouping ineffective in dealing with regional issues.
"ASEAN has a culture of working around problems rather than confronting them. But there is no compelling reason why discussing regional issues in a more open way should be seen as interference," Downer said.
"A strict interpretation of the principle ignores the reality that some problem can only be addressed effectively through regional co-operation," he said.
Investors viewed ASEAN -- comprising of Brunei, Cambodia, Indonesia, Laos, Myanmar, Malaysia, the Philippines, and Vietnam -- as a single bloc rather than as individual economies, said Downer.
"I know there are sensitivities but non-interference should not mean non-action," he said.
"It's not such a good idea if that principle of non-interference is translated into non-action when there are problems."
Downer said Australia was still as committed as ever to a free trade agreement with ASEAN even though the grouping last year rejected the set up of a taskforce to look into the feasibility of such a pact.
"I repeat today that we still are this day ... we are still prepared to enter into negotiations with all of the ASEAN countries for a free trade agreement," Downer said.
"And that will be a very good outcome for ASEAN and a very good outcome for Australia."
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