The Association of Southeast Asian Nations consisting 10 members has remained undeniably the most successful regional organization. With almost 662 million population and GDP of US $ 3.2 trillions, it becomes the third largest economy of the world. It was established in August 1967. The founding members such as Indonesia, Malaysia, the Philippines, Singapore and Thailand later joined by Brunei Darussalam, Vietnam, Myanmar, Laos and Cambodia. The key to establish such forum was to overcome the regional tension which impacted these countries during cold war.
The role of ASEAN on top of the line is economic integration along with the political and social stability across the region. The modest objective is “to accelerate economic growth, social progress and cultural development in the region through joint activities in the spirit of equality and partnership”. As it is culturally diversified due to the demographics which represents the religious and ethnic groups for instance the budhist-majority Cambodia and Muslim majority Indonesia are homogeneous. Such cultural diversity makes this region competitive while attracting the bigger markets which helped ASEAN towards the economic growth.
Although, the over night shift towards economic growth was not possible due to the wars in Vietnam and Cambodia during 1980s. The trade liberalization and industrial cooperation did not succeed either but the structure of institutional mechanism was created which paved a way in 1992 to initiate an agreement of the ASEAN free trade area. During that, the Vietnam’s shift in its policy of “More friends and fewer enemies” showed interest in joining the ASEAN which in fact joined in 1995. The joining of Vietnam in such crucial phase helped to the end the confrontations between Indochinese bloc and ASEAN as it was the first Indochinese state to join ASEAN.
The 1997 Asian financial crisis, started in Thailand puts devastating affects on the Southeast Asian states which compelled them to expand the economic cooperation with states outside Southeast Asia. Thus, it began with the formula of ASEAN+3 including China, Japan and South Korea. The integration of economies was a successful step due to the Chiang Mai initiative which offered these countries to currency swap arrangement to help cover the financial loses and support one another to fight the currency speculations.
In 2008, the members adopted the ASEAN charter which provided them with a legal document and institutional framework. This charter comprises three branches:
- The ASEAN economic community (AEC)
- The ASEAN Political-Security Community
- The ASEAN Socio-Cultural Community
This included the major aspects of social, political and economic integration among the member states as well as the outsiders. The economic shift occurred when in 2012 the dialogue towards Free Trade agreement began with . The ASEAN members had already created an ASEAN Free Trade Area (AFTA) in 1992 among the member states to attract the foreign markets, today the tariff among these states is zero.
During the 19th session of ASEAN, the Regional Comprehensive Economic Partnership (RCEP) was introduced and was finalized in 21st meeting of ASEAN in 2012. This was the successful initiative as it covers 16 countries in the region with ASEAN members and Free Trade Agreement partners (China, India, Australia, Japan, New Zealand and South Korea). This deal was signed in 2019, although India assured its reservations against RCEP as PM Modi, in his speech, stated, “the present form of the RCEP agreement does not fully reflect the basic spirit and the agreed guiding principles of RCEP. It also does not address satisfactorily India’s outstanding issues and concerns in such a situation.” The reservations were made in accordance with a fear than Indian industries would be unable to compete with China thus making the Indian market flooded with Chinese goods and products.
In November 2020, the Regional Comprehensive Economic Partnership (RCEP), working since 2012 was joined by China, Australia, Japan, New Zealand and South Korea. It was a major development of time as the world was already facing a pandemic which compelled the markets to shut down but due to the effective policies of Vietnam (Chair of 2020) it allows the market to grow. It gave a waiver to provide tax breaks, delayed tax payments and delayed fees for businesses which results in FDI over US $ 12 billion in 2020 only. Due to such inflow of investments, the capability of Vietnam to grow in the digital market in Southeast Asia increased.
ASEAN is also a party to Six free trade agreements outside of the member states. These include Australia-New Zealand, China, Japan, India, Republic of Korea and Hong Kong. Although, there is no drastic cut off in tariffs but this trade agreement covers the 30 percent of worlds population than any other trade agreements around the world. Along with the 10 member states and 10 dialogue partners (Australia, India, Canada, China, the EU, Japan, New-Zealand, South Korea, Russia and the US) , ASEAN also includes Pakistan, Timor-Leste, Bangladesh and Sri-Lanka. The Timor-Leste also applied for the permanent membership in 2011 but it wasn’t favorable for some member states.
Currently, the chair of ASEAN is in the hands of Cambodia and there are likely the chances for Indonesia to become the chair for year 2023. Timor-Leste has hoped to become a full member of ASEAN as Indonesian President Widodo has confirmed that the government of Timor-Leste has fulfilled all the requirements to be the newest member of the bloc. As ASEAN is more leaned towards the stability and economic growth rather than the political freedom, the regime legitimacy and survival of domestic politics has remained a top priority. Thus, the success of ASEAN was not down towards the authoritarian political system but on the basis of multilateral economic cooperation.
ASEAN’s economic cooperation with Pakistan begins in 1993 with a given status of Sectoral Dialogue Relations. On July 2004, Pakistan was admitted as 24th participant of the ASEAN Regional Forum (ARF). ASEAN and Pakistan signed the Joint Declaration for Cooperation to Counter Terrorism to combat international terrorism. Pakistan has established the ties with ASEAN in Artificial Intelligence (AI), economy, joint ventures,industrial development, banking and finances, and FDIs. Although the economic conditions of Pakistan reached at a critical juncture today, it does not fulfil the requirement of being stable economic growth given by ASEAN. The trade has also decreased from US $ 7.05billion to US $ 6.77 billion in year 2019-2020.
The policy of Pakistan towards ASEAN is not as focused and strong. India, while trading with ASEAN is US $ 200 billion, Pakistan still requires a better foreign policy to pursue towards the bilateral trade. Realization for Pakistan in Free Trade Agreement can enhance the trade as the joint feasibility study was conducted in 2009 assured the possibility to become an FTA partner with ASEAN. Since the, Pakistan has not not been precisely active.
As the chair of ASEAN for 2023 will be rewarded to Indonesia. The goal of Indonesia, as it is having the largest economic size 35.4% in the region, is to bring ASEAN back to the economic growth which was affected by COVID-19. The decline from 5.2 % to 4.9% was seen in the year 2021 due to the pandemic even though the IMF prediction of growing economies of Southeast Asia included Indonesia, Malaysia, the Philippines, Thailand and Vietnam. While chairing in 2023, Indonesia has to play a role between US-China dispute over South China sea as it creates friction among the member states of ASEAN.
Leave A Comment