Hitch a ride from dynamos China and India
OPPORTUNITY FOR ASEAN
First FTAs, next an Asian economic community, says SM Goh.
INDONESIA has a key role to play in reinvigorating Asean so that the regional group can ride on the dynamism of China and India, said Senior Minister Goh Chok Tong yesterday.
‘By hitching Asean to these two powerful steeds, we can fly together to greater prosperity,’ he said.
Mr Goh was giving the keynote address at the launch of the CEO Circle – a forum for top businessmen in the region.
The event at the Grand Hyatt hotel was attended by 250 people, many of them business tycoons from Indonesia and Singapore.
Mr Goh noted that China and India are now dominating the radar screen of international investors amid the ‘man-made and natural disasters that cast a dark shadow over Asean’.
For a decade before the 1997 financial crisis, Asean’s growth matched that of China and surpassed India’s.
‘But since then, China has streaked ahead and India has caught up with Asean,’ he said.
These two countries will lead the way when Asia emerges as the most dynamic growth region in the world in the next 20 years, he said.
It is in Asean’s interest to ‘hitch its chariot to these two galloping horses’, added the Senior Minister.
Geographical, historical and cultural links make India, China and Asean natural trade partners, he said.
‘The economies of each nation were at different stages of development but complemented each other. For the last decade, trade had grown significantly between Asean and the two economic giants,’ he added.
In 2003, this amounted to US$55 billion (S$91.5 billion) and US$12 billion respectively – a trend that he expects to continue.
He said that there were reports that China and India would sign a free trade agreement (FTA) soon. If they did, they might need Asean less.
Asean, therefore, should speed up negotiations to establish FTAs with China, India, Japan, South Korea, Australia and New Zealand, he said.
FTAs with China and India should be completed and implemented by 2010 and 2011 respectively, he added.
‘When these FTAs are completed, it requires little imagination and effort to move on to the next stage – the construction of an Asian economic community,’ said Mr Goh.
He called on Asean countries to band together to form a ‘common chariot’ because individually none has the economic pull of China or India.
Asean economies are too small or weak for economies of scale. But there could be greater efficiency and synergy if there is market allocation of resources.
He cited television manufacturing as an example of how production chains have formed across the Asean region to the benefit of all. This has enabled Asean to be a major global exporter of television sets.
Another example of Asean working together is Singapore’s agreement with Hanoi to link the two economies. In this instance, Vietnam takes a short cut in plugging itself into the global economy while Singapore’s trade and investments benefit from Vietnam’s growth.
Mr Goh said that Indonesia is central to Asean and its vision to create an economic community.
He said: ‘Unless the largest member in Asean is able to play an active part in coalescing the other members towards achieving common goals, it will be difficult for Asean to regain its vibrancy and dynamism.’
Vice-President Jusuf Kalla, who also spoke at the forum, said: ‘I agree with the Senior Minister that Asean cannot move without the Indonesian anchor. But how we move depends on what Indonesia does in time to come. It is really up to us to move forward.’
Mr Biantoro Wanandi, head of a major pharmaceutical company, Anugerah Pharmindo Lestari, agreed.
‘If Indonesia is affected by cancer, the rest of the region will also be affected. As the largest country in South-east Asia, it is in our interest to make sure there will be political stability. Without this stability, there will never be growth in Indonesia.’
On the call to engage China and India, he said: ‘We should engage two of the largest markets in Asia. There will better economies of scale. The operative words are competition and cooperation.’
Said Mr Eddy Asmanto, head of Prima Consulting, a financial management firm: ‘India and China are leading the way. We cannot take them out of the equation.’
As for Indonesia, he said the country ‘has been left too far behind the other Asean countries in terms of economic growth’.
‘Indonesia has become a burden. We should get it out of this mess. If Indonesia develops, the rest of the region will prosper,’ he added.
Mr Goh, who arrived yesterday on a two-day visit to continue the high-level exchanges between leaders of both countries, also held talks with Mr Jusuf.
In his speech, Mr Goh noted that Indonesia has re-established political stability and returned to the path of economic recovery in the last few years.
The new government is prepared to implement difficult but necessary measures such as reducing fuel subsidies.
But Jakarta continues to face challenges. Investors are still concerned about unclear labour laws and security.
Mr Goh said that while there might be some bilateral issues to resolve, Indonesia and Singapore must not allow them to stand in the way of larger interests in cooperating in other areas.
‘It is no secret that Singapore wants Indonesia to prosper,’ he said. ‘A prosperous and stable Indonesia will benefit its neighbours. An impoverished and unstable Indonesia will destabilise the region.’
And when asked by an Indonesian businessman about the possibility of an extradition treaty between the two countries, Mr Goh said Singapore would conclude one in due course.
But he made it clear that there are real complications so negotiations should run their course. He added that such a treaty would not solve all of Indonesia’s problems.
TAKE THE LEAD, JAKARTA
‘Unless the largest member in Asean is able to play an active part in coalescing the other members towards achieving common goals, it will be difficult for Asean to regain its vibrancy and dynamism.’
– SM GOH, on how Indonesia is central to Asean
‘I agree with the Senior Minister that Asean cannot move without the Indonesian anchor. But how we move depends on what Indonesia does in time to come. It is really up to us to move forward.’
– INDONESIAN VICE-PRESIDENT JUSUF KALLA
GOOD IDEA BUT …
‘I like the idea of improving collaboration among Asean countries. But do you seriously think this can happen? There is still a lot of distrust among the countries and the thinking continues to revolve around the zero-sum game.’
– MR JOHN PRASETIO, of the Indonesian Chamber of Commerce