Amid great power tussle, Asean has big opportunities: Ex-Indonesian minister

WASHINGTON – Asean needs to reinforce open regionalism and develop a long-term low-carbon vision to take advantage of opportunities or risk member states drifting apart, says former Indonesian minister Mari Pangestu.

With open regionalism, Asean will engage all countries which accept its rules, without discrimination against any other – unlike the exclusive trade and investment club under close regionalism.

“If we really believe in the relevance of Asean and the centrality of Asean, then Asean is really one of the potential middle powers that can actually navigate this,” Dr Pangestu said in The Straits Times’ Asian Insider podcast.

“You don’t want to be pulled either from the China side or the US side, or (have) other countries saying this should be your regional order,” she said. “We should really take charge of how we should be looking at this.”

This means the grouping is not exclusive to either China or the United States, but it engages both countries and other powers big and small, inviting them to be part of its regional economic integration, alongside political cooperation, she added.

“This... would make Asean the epicentrum of growth... providing a potential way forward, which will preserve open regionalism but at the same time contribute to multilateralism.”

An avowed “Aseanist”, Dr Pangestu is the outgoing managing director of development policy and partnerships at the World Bank in Washington. She was Indonesia’s minister of trade from 2004 to 2011, and minister of tourism and creative economy from 2011 to 2014.

Dr Pangestu noted the potential concern that each Asean member state will go its own way because of national interest, making its own bilateral and regional deals.

“That would be very negative for the potential of Asean... to be a regional power as well as a regional economic (power and) regional value chain,” she said.

In a world of much uncertainty, to reduce vulnerabilities, there is a trend towards diversification and “deconcentration” of supply chains as a response to security and geopolitical shocks, Dr Pangestu noted, and the bloc is well placed to benefit.

“You want Asean to be the attractive location for that relocation,” she said.

Moreover, security and economics are not separate, she pointed out. Economic interdependence needs to be seen as part of security cooperation and include non-traditional security concerns such as climate, health, refugees and immigration.

Asean leaders and the bloc’s current chair Indonesia need to come up with a concept and vision to keep the grouping relevant and competitive, she added.

“The implementation can come afterwards. And it will come through strengthening existing agreements and frameworks, and reinforcing the principles of what we have been used to with Asean, and asking dialogue partners to also join principles such as non-alignment, non-interference and open regionalism.”

A key element for the bloc to be both attractive and relevant should be a long-term vision for a low-carbon development strategy, because that is what countries will look for in terms of where they would relocate manufacturing, Dr Pangestu said.

That includes strategies for the electric vehicle (EV) industry.

“If you want to have an EV strategy, then you’ve got to have your own EV national strategy and... an Asean strategy would be helpful,” Dr Pangestu said.

And Asean needs to leverage its complementary strengths, she added. Indonesia, Malaysia and the Philippines, for instance, have rare earth and critical minerals for the EV industry. The question is how to leverage this strength in a collective rather than individual manner.

Similarly, 64 per cent of the grouping’s digital economy is based on e-commerce, but Asean companies are facing impediments to being able to leverage the markets of the 10 member states, she said.

Asean must move forward with services sector liberalisation and consensus rules for the digital economy, she added. An Asean Digital Economy Framework Agreement, expected in 2023, will be a critical element of that.