Making European Union-ASEAN ties fruitful<\/p>\n
By Grace Sung<\/p>\n
BRUSSELS: The figures are telling. Between 1995 and last year,
\nthe European Union accounted for 21 percent of the total foreign
\ndirect investment to ASEAN, putting it ahead of Japan and the
\nUnited States.<\/p>\n
In 1994, ASEAN exports to the EU and Japan were almost
\nidentical, at US$34 billion (S$61 billion). By 1999, exports to
\nJapan had gone up to US$37 billion, but exports to the EU jumped
\nto US$56 billion.<\/p>\n
Many in Southeast Asia complain about the insufficient EU
\neconomic presence in their countries, but officials here point
\nout that Europe is, in fact, one of the largest investors in
\nASEAN and trade links between the two regions are considerable.<\/p>\n
Many European companies did not pull out of ASEAN during the
\nfinancial crisis. For instance, total German foreign direct
\ninvestment (FDI) doubled between 1996 and last year.<\/p>\n
"While Asian countries lost the support of Japanese and
\nAmerican banks after the crisis, old-fashioned European banks
\nstood by," Juergen Fitschen, a member of Deutsche Bank's board of
\nmanaging directors, said at the recent "Europe in Asia"
\nconference here. "Most finance in the last five years has come
\nfrom European companies," he said.<\/p>\n
Indeed, as Philippine Ambassador to Britain Cesar Bautista
\npointed out: "Europe is an underrated key partner of ASEAN."<\/p>\n
But take another set of figures and they tell a different
\nstory.<\/p>\n
In 1999, EU FDI to Northeast Asia was 16.7 billion euro
\n(S$25.7 billion), four times the amount which went to the
\nAssociation of Southeast Asian Nations. Total EU investments in
\nSoutheast Asia accounted for only 2 percent to 3 percent of its
\ntotal FDI outflow. Bilateral trade has fallen since the Asian
\nfinancial crisis.<\/p>\n
EU Trade Commissioner Pascal Lamy himself says that European
\ninvestment in the region is below potential. Why?<\/p>\n
First, the headline news is worrying. Corruption, economic
\nturmoil, leadership tussles and political uncertainty.<\/p>\n
President and chief executive officer of Haw Par Corporation
\nHong Hai told The Straits Times: "The news from ASEAN is not
\nrosy, but these countries have lived through history with
\npolitical change.<\/p>\n
"They have taken it in their stride and business has carried
\non, even thrived, independently of the strife."<\/p>\n
ASEAN participants also urged the Europeans to be more patient
\nand less preachy with them.<\/p>\n
"Europe's taken hundreds of years to develop. We have had only
\ndecades. You should not only focus on the negative aspects of
\nsociety in Southeast Asia," said Pham Chi Lan, executive vice-
\npresident of the Vietnam Chamber of Commerce and Industry.<\/p>\n
The ASEAN-EU relationship has been complicated by differences
\nover the linking of economic cooperation with labor,
\nenvironmental and human-rights issues.<\/p>\n
One major conflict of interest is Myanmar. Ministerial talks
\nbetween the two blocs stalled for more than three years after
\nYangon joined ASEAN.<\/p>\n
Although a ministerial meeting was finally held last year,
\nmuch of the discussions focused on Myanmar.<\/p>\n
Barry Desker, director of Singapore's Institute of Defense and
\nStrategic Studies, said: "The EU has adopted a country-specific
\nor issue-specific approach that can easily derail relations."<\/p>\n
Member of European Parliament Elmar Brok sent a positive
\nsignal at the conference, saying: "We sometimes have the attitude
\nthat our political system must be the example for every country.
\nTherefore, we try to teach other countries -- sometimes too much.<\/p>\n
"We as Europeans will always have human rights as one of our
\npolitical cores, but we have to see internal development towards
\ndemocracy and the rule of law might be different from what we are
\nused to having in Europe.<\/p>\n
"If we come to such an understanding, it would make our lives
\neasier and bring positive internal developments."<\/p>\n
European interest in Southeast Asia has also been dampened by
\nconcerns over economic issues, including non-performing loans,
\nslow structural reforms and inconsistent investment and financial
\npolicies in some countries.<\/p>\n
While officials strive to convince European counterparts of
\ntheir openness to foreigners, said a commission official, "the
\nnext day you read something else in the papers. There are dozens
\nof examples like that".<\/p>\n
Fitschen said: "The FDI will not come back in a big way unless
\nforeign investors feel there is a comfortable structure for them.
\nOtherwise, the money will go elsewhere. There is increased
\ncompetition from other countries."<\/p>\n
China, as one participant put it, is an obsession for
\nEuropeans right now.<\/p>\n
But although ASEAN is being sidelined as a result, in the
\nmedium and long term it will benefit from China's growth, said
\nSingapore Trade and Industry Minister George Yeo.<\/p>\n
"China will unite Southeast Asia not as an enemy but as a
\npartner and competitor. Historically, each time China was
\nprosperous, it also brought prosperity to Southeast Asia," he
\nsaid.<\/p>\n
Not only are ASEAN countries losing out to China, but they
\nalso have to compete with central and eastern European states,
\nwhich are more natural investment locations for EU companies.<\/p>\n
To restore investor confidence, ASEAN countries must push
\nthrough structural reforms quickly. "Investments will only return
\nto potential with a clear, transparent, non-discriminatory and
\npredictable regime," said Lamy.<\/p>\n
Former Indonesian foreign minister Ali Alatas told The Straits
\nTimes: "We should realize that unless we resolve our problems
\nquickly, companies will not come because they will go to places
\nwhere they can work."<\/p>\n
Participants stressed that the ASEAN Free Trade Area would be
\ncrucial, not only in lowering tariffs, but also in giving
\ncompanies the opportunity to do business with one integrated
\nmarket, rather than several markets with different rules.<\/p>\n
Despite the volatility of political transition and economic
\nreforms, Europe should take a long-term view of the potential of
\nASEAN, a market of 500 million people.<\/p>\n
Among the many areas Europeans could invest in are:
\ninformation technology, life sciences, food processing, tourism,
\ninfrastructure, and regional projects like the Greater Mekong
\nsub-region. Harmut Nassauer, chairman of the European Parliament
\ndelegation for relations with ASEAN, said that the last few years
\nhad not been easy for ASEAN-EU relations and "we have become
\nover-pessimistic".<\/p>\n
The relationship could develop more fruitfully, he said, if
\n"both sides put their houses in order". ASEAN needs to push
\nthrough liberalization and market reforms, while the EU states
\nneed to develop consistent growth while seeing through
\ninstitutional reforms and enlargement.<\/p>\n
BG Yeo said that while European enlargement was important to
\nthe EU, it should not reduce to secondary importance the
\nhistorical changes taking place in Asia.<\/p>\n
Desker said that, within ASEAN, there was a perception that
\nthe EU's attention to the region was a function of its economic
\nperformance.<\/p>\n
"This should not be the sole criterion. Otherwise, the EU
\nrisks being seen in ASEAN as a fair-weather friend," he said.<\/p>\n
-- The Straits Times\/Asia News Network<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/making-european-union-asean-ties-fruitful-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }