Gloomy skies over ASEAN economic ministers meeting

Gloomy skies over ASEAN economic ministers meeting

SINGAPORE (AFP): Southeast Asian economic ministers meeting in
Cambodia this week are faced with the task of sustaining growth
while their trade-dependent economies are hammered by the US
slowdown, analysts said.

Their job is made more difficult by pockets of political
instability which are dampening investor interest in the region
at a time when China's allure as an investment haven is growing.

"It's a question of marketing ourselves with the right
strategy," said Malaysia's International Trade and Investment
Minister Rafidah Aziz.

Economic ministers from the Association of Southeast Asian
Nations (ASEAN), a 10-nation market of 500 million people, will
meet from May 2-7 in the Cambodian city of Siem Reap, site of the
ancient Angkor Wat temples.

Their counterparts from China, Japan and South Korea are
expected to join them under the so-called ASEAN plus three
umbrella.

A spokesman for the ASEAN secretariat in Jakarta, M.C. Abad,
said proposals to expand a free trade arrangement with Northeast
Asia -- China, Japan and South Korea -- as well as Australia and
New Zealand are expected to be tabled.

World Trade Organisation (WTO) issues such as the need for
greater access for industrial goods, as well as agriculture and
services, and the need to simplify the accession process for
developing countries to the global trade body, were also likely
to be raised.

An underlying issue was to make ASEAN relevant as an entity,
analysts said.

"Frankly, the group has not done much to promote itself as a
group," said Pande Raja Silalahi, an economist with the Centre
for Strategic and International Studies in Jakarta.

"Everyone is promoting themselves to foreign investors, vying
with others in offering better terms."

Expanding the ASEAN Free Trade Area (AFTA) to cover Australia
and New Zealand could prove to be difficult for consensus-driven
ASEAN, given strong opposition by Malaysia, analysts said.

In an apparent reference to Australia and New Zealand,
Malaysian Prime Minister Mahathir Mohamad has warned against
attempts by "some countries" to gain backdoor entry to AFTA using
bilateral free trade pacts with ASEAN members.

"The challenge is how to make ASEAN more effective as an
organisation and how to restore confidence, translated in terms
of increased investment flows," said Jose Tongzon, an economics
professor at the National University of Singapore (NUS).

Dealing with the US economic slowdown and tougher competition
from China are the other challenges, he told AFP.

Southeast Asian nations, led by affluent Singapore, have been
forced to slash economic growth forecasts this year as the US --
a key market for ASEAN exports -- looks set for a sharper
economic fall than anticipated.

With the region still smarting from the blows of the Asian
financial crisis in 1997 and 1998, ASEAN ministers should put
aside their differences at Siem Reap to forge better economic
cooperation, said Chaiwat Khamchoo, Dean of Political Science at
Chulalongkorn University in Bangkok.

The general economic environment would be a major topic of
discussion, along with strategies for the more advanced members
to help their less developed neighbours, he said.

Thailand's priorities would be to push for better cooperation
on tourism -- a crucial driver of the ailing Thai economy -- as
well as on electricity generation in the Mekong sub-region which
also covers Cambodia, Myanmar, Laos and Vietnam.

The other ASEAN members are Brunei, Indonesia, Malaysia, the
Philippine and Singapore.

In the long-term, ASEAN economies should cut dependence on the
US market by diversifying exports, promoting intra-ASEAN trade
and reducing reliance on the US dollar through barter
arrangements, Tongzon said.

AFTA, which would see tariffs brought down to between zero and
five percent by 2003, should be strengthened to give the group a
greater leverage against China, he added.

But the analysts said political bushfires were keeping
investors at bay, pointing to troubles in Indonesia, ASEAN's
largest member, and instability in the Philippines.

"Promoting ASEAN is not just a matter of perception. You also
have to show the real thing in terms of improved environment,"
Tongzon said.