New leaders to boost investments in ASEAN

New leaders to boost investments in ASEAN

SINGAPORE (AFP): The emergence of new and younger leaders in the Association of Southeast Asian Nations (ASEAN) has laid the foundation for a return of investor confidence, but policy reforms remain the key, ASEAN chief Rodolfo Severino said on Wednesday.

"It requires more than young leaders to convince investors. What matters is policy," Severino said in an interview with AFP.

He said the rise to power of Megawati Soekarnoputri in Indonesia, Gloria Arroyo in the Philippines and Thaksin Shinawatra in Thailand should stabilize the region and help put it back on the radar screens of investors.

With these new leaders in place, "we see the beginnings of coherent policies in some of the major economies of ASEAN," he said.

He described the flurry of diplomacy that saw Megawati tour all 10 ASEAN members and Arroyo and Thaksin visiting Singapore last week as a "good coincidence".

These visits "brought attention to ASEAN and it focused the minds of these leaders on ASEAN at the same time" ahead of a summit of Southeast Asian leaders in Brunei in November, he said.

Megawati's choice of cabinet officials, which has won praise and led to the signing of a letter of intent with the International Monetary Fund (IMF), would be helpful for investments into ASEAN's biggest country, said Severino, who was in Singapore to speak at a university symposium.

The agreement with the IMF, which would allow the resumption of loans of up to US$5 billion, "should bolster investor confidence and subject Indonesia to certain standards that they have to abide by," he said.

But he said Indonesia was not yet over the hump, as it faced challenges to restore the rule of law, deal with separatist threats as well as human resource development and integrating with the rest of the region.

"You can't resolve these overnight. The important thing is to make clear the basis for growth... is laid so that investments will come in anticipation of the growth," he said.

"Until we see a self-sustaining inflow of investments, then we cannot say that Indonesia is over the hump. It takes more than a change of president," he added.

Speaking to students at the National University of Singapore earlier Wednesday, Severino said ASEAN must integrate its economies faster and find new niches if it wants to compete with giant neighbor China.

"ASEAN countries recognize that they must integrate their economies faster because investors are looking for large, integrated markets rather than small, fragmented ones," he said.