RI's woes threaten ASEAN's vision of investment

RI's woes threaten ASEAN's vision of investment

By Ruth Youngblood

SINGAPORE (DPA): The tumultuous events in Indonesia threaten
to stall Association of Southeast Asian Nations (ASEAN)'s efforts
this week to turn Southeast Asia into an investment haven, with
analysts warning "all bets are off" until credibility is restored
in the region's largest country.

Delegates from the 10-member ASEAN assemble in Singapore for
the 31st ASEAN Economic Ministers (AEM) meeting committed to
expediting ambitious plans to promote free trade and investment
agreed to last year in Hanoi.

But the blueprint may remain a "paper promise" amid ongoing
confrontations in East Timor, the Bank Bali scandal and political
uncertainty hanging over Indonesia's leadership, said Simon Tay,
chairman of the Singapore Institute of International Affairs.

"What happens in Indonesia impacts ASEAN as a whole," said
Tay. "Complying with the International Monetary Fund (IMF)
prescriptions is absolutely critical and affects all the
players."

AEM organizers said the starting point for the meeting is the
Hanoi Plan of Action (HPA) agreed to last year by ASEAN leaders.
While seeking to set realistic goals, it is aimed at avoiding a
recurrence of the economic crisis by helping governments better
assess the present signs of recovery and attracting a return of
capital.

The six days of consultations kick off Monday and Tuesday with
preparatory meetings by senior officials, the ASEAN Free Trade
Area (AFTA) council session Wednesday followed by the ministerial
talks.

With AFTA envisioned as creating a barrier-free trading
environment by 2002, Tay Thiam Peng, deputy secretary of the
Ministry of Trade and Industry, said its implementation would
result in a "choice area of investment for multi-nationals."

ASEAN includes Indonesia, Malaysia, the Philippines, Thailand,
Singapore, Brunei, Vietnam, Laos, Myanmar, and Cambodia.

"There are real reasons to be optimistic," Tay Thiam Peng
said, citing the recovery of most of the members from the
economic crisis, while contending Timor's problems do "not
feature in the larger picture of Indonesia."

One of the biggest unknowns, he acknowledged, is when the IMF,
the World Bank and the Asian Development Bank will resume their
loan disbursements, held up by the Bank Bali scandal. Indonesia's
parliament recommended last Friday that seven top officials be
suspended from their jobs and formally investigated, including a
close aide to President B.J. Habibie.

The multilateral donors want full disclosure surrounding the
payment of US$70 million by Bank Bali to a firm linked to the
ruling Golkar party. The scandal is seen by analysts as
effectively ending Habibie's chances of re-election later this
year.

An abridged version of the audit report by the accounting firm
PricewaterhouseCoopers pointed to "numerous indications of
fraud", but where the money went has not been publicly answered.

ASEAN leaders embarking on road shows to capital-exporting
countries to highlight the region's opportunities would be
premature amid the current uncertainties, Simon Tay said,
referring to another initiative to be taken up by the ministers.

"There's nobody (in Indonesia) the IMF or other lenders or
donors can negotiate with who can provide halfway credible policy
commitments for the medium term," said (Singapore) Business Times
columnist Vikram Khanna. "So, until the political picture becomes
clearer, all bets are off on the direction of economic policies."

With ASEAN clinging to the tenet of non-intervention, Tay
urged the ministers to meet in bilateral sessions and on the
sidelines to press the cause of restoring stability and
credibility in Indonesia.

The group had been widely criticized for failing to take
concerted action amid the two years of economic upheaval. Foreign
ministers wrapped up their annual meeting in Singapore in July
acknowledging more had to be done to sustain the recovery process
and vowing to expedite financial and other policy reforms.

"ASEAN members may choose to act with circumspection," Tay
said, "but they must act."