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."