SE Asia still struggling as ASEAN summit nears
SE Asia still struggling as ASEAN summit nears
SINGAPORE (AP): In Indonesia, separatist violence, pervasive corruption and massive corporate debt are derailing hopes for a full recovery from the worst economic crisis in three decades.
In the Philippines, President Joseph Estrada's impeachment on corruption charges is battering business confidence.
And a weak currency, high oil prices and bad bank loans in Thailand are dealing serious blows to the economy.
Amid this chaos - both economic and political - the heads of government from the Association of Southeast Asian Nations will hold a three-day summit starting Wednesday, with regional integration and economic recovery high on their agenda.
"We will discuss the present difficulties we are all faced with," Singapore Prime Minister Goh Chok Tong told reporters last week at the Asia-Pacific Economic Cooperation summit in Brunei. "But we should not just be wringing our hands and lamenting that we have big problems."
Southeast Asia is slowly coming back from the financial crisis that wreaked havoc with its economies in 1997 and 1998. Yet the region is falling behind other parts of Asia in attracting investment and technology, despite strong growth in countries such as Singapore and Malaysia.
Goh said ASEAN leaders' challenge this week will be to convince the world "that we are on the right track despite our present difficulties, and all of us are working together to integrate our economies."
Among the major initiatives Singapore is promoting for the ASEAN summit is an e-commerce accord in which Southeast Asian nations are expected to agree to tear down trade barriers and promote investment in information technology.
Of all the ASEAN countries, Singapore is in the best position to spearhead such an aggressive response to the challenges of globalization. Officials on Friday announced that the economy grew by a whopping 10.4 percent in the year's third quarter, and confirmed that Singapore's employment levels are back to the pre- Asian economic crisis levels.
Yet emphasizing technology and e-commerce is a luxury that many Southeast Asian countries might find elusive given their current need to concentrate on more basic priorities such as staving off economic and political disasters.
Indonesia and the Philippines provide the two most glaring examples of countries where political uncertainty threatens to spill over into the economy.
While Indonesia's economy is expected to expand this year by 4.5 percent - the first growth since 1997 - political instability and a perceived lack of will to reform the country's distressed banking system are keeping foreign investors away.
In the Philippines, which was largely unscathed by the 1997-98 financial crisis, foreign investment has plunged 80 percent this year, the stock market is trading near two-year lows, the currency hit a record low last month, inflation is rising and export growth is declining.
ASEAN members Brunei, Malaysia, Myanmar, Indonesia, Thailand, the Philippines, Singapore, Laos, Cambodia and Vietnam are trying hard to compete with Northeast Asia as a destination for foreign investment.
But a lack of confidence in the way Southeast Asia has handled the financial crisis has sent much of that investment north, where countries such as South Korea and Taiwan have responded to the same crisis by liberalizing their economies and opening up key sectors.
By contrast, Malaysia imposed capital controls, Thailand did little to clean up its banking system and Indonesia has been accused of showing favoritism in a huge bailout of a corporate debtor.
The region's economic outlook has been hampered by massive flooding in Vietnam, Laos and Cambodia, uncertainty surrounding upcoming elections in Thailand and calls for a slowdown in the pace of tariff reductions under the ASEAN Free Trade Agreement.
ASEAN Secretary-General Rodolfo Severino recently told reporters that foreign direct investment into ASEAN countries had shrunk from US$19.6 billion in 1998 to $16.9 billion in 1999. This year's figure was expected to be "about the same" or less, he said.
Despite the problems, economic growth is expected to occur this year in most Southeast Asian countries, albeit at a slower pace than once predicted.
Malaysia's Gross Domestic Product is expected to grow 7.5 percent this year and 7.0 percent in 2001, but the exuberance that once characterized global investors' view of Malaysia has been muted.
"Yes, the economy is nearing pre-crisis levels but the ramifications (of the crisis) will continue far longer," said Ping Tan, an analyst at JP Morgan in Singapore. "It is something that will continue to haunt the region for some time."