Single currency distant prospect for ASEAN states

Single currency distant prospect for ASEAN states

By Olaf Jahn

HONG KONG (DPA): ASEAN, the Association of South-East Asian
Nations, is in the throes of a crisis. Its leaders may have
smiled brightly at the end of their summit meeting in Hanoi, but
smiles could not belie the seriousness of the crisis.

Given the region's far-reaching economic problems the nine
ASEAN member-states may have been able to agree on a number of
positive projects, but they failed to agree on any kind of grand
design.

The principal change that deserves to be viewed positively is
the readiness of core members such as Thailand, Malaysia or
Indonesia to permit 100-percent takeovers of their banks or
industrial companies. At first glance, tax incentives for foreign
companies sound encouraging too.

But most of the projects agreed in the Hanoi action plan are
half-hearted. Consensus within ASEAN extended only as far as
bringing forward by 12 months to 2002 the launch of a tariff-free
trade zone.

No agreement proved possible on an effective supervisory
system for the financial sector that might be able to take the
edge off crises in the making. Some members are simply not
prepared to divulge the data needed.

ASEAN has accordingly sought to make headway in isolated
sectors, steering clear of problem areas. That does not sound
good for any prospect of the pact serving as an economic and
political sheet anchor in the region.

What ASEAN urgently needs is genuine banking reforms,
transparency in company management, an end to corruption and
nepotism and clear, enforceable laws that ensure free
competition. The conflicting interests among its members make
that hard to achieve.

Communist-run states such as Vietnam and Laos or Burma with
its military junta are afraid of greater openness and
transparency in their economies, while the interests of democrats
and semi-authoritarian rulers such as Malaysia's Mahathir
Mohammed still run counter to those of dictatorial generals.

Where Thailand is throwing its markets open, Malaysia is
battening down the hatches and Rangoon is almost totally isolated
both economically and politically.

This dilemma weakens an association that aims not only to
become an equal counterpart to trade areas such as Nafta, the EU
or China but might also be a stabilizing counterweight to Chinese
bids to exert influence.

Without a clear course and without leadership, however, the
ASEAN states will, above all, fail to agree on urgently needed
crisis management measures.

Japan too, economic giant though it might be, has shown itself
equally unable to help the ASEAN region to greater efficiency and
singlemindedness of purpose. Its new, multi-billion "rescue
package" for its neighbors might more accurately be called a
Japanese self-help plan.

The yen remittances are anything but selfless. The main
objective of the billions that are to be spent is to shore up the
business done by Japanese companies in Asia.

Amazingly, however, the ASEAN leaders plan to consider
launching a common currency. That shows that all leaders have a
sneaking suspicion of where they should be heading in the age of
globalization if the region is not to be overwhelmed by its
competitors.

But how to embark on cooperation that is so much closer is a
controversial issue, and it is controversial because it decides
the fate of power monopolies.

The Hanoi summit demonstrated yet again that the ASEAN states
will only be heading back in the direction of permanent growth if
any economic moves they make are accompanied by comprehensive
political reforms.

That remains a distant prospect for the pact, for its peoples
and for potential investors.