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.