| BANDAR SERI BEGAWAN, Brunei, April 26
BANDAR SERI BEGAWAN, Brunei, April 26 Southeast
Asian nations have quietly begun to row back on a deadline of
forming an "economic community" by 2015, confirming what many
economists and diplomats have suspected for years as the diverse
group hits tough obstacles to closer union.
Rather than referring to the end of 2015 as a firm goal,
officials at this year's first summit of leaders of the
Association of Southeast Asian Nations (ASEAN), whose 10 members
range from glitzy Singapore to impoverished Myanmar, prefer to
call it a "milestone" to be built on in years ahead.
In so doing, they are bowing to the reality of slow progress
and even some regression on politically sensitive goals, such as
eliminating non-tariff barriers and lowering obstacles to the
free flow of labour in the diverse region of 600 million people.
While failure to meet the ambitious goal, which was brought
forward from 2020 originally, is no surprise, it risks
undermining ASEAN's credibility at a time when it faces
unprecedented divisions over maritime disputes with China.
"Essentially ASEAN's community-building is an ongoing
process that will continue even after our 2015 milestones,"
Brunei Prime Minister and Sultan Hassanal Bolkiah told a
summit-concluding news conference on Thursday.
He acknowledged "challenges due to the varying levels of
development amongst us".
The summit's final communique contained no specific
commitment to the 2015 goal, saying that leaders had agreed to
"leverage upon ongoing work to establish the AEC", or ASEAN
The problems raise doubts over whether the group, whose
renowned "consensus" approach is designed to protect national
interests but also slows decision-making, can bridge yawning
economic gaps between richer nations like Malaysia and newer,
poorer members such as Myanmar and Laos.
"They are a long way off," says Jayant Menon, a senior
economist at the Asian Development Bank in Manila, referring to
the "Mekong" nations of Laos, Cambodia, Myanmar and Vietnam.
"This kind of exercise - highly ambitious, short time-lines
- simply works to fracture the organisation further."
Founded in 1967 in the midst of Cold War conflicts,
insurgencies and coups in Southeast Asia, ASEAN has become the
region's most successful grouping, credited with preventing
strife and promoting a surge in trade and investment.
But critics say it appears to be reaching the limits of its
integration unless its decision-making and institutional powers
are strengthened. The ASEAN Secretariat in the Indonesian
capital, Jakarta, has fewer than 1 percent of the staff numbers
at the European Commission, a reflection of governments'
reluctance to cede sovereignty.
"I think nobody will say that," Philippine President Benigno
Aquino told reporters earlier in the oil kingdom of Brunei,
where the summit was held this week, when asked if the 2015 goal
was now impossible, adding there was much work to be done.
His trade minister, Gregory Domingo, said non-tariff
barriers remained the thorniest problem, suggesting that the
pace of reform was being dictated by the slowest-moving members.
"We are liberalising on our own, but our liberalisation has
to be in sync with others. Otherwise, if we liberalise too fast
ahead of others, it will be to our disadvantage."
Complex and unpredictable import standards in some countries
- such as the number of bananas required in a bunch - were
holding up the liberalisation of agriculture trade, he said.
Signs that the AEC was not going according to plan emerged
last September at a meeting in Cambodia when a top official said
its completion may be delayed to the end of 2015 rather than the
Investors and multinational executives are eager for ASEAN
to accelerate its integration to give them better access to a
big, youthful population and rapidly growing middle class at a
time when Southeast Asia is a rare bright spot in the global
But many voice disappointment that progress in harmonising
regulations has not kept pace with the rhetoric and with
businesses' own efforts to treat Southeast Asia as one market.
"Frankly, today you're either local or foreign in most
countries; there's no in between when it comes to regulations,"
Nazir Razak, the chief executive of Malaysia's CIMB
bank told Reuters in an interview in February. "It's time we
give substance to what ASEAN means, what it means to be ASEAN."
ASEAN has made strong progress in some areas, reducing
nearly all import tariffs among the wealthier six members to
zero, for example, as it moves towards its goal of becoming a
Overall, it says it has implemented 77.5 percent of AEC
measures, up from 74.5 percent last October. But economists say
the remaining 20 percent or so of steps are the tough ones, and
that many agreed by ASEAN still face the hurdle of domestic
While formal tariffs have come down, other barriers to trade
remain formidable, such as government protection for sensitive
industries and sectors.
Malaysia, for example, has been reluctant to liberalise auto
trade barriers for fear of competition from regional
car-manufacturing powerhouse Thailand. The Philippines has kept
in place heavy restrictions on foreign investors that critics
say are aimed at shielding domestic businesses from competition.
Indonesia, Southeast Asia's biggest economy, has taken a
protectionist turn over the past year by capping foreign
ownership of mines and introducing a 20 percent export tax on
metal ores in an effort to boost its industry.
Domestic political pressures have limited steps to
liberalise worker migration within ASEAN to a handful of
As ASEAN plods along, it risks being overtaken by more
nimble moves as Asian countries strike more favourable
free-trade deals with countries globally, adding complexity to a
so-called noodle soup of regional agreements.
Several ASEAN countries are aiming to join the proposed
Trans-Pacific Partnership, which includes the United States.
"This is pulling in different directions," said the ADB's
Menon. "I don't know how this is all going to work out."
(Additional reporting by Manuel Mogato; Editing by Jason Szep
and Robert Birsel)