Asean integration vs domestic preoccupations


Tan Sri Dr Munir Majid, The Star

EVERY so often there is concern about the level of commitment to Asean among its members states.

Even with Malaysia, which is taking some very active steps as the chair to ensure a credible community – particularly the AEC (Asean Economic Community) – is announced at the end of 2105, some are wondering whether the challenges confronting its domestic economy, will be a distraction.

Of course the likelihood of oil prices remaining low throughout 2015 will have serious implication on the country’s fiscal position. Experts are talking about the average price being US$47 per barrel whereas the budget assumed well above US$100 for the contributor to revenue of more than one-third.

The ringgit is weak. We are already looking at RM3.70 to the dollar, not too far from the RM3.80 that was fixed in 1998 during the Asian financial crisis. Foreigners are selling their holdings of Malaysian bonds and equity, and there are concerns over liquidity and bank exposures. There is the threat of higher inflation with the weaker ringgit (despite lower oil prices), what with the GST also coming in during the year.

The worst thing to do however is to panic. I have every confidence the Malaysian Government and leadership will be able to handle the challenging circumstances with, hopefully, the engagement of the private sector as well. An A-Team Malaysia will be able to ride out this challenging year by forming a strategy quickly, to strengthen other revenue sources and to have a tight lid on spending, to contain inflation, to ensure domestic banks remain strong, to address political issues that could conspire with the challenges to attack confidence in the country – and, most of all, to avoid a potential twin deficit by using the weak ringgit to boost exports quickly: tourism (which contributes about 13% to our GDP) is one sector not so structurally inflexible which can offer some quick wins.

Government leadership is not a fairweather enterprise. Neither is it unidimensional or unidirectional. The country has every ability to weather the storm we have to negotiate and, at the same time, to carry through the plans, as the chair of Asean, to ensure a successful conclusion of 2015 – without neglecting any single domestic challenge.

It is with its largest member Indonesia that the level of commitment to Asean arouses the greatest concern.

During the long legislative and presidential campaigns last year, strong nationalistic statements were made particularly by Gerindra and its presidential candidate Prabowo Subianto which raised fears of a negative Indonesian attitude towards Asean.

Now with President Joko Widodo in power statements have been made, although not as nationalistic and strident, which are quite clear that Indonesia will look after its own interest first of all. While this is not surprising – as it is the leitmotif of every state – there is concern of what they might imply for Indonesian commitment to Asean and to the community building process so critical in 2015.

I have never had any doubt about Indonesia’s commitment to Asean, something confirmed by conversations I recently had in Jakarta. But what Indonesia wants to know more intimately – particularly with regard to the AEC – is about actual benefits.

Indeed, in Indonesia’s wider foreign policy under Jokowi, the country is not going to be involved in visibility international relations, but in benefit-based involvements. Whether this means abandonment of Indonesia’s long-standing foreign policy credo best described by its first vice-president Hatta as mendayung antara dua karang, remains to be seen.

But what is clear for now is that the Jokowi administration is focused on benefit, particularly economic benefit, for the Indonesian people and economy.

The AEC brings that benefit. However this is not adequately appreciated in Indonesia because its leaders have not been sufficiently engaged to spell out the real economic benefits of the AEC.