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AseanAffairs Magazine January - February 2011



With the growth of the Asean economies, David Swartzentruber reports on the entry of Dark Pool electronic trading platforms into the region.

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A new Asean chair, a World Cup bid and is Asean ready for the AEC?

World Cup finals in 2030

Indonesia assumed the chairmanship of the Asean community at the beginning of 2011 and it is assumed that Indonesia will pursue a more aggressive role, especially on the economic front, than 2010’s chair, Vietnam.

Even before January arrived at the last Asean meeting of 2010, Indonesia floated the idea that a common currency should be established. A common currency is usually considered to be some distance off for Asean because of the great disparity between the poorest countries in Asean and the top economy, Indonesia.

Another factor is that there is still little “common community” sense among most of the populations of the individual countries in Asean. For example, in most Asean countries citizens would find it unacceptable to see any other pictures on local currency than their country’s leaders-past and present. However, the lack of a common currency does not stop Asean economies from advancing.

In the last week of January, the International Monetary Fund (IMF) weighed in on Asean economies and for the Asean 5 region alone—which includes the Philippines, Indonesia, Malaysia, Thailand and Vietnam—average growth projections by the IMF stood at 5.5 percent for 2011 and 5.7 percent next year.

“Developing Asia continues to grow most rapidly, but other emerging regions are also expected to continue their strong rebound,” the IMF said in the report.

The projected average growth rates for Asean 5 were slower than the estimated 6.7 percent for 2010 but faster than the 2011 growth forecasts for western economies.

To sustain this economic success in Asean interconnectivity , both logistically and in communications, is a priority and as 2011 arrived this was a hot Asean topic.

The 10th Asean Telecommunications and IT Ministers (TELMIN) meeting held in Kuala Lumpur ended on a highly-successful note with the launch of the Asean ICT Masterplan as a definitive action plan to enhance connectivity among Southeast Asian nations and raised their competitiveness in the international arena.

In Asean today, ICT is a growth industry sector, employing more than 11.7 million people and contributing more than US$32 billion or more than 3 percent to Asean’s gross domestic product (GDP).This is projected to grow significantly by 2015.

Inter-Asean connectivity remains a challenge as rolling out modern broadband networks requires a huge investment. Much of the connectivity within Asean still routes to the United States and Europe before reaching a fellow Asean country. The digital divide will also continue to be a challenge in Asean, as most rural populations lack access. There is also the issue on connectivity in which investments would be required.

The plan has also proposed the establishment of an Asean Broadband Corridor to identify and develop locations in each Asean member state that offer quality broadband connectivity.

At the final Asean Summit of 2010, Indonesia took a more assertive role.

An Asean World Cup?

Another issue that caused recent excitement in Asean was the proposal at a three-day retreat on the Indonesian island of Lombok that Asean put in a bid to host the World Cup finals in 2030. None of the 10 nations in Asean have ever qualified for a World Cup finals but nonetheless, European football is the most popular sport in Asean. A yearly Asean Cup tournament is held.

FIFA’s shock decision to hand Qatar hosting rights to the 2022 World Cup finals suggests football’s world governing body no longer relies solely on “old” requirements, such as a proven international track record on the field as necessary, to come up with a successful bid. This has raised Asean’s hosting hopes.

The Asean bid may face tough competition from Australia, China and India but many feel that the cultural diversity and population of 600 million people spread across Asean will also be a big attraction for FIFA.

Is Asean ready for the AEC?

The Asean Economic Community (AEC) blueprint has four major targets: establishing a single market and production base, creating a competitive economic region, promoting equitable economic development and encouraging full integration into the global economy As Asean’s new chair, Indonesia said it would remove all legal barriers toward the establishment of the Asean Economic Community (AEC) and would ensure all member countries were ready for broader integration in 2015.

Indonesian Trade Minister Mari Elka Pangestu says that currently the realization of the blueprint to establish the AEC faced stumbling blocks due to the late ratification of agreed regulations by Asean member states, including Indonesia.

In its position as the new chair of Asean, Mari said Indonesia would encourage Asean members to increase efforts to combat constitutional, legislative and regulatory limitations that could hinder the realization of the AEC. The new community is similar in structure to the European Economic Community but without a common currency at this point.

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