Distracted by declining exports and ballooning layoffs, the leaders of the 10-nation Association of Southeast Asian Nations (Asean) were not in a mood to talk human rights, nor were they prepared to look into the burning issue of stateless Rohingyas either, when they met at the bloc’s annual summit in Thailand.
As the summit wrapped up on March 1, the leaders called for coordinated policies and joint actions at the regional level to deal with a worsening global financial crisis that is battering their export-dependent economies, but did not spell out any specific actions the group would take.
“They also welcomed expansionary macroeconomic policies, including fiscal stimulus, monetary easing, access to credit including trade financing, and measures to support private sector ... to stimulate domestic demand,” said a statement issued after the summit. The group did not outline any specific policies or actions it would take on a regional level in the statement.
Across the region, economic growth is slowing rapidly as consumers and companies cut back spending amid the worsening global downturn. Singapore is already in recession and economists believe Malaysia and Thailand are on the brink, while Indonesian growth has slowed to its weakest pace in more than two years.
Many countries in the region have announced stimulus spending plans in a bid to stem the economic damage, but exports will not stage a major recovery until consumers in the West start spending again.
For Thailand, the 14th Asean Summit was an opportunity to redeem its bruised image after the domestic political turmoil that almost cost its rotating chairmanship, and it did that. Taking the driving seat, Thailand’s Prime Minister Abhisit Vejjajiva was seen putting every effort to move everything forward, keep the discussions on track, and work on the sidelines to mend fences with neighbouring Cambodia.
For most Asean watchers, the belated summit sent decidedly mixed signals on world trade. While Asean signed a Free Trade Agreement with Australia and New Zealand to create one of the largest such trade arrangements in the region, Malaysia and Indonesia were talking about protecting domestic industry at the same time.
The pact with Australia and New Zealand covers a broader range of goods and tariffs than similar Asean trade deals with China, Japan and South Korea.
Australian Trade Minister Simon Crean was upbeat when he said, “This is an extremely strong signal to the rest of the world that the Asian region remains committed to pursuing economic growth, exports and jobs to help drive the economic recovery.”
Modelling conducted in 2000 found the agreement would add $48 billion to GDP across Asean nations, Australia and New Zealand over 20 years. The agreement is Australia’s largest free trade agreement, surpassing the free trade deal between Australia and the United States.
Australia was hopeful that the deal could give new impetus to bilateral free trade talks with China, Malaysia and Japan. However, with countries in the region seeing a sharp fall-off in trade as the global financial crisis takes its toll on their export-dependent economies, signs of trade protectionism are emerging that could lead to a further shrinkage of world trade.
Asean leaders who gathered for the annual summit at Thailand’s royal seaside resort of Hua Hin, some facing elections this year and over the next year or so, might be hedging their bets about world trade.
Malaysian Prime Minister Abdullah Badawi believes it is okay for Malaysia to implement a “Buy Malaysian” campaign as “everyone is saying it”. “I think it is a normal reaction under this kind of situation. First of all we have to protect our people,” Abdullah said in an interview with the Bangkok Post.
Southeast Asia’s largest economy, Indonesia has also been considering a “Buy Indonesia” policy.
Singapore Prime Minister Lee Hsien Loong was worried when he said Asean risked missing its target to be an economic community by 2015 if its country members were not committed to an open economy. In a CNBC interview, Lee said it was