Despite high economic growth and healthy foreign currency reserves in most countries in the region, we are now facing a number of new challenges: Highly volatile and high oil prices, rapidly rising food prices in recent months, economic difficulties in the United States and Europe with high unemployment, low growth and rising inflation, social unrest in the Middle East and Africa and more frequent and less predictable natural disasters.

Now, the world is dominated by drastic headlines such as: “Mountains to climb,  August was nerve-racking, September and October will be no better!” Or, “World on brink of meltdown”; or how about: “Rating downgrade for US and Italian banks”,  and so on.

Haven’t we just fixed the crisis of 2008? Are we hitting another downturn of the economic cycle? Is Quantitative Easing by the US Treasury and Bank of England (or going back to the printing press) not working anymore?

Instead of asking “what went wrong?” I think it is time to ask ourselves if we have done enough! Did we address the fundamental flaws in the global financial system last time? What’s happening with the long-overdue global financial architecture? What’s happening with the reform of financial system? What’s happening with the Doha Development Agenda promised by G20?

I was under the impression that once the economy started to recover, the effort to embark on difficult fundamental reforms became a second priority that did not receive the attention they deserved. Unless and until we are prepared to be honest with ourselves and start making hard decisions on long-standing global governance issues, the problems will not go away and crises will continue to resurface. This is in fact one of the lessons we learned from the economic crisis of 1997.

In order to address the systemic crisis in the global financial system, we need concerted effort and global solutions. the Association of Southeast Asian Nations as well as + 3 and + 6 need to play a role in contributing, shaping and managing the roadmap to realisation of new global financial and economic order. That is why it is all the more important for Asean to continue to deepen and broaden its regional co-operation and integration so that our voices are heard and the challenges in the global governance system are addressed.

To realise the Asean Economic Community in 2015, we need both hardware and software.

The Asian Development Bank study on the infrastructure for Seamless Asia  in 2009. ), between 2010-2020,

Asia needs about US$8 trillion investment in infrastructure between 2010 and 2020. For Asean, 50 projects amounting to $47 billion — $41 billion for energy projects and $6 billion for transportation projects — have been identified.

According to the master plan on the Asean connectivity, there are two flagship land transport infrastructure projects: the Asean Highway Network and the Singapore Kunming Rail Link. The highway network project is still missing over 5,300 kilometres encompassing six member states including Burma, Indonesia, Laos, Malaysia, the Philippines and Vietnam. The rail link project have 4,069 kilometres of missing links or links which need to be rehabilitated in six member states including Burma, Cambodia, Laos, Malaysia, Thailand and Vietnam.

Only about 2,300 kilometres of eight gas pipeline interconnection projects are operating. This is half of what’s included in the master plan. The Asean Power Grid is also a flagship programme which aims to help members to meet increasing demand for electricity and improve access to energy services by enhancing trade in electricity across borders, optimising energy generation and development and encouraging possible reserve sharing schemes.

In order to finance these projects, Asean will have to raise funds from both domestic and abroad and from both public and private sources. Asean is working on an Asean Infrastructure Fund which is worth $485 million by consolidating funds for infrastructure investment from the region. Also, we should imagine the broader picture of Asean +6, especially with China and India in the architecture. For example, the East Asia Infrastructure Investment Fund could be a more sizeable version of the Asean Infrastructure Fund.

Economic integration according to the AEC blueprint is essentially on course.  More than 92% of the first tranche activities targeted in 2010 had been implemented. There are some areas that are lagging behind, especially in transport and services liberalisation but the majority of commitments are on course. Essentially, Asean is on course for the AEC by 2015.  Good progress was also made in completing the Agreement on the Facilitation of Goods in Transit (AFAFGIT). We welcome the historical resolution of the Tanjong Pagar railway station issue between Malaysia and Singapore which was announced by the two prime ministers on May 24 last year for Malaysia to move its railway station from Tanjong Pagar to the checkpoint and to create a joint venture to develop this 217 hectares of land owned by Malaysia. This dispute had prevented the two countries to agree on common frontier posts under the AFAFGIT’s protocol and delayed the finalisation of this Protocol which was meant to be completed in 1998. We must accept the fact that sometimes economic concern needs political will and solution.

In May 2010, the entry into force of the Asean Trade in Goods Agreement, one of the region’s landmark economic agreements aimed at lowering the cost of doing business and simplifying trade-related transactions, will help facilitate trade by simplifying processes and procedures thereby reducing transaction time and cost of doing business hence benefitting the business community and the public. The International Monetary Fund forecast shows that GDP in Asean will be growing at about 7-8% per annum from $1.8 trillion in 2010 to $2.7 trillion by 2015. Indeed, this projection sounds really exciting but can we make it a reality that benefits the majority of peoples of Asean, especially with the current emergence of the global challenges that I have just mentioned.

Not only we cannot afford to be complacent but we must also act, both individually and as a group of nations at different levels. Globally, we must work hand-in-hand and act in concert to ensure that the effort in the reforms of the global governance system including the financial architecture continue at appropriate pace and in the right direction. We must also think as a group that if the negotiation of the Doha Development Agenda at the World Trade Organisation level is not coming to a successful conclusion soon, what could be the next best alternatives?

Regionally, we must continue our effort to deepen and broaden our economic integration. The Asean + 3 and Asean 6 are making good progress but the architecture is not yet finalised. We must also think of sub-regional arrangements as well as expanding our co-operations with South Asia. In addition, we as a region must continue to implement self-help mechanisms such as $120 billion the Chiang Mai Initiative Multilateralisation and others to ensure regional stability and to prepare ourselves for future economic volatility and uncertainty.

With the economic difficulties in the west, depreciation of some major currencies and the dependency of  dollars for trade transactions in the region, we need to create necessary financial instruments and facilities to enable countries in the region to use regional currencies for trade and investments as well as to rebalance our foreign currency reserves.

To complete the missing links in the AEC, we need to find the most cost-effective way to finance these multi-trillion dollars investments. This is where the private sector comes in as governments alone do not have enough capacity to cope with these monumental undertakings. Perhaps, we must also think as to how we take advantage of the financial flows from west to east. In other words, how can we channel the flows to the needed infrastructure projects in the region?

Finally, at the national level, we must ensure that our peoples will reap maximum benefits from the economic integration. I have metaphorically referred to the hardware and software earlier when talking about the process and preparation for the AEC. However, the hardware and software will be of no use if our peoples do not have knowledge and skills.

For decades, most private companies are so used to operating in a less competitive market in each individual country.

However, they now need to change the mindset altogether. They must think of Asean 10 as one market and production base. They must think of how to be part of supply chain whilst sustaining their competitive advantage.

Abhisit Vejjajiva is the opposition leader and former prime minister. The above was an excerpt from a speech delivered at the Asean 100 Leadership Forum 2011 in Manila. –Bangkok Post