Last month, the Association of Southeast Asian Nations launched a report entitled “Narrowing the Development Gap in ASEAN: Drivers and Policy Options”. At the ceremony, Mr Vu Dang Dzung, the Vietnamese representative to ASEAN, acknowledged that it was “impossible to build a community if the gaps persist among the member countries,” referring to the ASEAN Economic Community (AEC).
Outlined in 2007, the AEC vision is for Asean to become by 2015 “a single market and production base, a highly competitive economic region, a region of equitable economic development, and a region fully integrated into the global economy.” Although it will not be achieved – at least not fully – by then, the fast approaching deadline should be a motivation for Asean leaders to step up their efforts. And boosting competitiveness should be their priority, for it will foster economic development, which will, in turn, reduce regional disparities and accelerate regional and global integration – the other goals of AEC.
Since 1979, the World Economic Forum has been studying and benchmarking competitiveness. The 2012-2013 edition of its Global Competitiveness Report (GCR) reveals the deep and persisting competitiveness divide within ASEAN. Singapore ranks second overall – behind Switzerland -among the 144 economies included in the report. Cambodia, ASEAN’s worst performer, ranks 85th. Malaysia (25th), Brunei (28th), Thailand (38th), Indonesia (50th), Philippines (65th), and Vietnam (75th) come in between (Lao PDR and Myanmar are not covered but will likely be included in the next edition).
We define competitiveness as the set of institutions, policies and factors that set the level of productivity of a country.These include governance, infrastructure, education, market efficiency, financial development, technological adoption, market size, business sophistication, and innovation. In all these areas, there exist many and profound gaps among Asean countries. Corruption, red tape, transport and energy infrastructure, for instance, are bottlenecks for a large majority of them, so is technological readiness and the growing skills gap.
That being said, there are reasons for optimism. First, Asean members fare well compared with the rest of developing Asia. In the latest GCR, Cambodia is well ahead of Mongolia, Bangladesh, Pakistan, Nepal, and Timor-Leste, ASEAN’s aspiring member. Second, most Asean countries exhibit positive trends, with all the either improving or maintaining their rank since 2005. (Cambodia has leapfrogged the rankings: back in 2005 a mere 6 percent of countries ranked below it, while today, the figure is 40 percent).
The responsibility of addressing the structural problems lies primarily with national actors. Regional cooperation is not the panacea. But ASEAN, as an association, retains its entire raison d’être, as a necessary complement to individual members’ efforts. It remains the forum where critical trans-national issues, such as trade facilitation, terrorism and environmental protection are addressed and common Asean stances on key global issues, including trade negotiations are decided. It is also where diplomatic tensions can be aired, with leaders nurturing a sense of “ASEAN-ess,” which is often lacking in day-to-day regional affairs.
ASEAN is also the interface where good practices are shared. There are many stories of Asean members successfully addressing key competitiveness issues that could be emulated. For instance, Singapore is a competitiveness champion. Its administration is one of the world’s least corrupt and most efficient. Malaysia has been tackling excessive regulation as part of its Government Transformation Programme, and the Philippines, where a national competitiveness council was set up in 2006, has made significant strides against corruption.
The World Economic Forum is committed to supporting these efforts, through its research and by leveraging its convening power. The World Economic Forum on East Asia 2013 is taking place this week Nay Pyi Taw, under the theme “Courageous Transformation for Inclusion and Integration.” During this historical meeting, hundreds of leaders from Asia will discuss bold and far-reaching solutions for boosting competitiveness, accelerating integration, and improving resilience.
Since its creation some fourty-five years ago, Asean has made significant strides. But evolving from a loose association to a tightly-knit group will require stepping up efforts, particularly to narrow the cavernous competitiveness divide. In 2012, at the Forum’s Annual Meeting in Davos, Lim Hng Kiang, Singapore’s Minister of Industry and Trade, used a nice analogy to refer to ASEAN: “Like the swan, we do not always move forward. We sometimes go in rounds – but always gracefully.” It is time for the swan to soar. And let’s not quibble over the fact that this bird is not found in South-East Asia.
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