KUALA LUMPUR: Efforts made by Asean to reduce development gaps between the countries is working but these countries must also ensure that inequality does not increase within their own countries, said the Asian Development Bank (ADB).

Its lead economist for trade and regional cooperation Jayant Menon said that inequality within some Asean countries is starting to happen and must not be left unchecked.

“The challenge that some of these countries are facing is while they have reduced development gaps across countries, inequality within countries seems to be also rising. You don’t want to replace one kind of inequality with another,” he told reporters at the 4th National Export Conference 2016 yesterday.

“So their challenge is to reduce inequality across countries while ensuring inequality within the country also doesn’t start increasing. That is starting to happen in many new member countries and it needs to be checked,” he said.

Jayant said the challenge in preparing for the Asean Economic Community (AEC) is the trade-off between keeping things competitive and fair at the same time, as Asean is hugely diverse, especially between the newest members and original members of AEC.

“You’ve got Singapore whose per capita income is 60 times that of Myanmar. So going forward, we need to try and narrow the development gaps. The problem is, in Asean, the rich countries are tiny. We don’t have a Germany or France to pay for a convergence fund like in Europe, where they can actually throw billions of Euros in helping the newest members adjust to the new competitive environment.

“Here, those kinds of money are simply not available. You can’t expect Singapore or Brunei to cough up that kind of money when they are not interested in doing that kind of contribution because Asean doesn’t play the same kind of role that the European Union plays,” he added.

In response to this, new members of AEC are pursuing market oriented reforms and opening up to trade and investment, resulting in these new members growing faster than the original members, which narrows the development gaps between the countries.

“The only issue is, is it happening fast enough? That is an open question but it is happening. Over time, we expect that this will eventually not eliminate, but significantly reduce the gaps,” he said.

Earlier in his keynote address, Jayant said the reform in Asean began before the announcement of the AEC and Asean has a long history of working slowly but surely towards greater integration.

He said the Asean Free Trade Area (AFTA) was successful in setting the stage for the AEC, especially in terms of eliminating tariffs.

“For me, Asean’s greatest achievement doesn’t lie with the things it has mandated, the kind of rules and reforms that it has prescribed on paper. For me, Asean’s greatest achievement has come from what it has done above and beyond what is required.

“What I mean by that, is the way in which Asean has used regionalism to promote globalisation and this is where it contrasts sharply with Europe.”

Jayant said Asean is an outward-looking economic exercise in globalisation compared with Europe’s inward-looking approach, and hopes that all other arrangements including the Regional Comprehensive Economic Partnership and Trans-Pacific Partnership Agreement would also employ the same approach.

Jayant said although a lot of progress has been made towards the implementation of AEC, there is still a lot of work to be done in information sharing and outreach as the level of awareness of AEC is “very low” with “even lower” preparedness. “But since 2025 is a realistic deadline, there’s still time to work on improving that.” Eva Yeong, sunbiz@thesundaily.com, 25 March 2016

Source: http://www.thesundaily.my/news/1739207