Poverty reduction key to ASEAN's plan to integrate its market

[XINHUA]

MANILA, Oct. 27 -- Poverty reduction is the key to success behind ASEAN's plan become an integrated regional market by 2015.

A senior economist of the Asian Development Bank said that ASEAN governments need to promote cross border trade and investments to slash poverty levels, close the "development" gap between wealthy and poorer nations and keep the region resilient amid a possible global downturn.

"In ASEAN, (regional economic cooperation) is about jobs, prosperity and keeping peace and stability," said Ganeshan Wignaraja, principal economist for ADB's Regional Economic Integration department.

Poverty reduction, he said, is good from a "development point of view but it also helps with social stability."

"If we can't provide jobs, especially with a scenario of a possible world recession next year, then inequality rises, poverty incidence goes up and social tensions will be very strong," Wignaraja said in an interview with Xinhua.

Leaders of Southeast Asian countries announced in 2003 their plan to create the ASEAN Economic Community (AEC) which will serve as an integrated regional market for the 10 ASEAN member states including Thailand, Vietnam, Philippines, Indonesia, Malaysia, Cambodia, Singapore, Laos, Brunei and Myanmar.

The AEC is envisioned to be in place by 2015. ASEAN member countries believe that an AEC will promote free flow of goods, services, capital and skilled labor in the region. This will make the region a greater economic clout as it stands to compete with Asian economic juggernauts like China and India.

Wignaraja believes "the future is bright" for such regional integration. That said, ASEAN need to resolve several challenges before it can accomplish its goal of regional integration.

The immediate concern is the threat of another global recession on back of economic uncertainties in the U.S. and the European debt crisis.

The U.S. and EU are the main export markets for ASEAN products. This will affect regional integration and Wignaraja said it's essential that ASEAN countries boost regional domestic and demand.

Over the long term, however, Wignaraja said there also needs to be continued integration in trade and investments especially. He sees a "major opportunity" in liberalizing services like finance, health, education and information technology.

Wignaraja noted that a "mutual recognition of professional standards" can help in opening up the flow of skilled labor within the region.

"For example, right now, a lawyer trained in Singapore can't practice in Vietnam or vice versa," he said.

Wignaraja said ASEAN members need to reduce non-tariff measures to promote cross border investments.

"Within ASEAN countries, there's still strong local ownership that's discouraging entry foreign investments," he said.

ASEAN governments also need to work on cross border roads and railways to reduce cost, he added.

So far, there's this plan to build a massive railway line from Singapore to Kuming in southwest China. Known as the Singapore- Kunming Rail Link (SKRL), the SKRL, which covers 3,000 miles, will connect domestic lines within several Southeast Asian nations. The ADB is putting in 84 million U.S. dollars and the Australian government is putting in another 21.5 million U.S. dollars to help finance its construction.

Wignaraja said ASEAN's move towards expansion like ASEAN Plus Three (ASEAN +3) - a regional cooperation that includes the three East Asian nations of China, Japan, and South Korea.

Such cooperation is "critical to ASEAN prosperity," according to Wignaraja, noting that trade between ASEAN and China, for instance, is now valued at 300 billion U.S. dollars.

This bode well for ASEAN's plan for 2015. But Wignaraja said China, Japan and South Korea also need to create a similar agreement to make it work over the long term.

"At the moment, you have ASEAN + 3. But there's no similar agreement among the three East Asian countries," he said.

Another issue crucial to ASEAN integration is the inclusion of Russia and the U.S. in the East Asia Summit (EAS) - a regional cooperation among 16 countries in the East Asian region plus Australia.

The U.S. and Russia will formally join the group in the sixth East Asia Summit (EAS) that will be held next month in Indonesia.

"For the U.S., this will open a door to trade and investment to Asia" and will formally link East Asian economies with that of the U.S., Wignaraja said.

He added that Russia's membership is "mutually beneficial" for both East Asia and Russia.

"Russia is now the world's largest energy producer. So energy cooperation is critical," he said, stressing the growing demand for energy from fast growing Asian economies. On the other hand, this will give Russia more access to East Asian markets.

That said, Wignaraja said, ASEAN leaders should not forget the "centrality of ASEAN" and how linking the region with global economy can promote development in the region.

"The ASEAN cooperation project has been impressive but the region has to solve critical challenges first so that it can move forward," he said.