Get Your Act Together

Rising giants India and China have undermined foreign investors’ interest in other developing economies –particularly in South East Asia. Both countries boast a rapidly growing middle-class amidst a vast population of 1.3 billion and 1.1 billion people respectively.

The leaders of Malaysia and Singapore have both raised concerns over this issue. Meeting on the sidelines of the recent Europe-Asia (ASEM) meeting in Finland, both agreed that one solution would be for ASEAN member countries to be seen as a single entity instead of ten separate nations.

Greater intraregional cooperation is the sine qua non if this goal is to be achieved. Together, these countries make up a total population of 530 million, making it larger than the EU and the US.

Recent events tell us however that we still have a long way to go. Singapore’s Minister Mentor, Lee Kuan Yew attracted international attention when he said Malaysia and Indonesia “had problems with their Chinese” and the success of the Chinese led to them being “systematically marginalized”.

This has enraged Malaysian politicians particularly Malaysia’s former prime minister Mahathir Mohamad who has retaliated by accusing Mr Lee of marginalizing Malays in Singapore.

Disregarding the truth or the atrocity of both their remarks, a more important observation is the damage it has done to bilateral ties.

Umno vice-president Tan Sri Muhyiddin Yassin told The Star that Mr Lee was among those who founded the concept of Asean co-operation to foster greater understanding in the region and should know that such remarks would not benefit the region.

While Singapore is undoubtedly the most successful country in the region, its restrictions on free speech as witnessed during the recent IMF meeting leave much wanting.

Perhaps it is this lack of public activism which has provided a stable environment for the city-state’s undeterred growth. If ASEAN is to rise in prominence, its members should follow suit with unconstructive comments being kept under wraps.

Malaysia and Thailand also need to resolve issues concerning the Common Effective Preferential Tariff (CEPT). Thailand is required to lower tariffs for car imports from Malaysia from 20% to 5% under CEPT.

Thailand is ASEAN’s largest automaker and exporter and refuses to comply unless Malaysia removes the Approved Permit system which acts as a non-tariff barrier to Thai vehicles.

On Tuesday, the Thai military enforced a coup d’etat in Bangkok which ousted PM Thaksin Shinawatra. Regional stock exchanges took a slight plunge following the coup but its peaceful end could help lift investor confidence, according to The Star.

Other countries may stand to benefit from the coup as foreign investors withdraw funds from Thailand and seek out other regional investments.

But that is besides the point. In the long term, cohesiveness among ASEAN countries coupled with political stability is necessary for the region to acquire a competitive edge over rising giants China and India, allowing it to be a popular hub for investment.