Southeast Asia is a part of the world where much of the wealth was created by former colonial masters, inherited by a small elite clique of oligarchs, and is now largely held by the ethnic Chinese diaspora. The degree to which this wealth has trickled down to the greater population varies by country. Nonetheless, major southeast Asian countries continue to regard improving social equality in their respective societies as a shared challenge.
Not surprisingly, there was plenty of talk of education as ultimate ‘equalisers’, of applying ‘inclusive finance’ to reach the ‘unbanked’, of implementing ‘sustainable’ reforms, solutions, and change and other ‘sustainable’ this and that, all on this first day of the World Economic Forum held in Manila this year.
Yet much still needs to be done. One can’t help but find irony in the crony capitalist heads of state of Indonesia and the Philippines talking about “reform”. Considering that transparency, access to information, and freedom are pillars of much of the reform aspired for by the two poorest of the major ASEAN nations, there is lots of reason to remain skeptical.
For that matter, Southeast Asia overall remains the antithesis of transparency. Relatively prosperous Malaysia was highly-criticised for the handling of the crisis surrounding the disappearance of Malaysia Airlines Flight MH370 on account of the opaqueness of its investigation and police work. Thailand, for its part, continues to slog through what seems to be an increasingly untenable political crisis. And the world recoiled in horror as oil-wealthy Brunei embraced Sharia Law last month.
Will the much-anticipated ASEAN common market ever materialise? This is the big elephant in the room that politicians seem to be ignoring even as they pay lip service to trite motherhood statements and euphemisms. The reality is that a common market in the region will greatly reward nations that have had headstarts building well-capitalised competitive industries and possess traditions of producing high-quality products and services. Countries that have protected their local industrialists and lack a tradition of operational excellence will likely suffer on such a level playing field.
While prosperous Malaysia, Thailand, and Singapore will seize the market for high-added-value manufactured goods and premium financial services in such an environment, the Philippines and Indonesia will continue to be in a low margins labour-added-value race to stay ahead of the even-lower-wage Indochinese economies.
Even then, however loudly talk of open markets and borderless trade echo through the plenary sessions of the WEF, the Philippines’ 1987 Constitution only need say “Not so fast…” to kill the conversation. The Philippine Constitution limits and even bars foreign ownership in key industry sectors, all but ensuring the continued domination of the country’s economy by a small handful of Filipino dynasties.
Whatever happens, it seems local businessmen hardly care either way. According to studies conducted on the attitudes of companies operating in the region by Omkar Shrestha of the Asian Development Bank (ADB)…
[…] firms were less interested in the common market and were more focused on constraints in individual Asean countries. The major concerns were corruption, poor infrastructure and the lack of trained labor in the region, Mr. Shrestha said.
A majority of respondents in both surveys believe the common market won’t come about next year; that Asean is really 10 individual markets rather than a single one; and that the region remains highly fragmented and diverse, Mr. Shrestha said.
Indeed, it remains to be seen whether or not the almost 600 delegates from all over the world will see and acknowledge the much-touted “progress” of the Philippines (once Asia’s “sick man” now regarded as this year’s most promising emerging economy) while on the ground in Manila. The Philippines’ premiere metropolis is home to vast colonies of unsightly squatters and traffic on its streets is gridlocked most of the day. How adept the government is at masking these blights (as former First Lady Imelda Marcos was famous for successfully doing in the 1970s during similar international conventions) will largely determine the verdict.
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