Asean urged to speed up integration amid turmoil

Asean urged to speed up integration amid turmoil

DEBBIE TOO
BANDAR SERI BEGAWAN

Tuesday, November 4, 2008

ASEAN members should spur efforts to integrate their economies and wean the region's dependence on the US as a trade partner as the region grapples with the financial crisis.

"Basically for the past 30 years, the world economy has been relying on the American consumers to drive global growth and it was only recently, emerging markets started to do it," said Cesar Purisima, chairman of the executive committee of Philippine-based process integration consulting firm Prople BPO/Prople KPO Inc.

"In 2007, it was the first time China conquered more of the global growth in actual terms than the US. Then the crisis happens. Now the question is who will help drive us from this present situation?" said Purisima, who was one of the panelists at yesterday's Asean-Japan Business Meeting held here.

He said Asean and Japan, with the rest of Asia should try to accelerate the integration of the region and create an alternative consumer market.

"Through the purchasing power of the consumers, we will therefore create a bigger domestic market," he said.

The former Philippine finance secretary said integration has to be done with Asean as a whole because individually, it will not succeed. "Whether it is Asean countries or Asean+Japan or Japan+3, we should put together funds to accelerate this integration that will focus on narrowing infrastructure gap to focus on putting together the various supply chains and various Asean companies so that they could operate as one," he said.

"For example, a Philippine food company could be put together with a Thai food company, or a Philippine insurance agency could merge with a Singapore insurance company so that they could operate as one so integration is not only done at the government level, but also at the corporate level," he said.

He said that 60 per cent of exports from Asia went outside Asia. This figure has to be reduced, he said, saying more of Asia's exports should be shipped within the region.

Also, he said, "The exports have to be final consumer goods and not the intermediate goods."

Purisima said the process of improving purchasing power would have to start with improving workers' productivity and improving infrastructure.

"Once you gain momentum, you will realise the power of numbers and when you have 575 million people improving their per capita income by $1,000 each, that's $575 billion in additional economic equity that will go a long way in moving economies not only for the region but for the world," said Purisima.

If Asean economies do not integrate, Purisima presented a grim scenario.

"If the reaction of the countries was to be more protectionist, then that will make the crisis even worse. What would happen is that cost of goods in each other's markets will increase and the disposable income will continue to decrease and economical liquidity in general will slow down.

"When you are trying to protect your market by closing the door, you actually get the opposite effect, which is, harming your economy more," he said.

"The fact is that we've globalised and it's hard to reverse," he said.

The Asean-Japan Business Meeting was held at The Empire Hotel and Country Club. It ends today.The Brunei Times