SINGAPORE â€“ Corruption, insufficiency of adequate infrastructure and geopolitical risks are some of the major challenges Southeast Asian nations face in their aim to create an integrated community and sustain their growth momentum, analysts said in a forum.
â€œThe new normal for global demand has been slow but this is an opportunity for Asean (Association of Southeast Asian Nations) as a collective group to be taking the wave into our own hands,â€ Supachai Panitchpakdi, former secretary-general of the United Nations Conference on Trade and Development, said during Maybank Kim Engâ€™s Invest Asean 2014 conference here.
â€œThis is the Asean moment… We shouldnâ€™t be distracted by side efforts and we need to have Asean-centric policies to face global challenges,â€ Panitchpakdi, said.
For one, fighting corruption and promoting good governance should go hand in hand with pursuing economic development among the members as they gear up for the launch of the Asean Economic Community next year, Datuk Paul Low Seng Kuan, Malaysian senator and minister, said.
â€œIf you want to rationalize your fiscal policy you should also rationalize government as well. Itâ€™s the challenge for Asean governments to have a sort of system of governance that encourages sustainable growth,â€ Low told the conference.
He explained that while there is still no progress in some countries with regard to eradicating corruption, the issue has been realized and there have been steps toward achieving this goal.
â€œIntegrity is important. The issue is if the political leaders themselves have the will to do it,â€ Low said.
But Asean member countries may have a bigger problem with regard to improving its infrastructure network if it wants to increase investments to the region.
â€œThe Asean Economic Community should focus on practical measures such as physical infrastructure to improve physical connectivity among member countries,â€ Josef T. Yap, former president of the Philippine Institute for Development Studies, said.
The Asian Development Bank in 2012 said Asia will need to invest $8 trillion in the next decade for its infrastructure needs including water sanitation, transportation, and telecommunications.
For the Asean alone, Goldman Sachs last year said the group will need to spend $550 billion until 2020 for its infrastructure needs.
Panitchpakdi concurred that the 10-member countries should be putting up more infrastructure to meet the needs of their own economies but he added there should also be efforts in increasing domestic demand to drive growth.
â€œWe need basic social protection for the sick people and unemployed for example… to increase demand [so economies] can change from being trade-oriented,â€ he said.
The Asean is also hounded by geopolitical risks in the region particularly those involving China, Kishore Mahbubani, dean and professor at the Lee Kuan Yew School of Public Policy in the National University of Singapore.
Mahbubani explained that the ongoing tensions between Japan and China have resulted in Japanese investments being moved from China to Asean.
â€œAsean moves like a crab: two steps forward, one step backward, and one sideways… but while it is true that they do not implement many of the commitments (under the Asean economic community), many still remain,â€ Mahbubani said.
â€œIt is also important to keep the commitments in the book to influence political presence,â€ he continued.
John Chong, chief executive officer of Maybank Kim Eng Group, said â€œWe believe in the potential of Asean and are excited to be a part of this flourishing economy.â€
The conference was meant to increase awareness of the investment potential of companies in the region, Datuk Abdul Farid Alias, group president and chief executive officer of Maybank, said.
â€œWith Maybank Kim Eng achieving Aseanâ€™s highest market trade value in 2013, we believe we are in a unique position to inspire global investors with distinctive ideas and insights to realize greater value from investing here,â€ Alias said.