Market

The member economies of the ASEAN have agreed to accelerate programs that would create an integrated regional economy by 2015. That involves moving the date for full regionalization by five years from the earlier target of 2020.

There is strong impetus for doing this. The economic ministers of the ASEAN reckon that unless the region speeds up the creation of an open market, investments will move to China and India instead. Many opportunities for growth will be lost to the Southeast Asian countries.

The vision of a regional economy has been nurtured for many years, long before China and India emerged so strongly over the recent period with incredible growth rates and immense capacity to soak up global investments. But that vision had to surmount many challenges.

Two decades back, most of the economies of the ASEAN were characterized by heavily protected trade regimes, nationalization of many vital business sectors and heavy government regulation of the domestic market, including price- and exchange rate-setting. Public opinion throughout the region was largely trapped in old-style, state-centered ideas about development. It was deeply suspicious of competition-driven, market-disciplined and liberalized economic environments.

Recall how, in our own case, leftist militants with their North Korean-style doctrines of economic nationalism, mounted protest marches in the streets against our entry in a projected ASEAN Free Trade Area (AFTA). They denounced our participation in APEC, condemned out ratification of the WTO and weighed in against every reform measure that diminished protectionism and encouraged competitiveness.

Those leftist militants are still out there, some of them actually sitting in Congress, nursing their Jurassic notions about how economies should work. They will mount a rear-guard struggle against every step taken in the direction of economic modernity.

In this day and age, their version of our country’s future is to be like North Korea. They wax romantic about idiotic notions concerning "self-reliance" and "nationalist industrialization." They can be very shrill and very intemperate about the most inane causes, ranting at every turn against the weight of economic evidence.

Their version of economic paradise is one where wages are set politically, prices are determined by political convenience, subsidies are high and taxes are low. It is an improbable economy, earlier versions of which collapsed so humiliatingly over the last two decades.

One other reason why the effort to build a regional economy slowed down was the admission into the ASEAN of the relatively backward economies of Vietnam, Laos, Cambodia and Burma. These economies were just emerging from the ravages of war and the disastrous socialist experiments they conducted.

Vietnam, of course, is now one of the fastest growing economies in the region, threatening to overtake the Philippines at some point soon if we do not get our act together. The broadening of the ASEAN, nevertheless, meant that the entire grouping had to adjust the pace of its integration so that the poorest performers could keep up.

Unlike what the European Union did when it decided on broadening membership to its economic community, the ASEAN was too polite to set standards of economic performance and policy directions as qualifications for admission into the regional community.

Notwithstanding, it seems that the "non-core" ASEAN economies are now willing to accept a headier pace of liberalization, deregulation and regional integration. The late entrants to the Association might have more backward economies, but they also have authoritarian regimes capable of forced-marching their publics into the brave, new world of borderless economies.

There will be no problem, too, for most of the "core" ASEAN economies to adjust to the faster pace of integration agreed upon.

Singapore would have no problems, definitely. It has a first-rate, outward-looking economy that is aching for greater regional integration. The city-state has shown great willingness to conclude bilateral free trade agreements with any other country willing to do so.

Malaysia is now in much the same disposition, having pulled up its per capita GDP to newly-industrialized economy status. Prime Minister Badawi has, in fact, been the most influential voice pushing for a faster pace towards regional integration.

Thailand’s impressive growth the past two decades has been fueled by heavy foreign direct investments. It will have the most to lose if the ASEAN fails to push faster towards regional integration and the region subsequently loses out in the competition for investments to the much denser markets of India and China.

Indonesian public opinion is inclined towards greater regional integration. We do not see, in the streets of Indonesian cities, the sort of protest marches against economic liberalization that we see here.

Ironically, the Philippines might find itself having the most difficulty adopting the market-opening measures required by a faster transition towards a regionalized economy.

To begin with, we are saddled with a Constitution laden with archaic economic prescriptions. It is a constitutional framework notorious for provisions hostile to the free movement of investments.

Our economic policy-making process is highly politicized. We have a poisoned political climate that made it very difficult to even pass a development-oriented budget to begin with, not to mention economic reform measures that might run counter to the populist grain of public opinion that politicians regularly exploit for purposes of grandstanding and in aid of electoral ambitions.

Needless to say, we have well-established political movements anchored on 19th century vintage economic thinking. Our mass media is notorious for the very low quality of policy debates it makes possible, preferring coverage of political bickering and heckling to a more serious sorting out of our national prospects.

We have great challenges to overcome if we are to keep pace with the rest of the region, and if the region is to keep pace with the rest of the world.