ASEAN celebrates with fresh confidence
Eric Teo Chu Cheow China Daily Updated: 2006-01-25 06:04
Chinese all over the world are preparing to welcome the Year of the Dog, but celebrations could be of significance to all Southeast Asians in the coming year.
China will be celebrating after a bumper economic year, although major domestic challenges abound, ranging from environmental degradation to much-needed social reforms. Meanwhile, ASEAN-China relations remain sound and solid.
The Lunar New Year in Southeast Asia has been celebrated in Viet Nam as Tet, and as Imlek in Malaysia, Singapore and Indonesia since 2003. In other Southeast Asian countries, such as Thailand, the Philippines, Laos and Cambodia, the Year of the Dog will be celebrated by ethnic Chinese communities and Chinese businesses.
The Year of the Rooster has generally been good for Southeast Asia, despite natural catastrophes such as floods and earthquakes in the direct aftermath of the previous year's gigantic December 26 tsunami. The Year of the Dog should thus prove to be an equally good year for Southeast Asia, especially as economic growth is expected to accelerate across East Asia, led primarily by a very buoyant China, as well as an awakening Japan.
Southeast Asia has indeed witnessed a year of sound economic growth and general social stability, despite some violence and conflicts in southern Thailand, the Philippines and parts of Indonesia. Moreover, ASEAN managed to launch the East Asia Summit (EAS) in Kuala Lumpur in mid-December, despite uncertainties in the future of the regional entity.
Indonesia's economy is expected to stabilize this year after the plunge of the rupiah last August and the drastic reduction of hefty state oil subsidies, which had resulted in a dose of high inflation in the last three months of 2005. With the appointment of a new economic team in Jakarta, inflationary pressure is expected to drop within the Indonesian economy, the rupiah will strengthen and foreign direct investment should begin to flow in this year. The Indonesian-Chinese business community will be celebrating Imlek and looking forward to the New Year with confidence.
Malaysia's economy should continue to churn out 5 to 6 per cent growth, while 5 per cent growth is expected in Thailand. Domestic spending remains strong in these two countries as consumption and local investments pick up steam and as FDI flows into their economies as a result of the positive international economic situation. Infrastructure spending is expected to be strong, so as to stimulate both economies, with IT infrastructure spending expected to funnel growth in Thailand.
The Philippines can continue to expect a good year of revenue inflows from overseas contract workers way beyond the present level of US$4.9 billion, as the peso, inflation and the Manila Stock Exchange all stabilize.
Viet Nam can also expect a bumper year ahead, as its economic growth heads up to the 9 per cent level, whereas the Cambodian and Laotian economies are likely to register more modest, but still significant, growth of about 4 per cent.
Intra-Asian co-operation seemed to have increased substantially through the fight against bird flu, with China recently reporting it may have made a breakthrough in finding a vaccine against the deadly H5N1 strain.
Functional co-operation will definitely increase across East Asia, as stated in the Kuala Lumpur Declaration issued at the end of the EAS. Both China and Southeast Asia will have their roles to play in intensifying East Asian functional co-operation.
But more importantly, China's locomotive role in Asian economics, finance and trade will continue to be consolidated in the coming Year of the Dog. Beijing is reported, though not yet officially, to have registered phenomenal growth of 9.7 per cent in 2005, despite attempts to slow down growth.
In fact, the 5th plenum of the Party in the summer and the latest annual economic conference in December in Beijing advocated a slow-down towards more sustainable 8 per cent per annum growth in coming years, but there are doubts if this will be achieved in the near future.
As the Chinese economy booms, Southeast Asia's trade surpluses with Beijing should be maintained, thus helping consolidate ASEAN economies further. Southeast Asians are also looking forward to more Chinese investment in ASEAN economies, just as tourists bring sizable revenues to the region.
China will thus undoubtedly be pulling Southeast Asian economies up during the Year of the Dog, as economic, financial, social and cultural co-operation intensify between Beijing and ASEAN. Besides the ASEAN-China Free Trade Agreement, which is reported to be making progress in the services area at present, Chinese trade, investments, tourists and technology transfers should funnel growth and prosperity in ASEAN.
The author is a business consultant and strategist at the Singapore Institute for International Affairs.
(China Daily 01/25/2006 page4)