Vietnamese Prime Minister Nguyen Xuan Phuc attends a press conference after conclusion of the 36th ASEAN Summit in Hanoi, Vietnam, June 26. 2020. (WANG DI / XINHUA)
Southeast Asian leaders have emphasized on the need for regional cooperation in rebuilding their economies hard-hit by the pandemic.
At the 36th Association of Southeast Asian Nations (ASEAN) Summit held on June 26, leaders of the 10-member bloc pledged their “strong commitment” to implement a comprehensive recovery plan that will stabilize the regional economy while keeping COVID-19 at bay. This was one of the highlights in the ‘ASEAN Leaders Vision Statement on a Cohesive and Responsive ASEAN: Rising Above Challenges and Sustaining Growth’ that was issued at the end of the virtual summit chaired by Vietnamese Prime Minister Nguyen Xuan Phuc.
Analysts said that ASEAN’s focus on regional cooperation implies the leaders’ acknowledgement that they need to go beyond providing fiscal stimulus to their respective domestic economies.
“They have come to the realization that if you want to get out of COVID-19, you have to get out of it as a region,” said Mustafa Izzuddin, senior international affairs analyst at political consultancy Solaris Strategies Singapore.
Speaking with China Daily, Mustafa said the economies of the 10 countries – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – are inter-connected. As such even if one country has completely wipe out the virus, it will be impossible for this country to open up its borders and go back to business if its neighbors are still dealing with an outbreak.
The economic recovery is a “collective effort,” he said, noting that the novel coronavirus can spread beyond one’s borders.
Tan Hsien Li, co-director of ASEAN Integration Through Law at the Centre for International Law, National University of Singapore said ASEAN members usually come together to address major crises such as the 1997 Asian Financial Crisis and the Severe Acute Respiratory Syndrome outbreak in 2002.
“The COVID-19 is of the same magnitude. This (pandemic) will propel greater cooperation as there is the realization that nobody can go it alone,”Tan told China Daily.
Venkatachalam Anbumozhi, senior economist at the Jakarta-based Economic Research Institute for ASEAN and East Asia (ERIA), said that summit was held at a time when the countries in the region are dealing with “severely-damaged business and investor confidence” caused by the COVID-19.
“Supply chain disruptions, weak demand shocks, and other social distancing measures, affected the intra-regional trade and export to other regions like the United States, Japan and European Union,” Anbumozhi told China Daily. This is why he welcomed the ASEAN Vision Leaders Statement, noting that it shows that the 10 countries can work together in order to save lives and jobs.
Compared with other regions, the number of ASEAN’s COVID-19 cases are relatively lower. The number of confirmed cases in the region is at 136,616 as of June 25, according to the World Health Organization.
ASEAN governments have closed borders, temporarily shuttered schools and businesses and promoted social distancing to stem the rise of infections. But while these containment measures helped curb the spread of the virus, they also slowed economic activity. Trade and investment flows were disrupted while unemployment level increased and consumer demand weakened. The Asian Development Bank forecast Southeast Asia’s economy to fall by 2.7 percent this year.
In their Vision Statement, ASEAN leaders said they will implement a comprehensive recovery plan “with a view to improving stability and resilience of the regional economy, preserving supply chain connectivity, while staying vigilant of a second wave of infections”.
They also pledged to retain “necessary interconnectedness” in the region by encouraging business travel but without sacrificing public health; support small and medium enterprises and restore a conducive business environment.
ASEAN leaders also adopted the Hanoi Plan of Action on Strengthening ASEAN Economic Cooperation and Supply Chain Connectivity in Response to the COVID-19 Pandemic. This document listed the measures that ASEAN governments will enforce to mitigate the economic impact of the pandemic. These measures include easing the flow and transit of food, medicine, and medical supplies around the region; cooperating in the production of and access to medicines and vaccines used to treat COVID-19; promoting local currency settlement to boost intra-regional trade and investment flows; and refraining from imposing unnecessary non-tariff measures.
“The region is anticipating a recession for the year due to the pandemic. So existing initiatives such as the ASEAN Economic Community which reduces and removes tariffs and non-tariff barriers acquire renewed importance and must be reinvigorated,” Oh Ei Sun, senior fellow at the Singapore Institute of International Affairs told China Daily.
Oh said that it is also for this reason that ASEAN member-countries need to conclude negotiations for the Regional Comprehensive Economic Partnership (RCEP) – a proposed free-trade agreement which is expected to cover about one-third of the global economy.
Brief performances are presented at the opening ceremony of the 36th ASEAN Summit in Hanoi, Vietnam, June 26, 2020. (WANG DI / XINHUA)
ASEAN led the formation of the RCEP in 2012 and was supported by six other countries: China, India, Japan, South Korea, Australia and New Zealand. If completed, it will be the largest multilateral trade deal in the world.
ASEAN leaders said they will “dedicate utmost efforts to conclude a modern, comprehensive, high quality, and mutually beneficial” RCEP. They also committed to sign the pact this year as this will show the regional bloc’s “firm commitment” to an open, inclusive and rules-based multilateral trading system.
Anbumozhi of ERIA said concluding RCEP negotiations will help revive business confidence and stimulate growth. This is “a needed shot in the arm” not only for the ASEAN economy, but also the global economy.
“Since RCEP is ASEAN-centric, (concluding RCEP negotiations) could show real global leadership on the part of ASEAN,” he said.
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