The United States’ and Europe’s economic crises will likely affect ASEAN, whether directly or not, through foreign direct investment and third- party trade.
“[The crisis] will certainly have some implications for us, maybe not in the short term; but in the long term, it will have a negative impact,” ASEAN Secretary-General Surin Pitsuwan told The Jakarta Post in an interview in Jakarta on Tuesday.
He said ASEAN’s economic ministers, as well as their counterparts from dialogue partners, would consult with each other about possible actions they might undertake to anticipate “how the current [economic] turmoil is affecting ASEAN’s efforts toward integration in building the Economic Community.”
The 10 ministers from ASEAN countries, as well as commerce and industry ministers from Australia, China, India, Japan, New Zealand and South Korea, are meeting this week in Manado, South Sulawesi, for an ASEAN Economic Ministers’ Meeting (AEM).
They are expected to try to advance plans to form an ASEAN Economic Community by 2015, with further integration planned beyond that date.
The US and Russia will attend for the first time, too. They will all be keen to boost business in the region, Reuters reported Monday.
Surin said ASEAN’s exports to the US would be “further dampened” due to the crisis.
“Some of the markets in the region are also being affected, like South Korea, which is more exposed to the US economy,” he said.
“This negative impact will affect us because South Korea is our dialogue and FTA [free trade agreement] partner.”
Despite possible discussions among the regional economic ministers, “I will not anticipate what their prognosis is, or what their reactions are going to be,” Surin added.
It was important, Surin said, for those ministers to discuss this particular issue because East Asia has been a “critical engine of growth” to ASEAN.
The US’ debt crisis, he went on, would also affect the flow of foreign direct investment into the region.
According to Surin, realized foreign direct investment stood at US$75.8 billion in 2010, a two-fold increase from the $37.9 billion recorded in the previous year.
He said the largest foreign investor in the region was the European Union, which accounts for roughly 22 percent of total foreign direct investments, followed by ASEAN countries themselves, with a 16 percent share, Japan and the US.
“But the EU has its own problems; Japan too because of the tsunami; and the US, as well,” he said, adding that he expected ASEAN to be able to maintain the figure of last year’s realized foreign direct investment this year.
China helped Asia lead the global post-2008 recovery, although some wonder how much more weight Beijing will be willing to exert, as it grapples with inflation at a three-year high, Reuters reported.
And for Beijing, the health of the rest of the region is important, said Zhang Ling, a researcher at the
Chinese Academy of Social Sciences, a top government think tank. “Chinese exports to ASEAN nations rebounded very strongly after the global financial crisis, much faster than to traditional markets,” she said as quoted by Reuters.