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ASEAN Looking Inward Amid US, EU Economic Woes

ASEAN Secretary General Surin Pitsuwan speaks during an interview in Nusa Dua in Indonesia's resort island of Bali, July 20, 2011. (file photo)

ASEAN Secretary General Surin Pitsuwan speaks during an interview in Nusa Dua in Indonesia's resort island of Bali, July 20, 2011. (file photo)

Economic ministers throughout East Asia are meeting Wednesday in Indonesia to discuss the impact of a potential economic slowdown in the United States, European Union And Japan.

They are gathering for an annual commerce, trade and investment conference organized by the Association Southeast Asian Nations.

In an interview with VOA, ASEAN Secretary General Surin Pitsuwan says the economic woes of the rest of the world will encourage more regional integration.

He adds Wednesday's meetings are likely to focus on the downgrading of the U.S. credit rating, the volatile swings in stock markets around the world and concerns about how signs of economic stagnation in other parts of the world may affect Asia.

“That is going to have psychological impact. That will have a direct impact on investment mood, on the availability of resources and on the consumption," he says. "Confidence of the consumers in the U.S. which will certainly impact on us, at least in the medium term and long term. Short term we probably can manage, but long term we still need the largest economy of the world to be humming.”

Southeast Asian countries have seen an increase in foreign investment of more than 100 percent from $37 billion in 2009 to $75 billion in 2010.

Surin says, although an economic slowdown in Japan and the West would hurt growth in Asia, investment in ASEAN countries from within the region has also grown to more than $12 billion in 2010. Surin says he expects economic ministers in the region to focus on improving intra-ASEAN investment, to reduce trade barriers in Asia and become less dependent on exports to Japan and the West.

“These are the figures that are rather encouraging for us. How we are going to maintain this in light of what happened in Japan, what happened in the U.S. now, what happened in the Euro zone, that is going to be quite a challenge, but I think the answer would be regional market, regional integration, regional cooperation."

ASEAN has looked to the EU economic community as a model for its own economic integration plans.

But Surin says the difference in the level of political and economic development in members like Burma and Singapore limits such plans in the short term.

And he says recent experiences in the EU, where strong economies like Germany are being asked to help bail out struggling members like Greece, may make ASEAN countries members concerned about ever adopting measures like a single currency that would limit economic independence.

“If anything, integration in the Euro zone tells us that integration can also be negative, that we will be exposed to each other's problems, that one country's problem can drag everybody else down the same hole," Surin says. "So if you want to go on the road to integration you have to be extremely careful that you have measures that can manage the downside of integration.”

The ASEAN-led economic conference in Indonesia will include meetings of the 25th annual ASEAN Free Trade Area, the 14th annual ASEAN Investment Area Council and other groups supporting the economic integration of the 600 million people living in Southeast Asia.