01 Aug Power Play: The New Dynamic of Business and Investment
The SIIA held our seventh annual ASEAN and Asia Forum (AAF) on Friday, 1 August 2014, on the theme of “Power Play: The New Dynamic of Business and Investment”. Here are some of the day’s highlights. Excerpts from the forum will also be broadcast in a special programme on Channel NewsAsia on Monday, 18 August 2014 at 8.30pm.
Regional Tensions and ASEAN Neutrality
Tensions are brewing in the Asia-Pacific between China and Japan, with the United States also seeking to expand its influence in the region. In this context, both China and Japan have been trying to court Southeast Asian countries with promises of aid and investment, though the situation has been complicated by China’s maritime disputes with the Philippines and Vietnam.
China is asserting influence over ASEAN countries by adopting a carrot and stick approach, said Dr. You Ji, Visiting Senior Research Fellow at the East Asia Institute. China has invested heavily in the region, especially in infrastructure projects, but it could threaten to withdraw that investment unless Asian states align with its interests.
Speaking from the perspective of Myanmar, the current ASEAN chair, His Excellency U Soe Thane, Coordinating Minister for Economic Development, Ministry for President’s Office, Myanmar, stressed that when it comes to managing regional tensions, ASEAN needs to remain neutral and objective, rather than take sides: “If we steer too hard in favour to one country and away from others, we risk damaging ourselves.”
ASEAN countries are also wary about economic competition with other regional hubs in Asia, such as cities in China and Hong Kong. Negotiations are currently under way to establish an ASEAN-Hong Kong FTA, and some expressed concern that Hong Kong could pull business and investment away from ASEAN. But Mr. John C. Tsang, Financial Secretary, Hong Kong Special Administrative Region, stressed that “what we (ASEAN and Hong Kong) have to strive for is a larger market for all to share.”
In order to boost trade within ASEAN, as well as to make Southeast Asia more attractive to foreign investors and firms, the ten ASEAN countries will establish a common market and production base by the end of 2015, under the ASEAN Economic Community (AEC).
However, cooperation within ASEAN cannot be taken for granted. In order for the AEC to succeed, countries must remain committed fulfilling the region’s integration goals . “What could potentially derail this journey towards full economic integration would be when national interests start to become a much more important factor than regional interests,” warned Mr. Lim Cheng Teck, Chief Executive Officer, ASEAN, Standard Chartered Bank.
Myanmar’s Reform Process
Myanmar’s ongoing reform process and upcoming elections were also an area of focus at the conference, given the country’s prominence as the current chair of ASEAN. Speakers at the forum agreed that regardless of who wins Myanmar’s 2015 Presidential Elections, the country will need to continue making progress on its reforms.
Commenting on the White House’s decision to extend some US sanctions on Myanmar for another year, Minister U Soe Thane, said that Myanmar is trying very hard to implement reforms, but this needs to be a gradual process, as both political parties and citizens adapt to new realities.
Minister U Soe Thane also highlighted human resource development and capacity building as his country’s greatest challenges. He noted that Singapore has been very supportive in this regard, for instance by setting up the Singapore-Myanmar Vocational Training Institute in Yangon. The institute will help to build up a pool of skilled workers that foreign companies can tap on when they set up shop in Myanmar. This is also aimed at improving the country’s attractiveness as a destination for foreign investment in the longer term.
Mr. Hiro Taylor, Country Manager for Myanmar, Visa Inc, noted that Myanmar has a lot of talented people, especially in government, but that this pool of skilled manpower is starting to thin out. Industries in Myanmar cannot simply employ professionals from overseas, as they need people with local knowledge. Dr. Maung Maung Lay, Vice President of The Republic of the Union of Myanmar Federation of Chambers of Commerce & Industry (UMFCCI), agreed with this, adding: “the talent is there…it just needs to be nurtured”.
Implications for Business
Summing up the day’s discussions, Associate Professor Simon Tay, Chairman of the SIIA said: “Our region is experiencing significant political and security tensions. Asians are now awake to the fear of armed conflict.”
He also added: “Singapore and all ASEAN countries are experiencing both the opportunities and risks of these trends – what could become a ‘Power Play’. Amid this uncertain regional environment, it is crucial that Singapore considers the implications for doing business in the region.”
About the ASEAN and Asia Forum: The annual AAF aims to be the leading conference for Singapore’s private sector to discuss regional issues, and is part of the SIIA’s mission to promote awareness about ASEAN and international affairs. As a flagship event of the institute, the forum builds on our connections with both the public and private sectors to create a venue for meaningful dialogue.