We continue our short conversations with some of our regular contributors about their outlook for 2022.
Here, we speak with Pushpanathan Sundram, CEO of PublicPolicyAsia Advisors & former Deputy Secretary-General of ASEAN for the AEC, about the areas that ASEAN must prioritise in the new year, the political, social and economic challenges the region faces, and the role of the RCEP in ASEAN’s recovery.
Unravel: What should ASEAN’s priorities be in 2022?
Pushpanathan Sundram: ASEAN’s priorities for 2022 are quite clear. First, to speed up economic recovery from the COVID-19 pandemic. Second, to address the Myanmar issue and ASEAN’s credibility. Third, advance the Code of Conduct (COC) of the South China Sea. And fourth, ratifying and implementing the regional comprehensive economic partnership (RCEP) agreement.
First, there is still a lot of uncertainty about how the COVID-19 pandemic will pan out in 2022. While ASEAN countries have gradually reopened their borders to other ASEAN and foreign countries for vaccinated travellers, this situation could be reversed quickly if a new and virulent variant is detected. The spread of the Omicron variant, for example, has forced ASEAN countries to place more restrictive measures to stamp out infection rates.
Going forward, a delicate balance will need to be achieved by governments between livelihoods and lives. The region must work together to address the situation effectively and implement the ASEAN Comprehensive Recovery Framework (ACRF) and its implementation plan. ASEAN needs to speed up the implementation of the ACRF while collaborating closely in managing the transition from the pandemic to the endemic phase by implementing more coordinated measures that will allow the ASEAN economies to recover and grow.
Second, the peace and reconciliation process in Myanmar remains tricky due to many stumbling blocks and the COVID-19 pandemic. Finding solutions to achieve national reconciliation, durable peace, stability and development in Myanmar has not been easy. There has been no significant progress in implementing the Five-Point Consensus since its adoption in April 2021 by the ASEAN leaders and Senior General Min Aung Hlaing. The role of the ASEAN Chair’s Special Envoy on Myanmar to coordinate a ceasefire has not taken off as he has no access to all the parties involved. The new Chair of ASEAN, Cambodia, has a different perspective about handling the Myanmar issue. Instead of isolating Myanmar’s State Administration Council, Cambodia wants to work with it to find solutions led by Prime Minister Hun Sen himself. Going forward, Cambodia will have to work closely with the ASEAN countries in its engagement of Myanmar, accommodate the interests of all parties involved and encourage humanitarian assistance with the cooperation of Tatmadaw to achieve progress. A balancing act indeed without clear directions on how the outcomes will go given the divisions among the parties involved in Myanmar and the positions of individual ASEAN countries. The RCEP ratification by Myanmar is a potential casualty if progress is not achieved on the political front.
Third, the South China Sea COC needs to progress after repeated delays over the past few years. ASEAN and China are unlikely to conclude the COC in 2022 due to the scope and range of coverage differences, the intense US-China geopolitical rivalry, and the COVID-19 pandemic. Some of the critical issues to iron out are whether the COC should be legally binding, its geographic and maritime activities scope, and the role of extra-regional powers. Within ASEAN, Vietnam and the Philippines are likely to continue taking strong positions in the negotiations. China will do the same. Experts have said that the chairmanship of Cambodia at this juncture will also impact the COC negotiations based on its last chairmanship of ASEAN in 2012, where the ASEAN communiqué was not released because of substantial differences on the issue among the claimant states. As a result, the trust deficit may need to be narrowed for current negotiations to progress. Besides, Cambodia’s relations with Vietnam, and the Philippines’ presidential election in May 2022, would also impact talks. The Philippines’ China policy will be one of the hot election issues.
Unravel: What is the significance of RCEP, which has come into force on 1 January 2022, for ASEAN diplomacy?
Mr Sundram: First, the significant size of the RCEP needs to be recognised. It is the largest trading bloc in the world with a combined population of 2.2 billion, total GDP of $38,813 billion and comprises almost 28% of global trade.
The RCEP is more than just a trade agreement. It reaffirms open regionalism and serves as a catalyst for international trade and investment in the current COVID-19 pandemic setting with global uncertainties and inward-looking government policies in Asia. While the RECP builds on ASEAN’s existing bilateral free trade arrangements (FTAs), it provides a broader regional trade and investment integration network. It further maintains ASEAN centrality in the region’s economic integration and serves as a catalyst for the future tripartite China, Japan, and South Korea FTA. With the RECP, more than 80% of trade between China and Japan and Japan and South Korea will be at zero tariffs. Apart from lowering trade tariffs and investment barriers, the RCEP will also integrate the three countries’ industrial supply and value chains through more flexible cumulative rules of origins.
The RECP has been effective since 1 January 2022, when the six ASEAN countries and four non-ASEAN countries ratified the agreement. Last month, South Korea voted to ratify the deal, followed by Malaysia this month. The Philippines is expected to approve the agreement within the first half of 2022. ASEAN will have to encourage Indonesia and Myanmar to ratify the deal to play the leadership role in moving the RCEP, which will be one central platform to help ASEAN’s recovery, reconfigure supply chains, encourage more regional investments, and advance its cross-border e-commerce agenda. As the lead negotiator of the RCEP on the ASEAN side, Indonesia should look at ratifying the agreement soon. It is hoped that the bilateral meeting between the Singapore Prime Minister and Indonesian President this week in Bintan, Riau Islands, will help move the process. However, Myanmar will be a challenge unless politics and economics are kept separated for ratification to take place.
Unravel: What are some of the key economic challenges you expect the region to face this year?
Mr Sundram: The critical challenge will be the economic recovery following the pandemic. How fast ASEAN can progress will depend on how the pandemic pans out. ASEAN has to stay its course towards recovery and implement the ACRF and its implementation plan. Additionally, there needs to be more coordination within ASEAN in terms of cross-border arrangements so that goods, services and business people can move with certainty.
Second, the swift and full implementation of the RCEP will boost ASEAN recovery since trade and investment are essential building blocks for ASEAN’s economic recovery from the pandemic. Third, the two remaining ASEAN countries should ratify the RCEP for the full effects of the FTA to be felt. The role of the ASEAN chair and the ASEAN Secretariat will be important in moving the two issues.
Fourth, with the recent UN ASEAN Food Systems Summit and the UN Climate Change Conference, ASEAN must look at its sustainability policies at the regional and country levels while focusing on economic recovery and growth. Although this is a mid- to long-term priority, ASEAN countries will have to align their economic and other policies with sustainable development at the regional level. ASEAN economies continue to be fuelled by energy-intensive carbon-emitting production, and the region’s energy demand is increasing rapidly. Besides, Southeast Asia is particularly vulnerable to climate change as it relies heavily on agriculture, natural resources and forestry for livelihoods. Therefore, ASEAN should put together sustainable policies and implement them to build a resilient regional economy to continue attracting foreign trade and investments.
Pushpanathan Sundram has more than three decades of experience working in the highest levels of government, international organisations and the private sector. He was the Deputy Secretary General of ASEAN (Deputy Minister) for the ASEAN Economic Community (AEC) from 2009 to 2011. He also served in several senior positions in the ASEAN Secretariat from 1997-2008 which included Principal Director of the Bureau of Economic Integration and Finance; Director of External Relations and Special Assistant to the Secretary General of ASEAN. He was instrumental in the development and implementation of the first AEC Blueprint and the first Master Plan on ASEAN Connectivity.