Politically, the Americans are in the Stone Age when it comes to Southeast Asia
Ernest Z. Bower, Director of Southeast Asia Program and Senior Advisor, CSIS Washington, DC:
How important is Southeast Asia today to the United States, as this superpower moves out of its economic slump? Is the US aware of this region's importance and how trade with it has contributed to its economic recovery? Ernest Z. Bower believes that these questions should be the concern of business and governments in Southeast Asia, and whether the Americans will sustain their interest in this region, in the years to come.
Bower, who was once president of the US-ASEAN Business Council, is senior advisor and director of Southeast Asia Program at the Center for Strategic and International Studies in Washington, DC, concurrently the CEO and founder of BowerGroup Asia. He believes that in the next decade, political reforms in Southeast Asia will impact China more significantly than Chinese dominance over the Association of Southeast Asian Nations (ASEAN). Concerns over China's economy have increased as it shows signs of slowing down, with industrial output declining from 13.9 percent last year to 11 percent today. In a recent interview with Tempo English Edition's Gita Lal and photographer Jacky Rachmansyah, Bower spoke of US-ASEAN trade relations and what the slowing of the Chinese economy spells out for the balance of power in the region. Excerpts:
Why do you believe political reforms in Southeast Asia will affect China, rather than the other way around?
Southeast Asia has not had something like the Arab Spring, but if it was up to me, TIME Magazine's Man of the Year would be the ASEAN voter. In Thailand, voters sort of rejected traditional power centers and institutions such as the monarchy and the Bangkok elite. In the Philippines, they elected a guy who didn't even expect to be president, based on his mother's record of clean governance. Voters in Southeast Asia are showing their powers. Indonesia is the anchor example. However, will that excitement that Indonesians started be retained? Will the democratic institutions keep up with people's interests in democracy or do they get a whiff of freedom and settle for what is? The empowerment voters have portrayed in Southeast Asia is something that the Chinese have not been able to touch, much less influence. I am possibly looking at a population of 3.5 billion private sector consumers by 2030. This is something China will need to face: people in the Asia Pacific who will want fairness and who will want to have a say on their governments. I think that trend is going to have a more powerful impact on China, than China's economic influence will have on Southeast Asia probably in the next decade.
Do you see Southeast Asian economies facing difficulties in years to come as a result of China's economy slowing down?
A hard landing in China would really impact ASEAN. Over the past 10 years, China has moved from being ninth or tenth in the pack in terms of being an ASEAN trade partner, to being the number one trading partner. So yes, this will impact ASEAN.
How should American multinationals position themselves when it comes to ASEAN today?
If you were a smart multinational company, think about internationalizing your company with a base in Southeast Asia. A Southeast Asia-centric strategy allows you to access China and India without having to get stuck in closed regimes. The strategy is this: if you are based in ASEAN, you can use, for instance, an investment in Indonesia as a base to reach not only 640 million people in ASEAN, but people in India, into China and use existing free trade agreements to your advantage. This is incredibly powerful, particularly when you think about the 3.5 billion private sector consumers in 2030. China is starting to make it much harder for investors. But if you are based in Indonesia, Singapore or Malaysia, you don't have to be worried about indigenous innovation. ASEAN is going to be the natural trading hub.
Do Americans believe Southeast Asia is important for their economy?
We are the number one investor in Southeast Asia over time. If you include energy investment, the Americans have invested 10 times more in Southeast Asia than they have in India. They have invested, over time, 3.5 times more in Southeast Asia than they have in China. ASEAN is our fourth-largest trading partner. From a business point of view, ASEAN is very important to us. Our president has spoken about the pivot to Asia.
The benchmark that Southeast Asians should watch out for is an American leader in the White House who will spend time talking about how important Southeast Asia is to the US as it moves out of its economic slump. Is Southeast Asia important to the US from a security point of view? If an American leader takes those issues to our country and talks about it in a sustained way, and not only at the APEC or EAS meets, only then can we say that the politics in America has begun to match up with what the real interest for Americans is. That has not happened yet. President Obama has shown a hint only. Politically, the Americans are in the Stone Age when it comes to making an argument to our own people about why Southeast Asia is important to us.
What concrete measures has the US taken to show that it favors economic integration with ASEAN?
The most significant indicator is the Trans Pacific Partnership (TPP a multilateral free trade agreement to liberalize the economies of Asia Pacific by gradually reducing all trade tariffs to zero by 2015). If we really want to open the doors to tremendous new levels of investment to Indonesia, then this is it. If you want small American SMEs to join and open up in Indonesia, I would recommend that Indonesia joins the TPP.
Some believe the TPP and the deployment of US Marines in Darwin are attempts to contain China. Do you agree?
Absolutely not. The US very clearly knows that it cannot contain China. We do not want it. The US strategy is to have a prosperous China one that answers questions on food, energy and water security.
Our message to the Chinese is that: we Americans are here [in Asia Pacific]. We are not leaving. We do not want the Chinese to get the mistaken impression that somehow our attention has been diverted to the Middle East. Or that we are going to pull in economic focus at home and be protectionist, and not be an Asia Pacific power. A lot of people are concerned with the American approach to the TPP and what looks like increased military presence is somehow an effort to contain China. This is not true. The TPP is open to the Chinese. The country that has asked our US Trade Representative the most questions about the TPP is China, by a factor of 5, more than anyone else. Our hope is that the Chinese will join the TPP. Over time the Chinese will do it. From a military point of view, the US has access to bases in Australia. This will be no more than a light footprint.
If you were China, how would you view the deployment of US Marines in Darwin?
I would sort of say� oh no. Maybe we misjudged the script. We, China, thought that we would be the dominant power in Asia. And the Americans were nicely moving off into the Middle East and also having financial problems of their own. We are the second-largest economy in the world and we are the number one trading partner with these (Asian) countries. This is really our region and our area of influence. But they (Americans) have come back with the TPP. They are not looking to leave Asia. That is annoying and it wasn't part of our plan.
How does the US reassure China that its Marines deployment in Darwin does not constitute a threat?
It is only a massive threat if China says wait, I want to dominate Asia. The rest of Asia does not want China to dominate it. The Chinese that perceive this as a massive threat are not in step with what their neighbors actually want. This could inherently destabilize the region. If you talk to the thoughtful Chinese, they are asking how should China build. How do you spread Chinese influence, power and economics?
No. 28/12, March 07, 2012
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