AEC cab benefit from new ‘cold war’ in region, says Don

48 years after the formation of ASEAN, the Asean Economic Community (AEC) is scheduled to start in December 2015.  In this JCI webcast, Prof James Chin, JCI’s Senior Fellow in Governance Studies, will speak to two leading economists about Malaysia, as chair of ASEAN in 2015, and the formation of the AEC. They will address the challenges faced by AEC and what Malaysia can do to assist the formation of the AEC.

The two prominent economists:

1) Prof Woo Wing Thye, JCI president and Prof of Economics, University of California, Davies

2) Prof  Rajah Rasiah, Prof of Economics and Technology Management, Universiti Malaya

Malaysia, as chair of ASEAN in 2015, can play a key role in ensuring that the ASEAN Economy Community (AEC) will be a success. Professor Woo Wing Thye, president of the Jeffrey Cheah Institute (JCI), said there is an opportunity for Malaysia to push fellow ASEAN countries to promote greater economic integration in view of the common threat in view of the revival of the ‘cold war’ between China and the US in this part of the world.

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China and the US are currently competing for influence in the region and this can clearly be seen by the US ‘Pivot to Asia’ Policy.

In webcast organised by JCI, Prof Woo said the new ‘cold war’ is good for ASEAN as both the Chinese and the US will court ASEAN with economic deals. He added that this situation may not last for long so it is important that Malaysia uses its influence as ASEAN chair for 2015 to push hard for AEC.

Prof Woo also suggested that Malaysia pushed for a regional mediation mechanism to resolve disputes to keep tensions low in the region in order to maximise benefits from external powers.

Prof Rajah Rasiah, from Universiti Malaya, argued that critics are wrong about the AEC when they say AEC will not be realised by the end of 2015. He sees the AEC as part of a process for ASEAN to integreate economically in the long run, and that the AEC will be an declaration of ASEAN’s intent. While some AEC targets will be met by the end of this year, he sees the real AEC as something in the future, rather than now.

Prof Rajah also stressed the need to take the environment and labour issues into account when policy makers deal with the AEC. These two areas are not being monitored properly at the moment. There must be also a commitment to allow a free movement of people among ASEAN countries which will lead to a free movement of ideas.

Both these prominent economists say Malaysia must open up and liberalise its economies and policies. In particular, the bumiputera policy in Malaysia is one of potential areas that have to be reformed in order for Malaysia to benefit fully from the AEC in the long run.  The bumiputera policy is holding Malaysia back from its full economic potential.

One final suggestion for Malaysia to take the lead is to promote the use of English in ASEAN countries. According to Prof Woo this will allow ASEAN countries to harmonise the standards of higher education across ASEAN countries. The European countries have done this and it has brought enormous benefits to Europe where there is a common standard on university education across the European Union countries.

Prof James Chin moderated the webcast. The full webcast can be viewed at www.jci.edu.my