Expanding ASEAN: Five candidates and their options

Reading Time: 5 minutes

ASEAN_peopleThe Association of Southeast Asian Nations, or ASEAN, is the oldest functioning regional organisation in Asia. It began with ASEAN’s five original members, Indonesia, Malaysia, the Philippines, Singapore and Thailand, who founded the association through the signing of the Bangkok Declaration in 1967, and has since grown with Laos, Myanmar, Vietnam, Brunei and the latest nation being Cambodia, which joined in 1999, to ten members.

By Arno Maierbrugger

With 600 million people and a combined GDP of $2.3 trillion as per the end of 2012, the bloc is set to rise to the world’s next economic superpower. As an economic force, ASEAN has become the third growth engine within emerging Asia after China and India and is forecast to exceed Japan’s GDP by 2028. The bloc is playing an increasingly important role in regional trade and investment growth. This is particularly important at a time when the medium-term growth outlook for other leading world economies — the EU, the US and Japan — is showing weakness due to high government debt levels and fiscal consolidation.

Being an important engine of growth for the whole Asia-Pacific region, contributing to sustained strong growth in trade and investment flows, it is no wonder that several states are looking into the possibility of joining ASEAN as full-fledged members.

One of the criteria for membership is that a prospective member must agree to subscribe or accede to all the treaties, declarations and agreements in ASEAN, starting with those outlined in the Bangkok Declaration and those developed in various subsequent treaties, declarations and agreements of ASEAN. One common concern that must be addressed through negotiations is the ability of a prospective member to participate in the ASEAN Free Trade Area and all other economic cooperation arrangements.

There are no conditions for membership other than location in Southeast Asia and the usual principles of inter-state relations. ASEAN has no membership criteria related to the character of government, ideological system and orientation, economic policy or level of development. If there were such criteria for membership, a regional association would not be possible in Southeast Asia, given its diversity.

Inside Investor took a look at the options — or non-options — that five possible ASEAN member candidates have to join the association.

East Timor
East Timor, which split from Indonesia in 2002 and has since become an independent state, is one logical candidate for an ASEAN membership given its location and its dire need for development assistance by the other countries. However, this is also perceived as a disadvantage to not only richer countries such as Singapore, but even poorer ones such as Laos, because of concerns that the relatively less developed country would make it difficult to achieve economic integration in ASEAN as planned by 2016. East Timor first sought membership in ASEAN in 2007, and a formal application was submitted with the support of Indonesia in March 2011. However, East Timor has not even been granted observer status in the bloc yet. Economically, East Timor has new revenue from offshore oil and gas reserves, but little of it has gone to develop villages, which still rely on subsistence farming. Nearly half the population lives in extreme poverty. Seemingly, there is no argument that East Timor deserves ASEAN membership at present. If East Timor wants to succeed in joining ASEAN, it must address a number of challenges, includling diversifying its economy away from oil, introducing proper investment laws and trade arrangements, build up its industry, crack down on human trafficking, corruption, money laundering and drug trade, as well as address the lack of basic infrastructure and a decent security environment. Overall, it is not impossible that East Timor joins ASEAN, but the process will take time. There is no basic refusal from ASEAN members towards this possibility, except from presently Singapore and Laos, but consensus will highly likely not be found before the ASEAN Economic Community comes into effect.

Papua New Guinea
Papua New Guinea has been pushing for full membership since at least the 1980s, struggling with the problem that the country is geographically not a part of Southeast Asia. Papua New Guinea’s dynamic economic growth over the past decade has created an appetite for bigger trade ties with ASEAN, but the requests to join the bloc have so far been rejected. The main reasons cited for this are the political instability in the country and the high incidences of crime and public violence. Economically, both sides would benefit from Papua New Guinea’s membership as the country has an abundance of natural resources. However, underskilled manpower, trade policy in its infancy and certain ‘negative perceptions’ of Papua New Guinea make a membership in the foreseeable future unlikely, according to observers. Indonesia has been supporting Papua New Guinea’s membership, but, however, has not been joined by other members so far. At least, Papua New Guinea enjoys observer status in ASEAN since 1976.

ASEAN-flag-4Bangladesh
Bangladesh has been considered as a potential ASEAN member by several parties, and Laos is even recommending to grant it observer status. As part of its recent reorientation of economic and foreign policy, Bangladesh adopted a ‘look east’ policy to engage with ASEAN countries in order to increase trade and investment relations with them. Bangladesh’s economy is almost equal to the size of the combined economies of Cambodia, Laos and Myanmar and so is the size of its population. The country also would link up ASEAN with a comparatively vast market of South Asia, first of all India. However, Bangladesh needs to diversify its exports and ensure better quality products to increase trade with ASEAN as a first step. Thus, integration into ASEAN economies could only be along term policy aim of Bangladesh.

Sri Lanka
Sri Lanka actually received an invitation to join ASEAN when it was formed over 46 years ago but did not accept.  Since then, political, trade and cultural ties between Sri Lanka and ASEAN member states have been tight and mutually beneficial. Sri Lanka is a member of the South Asian Association for Regional Cooperation (SAARC) and has played a leading role in promoting regional economic and cultural cooperation. Yet, SAARC is bogged down mainly due to India’s size and the India-Pakistan rivalry. Becoming a member of ASEAN would give Sri Lanka an insurance policy against unwelcomed Indian interference. The biggest gain Sri Lanka stands to benefit from an ASEAN membership is easier access to trading and investment opportunities in the region. Seeking membership of ASEAN is not an impossible task for Sri Lanka, however, it will have to think about the fact that it is geographically not a part of Southeast Asia, which is one major – though not untouchable – precondition.

Taiwan
Taiwan has sought closer ties to ASEAN since the bloc’s inception in its aim to get out of China’s economic stranglehold. Same as for Sri Lanka, it would have to be defined whether Taiwan is part of Southeast Asia or of a larger East Asia region to make it eligible for membership. Taiwan would not need to join ASEAN for economic reasons, as the country is more developed than the majority of ASEAN member countries, but it could benefit from the open market of the huge region. Certainly China would oppose a Taiwan membership in ASEAN, which remains the main obstacle for a membership bid. Taiwan has been working on a free trade agreement with ASEAN for that reason and is also benefiting from the ASEAN-China Free Trade Area by using Chinese free trade zones as a gateway to ASEAN.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid

The Association of Southeast Asian Nations, or ASEAN, is the oldest functioning regional organisation in Asia. It began with ASEAN's five original members, Indonesia, Malaysia, the Philippines, Singapore and Thailand, who founded the association through the signing of the Bangkok Declaration in 1967, and has since grown with Laos, Myanmar, Vietnam, Brunei and the latest nation being Cambodia, which joined in 1999, to ten members. By Arno Maierbrugger With 600 million people and a combined GDP of $2.3 trillion as per the end of 2012, the bloc is set to rise to the world's next economic superpower. As an economic force, ASEAN...

Reading Time: 5 minutes

ASEAN_peopleThe Association of Southeast Asian Nations, or ASEAN, is the oldest functioning regional organisation in Asia. It began with ASEAN’s five original members, Indonesia, Malaysia, the Philippines, Singapore and Thailand, who founded the association through the signing of the Bangkok Declaration in 1967, and has since grown with Laos, Myanmar, Vietnam, Brunei and the latest nation being Cambodia, which joined in 1999, to ten members.

By Arno Maierbrugger

With 600 million people and a combined GDP of $2.3 trillion as per the end of 2012, the bloc is set to rise to the world’s next economic superpower. As an economic force, ASEAN has become the third growth engine within emerging Asia after China and India and is forecast to exceed Japan’s GDP by 2028. The bloc is playing an increasingly important role in regional trade and investment growth. This is particularly important at a time when the medium-term growth outlook for other leading world economies — the EU, the US and Japan — is showing weakness due to high government debt levels and fiscal consolidation.

Being an important engine of growth for the whole Asia-Pacific region, contributing to sustained strong growth in trade and investment flows, it is no wonder that several states are looking into the possibility of joining ASEAN as full-fledged members.

One of the criteria for membership is that a prospective member must agree to subscribe or accede to all the treaties, declarations and agreements in ASEAN, starting with those outlined in the Bangkok Declaration and those developed in various subsequent treaties, declarations and agreements of ASEAN. One common concern that must be addressed through negotiations is the ability of a prospective member to participate in the ASEAN Free Trade Area and all other economic cooperation arrangements.

There are no conditions for membership other than location in Southeast Asia and the usual principles of inter-state relations. ASEAN has no membership criteria related to the character of government, ideological system and orientation, economic policy or level of development. If there were such criteria for membership, a regional association would not be possible in Southeast Asia, given its diversity.

Inside Investor took a look at the options — or non-options — that five possible ASEAN member candidates have to join the association.

East Timor
East Timor, which split from Indonesia in 2002 and has since become an independent state, is one logical candidate for an ASEAN membership given its location and its dire need for development assistance by the other countries. However, this is also perceived as a disadvantage to not only richer countries such as Singapore, but even poorer ones such as Laos, because of concerns that the relatively less developed country would make it difficult to achieve economic integration in ASEAN as planned by 2016. East Timor first sought membership in ASEAN in 2007, and a formal application was submitted with the support of Indonesia in March 2011. However, East Timor has not even been granted observer status in the bloc yet. Economically, East Timor has new revenue from offshore oil and gas reserves, but little of it has gone to develop villages, which still rely on subsistence farming. Nearly half the population lives in extreme poverty. Seemingly, there is no argument that East Timor deserves ASEAN membership at present. If East Timor wants to succeed in joining ASEAN, it must address a number of challenges, includling diversifying its economy away from oil, introducing proper investment laws and trade arrangements, build up its industry, crack down on human trafficking, corruption, money laundering and drug trade, as well as address the lack of basic infrastructure and a decent security environment. Overall, it is not impossible that East Timor joins ASEAN, but the process will take time. There is no basic refusal from ASEAN members towards this possibility, except from presently Singapore and Laos, but consensus will highly likely not be found before the ASEAN Economic Community comes into effect.

Papua New Guinea
Papua New Guinea has been pushing for full membership since at least the 1980s, struggling with the problem that the country is geographically not a part of Southeast Asia. Papua New Guinea’s dynamic economic growth over the past decade has created an appetite for bigger trade ties with ASEAN, but the requests to join the bloc have so far been rejected. The main reasons cited for this are the political instability in the country and the high incidences of crime and public violence. Economically, both sides would benefit from Papua New Guinea’s membership as the country has an abundance of natural resources. However, underskilled manpower, trade policy in its infancy and certain ‘negative perceptions’ of Papua New Guinea make a membership in the foreseeable future unlikely, according to observers. Indonesia has been supporting Papua New Guinea’s membership, but, however, has not been joined by other members so far. At least, Papua New Guinea enjoys observer status in ASEAN since 1976.

ASEAN-flag-4Bangladesh
Bangladesh has been considered as a potential ASEAN member by several parties, and Laos is even recommending to grant it observer status. As part of its recent reorientation of economic and foreign policy, Bangladesh adopted a ‘look east’ policy to engage with ASEAN countries in order to increase trade and investment relations with them. Bangladesh’s economy is almost equal to the size of the combined economies of Cambodia, Laos and Myanmar and so is the size of its population. The country also would link up ASEAN with a comparatively vast market of South Asia, first of all India. However, Bangladesh needs to diversify its exports and ensure better quality products to increase trade with ASEAN as a first step. Thus, integration into ASEAN economies could only be along term policy aim of Bangladesh.

Sri Lanka
Sri Lanka actually received an invitation to join ASEAN when it was formed over 46 years ago but did not accept.  Since then, political, trade and cultural ties between Sri Lanka and ASEAN member states have been tight and mutually beneficial. Sri Lanka is a member of the South Asian Association for Regional Cooperation (SAARC) and has played a leading role in promoting regional economic and cultural cooperation. Yet, SAARC is bogged down mainly due to India’s size and the India-Pakistan rivalry. Becoming a member of ASEAN would give Sri Lanka an insurance policy against unwelcomed Indian interference. The biggest gain Sri Lanka stands to benefit from an ASEAN membership is easier access to trading and investment opportunities in the region. Seeking membership of ASEAN is not an impossible task for Sri Lanka, however, it will have to think about the fact that it is geographically not a part of Southeast Asia, which is one major – though not untouchable – precondition.

Taiwan
Taiwan has sought closer ties to ASEAN since the bloc’s inception in its aim to get out of China’s economic stranglehold. Same as for Sri Lanka, it would have to be defined whether Taiwan is part of Southeast Asia or of a larger East Asia region to make it eligible for membership. Taiwan would not need to join ASEAN for economic reasons, as the country is more developed than the majority of ASEAN member countries, but it could benefit from the open market of the huge region. Certainly China would oppose a Taiwan membership in ASEAN, which remains the main obstacle for a membership bid. Taiwan has been working on a free trade agreement with ASEAN for that reason and is also benefiting from the ASEAN-China Free Trade Area by using Chinese free trade zones as a gateway to ASEAN.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid