Exclusive interview with new ASEAN Secretary General
Le Luong Minh, formerly Vietnam’s Deputy Minister for Foreign Affairs and UN diplomat, took over the five-year tenure as Secretary-General of the Association of Southeast Asian Nations (ASEAN) on January 1, 2013. Minh will lead the ten-member bloc through the formation of the ASEAN Economic Community and will have to solve other pressing issues such as the South China Sea struggle, pushing forward political and economic reforms and reducing gaps between the countries.
Le Loung Minh gave Investvine‘s Arno Maierbrugger an exclusive interview as he commenced his tenure as ASEAN’s top diplomat
You will be steering ASEAN through historical changes, namely the ASEAN Economic Community, or AEC. Where do you see the main challenges?
Since its inception in 2003, the AEC has already brought important gains to the region. Tariffs have been reduced to less than 1 per cent on average, trade costs have been lowered, and intra-ASEAN services trade and investment has increased. But beyond these gains challenges remain. One challenge is the implementation of AEC measures. Although around 74 per cent of measures are now in place, a number of measures are still pending particularly in services liberalisation, standards and conformance, customs integration, and connectivity. Thus it is important that implementation bottlenecks are addressed. Another challenge is the need to prioritise the measures under the AEC. Since the AEC cuts across different pillars, focusing on priority areas for integration and advancing those areas with high impact where significant progress can be achieved is crucial. These include, for example, the elimination of non-tariff barriers, removal of restrictions on cross-border investments, implementation of mutual recognition arrangements for services sectors, and facilitating movement of capital.
ASEAN has attracted a lot of global attention for its booming economy. Does this implicate a stronger political role on the world stage, and if yes, what will be your policy?
ASEAN’s engagement on the global stage stems from its recognition that the world is now faced with complex, multi-faceted and transnational challenges that require concerted efforts of all nations and other stakeholders. As an organisation that has withstood the test of time and has contributed immensely to regional peace, stability and prosperity, ASEAN is well positioned to make worthy contributions to the solution of regional and global challenges. ASEAN leadership will definitely be tested because of ASEAN’s increasing economic weight in the global economy. In my view, ASEAN’s policy should continue to focus on mutual respect and shared responsibility. For example, ASEAN should ensure by participating actively in the discussion of global economic issues that the new opportunities to reform the global economic system are not wasted. It also requires our governments to remain committed to reforms and be more accountable. Policy makers in the region should continue to push for measures that will sustain the recovery and growth, like building the foundations for strong economic growth and macroeconomic stability and deepening economic integration.
There is a lot of remaining integration challenges in the ten-member bloc. What are the most pressing issues you want to address straight away?
One pressing issue is to address the “beyond-the-border” measures under the AEC, including non-tariff barriers and regulatory constraints. These include, in my view, addressing the most immediate concerns by the markets. For example, in facilitating free flow of goods, reducing logistics barriers to trade can be a priority. In services, it can be the provision of efficient transport and financial services to support trade flows. In investment, one priority is to increase equity participation in local industries and reduce business costs; and in facilitating freer flow of capital, harmonising withholding taxes can be the goal. In short, we should achieve the right balance between what the markets need and what countries can offer. Another issue is to overcome the implementation gaps under the AEC. As mentioned earlier, while progress has been achieved, gaps remain. There is a need to transpose regional commitments to national commitments through appropriate domestic processes. Countries’ capacities to implement the various AEC measures also need to be enhanced, as well as the financing requirement of some of these measures including connectivity projects. Finally, another issue to address is the AEC monitoring. It’s time for us to develop a more robust monitoring scheme to assess the extent by which integration has succeeded, and to identify areas where more progress is needed.
Rapid growth also indicates a threat of overheating. How do you think ASEAN should direct its macro-economic management?
The first thing to do is to strengthen policy coordination in the region. Given the increasing interdependence of ASEAN economies, policy coordination is crucial to ensure our economic resilience. The recent crises in the global economy – the 2008 Global Financial Crisis and 2010 Eurozone debt crisis – clearly show how policy coordination has helped ASEAN contain the impact of these crises to the region. For example, given the strong links between financial markets and the resulting speed by which financial difficulties can spread, it is critical that ASEAN economies regularly share information and consult each other on changes in their respective key policies. Second, with weak external demand, ASEAN countries should continue to strengthen the domestic sources of growth to sustain economic growth. This requires a rebalancing in favor of domestic demand such as private investment. There is also a need to manage liquidity requirements in all economies and strengthen the prudential oversight. Finally, there is a need to implement structural reforms to enhance productivity growth in ASEAN.
ASEAN with 600 million consumers and two trillion dollars of combined GDP is a strong force. What does this mean for global partnerships of the bloc?
When the AEC will be realised by 2015, it is expected to add up to $69 billion in ASEAN GDP from a baseline figure (2008) and to between $117 billion and $264 billion in FDI stocks per annum. It will also increase per capita GDP in ASEAN-5 by between 17 and 26 per cent on average, and will contribute to significant productivity improvements in smaller ASEAN economies. With these gains, ASEAN can play a major role in advancing economic integration and globalisation. So far the ASEAN experience in integration has been encouraging. Therefore, it should continue to lead in opening up its markets, advance integration in trade, investment and finance, and actively participate in trade and financial globalisation. Through the above priorities, ASEAN should be able to contribute to re-shaping global economic and financial systems and sustaining the post-crisis global recovery, and playing a much needed leadership role in the process.
What is your stance towards the Trans-Pacific Partnership promoted by US President Barack Obama?
Formations of regional trading arrangements are considered as building blocks towards the multilateral WTO system. As such regional trade agreements and initiatives including the Trans-Pacific Partnership (TPP) currently being negotiated by 11 APEC member economies are welcome. Within ASEAN, there is the Regional Comprehensive Economic Partnership (RCEP) involving 10 ASEAN Member States and ASEAN’s 6 FTA partners (Australia, China, India, Japan, Korea and New Zealand). Despite overlaps in terms of membership, both the RCEP and TPP are expected to play critical roles in catalysing the ASEAN Economic Community and the APEC Community, respectively. Although they diverge in scope and coverage, I see the RCEP and TPP as mutually reinforcing not only in contributing to the general economic welfare of the economies participating in either or both the RCEP and TPP, but also to the overall growth and development of the East Asian/Asia-Pacific region.
Q: What will be ASEAN’s policy under your leadership on regional disputes such as the South China Sea dispute?
A: Promoting shared norms and values to ensure harmonious and peaceful inter-state relations in the region is an important component of ASEAN’s priorities. Our policy on regional disputes will remain guided by relevant principles enshrined in the ASEAN Charter and the Treaty of Amity and Cooperation in Southeast Asia (TAC). Specifically for the South China Sea, ASEAN will continue to be guided by relevant instruments in this respect, namely the Declaration on the Conduct of Parties in the South China Sea (DOC) and the guidelines for its implementation, ASEAN’s Six-Point Principles on the South China Sea as well as the ASEAN-China Joint Declaration issued on the occasion of the 10th anniversary of the DOC. This is a solid foundation for both ASEAN and China to continue efforts to address the South China Sea issues in a peaceful and constructive manner.
Many infrastructure challenges have to be addressed in developing ASEAN countries. Where will all the funds come from?
Under the Master Plan on ASEAN Connectivity, it is estimated that ASEAN countries will require infrastructure investments of $60 billion annually for this decade alone. Over the next five years, governments in the region will spend between 1 to 3 per cent of their GDP on infrastructure investment. One source of funding is the ASEAN Infrastructure Fund (AIF) which was established by the Finance Ministers in 2011. Other sources of funding could also be tapped from domestic capital market, public-private sector partnerships (PPP), international financial institutions and external partners.
What do you expect from Myanmar’s political and economic opening in the mid-term?
The ASEAN Leaders welcomed the significant developments in Myanmar and underscored the importance of maintaining a strong momentum in enhancing socio-economic development and, promoting good governance and democratic practices. I am convinced Myanmar will continue to build upon the recent developments to further liberalise trade and investment and increase its engagement with private sector in economic activities as it works toward establishing a market oriented economy. I am also confident that with strong political will and well managed reforms, Myanmar will be able to address the challenges, which are lack of infrastructure, limited institutional capacity etc., that lie ahead as it opens and modernises its economy, and intensifies its relations and partnerships with the global community.
Will Vietnam play a stronger role in ASEAN under your leadership?
Vietnam has made substantial contributions to ASEAN since it joined the association in 1995. Over the past 18 years, Vietnam has actively participated in ASEAN’s efforts to maintain peace and stability, promote economic development, enhance regional integration and strengthen relations with Partners. I am sure Viet nam will continue to play a strong role in ASEAN notwithstanding who the Secretary-General of ASEAN is. As the Secretary-General of ASEAN, I will work closely with all member states to realise our leaders’ vision for a region which is outward looking, living in peace, stability and prosperity, bonded together in partnership in dynamic development and in a community of caring societies.
[caption id="attachment_7088" align="alignleft" width="300"] Le Luong Minh, ASEAN Secretary-General[/caption] Le Luong Minh, formerly Vietnam's Deputy Minister for Foreign Affairs and UN diplomat, took over the five-year tenure as Secretary-General of the Association of Southeast Asian Nations (ASEAN) on January 1, 2013. Minh will lead the ten-member bloc through the formation of the ASEAN Economic Community and will have to solve other pressing issues such as the South China Sea struggle, pushing forward political and economic reforms and reducing gaps between the countries. Le Loung Minh gave Investvine's Arno Maierbrugger an exclusive interview as he commenced his tenure as ASEAN's top...
Le Luong Minh, formerly Vietnam’s Deputy Minister for Foreign Affairs and UN diplomat, took over the five-year tenure as Secretary-General of the Association of Southeast Asian Nations (ASEAN) on January 1, 2013. Minh will lead the ten-member bloc through the formation of the ASEAN Economic Community and will have to solve other pressing issues such as the South China Sea struggle, pushing forward political and economic reforms and reducing gaps between the countries.
Le Loung Minh gave Investvine‘s Arno Maierbrugger an exclusive interview as he commenced his tenure as ASEAN’s top diplomat
You will be steering ASEAN through historical changes, namely the ASEAN Economic Community, or AEC. Where do you see the main challenges?
Since its inception in 2003, the AEC has already brought important gains to the region. Tariffs have been reduced to less than 1 per cent on average, trade costs have been lowered, and intra-ASEAN services trade and investment has increased. But beyond these gains challenges remain. One challenge is the implementation of AEC measures. Although around 74 per cent of measures are now in place, a number of measures are still pending particularly in services liberalisation, standards and conformance, customs integration, and connectivity. Thus it is important that implementation bottlenecks are addressed. Another challenge is the need to prioritise the measures under the AEC. Since the AEC cuts across different pillars, focusing on priority areas for integration and advancing those areas with high impact where significant progress can be achieved is crucial. These include, for example, the elimination of non-tariff barriers, removal of restrictions on cross-border investments, implementation of mutual recognition arrangements for services sectors, and facilitating movement of capital.
ASEAN has attracted a lot of global attention for its booming economy. Does this implicate a stronger political role on the world stage, and if yes, what will be your policy?
ASEAN’s engagement on the global stage stems from its recognition that the world is now faced with complex, multi-faceted and transnational challenges that require concerted efforts of all nations and other stakeholders. As an organisation that has withstood the test of time and has contributed immensely to regional peace, stability and prosperity, ASEAN is well positioned to make worthy contributions to the solution of regional and global challenges. ASEAN leadership will definitely be tested because of ASEAN’s increasing economic weight in the global economy. In my view, ASEAN’s policy should continue to focus on mutual respect and shared responsibility. For example, ASEAN should ensure by participating actively in the discussion of global economic issues that the new opportunities to reform the global economic system are not wasted. It also requires our governments to remain committed to reforms and be more accountable. Policy makers in the region should continue to push for measures that will sustain the recovery and growth, like building the foundations for strong economic growth and macroeconomic stability and deepening economic integration.
There is a lot of remaining integration challenges in the ten-member bloc. What are the most pressing issues you want to address straight away?
One pressing issue is to address the “beyond-the-border” measures under the AEC, including non-tariff barriers and regulatory constraints. These include, in my view, addressing the most immediate concerns by the markets. For example, in facilitating free flow of goods, reducing logistics barriers to trade can be a priority. In services, it can be the provision of efficient transport and financial services to support trade flows. In investment, one priority is to increase equity participation in local industries and reduce business costs; and in facilitating freer flow of capital, harmonising withholding taxes can be the goal. In short, we should achieve the right balance between what the markets need and what countries can offer. Another issue is to overcome the implementation gaps under the AEC. As mentioned earlier, while progress has been achieved, gaps remain. There is a need to transpose regional commitments to national commitments through appropriate domestic processes. Countries’ capacities to implement the various AEC measures also need to be enhanced, as well as the financing requirement of some of these measures including connectivity projects. Finally, another issue to address is the AEC monitoring. It’s time for us to develop a more robust monitoring scheme to assess the extent by which integration has succeeded, and to identify areas where more progress is needed.
Rapid growth also indicates a threat of overheating. How do you think ASEAN should direct its macro-economic management?
The first thing to do is to strengthen policy coordination in the region. Given the increasing interdependence of ASEAN economies, policy coordination is crucial to ensure our economic resilience. The recent crises in the global economy – the 2008 Global Financial Crisis and 2010 Eurozone debt crisis – clearly show how policy coordination has helped ASEAN contain the impact of these crises to the region. For example, given the strong links between financial markets and the resulting speed by which financial difficulties can spread, it is critical that ASEAN economies regularly share information and consult each other on changes in their respective key policies. Second, with weak external demand, ASEAN countries should continue to strengthen the domestic sources of growth to sustain economic growth. This requires a rebalancing in favor of domestic demand such as private investment. There is also a need to manage liquidity requirements in all economies and strengthen the prudential oversight. Finally, there is a need to implement structural reforms to enhance productivity growth in ASEAN.
ASEAN with 600 million consumers and two trillion dollars of combined GDP is a strong force. What does this mean for global partnerships of the bloc?
When the AEC will be realised by 2015, it is expected to add up to $69 billion in ASEAN GDP from a baseline figure (2008) and to between $117 billion and $264 billion in FDI stocks per annum. It will also increase per capita GDP in ASEAN-5 by between 17 and 26 per cent on average, and will contribute to significant productivity improvements in smaller ASEAN economies. With these gains, ASEAN can play a major role in advancing economic integration and globalisation. So far the ASEAN experience in integration has been encouraging. Therefore, it should continue to lead in opening up its markets, advance integration in trade, investment and finance, and actively participate in trade and financial globalisation. Through the above priorities, ASEAN should be able to contribute to re-shaping global economic and financial systems and sustaining the post-crisis global recovery, and playing a much needed leadership role in the process.
What is your stance towards the Trans-Pacific Partnership promoted by US President Barack Obama?
Formations of regional trading arrangements are considered as building blocks towards the multilateral WTO system. As such regional trade agreements and initiatives including the Trans-Pacific Partnership (TPP) currently being negotiated by 11 APEC member economies are welcome. Within ASEAN, there is the Regional Comprehensive Economic Partnership (RCEP) involving 10 ASEAN Member States and ASEAN’s 6 FTA partners (Australia, China, India, Japan, Korea and New Zealand). Despite overlaps in terms of membership, both the RCEP and TPP are expected to play critical roles in catalysing the ASEAN Economic Community and the APEC Community, respectively. Although they diverge in scope and coverage, I see the RCEP and TPP as mutually reinforcing not only in contributing to the general economic welfare of the economies participating in either or both the RCEP and TPP, but also to the overall growth and development of the East Asian/Asia-Pacific region.
Q: What will be ASEAN’s policy under your leadership on regional disputes such as the South China Sea dispute?
A: Promoting shared norms and values to ensure harmonious and peaceful inter-state relations in the region is an important component of ASEAN’s priorities. Our policy on regional disputes will remain guided by relevant principles enshrined in the ASEAN Charter and the Treaty of Amity and Cooperation in Southeast Asia (TAC). Specifically for the South China Sea, ASEAN will continue to be guided by relevant instruments in this respect, namely the Declaration on the Conduct of Parties in the South China Sea (DOC) and the guidelines for its implementation, ASEAN’s Six-Point Principles on the South China Sea as well as the ASEAN-China Joint Declaration issued on the occasion of the 10th anniversary of the DOC. This is a solid foundation for both ASEAN and China to continue efforts to address the South China Sea issues in a peaceful and constructive manner.
Many infrastructure challenges have to be addressed in developing ASEAN countries. Where will all the funds come from?
Under the Master Plan on ASEAN Connectivity, it is estimated that ASEAN countries will require infrastructure investments of $60 billion annually for this decade alone. Over the next five years, governments in the region will spend between 1 to 3 per cent of their GDP on infrastructure investment. One source of funding is the ASEAN Infrastructure Fund (AIF) which was established by the Finance Ministers in 2011. Other sources of funding could also be tapped from domestic capital market, public-private sector partnerships (PPP), international financial institutions and external partners.
What do you expect from Myanmar’s political and economic opening in the mid-term?
The ASEAN Leaders welcomed the significant developments in Myanmar and underscored the importance of maintaining a strong momentum in enhancing socio-economic development and, promoting good governance and democratic practices. I am convinced Myanmar will continue to build upon the recent developments to further liberalise trade and investment and increase its engagement with private sector in economic activities as it works toward establishing a market oriented economy. I am also confident that with strong political will and well managed reforms, Myanmar will be able to address the challenges, which are lack of infrastructure, limited institutional capacity etc., that lie ahead as it opens and modernises its economy, and intensifies its relations and partnerships with the global community.
Will Vietnam play a stronger role in ASEAN under your leadership?
Vietnam has made substantial contributions to ASEAN since it joined the association in 1995. Over the past 18 years, Vietnam has actively participated in ASEAN’s efforts to maintain peace and stability, promote economic development, enhance regional integration and strengthen relations with Partners. I am sure Viet nam will continue to play a strong role in ASEAN notwithstanding who the Secretary-General of ASEAN is. As the Secretary-General of ASEAN, I will work closely with all member states to realise our leaders’ vision for a region which is outward looking, living in peace, stability and prosperity, bonded together in partnership in dynamic development and in a community of caring societies.
