KUALA LUMPUR: In integrating Asean as one single market, the most important thing Asean needs to do is to readjust its mind map of where it sits in the world, said The London School of Economics professor Danny Quah.
“Asean needs to realise that it is in a better place location. We think we are part of a global supply chain, where the East is involved in the manufacturing and assembly, while the product is sold to Western consumers.
“To continue with the Iphone analogy, this would mean that the rise of Asia has only been made up from 4%. If this were true, then Asia’ success of the global supply chain would be very fragile.
“At the best of times we make 4%.
“In the worst of times, we would be making negative returns,” said Quah.
Over the last two financial crises, China and East Asia have continued to grow.
Germany, for instance, which used to export to other parts of Europe, continues to double its exports without these European countries exporting from it.
It has now been replaced by developing Asia, with China taking up a third of these exports, he said.
This is also seen in the Gulf, Kuwait and the Emirates. Their major export markets used to be the US and Western Europe. Exports in these countries have either not grown or declined.
However their export volumes have now increased by five times, and it is to developing Asia.
“So if we really held on to that 4% theory, this would not be possible. If the West is not consuming, then who is?
“The decoupling is actually going on in the world. Asia has a momentum in its economic trajectory that is independent of the troubles of the West,” said Quah.
“The missing link is that we think we make up the 4%. There is a shift in economics eastward, it is real and will continue.
“We must adjust our mental mind map. We must take greater responsibility. We need to be more innovative and develop domestic demand in our own markets,” said Quah.
Apart from the readjustment of one’s mind mapping, Quah said there needs to be a harmonising of regulations and a liberalising in trade and protective markets.
While Quah is optimistic about the integration of Asean, he admits that the idea is still a huge distance away .
Reforms will take time. And this is especially so with Asia’s way of making decisions that are deliberate, non confrontational and consensual in nature.
Source: The Star Online