Wary Neighbors Turn Into Partners in ASEAN

July 9, 2012

Ny Times: Thomas Fuller

Wary Neighbors Turn Into Partners in a Quickly Developing Southeast Asia (ASEAN)

by Thomas Fuller (07-05-12)

PHU NAM RON, Thailand — This hillside village along the border with Myanmar was once a dead end. The road from Bangkok curved up scenic mountains through a sparse collection of wood and cement houses and stopped at the frontier.

Now, as Myanmar opens up to the world after decades of isolation, Thai construction crews are clearing paths through the malarial jungles in preparation for creating a gateway that underlines the movement toward broader regional integration.

Southeast Asia has long been divided by language, religion, historical rivalries and, farther south, the geography of sprawling archipelagos. But the opening of Myanmar; the construction of bridges, railways and roads on the Indochinese peninsula; and the rise of inexpensive air travel are bringing the region’s nations closer to the goal of standing up to the two giants of the neighborhood, India and China. Those changes, in turn, give more credence to plans to establish a common market by 2015.

“The rest of the world seems to be stalling,” said Surin Pitsuwan, the Secretary General of the Association of Southeast Asian Nations (ASEAN), which is steering plans for the common market. “We are doing quite well.”

As ASEAN prepares for high-level meetings next week that will be attended by Secretary of State Hillary Rodham Clinton, the ambitions for knitting Southeast Asia together economically have never been greater.

In 2014, Communist-ruled Laos and its capitalist neighbor Thailand, which were enemies during the cold war, are set to inaugurate the fourth bridge built across the Mekong River in less than two decades. Western Cambodia gets its electricity from Thailand, and the glittering lights of Bangkok are possible, in part, because of the natural gas that is piped in from Myanmar. And Myanmar says it will start rebuilding its rail line to Thailand — conceived by Japan, built by prisoners during World War II and made famous by the movie “The Bridge on the River Kwai.”

These types of connections “are starting to restore Southeast Asia’s position as the crossroads of Asia,” said John Pang (right), chief executive of a research organization that studies ASEAN and was set up by the CIMB Group, a Malaysian banking network that operates throughout the region.

The impetus for the ASEAN nations’ integration in many ways comes from the outside. Both Japan and China have been active in financing infrastructure projects in the region, partly because a better-connected Southeast Asia will make it easier to sell their products — and, in Japan’s case, to link a vast network of suppliers to Japanese-owned factories.

“This is their backyard,” Mr. Pang said. “They want easy access, and they want it organized.”

China’s view of Southeast Asia is more complicated. Economically, it would like to see a strong ASEAN, Mr. Pang said. But on some delicate territorial issues, Beijing insists on dealing with countries individually, in particular on the rising tensions over the competing claims in the South China Sea.

From some vantage points, Southeast Asia barely coheres as a region. There is an absolute monarchy, Brunei. There are also two nominally Marxist countries, Laos and Vietnam; and a freewheeling democracy prone to military coups, Thailand. At the geographical extremes are Indonesia, which is mostly Muslim and is the world’s largest archipelago, and Myanmar, largely Buddhist, with mountains that form the foothills of the Himalayas.

But the integration of Southeast Asia has taken on a life of its own. It more closely resembles the European Economic Community, an early predecessor to the European Union, than it does the current European bloc, which is struggling to reconcile its plans for a common monetary policy with its lack of fiscal and political unity.

The treaty among the 10 member countries of ASEAN is only loosely enforced, a sharp contrast with the treaties governing the 27-nation European Union. The ASEAN Secretariat in Jakarta, Indonesia, employs 295 people, a fraction of the 33,000 people who work for the European Commission in Brussels and elsewhere.

“Each member state is still very jealous of its own sovereignty and decision-making power,” Mr. Surin said. “My role is to implement, not to lead.”

Those who follow the progress of Southeast Asia’s integration say the process has been more organic, less scripted and less legalistic than Europe’s. The movement of people across borders is the product of both the weak rule of law in the region and the mismatch between the supply and demand for workers. People from Myanmar, Cambodia and Laos who want to work in Thailand slip across the porous borders or pay a bribe of about US$1.50, often in full view of the immigration authorities.

An estimated two and a half million people from those three countries have taken that route. Thailand, having realized the value of such labor, has offered temporary working papers to 900,000 people, but it jealously guards the path to citizenship.

Travel for the more affluent has been transformed by AirAsia, a low-fare carrier that was rescued from insolvency by a Malaysian entrepreneur a decade ago. It now has 4,800 flights a week, close to 90 percent of them within ASEAN’s member nations.

“We have barely scratched the surface in terms of meeting demand,” Tony Fernandes, the chief executive of AirAsia, said by e-mail. Multinational companies have been among the biggest beneficiaries of ASEAN’s growing cohesion.

Stuart Dean, the Chief Executive of General Electric ASEAN, a division of the global company, says it has benefited from the economics of scale by consolidating its three light bulb facilities into one large factory in Indonesia.

Mr. Dean describes the opening up of Myanmar as the “most remarkable thing I’ve seen in ASEAN in 20 years.” But he laments the absence of consistent standards in the region, the barriers to trade, and the lack of integration among capital markets. “Generally speaking, it’s two steps forward, one step backward,” he said.

Wayne Spittle, a Senior Vice President at Philips, the Dutch multinational corporation, says customs clearance is a persistent problem. Philips keeps spare parts for medical equipment in Singapore and sends them across the region when needed. But in countries like Indonesia and the Philippines, the parts are typically held up for at least a week.

“You’ll often get comments like, ‘Pay some money and you’ll get it through customs — you’ll get the order much quicker,’ ” Mr. Spittle said. “That’s not something we do.”

The sheer notion of a region called Southeast Asia is relatively recent. Benedict Anderson, an expert on nationalism who has based much of his work on Indonesia and Thailand, said the term first started appearing in American and British scholarly journals in the 1930s and 1940s.

“It came from academia,” Mr. Anderson said. “When they were dividing up the world for research purposes, Southeast Asia was a kind of residual area. It wasn’t Oceania; it wasn’t Australia, India or China.”

Wars have divided the region for centuries. Thailand and Burma, as Myanmar was previously known, have fought at least 44 times. Two of those wars were for control over the area where Thai engineers are now tracing the road through the Burmese jungles.

What Thailand could not achieve through war it is getting in peace: relatively easy access between Bangkok and the port of Dawei, Myanmar, on the Andaman Sea. Ultimately, the new road will provide a shorter trade route to Europe, the Middle East and Africa for products made on the Indochinese peninsula.

Like Southeast Asia’s integration itself, the project is touch and go. Long-term financing is uncertain, and Myanmar’s transition to democracy is still fragile. But construction continues, and residents here in Phu Nam Ron, Thailand, are already using parts of the road to reach Dawei.

And there is one indicator, above all others, suggesting that plenty of people are betting on its ultimate success: land in the village of Phu Nam Ron now goes for 25 times what it did just a few years ago.

“Each time another government minister visits,” said Apirat Sa Ngobjit, the village headman, “the price of land goes up.”

A version of this article appeared in print on July 6, 2012, on page A4 of the New York edition with the headline: Wary Neighbors Turn Into Partners in a Quickly Developing Southeast Asia.

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