Challenges on the Way to an East Asian Community

May 25, 2006

Abdullah Ahmad Badawi
Prime Minister, Malaysia

Distinguished guests,
Ladies and gentlemen.

I am pleased to have been invited yet again to speak at this important conference, my third time in as many years. On the two previous occasions that I was here, I spoke about East Asian regional integration. I spoke about why it is needed, why it is logical and, indeed, why it is inevitable. I argued that the process must transcend economics to include political, social and security community building. I also stated my firm conviction that the ASEAN plus three process must be at the centre of community building efforts. To my mind, no other option is as sensible or feasible. I further argued that the ASEAN plus three process is entirely consistent with the principles of openness and inclusiveness.

At this conference, I would like to share with you my thoughts on some of the continuing challenges that lie in the way of an East Asia Community building. This is an important subject because of the new developments that have taken place since our last meeting, the most important of which has been the initiation of the East Asia summit in Kuala Lumpur in December 2005. It is also an important subject in view of the powerful geopolitical and geo-economic pressures that are building in the region and globally.

Let me begin by tracing the key landmarks in the evolution of the historic community building initiative of East Asia. The first step was taken when Malaysia proposed an East Asia economic group in 1990 as a way of overcoming the impasse in the Uruguay round of multilateral trade negotiations, following the failure of the Brussels ministerial meeting. The idea then was that the E.A.E.G could be a force, much as the Cairns group was, and still is, in the agricultural sector. The E.A.E.G was, in other words, a response to a problem. In the interest of time, I will not go into all the reasons why this proposal was misunderstood, intentionally and otherwise. Suffice it to say that, although ASEAN saw its significance and adopted it as the East Asia Economic Caucus in 1992 as a means of promoting cooperation in economic matters, some other countries in the region thought otherwise.

The lack of consensus made the East Asia initiative largely dormant until 1997. It took the financial crisis that descended upon the region that year to convince the countries of East Asia that they would really need to work together if their greatest concerns are to be better addressed. Throughout the region there was capital flight, currency collapse, soaring interest rates, extreme financial distress, depressed equity markets and unprecedented economic recessions. The lack of comprehensive assistance from countries outside of the region and from international organisations made it clear that East Asian countries were on their own. They realized that they would have to do something for themselves because no one else would. As usual, the threat of economic collapse created the powerful incentives for cooperation that the euphoria of economic prosperity could not.

The alarming situation prompted regional states to hold the first ASEAN plus three summit on an informal basis in Kuala Lumpur during the commemoration of the 30th anniversary of ASEAN. The initiative to build an East Asian Community gained momentum since then. The East Asia Vision Group and the East Asia Study Group, in which we all participated fully, outlined the vision and objectives of the East Asia Community. We committed ourselves to no less than 26 high priority measures in pursuit of the stated objectives to realise our common vision.

Out of the desire to meet our common needs, schemes such as the new Miyazawa initiative and the Chiang Mai initiative were born. The new Miyazawa initiative, announced in October 1998, provided for US$30 billion of financial assistance by Japan to Indonesia, Malaysia , Philippines, South Korea and Thailand, out of which 21 billion dollars was eventually allocated. I would like to record again my profound appreciation to the government of Japan for the timely assistance to Malaysia . The spirit of caring that Japan demonstrated to fellow East Asian countries when they were in distress demonstrates what being part of a community is all about.

The Chiang Mai initiative of May 2000 comprised cooperation in monitoring capital flows, regional surveillance, personnel training and a bilateral currency swap arrangement network. I must commend the good work of our finance ministers for enhancing and fine-tuning the swap arrangements and bolstering domestic debt markets. The size of the currency swap agreements today has doubled to US$71.5 billion from US$39.5 billion when we met in this conference last year. The work may have been slow but persistence has paid off.

The convening of the first East Asia summit at the end of 2005 marked another milestone in the evolution of the East Asia initiative. India, Australia and New Zealand joined the East Asia countries in a forum for dialogue on broad strategic issues of common interest to promote community building in the region.

This is where we are now. Many challenges remain. I believe that we should not be deterred by challenges, however intimidating they may appear to be. Indeed they should act as a spur to prod us into taking more concerted action. Challenges are not unique to the East Asia initiative. History tells us that every grand enterprise entering into uncharted waters confronted its own set of challenges. Sixty years on, the European Union, the oldest and most successful regional enterprise so far, also continues to confront many challenges. We should therefore persevere.

Among the challenges we face, let me highlight the three that I think are the most crucial and the most urgent. I will call the first the challenge of cohesion; the second the challenge of conviction; and the third the challenge of implementation.

I have placed the challenge of cohesion first on the list for good reason. If there is no solidarity among members of a collective enterprise, that enterprise is doomed to fail. And I am sure we will all concede that in the last two years our solidarity has been seriously dented. You would remember that last year, the dark clouds of Sino-Japanese relations hung low over this conference. I was disappointed that the bilateral meeting between Prime Minister KoizumI and Vice Premier Wu did not take place. I was not alone. I said then that we had to be careful not to return to a history when Asia was divided and carved up at the whims and fancies of others.

I am afraid I have to be candid and say that the situation has worsened. Our economics is pushing us in one direction, but our politics is pulling us in another. In addition to the difficulties between Beijing and Tokyo, relations between seoul and Tokyo have also become further strained. Southeast Asia too contain many unresolved problems. We must expect some differences between states. They are only natural. But when differences lead nations to pull in different directions, then we will all suffer the consequences. The repercussions will be even more disastrous if some of our actions result in the undermining of the East Asia Community initiative that we nurtured and launched together.

We must put an end to this unhealthy slide in our relations. We must close ranks over the East Asia enterprise and restore our cohesion. If we cannot resolve our differences easily, we should at least attempt to moderate our sentiments towards each other. Above all, we should not let our bilateral differences get in the way of building the East Asia Community. We should not allow regional cooperation to be held hostage to bilateral constraints. Many of the members of ASEAN, for instance, also have outstanding bilateral issues. But we have never allowed them to frustrate cooperation within ASEAN, and each of us would always exercise care not to undermine ASEAN as an organization.

China, as a giant economy, and still growing, has given rise to certain apprehensions. It has led many regional countries to believe that China is becoming a threat. This will affect our relationships with China. This will lead to unnecessary hedging against China. Such an attitude will affect our cohesiveness and dampen our efforts at community building in East Asia. The so-called "China threat", it seems to me, needs to be examined more dispassionately.

Let me proceed now to the second challenge, the challenge of conviction. For instance, there are apprehensions that if East Asia cooperation becomes strong, ASEAN cooperation will become weak. There are also concerns that coming into being of the East Asia Community will be at the expense of the ASEAN community that is envisaged in Bali Concord II.

Such apprehensions are unfortunate indeed. They will only serve to contribute to our mutual detriment, not to our mutual good. All the different processes - ASEAN, ASEAN plus three, East Asia summit - are meant to complement and support each other, not to balance and check each other. Each process has its own logic and purpose, and each deserves its own measure of conviction. Each needs to be promoted in earnest, not against each other, but in tandem with one another.

Let me be crystal clear on Malaysia 's position. Malaysia believes that the core of the East Asian Community must be ASEAN. ASEAN has some weaknesses and disadvantages as a regional organisation. But only ASEAN has the requisite credentials and characteristics upon which to anchor an East Asian Community. Its organisational norms, behaviour and practices are well established. It is committed to promoting regional cooperation for peace and prosperity. It is a force for moderation and a threat to none. It believes in open regionalism and working with all for mutual good. ASEAN's agenda is regional first, all others second.

I am convinced therefore that ASEAN is the appropriate anchor of all regional initiatives in the region. ASEAN shall also drive both the ASEAN plus three as well as the East Asia summit processes, with the active participation of all the other countries involved. ASEAN will not allow any country to dominate the processes because the "ASEAN way" disapproves of domination. ASEAN will therefore continue to chair both processes. It has become commonplace to speak of ASEAN as being in the driving seat of East Asian cooperation. In fact, ASEAN is more than just the driver. In many respects, it is also the engine.

Malaysia is fully committed to the proposition that ASEAN plays a central role in promoting regional cooperation. At the same time Malaysia is fully and totally committed to the ASEAN plus three and East Asia summit processes as well. Our commitment to these two processes will be in complete conformity with their respective intended purposes. The Kuala Lumpur Declaration of the ASEAN plus three summit in December last year stated unambiguously that the- ASEAN plus three process - and I quote - "will continue to be the main vehicle" to realise an East Asian Community. We are likewise committed to the East Asia summit process in accordance with the Kuala Lumpur Declaration on the East Asia summit last December. The declaration says that the summit will be - and I quote - "a forum for dialogue on broad strategic, political, and economic issues of common interest and concern in East Asia". The declaration further states that the summit's role in promoting community building in the region will reinforce the realisation of the ASEAN community, and that it "will form an integral part of the evolving regional architecture".

This regional architecture will be the subject of much deliberation in the months ahead. The ASEAN plus three process has been tasked to produce the second joint statement on East Asia cooperation at its tenth anniversary in 2007. The East Asia summit will convene in the Philippines in December this year, and it will attempt to take the summit a step forward from the inaugural meeting held in Kuala Lumpur last year. In both instances, much will depend upon ASEAN, because it chairs and drives both processes.

The countries of East Asia must renew their conviction in the ASEAN plus three process. That process should remain as the primary vehicle for community building in East Asia. I see at least three very good reasons why this process must remain the primary vehicle.

First, because we achieved full consensus on the East Asia Community building process from the very inception of our initiative to build an East Asian Community. This consensus was no ordinary consensus. It was a consensus forged in the members of the Asian financial crisis, when none outside the East Asian circle felt moved enough to come to our help in our hour of great need.

Second, because we have already invested nine years in building this community through the ASEAN plus three process, we worked hard at this, each doing our bit to lay the foundations of the East Asia Community that was based on a clear vision of what this community should look like and the purposes that it should serve. We are now looking to the next ten years to build on the progress we have made so far. There is little to be gained by diverting from the path we have set for ourselves.

Third, and most importantly, because it makes eminent sense. What we are engaged in is not mere cooperation. It is community building, something that is more exacting and which requires greater commonalities among the parties involved. A community must be built by the people of that community, in their own mould. The people of a community must share more than a common economic or security space. They must also share a broadly common social and cultural space. Only then can that community bond together and endure. In other words, the East Asian Community must comprised East Asians, and it must be built by East Asians.

If I sound like I am advocating a closed East Asian Community, let me hasten to correct any such impression. I believe that the East Asian Community must engage fully with the outside world. Only then can it prosper. We must engage fully with all the nations that are important to us, through all the forums and vehicles most important to us. It is for this purpose that we embarked upon the East Asia summit initiative, and it is for this reason that we should welcome and further develop this process. The summit process enables the ASEAN plus three countries to engage and cooperate fully with the other participants of the process for mutual benefit.

As participants in the East Asia summit process, there is much that India, Australia and New Zealand can offer to the community building effort in East Asia. Their contribution towards trade and economic development will be particularly important. Similarly, a dynamic and growing East Asia also provides many opportunities to these three countries as well. It is in this context that the East Asia summit also promotes community building in East Asia, and is a part of the evolving regional architecture.

Let me turn now to the third challenge, that is the challenge of implementation. We need cohesion and cooperation among the East Asian countries. We need to strengthen conviction in the processes that we have established and the roles that we have assigned for them. But all these will not count for much if we do not commit ourselves to fully implementing the various initiatives and programmes that we have agreed upon and those that we will adopt in the future.

The challenge of implementation is not unique to the East Asia enterprise. Back home, in Malaysia , one of my greatest challenges is to implement the plans that we have approved and deliver on the promises that I have made. My greatest challenge now is to successfully implement the ninth Malaysia plan, an ambitious five-year development plan, which represents the final push for achieving the status of a fully developed nation by 2020. I have labelled it as the national mission, to reflect the importance of the way forward and the sanctity of the objectives.

We lag behind in the implementation of several of the measures that we had agreed upon. Not surprisingly, we need to do much more in the field of poverty alleviation, an area of core concern for nearly every developing country in the region. We are also well behind in realising our initiative to build an East Asia free trade area. We identified it as a long-term measure albeit of high priority, but the failure of the World Trade Organisation to achieve substantial progress in the multilateral trade negotiations in the Doha development round so far, makes it imperative that we pursue, with greater urgency and seriousness, an East Asia free trade area. We should make greater effort to consolidate and link the many bilateral and sub-regional F.T.A.s. that we already possess. A region-wide F.T.A. that creates a market of almost two billion people will be the largest in the world. Once established, it will be the most impressive achievement yet of cooperation and community building in East Asia

When we met in 1997 at the first ASEAN plus three summit, we launched an initiative of profound historical significance. That was the first difficult step in the direction of building the East Asian Community. Despite many constraints and obstacles, as well as some disappointments, we made steady progress. We can be proud of some of our accomplishments. But we are at a critical juncture now. The unifying impulse of the asian financial crisis appears to have lost some of its momentum. In the years that intervened, new anxieties and doubts have developed. Some of us appear to be tugging in different directions.

We must ensure that we do not falter or drift. Above all, we must not stray. As we stand poised on the threshold of the second decade of our cooperative enterprise, let us come together and re-dedicate ourselves towards realising the vision of an East Asian Community that is built on powerful resolve, common purpose and united endeavour.

It is my deepest wish that when we gather again here in Tokyo next year, we will be able to report good and sound progress.
Thank you.

Titles of speakers, names of companies, etc., were correct as of the time when the forum was held.