ASEAN is a unique institution with unique sets of opportunities and challenges. Its sheer ability to rally a group of nations that are socially, politically, and economically diverse should not go unmentioned in history books. However, it has consistently underdelivered its promises: trade barriers persist, resource distribution mechanisms remain non-existent, and awareness of ASEAN amongst citizens of Member States is still low.

These situations are direct results of ASEAN’s double-edged non-interference policy. Agreed during the 1967 Bangkok Declaration, the policy states that a Member State shall not directly interfere with the decision-making process of another Member State. In simple terms, there is no formal ASEAN medium for Malaysia to address the Philippines’ policy on extrajudicial killings, for example. What this does is take away the incentive for individual countries to forgo their interests in favor of a common goal. Political economists call this behavior a collective action problem, an unfortunately prevalent trait throughout the region.

Also read ASEAN: same, same not different’

The inclusion of a non-interference policy in the ASEAN framework was a needed compromise back in 1967. Southeast Asia has a complicated history with external powers and the influence of autocratic political systems from pre-colonial times is still felt today. ASEAN had to sell itself as a solely cooperative body to avoid the risk of being outed as a veiled version of colonialism. At the time, it was an acceptable and practical set-up.

Fast forward to the status quo, bigger stakes emerged as China established itself as a major player in the region. The ongoing South China Sea conflict between China and several ASEAN states, for instance, is a classic example of a collective action problem. Current efforts have been centered on pressuring China via legal and political means, but to minimal effect; China has gone to reject the Hague’s ruling on discrediting its nine-dash line claim in the South China Sea.

Also read Uncharted Water: South China Sea’

The important observation here is that aside from the Philippines as plaintiff in the ruling, responses from the rest of the ASEAN Member States have been unaggressive. The 2016 ASEAN Summit, which came after the Hague’s ruling, failed to come up with a joint statement to address China’s refusal to acknowledge it.

To understand why, we need to look at the two-faced relationship ASEAN has with China. On the one hand, there is the maritime dispute, but on the other, there is also reliance on the Chinese economy. As of 2015, China has overtaken other ASEAN trade partners in both exports and imports, controlling 15.2% of our total trade. Chinese foreign direct investments (FDI) are comparatively low, but its 16.7% compound annual growth rate (CAGR) between 2007 and 2015 far exceeds others – including intra-ASEAN FDI at 13.8%  – implying that we are relying more and more on Chinese capital.

Figure 1: Total ASEAN Trade in Goods
Figure 2: Net Inflow of FDI in ASEAN

This dichotomy causes a dilemma for individual ASEAN Member States as they thread a careful line between maintaining favorable trade conditions and upholding their national sovereignty. The solution is again, simple. ASEAN can ‘balance against’ China as a regional bloc by forming stronger intra-ASEAN economic linkages. This could be in the form of smoother capital flows as well as strengthening intra-ASEAN trade. In the long run, we would then no longer rely on China to drive our economy hence eliminating the above dilemma. The caveat is of course, no state quite wants to jeopardize their economic position in the short term in favor of potentially lower returns from intra-ASEAN investments.

To put it in explicit terms, collective action problem is a big roadblock for ASEAN. There needs to be a thorough assessment of how ASEAN is doing so far, 50 years on. Its constant penchant to underdeliver its goals are often excused by the notion of “the ASEAN way”, but the reality is that upper limits exist in the use of a non-interference policy. Yes, it played an important role to ensure a peaceful post-colonial realignment, but what if that is all there is? How can ASEAN fully realize its goals to accelerate each other’s growth when its current way of doing things does the exact opposite? ASEAN leaders ought to have these reflections now, before it is all too late.

Also read ‘ASEAN: A Strategic Region with Rising Relevance’

 


Hisyam Takiudin is a senior studying Economics and Political Science at Brown University.

Disclaimer: All opinions expressed in this article are the author’s own and do not necessarily reflect the views of the ASEAN Economic Forum.