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Lin Zhaowei And Tan Hui Yee

The Straits Times

Publication Date : 11-01-2013

Southeast Asian countries should prepare to weather a global slowdown this year as three of the world's four growth engines - the United States, the European Union and Japan - are in the doldrums, said former Indonesian vice-president Jusuf Kalla.

China, the fourth engine, is also not in good shape, adding to economic worries.

Delivering the keynote address at the Institute of Southeast Asian Studies' (Iseas) annual Regional Outlook Forum yesterday, Kalla used the analogy of a plane's engines to describe how Asean is affected by the global economic uncertainty.

Southeast Asian countries should try to minimise the impact of the downturn "by strengthening fiscal and monetary policy, as well as shifting reliance towards domestic and regional demand rather than the global market", he told the audience of about 400, among them policymakers, academics and business leaders.

Kalla also highlighted the need to maintain peace in the region, promote the capacity to innovate and deal with population changes as the challenges facing the region this year and beyond.

With Indonesia's rising economic clout, Kalla believes the country is set to play a bigger role in stabilising the region.

"It is in Indonesia's ultimate interest to maintain peace and vibrancy in Southeast Asia," he said. "Economic expansion is very crucial for Indonesia in providing jobs to the three million young Indonesians who enter the job market each year."

Although increased cooperation within the region was a key message in his speech, Kalla also noted that Asean's unity has been affected by rising tension between some member states and China over maritime disputes.

Last July, Asean failed to issue a joint communique for the first time in its history, after summit host Cambodia refused to include any reference to the territorial disputes in the South China Sea.

"One of Asean's major limitations is its lack of ability to engage in open discussions and make bold decisions," he said. "This is in part due to Asean's reliance on consensus in its decision- making process."

He suggested that Asean allow voting if the consensus-based approach does not work.

"Delays in making decisions will potentially increase the magnitude of conflicts, breed more uncertainties, and make it tougher to find a significantly effective solution," he said.

Iseas senior fellow Ian Storey, speaking at a separate session yesterday, noted that the US is concerned about Asean's weak consensus on the territorial disputes.

He expects these disputes to "continue to figure prominently at multilateral security forums" this year, citing as examples the Asean Regional Forum and the East Asia Summit.