The heavy weight given to the ASEAN Free Trade Area (AFTA) and related ASEAN Investment Area (AIA) in the ASP 5 program was in line with the main thrust of ASEAN regional integration efforts. These efforts in regional cooperation to plan, agree on and to begin implementing a key element of a consistent policy environment for trade and investment across the whole region put ASEAN economic cooperation on a completely different level. Much of the work in this core area of ‘regional integration’ was carried out by the ASEAN secretariat under funding by UNDP.
UNDP ASEAN Consultation and Dialogue
Two ASEAN-UNDP events held in October 1996 in Kuala Lumpur were additional testimonies to the much strengthened dialogue mechanism between the two entities. The first meeting of the Joint Management Committee (JMC) took place, attended by the ASEAN Directors-General, the ASEAN Secretariat and UNDP. This achieved a prompt and effective resolution of all outstanding implementation issues of the ASEAN Sub-regional Programme for the Fifth Cycle (ASP-5). The First Meeting of the ASEAN-UNDP Dialogue also took place, co-chaired by the Secretary-General of ASEAN and the UN Assistant Secretary General and Director of the Regional Bureau for Asia and the Pacific. As the first formal dialogue session between the two Dialogue Partners, this meeting was historically significant: it gave both parties the opportunity to cordially exchange their views outside the framework of the sub-regional programmes. Respective goals and priorities, current issues and possible areas for future collaboration were among the issues discussed.
ASP 6: Responding to the Asian Financial Crisis
ASP 6 was originally seen as a continuation of ASP 5, with similar levels of funding and, based on program formulation work funded by UNDP, with a similar balance of priorities. However, the East Asian Financial Crisis that began in August 1997 greatly altered these plans. UNDP funding was scaled back as some UNDP resources were reallocated to other sub regional and national programs responding to the aftermath of the crisis. ASP 6 was reformulated as a ‘fast track’ response to the financial crisis and to the impact of the crisis on low income and vulnerable groups, although smaller sub components dealt with trade and investment issues and institutional development issues.
ASP 6: Program Components by Funding Level
|
Program |
Funding (US$) |
Percent |
|
ASP 6 |
2,266,824 |
100 |
|
Program to Monitor and Facilitate the ASEAN Economic Recovery |
1,743,874 |
77 |
|
· Financial Sector Components
|
792,119
|
35 |
|
· Social Needs Components
|
602,815
|
27 |
|
· Trade, Investment and Tourism Components
|
348,940 |
15 |
|
Program for ASEAN Institutional Development
|
343,000 |
15 |
|
Project Management Team |
179,950 |
8 |
One of the sub-components in the financial sector work aimed at developing a Surveillance System within the Secretariat capable of providing early warning of problems in the financial systems within the region and to produce an ‘Economic Outlook’ paper to keep ASEAN policy makers up to date with economic, financial and investment developments. Another sub-component surveyed developments in financial sector reform programs in the more developed ASEAN 6 economies with an eye to lessons that might be useful for the new CMLV member states (Cambodia, Myanmar, Laos and Vietnam. Other sub-components explored the scope for using ASEAN currency payments mechanisms, developing an ASEAN bond market within the region, and developing a regional swap facility to reduce the vulnerability of the region to international financial crisis. The work on the regional swap facility expanded to include cooperation with other Asian countries (China, Japan and the Republic of Korea), an early step in the development of an ASEAN + 3 cooperation framework.
Given the severity of the financial crisis and the negative impact on lower income groups, another component was directed towards increasing the capacity to monitor the economic well being of low income groups and developing social safety nets to mitigate the impact of economic crises on these groups. Given the many country specific factors that need to be taken into account in the design of social safety nets, and the very significant difference in these factors amongst the ASEAN member states, the design and implementation of such programs is best be carried out at the national level. However, the ASEAN programme was used to highlight the issue and to exchange experiences within the region on this important issue. In addition, ASEAN’s efforts maintain a momentum towards ‘outward looking’ regional integration and to re-establish high rates of growth provided hope for improved living conditions throughout the region.
The trade component was originally designed to address the sharp drop off in exports that occurred during the early stages of the financial crisis as the credit system in many countries contracted sharply. However, exports recovered rapidly with the strong incentives provided by sharply depreciated currencies in the region. Much of the focus of the work shifted to identify reforms in the policy environment needed to regain dynamic growth and competitiveness in the region. The work on trade also considered the implications of WTO accession by China for the regional economies, and the increased competition and opportunities that are likely to result from the deeper integration of China into the global economy. Work was also carried out comparing investment incentives within the region to related policies in other countries competing for private foreign investment with the region, Steps were also taken towards making the ASEAN region as a whole into a successful attraction for tourists with the development of tourist promotions geared to the whole region.
The institutional development component was used to carry out a review of the role and function of the ASEAN secretariat, a review that found that the Secretariat was fulfilling its major mandate of supporting the consultative processes and servicing the ASEAN structures with reasonable efficiency.
Current ASEAN-UNDP Consultation and Dialogue
A meeting between the ASC Chairman and the UNDP Administrator, held on 20 September 2000 in New York, recognized the need for more intensive consultations between the two sides to enhance cooperation. Thus, a brain storming session between ASEAN Directors-General and UNDP Representatives in ASEAN countries was convened for this purpose on 11 October 2000 in Ha Noi. The brainstorming session provided useful insights to strengthen future ASEAN-UNDP collaboration.
On 21 March 2002, the Second ASEAN-UNDP Joint Management Committee and ASEAN - UNDP Dialogue meetings took place. ASEAN and UNDP took stock of previous and present collaboration and exchanged views on future cooperation. On the basis of a comprehensive review of the last two cycles of the ASEAN Sub-Regional Programmes, it was concluded that UNDP support to ASEAN has been most effective when programmes:
· are focused on the ASEAN agenda of developing a well-integrated and peaceful region that is ‘outward-looking’ and that supports a successful integration of the regional economy into the world economy;
· respond to an agenda set out by the ASEAN member states through their consultative processes;
· are designed with a good understanding of the capabilities and the limitations of the ASEAN Secretariat and related ASEAN institutional structures;
· deal with issues that are best tackled at the regional level where regional agreements have been entered into or where there are good prospects for such agreements.
In reviewing the areas of focus of the last two programme cycles, it was agreed that ASEAN had successfully advanced open regionalism, especially as a result of ASP-5. Reflecting on the achievements of UNDP ASEAN cooperation over the 1990’s, the consensus was that UNDP should build on such efforts during the next phase of UNDP support.
The Next Phase of the UNDP ASEAN Partnership
It was agreed that the UNDP would fund a policy-oriented project or facility that would focus primarily on deepening regional integration was the best vehicle for future ASEAN-UNDP collaboration. The facility would help capture emerging issues, particularly given the current changes taking place in the region. The purpose of the facility is to strengthen ASEAN’s capacity for exploring policy options in terms of deepening regional integration.
ASEAN and the UNDP launched the three-year ASEAN-UNDP Partnership Facility Programme with the signing of the programme document in April 2003 by the Secretary-General of ASEAN and the Resident Representative of UNDP in Jakarta.
The US$1.45 million Facility Programme is aimed at providing analytical and advisory support services to ASEAN to address the current and emerging issues in regional integration within ASEAN and with other countries.
Under the Programme, the UNDP’s technical advisory support will focus on ways to accelerate the implementation of regional trade and investment liberalisation and help narrow the development gap among ASEAN Member Countries, including addressing emerging issues such as the link between trade liberalization and poverty reduction, giving special attention to Cambodia, Laos, Myanmar and Viet Nam.