The first thing that must be said about regionalism in Southeast Asia is that it is already upon us, whether we like it or not. It is a reality that we cannot deny. It is an inevitable trend that will engulf us to our harm unless we embrace it for our benefit.

The economic crisis of the last two years has demonstrated, as nothing else could, the reality of the integration of Southeast Asia's economies. All ASEAN countries have suffered from the contagion to some degree or another regardless of individual circumstances.

Even countries like Laos, Myanmar and Vietnam, whose currencies have been relatively insulated from the volatile movements of currencies elsewhere, have felt the pain of the crisis - simply because their leading markets and their primary sources of investment have been some of the most badly-hit economies in the region. At the other end, even such a well-managed and open economy as Singapore's has been buffeted, and Singapore, as never before, has seen its markets shrink, its wages cut, its employment drop and its growth stalled.

All this is not surprising; at least not in hindsight. Investors had come to regard Southeast Asia as one investment area even before ASEAN itself officially proclaimed it as such. When trouble shook one or two ASEAN economies, investors pulled out their money from all. This regionalized perception on the part of international investors has been considered as one of the forces behind the so-called contagion effect of financial alarm that swept through Southeast Asia and beyond.

To some extent, the regionalized investor perception is justified. After all, from 1993, when the move toward an ASEAN Free Trade Area began, to 1997, the year of Southeast Asia's financial debacle, the share of intra-ASEAN trade in total ASEAN trade rapidly rose from one-fifth to one-fourth. In absolute terms, intra-ASEAN trade expanded from US$43.3 billion to US$84.4 billion in four years, despite the fact that half of the last year, 1997, was marked by a severe downturn in economic activity.

In 1997, twelve million Southeast Asians constituted about forty percent of the thirty-one million total tourist arrivals in ASEAN. Three million migrant workers in ASEAN are from within Southeast Asia itself.

Singapore in Southeast Asia

Singapore has accounted for much of Southeast Asia's growing economic integration. It serves as a trans-shipment point for much of the region's trade in goods. It is a vital hub of air and maritime transport. It processes many of Southeast Asia's products for export elsewhere. It is the leading provider of trans-national services for the region - banking, insurance, telecommunications. Singapore is the site of many of the regional headquarters of the world's great corporations. At the same time, it has to bring in many of its needs from elsewhere in the region.

The share of Singapore in intra-ASEAN trade has consistently hit over forty percent since 1993, and the rest of ASEAN has bought twenty-three to almost thirty percent of Singapore's total exports during this period. We have no firm figures for investments, but anecdotal indications point to sizeable Singapore investments in the rest of ASEAN.

People from Southeast Asia constitute a large proportion of Singapore's labor force at all levels, invigorating its economy, enriching its culture. The National University of Singapore and other centers of intellect, like this institute and the Institute of Southeast Asian Studies, are assuming the intellectual leadership of the region in many vital fields.

Singapore's integration with and stake in the fate of the region are just as clear in other areas. Serious conflict within any of its neighbors or between them could shake Singapore with a flood of refugees knocking at its door and in other ways. Regional instability could frighten investors away. Singapore cannot be immune to the spread of communicable diseases in the region.

The massive atmospheric pollution that has, periodically and with increasing gravity, blanketed and almost literally suffocated Singapore arises from land and forest fires elsewhere in the region. According to the World Wide Fund for Nature (WWF), the haze in 1997 caused S$12.5 million or US$8.8 million in short-term damage to health in Singapore. It set back Singapore tourism by S$81.8 million or US$58.4 million. It inflicted S$9.7 million or US$6.9 million in losses on Changi Airport and Singapore-based airlines. WWF calculates that the losses suffered by Singapore tourism alone could have fully funded the Community Chest in this country, which comprises fifty charities and benefits 180,000 people, for three years.

The situation of Singapore is only the most obvious manifestation of the ASEAN countries' tightening linkages with one another, which are clear and undeniable. The question is whether the strains of economic difficulty, trans-boundary pollution and exacerbated bilateral disputes have started to unravel those linkages and severely and irreparably wounded ASEAN solidarity.

When the financial crisis and the haze pollution started to sweep Southeast Asia in the latter half of 1997, media and academic commentators in the West and even some in ASEAN, who should have known better, quickly jumped to the facile conclusion that these developments had routed ASEAN into disarray, fragmentation and even death. They declared that the ASEAN Free Trade Area had stalled, if not died.

I said then that such pronouncements flew in the face of logic and the facts.

If the growing integration of ASEAN's economies renders each of them vulnerable to trouble - or the perception of trouble -- in the rest, the thing to do is to work even more closely together to reduce everyone's potential for trouble. If all of us are in the same boat, the thing to do at the gust of a storm is not to jump overboard but to work together to keep the vessel on even keel and steer it to safer havens.

If investors have fled from the troubles of the region, breaking up the ASEAN market into little pieces will not bring them back. What will bring investors back is a larger, more integrated, more efficient market. If financial panic has swept the region, the response is not for ASEAN countries each to retreat into isolation but to step up consultations and the flow of information among them and increase their transparency to one another. If events in one ASEAN country are grievously hurting another, the reaction is not to descend into mutual recrimination but to intensify engagement and cooperation. If regional problems are confronting them all, the course of action is not for each country to go its own way but to work closely with the others to deal with them. Regional problems require regional solutions.

That is the logic.

The fact is that, in their wisdom and to their everlasting credit, that is the course that ASEAN's leaders have decided to chart and prescribe.

Contrary to the knee-jerk speculation of many commentators, ASEAN has deepened and accelerated AFTA. For the six original signatories to the AFTA treaty, AFTA is now to be formally completed by the beginning of 2002. But because they have agreed to extend by 2000 full AFTA treatment to as much as ninety percent of products traded within ASEAN, we can say that, for all practical purposes, AFTA will have been completed in less than eight months from now. The idea is to create, within a fairly short time, a zero-tariff market of half a billion people with a regional GDP today of US$700 billion.

As with goods, so will it be with services. ASEAN's leaders have instructed their officials to start negotiations immediately, and complete them in 2001, on liberalizing trade in services in all sectors and all modes of supply. Already, mutual commitments have been made in the seven areas of air transport, business services, construction, financial services, maritime transport, telecommunications, and tourism.

ASEAN's leaders have decided to open their manufacturing sectors to investments from within the region and to extend national treatment to such investments, creating what they call the ASEAN Investment Area. This would significantly advance the integration of the ASEAN economy.

At the same time, plans have been laid to bind the ASEAN nations together and ease the movement of goods among them through networks of roads, railways, gas pipelines, electricity transmission lines and telecommunications.

Rather than unraveling the fabric of ASEAN cooperation, the region's economic troubles have, in fact, pushed ASEAN to cooperate much more closely in dealing directly with the financial and economic weaknesses that the troubles have exposed. Finance is an area of ASEAN cooperation that is quite new, but cooperation among finance ministries and central banks is being stepped up. Systems are being set up for early warning, monitoring of short-term capital flows, peer review of country data and country policies, and joint policy formulation. A unit in the Secretariat has been established to support this effort, with technical help from the Asian Development Bank.

ASEAN's leaders, at their summit in Hanoi last December, endorsed these programs to hasten and deepen economic integration and financial cooperation. In the Hanoi Plan of Action, they prescribed specific measures to carry them out. The Hanoi Plan of Action also laid down steps for ASEAN to cooperate much more closely in making its industries more competitive in a fast-globalizing world and in improving the lives of its people. It focuses on science and technology, small and medium enterprises, social safety nets, environmental protection, food security, the fight against illicit drugs, and disease surveillance, as well as on trade, investments, infrastructure and finance. The emphasis is on training, institution-building, information exchange, the sharing and adoption of best practices, and mutual help in other ways.

ASEAN economic integration and cooperation have come a long way, a process that the global and regional economic downturn has given new momentum. However, like the proverbial cyclist, it must keep moving or crash. ASEAN's growing closeness means that one country's problems affect the others with increasing impact. This, in turn, requires ASEAN to move closer together still. The cycle goes on toward ever-closer inter-relationships.

So, beyond AFTA, beyond services, beyond the ASEAN Investment Area, beyond the economic surveillance process, where does ASEAN go from here? What are the nature and direction of Southeast Asia's further integration and solidarity?

I might point to a few possibilities.

For a start, ASEAN might look at how it can mobilize its own resources for some of its cooperative activities. Regional integration and cooperation are advanced in several ways. Some involve adopting policies and coming to agreement. Others cost real money. Meetings and workshops cost money. Studies cost money. Joint promotion costs money. Training costs money. Cooperative action on the ground costs money.

Yet, over the years, a variety of factors have prevented ASEAN from marshaling its own resources for most of its own projects and activities beyond funding the ASEAN Secretariat. To be sure, ASEAN's dialogue partners and other international organizations have been generous with their support for ASEAN projects, some for as long as twenty-five years. But external sources are limited by the decreasing levels of foreign-aid funds and by the interests and priorities of the partner countries and agencies.

More importantly, there are just some things that ASEAN has to do for itself and by itself. This would probably require national agencies concerned to set aside part of their respective budgets for ASEAN-related activities and projects. For example, ASEAN members may have to set aside resources to fund studies on the future of ASEAN cooperation, on potential niches for ASEAN in tomorrow's industries, and on the strategic situation in East Asia, including the objectives and optimal modalities of ASEAN's relations with Northeast Asia. ASEAN ought to devote more resources for feasibility studies for large-scale infrastructure projects to bind the region closer together in order to lay the ground for investment in them. ASEAN should be doing more to enable its newer members to integrate themselves more effectively within the association.

ASEAN has already been doing some of this. The ASEAN Fund is supporting the work of the Eminent Persons Group set up, upon the suggestion of Prime Minister Goh Chok Tong, to chart the future of ASEAN cooperation. Singapore has pledged to put up half the expected funding requirements of the study of information-technology standards and performance in ASEAN. Malaysia has underwritten the feasibility study of the Singapore-Kunming railway project. The older ASEAN members have modest technical assistance programs for the benefit of the newer members. The Secretariat itself has undertaken some of this assistance. The seed money for the ASEAN Science Fund has been put up by the member-states. ASEAN is funding the core of the ASEAN economic surveillance process and of ASEAN efforts to coordinate the fight against haze pollution. But clearly more has to be done.

ASEAN, for example, has to put up its own resources to improve its image in the international community - an image, not too well-known to begin with, that has been battered by the financial crisis and the haze problem. ASEAN would do well to fund programs to promote ASEAN as a single tourism destination. I need not belabor the common interest all ASEAN countries have in increased tourism in the region.

Devoting real resources to ASEAN cooperation would be the ultimate demonstration of the member-states' commitment to the regional cooperation from which they presumably benefit and which they have so eloquently espoused.

One salutary result of regional economic integration has been the rationalization of production processes across national boundaries. This has brought about greater efficiency and beneficial economies of scale. However, ASEAN cannot stop there. The logical next step may have to be taken, which is to coordinate economic and industrial policies more closely. Uncoordinated policies for integrated economies could lead to disasters in sectors such as automobiles and electronics, which account for much of ASEAN's GDP and exports. This means the harmonization of legislation, investment conditions, accounting standards, and so on.

Another step that ASEAN might take on the road to greater regionalism is to open itself to the possibility of taking regional action to help a member-country deal with internal difficulties that have regional or international dimensions; assist member-countries in resolving disputes between them; and keep actions and policies of one member-country from seriously harming others. This, of course, presupposes that ASEAN members would be willing to accept such involvement by their neighbors.

Other regional associations do this all the time - the Organization of African Unity, the Organization of American States, not to mention the European Union. Indeed, ASEAN has twice involved itself in the affairs of Cambodia, and did a creditable job of it both times. However, that was before Cambodia was a member of the association. Would ASEAN have done for Cambodia what it did in the 1980s and in 1997 and 1998 if Cambodia had already been a member of ASEAN then? It is an interesting question.

For twenty years, the Philippines suffered from an armed separatist uprising in its south. Because of the problem's perceived international dimension, the Philippines turned to the Organization of the Islamic Conference for help and not to ASEAN. There were perfectly valid, even urgent reasons for the Philippines to go to the OIC, but ASEAN was almost totally out of it. The situation moved more rapidly to a resolution after Indonesia took an active hand in it. However, Indonesia did so, not as part of ASEAN but as an additional member of the OIC committee handling the matter.

There are other examples.

It has been argued that ASEAN members have not attained such a level of mutual trust as to involve the association in delicate political situations. That may be so, but such an involvement in the future might be worth looking into as a natural consequence of growing regional integration.

Regionalism is upon us. It is here to stay. The only way to deal with its problems and challenges is to strengthen and use regionalism to confront and overcome them.

It is in this light that ASEAN member-countries must resist the temptation to give priority to reaching out to the mighty powers and the big markets as a substitute for ASEAN and regionalism. ASEAN is, of course, open, as individual countries and as an association, to the rest of the world and to the global economy. Most ASEAN countries are members of WTO, of APEC, and of ASEM, and ASEAN would like to see all its members belong to these other organizations and forums. ASEAN and its members are committed to liberal trading and investment regimes. The major industrial nations are ASEAN's leading markets and sources of investment and technology. ASEAN recognizes the interest of outside powers in the region.

However, links with developed markets and the global economy must not be forged at ASEAN's expense or as an alternative to it. A new world order has not yet arrived, in which interests are balanced and disputes adjudicated fairly under benign rules that are impartially applied and effectively enforced upon all.

It is all too clear that such a utopia remains far from being upon us. Until it arrives, a long, long time from now, if ever, economic power, whether of states or of corporations, will continue to have preponderant advantage. In the face of this, weaker states must band together regionally, strengthening their solidarity and advancing their common interests. There are only two alternatives. One would be the domination by more powerful states and mighty corporations. The other alternative would be the rise in a fragmented region of narrow nationalisms that are no longer viable.

There is enough common ground, fertile ground for regionalism to thrive in Southeast Asia. There are the immutable factor of geography and the common strategic interests that flow from it. Southeast Asian countries, even with the wide gaps in their levels of development, share a broad range of common economic interests. Their shores have been washed by successive waves of historical trends. We need not dwell upon their extensive cultural linkages.

Whether one likes it or not, the destinies of Southeast Asian countries lie with one another, in a common destiny that is most vividly and most effectively expressed in ASEAN.