Comment on “ASEAN's New Frontiers: Integrating the Newest Members into the ASEAN Economic Community”

Authors


Correspondence: Muhammad Chatib Basri, LPEM-FEUI, Jl. Salemba Raya no. 4, Jakarta 10430, Indonesia. Email: dedebasri@hotmail.com

Pomfret (2013) has produced a very interesting and valuable paper. He provides an excellent overview if the Association of Southeast Asian Nations' (ASEAN) new frontiers including Cambodia, Lao, Myanmar, and Vietnam (CLMV) and how these newest members try to integrate into ASEAN community. I find this paper very informative and stimulating. This paper provides a good background for a general audience and policymakers who are not specialists on CLMV. Pomfret starts off by providing the background to the dynamics of ASEAN. He provides a brief review of ASEAN including the economic integration process, and then argues that the process was not easy and required a lot of time for negotiations before ending up with a better shape of economic integration. Pomfret shows that ASEAN has moved from a weakly integrated regional economic arrangement into a deep integrated region. He also emphasizes the importance of increasing the role of production networks among the original ASEAN members with East Asia.

Pomfret also provides a brief history of CLMV, which is very useful for most readers who are not specialists on CLMV. This brief history also helps readers to walk through the rest of the paper.

There are several important findings in this paper. First, drawing a lesson from CLMV is important in helping us not only understand the future scenarios of these four newest ASEAN countries but also for the future expansion of ASEAN. I agree with this point, and I think this is one of the major contributions made by this paper. Second, Pomfret argues that the simplest explanation of the persisting development divide within ASEAN is history. He also emphasizes the importance of the role of the development strategy adopted, market oriented versus nonmarket oriented, and inward looking versus outward looking. There is also a very interesting comparison with the case of eastern European countries. Pomfret argues that catching up with more advanced neighbors was not merely a matter of changing policies, because it still takes time to catch up with countries which are far more advanced. Third, Pomfret also makes a very important point that catching up is a moving target, because the economic integration among the ASEAN6 also accelerates the pace of their development. Finally, Pomfret argues that it is very important to look at whether trade costs will be reduced to the levels that permit CLMV to participate in the regional value chains.

I should say that overall, I agree with all these findings made by Pomfret, so I just want to add some questions or specific comments.

First, it is obvious that the choice of economic policies matters (market vs. nonmarket, inward vs. outward looking), but it is very important to take into account political factors as well. In my opinion, one of the reasons why the CLMV countries lag behind is because of war and continued political conflicts. While the other parts of ASEAN live in a relatively peaceful political realm, the CLMV countries have to face war and long internal conflicts. I argue that this political issue matters, because as is pointed out by Pomfret, Vietnam has overtaken the Philippines in terms of net inflows of Foreign Direct Investment (FDI). I mean to say that the political stability in Vietnam and the relatively political instability in the Philippines is one of the key explanations for why Vietnam has overtaken the Philippines, although it is obvious that serious reforms have also been undertaken by the Vietnamese government. Thus, it would have been very interesting if Pomfret could have provided us with the political economy story, which is unfortunately missing from his paper.

Second, it is worth noting that one of the key reasons to explain the gap of economic growth among the ASEAN6 and the CLMV is investment. Most of the ASEAN6 countries including Vietnam perform relatively well; thanks to strong FDI flows. It would have been worthwhile if Pomfret had elaborated more on the issue of FDI among ASEAN6 and CLMV, because these are the key factors in explaining their growth.

Third, I was wondering if Pomfret could help readers to understand how we perceive the existence of CLMV in the context of a rising Asia and the slow down of Europe and the USA. The most specific question is how are the CLMV countries affected by the changing pattern of global growth? Can CLMV reap the benefits of this change? Of course, I agree with Pomfret that the reduction of trade costs is an important variable in enabling the CLMV participate in the regional supply chain, but beside this factor, is there any external factor which may help the CLMV to take advantage of Asia's rise?

In sum, this paper is worth reading and offers an important contribution for the study of ASEAN's new frontiers and the future expansion of ASEAN. Furthermore, various lessons can be drawn from this paper, particularly a comparative study with other countries with similar problems.

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