In light of Singapore’s 50th year of independence, The Georgetown Journal of International Affairs sat down with Mr. Ernest Bower, the Sumitro Chair for Southeast Asia Studies at the Center for Strategic and International Studies (CSIS), to discuss the country’s history and other recent developments in Southeast Asia.
GJIA: Since its independence in 1965, Singapore has transformed into one of the most economically prosperous countries in the world. What factors have driven its success?
EB: By all accounts, Singapore has been very successful. Like other Southeast Asian countries – except for Thailand, which was not colonized – Singapore won its independence after the Second World War and in the midst of the oncoming Cold War. It was one of the five founding members of the Association of Southeast Asian Nations (ASEAN) in 1967. At the time, Singapore was only two years old. The country was led by a very strong leader, Lee Kuan Yew, who, like his ASEAN colleagues, Indonesian President Suharto, King Bhumibol of Thailand, and Philippine President Ferdinand Marcos, had a heavy hand in facilitating his country’s development. All of these leaders, however, really drove economic growth. Their countries had opportunities to make choices about economic development and move from being postcolonial agrarian trading posts toward becoming industrialized countries.
Singapore was the most successful out of that group because it had a very targeted approach. Whereas other countries in the region opened up and encouraged foreign investors to enter their domestic markets, Singapore was very selective. The Singaporean government actually handpicked the companies that could invest in its country. Singapore also created an unparalleled pro-business environment. Lee Kuan Yew’s ability to make decisions within the country’s governing structure, the People’s Action Party (PAP), without political opposition and bureaucratic impediments enabled his regime to far surpass the success of those in neighboring countries. His unity of vision, backed up by strong institutions and a bureaucracy built to implement his ideas, was vital to progress. I think these factors heavily contributed to Singapore’s great success.
GJIA: The ASEAN Economic Community (AEC) works to better integrate the economies of Southeast Asian countries. What challenges threaten the present and future effectiveness of the initiative, and what can be done to ameliorate those difficulties?
EB: ASEAN consists of ten extremely diverse countries and is home to about 620 million people. On one end of the spectrum, you have Singapore, which is highly developed, and on the other end, you have areas of extremely low development, such as in parts of Laos and Myanmar. The community is also home to a wide range of political systems, and ethnic and religious groups. Indonesia has the largest Muslim population in the world, although it is not officially an Islamic country. So the Southeast Asia region encompasses a very diverse set of nations. I think that is probably one of the biggest challenges for the AEC and for the complete economic integration of the region, a goal that ASEAN leaders had hoped to accomplish by the end of this year. The ultimate goal of the organization, however, is to make ASEAN competitive as a single market with 620 million people and a $3 trillion GDP.
ASEAN has made a lot of progress toward that end; one can substantially move products between member countries tariff-free. What ASEAN has not managed to agree on is the movement of people. Immigration is still constrained within the region. There is no free trade in services. Member countries have yet to merge investment regimes. They have discussed merging into one currency and creating one central ASEAN stock market, but I doubt that will happen soon. It is and has been a real challenge for the ASEAN countries to achieve cohesive standards. They enjoy sovereignty. The reality is that ASEAN countries have underinvested in the bureaucracy and power that the ASEAN Secretariat would need to achieve the goals of the AEC within the desired timeframe. For now, the AEC remains a goal, not a reality.
GJIA: Given its relatively stronger economy, how does Singapore feel about the AEC and economic integration?
EB: I think Singapore is explicitly all for it. They love the idea of ASEAN economic integration and they should! They are the biggest trading nation in the region; they have been the most profligate trader of the ASEAN countries, entering free-trade agreements with countries around the world, including the United States, China, India, members of the European Union, and Japan. Trade accounts for over 300% of the country’s Gross Domestic Product (GDP), making it also the most trade-dependent country in the world. The Singaporeans have encouraged other ASEAN members to follow suit.
Yet the truth is that Singapore benefits competitively from being out in front of the pack. So while they are strong advocates for the AEC, they are not relying on its near term success. Instead, they have hedged their bets by inking free trade deals prolifically and thoughtfully with key global economies that drive innovation, talent development, and linkages to supply chains. In other words, Singapore leaves little to chance, and where it can, it hedges effectively. Their current position gives them a special competitiveness. I think there is also some worry in Singapore about the Singaporean identity being consumed by ASEAN, or rather subsumed under the unified brand. I don't think they need to worry about that. By and large, they are huge advocates for the AEC. They are an engine for the standardization of rules within ASEAN.
GJIA: The Asian Infrastructure Investment Bank (AIIB) has been a hot topic of late. Do you see the AIIB as a catalyst for the integration of the AEC?
EB: There are enormous needs for infrastructure development across ASEAN member countries, a reality that explains why the Chinese proposal for an Asian Infrastructure Investment Bank was so very warmly received. ASEAN, frankly, needs the money and the support; what member countries are less interested in, and what they are worried about is China using its economic leverage to force smaller nations to heed to its sovereign interests, for instance, in the South China Sea. I think that element has caused some real concern.
Nonetheless, it’s an $80B opportunity, and that's only a drop in the bucket of what will eventually be needed to develop ASEAN countries. ASEAN’s infrastructure needs are estimated at about $3T. So in that sense, I think ASEAN welcomes China’s involvement. Though I would not go so far as to say that the AIIB is directly tied to the future success of the AEC. ASEAN integration, however, will benefit from investment in regional infrastructure, as ports and roads link peninsular Thailand to Malaysia and Singapore, and highways are constructed across Indonesia.
GJIA: China rejects ASEAN’s role in resolving disputes in the South China Sea. What can ASEAN do to maintain peace and stability in the region, and better protect the interests of its members?
EB: I don't think ASEAN has given up on this front. What they are currently trying to do is convince China to sit down and negotiate a legally binding code of conduct that would then govern the South China Sea. I think ASEAN will continue to move in that direction. What it fears most is a China that both is economically successful and militarily strong, and wants to impose its will on the sovereignty of its neighbors. That is what ASEAN, which has always been interested in geo-political balance, is worried about it.
There is a great deal of anxiety about China, what it wants to be, and what it intends to do with its newfound military might. Having said that, Southeast Asia wants China to be successful and to feel secure because those two conditions are necessary for ASEAN itself to be successful. I think that ASEAN’s plan is to over time shape China’s thinking away from the unilateral prescription on sovereignty, convince China that there will be great costs to strictly seeing one way of proceeding into the future, and ultimately have China play by the rules in new regional security and economic structures. China will be the biggest player in regional cooperatives, and ASEAN is willing to cede to it a status as such. However, ASEAN members will not do so at the expense of their own sovereign interests.
Ernest Bower is a senior adviser and the Sumitro Chair for Southeast Asia Studies and Co-Director of the Pacific Partners Initiative at the Center for Strategic and International Studies (CSIS). Mr. Bower also serves as president & CEO of BowerGroupAsia, a business advisory firm. Prior to forming his company, he served as president of the US-ASEAN Business Council for a decade.
Mr. Bower was interviewed by Elaine Li on 1 May 2015 in Washington, D.C. This interview has been edited for length and clarity.