1.     I join my colleagues In thanking His Excellency, Prime Minister Chuan Leekpai, for his opening remarks. I also congratulate my friend Surin Pitsuwan, Foreign Minister of Thailand, for all his efforts over the last year. On behalf of my delegation, I would like to thank the Thai Government for the excellent arrangements and their warm and generous hospitality.

2.     The last three years have been very difficult for the region. Fortunately, most economies have bounced back from the devastating economic crisis of 1997. Indonesia however, still faces serious political and economic problems. But the region as a whole Is recovering well. Most economies have stabilised. Growth rates are robustly positive,

3.     The region’s quick recovery has vindicated our confidence In the strength of our fundamentals. While we can be proud of this, we must ask whether it has really changed perceptions of ASEAN?

4.      Michael Leifer, a well-known British academic who has spent a lifetime studying our re ion, has recently concluded that ASEAN “stands exposed as a very feeble vehicle”. Asiaweek of 9 June 2000 described ASEAN as “drifting apart”. The Asian Wall Street Journal of 12 October 1999 concluded that “ASEAN’s best days … may be behind if”.

5.      In 1998, I pointed out that ASEAN faced a crisis of confidence. Today, we may ask ourselves why the regional economic recovery has not translated into a restoration of international confidence in ASEAN.

6.      We may not like these perceptions of ASEAN as ineffective and a sunset organisation. We may question whether It is justified. But they are political facts. Perceptions can define political reality- If we continue to be perceived as ineffective, we can be marginalised as our Dialogue Partners and international investors relegate us to the sidelines.

7.      The danger is real. It is not just a matter of the idiosyncratic opinions of a few newspaper commentators or academics. As of 6 July 2000, one internationally respected emerging market investor index assigned weightages to only four ASEAN countries. The four countries collectively.. accounted for 23%. The highest weightage given to any ASEAN country was 12%. The others were just in single digits. In comparison, the index assigned 11% to China; 17% to Taiwan: 23% to Hong Kong and 20% to Korea.

8.     These weightages must be taken seriously. They reveal how international investors view Southeast Asia vis-a-vis other parts of Asia. They do influence investment decisions. On 29 June 2000, The Far East Economic Review reported that “most investors from outside region would rather head for the relative stability of North Asia than risk further upheavals in ASEAN countries”. It quoted one bank analyst as saying that “Northeast Asia will definitely out perform Southeast Asia over the next two to three years”. Let us also not forget that China’s entry Into the WTO, while opening up many new opportunities for us, may also divert inve3tors from ASEAN.

9.     We cannot deal with these perceptions and their effects by insisting that all is really well or that they are inaccurate or unfair. The regional crisis of 1997 has been called the first crisis of globalisation. The global economy has created enormous new opportunities and great new challenges for all of us. It has set new international benchmarks that we must meet if we are to restore confidence in our region and in ASEAN.

10.     Alan Greenspan, Chairman of the US Federal Reserve Board, recently warned that “we do not, and probably cannot, know the precise nature of the next International financial crisis. That there will be one is as certain au the persistence of human financial Indiscretion”.

11.     Our Dialogue Partners and international investor are no longer just concerned with the fact of our economic recovery. They are now closely scrutinising the quality of our recovery. They are interested in how we recovered from the last crisis in order to know whether we can manage the next one.

12.     The Bank of International Settlements (BIS)’s annual report for 1999 acknowledged the progress made by our governments in rebuilding the financial institutions that had been ravaged by the economic crisis. But it noted that several recovering Southeast Asian economies still had low resistance to future banking crisis. The BIS warned that the region’s banks have generally not achieved anticipated levels of success in clearing non-performing loans, that corporate debt restructuring had been slow and that governmental commitment to the financial reform was wavering.

13.     The International Herald Tribune (IHT) of 10 July 2000 pointed out that the Southeast Asian stock markets had slipped and reported that “analysts and fund managers attribute the sell-off to the perception that Southeast Asia, despite an economic rebound, is a dangerous place to invest because of political instability, corruption and lack of technological sophistication”.

14.      In an increasingly knowledge driven global economy, such perceptions and other intangibles are as important as market size or natural resources. And we should have a realistic appreciation of where we stand in relation to other regions and regional organisations.

15.      APEC accounts for about 56% of world GOP, but ASEAN, despite its 500 million people, is only 1.5% of world GDP. The EU is almost 30% of world GDP. The Organisation of American States (OAS) minus the US and Canada accounts for almost 7%. NAFTA is about 33% of world GDP. The South Asian Association for Regional Cooperation (SAARC) is almost 19%. MERCUSOR is about 4%. Only the Organisation of African Unity (OAU) at 1.4% of world GDP is smaller than ASEAN.

16.     What should we do? The global economy is challenging all existing regional institutions. It poses a fundamental question. What does it mean to be a regional organisation in a globalised world? Two of the most important responses have come from North America and Europe in the form of NAFTA and the EU. But Southeast Asia’ does not have a single dominant economy to serve as a magnet and dynamo like NAFTA. And ASEAN is not a supranational organisation like the EU. We must also be realistic, in acknowledging that many factors are beyond our control. But we are not entirely powerless.

17.     I have four suggestions:

• It has been axiomatic in ASEAN that regional resilience depends on national resilience. Confidence in ASEAN will not be restored until international Investors and our Dialogue Partners are convinced that we are individually serious about adopting the best standards of government, transparency, corporate governance and the rule of law. I am not advocating one size fits all solutions. Nevertheless, our national standards must be comparable to International best practices. There must be no backsliding on structural reform.
• We must forge ahead with AFTA to prove that we will remain open and are confident enough to submit, ourselves to market disciplines. We must likewise push on with e-ASEAN in order to meet the rapid changes brought about by globalisation and the IT revolution. Those members who have plugged. into the New Economy earlier must provide assistance in training and human resource development to the others. If ASEAN does not adapt, it risks being marginalised in the knowledge-based economy.
• We must do more to help the newer ASEAN members catch up and integrate with the region and w1th the world economy. ASEAN integration should be a priority area. We must cooperate for mutual benef1t. The Mekong Basin Is an important vehicle to achieve this. Out, Implementation has been slow. There is an urgent need for better prioritisation and coordination.
• We must move swiftly and decisively to deal with regional transnational problems such as the environment, piracy and drugs.. This requires political will. It does not mean compromising sovereignty. But it does require greater co- operation and pooling of our resources to deal with problems that countries cannot handle on their own separately but yet can affect the others.
  

18.      I recognise that we have made a start in many different areas. We have established the Troika as an instrument for us to quickly respond to fast changing events that affect ASEAN. We have also embarked on investment roadshows to our major trading partners. But the fact that negative perceptions of ASEAN nevertheless persist is proof that what we have done is not enough. We must be more, resolute to put our region back to where it was. I do not believe that anyone wants ASEAN to fail. But to convince others to help us, they must first be convinced that we are serious about helping ourselves.

19.      The stakes ate high. I have spoken frankly about the problems and highlighted the negative perceptions and assessments of ASEAN because I believe we can prove them wrong. ASEAN’s essential function was and is as an organisation to manage the divergent and conflicting interests of the countries of Southeast Asia, a region once known as the “Balkans of Asia”. That differences and conflicts have been contained and that there has been no war except for Vietnam and Cambodia is a major achievement. But our success in avoiding serious conflicts has made others judge us by a higher standard. The stability that ASEAN promoted was the foundation of our previous economic development. Unless we can cope with the challenges of globalisation and not flinch from the difficult next steps in regional co-operation to better improve our chances of securing our future we will be throwing away our opportunities in this new era.

20.      The future will be dominated by the forces of globalisation and IT. We can choose to opt out and allow these forces to flow around us but at the cost of becoming irrelevant, The technologies cannot be disinvented. We can either learn to use them or be by-passed, in which case we risk being side-lined. ASEAN will then be a hollow shell that cannot keep up with the fast growing New Economies of Northeast Asia: Korea, Japan, China, Hong Kong and Taiwan.

21.     We can reverse these negative perceptions of ASEAN by carrying out the structural reforms to our economies to make them more open and capable of being a player on the right side of the digital divide, winning back the confidence of G7 investors and resuming high growth. We have overcome many difficult challenges in the past three decades. We can do so again. Let us redouble our efforts to recapture the ground we have lost in the last three years. We have much to gain by increasing the scope of our co-operative efforts.