Asian economies to integrate despite sea row - experts

Despite the present tensions over the disputed territories at the South China Sea, experts from the Asian Development Bank believe that Asian economies will continue to integrate.


ADB analysts said economic integration in the region has been dictated by the economic considerations and not by political factors.


"Asian integration will continue despite geopolitical tensions. On the ground, in the last few years, especially after the Lehman collapse in the Fall of 2008, the business sector in Asia has continued working on its business with other Asian countries and emerging markets outside Asia. The integration process in the region is more market-driven than in Euorpe," said Iwan Azis, ADB Office of Regional Economic Integration head.


Lei Lei Song, principal economist at the ADB Office of Regional Economic Integration, added that the ADB is willing to become an "honest broker" among the parties in the South China Sea disputes.


"Were there no cooperation, there would be no utilization of natural resources, which would be not good for everybody. As an independent multilateral development bank, ADB can demonstrate the benefits of cooperation, and try to find a mutually beneficial way to develop natural resources," Song said.


Manila and Beijing have been engaged in a standoff over the Scarborough Shoal since April following discovery of eight Chinese fishing vessels within the Philippines' claim of 200-mile exclusive economic zone.


Although the Association of Southeast Asian Nations has been viewed as a "talk shop", Azis said the group could play a "critical role" in forging Asian economies closer.


"The 'talk shop' characterization is largely due to a narrow perspective of integration. ASEAN has played a major role in various aspects, not just in the economic arena, and some are even deeper than the economic area. One can always develop counter-factual scenarios about the 10 countries, i.e., what would happen if there were no ASEAN? But even in the economic aspect its role in Asian integration is very critical. For example, in ASEAN+3. Since ASEAN+3 is the most quoted example of Asian economic integration, the association will definitely play a strategic role in Asian integration," he said.


The lack of common currency in the region is also unlikely to deter the economic integration of Asian countries.


"A common currency has never been a concrete plan in Asia. Discussions among scholars and analysts, yes. But among policy makers, never. Realistically, a basket currency can be anticipated but in very long run," Azis said.


Song said the present difficulty of the Eurozone should serve as a lesson to the Asian economies.


"There are many more pre-conditions for a common currency than we previously thought. And Asia is far from satisfying those pre-conditions. A common currency is not feasible for Asia for the moment. In the very, very long run, there might be a common currency. But it would be a very very long run," Song added.


To facilitate intra-regional trade, however, Song said Asian economies should discuss exchange rate policy and this is where a basket of currency could come in.-The Philippine Star (July 23, 2012 8:04PM)