ECONOMIC IMPACT ON SINGAPORE OF ASEAN'S EXPANDED MEMBERSHIP

Abstract

In July 1995, Vietnam formally joined ASEAN as its seventh member and it is expected that the rest of the Indochinese states - Cambodia, Lao PDR as well as Myanmar, the four Southeast Asian transitional economies (SEATEs) will soon follow in the footsteps of Vietnam. A bigger ASEAN will definitely incur costs as well as result in beneficial implications for the region as a whole and for individual member countries. The question of an expanded ASEAN calls for deeper understanding of the impact on the remaining members of the club by these countries. The admission of Vietnam into ASEAN and the keen interest indicated by Cambodia, Laos PDR (which are now holding observer status, indicated that they would officially seek membership in 1997 ) and Myanmar (who became an ASEAN observer in 1996 and has sought membership in 1998) is a positive affirmation that the benefits of the ASEAN members outweigh any potential costs and drawbacks. An enlarged ASEAN would mean a bigger force and a greater voice in the international fora such as APEC. It will also boost the attractiveness of the regional grouping. Besides, their inclusion in ASEAN means inclusion in AFTA, the ASEAN Free Trade Area which would provide increased opportunities for trade and investment for the members of the club. This academic exercise seeks to address policy issues relating to the impact of ASEAN expansion, with particular reference to Singapore. In order to examine the impact of ASEAN' s membership on Singapore, this study aim to look into the details of their economic reforms and economic structure. The consequences of the economic reforms and policies of these countries would play an important role in shaping Singapore's economic destiny. If the economic reforms are in line with Singapore's development strategy, Singapore would able to benefit greatly from their inclusion and these countries could become a vital part of Singapore's overseas investment (regionalisation) and thus help in the development of an external wing for its future economic growth. Nonetheless, despite the presence of plentiful trade and investment opportunities in the Indochinese States and Myanmar, there is still some potential problems which the remaining members of the club should be aware of. The problems of poor infrastructure and suitable business partners, bureaucratic obstruction, funding constraints and political uncertainty definitely require careful assessment before investing. Since the per capita GDP for Indochina and Myanmar is far below those of the poorest ASEAN countries, the potential market expansion may not be as big as desired. This means that although there may exist a large market for consumer goods, the general population in these countries is still relatively poor. Furthermore, the Indochinese states' current stability may not last long if there are internal political disagreement. The disastrous past of the Indochinese states and Myanmar may presage an equally disastrous future. Thus, the ASEAN members should take note of the problems and not be too carried away by their large potential market and abundant resources. Acknowledging these difficulties of the expansion of the organisation and dealing with them tactfully, would help ASEAN including Singapore, to cope with the challenges ahead.