A Public Lecture on  Indonesia and the East Asian Regional Integration Process
 

 

Mr. Marshall M. Bouton, President of the Chicago Council on Global Affairs,
Mr. Edward Wanandi, Chair and CEO of Trailmobile Corporation, Corporate Sponsor of this Event,
Distinguished Officers and Members of the Chicago Council on Global Affairs,
Distinguished Guests,
Ladies and Gentlemen,
 
 
It is a pleasure for me to address this distinguished audience that has been gathered here this evening by the Chicago Council on Global Affairs in cooperation with Trailmobile Corporation.
 
By organizing events like this, the Council tunes in to voices from various parts of the world. The Council is thus able to bring the world to Chicago so that it can, in turn, bring Chicago to the world.
 
Tonight I would like to add my voice to the more eminent ones you have already heard over the years. I bring good news—about my country, Indonesia, and the regional organization of which it is a co-founder, the Association of Southeast Asian Nations (ASEAN). And also about some positive developments in the larger East Asian region today.
 
But if I stood here before you ten years ago, I would have nothing but bad news to tell you. At that time, the Asian Financial Crisis was in full rage and Indonesia was in the throes of a multiple crisis: economic, social and political.
 
Before the crisis, some 22 million Indonesians lived below the poverty line; at the height of the crisis, that figure more than doubled—to some 48 million. The year 1998 saw our economy plummet to a negative growth of 13.5 percent. Inflation went as high as 84 percent and the debt to GDP ratio soared to 150 percent. Scores of banks, business establishments and factories closed down, laying off workers by the millions. Students dropped out of school by the thousands.
 
Moreover, the country was in a state of political turmoil: the people were angry at their dreadful plight, there was tumult in the streets and the crime rate went up sharply. The social volcano was rumbling loud.
 
Fortunately, we knew what the situation required: reform and the political will to carry it out. And reform was precisely what we resorted to in order to liberate ourselves from the crisis.
 
Thus we began our transition from three decades of authoritarian rule to a more fully democratic system. Immediately freedom of expression and freedom of association, and all civil and human rights, were restored, respected and promoted. We incorporated these rights into our constitution, which we amended four times to ensure reform of the electoral process.
 
We were just as thorough in the structural reform of our economy. We passed bankruptcy laws that were more equitable. We leveled the business playing fields with new regulations. We also entrenched a policy of fiscal prudence.
 
Gradually our economy recovered. Negative growth was reduced to one percent and then to zero as we entered the new millennium. This was followed by years of slow growth. But in 2005 we attained a growth rate of 5.6 percent, which we improved last year to 5.9 percent. This year we expect 6.4 percent and next year we project to attain 6.6 to 6.8 percent This was the highest rate of consecutive growth that Indonesia has achieved since the Asian Crisis.
 
We reduced inflation by 11.5 percent from 17.1 percent in December 2005 to 6.6 percent in December last year. The rupiah has been stable for several years now. From 2005 to 2006, our exports rose at about 20 percent. Our debt to GDP ratio during the period was at its lowest at 40 percent and this year is at 33 percent. During the same period, our foreign exchange reserves reached $43 billion. Today, it stands at an unprecedented US$50 billion plus.
 
We have made our democratic transition: we probably hold the record in the number of free and democratic elections held in a period of three years. In 2004, we had three national elections. Since then we have held 280 local elections. By 2009 all our local officials will be accountable to the electorate.
 
In our anti-corruption drive, our justice system has investigated, tried and jailed more than 100 government officials—including incumbent governors, legislators, mayors and former cabinet members.
 
Admittedly, we have had our setbacks. The present government was barely two months in office when an earthquake and a tsunami struck our provinces of Aceh and North Sumatera, killing more than 150,000 of our people, wiping out whole communities, and demolishing public infrastructures.
 
Aceh and North Sumatera are now on the way to complete recovery, with the help of friends from the international community. And the three-decade long separatist insurgency in Aceh has come to a peaceful settlement.
 
Rescue operations were still going on in Aceh in the aftermath of the tsunami when the government took strong initiatives to persuade the separatist Free Aceh Movement (GAM) to return to the negotiating table. Moved by the need for peace in the process of rebuilding Aceh, both sides negotiated in record time and faithfully implemented the terms of the resulting peace agreement.
 
Today Aceh is run by a democratically elected Governor who was once a separatist rebel.
 
We suffered another major setback from a series of terrorist attacks, the bloodiest of which were the bombing attacks in Bali that killed over 200 innocent individuals, mostly foreign tourists.  We responded to these attacks with diligent police sleuthing that brought over a hundred terrorist operatives to justice.
 
We have broken up their networks and put them on the run. We did all these without incurring any complaints of human rights violations. We balance our security need with respect for democratic process and for human rights.
 
At the same time, we are addressing the root causes of terrorism. Fully aware that terrorism thrives in a climate of grievance, we are doing all we can, in the first place, to fight the scourge of poverty and its attendant social maladies.
 
Thus we have adopted a national economic policy that is pro-poor, pro-job creation and pro-investment. We also cast a wide social safety net. We have an intensive programme of building infrastructures in the rural areas where most of our poor live.
 
Complementing our anti-poverty efforts is our drive to promote interfaith and intercultural dialogue at the national, regional and global level.
 
Indonesia has a tradition of dialogue, called musyawarah or consultation in search of mufakat or consensus. We are putting to good use centuries of our experience in this process.
 
We also have plenty of practice in dialogue at the regional level—through our involvement in the Association of Southeast Asian Nations (ASEAN).
 
The relative peace that Southeast Asia and neighbouring countries have enjoyed during the past four decades can be largely attributed to the habits of dialogue and cooperation that ASEAN deliberately cultivated. Because of that relative peace, the regional and neighbouring countries could focus on economic cooperation and economic initiatives—which explains much of the extraordinary economic dynamism of the region.
 
Yet it was born at a very inauspicious time in the history of Southeast Asia; when the Vietnam War was raging and the five founding members—Indonesia, Malaysia, the Philippines, Singapore, and Thailand—hardly knew each other. Malaysia was still in conflict with Indonesia and a territorial dispute simmered between the Philippines and Malaysia. The pundits of that time liked to call our part of the world the Balkans of Asia.
 
But in the course of a learning curve that lasted many years, the ASEAN members acquired the habit of regular and frequent consultations and cooperation.
 
A breakthrough took place in the late 1980s and early 1990s when Indonesia, as interlocutor of ASEAN, played a key role in a peace process that culminated in the rebirth of a democratic Kingdom of Cambodia. ASEAN thus gained the confidence to establish in 1994 the ASEAN Regional Forum (ARF), involving countries that have an impact on the security situation in the Asia-Pacific.
 
The rapid expansion of the ARF was matched by ASEAN’s expansion, in the late 1990s include ten countries in Southeast Asia.
 
Meanwhile, within ASEAN itself, defence ministers are regularly holding dialogue on security matters. And there is today within ASEAN, and between ASEAN and its dialogue partners, a great deal of concrete initiatives in counter-terrorism, in the effort to keep the strategic Strait of Malacca safe, in fighting non-traditional security threats like transnational crime and contagious diseases, and in the management and mitigation of natural disasters.
 
There is also a great deal of shaping and sharing of norms. As a consequence of the ASEAN Declaration on the South China Sea of 1992, ASEAN and China eventually agreed on a Code of Conduct in the South China Sea. Thus, rival claimants to all or parts of the South China Sea committed themselves to refraining from any action that might increase tension among them.
 
Another important tool of ASEAN in preventive diplomacy is the Treaty of Amity and Cooperation (TAC) in Southeast Asia. It serves as a code of conduct for relations among ASEAN members and between ASEAN and external powers: signatories and acceding states renounce the use of force and bind themselves to peaceful settlement of disputes.
 
ASEAN Dialogue Partners that have acceded to the TAC include China, South Korea, Japan, India, Australia, New Zealand, and more recently Russia, France and Timor Leste.
 
Hence, there is an evolution going on in our part of the world, the shaping of a new architecture of the East Asia region that is driven by ASEAN’s ceaseless networking.
 
That evolution became manifest in 1997 when ASEAN launched ASEAN plus Three process in response to the Asian Financial Crisis. Since then ASEAN+3 has served as an effective platform for East Asian countries to further strengthen cooperation at various levels and areas, particularly in economic and social, political, and other fields.
The ASEAN plus Three process gained so much momentum that in 2004 the idea of an East Asian Summit was launched by ASEAN. Initially, the East Asia Summit would be limited to the participants of the ASEAN plus Three process, as they represent the East Asian geographic area. But later Indonesia, with the support of Singapore, pushed for a more inclusive idea of East Asia, one that embraced India, Australia and New Zealand.
 
Thus ASEAN redefined the notion of East Asia to mean not just a geographical, racial and cultural entity—but an entity formed over many years of habitual and intensive consultation and cooperation between ASEAN and its dialogue partners.
 
There is no denying that the United States is a Pacific power that has maintained, over many decades, active economic and security engagement with the countries of East Asia. It would be a debacle for both East Asia and the US, and to the rest of the world as well, if the US were to disengage from the region.
 
The democratic countries in East Asia need the United States as a close partner in addressing the democratic deficit in the region. The United States can do a lot in helping the regional countries develop their political institutions. Democratization, however, should be home-grown and not something imposed from outside.
 
We in ASEAN welcome the intention of the US Government to appoint an Ambassador to ASEAN and to revive the ASEAN-US Commemorative Summit.  We also believe that the United States should now seriously consider acceding to the Treaty of Amity and Cooperation as nine other Dialogue Partners have done.
 
At this juncture, let me just give you an idea of the magnitude East Asia. ASEAN alone has a population of 567.56 million. Add that to the aggregate population of Northeast Asia (China, Japan and South Korea), which stands at 1.498 billion, and you get a total of 2.065 billion or about one-third of humankind. And if you add to that the population of India, Australia and New Zealand to get an idea of the population represented by the East Asia Summit, you get well more than three billion, which comes close enough to half of all humankind.
 
In terms of GDP, ASEAN has a total of US$1.072 trillion, with a GDP per capita of US$1,890. Combine that with the total GDP of Northeast Asia, which is US$8.307 trillion, you get an East Asian GDP of US$9.38 trillion and a per capita GDP of US$4,540.
 
In terms of internal trade, intra-ASEAN trade totals US$304.89 billion or 24 percent of the aggregate trade of the ASEAN countries. Put together the total internal trade of Southeast and Northeast Asia and you get a total intra-East Asian trade of more than US$620 billion.
 
In terms of economic growth, China leads the East Asian pack.
 
Already a nuclear power with a military capability in outer space and now building a blue water navy, China has doubled military spending in a span of four years. It is therefore important that China remains firmly engaged with forums that are decidedly constructive in orientation, such as the ARF, ASEAN plus Three and the EAS.
 
On the other hand, Japan, which remains the world’s second largest economy, is reviewing its pacifist post-World War II constitution.
 
Under pressure by the US to shoulder more of the cost of its own defence, and getting more uncertain of the US nuclear umbrella as US forces redeploy out of Japan, and living next door to a bellicose North Korea, Japan is ripe for a break from its long-held pacifist posture.
 
By itself, Japan could go on an arms race with China. But deeply engaged with ASEAN, Japan could instead contribute more to the security of the region—especially in the strategic sea-lanes of Southeast Asia.
 
Two other participants to the EAS, South Korea and India, are world leaders in technology, with South Korea already classified as a developed country and India being fancied as in a position to rival China’s economic dynamism in a few years’ time. But in spite of their respective economic clout and the global prestige that they enjoy, none of these four great nations are in a position to take the helm of the EAS process.
 
They must depend on ASEAN to give political coherence to the process. Indeed, they will find it hard to work together or go anywhere together without ASEAN in the driver’s seat.
 
In the future, however, ASEAN cannot simply keep on relying on the inability of its Northeast Asian partners to work directly with one another. It must begin to earn its hold on the driver’s seat on the basis of its own intrinsic merit.
 
That is why it must transform itself into an ASEAN Community. And last January, ASEAN Leaders decided in Cebu, Philippines that the full integration of ASEAN be accelerated so that it is attained in 2015 instead of 2020 as earlier agreed on at their ninth summit in Bali, Indonesia, in 2003. We are hastening the process with the adoption of an ASEAN Charter that will provide ASEAN with a legal personality and codify its values, norms, ideals and principles.
 
Meanwhile, various bilateral free trade areas are being negotiated between participants of the East Asia Summit. I like to think that these are the building blocks to an eventual East Asia Free Trade Area—that will be established perhaps a decade from now. By then the new regional architecture will be fully unveiled, with ASEAN in the driver’s seat on its own merits.
 
At the same time, individual ASEAN members must enhance their own national resilience. For instance, Myanmar must make good its avowals of democratization and respect for human rights. But its Roadmap to democracy did not produce tangible results.
 
ASEAN’s policy of constructive engagement with Myanmar has not induced the desired changes in the country. On the other hand, the sanctions imposed by the West and its condemnation of Myanmar have not been any more successful. Myanmar seems comfortable with its immediate big neighbours.
 
A compromise between these two approaches is worth looking into.
 
For its part, Indonesia will continue to fine-tune its democratic institutions and processes. And working closely with our neighbours, we will never cease to contribute to the solution of various issues and problems on the East Asia landscape.
 
We are helping neighbouring countries fight terrorism through initiatives like the establishment and operation of the Jakarta Centre for Law Enforcement Cooperation (JCLEC). 
 
Earlier this year, Indonesia and Australia jointly organized the Sub-regional Conference on Counter-Terrorism in Jakarta with a view to strengthening counter-terrorism cooperation in the sub-region.
 
In the face of the threat of climate change, we are building infrastructures and arrangements for disaster management and mitigation. We are committed to contribute to a regional standby force for that purpose.
 
At the global level, Indonesia will play a key role on the issue of climate change when we host the 13th session of the Conference of Parties to the UN Framework Convention on Climate Change and the third session of the Meeting of Parties to the Kyoto Protocol.
 
We expect that the Bali Conference will set the stage for the establishment of a global partnership on climate change, and prescribe concrete actions and rationalized targets for cutting down of greenhouse gas emissions after the Kyoto Protocol expires in 2012.
 
In partnership with Australia, we are rehabilitating the peat lands of our island of Kalimantan. We are also intensifying and expanding our reforestation programme so that for every one million acres allotted to industrialization, two million hectares shall be reforested.
 
We will try to contribute as best as we can to global peace and security as a non-permanent member on the UN Security Council, mindful of our role as the world’s third largest democracy and the country with the largest Muslim population. At the national level, we will strive to translate our excellent macroeconomic position into more jobs and social benefits for our people.
 
That is how Indonesia contributes to the evolution of East Asia and that is how we in ASEAN build: block by patient block. But we are building faster now but still at a pace that is equally comfortable to our fastest and slowest members.
 
Thus we will achieve the transformation of ASEAN and the eventual economic integration of East Asia.
 
I thank you.