SA agreement with South East Asian bloc opens up a host of opportunities, Daily Maverick, by Hilton Fisher, 30 September 2020
South Africa is in the process of acceding to the Treaty of Amity of the Association of South East Asian Nations (ASEAN), the fifth-largest economy in the world. The potential for future trade, investment and a host of other cooperation agreements is exciting.
Few regions in the world offer such promise and potential for the future of South Africa’s international relations as the region comprising the members of the Association of South East Asian Nations (ASEAN). From large consumer markets, dynamic trade and investment opportunities to a successful model of regional integration that has contributed meaningfully to growth and development – the potential for cooperation is vast.
As part of efforts to deepen South Africa’s engagement and cooperation with this region, our country has begun with the process of acceding to the ASEAN Treaty of Amity (TAC). The TAC was signed at the first ASEAN Summit Meeting in Bali, Indonesia, in February 1976.
ASEAN is a regional organisation aimed at promoting economic growth and regional stability among its member states. Comprising 10 member states (Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Laos, Myanmar, Cambodia and Vietnam), the organisation’s headquarters are in Jakarta, Indonesia.
ASEAN actively encourages non-ASEAN States outside South East Asia to enhance cooperative relationships through accession to the TAC. Recognising the pivotal importance of ASEAN, key regional players such as China, Japan and South Korea are regular participants at ASEAN Summits and meetings while prominent dialogue partners include the European Union, India, Russia, the United Kingdom and the United States of America.
With a combined GDP of $2.8-trillion and a population of 650 million, in comparison to the $2.6-trillion GDP and 1.3 billion people of Africa, ASEAN is the fifth-largest economy in the world. A burgeoning middle class with a huge consumption potential and discretionary funds makes ASEAN a pivotal consumer market of the future and an attractive region to Africa.
While the preamble of the TAC makes references to principles adopted during the 1955 Bandung Asian-African Conference, these have not yet translated into significant business opportunities for African countries. There are approximately 300 companies from ASEAN, mainly in the areas of agri-business, manufacturing, oil and infrastructure, active in Africa and are mostly concentrated in South Africa, Nigeria and Egypt. Africa has become a destination for investment from ASEAN.
The major ASEAN investors in Africa are Singapore, Malaysia and Indonesia, while the ASEAN countries with the highest trade with Africa are Thailand, Indonesia and Singapore, with South Africa, Nigeria and Egypt being the largest African import markets for ASEAN goods.
One way for Africa-ASEAN reciprocal trade and investment to flourish is to forge agreements with regional blocs, more specifically through the African Continental Free Trade Area Agreement (AfCFTA). There have to date been no trade agreements between ASEAN and African regional economic communities. In 2008, seven ASEAN nations with diplomatic representation in SA forged the ASEAN-Pretoria Committee (APC) in an effort to boost trade and investment with South Africa. These are concerted efforts by ASEAN to boost trade and investment with Africa in general and South Africa specifically. It is imperative that SA develops a clear strategy to optimally benefit from accession to the TAC by means of increased cooperation, trade, investment and tourism.
While South Africa has diplomatic and economic relations with individual ASEAN members, accession to the TAC will formalise its relations with ASEAN as a bloc. SA-ASEAN relations offer many opportunities. Accession to the treaty will ultimately contribute to facilitating closer trade relations and more investment opportunities. South Africa, however, needs to find a way to take advantage of a Free Trade Agreement (FTA), within the current legal framework, in the Southern African Customs Union (SACU), the Southern African Development Community (SADC) and ultimately within the AfCFTA.
ASEAN presents an opportunity for SA to explore broader economic opportunities outside the traditional markets of the USA, the EU and China. Tensions in the global trade arena, constrained markets and the post Covid-19 world portend a shift in geopolitical, economic relations. ASEAN offers an opportunity to fill the void and pursue new opportunities. Since, ASEAN has free trade among its members as well as six other countries, it is prudent for SA to develop a strategic approach towards its interaction with ASEAN.
SA’s foreign policy objectives of economic diplomacy aimed at enhancing job creation, education and training as well as health cooperation will be well served through accession to the TAC. The timing of this accession offers a significant opportunity for SA’s post-Covid-19 economic recovery efforts.
There is scope for greater collaboration with ASEAN member countries across the various multilateral and regional bodies. Four ASEAN countries (Indonesia, Malaysia, Singapore and Thailand) are, together with South Africa, members of the Indian Ocean Rim Association (IORA) whose objective is to promote sustained growth and balanced development through regional cooperation. South Africa’s membership of IORA and the closer relations with ASEAN that will be brought about by accession to the TAC need to be harnessed in pursuit of its national interests.
Accession to the TAC offers SA the further opportunity to pursue its multilateral agenda related to, inter alia, combating human trafficking, terrorism, illegal fishing, illegal logging, organised crime, reducing the proliferation of drugs, the effects of climate change and improving food security. The promotion of tourism and reciprocal visa regimes will be accelerated through accession to the TAC. Add to these collaboration around research and development, exchanges between academia, collaboration between policy-makers and professionals, cultural exchanges, religious exchanges, language and gastronomy.
ASEAN’s success lies in its agility and receptiveness to change and demand. One such transformative change is the Fourth Industrial Revolution (4IR). While the precepts of the 4IR have been part of the economic integration agenda of ASEAN, the implementation in the post-Covid-19 economic reconstruction is likely to be accelerated. ASEAN leaders have stressed that gaps in digital infrastructure and connectivity, skills and knowledge development and the formulation of digital policies will play out at the regional level and must be prioritised as the greatest impact of the 4IR. The implementation of 4IR in ASEAN post the Covid-19 pandemic will accelerate economic integration by enhancing economic cooperation and supply chain connectivity.
As South Africa prepares for a technological leap into the digital future, ASEAN provides an excellent example of how to both harness and navigate the opportunities and challenges this digital transformation offers to developing countries. ASEAN has been successful in propelling the South East Asian region into prosperity while maintaining durable stability amidst diverging political systems and ethnic and linguistic diversity.
Looking ahead, it is anticipated that South East Asia will become even more strategic and the region more populous. Situated in the heart of the Asia-Pacific region, ASEAN occupies a strategic military location and lies at the crossroads of global trade. South Africa’s accession to the Treaty of Amity provides the opportunity to strengthen ties with a regional partner and advance its foreign policy objectives. DM