ASEAN unites to face economic heat

Facing the global financial crisis, the Association of Southeast Asian Nations (ASEAN) has called for coordinated action and reform of international financial systems, while warning against protectionism. The leaders agreed to refrain from raising trade barriers or introducing new ones.

The joint statement came on Sunday at the end of the 14th ASEAN summit in the Thai beach resort of Hua Hin, which focused on the effect of the meltdown on the 10-member bloc's export-driven economies. The leaders ''called for a bold and urgent reform of the international financial system,'' adding that emerging and developing economies should have more voice in future.

The statement said the leaders ''urged that more coordinated action by both developed and developing countries be taken to restore financial stability.''

The leaders of the 10 ASEAN nations reaffirmed in the statement their determination to ensure the free flow of goods, services and investment, and facilitate movement of business persons, professionals, talents and labor, and free flow of capital.

They also urged that more coordinated action by both developed and developing countries be taken to restore financial stability and ensure the continued functioning of financial markets to provide support to growth.

The ASEAN statement stresses its aim to form an economic community similar to the European Union by 2015. However, the nations stressed that the EU was an inspiration and not a model.

Human rights were a particular issue for the grouping, which includes non-democratic countries Burma and Vietnam. ASEAN also made much of its first charter of rules - but it has established no mechanism for enforcing them on its members, our correspondent adds.

Economic unity still far off
Analysts largely agree that the ASEAN aim of an economic union is unlikely to be reached in the foreseeable future, given the deep economic and political disparity between the 10 nations, which include Indonesia, Singapore, Malaysia, Philippines, Thailand, Brunei, Cambodia and Laos.

The disparity has hindered the region's ability to leverage its market of 570 million people and compete for investments with China and India, the world's fastest growing economies. Thai Prime Minister Abhisit Vejjajiva, who chaired the summit, called on the bloc to ''accelerate the formation of an attractive single market''.

But the deep concessions that analysts say are necessary to boost growth in the region. Were absent from the summit agenda.

In the more immediate economic sphere, it has made some headway, signing a landmark free trade agreement with trading partners Australia and New Zealand.

In one of the less high-profile agreements to come out of the summit, dentists are now allowed to practice throughout the region.

Multinational companies have scaled back spending plans in the region because of the global recession, leading to fiercer competition among governments looking to attract investment and create jobs. Singapore has cut corporate taxes for the second time in three years; Malaysia has pledged to liberalise its services sector, and Cambodia has extended tax breaks for selected industries.

The region's four largest economies -- Singapore, Thailand, Malaysia and Indonesia -- account for almost 90 per cent of all foreign investment into Asean. The purchasing power of the group's four poorest countries was five times less than the other members in 2007, according to statistics on the ASEAN website.

For four decades, ASEAN was seen as little more than a talk shop which made decisions mainly by consensus, refusing to interfere in the affairs of individual countries. Two years ago the bloc's leaders signed a charter, the first legally binding document since the group's founding in 1967.

But the new charter, which came into force three months ago, has no mechanism to stop member countries from implementing protectionist policies. Earlier this month Indonesia ordered civil servants to use local products, and Malaysian Prime Minister Abdullah Ahmad Badawi said it was ''normal'' for countries to resort to protectionist measures in a slowdown.

The push for more integration comes at a time when the EU is straining under the pressures created by a similar disparity in the strength of its constituent economies.