Southeast Asia: Transition among the Nagas - Dragons and Tigers: A Geography of South, East and Southeast Asia - page 409

barriers to intraregional exchange. Third, the productiv-
ity of countries such as Vietnam, with its low level of de-
velopment, or Brunei, with its small size, cannot be
expected to match the volume and diversity of output of
more developed countries such as Singapore or Thailand.
Facing competition from India and China, ASEAN is
being forced to confront its failure to realize a long-held
goal: integration into a single market that is attractive to
foreign investors. Singapore and Thailand are pushing
for change and Brunei and Malaysia are somewhat sup-
portive. However, the newer members—Cambodia,
Laos, Burma, Vietnam, and Timor-Leste—are reluctant
to open their economies fully because they fear they can-
not compete with the stronger countries. Some have
backslid from original commitments to cut tariffs by 60
percent. The backsliders include Malaysia with its car in-
dustry , Indonesia with rice and sugar, and the Philippines
with rice and petrochemicals.
India and China sent representatives to the ASEAN
summit in Bali, Indonesia in 2003. They boasted about
their investments in Southeast Asia and pointed out the
importance of their economic roles in the region. These
countries want to forge links with ASEAN in a larger eco-
nomic community .
ASEAN now has what it calls “dialogue partners.”
ASEAN

blatant human rights violations among their members—
such as in Cambodia in the past and in Myanmar
(Burma) today .

Economic Crises of the 1990s
and 2000s

Rapid economic growth in the non-Communist ASEAN
countries came to a rapid halt in the late 1990s when
overlending by banks caused a major financial crisis.
Thailand, the Philippines, Malaysia, and Indonesia were
forced to devalue their currencies in 1997. The problems
were caused by high levels of foreign borrowing, govern-
ment budget deficits, large bank loans to glutted prop-
erty markets, and slower than expected economic
growth. Japan, in its own economic crisis, slowed invest-
ment and technical transfers to Southeast Asia.
Thailand suffered most as the crisis led to a change
of government and a new constitution. Austerity meas-
ures were imposed. Malaysia and Indonesia, long ruled
by authoritarian governments, found it more difficult to
admit mistakes and launch reforms and restructuring.
President Suharto of Indonesia was forced to resign, leav-
ing the country' s economic and social life in chaos. In-
donesia has had the hardest time recovering from this
1997 crisis, partly because a backlash against the Chi-
nese led to their withdrawal in large numbers together
with their money . Indonesia also had to absorb more
than a million workers who were deported from Malaysia
during the crisis there.
By the early 2000s, China presented new challenges
with increased competition and increased markets. The
redirection of foreign direct investment to China slowed
Southeast Asia' s recovery from the 1997 crisis. Moreover,
Chinese goods compete in textiles (Vietnam and Indonesia)
and higher-value products (Thailand and Malaysia).
ASEAN knows that it must attract investors, lower trade
barriers to open up markets, and upgrade domestic
worker skills to counter China' s impact, but inevitably it
will face severe competition from China in many areas in
the years to come.
The more recent economic crisis that ensued in 2007
hit Southeast Asia' s economies as exports fell and the in-
flux of foreign capital slumped sharply . However, the cri-
sis was abated when governments provided stimulus
packages to banks and businesses and cash transfers to
the public. Moreover, those economies with large num-
bers of workers overseas, such as Indonesia and the
Philippines, were cushioned by cash remittances.

3 adds China, Japan, and South Korea.
2ASEAN refers to Australia and New Zealand. Dialogue
partners participate in discussions not only on economic
issues but also on political issues such as democracy in
Myanmar, the spread of bird flu, and the insurgency in
southern Thailand.
Pursuing consolidation, ASEAN leaders have en-
dorsed a blueprint that envisions a single common mar-
ket and a single production base with the free flow of
goods, services, investment, and capital. The year 2020 is
the target date, but Singapore and Thailand want to ac-
complish it sooner. ASEAN leaders have agreed to re-
move non-tariff barriers, and harmonize customs
procedures and product standards. Targets have been set
for 100 priority sectors ranging from wood products and
cars to air travel and tourism.
These economic agreements might change the face
of ASEAN, which until recently has been most effective
in the political arena, curbing hostilities and acting as a
forum to solve numerous disputes. Most importantly , a
strong regional identity has been created among its
members. Geographer Antonia Hussey (1991) wrote,
“The sense of identity and cooperation espoused by
ASEAN is not found elsewhere in the third world.”
However, countries have been too hesitant in criticizing