ASEAN is key to 'Asian century'

With about 600 million people, ASEAN has only half of India's population but already a larger GDP.

Story highlights

  • ASEAN economies have been growing at an average of more than 5%, Parag Khanna says
  • With a shared population of just half India's, ASEAN already has a larger GDP, he says
  • Research firm IHS projects that ASEAN's GDP will reach $4.7 trillion in 2020
  • ASEAN nations' top priority must be infrastructure investment, Khanna says

Over the past year I've revisited a host of Southeast Asian countries I first began traveling in more than a decade ago. The region's progress has been remarkable both in terms of overall economic growth and the promising opening of formerly isolated nations like Myanmar. With China's slowing growth and rising wages, investors and exporters are searching for new long-term opportunities and sites of production. The time of the Association of Southeast Asian Nations (ASEAN) has come.

Last month in Laos, I met a Malay-Laotian couple with modest backgrounds who met while on fellowships in Japan. After their respective graduate degrees, they reunited in Vientiane where they advise government agencies, donors and NGOs. Their cross-border mobility is a symbol of an entire new generation of upwardly progressive Southeast Asians who view their success as intimately connected to the broader region rather than their smaller home nations alone. While much attention is paid to President Xi Jinping's articulation of a "China Dream," quietly an "ASEAN Dream" is also being born.

Read more: ASEAN 'cornerstone' of Japan's Asian diplomacy

While obviously far from integrated in the ways the European Union is, ASEAN now has a momentum that Europe's regional project lacks. Despite their historical differences and rivalries, ASEAN countries have been pushing forward rapidly with cross-border investments, commercial integration, and intra-regional trade that has kept them growing fast -- averaging more than 5% -- even as the major export markets like Europe lose steam. With about 600 million people, ASEAN has only half of India's population but already a larger GDP. Research firm IHS projects that ASEAN's GDP will reach $4.7 trillion in 2020, not far off where Japan is today.

Philippine economy on the grow
Philippine economy on the grow


    Philippine economy on the grow


Philippine economy on the grow 04:13
Rich flock to Singapore
Rich flock to Singapore


    Rich flock to Singapore


Rich flock to Singapore 02:20
Indonesia's economic boost
Indonesia's economic boost


    Indonesia's economic boost


Indonesia's economic boost 02:40
Coke investing in transformed Myanmar
Coke investing in transformed Myanmar


    Coke investing in transformed Myanmar


Coke investing in transformed Myanmar 03:20

Strategic location

ASEAN countries have strategic geography on their side as well. The region forms the crossroads of China and India, with deep infrastructural links re-emerging gradually through Myanmar. It is also the main conduit, via the Straits of Malacca, for most of the world's oil flows between the Near East and Far East.

Now is the time for ASEAN to move from size to coherence. Over the past 50 years, Southeast Asia has experienced colonial liberation, the traumatic Vietnam War, internal rivalries between Indonesia and Malaysia, various forms of strongman rule, and diplomatic self-isolation through non-alignment. Today the region can be considered largely stable save for the simmering South China Sea dispute.

This is ASEAN's chance to assert its collective voice, with American backing, vis-à-vis China and ensure that no single power dominates these crucial waters. The same applies to the issue of China's rampant upstream damming of the Mekong River, which threatens the stability of downstream flows on which ASEAN's heavily agricultural nations depend.

Read more: ASEAN chief: South China risks becoming 'Asia's Palestine'

Continued economic integration is also a strategic imperative. ASEAN is expected to launch an Economic Community (EAC) by 2015 that can either boost the region's growth potential or reveal deeper protectionist firewalls in both strong and weak economies. As much as Vietnam and Thailand stand to gain from even greater access to Myanmar, Cambodia, and Laos, a community worth its name needs a vision to help develop its poorest members.

The top priority both to promote integration and assist weaker ASEAN nations must be infrastructure investment. Besides Singapore, which has already become a first world city-state, only Vietnam and Malaysia have significantly invested in nationwide infrastructure. Coupled with significant political and regulatory reforms, their second wave is under way. Other major ASEAN countries such as Indonesia, Thailand and the Philippines are finally ramping up in terms of allocating greater shares of the national budget and overall GDP to infrastructure.

Crucial gateway

Far too often flooding and other mishaps take critical sectors of their economies offline. Indonesia is now focused on roads, Thailand on railways, and the Philippines on ports. If they execute on these critical projects, the current growth rates will be far more resilient in the years ahead. Furthermore, with their high savings rates, dynamic private sectors, and growing interest from international markets, much more indigenous and foreign capital can be allocated towards public-private investment pools that can finance long-term infrastructure needs.

We should remember that ASEAN's integration and development is as fundamentally a social as an economic or political issue. Around the world, urbanization is bringing never-before-imagined opportunities to more than 50 million people per year who move into cities -- but it has also exacerbated inequality, fueling unrest from Sao Paulo to Istanbul.

For inclusive growth to occur, urbanization must be strategically conceived as a vehicle for employing -- and training -- tens of millions of youth in construction, hospitality, healthcare, education, and other services. Furthermore, the large rural poor populations of Myanmar, Cambodia and Indonesia need the basic health and education systems, as well as more advanced agricultural equipment that open borders can bring.

For decades ASEAN has been thought of as a second-tier regional body. Now it has a chance to be the crucial gateway between powerful regions, a network of sustainable cities, and a thriving pillar of the century of Asia.

      Parag Khanna

    • Local visitors walk on the premises of Sri Lankas latest mega port, the Chinese-built Colombo International Container Terminal (CICT), in Colombo on August 13, 2013, a week following its commissioning. Sri Lanka is aiming to be South Asia main shipping hub by investing billions of dollars in port infrastructure, much of it with Chinese help. AFP PHOTO/LAKRUWAN WANNIARACHCHI (Photo credit should read LAKRUWAN WANNIARACHCHI/AFP/Getty Images)

      Why world powers covet Sri Lanka

      Is Sri Lanka's location in the saddle of the "new maritime Silk Road" arcing from the Persian Gulf to the Straits of Malacca a blessing or a curse?
    • A woman walks by high-rise buildings in downtown Bangkok on April 29, 2013. Asia-Pacific growth will edge up this year on the back of a recovery in the US and emerging nations, a UN study said, but it urged governments to take bolder steps to lift millions out of poverty. AFP PHOTO / Christophe ARCHAMBAULT (Photo credit should read CHRISTOPHE ARCHAMBAULT/AFP/Getty Images)

      ASEAN key to 'century of Asia'

      ASEAN has a chance to be the crucial gateway between powerful regions, a network of sustainable cities, and a pillar of the Asian century.
    • BEIJING, CHINA - DECEMBER 14: (CHINA OUT) Job seekers crowd at together at a job fair for postgraduate students on December 14, 2008 in Beijing, China. Nearly 40,000 applicants competed for approximately 14,228 job positions at the fair. The number of college graduates will hit 5.59 million this year, an increase of approximately 640,000 from 2007. Chinese students struggle to find positions with job vacancies becoming increasingly scarce due to the global economic crisis. (Photo by China Photos/Getty Images)

      Can China become a melting pot?

      President Xi Jinping has emphasized prosperity, happiness, and a revitalized national ethos. Can he deliver the "Chinese Dream?"
    • People hold a huge banner during a demonstration demanding Brazilian President Dilma Roussef to veto a bill that would redistribute oil royalties in favor of non-oil producing states, in Rio de Janeiro, Brazil, on November 26, 2012.

      Is Brazil ready to take center stage?

      The World Cup and Olympics guarantee that Brazil's international visibility will continue its rapid ascent. Now it must ensure there are seats for all the guests.
    • A child on boat

      Is it springtime for Nigeria?

      Can Nigeria be sub-Saharan Africa's Egypt? Ground zero for a revolution not against autocracy but unfathomable corruption?
    • Park Jung-geun (pictured right) was imprisoned in January of this year accused of "acts that benefit the enemy."

      Typhoon tourism: Week in N. Korea

      China is if anything a more likely future model of governance for North Korea than outright democratization or sudden reunification.
    • Workers on a production line at Foxconn's Longhua plant, which employs 300,000 people and makes products for Apple.

      Opinion: It's the technology, stupid

      Technology is now the most important source of power and well-being. China's superpower rise is directly attributable to its technological strategies, experts say.
    • Singapore Skyline

      Big ideas from small places

      In the current phase of globalization, financial, ecological, political and social crises are occurring simultaneously and magnifying each other.
    • Saudi dissident and suspected terrorist leader Osama bin Laden is seen in this undated file photo taken somewhere in Afghanistan.

      'OBL assassinated, not martyred'

      Parag Khanna believes Osama bin Laden killing could be a big step toward creating a "global rule of law," and should be viewed as a victory of the global rule of law.