14th August 2012

“ASEAN in the New World Economy’

Thank you Khun Khittirat.

His Excellency, distinguished guests, friends, ladies and gentleman.

Looking ahead, there are two possible choices for ASEAN: either we become more integrated and our citizens feel a greater sense of ASEAN citizenship in addition to national citizenship, or we begin to disintegrate.

South China Sea dispute

I would like to spend a little bit of time talking about the failure of the recent foreign ministers’ meeting in Cambodia to issue a joint communique because of the disagreement over the South China Sea. That failure should sound a loud alarm to us to put things right because if we don’t put things right, things can go badly wrong. It is natural for the foreign ministry of each claimant country to say that its claim is incontrovertible, but the claims do overlap. When incontrovertible claims overlap, the claims cannot be incontrovertible. And unless there is recognition that there are different points of view, it is not possible to sit down, have a discussion, and try to work out win-win outcomes.

Many problems in life cannot be solved immediately, they can only be managed; and we must leave the future to solve some of our problems. China’s nine-dash claim in the South China Sea seems to many in Southeast Asia to be excessive, almost turning the South China Sea into a Chinese lake. But in fact, China’s claim is not without a certain historical basis. To begin with, it is not a new claim. It was an old claim from Min Guo, from the Republic of China under Chiang Kai-Shek. And when China drew that map, the predecessor powers of Southeast Asia – the Americans, the British, the French, the Dutch – didn’t object. Well maybe they thought China was in such a mess at that time, they could ignore what China claimed.

But China was involved as a big power in some of the most important discussions that shaped the post Second World War world. When the Japanese invaded China in 1937, they were at war with China but not at war with the European powers or America. And as part of that war they occupied coastal China and the South China Sea islands, and incorporated them into their maps. So in a court of law, the Chinese claim is not to be immediately dismissed. But, at the same time, the idea that China’s waters stretch all the way to my front yard; that troubles, even outrages Vietnamese, Filipinos and others.

The claims of the 4 ASEAN states – Malaysia, Brunei, Philippines, Vietnam – are mostly based on UNCLOS[1]. When China acceded to UNCLOS, China registered its claim based on this nine-dash map. So you cannot use UNCLOS as an argument against China.

I was asked about the South China Sea in Manila, when I addressed the students of De La Salle University earlier this year. I knew the sense of anger and grievance. So I went through these arguments with them. I fully understand why if I were Filipino, I would hold a certain point of view. But there are other points of view and each government is constrained by its own population not to concede any claim in a negotiation.

Take Preah Vihear[2] between Thailand and Cambodia, for example, it is highly political on both sides. We have to recognize this, and then what do we do?

In the case of the Philippines, it’s a little complicated because that claim is written into the Constitution. If the Philippine government were to say that it agreed to joint development of economic resources, that can be interpreted to be against the Constitution. Of course Sabah[3] is also in the Philippine Constitution, but somehow ways have been found around that.

With Vietnam, it’s much more complicated because during the war years Vietnam conceded China’s claims. But then said it was under duress subsequently. Vietnam’s relationship with China goes way back into history, and rather fraught.

Between Malaysia and China, between Brunei and China, the parties take a more practical approach and so there is no big fuss. And between Malaysia and Brunei, they have settled their own claims between themselves for mutual benefit.

The Americans, sensing unhappiness in certain quarters in ASEAN, thought they should rally around them, but their support is calibrated. I used to tell my American friends when I was in office, “do come closer, within the radar screen, but over the horizon please. Because if you come too close; everybody feels very awkward. In any case you yourself say your only interest is freedom of navigation and you don’t take sides on the claims.” Singapore, Malaysia, and all of us, have a common interest in freedom of navigation.

But of course the Chinese are not happy that the American military – aircraft, ships, submarines -are just outside the fence, with their radars and sensors. So in the year 2001, there was the Hainan spy plane incident which caused bilateral relations to become rather tense and which were only fully repaired after September 11. I remember it well because I was at the APEC meetings in China and witnessed some of the tension that existed between the two sides.

Indonesia, which must always take the leadership role in ASEAN was very worried by the recent outcome in Cambodia. I was told the President called up Foreign Minister Marty, who then visited all the capital cities of ASEAN to help repair the damage. Pak Marty succeeded in getting ASEAN countries to agree on key points.

Businesses rely on a stable and united ASEAN

But what is critical is the coming leaders’ meeting. We cannot have a repeat at that summit; if we do our future will be bleak. And it is very important that we who are in business, we have every vested interest in a stable outcome, and we should lobby in favour of that. Because there is no point in talking about the future of ASEAN in the new global economy if we are having a big fight in the South China Sea and ASEAN itself is divided. There is no guarantee that ASEAN will always cohere.

During the cold war we were divided. I remember once when I attended a meeting in Luang Prabang seeing a relic from that period. It was a free afternoon, we climbed up the hill and saw rusting guns pointing towards Thailand. And it was not long ago when the Mekong was the line across which two great powers confronted each other. And when Vietnamese divisions crossed the Mekong, between Thailand, Singapore, and Malaysia, we huddled together in the trenches to resist them.

I remember when after all that ended and when Vietnam decided to settle with China and joined ASEAN, a visit by Nguyen Van Linh[4] to Singapore, where he met Lee Kuan Yew at the Istana. After dinner, he shook Lee Kuan Yew’s hands tightly and asked him to be Vietnam’s advisor. Lee Kuan Yew couldn’t believe his ears because for years we were fighting Vietnam at every forum, hammer and tongs, tooth and nail. We were determined not to allow them to lay claim upon all of French Indo-China because that must mean their overlordship of Southeast Asia.

Fears bind ASEAN together

Time has elapsed and today we have an ASEAN that has come along quite well over 45 years. Year by year, progress can be frustratingly slow. But if we take 5-year snapshots, it has not been bad at all. And today, in every ASEAN foreign mission, our national flags side by side with the ASEAN flag. That’s something that would have been unimaginable even a few years ago.

The reason why ASEAN works is because … It’s not because we have a natural affection for each other. That doesn’t endure. It’s because we share common fears. It is fear that binds, not affection which can be fickle. And the fear is that if we are divided, Southeast Asia will be Balkanized. We will become dispensible pieces on the chessboard of the big powers. We will lose our sovereignty and be much worse off.

Yes we have differences, and these differences persist. But if we don’t come together, we can’t negotiate with China, Japan, US or India on any basis of equality. Each of them will be in a position to bully us individually. For this reason, Vietnam would want to ASEANize the South China Sea issue. China is naturally against it. And this was one of the underlying tensions in the recent meeting in Cambodia. If there is only one big power with us in the room, then of course we have to recognize certain limitations in our negotiating position. But if there are a few big guys in the room when we’re negotiating, it is a bit more comfortable. For this reason, it is critical for ASEAN and China to agree on a Code of Conduct in the South China Sea.

China’s Relationship with smaller countries and with ASEAN

This is not to say that China is unreasonable when it deals with small countries bilaterally. The fact is, if you look at China’s history of borders negotiations, they were often marked by Chinese concessions. I remember once crossing the Yalu River to Dandong in China after visiting North Korea. The Chinese told me that all those little islands in the river near the Chinese side belonged to North Korea. I asked, how come? Well, they were given to North Korean on one condition: that the entire river would be open to navigation by both sides. On that basis, China was prepared to be nice to North Korea which was a close ally.

Many years ago, I discussed with Myanmar ministers about how the border between Myanmar and China was delineated in 1960. They told me it was mostly resolved along the McMahon line. The McMahon line was the boundary the British settled with the local Tibetan government at a time when Great Britain recognized China as “suzerain” over Tibet. Qing China never recognized it. However, China under Mao and Deng was prepared to talk about the practical line of control. But when China negotiated with Myanmar, China was quite happy to settle around the McMahon line.

The point I’m making is that it is not in China’s interest to bully ASEAN countries because China knows if ASEAN countries feel bullied, then we will invite others into the room, and this would give them complications.

And it is for this reason, that in the year 2000, where Premier Zhu Rongji was attending a regional meeting in Singapore, at a time when we in ASEAN were reeling from the financial crisis in 1997, 1998, while China was streaking ahead, he offered a Free Trade Agreement between ASEAN and China. At that time the ASEAN leaders did not know how to respond. They thought that China would eat us up if there was an FTA. I remember trade ministers discussing this in Hanoi. It was September 11, our hand phones were all buzzing because of what was happening in New York. That night, we agreed that we should negotiate the FTA because China wanted it politically and we could get something for it. This led to the early harvest which benefited ASEAN countries disproportionately. The following year in Phnom Penh, China and ASEAN leaders signed a framework agreement. At that ceremony, Premier Zhu Rongji said China did not seek for itself an exclusive position in ASEAN.

In other words, China knows that ASEAN will never want to have China as its only friend. ASEAN prefers to be promiscuous, to have many friends. China knows that, we know that, and it creates a more comfortable situation for all of us. Those who argue that China was out to rack ASEAN at the recent Cambodia meeting, I think they are wrong. It is not in China’s interest. China of course has territorial interests to defend and does not want those issues to be ASEAN-ized. But it is not in China’s interest to have a divided ASEAN because in a divided ASEAN, the Americans, the Indians, everybody else will be sucked in. China needs a peaceful Straits of Malacca – 80% of the oil it imports goes through the Straits of Malacca.

Major powers want a united ASEAN

Is it in the U.S. interest to divide ASEAN? I also don’t think so.

Because if ASEAN were divided, then China will be able to pick off ASEAN countries one by one. Can the U.S. match China in this game? Maybe the Philippines would remain with the U.S. but even that I’m not so sure because if you look at the trade accounts, China matters more and more to the Philippines. So the U.S. over the years have decided, better go along with ASEAN. The Indians, Japanese have also come to the same conclusion. In other words, all the major powers want us to be united.

The key is that we ourselves must be united and not allow internal differences to divide us. The big powers are happy to have ASEAN in the lead because we are not threatening. We have no ICBMs[5], no nuclear submarines, no cruise missiles to threaten anyone, so everybody trusts us to be in the driver’s seat. Recently, after the Cambodian meeting, China again affirmed ASEAN’s leadership.

And here, I must really applaud Dato’ Sri Nazir and your other nine conferees on the creation of the ASEAN Business Club because some political conflicts are completely against our interests. So there was this unhappiness over the South China Sea. China decided strategically not to react militarily; not to react to the action, but to react to the strategy. They decided the proper response was mangoes, bananas and tourists. And who were hurt? The Filipinos were hurt, the Chinese were hurt, we were all hurt.

Or take Preah Vihear. For those of us who are neither Cambodian nor Thai, it is difficult to understand all the arguments. I know it involves a few square kilometers of land.

When I was foreign minister, I once naively proposed that the temple and the surrounding area be turned into an ASEAN heritage site so that it can be promoted for regional tourism. All sides would benefit. I didn’t realize how sensitive the issue was domestically in both Thailand and Cambodia.

Business influencing Politics

But if business interests, and we are not without our own interest, lobby our governments, help lay out the case, that cooperation will bring us much more benefit, that may tip the political arguments. Many problems cannot be solved, some can only be solved in the future. But in the meantime let us facilitate movement, stimulate economic development, do good business. And these developments themselves may help create better conditions for the resolution of the original problems.

I told the students at De La Salle University in Manila that there are two ways to look at the South China Sea. One is to see it as a dividing line between China and Southeast Asia. But has that been the South China Sea historically? The South China Sea was where the trade flowed between Chinese dynasties and the kingdoms and principalities of Southeast Asia, all the way to India, the middle east and beyond. In Malay we call these lands ‘tanah di bawah angin’, where the monsoons blow. We live beneath the monsoons. The ships travel up and down, carrying goods and ideas, mixing blood.

All over the archipelago, you find Chinese artefacts going back to the earliest dynasties. Over in coastal China, you do genetic testing, and you find that there is a lot of Southeast Asian blood. We can see the South China Sea as a dividing line, or we can see it as a bridge, which has always linked us together.

And between the two futures, between conflict and cooperation, we can value all the oil and gas below the seabed, it is much less than the benefits that will come from good relations and cooperation. When we set things in perspective, the original unhappiness is actually small. I was involved in negotiating a settlement of railway land between Singapore and Malaysia. In the end, the numbers were puny compared to the stakes. And today, between Malaysia and Singapore, we have opened a new chapter in bilateral cooperation.

ASEAN needs to link up

What we need to do in ASEAN is to link up and improve connectivity, within and between countries, and from ASEAN to China and India by land, sea, air and the Internet, and to the rest of the world. The moment you throw a bridge, or pave a road, or establish Internet connection, you create opportunities for arbitrage, for trade, to do new things and grow new businesses. After a while, new vested interests grow, altering the political equation.

You look today, Bangkok Bank, CIMB, and many here in the room including my own group, Shangri-La, Wilmar, what flag do you attach to them? It’s not easy, you have to attach multiple flags and increasingly, if you look around ASEAN, more and more companies know that if they do not go regional or international, they don’t stand a chance. You can hide behind barriers, but it’s only good for so many years. You only weaken yourself, and beyond that, you are in danger. Better to create within the ASEAN economic space conditions for the growth of regional companies. I am not being idealistic, there will always be nationalist pressures. Within each country there are those who favour liberalisation and those who are protectionist. There is no point preaching to another country but within each country, those of us who subscribe to this vision of the future; we can weigh in and play a role so that on critical decisions, governments take the right and not the wrong decisions.

Today, connectivity is a big, big agenda item for ASEAN. Here, if we are skillful, like a Tai Chi exponent, we can borrow energy from the environment around us. China of course wants to build links into Southeast Asia. From Nanning and Kunming to Hanoi, through Laos, through two separate routes to Myanmar, and from there into Thailand. From Kunming, China is building pipelines to Kyaukphyu[6] in Myanmar on the Bay of Bengal.

China wants a fast speed rail, Kunming to Vientiane, agreement already signed, still not moving yet but I think it’s going to move, and from there to Bangkok. China’s big objective is Bangkok because if they reach Bangkok, it’s a huge market, lots of opportunities. If it terminates in Vientiane, it’s not really economic, but if it terminates in Bangkok, even if does not come down to Malaysia and Singapore, the investment is entirely worthwhile. And then from Bangkok, to Dawei in Myanmar. That will enable China to bypass the Malacca Straits.

I went through this exercise with Kerry Logistics. The signs are clear, China wants to come down to Bangkok via Laos. With Vietnam it’s always a little complicated, but they know that Vietnam will be more amenable to porous borders if China has alternatives. And one day there will be greater porosity and the link between Bangkok and Ho Chi Minh City through Phnom Penh will also open up.

Opening of Myanmar completes the jigsaw puzzle

What is absolutely critical is the opening of Myanmar because it is the missing piece in the entire jigsaw. Myanmar has long borders with both China and India. The opening of that country makes our collective future much brighter. Therefore, we must help Myanmar, in our own interest. We know it is politically complicated. The future depends on the relationship between Aung San Suu Kyi, the Tatmadaw and the ethnic groups.

But there is no way they can go back to the past. The dam has broken. You can’t put the water back. How the water flows into the sea, however, well, that depends on how the players interact with one another, and how we who are Myanmar’s friends are able to influence good behaviour by all parties. I am very pleased to hear that ABC is thinking of inviting Aung San Suu Kyi to Jakarta, because she has only visited Bangkok during the World Economic Forum and has yet to visit other parts of Asia. Indonesia would be a good place for her to visit.

If we can have a Myanmar that is politically, economically, physically and culturally linked to the rest of Southeast Asia, then the East-West links will all open up. I remember two road trips I did with other ASEAN Foreign Ministers. One, from Mukdahan[7] to Savannakhet[8] to Quang Tri , then to Hue and Danang. It went through what was the most heavily bombed piece of of real estate on Earth during the Indo-China War. Today, we have peace, villages have become towns, everywhere signs of growth. The following year, we travelled by road from Chiang Rai, crossed the Mekong to Laos and from there to Jinghong in Yunnan. Very quickly, many of us will lose count of the number of bridges thrown across the Mekong River. What we need are links to Myanmar, to Bangladesh, to India. Of course it will take time and there will be twist and turns. We have to be skillful and create competitive pressures so that those who are slow come under pressure to move faster.

If we can achieve this, we will create a grid, with China helping us build the North-South links, and Japan India, and the US helping us build the East-West links because they want to compete with China for access. Once the Southeast Asian network is in place, we become the link between China and India.

China-India Relations and its impact on ASEAN

Today, the single most important relationship in the world is the Sino-U.S. relationship, but further down the century, China-India relationship will also become very important. Together, China and India account for 40% of the world’s population. In terms of brain power, I think they are more like 60% of the world.

So imagine this. We have on one side China, and on the other, India. We are in between and everything that we are, our food, our culture, our habits, our blood, are a mixture of both. Surely, surely, we must have the ability and instinct to benefit from this simultaneous rise of China and India. Between them, there is a cultural gap. You watch them when they interact, whether in the UN or in business circles or in America, it is not so easy between Indians and Chinese because of civilizational differences.

But for us in Southeast Asia, perhaps not all of us, but certainly for many of us, we are multi-channel. We are able to switch from one frequency to another. If there are Chinese in the room, we switch, when there are Indians in the room, we re-tune our amplifiers and receptors, if there are Americans or Japanese in the room, we adjust again. We do this often without thinking because this instinct is in our blood.

Sometimes we are criticized for being soft, that we are not Cartesian enough, that we don’t always make clear decisions. All that may be true, but for many things, being soft, being indirect and being ambiguous can be very useful. In between two tectonic plates like China and India, if we try to be hard in between, it’s going to be very painful. It is better for ASEAN’s external policy to be like Thailand’s. Over the years, Thailand has been able to keep its independence by subtle sensing and reaction to external forces. Try pushing or pulling a Tai Chi master. You will not succeed because he is always adjusting and turning the force against you. Thailand has that skill. This should be ASEAN’s skill. So if anybody pushes us too hard, we will make slight adjustments so that other forces come into play. In this way nobody can push us too hard and our future will be all right.

But to accomplish this, we must not allow the South China Sea problem to get in the way. We must encourage and invest in the connections which integrate us. In our own national councils, we in the business world should be a force for opening up and liberalisation so that the ASEAN economic space is not just something on paper, but something real. We want the younger generation to feel that the whole of ASEAN is their region. This is the region that I belong to. If we can do this, we will be the bridge between India and China. And if they cooperate and don’t clash, our future will be bright.

If they clash, our lives will be very complicated. Will they clash? Some people say that it is inevitable, but that is a western view of the world, you know the argument, new powers rise, there must be contest, war, revolution. However, in the long history of contact between China and India, which goes back to the mist of early history, they have only fought once in 1962. It was a minor war on the scale of things, still a scar in India, but in China largely forgotten, except among a few.

Significance of Nālandā University

In the last few years, I was privileged to be involved in a wonderful project that I commend to all of you, which is the rebuilding as a secular university, of an ancient Buddhist university called Nālandā[9].

Nālandā, for those of you who are not familiar with the history, was probably the world’s first university. It existed from the 5th to the 12th century. At its peak, it had over 10,000 students from Southeast Asia, China, Japan, Korea, Central Asia, Persia and elsewhere. In the 12th century it was destroyed by Afghan invaders, about the time when Oxford was established, but before Cambridge. Many subjects were taught, not just Buddhism. When the British were in India, no one knew what the ruins were; they knew it was Buddhist. Until the British Army engineer, Alexander Cunningham, chanced upon the English translation of an ancient text written by a Chinese monk, Xuan Zang or Tripiṭaka, the monk from the Journey to the West, you know the story of the monkey god. That monk, whom every Chinese kid is familiar with, went to India and lived in Nālandā for many years. He left China without permission, under the Tang Taizong, which was of course a very serious crime.

After many years, he brought sutras back to China. But first, he had to ask for permission to re-enter China which he did from Hetian or Khotan along the southern Silk By that time, his reputation had spread back to China. The Emperor sent an imperial guard to escort him back to Chang’an (present day Xián) and welcomed him home personally. There, he translated the sutras into Chinese. He also wrote a very important book, The Record of the Great Tang Western Region. It was that book written in the 7th century, which Alexander Cunningham read in the 19th century in English. When he read it, his eyes must have dropped out. Xuan Zang’s record read like a tour guide not only of Nālandā, but of many historical places in Indo-Gangetic Plain.[10] It was through China that India recovered a significant part of its history. As a result of that rediscovery, many Indians took on Buddhist names.

For a long time, there was a hope, a longing that somehow the university would be re-established. And finally we succeeded in getting the East Asian Summit leaders, which consists of the ASEAN 10 countries, India, China, Japan, Korea, Australia and New Zealand, to support the revival of Nalanda as a regional project. Upon this support, the Indian parliament, two years ago enacted a special law to establish Nalanda as an international university. It is located in the Indian state of Bihar near the old ruins. The Chief Minister has acquired 450 acres of land flanked by the Rajgir Hills. National authorities are making sure that the national infrastructure development, including airport, highways, and railroad, will support Nalanda. Faculty for the first two schools will be recruited next year and students will be enrolled for the year after. The buildings will take longer to build.

I have been involved in the project from the beginning under the leadership of Amartya Sen, the Nobel Laureate Harvard professor, who is now the first Chancellor of Nalanda University. I chair the International Advisory Panel. I was so delighted, so honoured when Princess Sirindhorn agreed to join us on the Advisory Panel. When I came to Bangkok to invite Her Royal Highness a few months ago, she had me to her palace for dinner and I was amazed by her knowledge. Her Royal Highness had been to Nalanda before and was completely familiar with its history. At dinner, there were professors from Chulalongkorn University who were interested in cooperating with Nalanda University. I proposed the establishment of a Nalanda-Suvharnabhumi Centre in Chulalongkorn University as Suvharnabhumi encompasses Myanmar, Thailand and Indo-China. In Singapore, we have established a Nalanda-Sriwijaya Centre. Sriwijaya encompasses Indonesia, Malaysia, Singapore and Southern Thailand. It is good for us to go beyond national definitions.

Man living in harmony with man, with nature, as part of nature

All of us, in our own different ways, can promote the Nalanda ideal, Buddhist in inspiration, of man living in harmony with man, man living in harmony with nature, and man living as part of nature. This should be the philosophy which underlies competition and cooperation in Asia. If we can achieve this for India, China and ASEAN – that is half of the world – we will help change the world for the better. That’s something worth doing.

Yes, we in ASEAN are not a great power, we do not get many medals in the Olympic Games, Thailand has a few, Indonesia has a few, but not many, but we are not unimportant. If we play our role, we can create a better Asia, and that better Asia will usher in a better world. If each of us does a little bit, if each business leader does a little bit, including ABC and others, collectively, we can affect national decisions, and make the region safer. Small actions can position ASEAN in a way which enables larger forces to push us and everyone else in a favourable direction.

Thank you.


[1] The United Nations Convention on the Law of the Sea

[2] The Cambodian–Thai border dispute is an ongoing border dispute between Bangkok and Phonm Penh. It is involves claims to 2.4km2 of land that surrounds the Peah Vihear temple. This dispute has been incited by nationalist sentiment of domestic politics.

[3] This refers to the North Borneo territorial dispute between the Philippines and Malaysia. The Philippine constitution stipulates that the territory belongs to the Philippines.

[4] Nguyễn Văn Linh was a political leader of the Vietcong during the Vietnam War.

[5] Inter-continental ballistic missile

[6] Special Economic Zone of Myanmar

[7] Mukdahan is one of the north-eastern provinces of Thailand. Neighboring provinces are Amnat Charoen. Its eastern borders the Mekong River, across which lies Savannakhet Province of Laos.

[8] Savannakhet or Kaysone Phomvihane is a city in western Laos and the capital of the Savannakhet Province

[9] Nālandā was an ancient center of higher learning in Bihar, India.

[10] Refers to the fertile plains of northern and eastern India and extends to modern day Pakistan, Bangladesh, and Nepal.