Asean Chief Says Asia Tensions Could Hit Growth

Jan 17, 2013- JAKARTA—Mounting tensions over competing territorial claims in the South China Sea could hurt economic growth and integration in Southeast Asia, the new head of the Association of Southeast Asian Nations said.

Le Luong Minh , secretary-general of the 10-country association, said the region would suffer if frictions continue over control of the resource-rich waterway. China has claims in the area that overlap with those of Asean members Vietnam, the Philippines, Malaysia and Brunei, as well as Taiwan.

Many fear any escalation of the political and military posturing over the South China Sea could hurt development in Southeast Asia, which has posted some of the strongest growth in the world in recent years.

"Confidence for investment, confidence for trade and confidence for economic cooperation always depends on stability," Mr. Minh, a former deputy foreign minister of Vietnam, told The Wall Street Journal on Wednesday in one of his first interviews since taking office this year.

With more than 600 million people and a combined gross domestic product of nearly $2 trillion, the 10 Asean countries have become an important new growth area as slowdowns hit many developed economies in the West, and as regional powerhouses India and China show signs of deceleration.

But the group remains a patchwork of politically diverse nations with vastly different economies. Singapore's annual GDP per capita was more than $40,000 last year, while in Indonesia it was around $3,500 and in Myanmar less than $1,000. The other members of Asean are Cambodia, Malaysia, Laos, the Philippines, Thailand, Vietnam and Brunei.

Mr. Minh said he hopes that during his five-year term "such complicated developments in the South China Sea stop, so countries could be free from any danger and focus on economic development."

To keep growth on track and raise the standard of living in its poorer countries, Asean needs to avoid being overly distracted by the South China Sea dispute and promote further economic integration, Mr. Minh said.

Depicted for decades by critics as little more than a talk shop for the region's leaders, Asean in recent years has gained diplomatic and political credibility with its impressive economic growth, even as much of the world has struggled. But some analysts see Southeast Asia as a potential battleground for the world's superpowers, with both the U.S. and China making declarations about the area's growing strategic importance.

The bloc also faces unprecedented squabbling among its member countries over what to do about China's increasingly assertive claims over most of the South China Sea.

Some Asean members have welcomed Washington's growing diplomatic and military engagement in the region to counterbalance China's. Other members with close ties to Beijing—notably Cambodia—have kept the group from taking a unified stance on the issue of overlapping territorial claims.

Despite the tensions, Mr. Minh said Asean's cumulative economic growth should exceed 5% this year. Last year members recorded combined GDP growth of around 5.2%.

"Despite some risks and other challenges—such as rising food and energy prices and growing global imbalances—the outlook in 2013 for Asean remains broadly positive," he said. "Asean is the center of growth in the Asia-Pacific region."

The association has set itself a target of creating the Asean Economic Community by the end of 2015. By radically reducing barriers to trade, capital and labor movement among member nations, it hopes to spur more growth and prosperity in what will become the world's newest economic bloc.

Difficulties in implementing the required changes within each country have forced Asean to delay the launch of the economic community from the beginning of 2015 to the end of that year. But Mr. Minh said member states must push through the reforms needed to make the community work.

"The remaining issues for us to undertake are the more difficult ones," such as getting rid of non-tariff barriers to trade as well as restrictions on labor movements, he said. "There is very much work to be done from now until 2015."

Write to Eric Bellman at