INSIGHTS ON THE BENEFITS OF EAST ASIAN INTEGRATION

The benefits of regional integration are greater than previously realized. This section summarizes the main benefits of regional integration as documented in the literature on this, and discusses recent work that suggests that regional integration can be even more beneficial than previously realized, especially if the potential associated risks of integration are managed properly.

The Benefits of Regional Integration

Conventional Analysis Stresses Specialization as the Driver of Benefits

The conventional analysis of the benefits of regional integration focuses on trade in goods and emphasizes trade and location effects. The preferential reduction in tariffs through regional agreements induces a shift in demand towards exports from partner countries at the expense of domestic production (trade creation) and away from exports from non-member countries (trade diversion). According to this view, trade creation improves welfare, trade diversion reduces it. Changes in trade flows induce changes in the location of production between member countries of a regional agreement based on static comparative advantage (specialization).

New Insights Identify Economies of Scale and Agglomeration Economies as the Key Driver

The new economic literature — sometimes called the “new international trade theory” — summarized in An East Asian Renaissance (Gill and Kharas 2007) and World Development Report (World Bank 2009), emphasizes the increasing role of economies of scale and agglomerations economies as central forces driving international trade, the geographical concentration of economic activity, and economic growth. While this theory was developed in the late 1970s (Krugman 1979), empirical support has been more recent. The premise of the new thinking is that when trade barriers fall, firms gain access to bigger markets, allowing them to expand production and reap economies of scale. But openness also exposes them to competition from rival foreign firms, paring their margins. As such, some firms may go out of business, but between the domestic survivors and the foreign entrants, consumers will have more variety of goods to choose from. Thus the main gains from trade arise not from specialization, but from economies of scale, fiercer competition, and increased consumer choice that regional integration and, eventually, globalization provide.

This chapter focuses on states’ involvement in the institutional integration processes in East Asia. “Institutional integration” here means formal agreements between states, such as free trade agreements (FTAs), as well as their participation in regional cooperation frameworks, such as ASEAN and ASEAN+3 (ten ASEAN members and Japan, China, and South Korea).

The outbreak of the Asian financial crisis in 1997 gave direct momentum to the creation of the concept of “East Asia” as a region and political and economic integration in the region. Since then, the integration processes in East Asia have developed in various aspects and forms: from separate bilateral currency swap agreements to the Chiang Mai Initiative, from bilateral FTAs to ASEAN+1 FTAs, and from ASEAN cooperation to ASEAN+3 and ASEAN+6 (ASEAN+3 plus Australia, New Zealand, and India) initiatives, among others. During these processes several characteristics of East Asian integration processes have emerged. The main aim of this chapter is to identify these characteristics and try to explain the factors behind such characteristics.

First, this chapter points out that integration processes in East Asia are generally sector- and function-based, and bilateral, subregional, and multilateral frameworks coexist in the same sectors. It also shows that “extra-regional” states are participating in many of these bilateral and multilateral frameworks. Then, the chapter considers the factors behind these characteristics. It assumes that individual East Asian states are seeking practical and concrete benefits from the processes and they are not tying themselves to any particular method, or geographical area, to achieve the benefits.

Second, it argues that East Asian engagement policies of Australia — whose place in “East Asia” remains ambiguous — illustrate the characteristics of East Asian integration in the last twenty years. Australia changed its foreign policy approach significantly at the turn of the century. The chapter explains the change in some detail, and argues that the nature of East Asian integration can be explained in sharp relief by examining the differences in intentions and results of Australia's Asian engagement policies in the 1990s and 2000s.

Asian professionals have been going to the United States, Canada, Australia, the United Kingdom, and other western European countries over much of the contemporary history of migration. This is partly a legacy of a long history of colonial relationship, especially in the case of the Philippines and the United States, Malaysia, Hong Kong, Singapore and the United Kingdom, and Indonesia and The Netherlands, and also due to strong trade and investment links between them which occasion movements of traders, managers, and technicians, including intracompany transfers. The desire of many young Asians to acquire advanced degrees from western educational institutions has reinforced these trends, while shortages of skills and talents in western industrial countries have prompted the adoption of welcoming immigration policies. Compared with other destinations these countries also offer easier access to certain niches of their labour market because of language and early steps taken to recognize professional degrees and qualifications acquired in foreign countries.

The rise of East Asian economies has deflected some of these flows towards destinations within the region and there are signs that the flows are accelerating, albeit from a low base. Expatriate Japanese managers have for some time been ubiquitous in the region's capitals from Seoul to Jakarta, but today one also finds among their ranks Koreans, Taiwanese, Filipinos, Malaysians, and Thais. They manage factories in China and Thailand, run banks in Lao PDR and Cambodia, staff hospitals in Singapore and Brunei, and pilot passenger airlines from Hong Kong and Malaysia. The numbers engaged in these movements are difficult to ascertain, but they have clearly grown over the past decade and are likely to continue into the future in spite of the global economic crisis. Intracorporate transferees and the movements of professional managers and engineers are bound to grow with the extension of supply chains among East Asian economies as evidenced by the growth in the volume of intraregional trade in intermediate goods and commodities, related services, and direct foreign investments.

Majulah Singapura (Onward Singapore) mirrors the patriotic fervour of the composer, who earnestly wished to infuse the future generations of Singapore with a sense of urgency to work towards a progressive and dynamic, post-independent nation. It was his deep conviction and emotional drive which led, more than fifty years ago, to the birth of the country's national anthem. Such were the prophetic thoughts he documented then.

My late father, Pak Zubir Said, as he was affectionately known to one and all, was a man in a hurry. He was in great haste to see Singapore emerge as a truly independent country. To him time was the essence of everything and time was such a valuable commodity. He was clear in his thoughts and his vision that the country needed to forge ahead and work with courage and fortitude towards achieving independence in the true sense of the word. To this end, he encapsulated, in the Singapore anthem, aspirations and dreams of a people, calling them to rise and move forward in unity. But in this endeavour, Papa had to traverse a stormy journey. The highs and lows in my father's life were linked to the national anthem of Singapore, Majulah Singapura. In composing it, he experienced both elation and despair.

Zubir Said passed away on 16 November 1987 at the age of 80 years. In 1928, at the young age of 21, with only the shirt on his back and a clean towel, he left Sumatra and crossed the seas to make his home in Singapore. For almost 60 years, Singapore was haven for him as he lived and worked by the adage “where the sky above I uphold, the earth beneath I tread”. His dedication and loyalty to his adopted country were unwavering.

From being a violinist in the bangsawan, a form of Malay opera, to being a music icon in Singapore, he traversed through life building milestone after milestone, creating a personal history that leaves trails of achievements and legacies. He was a man who left little else but an unblemished character and reputation. He was a man who died leaving his name like the tiger that died leaving its stripes, as the Malay proverb says. His name is, above all, associated with the stirring national anthem of Singapore. He was well-known as a champion of Malay music, the arts and culture that is unadulterated. He once quoted his sentiment as that of Confucius, saying “I am not one who was born in possession of knowledge; I am one who is fond of antiquity and earnest in seeking it there.” This book is about the life and struggle of a man who was insatiable in his search for knowledge — any knowledge — who loved tradition and had a great respect for time-honoured customs and virtues.

Zubir Said's life was cloaked in unpretentious modesty. Coming from humble beginnings, totally self-driven all his life, humility and simplicity became second nature to him. He empathized with the less fortunate and the less educated as he himself was. A very significant driving force behind his work was his desire to pass on as much knowledge as he could to these people, especially the young.

A national anthem sings of a country's soul. It captures what it means to be a citizen, what unites citizens, and what distinguishes them from others. It is also a way of re-dedicating oneself to the Nation and all it stands for. People are urged to rise over passing occasions and be an exalted repository of a nation's deepest aspirations and profoundest dreams. At the same time, the anthem has to be simple enough for ordinary people to understand and relate to. Most of all, it has to appeal to the young — tomorrow's leaders and protectors of the nation who are being moulded in today's world. There are few things more moving than to see and hear peoples and particularly children celebrate their common future around the national flag, which children greet with the national anthem at the beginning of each school day. When abroad on important occasions, the singing of the anthem stirs our emotions even more strongly.

Singapore's national anthem fulfils all these functions. What is special about it is that it reflects the special nature of Singapore as a country born out of a disrupted flow in history, and yet a country which had to prove that its exceptionalism could survive and succeed. For this, every Singaporean must be grateful to Zubir Said, whose Majulah Singapura captures the flowering of the Singapore imagination vividly yet simply.

Our road to Independence began with internal self-government in 1959. That is when the great task of building our Nation awaited us. It was at that time that our national anthem was produced by Zubir Said.

The anthem in the original — that is in the Malay language — is pregnant with exhortations. The wordings are simple, but they evolve a call to our people to look ahead and overcome the challenges ahead, though not specifically stated, in a spirit that is new. The singing of it is a call to all, with a promise of a new dawn. Every pause, every emphasis, every nuance in it is meant to evolve that purpose, with determination.