VZCZCXRO6007
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGP #1299/01 3500710
ZNR UUUUU ZZH
P 150710Z DEC 08
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC PRIORITY 6129
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHKO/AMEMBASSY TOKYO PRIORITY 5955
RUEHBJ/AMEMBASSY BEIJING PRIORITY 2897
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 2143
RUEHBY/AMEMBASSY CANBERRA PRIORITY 2196
RUEAIIA/CIA WASHDC PRIORITY
RHHMUNA/CDR USPACOM HONOLULU HI PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RHEHNSC/NSC WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 03 SINGAPORE 001299 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MTS - M. COPPOLA 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ASEAN PINR SN
SUBJECT:  SINGAPORE ACADEMICS: ASEAN GOING THROUGH A 
CRITICAL PERIOD 
 
REF: SINGAPORE 1285 
 
¶1. (SBU) Summary: ASEAN leaders have yet to hold substantive 
discussions on the financial crisis, and ASEAN is in danger 
of being marginalized due to its lack of concerted action in 
a number of areas, academics at the Institute of Southeast 
Asian Studies (ISEAS) told U.S. Ambassador for ASEAN Affairs 
Scot Marciel and Ambassador Herbold on December 4.  The 
academics also warned that mainland Southeast Asian countries 
are increasingly gravitating towards China, and that a robust 
U.S. presence is needed to balance China's growing influence. 
 In a separate December 3 lunch hosted by Ambassador Herbold, 
Ministry of Trade and Industry (MTI) ASEAN officials said 
that while ASEAN integration is proceeding, there has been 
backsliding on implementation of the ASEAN FTA in several 
countries.  MTI added that many ASEAN members feel that U.S. 
engagement with ASEAN is not where it should be.  In a 
separate December 3 meeting, regional financial analysts were 
generally downbeat over the near-term economic prospects for 
the Southeast Asia region and saw continued declines in 
exports and slow economic growth, if not outright 
contraction, for some countries.  In a meeting at AmCham, 
members told Ambassador Marciel that companies in the region 
have been hit hard by the financial crisis, and that a 
scarcity of credit is the biggest cause for concern.  AmCham 
members suggested that if a major U.S. firm such as Citibank 
were to collapse, there would be significant political 
fallout throughout the region.  AmCham members also noted 
that expats appeared to be leaving Singapore in significant 
numbers.  End Summary. 
 
ASEAN at a Crossroads 
--------------------- 
 
¶2. (SBU) ASEAN needs to get its act together, as the 
organization is in danger of quickly becoming irrelevant, Dr. 
Chin Kin Wah, Deputy Director of the Institute of Southeast 
Asian Studies (ISEAS) told Ambassador for ASEAN Affairs Scot 
Marciel and Ambassador Herbold in a December 4 roundtable 
meeting with several ISEAS academics in Singapore.  In the 
past, ASEAN could be counted on to facilitate meetings 
between Asia's leaders.  However, during the current 
financial crisis, the Plus Three component (China, South 
Korea and Japan) of ASEAN Plus Three has met without ASEAN 
and, except for a brief meeting on the margins of the Asia 
Europe Meeting (ASEM) held in Beijing in October, ASEAN's 
leadership has not yet held discussions addressing the 
financial crisis, Chin lamented.  Ambassador Marciel 
acknowledged Professor Chin's concern, noting that ASEAN does 
not have a reputation as an organization that gets things 
done, and when governments want to get things done quickly, 
they rarely look to ASEAN. 
 
¶3. (SBU) Ambassador Marciel noted that the human rights 
situation in Burma continues to deteriorate, and that the 
Burmese regime's abuses clearly violate ASEAN's Charter.  He 
expressed dismay that not one of ASEAN's member countries has 
publicly criticized the Burmese regime for its actions. 
ISEAS Director Ambassador Kesavapany responded that ASEAN is 
facing a critical period, with the worsening human rights 
situation in Burma, Thailand seemingly falling apart, and 
racial and religious tension simmering under the surface in 
Malaysia.  Ambassador Kesavapany expressed hope that the new 
U.S. Administration, would act to open up new opportunities 
for multilateral discussions and cooperation in the region. 
 
The Pull of China and the Need for a U.S. Presence 
--------------------------------------------- ----- 
 
¶4. (SBU) Ambassador Kesavapany said the mainland Southeast 
Asia states, especially Burma, Laos and Cambodia, but even 
Thailand, are increasingly gravitating towards China.  Of the 
mainland states, only Vietnam is ardently resisting Chinese 
influence.  Ambassador Kesavapany said that U.S. influence in 
the region is needed to counter China and keep these mainland 
states from "breaking away." 
 
¶5. (SBU) Dr. Ian Storey observed that China has increased its 
assertiveness in dealings with Southeast Asian countries, 
 
SINGAPORE 00001299  002 OF 003 
 
 
especially in regards to oil and gas concessions in the South 
China Sea.  He reiterated a view expressed by several of the 
ISEAS professors that the United States appears to be pulling 
back from the region.  Ambassador Marciel responded that the 
United States Government remains deeply engaged on multiple 
fronts.  For example, the United States gives 600 million USD 
per year in assistance to Asia, with approximately 90 percent 
slated for Southeast Asia.  U.S. exports to Southeast Asia 
are roughly equal to U.S. exports to China, Ambassador 
Marciel noted.   Ambassador Kesavapany expressed surprise at 
the numbers and suggested ISEAS hold a U.S.-ASEAN workshop or 
seminar to highlight the U.S. involvement in Southeast Asia. 
 
 
Southern Thailand 
----------------- 
 
¶6. (SBU) Dr. Storey told Ambassador Marciel that Thailand's 
government is embroiled in its own political turmoil and is 
therefore unable to pay proper attention to the ongoing 
conflict in Southern Thailand.  Dr. Storey said the 
insurgency in Southern Thailand has many parallels with the 
insurgency which previously took place in Algeria and said 
the area has become increasingly vulnerable to external 
involvement. 
 
Climate Change 
-------------- 
 
¶7. (SBU) Michael Robinson noted that climate change issues, 
such as drought and rising sea levels, are looming as a major 
problem for Southeast Asia.  Except for Indonesia, most 
countries in the region continue to turn a blind eye to the 
problem, he said. 
 
ASEAN Economic Integration Improving, U.S. Falling Behind 
--------------------------------------------- ------------ 
 
¶8. (SBU)  Ms. Sulaimah Mahmood, Director of the ASEAN 
Division at the Ministry of Trade and Industry, told 
Ambassador Marciel in a December 3 meeting that ASEAN has 
made progress toward its 2015 target of an integrated ASEAN 
Economic Community.  Member states have improved ASEAN's Free 
Trade Agreement (FTA) chapter on trade in goods, incorporated 
sanitary/phytosanitary and other elements, have improved the 
investment agreement, and are working on another package of 
services liberalization.  She credited ASEAN's FTAs with 
other dialogue partners like Japan, China and Korea with 
helping to push integration within ASEAN.  However, Sulaimah 
admitted that there has been backtracking on implementation 
of the ASEAN FTA agreement in some countries, on services in 
particular. 
 
¶9. (SBU) Ambassador Marciel said that there was frustration 
on the U.S. side regarding the U.S.-ASEAN Trade and 
Investment Framework Agreement due to a lack of 
responsiveness from ASEAN to U.S. proposals.  Sulaimah agreed 
that engagement was not where it should be given the high 
level of trade and investment between the United States and 
ASEAN.  She said that Burma has been a thorny issue in 
U.S.-ASEAN relations, and noted that ASEAN is making progress 
with the European Union, despite its similar concerns over 
Burma.  Sulaimah said that negotiations with other FTA 
partners had helped build relationships for ASEAN, and 
observed that the United States had much less frequent 
meetings with ASEAN counterparts.  She suggested that at 
least one or two bilateral activities be held annually. 
Sulaimah also recommended that business links be enhanced, 
and suggested that U.S. multinationals pair up with ASEAN 
small and medium-sized enterprises for discussions of 
business issues with governments. 
 
ASEAN Economies Hit Hard by Slowdown 
------------------------------------ 
 
¶10. (SBU) In a roundtable discussion at a lunch hosted by 
Ambassador Herbold on December 3, regional financial analysts 
based in Singapore were generally downbeat over the near term 
economic prospects for the Southeast Asia region and saw 
 
SINGAPORE 00001299  003 OF 003 
 
 
continued declines in exports and slow economic growth, if 
not outright contraction, for some countries.  The analysts 
debated the prospects for Indonesia.  Currency issues in 
Indonesia are fueling fears in the investment community that 
a balance of payments crisis may be in the cards, though one 
analyst predicted the country would muddle through the 
current economic malaise without a serious fall out.  The 
analysts were negative on the prospects for reform in 
Malaysia, citing the lack of a meritocracy and the 
"bumiputra" policy that favors ethnic Malays as reasons for 
continued slow investment.  In Singapore, the analysts saw 
the GOS's plans to move up the new budget to January and 
introduce new fiscal stimulus measures as positive signs, but 
noted the relative lack of influence the GOS could bring to 
bear to stimulate Singapore's export-dependent economy. 
 
AmCham: If Citigroup Goes Down, Watch Out 
---------------------------------------- 
 
¶11. (SBU) The economic environment in Southeast Asia has 
never been more uncertain, American Chamber of Commerce 
members told Ambassador Marciel in a December 4 meeting. 
While members noted that some businesses, such as those 
involved in agriculture, are still thriving, many are facing 
hard times.  The biggest concern is the diminished 
availability of credit, one member said.  Many industries 
have been hurt, and there is a growing realization that the 
hope that China would pick up the slack had been misplaced. 
The shipping industry has "fallen off a cliff here, " one 
member said.  While there has been no political fallout yet, 
"if Citigroup or Goldman Sachs go down, it would have a major 
political impact throughout the region," with many perhaps 
blaming the United States for their economic woes, one member 
said. 
 
¶12. (SBU) AmCham Chairman Steve Okun said anecdotal evidence 
compiled so far indicates that expatriates are leaving 
Singapore in significant numbers.  For example, two years 
ago, expats had difficulties placing their children in their 
schools of choice; the Singapore American School (SAS) had a 
long waitlist and implemented a U.S. passport-only policy for 
potential enrollees.  This policy has been rescinded and 
there no longer appears to be a waitlist at SAS.  (NOTE: 
Container Security Initiative officials recently told a 
visiting staffdel that containers headed to the United States 
had dropped from 14,000 to 10,500, and that during screening, 
it is apparent that many of the containers still going are 
filled with American citizens' household goods.  End Note.) 
 
¶13.  (SBU) AmCham members noted a 12-15 percent increase in 
restructuring among Singapore-based companies over the last 
six months.  While consulting companies have been especially 
hard-hit, outsourcing has gone up considerably for larger 
firms, they said.  AmCham members expect the situation to 
worsen over the next six months. 
 
¶14. (U) Ambassador Marciel cleared this cable. 
 
Visit Embassy Singapore's Classified website: 
http://www.state.sgov.gov/p/eap/singapore/ind ex.cfm 
HERBOLD