OECD or BRICS? Key Members' Differences Might Weaken ASEAN Unity

Economic

Summary:

Indonesia, Malaysia, Thailand all pursue different 'diversification' strategies.

A series of ASEAN-hosted meetings in Laos last month highlighted shifts in the regional bloc's diplomatic dynamics and the evolving geopolitical landscape in Southeast Asia.

The three-day forum, which ended on July 27, included a meeting of ASEAN foreign ministers and a gathering of top diplomats from major countries and regions, including Japan, the U.S., China, India and the European Union. The regional bloc seemed eager to showcase its diplomatic influence in promoting global peace and stability through dialogue.

Yet, three key founding members of ASEAN -- Indonesia, Thailand and Malaysia -- are pursuing different strategies to broaden their respective international partnerships.

Shortly after meeting with Russian Foreign Minister Sergey Lavrov on July 28, Malaysian Prime Minister Anwar Ibrahim announced Malaysia's application for BRICS membership. Lavrov had visited Malaysia for two days following ASEAN foreign ministerial meetings in Laos.

In February, Indonesia applied to join the Organisation for Economic Co-operation and Development, which began reviewing its application in May. Thailand applied to the OECD in April and also sought BRICS membership in June.

Founded in 1961, the OECD consists of 38 countries, mostly from Europe and the Americas, with the only Asian members being Japan and South Korea. BRICS was established in 2006 by Brazil, Russia, India and China, with South Africa joining in 2011 and four countries, including the United Arab Emirates and Iran, added in January, making it a group of nine countries.

The OECD is known as a "club of developed countries," while BRICS positions itself as the "voice" of the Global South. These two groups have starkly different characters. The moves by the three ASEAN countries to broaden their international partnerships seem somewhat mismatched with their economic standings.

According to the International Monetary Fund, gross domestic product per capita is estimated at $12,570 for Malaysia, $7,337 for Thailand and $4,942 for Indonesia. From this perspective, Malaysia seems closest to OECD qualifications, while Indonesia's position looks more aligned with BRICS.

Why, then, has Jakarta opted to seek the membership of the OECD, not BRICS?

"At this point in time Indonesia sees BRICS as too politically motivated and driven too much by the geopolitical interests of some of its members," said Yose Rizal Damuri, executive director at the Center for Strategic and International Studies (CSIS) in Indonesia.

"There are two reasons that I think behind Indonesia's consideration to join it. First, Indonesia wants to elevate its credibility that might be useful to improve its position as investment destination and part of global supply chain. Second, the current administration put economic reform as its priorities," Damuri continued.

"President Jokowi and its team want the reform to continue and become the legacy of the incoming administration. Joining the OECD would bring Indonesia's commitment to continue the process."

Meanwhile, Malaysia's choice to pursue BRICS over the OECD stems from a "strategic necessity to diversify economic partnerships and reduce overreliance on the U.S. dollar," said Abdul Razak Ahmad, founding director of Bait Al Amanah, a private think tank.

"BRICS, which began as an economic alliance, has gradually evolved into a significant geostrategic platform. This transition appeals to Malaysia as it aims to navigate the current geopolitical complexities and avoid the entrapment risks associated with major power rivalries," he said.

Thailand is seeking membership in both the OECD and BRICS because the former represents the largest current market, while the latter offers access to a potentially big future market, according to a senior Thai government official. Since the Asia-Pacific Economic Cooperation (APEC) forum, to which Bangkok belongs, includes members from both the OECD and BRICS, pursuing both memberships is a logical step, the official added.

While the three countries have consistently advocated for "neutral diplomacy," their individual choices -- shaped by economic interests and political calculations -- reveal unique "diplomatic DNAs" rooted in history.

Indonesia gained international recognition as a leader among nonaligned countries when it hosted the 1955 Asia-Africa Conference (Bandung Conference). It was also the only ASEAN member at the Group of 20 summit, launched in 2008. When it chaired the G20 summit in 2022, Indonesia achieved the diplomatic feat of issuing a joint statement despite the challenges posed by Russia's invasion of Ukraine.

A natural extension of this elevated international status is Indonesia's pursuit of OECD membership. "Indonesia seems eager to join the club of developed countries to participate in the rule-making process," said a senior official at Japan's foreign ministry.

Thailand, known for its "balancing diplomacy," was the only Southeast Asian nation to retain its independence while its nearby-countries were colonized by Western imperial powers -- Vietnam, Cambodia and Laos by France, and Burma (now Myanmar) by Britain. It preserved its sovereignty by serving as a buffer zone between the two Western powers.

While being one of the five U.S. allies in the Pacific region, alongside Japan, South Korea, Australia and the Philippines, Thailand maintains close ties with China and Russia. Its strategy of blending elements from both the OECD and BRICS could be viewed as either opportunistic or savvy diplomacy.

For Malaysia, reducing reliance on the U.S. dollar is a key motive for joining BRICS, a lesson learned from the East Asian currency crisis a quarter-century ago.

When many East Asian countries faced shortages of foreign currency, the IMF required austerity measures and interest rate hikes as conditions for its support. Malaysia, however, rejected these conditions, choosing instead to implement capital controls and interest rate cuts. This approach led to a V-shaped recovery that surprised the world, while Thailand and Indonesia suffered severe recessions.

This experience left Malaysia with deep distrust toward the Washington Consensus, a set of economic policy prescriptions promoted by the U.S., the IMF and the World Bank for developing countries facing economic hardship.

Asian currencies remain vulnerable to higher U.S. interest rates, and Anwar's sudden mention last year of an Asian Monetary Fund, similar to the IMF, underscores his desire to reduce the country's reliance on the dollar. This likely explains Malaysia's interest in joining BRICS, which seeks to boost settlements in member currencies.

But why the rush? The answer may lie in the recent foreign ministers' meetings in Laos, which revealed the limits of ASEAN diplomacy.

In an editorial titled "ASEAN's copy-paste concerns," Indonesia's Jakarta Post daily criticized how ASEAN meetings have produced "simply repetitions of the same statements the group has issued year after year." The paper said the bloc has been playing it safe and avoiding open friction among members when confronting sensitive issues such as the South China Sea.

ASEAN has been trying to enhance its collective presence in the international community through unified voices, but its dysfunction has become increasingly clear.

"The regional order has become entangled in the U.S.-China rivalry," said Kei Koga, an associate professor at Nanyang Technological University in Singapore. "This has created a sense of urgency for Indonesia, Thailand and Malaysia to adopt to the changing strategic environment.

"While these countries won't abandon ASEAN, they clearly see the limits of its external influence."

In the case of BRICS, Thailand and Malaysia may face few obstacles to joining. With dominant members like China and Russia holding significant decision-making power and unclear membership terms and procedures, their applications could be approved as early as the summit in Russia in late October.

In contrast, Indonesia and Thailand will likely face big hurdles in their bids to become OECD members. To join the group, both countries must undergo rigorous reviews on a wide range of criteria, including free trade, investment, anti-corruption, environmental protection and climate change initiatives. Acceptance requires unanimous approval of all the existing members, a process that could take years.

On Aug. 8, ASEAN celebrated its 57th anniversary. From its initial identity as an anti-communist alliance, it shifted its focus to building an economic community after the Cold War, gradually expanding its membership and deepening internal cooperation.

Once hailed as "the most successful regional group in the world," ASEAN now faces significant centrifugal forces amid a broader reshaping of global orders and increasing multipolarity.

Source: NikkeiAsia

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OECD or BRICS? Key Members' Differences Might Weaken ASEAN Unity

Source: NikkeiAsia

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