CONFIDENTIAL
THE PROMOTION OF BRITISH INTERESTS IN SOUTH EAST ASIA : CURRENT BACKGROUND AND ASSUMPTIONS
1.
In
Our primary national objective is to cultivate a political climate in which we can protect and expand our economic stake in a relatively rich and fast growing region of the developing world. 1980 some 2% (about £850 million) of UK visible exports went to ASEAN. Total exports to ASEAN are slightly larger than our exports to Australia but less than those to Nigeria, Saudi Arabia or South Africa. Invisible earnings are worth at least as much as our visible receipts. Historically Britain has had a considerable investment stake in Malaysia and Singapore although our share of new investment is falling. Current investment in Malaysia and Singapore is estimated to be worth £1.8 billion. Recent developments in Malaysia have demonstrated the price of taking these countries for granted. Although the region's importance for the UK in the 1980's will depend essentially on economic factors, we share a general Western interest in maintaining regional stability and encouraging resistance to Soviet influence. We also have a specific interest in the economic stability of the region because of Hong Kong's trade and investment stake and its political stability because of our residual defence commitments in the area.
Eritish Policy Assumptions: Prospects for ASEAN
2.
ASEAN countries are better placed than others in the developing world to recover from recession. They do not carry a massive debt burden to the same extent as the Latin American countries. Even the Philippines which is the most vulnerable economy in the region has a debt service ratio less than half the size of the big Latin American debtors. The ASEAN countries should therefore be capable of funding most of their development plans. In the medium term their economic prospects will depend on their success in rapidly developing non-oil energy resources. Economic prospects for the individual ASEAN countries and Brunei are set out in Annex A.
3. Prospects for internal political stability are generally fair. The Philippines is currently the least stable of the ASEAN countries. The death or incapacity of Marcos would present severe problems. Whatever the nature of a successor regime, relations will the West would not be quite as easy as at present. The Marxist New People's Army appear to be gaining strength but is unlikely to pose a serious threat in the short term. None of the other South East Asian communist parties has any chance of coming to power in the foreseeable future. Indonesia also has a succession problem but the Indonesian military establishment will throw up a new leader. Successive coups in Thailand have had relatively little effect on the social structure or foreign policy. The likeliest potential threat in Brunei is internal unrest provoked by lack of any form of representative government or a coup d'etat by army officers frustrated by the concentration of authority in the hands of the Sultan and his family.
CONFIDENTIAL
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