Southeast Asian nations are key U.S. allies in the war against terror and represent an enormous opportunity for investors who have shied away since the Asian financial crisis.

Singapore is next in line to assume the organization’s five-year secretary-generalship.

What immediately comes to mind when Americans think of Southeast Asia is Vietnam. But the population of Vietnam (80 million) represents only 16 percent of the total population of 500 million found throughout the 10 Association of Southeast Asian Nations (ASEAN): Brunei, Cambodia, Indonesia, Laos, Malaysia, Mayanmar, the Philippines, Singapore, Thailand, and, yes, Vietnam.

Since the intense capital flight that took place during the Asian Financial Crisis of 1997-98, many investors have been wary about venturing back into this region. ASEAN, however, is of key strategic concern to the U.S.’s war on terrorism, and should not be neglected. New safeguards are also in place to ensure that another financial crisis is averted.

Explaining why ASEAN nations deserve increasingly more attention vis-a-vis the extremely popular Chinese market, Singaporean Secretary-General designate Ong Keng Yong uses the old adage that it’s always better not to put “all your eggs in one basket.”

Eager to allay fears that their region is an unstable ‘breeding ground’ for terrorists, ASEAN foreign ministers met in late July to declare their resolve for enforcing an anti-terrorism pact. The agreement, formalized in August, was designed to combat Muslim extremists bent on driving out U.S. interests and creating a pan-Islamic nation in Southeast Asia. Four of ASEAN’s member nations – Indonesia, Malaysia, (southern) Philippines, and (southern) Thailand – possess considerable Muslim populations and are considered by some as a favorite haunt for subversive terrorist activities.

Singapore has been instrumental in safeguarding U.S. interests in the region. In early September, it was announced that 21 additional suspects had been arrested for their Islamic-militant ties. Singapore has repeatedly been a source of crucial intelligence for the U.S. about suspected Al-Qaeda activity throughout Southeast Asia.

ASEAN leaders are also focused on stimulating trade and investment in the region.

Earlier this summer, ASEAN leaders met to speed up progress on an ASEAN trade plan, which would remove inter-regional tariffs and pave the way for widespread trade liberalization. Singapore is among six countries (including Brunei, Indonesia, Malaysia, the Philippines, and Thailand) that have already lowered tariffs to below five percent and are expected to phase out tariffs all together by 2010 or earlier.

Investors that remain wary of Asia should be aware of a regional cooperation program designed to alert central bankers to impending problems.

In order to keep a ‘finger on the pulse’ of financial flows, economic conditions, and policy changes in the region, ASEAN nations’ finance ministers and central bank officials are now sharing data that will track recent developments in each of their economies.

Of particular interest to foreign investors is the exchange of information on short term capital flows, which helps alert ASEAN nations as to whether banks in a particular country are over-lending or demand that could lead to over-borrowing is growing. This overall ‘peer review’ mechanism, operational since March 1999, is designed to complement the surveillance role of the International Monetary Fund (IMF).

Starting on January 1, 2003 Singapore will hold the ASEAN secretariat for five years. Mr. Ong Keng Yong will be heading the secretariat from Jakarta, the Philippines. Ong is widely known and respected for the multiple positions he currently fills. Ong is currently Prime Minister Goh’s press secretary, chief executive director of the People’s Association, and deputy secretary at the Ministry of Information, Com-munications and the Arts.