The leaders of many of the world’s fastest-growing economies gathered on the Philippine island of Cebu last week to consider Asia’s future.

Issues discussed at the annual summit of the Association of Southeast Asian Nations, or Asean, include the outlook for growth, integrating the region’s economies, terrorism, geopolitical risks, the pros and cons of globalization and imbalances imperiling global stability.

Weighty stuff, indeed. And yet, I’m blowing off Asean this year. Hundreds of journalists attended the gabfest with the best of intentions. Aside from a few nice meals in interesting locales, we tend to have little to show for our time. Ambiguously worded communiqués and hollow promises rarely make for good copy.

Instead, I decided to come to Thailand, a place dealing with many of the problems Southeast Asian leaders should be stepping up efforts to fix—and aren’t.

Let’s start with terrorism. New Year’s Eve bomb blasts in Bangkok that killed three people and injured 42 pierced the veneer of safety and stability that investors came to enjoy from the Asia-Pacific region’s ninth-biggest economy. As this nation of 64 million people buzzes about who was behind the attacks, investors are wondering who is in charge.

The bombings followed a September 19 coup that removed Prime Minister Thaksin Shinawatra from power. The military junta that replaced him has bungled its handling of the economy to comic proportions, reminding investors that even the most-favored emerging markets can be unpredictable places.

Risks abound

First, Thailand’s military leaders unveiled plans to create a “self-sufficiency economy,” without explaining what that is. That was followed by a flip-flop on capital controls aimed at taming currency speculation, an episode that spooked markets. This week brought even more confusion about government efforts to restrict foreign investment.

It’s all a bit odd. Thaksin was removed partly for a lack of transparency in his policies. Yet the generals have arguably been just as opaque and unpredictable as Thaksin ever was.

Thailand also finds itself on the frontline of debates about globalization. After years of opening its economy wide, Thailand’s leaders want to turn back the clock. The pendulum’s swing in the other direction is evident in their words and deeds. There’s a sense that Thailand has seen lots of Starbucks outlets and Western-style shopping malls go up, but has missed out on the full benefits of open trade.

Calling Cebu

The effects of global imbalances are on display in Thailand, too. Even with the coup, bombings and shaky management, the baht has risen 10 percent against the dollar over the past 12 months. Its advance isn’t about the Thai economy, but the dollar’s weakness. It’s an example of how global imbalances are affecting Thailand beyond policy makers’ control. It’s also a reminder that Asia is too dependent on weak currencies and massive foreign-exchange reserves as economic insurance policies.

Let’s hope officials in Cebu are paying close attention to Thailand’s plight. If policymakers don’t accelerate efforts to upgrade economies, Thailand’s woes could be a harbinger of the challenges that Asian economies will face—just as in 1997.

There’s much focus on how rapidly Asia is growing. China is booming, India isn’t far behind, Southeast Asia is vibrant and Japan is growing again. Clearly, as the 10th anniversary of the Asian financial crisis approaches, Asia is in far better shape than a decade ago.

1997 replay?

“The risk of a crisis like that in ’97 is slim, but Asia is certainly not free of risks or policy challenges,” says Nouriel Roubini, chairman of New York-based Roubini Global Economics LLC and a former US Treasury official.

Thailand’s experience these last four months is a case in point, and a cautionary tale amid Asia’s rising importance to investment portfolios around the globe.

“The current environment reminds me most of 1993 because big foreign-fund flows are sweeping into Asia,” Mark Matthews, a Singapore-based strategist at Merrill Lynch & Co., wrote in a report to clients. “Then in the mid-1990s, money started flowing out of Asia and into the Nasdaq. Once it pushed that up, it went into US housing. Now it’s coming back to Asia.”

This is Asia’s moment in the spotlight. In the 1990s, economies were too immature to handle massive capital inflows. A decade later, a chastened Asia is again on many investors’ radar screens. If it disappoints again, investors may steer clear for far longer than they did after the Asian crisis.

The 1997 meltdown exposed the Asian tigers as mere financial pussycats. The region’s high asset values ended up being more hype than reality—and in some cases, Ponzi schemes. It was so-called hot money boosting assets, not economic fundamentals.

Asian complacency

As hot money returns, Asia must stand and deliver. That means steady and transparent policymaking, sound financial systems and making sure globalization raises living standards for all, not just the well connected. Basically, it’s about avoiding complacency; rapid growth rates don’t mean Asia can rest on its laurels.

All those officials who met in Cebu should be paying attention to events in Bangkok. Thailand’s problems could easily be an omen for Asia.

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)

TAGGED as a mere “talking shop” because of an unwritten rule to make decisions by consensus and its reluctance to interfere in the internal affairs of member-countries, the Association of Southeast Asian Nations (Asean) appears deadset on proving the critics wrong, if the results of their latest meeting are any indication. 

The leaders of many of the world’s fastest-growing economies gathered on the Philippine island of Cebu last week to consider Asia’s future.

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