Every member state essentially has veto powers, which "is a design feature. It is not a bug", said Dr Balakrishnan.
"It is necessary if you're going to try and put together 10 sovereign states with such wide differences to work together effectively," he said at the Societal Leadership Summit.
About 450 people attended the Singapore Management University's one-day conference on lessons Asean learnt in the last 50 years and its progress in the next 50.
"This is a very testing time," said Dr Balakrishnan, addressing the ongoing Rakhine crisis and territorial disputes over the South China Sea.
The Rakhine crisis is complex with no quick fixes, and a situation which extremists want to inflame so that moderates are forced to take sides, he said.
Asean was unable to forge a common statement on the crisis, with Malaysia dissociating itself from the statement made by the Asean chair at the United Nations General Assembly last month.
But there was universal agreement within Asean that the violence had to stop immediately.
All also agreed that humanitarian assistance should reach all communities regardless of their race or religion, and that Myanmar should be supported in identifying a long-term solution to the root causes of the conflict.
"We're trying to be a voice of caution, reason and moderation in the midst of a very difficult situation," Dr Balakrishnan said.
Diplomats past and present speak up
Former Asean secretary-general Ong Keng Yong said: "The impression that the outside world has of Asean is we're like a ostrich, we put our head in the ground and don't want to talk about anything.
"There is a lot of work going on, and officials are constantly trying to find diplomatic solutions while trying to help the Myanmar authorities manage the humanitarian crisis," added the ambassador-at-large.
He also said: "The nature of news reporting and the media is that you must be seen to be doing a lot of things centre stage, and at the end of the public smooching you're supposed to come out with a baby or something. Actually, a lot of things have been happening behind the scenes."
Former Indonesia president Susilo Bambang Yudhoyono also recounted instances of when he engaged in behind-the-scenes diplomacy with fellow Asean leaders.
"Indonesia may be the largest country with the biggest economy and population, but at the Asean table we are all equal. We cannot impose views on others," he said.
He added that he was delighted that Myanmar has opened a new page in its democratic chapter.
"I hope the challenges that they face now - including with the Rohingyas - will prove to be a test that will reaffirm their commitment to democracy, human rights and the rule of law," he said.
The leaders also unveiled a granite sculpture titled Asean50, to mark the golden jubilee of Asean.
Created by local artist Tan Swie Hian, it is of a stylised Asian arowana with 10 scales symbolising each of the 10 Asean countries.
Emeritus Senior Minister Goh Chok Tong was also asked during a panel session what advice he had for Dr Balakrishnan on how to steer Asean when Singapore chairs the grouping next year.
Mr Goh replied: "Listen. Listen to the other nine leaders and align the interests with Singapore's.
"Don't advance Singapore's interests when it's out of line with the interests of the others. You will not succeed," said the former prime minister.
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