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ASEAN Economic Community Will Be Launched By End of Year

MD Staff

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Political and business leaders from ASEAN member states told participants at the 45th World Economic Forum  that the ASEAN Economic Community, uniting 10 countries with over 600 million people in a common market, will be a reality by the end of 2015.

“Some in the audience may not believe it, but believe me, we will have a single market by the end of the year,” Pridiyathorn Devakula, Deputy Prime Minister of Thailand, promised. Devakula said that tariff reductions within the community have already been largely accomplished, but work remains on cutting non-tariff barriers.

“The free flows of goods, capital and labour will provide the opportunity for ASEAN to become the factory for the world,” Samdech Samdech Techo Hun Sen, Prime Minister of Cambodia, said. He added that the next step would be for ASEAN to seek free-trade agreements, and that he expected the community to benefit from continued growth in China, from the opening of India’s economy and from renewed dynamism in Japan.

Pham Binh Minh, Deputy Prime Minister and Minister of Foreign Affairs of Vietnam, said: “Greater integration will provide many benefits to the entire ASEAN community.” Integration should spur governments to implement structural reforms, and more developed ASEAN countries should assist their less developed states in catching up.

Abdul Wahid Omar, Minister, Economic Planning Unit, Malaysia, noted that the region has grown at an average of over 6% a year for decades. “We now want to make sure that the economic prosperity we achieve is translated into higher personal income for the people,” he said. Integrations of rules and regulations and the creation of an ASEAN identity – perhaps in part through a common time zone – are logical next steps.

“ASEAN is growing faster than China or India, but it must be seen by outside investors as a single market,” Anthony F. Fernandes, Group Chief Executive Officer, AirAsia, Malaysia, said. Fernandes said the 10 countries still have different regulatory systems and bureaucracies. Government leaders must make it easier for companies and investors to operate in all 10 countries simultaneously. “Not everything will get done by December, but a lot will be fixed and it will be a fantastic platform,” he predicted.

James T. Riady, Chief Executive Officer, Lippo Group, Indonesia, said that unlike northern Asia, with its emphasis on heavy industry that works closely with government, most of ASEAN’s economies depend on entrepreneurship, light industry and services. The ASEAN common market will particularly benefit the services sector, which gains competitiveness with scale. “If the ASEAN Economic Community can become a reality this year, we are at the beginning of something quite fantastic,” he said.

Serge Pun, Chairman, Serge Pun & Associates (Myanmar), Myanmar, said that for years he had been a sceptic about ASEAN, but he is becoming a believer. Protectionist impulses are strong in both government and business, but governments now appear determined to make the ASEAN Economic Community a reality. “I have drawn a lot of optimism from looking at how governments view integration.” He added that the community’s diverse economies are an advantage, as less-developed countries such as Myanmar would welcome the unskilled jobs that more developed ASEAN members are shedding.

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Southeast Asia

In the midst of a pandemic, the EU must suspend its proposed palm oil ban

Nik Nazmi

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The world is finally waking up to the realization that the Coronavirus pandemic could result in a global death toll in the millions – if not higher. Hopefully, that won’t be the case, and a cure or at least a prophylactic medicine can be found soon to end “World War V” (as many are calling the Coronavirus pandemic, with the V standing for Virus)

COVID-19 is already projected to cost the global economy up to $2 trillion according to UNCTAD. Indeed, even before the crisis, the status of the global economy was pretty dire. UNCTAD issued a similar warning in September of last year that 2020 would likely see a global recession.

Contributing to UNCTAD’s outlook in 2019 were a plethora of trade wars around the world. Most notably between China and the United States and of course, the United Kingdom’s exit from the European Union is also tied to similar concerns. 

Those issues may have stolen the headlines but, plenty of minor skirmishes also involved the EU and the United States and even the United States and Turkey have played out of the past view years. Thus, prior to “World War V” the world had seen a plethora of protectionist battles being rage. And now, protectionist tensions are already beginning to impact “World War V” too – with the US recently hitting out at Germany, Russia and Turkey for introducing emergency export controls on medical supplies. 

Though it is not a headline stealer, the plight of my own country Malaysia is worth reviewing. A similar trade war is brewing between the EU and ASEAN. One that will impact millions of lives in a global economy that is already on the ropes given the impact of the Coronavirus. It wasn’t supposed to be this way. The European Union’s 2016 Global Europe Strategy hinted that an EU-ASEAN free trade deal was around the corner.

Yet, nearly four years later (despite some progress such as the recently signed EU-Singapore trade deal) such an historic agreement seems farther than ever. This year an EU blanket ban on palm oil importation is to be implemented. This will adversely impact Malaysia and many countries in the Global South. The ban comes over deforestation concerns. Yet, Malaysia has passed several landmark bills to ensure the sustainability of Palm Oil in recent years. The globe’s first government-backed mandatory certification standards for making palm oil sustainable were passed in Malaysia in November 2018. We need no push from the European Union for that to happen -it was something the government had long been working on in line with demand from consumers.

More importantly, an authoritative study from the International Union for the Conservation of Nature found that if done correctly, palm oil uses fewer resources (in this case land, fertilizer, and other chemicals) than a similar amount of oil produced from rapeseed, soy beans or other conventional equivalents. The overall findings of that report were verified in a second scientific study published in Nature this month by researchers at the University of Bath in the United Kingdom.

The current EU ban on palm oil makes no exemption for sustainable palm oil and has been a veritable economic death sentence in the current climate. Malaysia’s agriculture sector, of which palm oil is the biggest cash crop, employs over 1.5 million workers in Malaysia or 10 percent of our overall work force.

Since 40% of palm oil is grown by small holder farmers (farmers who have already been hard hit by the Corona onslaught), this regulation will hurt the most vulnerable communities in our nation hardest.

Malaysia, with over 1600 cases now has the worst Corona virus problem in Asia after South Korea and of course, China. Four people have died it what is already the worst outbreak of the virus in all of South East Asia. The economic impact of this is hard to foresee but, already the government of Malaysia has already issued a stimulus package for the economy, and we are set to see a spike in unemployment in our country over the Coronavirus. After all, the Palm oil industry was one of the first in Malaysia (the largest producer of the crop in the world) to respond to the crisis by telling members to go into a lockdown mode over concerns of spreading the virus.

However, coronavirus may ironically, be the trigger that finally compels both parties’ to compromise and agree on an historic trade deal that takes into consideration the needs of both the EU and ASEAN. After all, the EU also cannot afford to persist in a trade stand-off with ASEAN at a time of potential economic catastrophe.

For a trade deal to become a reality, steps must be taken by both parties. Malaysia must renew its commitment towards sustainable palm oil cultivation, something it has already shown a tangible commitment towards. And the EU must accept a longer implementation timeframe given the current global turmoil brought on by Covid-19. Such a deal can be a win-win for both trading blocs as sustainable palm oil could help power the EU’s push for a “Green New Deal” to power a 21st century infrastructure grid.

The alternative – curtailing global trade at a time when it will plunge the world into the most significant recession in living memory and jeopardize millions of lives – in Malaysia and beyond, is simply not an option.

In the aftermath of “World War V” hopefully we can bury protectionism and trade wars in the interest of global recovery. The sooner we act, hopefully, there will be much less to bury.

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Southeast Asia

Vietnam as ASEAN Chair and UNSC non-Permanent Member

Prof. Pankaj Jha

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Prime Minister Nguyen Xuan Phuc receives ASEAN President’s Hammer from his Thai counterpart Prayut Chan-o-cha on November 4, 2019. Source: vietnamup.com

Vietnam took the charge as ASEAN chair from its predecessor Thailand in November 2019, and the agenda for the year 2020 is diverse and challenging. The ASEAN as an organization accepted few geo-political changes and accepted that Indo-Pacific is a larger framework to which it needs to have a strategy. The result was the Indo-pacific outlook statement and this projected that ASEAN as an organization need to adjust to the evolving power configurations.

The developments in the context of Southeast Asia- be it the recurrent tensions in South China Sea because of assertive China; the Indonesian haze, and the tensions between Indonesia and China on illegal fishing in South China Sea are annual challenges for the ASEAN chair. The problem of Indonesian haze and other environmental problems needs cooperative approach. The ASEAN would have to prepare itself for the global recession which is looming large because of the Corona virus epidemic and the resultant slow down which is likely to affect not only Asia but the entire world. Another challenge this year would be for Vietnam to bring about the required understanding among ASEAN members who are party to the South China Sea dispute to come to a converging point so that the Code of conduct can become a legal document with compliance and penalty provisions. The Draft Code of Conduct (COC) is a large document encapsulating the aspirations and the legal position of each of the claimant parties. However, how to address all concerns and come to a common draft would be an arduous task. Vietnam would have to meander its way through deft diplomacy and skillful negotiations. Further, Vietnam is increasingly seen as an emerging economy and a strong nation which need to undertake a regional role. This needs few changes from the set template for consensus building and have to take measures to bring a common dialogue points. The foreign Ministers retreat which happens in the first quarter of each year would be the agenda maker for the number of meetings which would take place the whole year. Vietnam being the emerging economy as well as an APEC members, and also one of the stakeholder in RCEP process would have to make sure that RCEP is signed ‘with or without India’. However, if Vietnam by virtue of its comprehensive strategic partnership and excellent relations with India can bring the country back to the negotiating table, it would a shot in the arm for the ASEAN chair. India chose not to attend the Bali meeting to discuss RCEP with ASEAN members.

ASEAN chairmanship does have its own share of problems. However, taking cue from Vietnam chairmanship in 2011 when the same set of problems were existent, the country abided by the ASEAN way rather than proposing out of box thinking and solutions. The geo-political scene and the strategic compulsions do not give that easy comfort zone in decision making and it need strong adjustments both in terms of building a consensus and solving problems. At the international level, questions have been raised whether ASEAN centrality is a useful instrument in resolving maritime issues or it has diminishing returns. ASEAN community programme- Political-Security, Economic and Socio-Cultural Community would require midterm review in 2020 given the fact that the year 2025 is the deadline for its blueprint. Initiative for ASEAN Integration (IAI) Work Plan III (2016-2020), needs a strong effort as only 19 out of 26 actions (73.1%) have been achieved. 

One of the biggest challenge for the ASEAN nations would be to counter the spread of 2019-novel coronavirus (2019-nCoV)in the region and work out a comprehensive plan of action to control its spread and work out a common collaborative programme in the region. This might include regional centre for public health emergencies, strengthening regional public health laboratories network, monitoring the working of risk communication centres, and draw lessons from China’s experience in fighting the epidemic. Vietnam would have to address it on priority as it might have political, economic and social impact.

In the wake of tensions in South China Sea, the utility of Treaty of Amity and Cooperation in Southeast Asia (TAC) is under duress, there is a need to review and redraw the obligations under TAC for all the major powers of the region. For that there is a need to adopt two pronged approach of building trust and confidence among the dialogue partners as well as protecting interests of the region. The converging point for the dialogue partners would be humanitarian assistance and disaster relief (HADR), counter-terrorism, and humanitarian mine action.

Taking over as non-permanent member of UNSC, it is a unique opportunity for Vietnam to integrate developmental objectives of ASEAN and synergize it with UN initiatives. The convergence between ASEAN Community Vision 2025, and the UN 2030 Agenda for Sustainable Development (Complementarities Initiative) need deep research and effort and in this regard to feasibility study can be commissioned by Vietnam. The challenges related to illicit drug production, trafficking (both human and drugs) needs to be highlighted both at ASEAN and in the UN. ASEAN has adopted the ‘Plan of Action to Prevent and Counter the Rise of Radicalization and Violent Extremism’ and this needs representation and support from the UN bodies. Vietnam position would be catalyst in this regard so that regional efforts should be promoted in this regard. Cyber security has been addressed in ASEAN also as well as in UN but in terms of regional monitoring mechanisms across the world there is a deficit. Taking cue from ASEAN initiatives such as ‘Cybersecurity Centre of Excellence (ASCCE), and the Cybersecurity Capacity Building initiatives’ undertaken with support from Singapore and Japan respectively ’, Vietnam an make a case in UN for strengthening such institutions. Within ASEAN the efforts needed to streamline and collaborate on Fourth Industrial Revolution (4IR), and digital connectivity are insufficient and therefore it requires better dialogue mechanisms on a regular basis among the ASEAN members.

Vietnam would also have to take cognizance of the possibility of Practical Arrangements (PA) between ASEAN and the International Atomic Energy Agency (IAEA). This would need special attention at the UNSC so as to create a framework in Southeast Asia on nuclear safety, security, and safeguards. This will have a futuristic utility in terms of nuclear technologies and their applications. Within UN Vietnam will have to make special efforts to gain support for effective implementation of the SEANWFZ Treaty and submit it to the First Committee to the United Nations General Assembly.

ASEAN faces a number of cases related to Illegal, Unreported, and Unregulated (IUU) fishing and this needs to be addressed at global level so that a convention on IUU can be adopted. Vietnam would have to make special mention in this regard under the UNSC discussion agenda. Vietnam must also address challenges related to education, promotion and protection of the Women and Children and their rights, skill development and vocational training. Marine pollution and climate change have always resonated in the discussions in UNSC and Vietnam must take these issues to reflect concerns in Southeast Asia and why there is a need for global efforts. Other issues such as peat land management, haze management through financial support and disaster management need careful articulation and proposals in this regard.

While the agenda for the ASEAN requires better efforts as many initiatives need review in the year 2020 and also a comprehensive roadmap for future. On the other hand, issues in the UNSC Vietnam must highlight commitment regarding duties of upper riparian and lower riparian states, water pollution, and disaster risk financing at international level. In fact, the issue of Mekong river pollution and construction of dams would gain attention in this year. Further, Vietnam despite all these challenges would be able to balance the commitments towards ASEAN while at the same time playing a constructive role in the UNSC as non-permanent member. The year 2020 would be a challenging year as well as a year for adopting regional and global commitments towards security, prosperity, development, trade and connectivity.

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Southeast Asia

Russia-Indonesia: 70 years of friendship

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Jauh di mata, dekat di hati [Out of sight, close to the heart].” This is how Lyudmila Georgievna Vorobieva, Russian ambassador to Indonesia, characterized the relationship between the two countries.

In fact, in the 70 years of the relationship, it has gone through different states of proximity. It was pretty “hot” even before and around independence in 1945 when being leftist was identical with an anti-imperialist stance — and certainly during Sukarno’s presidency (1945 to 1967).

Then, abruptly, with the annihilation of the Indonesian Communist Party (PKI) in 1965 after a now-largely discounted “coup” by the PKI, the relationship suffered a long cold period of over 30 years during Soeharto’s New Order (1967 to 1998). Keeping the communist scare alive was, after all, one of the ways the regime maintained its grip on society.

Then-Soviet leader Mikhail Gorbachev’s perestroika (restructuring) and glasnost (openness) in the 1980s, the collapse of the Soviet Union in December 1991 and Indonesia’s Reformasi in 1998 paved the way for the restoration of warm, harmonious relations.

Mohammad Wahid Supriyadi, Indonesian ambassador to Russia since 2016, said we are now in the second golden age of Russia-Indonesia relations (the first being during Sukarno’s presidency). Wow! Who would have guessed?

For the lay person, these days Russia invariably draws our attention indirectly, e.g. for its alleged interference in presidential elections in the United States or for being the country where Edward Snowden, the National Security Agency whistleblower, has been living in exile for over six years.

I confess Russia hasn’t been that prominent on my screen lately either, until I heard about the Russia-Indonesia 70-year friendship exhibition at the National Gallery from Feb. 3 to 17 (see: “Snapshots: Indonesia, Russia exhibit 70 years of friendship”, The Jakarta Post, Feb. 5). I was keen to go because of my own “Russian connections”.

Yup! I was a sociology student in London (1976 to 1979), and took a course on Russia and China. The focus of my studies was Western industrial societies, so I wanted to know the other side of the Cold War (circa 1947 to 1991). It was also essential for writing my thesis on the People’s Cultural Institute (Lekra), the PKI’s cultural wing. Both Lekra and the PKI looked to these communist countries for guidance, especially the Soviet Union, to emulate their concept of “socialist realism” — art and literature that glorified communist values and supported the party line.

I was also connected to Russia by marriage. My late husband, Ami Priyono, was among the first seven Indonesian students sent to Moscow in 1956. Together with Sjumanjaya, they studied film at Lomonosov Moscow State University. Both eventually became prominent film directors in the 1970s and 1980s.

Ami’s father, Prijono, was culture minister in Sukarno’s first cabinet, serving for nine years (1957 to 1966). Prijono was a leading figure in the Murba Party (sometimes referred to as the second Indonesian communist party) and, like Sukarno, was pro-Soviet. In 1954, Prijono was awarded the Stalin Peace Prize.

So, the reason for my interest was partly a nostalgia trip and partly a desire to know more about our current relationship with the “Land of the Red Bear”, as Indonesians sometimes refer to Russia.

I was accompanied by Vladimir Anisimov, head of the artist collective Bureau of Creative Expeditions and curator of the Necklace of the Equator exhibition. A distinguished gentleman in his 70s, sporting a bushy silver-gray beard, a moustache and an artist’s ponytail, he was like a relic of the past, adding to the nostalgic atmosphere.

Vladimir explained in detail some of the 85 paintings on display. They were done by 10 Russian painters who over 20 years had travelled to Indonesia on various occasions, capturing scenes from Java, Sumatra, Madura, Bali, Lombok, Kalimantan and Sulawesi: landscapes, houses, ceremonies, local traditions — mainly focusing on the people. Mostly impressionistic, lots of bright colors and a touch of romanticism here and there, like the Madonna painting of a woman carrying a baby surrounded by flowers and a rainbow. No socialist realism here!

Exhibitions by Russian artists have been held before in Indonesia, in 2000, 2003 and 2005. Vladimir recalled that the opening day was usually full but after that, empty. The situation is completely different now, he said, with 200 to 300 people attending during work days and double that on the weekend.

Vladimir said they received only positive feedback. “People were impressed and spent a lot of time taking selfies with the paintings as backdrops. Maybe more time than just looking at them,” Vladimir smiled wryly.

Among the crowd were a young man and woman intently discussing something related to the exhibition. They were Indonesians but spoke in very fluent English. I approached them and asked them why they had come to the exhibition. “Oh, we are Marxists. We came because we wanted to know more.”

Wow, Marxists in our midst? So young and so brazenly declaring their ideological beliefs at a time when Indonesia’s communist phobia is still alive and well? They really piqued my curiosity, so I took their phone numbers and chatted with them by WhatsApp the following day.

Both were 25 and were members of a group of young Marxist-Leninists who, like them, were disillusioned with the state of the world. “In 2016, when Donald Trump was elected president, it was the moment where we started really realizing the evil of the US empire and imperialism,” they said.

“One of the things that really moved me,” the young woman said, “was reading DN Aidit’s [PKI chairman] speech for the

[party’s]

44th anniversary, when he said that one of the conditions of being a PKI member is ‘unmeasurable love for the people’.” For her, that’s what communism is: loving each other so fiercely that we fight for a world where no one has to suffer, a world free from exploitation.

Wow, talk about youthful idealism! Truth be told, any ideology, any political or economic system, as well as any religion, can be twisted to harm and oppress the people, however much our leaders wax lyrical about them, or about bilateral and international relations.

Maybe this is a time when our leaders should start listening to the younger generation to save the world. Greta Thunberg is trying hard to do that. Many more are joining her ranks, so all you politicians, bureaucrats and leaders out there, start listening!

Early version of the text published under: “Russia – Indonesia 70 years on: Some like it hot, cold or warm” in Jakarta Post

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