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Can the ASEAN Economic Community be a success?

Prof. Murray Hunter

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After almost two decades of discussion, the ASEAN Economic Community (AEC) will be proclaimed on 31st December. The AEC is a potentially significant and competitive economic region, should it be allowed to develop according to the aspiration of being a “single market and production base, with free flow of services, investments, and labour, by the year 2020”.

The ASEAN region as a composite trading block has the third highest population at 634 million, after China and India. GDP per capita is rapidly rising. The AEC would be the 4th largest exporter after China, the EU, and the United States, with still very much scope for growth from Cambodia, Myanmar, the Philippines, and Vietnam from a diverse range of activities ranging from agriculture, food, minerals and commodities, electronics, and services. The coming AEC is already the 4th largest importer of goods after the United States, EU, and China, making it one of the biggest markets in the world.

Unlike the other trade regions, the AEC still has so much potential for growth with rising population, rising incomes, growing consumer sophistication, and improving infrastructure.

Perhaps the biggest benefit of the upcoming AEC is the expected boost this will give to intra-ASEAN trade. Most ASEAN nations have previously put their efforts into developing external relationships with the major trading nations like the EU, Japan and the US through bilateral and free trade agreements. To some extent, the potential of intra-ASEAN trade was neglected, perhaps with the exception of the entrepot of Singapore.

The AEC is an opportunity to refocus trade efforts within the region, especially when Vietnam, Cambodia, Indonesia are rapidly developing, and Myanmar is opening up for business with the rest of the region.

The social, cultural, political and business interchange within the region has traditionally been low, until the rapid increase of intra-ASEAN travel, due to the low-cost airline explosion within the region.

Today intra-ASEAN trade is approximately 25% of total trade, growing around 10.5% per annum, and expected to reach 30% of total ASEAN trade by the year 2020.

However the necessary infrastructure to support intra-ASEAN trade growth is lagging behind with a delay in the completion of the Trans-Asia Highway in Cambodia, and vastly inadequate border checkpoints between Malaysia and Thailand in Sadao and Kelantan.

Some infrastructure development projects have been severely hit by finance shortfalls within member states.

There are a number of outstanding issues concerning the growth and development of the AEC.

The ASEAN Secretariat based in Jakarta has a small staff, where the best talent is lacking due to the small salaries paid. The Secretariat unlike the EU bureaucratic apparatus in Brussels relies on cooperation between the member state governments for policy direction, funding and implementation of the AEC.

Thus the frontline of AEC implementation are the individual country ministries, which presents many problems, as some issues require multi-ministry cooperation and coordination, which is not always easy to achieve as particular ministries have their own visions and agendas. Getting cooperation of these ministries isn’t easy.

There are numerous structural and procedural issues yet to be contended with. At the inter-governmental level, laws and regulations are yet to be coordinated and harmonized. So in-effect there is one community with 10 sets of regulations in effect this coming January 1st. Consumer laws, intellectual property rights, company and corporate codes (no provision for ASEAN owned companies), land codes, and investment rules are all different among the individual member states.

There are no integrated banking structures, no agreement on common and acceptable currencies (some ASEAN currencies are not interchangeable), no double taxation agreements, and no formal agreements on immigration.

There is not even any such thing as a common ASEAN business visa. These issues are going to hinder market access for regional SMEs. Any local market operations will have to fulfil local laws and regulations which may not be easy for non-citizens to meet and adhere to.

Even though there are some preferential tariffs for a number of classes of ASEAN originating goods, non-tariff barriers are still in existence, which are insurmountable in some cases like the need for import licenses (APs) in Malaysia, and the need to have a registered company which can only be formed by Thai nationals within Thailand.

Some of these problems are occurring because of the very nature of ASEAN itself. ASEAN was founded on the basis of consultation, consensus, and non-interference in the internal affairs of other members. This means that no formal problem solving mechanism exists, and the ASEAN Secretariat is a facilitator rather than implementer of policy. Illegal workers, human trafficking, money laundering, and haze issues between member states have no formal mechanisms through which these issues can be solved from an ASEAN perspective.

This weakens the force for regional integration.

One of the major issues weakening the potential development of the AEC is the apparent lack of political commitment for a common market by the leadership of the respective ASEAN members. Thailand is currently in a struggle to determine how the country should be governed. Malaysia is in the grip of corruption scandals where the prime minister is holding onto power. Myanmar is going through a massive change in the way it will be governed. Indonesia is still struggling with how its archipelago should be governed. There is a view from Vietnam that business within the country is not ready for the AEC.

Intense nationalistic sentiments among for example Thais, exasperated by the recent Preach Vihear Temple conflict along the Thai-Cambodian border need to be softened to get full advantage out of the AEC. The dispute in the International Court of Justice over Pedra Branca, and the Philippine rift with China over the South China Sea show the delicacy of relationships among ASEAN members. The recent Thai court decision on the guilt of Zaw Lin and Win Zaw Tun in the murder of two young British tourists may also show how fragile intra-ASEAN relationships can be.  

The AEC is going to fall far short of achieving its full potential of becoming a major influence in global trade.

The AEC is not intended to be the same model as the EEC. The AEC is far from being any fully integrated economic community. The lack of social, cultural, and political integration within the ASEAN region indicates the massive job ahead that Europe had been through decades ago. There is still a lot of public ignorance about what the AEC is, and lack of excitement or expectation for what should be a major event within the region. Respective national media are scant on information about the forthcoming launch of the AEC.

Economic nationalism is very strong within ASEAN. Malaysia has its Government Linked Companies (GLCs), State Economic Development Corporations (SEDCs), Thailand its Crown Property Bureau, and family business empires within each country which have vested interests in keeping market access at the current status quo. The AEC is seen as a threat to many existing business empires, which fear open market access. Many of these business empires have enormous political influence upon their respective governments.  

The AEC could be deemed to conflict with the special advantages bumiputera businesses in Malaysia enjoy in areas of government tendering and contracting.

It is yet to be seen how some of these businesses will behave within an AEC environment. However what can be said for sure is that the AEC will not create any level playing field for ASEAN businesses in the foreseeable future.

With the problems the EU is currently facing, maybe it is wisdom in hindsight that the leaders of ASEAN have been extremely cautious in their approach to the formation of the AEC. Any opening up of the labour market could also be a potential disaster. A free flow of labour across ASEAN would potentially put many under-qualified people out of work according to Gyorgy Sziraczki, the director of the ILO in Vietnam.

This could lead to economic downturns in some of the more susceptible parts of the AEC like Lao PDR and Cambodia. The AEC rather than promoting intra-ASEAN trade, lead to a more domestic orientation, where unemployed may see the informal economy looking much more attractive means of making a living.

However, if the leadership of ASEAN see the opportunities of dramatically increasing intra-ASEAN trade, then the AEC has great potential to assist the region withstand any steep economic downturn around the rest of the world.

Projects that are able to boost regional synergies like coordination of education, river system water management, energy, transport, banking and finance, may very quickly improve regional integration. Regional clustering can be developed in education, auto-parts, food production, electronic parts, and the value adding of basic commodities to benefit the economies of the region.

Infrastructure development will be vital to the success of the AEC. For this purpose the ASEAN Infrastructure Fund, financed by member countries and the Asian Development Bank will be extremely important. The recent ASEAN summit in Kuala Lumpur also reactivated the ASEAN Joint Consultative Committee to resolve trade and investment issues.

The slowness of the AEC should not be seen as a failure of ASEAN. We can see the slow pace that ASEAN makes decisions, with the long period it is taking to admit Timur Leste as ASEAN’s 11th member.

The vital questions here are whether the AEC will be able attract direct foreign investment to the region? Take advantage of rising opportunities like international education? Stop the talent drain from the region with China becoming more aggressive in attracting the best from the region? and Create an ASEAN awareness within the region?

Sadly, one may expect the fate of the AEC to be similar to that of the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT), and the Brunei Darussalam-Indonesia-Malaysia-The Philippines East ASEAN Growth Area (BIMP-EAGA). They are in existence by name, but with little real substance on the ground.

Innovator and entrepreneur. Notable author, thinker and prof. Hat Yai University, Thailand Contact: murrayhunter58(at)gmail.com

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Southeast Asia

Letter to heaven: An eulogy to Luang Poo Boonyarith Bundito

Rattana Lao

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Luang Poo Boonyarith with a Pagoda in the Thai Forest

Everyone knows him as a great monk who was an exceptional teacher of meditation. From the royal family to a layman, Luangpoo Boonyarith Bundito was well loved and respected.

Luang Poo Boonyarith was a forest monk who ordained since the age of 31. Like forest monks before him from Luang Poo Mann Puritat to Luang Poo Chob Thannasamo, he followed a strict tradition of solitude. For decades, he traveled to the furthest parts of Thailand and remained there on his own. For at least 9 years, he lived by himself in the peak of a Karen Mountain in the Northern Part of Thailand.

“The karen has an innocent mind” he said in his meditation preaching.

In 1974, he was sent by Wat Bawornnivetviharn on a diplomatic mission to preach Buddhism in Australia. During more than 30 years of his tenure there, he built, strengthened and taught the beauty of mediation to foreigners and Thai alike.

An epitome of what a modern diplomacy is.

With his compassion and open-mindedness, he welcomed Christian, Jewish and Muslim into his temples to learn how to meditate, even though they were clear not to be Buddhist.

He was equally straightforward to them. “Meditation and Buddhism is intertwined and Buddhism is a religion, not a philosophy nor a lifestyle”.

Something that would kill the New Age followers.

I had the privilege of knowing him since I was nearly four years old, where he would stay at our house during his trips and sabbatical to Bangkok. Sometimes he stayed for a couple weeks, sometimes that would last for a couple months. At least for 20 summers, we were lucky enough to host him.

While his disciples came to our house to seek truth and find peace, for a 4 years old me, Luang Poo was my English tutor. Having been fluent in French, German and English, Luang poo was a great linguist who paid attention to details of grammatic rules and depth of meaning and complexity of the vocabulary.

He is an avid reader – with extensive collection of books on philosophy, history, maps, arts and great classics. His gifts for me involved pens and notebooks, collection of postcards from foreign lands I never been or books I had never heard of.

At the age of 16, he gave me Brave New World by Aldous Huxley. With the density of idea and complexity of vocabulary, I quickly returned it to him.

He insisted: “keep it, when the time comes, you will get it.”

I did. When I joined Thammasat as an undergraduate student, Brave New World became my favourite, inspiring reference to make a difference in a toxic society.

As I became more interested in graduate schools and had my eyes on the most prestigious scholarship in Thailand, the Anandamahidol scholarship under the royal patronage the late king Bhumibol of Thailand, our conversation became more intense, focused and intellectual.

We debated ideas. With his wealth of knowledge on world history, we would always talk current affairs and politics. Theories and concepts.

Who would have thought a forest monk would be on point on world political affairs?

Luang Poo continued to guide me through the hardship of graduate schools. We would talk on the phone on the books I read, the papers I wrote and the difficulty things were for me to conceptualise.

“Sati, Ninja, Sati.” Conscious that meant. He said, “one word at a time. Never skim”.

He loves dictionary so he taught and trained me to open up every word I don’t understand.

If you open his books, you will find scribbles on the sideline on the explanation of words he did not know or his interpretation of them.

As studying theories became more complex, that kind of attention to detail allowed me to be on point, concise and succinct.

He said however that a Buddhist is not a theorist. A Buddhist is a doer. Test the theories, he meant.

When I consulted him with the idea of creating UNITE Thailand, he was on board and gave me the most life changing advice to an idealistic me with heavily foreign influences.

“Forget the theories, forget democracy, forget Buddhism, make kids happy, as many as possible.”

We did.

Before the tragic day of the 14th of November 2018 where he parted this world for heaven, he has suffered severe health issues and complication for 7 years that he could not talk, move or eat by himself.

He was the educator who loved Thailand so much. The last sentence he ever said to me was “a great person is one with gratitude. We are indebted to this land, be good. Be kind. Be nice. Be helpful.”

Thailand loses a great monk who taught them Dhamma. I lost a grandfather who helped me through the intensity of life, who taught me to read, write and question, who taught me the beauty of life, the necessity to serve our society.

Enjoy heaven, Luang Poo.

I will always remember you.

Ninja.

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Southeast Asia

Decoding The MoU Between India And Brunei For Space Research

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Brunei Darussalam or Brunei is one of the oldest continuing monarchies in the world. The ancient name “Negara Brunei Darussalam” means “State of Brunei- Abode of Peace”. Its earliest documented history dates back to 6th century when Brunei was apparently called “Puni” a possible distortion of the Sanskrit word “Baruni”. Brunei was then a Hindu-Buddhist kingdom which had linkages with the famed Sri Vijaya and Majapahit empires of the region, as well as with China.  It was in the late 14th century, Brunei converted into an Islamic Sultanate when its ruler, Awang AlakBetatar, married a Muslim Johore princess from Malacca and embraced Islam to become Brunei’s first Sultan – Mohammed Shah.  Bilateral diplomatic relations between India and Brunei were cemented in May 1984. India and Brunei by virtue being developing countries with strong traditional and cultural ties, enjoy a fair degree of commonality in their perceptions of major international issues. Brunei is a constant partner of India’s ‘Act East’ policy and expansion and deepening of cooperation with the Association of Southeast Asian Nations (ASEAN). Diplomatically, Brunei supports India’s claim for permanent membership in an expanded United Nations Security Council (UNSC) and also supported India for its candidature for a Non-Permanent Seat of the UNSC in 2012.

India’s export trade with Brunei in 2013 valued USD 32 million while imports mainly crude oil from Brunei were valued at USD 763 million. According to trade stats, India is the third-largest importer of crude oil for Brunei. The two important reasons enabling a positive bilateral trade have been relatively flexible shipping costs and Brunei’s small population base. Indians constitute around 2.3 per cent of Brunei’s total population. Indian migration to Brunei started since 1929 when oil was discovered in the country. Presently, the majority of the doctors in Brunei are from India and other professionals include engineers, IT professionals, bankers, teachers etc. Indian businessmen have managed to maintain a clear monopoly in the textile industry. According to the Census, there are approximately 10,000 Indian nationals living and working in Brunei.  Bilateral trade between India and Brunei stood at over $504 million in FY 2016-17, according to figures published by Brunei’s Department of Economic Planning and Development. The southeast Asian nation is critical for India’s Look East Policy and geopolitical expansion for strengthening of cooperation with the 10-nation regional bloc (ASEAN). Brunei also has served India’s country coordinator and political facilitator with the ASEAN for three years from 2012.

“When India celebrates the 75th year of Independence in 2022, and if possible, even before, an Indian son or daughter will undertake a manned space mission on board ‘Gaganyaan’ carrying the national flag,” Prime Minister Narendra Modi announced in his 2018 Independence Day Speech. This milestone will make India the fourth nation to send a human in space after the United States, Russia and China. Future plans include the development of Unified Launch Vehicle (ULV), Small Satellite Launch Vehicle (SSLV), development of a reusable launch vehicle, human spaceflight, controlled soft lunar landing, interplanetary probes, and a solar spacecraft mission. The Department of Space was allocated Rs 8,936.97 crore in the 2018 Budget for various space-related projects. The total allocation for the Department of Space for the second fiscal was around Rs 10,783 crore a leap from Rs 9,155.52 crore allocated for the FY 2017-18 net of recoveries and receipts. ‘Space economics’ suggests that spending on science and technology leads to all-round social development. The Government is also planning on investing extensively in research, training and skill development in robotics, AI, digital manufacturing, Big Data intelligence and Quantum communications, among others. Space Research has been one of the most important areas of interest of the present government.  In the current era of outer space research and development, India is heavily banking on bi-lateral and multi-lateral tie-ups to delve into this area.

The Union Cabinet chaired by the Hon’ble Prime Minister Narendra Modi has approved the Memorandum of Understanding (MoU) between India and Negara Brunei Darussalam on coordination in the operation of Telemetry tracking and Telecommand station for satellite and launch vehicles, and for collaboration in the field of Space Research, Science and Applications. The MoU authorises India to continue to operate, maintain and augment its ground station meant for supporting India’s launch vehicle and satellite missions. This will also enable India to share its experience and expertise in space activities through training of officials and students from Brunei Darussalam on Space Technology applications. Cooperation with Brunei Darussalam through this MoU would facilitate operation, maintenance and augmentation of Indian Ground Station to support India’s launch vehicle and satellite missions. The MoU will provide momentum to explore contemporary research activities in ground station operations and training on space technology applications. The MoU was signed in New Delhi, India on 19th July 2018. India also signed an MoU with South Africa on 26th July 2018, which shall enable both the nations to coordinate on the potential areas of cooperation such as space science, technology and applications including remote sensing of the earth, satellite communication and satellite-based navigation, space science and planetary exploration, utilise spacecraft and space systems and ground systems and application of space technology.

India has also signed similar MoUs with Russia, Oman and Japan for expansion of cooperation in the field of exploration and use of outer space for peaceful purposes. Joint projects, sharing of expertise and resources, development of space systems and components, scientist training and exchange of vital information are the central components of these agreements. India is marching towards economic prosperity and being labeled as the fastest growing economy in the world, it is geopolitically and strategically crucial for India to have a powerful outer space technology and to have a strong space relationship with other countries.

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Southeast Asia

Ahok biopic: The making of a man, the unmaking of a nation

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After comedies, ghost horror films are the genre most liked by Indonesians, with 44 percent saying they enjoy them. Apparently they produce a thrill, stimulate the imagination, invite curiosity and induce anticipation that the protagonist will prevail over evil forces.

Personally, I’m not a fan of such movies but I found myself looking forward to Nov. 8, when a “ghost“ movie was to be screened in theatres all over Indonesia. How come? That’s because the film was A Man Called Ahok — yup, about Basuki “Ahok” Tjahaja Purnama, former governor of Jakarta, currently jailed on blasphemy charges. I thought he was one of the best governors Jakarta has had, indeed, one of Indonesia’s best leaders, someone who wasn’t afraid to shake up the status quo.

It was a “ghost” movie in that it contained an apparition of Ahok, which embodied not just his spirit, but also the spirit of values that Indonesia seems to have forgotten, values needed to build a nation.

Controversy never seems to be far away from Ahok, from the no-nonsense way he ran his office, his zero tolerance for bad management, laziness and corruption, his unpopular policies (notably the eviction of squatters from slums), his fiery temper and tough talk (which enraptured and excited, agitated and outraged at the same time), his blasphemy trial and subsequent imprisonment, his divorce from Veronica Tan, his wife of 21 years while in prison, but also his amazing achievements during the short time he was Jakarta governor: disciplining civil servants, eliminating the ubiquitous pungli (illegal levies), transparency of the city budget, responding to citizens’ complaints, transforming Jakarta city transportation into one fit for a metropolitan city, cleaning up filthy polluted Jakarta rivers, beautifying and greening the city — achieving many things his predecessors were unable to do.

But you’ll see none of that in the film that was far from controversial. A review of the film stated that the “biopic about one of Indonesia’s most divisive, loved and hated political figures chooses to play it safe through a family friendly narrative and storytelling” (‘A Man Called Ahok: Journey from childhood to prominence’, The Jakarta Post, Nov. 10).

While the review provides a good summary of the film, I don’t think it was at all a matter of playing it safe. The filmmakers made a very deliberate, wise and insightful choice to portray the making of a man, from his childhood origins in Bangka Belitung, which makes us understand better why he turned into the leader that he did.

The film started when Ahok was aged 10 ( 1976), and stopped just about the time he became regent of East Belitung (2005). Ahok was born and raised in Gantong, East Belitung. His father Kiem Nam was a tauke (Chinese businessman), owner of a tin mining company, who raised his five children with tough love, teaching them to cooperate with each other, instilling the values of hard work and ambition, not for selfish personal reasons, but to serve others.

Kiem would drive his wife to despair, as he was always giving out money to people in need, even borrowing, so he could continue helping them. He said to her that their family still had a roof over their heads, and good food to eat. Yes, that was the case, because she sold some of her gold jewelry, so that the family could continue to eat.

While their relationship was often strained, clearly Ahok was a chip off the old block. He gave up being a doctor (his father’s dream) and a businessman (his own dream), to become a politician so that he could help people in a systematic way, unlike his father, not using his own money, but state funds.

The film is a biopic, true, but it’s a lot more than that. It’s in fact a microcosm of Indonesia, raising issues that remain relevant.

Discrimination: despite Kiem’s known humanitarianism and generosity, when Ahok decided to run for office, he faced resistance because of his Chinese ethnicity. As a child, he had once asked his father, “Are we Chinese or are we Indonesian?”. The father responded unequivocally, “We are Indonesians”. The film shows clearly how his father instilled the love of people and nation in his son.

Bangka Belitung has one of the largest concentrations of ethnic Chinese in Indonesia, who have helped the tin industry flourish. Indonesia is the second-largest producer of tin in the world, after China, this means the ethnic-Chinese have contributed to creating revenue for Indonesia.

That’s not the only thing they have contributed. They have contributed to our culture (look at all those dragons, phoenix, snakes and Chinese lions motifs on batik!), food (too many to mention), much needed capital, sporting prowess and guess what? Also Islam, which was brought in by Chinese traders in the 15th century. And yet the Chinese remain reviled and have been targeted as scapegoats throughout Indonesia’s history.

Poverty: There was clearly poverty depicted in the film throughout Ahok’s life in Bangka Belitung. While in 2018 poverty has fallen to a historic low, the Statistics Indonesia (BPS) figures show that almost 10 percent (27 million) of Indonesians are poor. That is still a very large number.

Corruption: in the film, there was a corrupt government official who kept trying to extort money from both Kiem, and later Ahok when he was an adult running the company. So far, corruption is still the cancer that is eating up the nation. According to the 2017 Corruption Perceptions Index, Indonesia ranks 96th out of 175 of the least corrupt countries. Well, at least it’s better than in 2007, when we ranked 143rd.

The lack of health services portrayed in the film is still the reality for many families in Indonesia, as are education facilities, still out of reach for many children.

Watching the film was a very emotional experience for me because of the injustice Ahok has had to endure. Talk about being punished for doing good! But it was emotional also because I thought of Indonesia and how the nation is currently ruled by mindless sectarianism, where religion is used to incite evil instead of fostering good, where selfish, narrow group interests prevail over the greater good.

A Man Called Ahok is a timely reminder of what it takes to build a nation. Hopefully, like a good ghost movie, the (good guys) protagonists will prevail over the evil forces currently haunting Indonesia.

An early version of text appeared in the Jakarta Post

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