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Can TPP be revived under APEC 2017 in Vietnam?

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Authors: Do Quynh Anh & Bui Hong Hanh*

The Trans – Pacific Partnership Agreement (TPP) is the largest and most ambitious trade agreement in history, which was considered dead when US President Donald Trump abruptly announced his withdrawal in February, 2017. But shortly thereafter, TPP quietly took by the 11 remaining parties to restructure efforts under the name TPP11.

After the United States withdrew from the TPP, there are three views concerning the future of this agreement. Firstly, the most pessimistic view is that TPP without the United States will no longer be a TPP, so other countries should give up the agreement. Secondly, after the United States decisively withdraw, TPP should invite other Asian countries such as China, South Korea and Indonesia to participate and start negotiations again. Thirdly, the TPP 11 that is being headed by Japan will not change the content and the rest will continue to promote the TPP sooner. The third view is agreed by remaining countries, but this conclusion of TPP 11 still face many obstacles.

It is said that with the determination of the remaining members, TPP11 still has the prospect of revival. On the sidelines of the 13th Ministerial Conference of the Asia-Pacific Economic Cooperation forum held in New Zealand in May, the remaining 11 nations, in an attempt to restart the agreement, agreed to find ways to continue implementing the TPP without US . If revitalized, the TPP will link 11 countries, including the world’s 4/20 leading economies, to a combined GDP of $ 9,800 billion, followed by 19 new free trade agreements. This is also the reason that some economists recently said that it is possible that the United States will have to rethink its attitude toward TPP.

In order to have a positive result from the other members, Japan and major economies in the TPP such as Australia, Canada and New Zealand have been working hard for nearly a year in the hope of accelerating the process. These members expressed their determination to work closely together to reach a compromise soon in line with the common interests of all countries.

Replacement of the United States leading position, Japan has pledged to play a leading role in setting a clear direction for the TPP11, as Tokyo believes that the agreement will not only bring economic benefits but also a geopolitical strategies. The victory in the House of Representatives elections in Japan on October 22 has strengthened the political role of Prime Minister Abe, who favors TPP, and shows the bright future of TPP11. From Australia side, Australia Trade Minister Steven Ciobo told reporters that the gains made by the TPP are worthy to continue the agreement. He expressed satisfaction with the views of Japanese Prime Minister Shinzo Abe and what they discussed showed that there are more positive factors than expected. New Zealand Prime Minister Bill English continued to promote TPP11. He emphasizes that the country has stepped to the stage joining hands with Japan to recover the TPP process.

Meanwhile, Canada, the second largest economy in the TPP11, said it would try to remove the terms of each concession to the United States in its initial agreement. The US withdrawal from the TPP is bringing more benefits to Canada as well as allowing it a better position to rewrite the treaty. The Westover Center recently announced a study entitled “The Art of Trade Negotiation: Quantifying the Benefits of the TPP Without the United States.” According to this report, Canada’s exports to the TPP11 countries by the year 2035 will increase by 4.7%, while Mexico will increase by 3.12%, higher than the base without the TPP. When TPP included the US, the increase was only 0.36% and 0.05%. In addition, Mexico and Canada also benefited from exports to foreign TPPs in the context of TPP11 adoption. The study also found that Canada’s largest harvest under the TPP was from agriculture, agricultural food because it was not competing with the United States in the TPP. The benefits of TPP11 will allow Canada and Mexico to broaden their lead in re-negotiating NAFTA. Peru and Chile are also beneficiaries of the US withdrawal from the TPP as these countries will have a larger market share in the non-US TPP. Similarly, Singapore will also have the advantage of not competing with the United States in the Asian market.

At present, in the hope of reviving the TPP Agreement, the original text of the TPP needs to be adapted to the new situation, not just a simple exemption from the US, but also a number of difficult issues. This new face gradually revealed. Some members have proposed modifying or freezing some of the terms of the agreement, such as issues related to state procurement or the protection of intellectual property rights. Viet Nam has proposed the possibility of regulating some provisions on worker rights and intellectual property regulations in the pharmaceutical field of the original treaty. Meanwhile, Canada and Mexico have issued the terms they want to suspend, including a number of provisions of the TPP that may be incorporated into the revised version of the North American Free Trade Agreement (NAFTA) between the United States and these two countries.

After many meetings, the common perception among member countries has progressed. A number of sessions have been conducted to find a way to modify the original TPP text to suit the new context. There have also been significant advances in discussions on the modification or suspension of certain terms, such as the intent to freeze a patent filing extension, if the application is subject to postponement. Unreasonable, investment rules, copyright protection …Although the United States has retreated, the TPP is better than any agreement currently on the agenda of countries, such opportunities are not much. So, basically countries are discussing the same agreement with the original version.

Officials from several countries said a possible agreement could be reached at APEC 2017 – the Asia-Pacific Economic Cooperation forum, which will take place in Danang, Vietnam in November. TPP members are present at this conference. The move comes after the end of the fourth round of talks between high-level officials in Tokyo in September, which has sparked renewed hopes for a large-scale cooperation in the TPP process. Observers note the importance that the parties have achieved.   Peruvian Trade Minister Edgar Vasquez announced to media after the meetings “All member states are willing to evaluate alternatives so that TPP can survive.”

At the meeting of APEC Finance Ministers in Hanoi on October 20, 2007, in addition to the contents related to APEC’s organization works in Da Nang next month, the information showed that with little change, Japanese officials and participating countries are optimistic that TPP will have a good result in Da Nang.

Commenting on the next APEC meeting next month, the Australian Ambassador said Australia’s main objective in the forum was to join the 10 member countries approve the TPP. After this round, the final decision on the new TPP, which many hope to become reality at the end of the year and if agreed, can be implemented from next year.

The TPP agreement will have some adjustments, but that contents is not much, not very important. Because of that, the general desire of TPP members still to hope America back. In order for the United States returned, TPP 11 can not cut off what it has installed in the Agreement so much, especially in such areas as labor, environment, intellectual property, public procurement, fighting terrorism, transparency and anti-corruption, conflict resolution, competition policy, and service sectors lead by United States. The revival of the TPP11, the Asia-Pacific region has determined Its own path, not completely passive look at the US leadership as before.

*Bui Hong Hanh, associate professor, Vietnam National University, Hanoi

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Southeast Asia

China-Indonesia relations are expected to grow during Jokowi’s second term

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The relationship between China and Indonesia seems to be increasing, especially in the field of trade economy, this is evidenced from the trade figures between the two countries which have reached 45.3 million. The relationship between the two countries is mainly focused on three sectors which include trade and business, politics and security, and people to people exchange. Some agreements also appear to have been agreed by both parties along with the increased visits of the two state actors in turn.

With the election of Joko Widodo in the second period recently, cooperation between the two countries is likely to increase.

Why?

To date, Indonesia has accepted 28 joint projects with a value of $ 91.1 billion, under the guise of the BRI. The projects include the Sei Mankei special economic zone; phase two for Kualanamu airport; clean energy development in the Kayan river in North Kalimantan; the construction of a special economic zone in Bitung, South Sulawesi, and Kura island in Bali. These projects were carried out by private parties from Indonesia and China.

The latest, Indonesia has also signed another BRI cooperation package in April 2019, which contains 23 cooperation packages in investment and trade projects. The cooperation package include the development of four economic corridors, the high-speed train and technology development project, and the development of education. The 23 projects have produced investment value of US $ 14.2 billion.

Several projects by China have not yet been fully realized in Indonesia. The projects that were initiated in the BRI collaboration still found obstacles such as budget and license. The realization of the budget in the amount of 50 billion USD has only touched the 3 billion USD figure, which means that some projects have not yet been implemented.

For this reason, China is expected to make maximum efforts to meet the target projects that have been initiated previously. This will also help China in covering up the issue of project failure faced by Indonesia and published by several international and national media.

Moreover, China’s expected efforts to accelerating the BRI project is in line with its goal to realize the BRI in 2049. That year was chosen along with the 100th anniversary of the founding of the People’s Republic of China. Indonesia’s territory which is quite strategic has become one of China’s attractions in making Indonesia one of the important routes for its BRI.

With some of the above explanation that some BRI projects have not been fully realized, these two things reinforce the reasons for China in accelerating the BRI project in Indonesia.

In addition, Jokowi’s previous leadership period focused on infrastructure investments. This can be seen with several Infrastructure projects that are currently being implemented in several regions of Indonesia. Nonetheless, these infrastructure projects have not yet been fully achieved, especially during the recent transition period whereby the government has been occupied with other issues.

In this context, Jokowi may see the BRI as opportunities for the Indonesian government which has a vision of equitable development in the country. Collaboration under the BRI is seen to benefit the Indonesian government in realizing its infrastructure development in the near future.

Recommendations for both

2To reap the full benefits of the expectedly growing China-Indonesia relations, there are several steps that should be taken by Indonesia and China. The Indonesian government should learn how other countries in Asia, such as Pakistan, Sri Lanka, Bangladesh, the Maldives, Kyrgyzstan, Tajikistan and Laos. They are countries that received investment from China that ended in a debt trap project, whereby they all had to give up all assets that had been financed from the Chinese project.

One example is how Malaysia renegotiated the BRI project, because Malaysia felt disadvantaged by the BRI project cooperation agreement. As a result, the projects’ costs are reduced from the initial agreement fee. Studying Malaysia’s policies, the Indonesian government should be aware of Indonesia’s position in cooperation with China, that Indonesia has a fairly high bargaining position. Because China needs Indonesia to achieve its economic goals in the BRI project, which would not have been possible without Indonesia.

In recent years along with the commencement of the BRI, China has made several efforts as a self-branding tool that aims to build its good image. In Indonesia, China began to introduce its country through various ways, one of which is cultural efforts such as through media and cultural efforts. However, this does not seem able to change the sentiment because the efforts are still limited and not widely implemented. To this date, negative perspectives on Chinese foreign investment is still found among the people who are contributing to the policy making of the Indonesian government.

In fulfilling its vision, China is expected to be able to use soft-power in building its image in ensuring its investments provide benefits that can boost national economic growth.

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Southeast Asia

Reducing gender gaps in Asia and Pacific essential to realizing region’s potential

Ingrid van Wees

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Over the past two decades, the Asia and Pacific region has made progress in reducing gender gaps in certain areas, most notably education. According to the World Economic Forum’s 2018 Global Gender Gap Report, 6 out of 25 developing Asian countries had attained gender parity in education. In 12 out of 18 Asia Pacific countries analysed in the Report, women outnumber men in tertiary education enrolment rates. 

However, these improvements in skills and professional training for women have not translated yet into progress towards equal economic and professional clout. 

Gender gaps persist in labour force participation, gendered-segregation of the labour market, financial inclusion, and representation in senior managerial positions across the corporate world. This is the only region in the world where the labour force participation rate of women is declining. Meanwhile, a growing body of research on the future of work in the region has highlighted the high concentration of women in informal and vulnerable work, and that the bulk of unpaid care work is disproportionally being carried out by women.  

Female participation in the labour force in 2018 ranged from 60.1% in East Asia at the top end of the spectrum to only 25.9% at the bottom end in South Asia, according to the International Labour Organization (ILO). When women do work, they are often segregated into “feminized” sectors, where wages are typically lower. Wages are not yet equal. In developing Asia, the gender wage gap (75%) is lower than the global average of 79%
    
Women’s share in managerial positions across Asia varies significantly. In the corporate sphere, three countries in this region are among the top 10 economies worldwide with women in senior management positions, higher than the global average of 25%. They are the Philippines at 39%, Thailand at 37%, and Indonesia at 36%. On the other hand, there are countries in the region at the lower end, for example Japan with only 7%.  

Women’s representation on corporate boards is even lower than at the managerial level.  This ranged from 11.6% in Indonesia to 1.9% in South Korea. In 2011, India and Malaysia established 30% mandatory gender diversity quotas for senior management and board positions in corporations. However, implementation has been slow. As of 2016, women accounted only for 8.6% on corporate boards in Malaysia and 5.2% in India.  

Banking at the most senior management level in particular remains male territory in the region, since the share of female representation at this level reached only 6.9% on average, according to data gathered by the Financial Times.

While developing countries in Asia and Pacific are embracing new financial technology to make rapid progress on financial inclusion, the gender gap is felt here too. Women accounted for just 35% of bank depositors and borrowers in these countries in 2016. 

Increasing women’s participation in the workforce and closing the wage gap would have a tremendous growth impact for the region. ILO in 2017 estimated that this could add $3.2 trillion to Asia and Pacific region economies.

Increasing women’s access to finance can have life-changing impacts on not only their lives, but those of their families and communities. For example, women-led small and medium-sized enterprises in Sri Lanka are benefitting from facilitated access to credit to grow their businesses through an ADB project, which has been further supplemented by a grant from the Women Entrepreneurs’ Finance Initiative (We-Fi). Since last year, over 323 women’s businesses,  employing 3,934 people, have financially benefitted from the project. 

Financial institutions targeting female clients will be more successful at understanding and responding to customers’ needs if their personnel mirrors the market. Including female professionals and managers in research product selection and marketing will lead to better custom-tailored products.  That is one reason why ADB’s Trade Finance Program has been running a gender initiative to support its participating banks to improve its workplace gender equality/family-friendly policies.

There is growing evidence that gender equality in management and leadership results in higher productivity, more diverse decision-making, and better and more sustainable results. This is particularly true for female leaders in the banking sector. A study by the International Monetary Fund recently found that a higher share of female senior leaders is associated with greater stability and more prudent management. 

Moreover, it is true for any type of organization that effective women leaders provide positive role models and contribute to changing social perceptions about women and girls.  Policymakers and multilateral development banks like my own must lead by setting good examples, and work with the banking sector to address the gender gaps. 

On its part, ADB is committed to accelerating progress in gender equality in its developing member countries. And it is championing the cause within its own institutional structure and corporate culture.

Among other sectors, ADB supports various projects with a gender focus in such areas as technical and vocational education and training, urban and water, rural development, transport, and renewable energy. It has also provided technical assistance for legal and judicial reforms in support of gender equality, as well as women’s leadership within government and communities at all levels.

Last year, 56% of ADB’s sovereign and nonsovereign lending at entry had strong gender design elements. ADB is setting even higher standards for itself. In July 2018, ADB’s Board of Directors approved a long-term corporate strategy called the Strategy 2030. Under this, ADB aims to ensure 75% of its projects in the public and private sector will include gender designs by 2030. 

Strategy 2030 sets gender equality and women’s empowerment as one of its operational priorities for the next decade. ADB will promote women’s economic empowerment by expanding entrepreneurship opportunities for women and promoting their access to quality jobs in higher-paying sectors and the science, technology, engineering, and mathematics sectors where women struggle to enter. 

ADB’s approach is also informed by a recognition of the importance of tackling discriminatory social norms and institutions. It includes  supporting legal, institutional, and governance reforms at public level to explore measures are carried out to remove gender-based discrimination, enhance women’s participation in public resource allocation, and support leadership at all levels

Another major thrust is reducing the domestic responsibilities faced by women through improved water, electricity, and transport infrastructure. In the Asia Pacific, women spend from 2 to 11 times more time on unpaid care work (caring for family members, cooking, cleaning, fetching water, etc.) than men. That time spent represents an important barrier to pursuing economic pathways.

In 2016, ADB Management took bolder actions and set higher targets to improve workplace gender balance by enhancing recruitment of talented women, career management, training, development, and retention of female staff within ADB. ADB also has a gender target for various levels of management that is closely monitored and transparently reported upon. Leadership development programmes are now being conducted to prepare women for senior positions and enable senior staff to become better managers of diverse teams. 

Gender equality will indeed be at the heart of ADB’s priorities under Strategy 2030 and across the institution. 

On a wider scale, women’s empowerment is not just an objective in itself; it is essential to achieving inclusive and sustainable development in Asia and the Pacific. Given the economic, environmental, and technology challenges facing society in Asia and Pacific, it is about time to utilise the ingenuity, creativity, and energy of the region’s entire population. To do this, countries must fully engage women; and educate and empower them to allow for their contribution. At the same time, we should ensure we include, educate, and equip all men and boys for this transition to make this journey together and leave no one behind.

ADB

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Southeast Asia

How Countries in Southeast Asia are Working Together to Accelerate Human Capital Development

MD Staff

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In their decades-long efforts to spur strong economic growth and significantly reduce poverty, countries in the Association of Southeast Asian Nations (ASEAN) also successfully improved education and health outcomes for their people. Today, however, ASEAN’s average indicators on education, skills development, and health are below what is expected of its current income levels. These persistent gaps can undermine future growth and prosperity in the region.

To thrive in the global economy, where new technologies will create industries that have yet to be imagined, and where the changing nature of work prizes higher-order skills, ASEAN countries will have to go back to basics – and invest in its children.    

The challenge is significant. Almost a third of children in the region have stunted growth due to chronic malnutrition, making them highly prone to life-long cognitive and physical limitations. These can lead to poor school performance and diminished career prospects overall. And though schooling rates are high across ASEAN, limited education quality generates large learning gaps – 21 in 100 children have low reading comprehension skills at the end of primary school. Some 15% of 15-year-olds living today will not reach the age of 60 mainly due to noncommunicable diseases such as diabetes, cancer, and cardiovascular and respiratory illnesses. Both issues are partly a result of unequal access to basic services, including healthcare and education, which in turn contributes to widening income inequalities.

ASEAN countries, while linked geographically and economically, have varying levels of life expectancy, job productivity, and education quality. At the core of these challenges is the need among all countries to accelerate human capital development. This month in Bangkok, Thailand, leaders from the region came together to discuss how to take this further.

“Disparity, poverty, education and health, remain a challenge in ASEAN. We have to make Human Capital Development an integral part of our development,” ASEAN Secretary-General Lim Jock Hoi told the ASEAN High-Level Meeting on Human Development on September 9, 2019.

Organized by Thailand’s National Economic and Social Development Council (NESDC) and Ministry of Foreign Affairs, the World Bank and UNICEF, the high-level meeting was designed to facilitate dialogue among member states to share successful policy frameworks and emerging challenges, as well as help identify new approaches to human capital development and move towards a set of common, yet adaptable, policy directions.

ASEAN has their work cut out for them. The World Bank’s Human Capital Index projects that upon adulthood, children born in ASEAN today will be just 59% as productive as they could have been. To change this, political commitment to shift public investments to the right places is critical. 

Thailand, for example, reduced the rates of child stunting from 25 to 11% over the last 30 years through targeted, community-based nutrition programs in areas with high levels of poverty. The successful approach brought together health, agriculture, education, water and sanitation by close community-level coordination to address malnutrition.

Anutin Charnvirakul, Deputy Prime Minister and Minister of Public Health, shared how Thailand kickstarted its Universal Health Coverage (UHC) scheme in 2002 even though it was still regrouping from the 1997 Asian Financial Crisis. The UHC scheme entitled every Thai citizen to essential health services, and coverage reached 100% in 2018.

“UHC is about national commitment. We don’t have to wait until we are rich to get UHC. We just have to commit,” Anutin said.

Other countries in the region have also performed well in various areas. Vietnam stands out with its high-quality basic education system due to its commitment to education reform and substantial public spending, while Singapore initiated successful schemes to retrain and employ older workers.

Experts presented delegates with data that illustrated how globally, investments in health and education, especially for young children, generates high returns on productivity. It gives the future workforce the necessary cognitive and social skills to navigate a knowledge-based economy. The meeting ended with recommendations for accelerating human capital development in ASEAN. These include fighting malnutrition with nutritious foods and quality healthcare, orienting the entire education system around improved learning for the young and lifelong learning for adults, and achieving UHC to provide everyone with quality health services and financial protection from health-related shocks to their income.

But as Laurence Chandy, UNICEF’s Director of Global Insight and Policy Office, reminded participants, to realize these goals, countries will have to make “fiscal commitments and more importantly set clear policies for implementation that are specific to each country.”

World Bank

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