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Securing the future prosperity of the Greater Mekong Subregion

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The Greater Mekong Subregion (GMS) countries have made stunning progress over the past quarter century. Once plagued by poverty, they are now economic success stories.

The GMS Economic Cooperation Program has contributed significantly to this transformation. Since it was established in 1992 as a means to enhance economic relations and promote regional cooperation, its six member countries—Cambodia, the People’s Republic of China, Lao People’s Democratic Republic, Myanmar, Thailand, and Viet Nam—have built a platform for economic cooperation that has mobilized almost $21 billion for high-priority infrastructure projects. Foreign direct investment into the subregion has surged ten-fold and trade between its countries has climbed from $5 billion to over $414 billion.

But the subregion faces challenges to its prosperity. Further reducing poverty, climate change adaptation and mitigation, energy efficiency, food security, and sustainable urbanization remain priorities of the GMS Program. Countries also face new challenges, including growing inequalities, rising levels of cross-border migration, and the potential impact on jobs of the fourth industrial revolution.

Moreover, GMS countries have agreed to significant commitments under the Sustainable Development Goals and the Paris Agreement on climate change.

There are also emerging opportunities for the region, including incorporating new technologies in various sectors such as education, agriculture, health, and finance. GMS countries are situated at the crossroads of South and Southeast Asia, and hence they can benefit from the increased momentum for growth in South Asia.

As GMS leaders gather this week in Ha Noi to chart the future of the program, it’s a good time to consider how a new generation of initiatives can ensure the GMS Program remains relevant and responsive to the subregion’s needs.

The Ha Noi Action Plan and the GMS Regional Investment Framework 2022, both proposed for adoption at the Summit, provide a platform for countries to strengthen their cooperation through continuous innovation. These two documents will have a sharpened focus on the GMS Program’s strategic goals of enhancing connectivity, competitiveness, and community in the subregion.

Connectivity, the first objective, has been dramatically improved. More than 10,000 kilometers of new or upgraded roads and 3,000 kilometers of transmission and distribution lines have been added under the program. These transport networks have been transformed into an interconnected network of transnational economic corridors, building on 25 years of work to extend the benefits of growth to remote areas. The Ha Noi Action Plan calls for the continued expansion of these economic corridors to boost connectivity both between and within countries.

The subregion’s competitiveness is improving through ongoing efforts to facilitate transport and trade flows, enhance agriculture exports, and promote the GMS as a single tourism destination after receiving a record 60 million visitors in 2016. Looking ahead, it will be important to continue cutting red tape and to remove remaining barriers to transport and trade.

Finally, communities are being strengthened through cross-border initiatives to control the spread of communicable diseases, expand educational opportunities, protect the subregion’s rich biodiversity, and mitigate the impacts of climate change.

GMS countries have identified a new pipeline of 227 projects worth about $66 billion under the GMS Regional Investment Framework 2018–2022. These projects will expand economic prosperity by developing cross-border transport and energy infrastructure.

ADB, which has been the program’s secretariat since its inception, expects to provide $7 billion over the next 5 years for a range of projects supporting transport, tourism, energy, climate change mitigation and adaptation, agribusiness value chains, and urban development. This builds on more than $8 billion in financing provided by ADB so far under the program.

To deliver these projects and make headway on other priorities such as infectious disease control and environmental preservation, strong partnerships are vital. The GMS Program depends on the collaboration of many stakeholders, including local administrations and communities, development partners, academia, and the media.

The GMS will benefit from strengthened partnerships with other regional and global cooperation platforms, leading to new opportunities for future development.

Partnerships with the private sector will also be increasingly important, and it is gratifying to see them deepening through the GMS Business Council, the Mekong Business Initiative, the e-Commerce Platform, GMS tourism and agriculture forums, and the recent Finance Sector and Trade Finance Conference.

I am optimistic that the subregion will meet its challenges and capitalize on emerging opportunities. By working together, GMS countries can deliver rapid, sustainable, and inclusive growth for another 25 years and beyond. ADB will continue to be an important and trusted partner in that endeavor.

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Southeast Asia

In Myanmar, Better Oversight of Forests a Vital Step in Transition to Rule of Law

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Authors: Art Blundell and Khin Saw Htay

For the first time, the Myanmar Extractive Industries Transparency Initiative (MEITI) has opened the books to share information with the public on revenue Myanmar’s government collects from harvesting timber. Last month, the MEITI released two reports juxtaposing statistics on production and tax payments from government ministries’ ledgers with corresponding figures reported by the state-owned Myanma Timber Enterprise (MTE) and forestry companies.

The reports are an important step toward improved transparency and accountability in Myanmar’s forest sector because they shine a light on irregularities that may point toward mismanagement or illegal activities. Unclear legal frameworks and weak enforcement in Myanmar’s forestry sector – a remnant of decades of military rule – have created an environment ripe for illegal logging and illicit trade, and mismanagement of natural resources.

The role of forests in Myanmar’s transition to democracy cannot be overemphasized. Money from illegal logging helped to fuel Myanmar’s decades-long civil war. Smuggling of illegally harvested timber to countries like Chinahas led to the loss of millions of dollars each year in government revenue. Corruption also fuels continued violence and prolongs armed conflict, especially in the heavily forested states that are home to most of Myanmar’s ethnic minorities.

The MEITI is committed to sharing its results at the state level—especially in Myanmar’s forest-rich regions. Myanmar’s citizens have the right to understand how their forests are being managed for the public good.

The EITI framework was launched globally in 2003 with a focus on oil, gas, and mining, given that these lucrative sectors are often key drivers of corruption in resource-rich countries. Myanmar is one of only a few countries (following Liberia’s lead) to add forestry to its EITI reporting, thanks to advocacy from civil society. 

Myanmar’s newest MEITI reports are a commendable step by the government toward transparency. But producing a report like this is not easy. The reporting highlights numerous disparities and irregularities in government record-keeping. This is not unusual for a first EITI report. It is also a major objective of the EITI: transparency leads to meaningful discussion about necessary reforms, while regular reporting creates an accountability mechanism to demonstrate progress.  MEITI is now preparing their next report covering fiscal years 2016-2017 and 2017-2018.

The MEITI is already driving progress. Myanmar’s Ministry of Planning and Finance (MoPF) has announced it will close the so-called “other accounts” maintained by State-owned Economic Enterprises, like the MTE, that have kept more than half their profits separate from the government’s central budget. Data in the MEITI report suggest that MTEretained74% of its $1 billion profits from fiscal years 2014-2015and2015-2016 in these other accounts–significantly more than the 55% that is permissible.

Myanmar’s Ministry of Natural Resources and Environmental Conservation (MoNREC) now holds important data that can be used to investigate and resolve irregularities uncovered by the MEITI reporting. For instance, the Forestry Department’s data on production does not match the data provided by the MTE, and it is substantially more than the Annual Allowable Cut (a government-determined sustainable level of harvest). Likewise, the MTE indicated that more teak was sold than its total reported supply. The source of the additional volume of teak logs is unexplained.

Reforms should help MoNREC address these irregularities.  Current reporting is obviously insufficient to capture reality.  With the help of a workshop that followed the MEITI launch, stakeholders are working with MoNREC to develop appropriate reforms for MTE and the Forestry Department, and to improve forestry sector governance in general. 

Opacity hurts the country in more ways than one. Illegal logging, corruption, and smuggling siphon off revenues meant for programs serving the public. Illegalities also threaten forests – and the communities that rely on forests for their livelihoods – and they drive off credible investment, leaving a gap often filled by investors with less regard for environmental and social regulations.

It is important to note that the MEITI reports cover only the period from April 2014 through March 2016, prior to Aung San Suu Kyi’s NLD Party coming into power. The current administration has committed to fairer distribution of benefits from Myanmar’s natural resources among its citizens, yet systematic barriers remain. Endorsing the recommendations from the MEITI report and implementing a roadmap for reform would signal the NLD’s commitment to good forest governance. Meanwhile, companies should do their part to comply with the law and accurately report production, sales, and other data in an accessible manner that allows for independent monitoring.

Myanmar’s forest resources hold great promise for the country’s people, its economy, and the government budget, if managed responsibly. The MEITI has a clear role in charting that path forward and in helping Myanmar manage its natural resources based on the principles of good governance.

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South-East Asia youth survey: Skills prized over salary

MD Staff

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Young people in South-East Asia face a relentless challenge to upgrade their skills as technology disrupts job markets, according to research released today by the World Economic Forum and Sea.

In a survey of 56,000 ASEAN citizens aged between 15 and 35, some 9% of respondents say their current skills are already outdated, while 52% believe they must “update their skills constantly.” Only 18% believe their current skills will stay relevant for most of their lives.

These concerns about skills are reflected in attitudes to jobs. ASEAN youths say the number one reason they change jobs is to learn new skills – the desire to earn a higher income comes second. 5.7% report having lost a job either because their skills were no longer relevant, or because technology had displaced them. Other reasons include the desire to create a more positive social impact and to have a more innovative working environment.

The survey also shows 81% of ASEAN youths believe internships are either equally important or more important than school education. In addition, over half are keen to spend time working overseas in the next three years, probably to gain new skills, with a significant portion wanting to work in another ASEAN country.

“It is impossible to predict how technology will change the future of work.” said Justin Wood, Head of Asia Pacific and Member of the Executive Committee at the World Economic Forum. “The only certainty is that job markets face accelerating disruption, where the lifespan of many skills is shortening. It is encouraging that ASEAN youths are aware of these challenges and show a deep commitment to lifelong, ongoing learning.”

Soft versus STEM skills

Overall, ASEAN youth attach greater importance to soft skills, and less importance to STEM skills – science, technology, engineering and maths. They see “creativity and innovation” as the most important skill – in which they also rank themselves highly – followed by the ability to speak multiple languages. They are confident about their soft skills, such as emotional intelligence, and list the two least important skills as “maths and science” and “data analytics”. They are particularly positive about their ability to use technology such as social media platforms, e-commerce sites, and e-payment systems.

Santitarn Sathirathai, Group Chief Economist of Sea, noted: “While it is essential that the region continues to invest in developing STEM skills among young people, we can also see that soft skills will have a vital role to play – even in the tech sector. In the world where knowledge becomes obsolete more quickly, soft skills such as adaptability, leadership and creativity will be crucial in ensuring young people have the resilience to constantly evolve their skill-sets in step with a changing market.”

The importance of re-skilling

Responding to the need to train workers in the face of technological change, the ongoing ASEAN Digital Skills Vision 2020 programme, launched by the Forum in Bangkok in November 2018 is assembling a coalition of organizations to train 20 million workers at ASEAN SMEs by 2020, and to provide internship and scholarship opportunities.

“The World Economic Forum’s ASEAN Digital Skills programme is delivering significant impact. In its first eight months, the initiative has already secured commitments to train over 8.9 million workers at SMEs, and to provide over 30,000 internships,” said Mr Wood.

Some 16 organizations have so far joined the programme: BigPay; Certiport, a Pearson VUE Business; Cisco; FPT Corporation; General Assembly; Golden Gate Ventures; Google; Grab; Lazada; Microsoft; Netflix; Plan International; Sea; thyssenkrupp; Tokopedia; and VNG Corporation.

“Government policy and business practices need to catch up to what is happening on the ground. Advances in technology will continue to impact labour markets into the future, and this requires ongoing education and skills training,” said Saadia Zahidi, Managing Director and Head of the Centre for the New Economy and Society at the Forum. “Anything less than a systematic shift in our approach to education and skills risks leaving people behind.”

Future jobs

When asked what type of organization they work for today, and where they would like to work in the future, ASEAN youths show a strong preference for entrepreneurial settings. Today, 31% are either entrepreneurs or work for a start-up. In the future, 33% want to work in an entrepreneurial setting. 19% of young people also aspire to work for foreign multinationals in the future (the current figure is 9%).

Traditional SMEs (as opposed to start-ups) are seen less favourably. While SMEs form the backbone of ASEAN labour markets, the survey reveals that small companies face recruitment challenges. 18% of youths work for SMEs today, but only 8% want to work for an SME in the future. One reason for the low interest is because young people say they receive less training at small companies compared to larger ones.

When asked what industry sectors are most attractive, the results reveal a clear preference for the technology sector, with 7% working in the industry today and 16% aspiring to work there in the future. In comparison, more traditional parts of the economy may face recruitment challenges. For example, 15% of youths work in manufacturing today, but only 12% want to work there in the future. Likewise, 8% work as teachers, yet only 5% want to work in education in the future.

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Southeast Asia

Being Wealthy Helps Singapore’s Naval Ambition

Bahauddin Foizee

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There’s an image that has been imprinted in the minds of the millions about Singapore, that it is a tiny yet wealthy city-state and an important Asian financial hub. But many are unaware of the fact that Singaporean armed forces are stronger than many regional forces, as it has one of the best navies, airforces and armies in the region.

Singapore’s navy, officially known as the Republic of Singapore Navy (RSN), in particular has been shaped over the years into a maritime force which is highly sophisticated and well-trained. An article on The National Interest ranked the RSN among the top five Asian navies, even when Indian Navy did not find a place in the list.

According to the aforesaid article, the RSN is a better navy than the Indian Navy in terms of quality, operation and policy-making, though the RSN lacks the experience, manpower and size of the Indian Navy. Arthur Waldron, an International Relations academic at the University of Pennsylvania, believes that if Chinese Navy, necessarily dividing the fleet, sends a taskforce to subdue the RSN at the Philip Channel, the narrowest part of the Strait of Malacca, the RSN would beat the Chinese taskforce.

Ambitious Procurement Plans

Singapore intends to build a navy that could protect its territories and economic interest from the potential hostility by any immediate larger neighbours, and more importantly a navy that could become lethal if combined with other regional and extra-regional navies (like Australia and Indonesia) against a greater navy (e.g. against Chinese navy). That is why, the RSN is currently on a spree to acquire more capabilities and next-generation platforms.

As part of its submarine force renewal program, the RSN is acquiring four Type 218SG submarines from Germany to improve the operational and combat capabilities of its submarine fleet. These new submarines will be having far more capabilities and durability — and are built to stay submerged about 50% longer — than those of the existing ones.

It’s worth mentioning here that submarines, unlike surface warships that have both peactime and wartime functions, is built to shoot and destroy targets as well as to conduct surveillance, even surveilling foreign coasts to gather vital intelligence. The very fact that a small city-state like Singapore has submarines in operation and is now renewing its fleet with even more capable submarines — shows how ambitious Singaporean navy has become about increasing its naval power.

Because of the larger capacity, these submarines have plenty of scopes for future upgrades, meaning that these submarines could be equipped with weapon systems such as long-range missiles to carry-out an offensive strike.

There’s more to the Singapore’s naval ambitions. Take for example the Joint Multi-Mission Ships (JMMSs), one of the RSN’s major new procurements. With full-length flight deck, these vessels would be almost 540 feet long with an estimated displacement of around 14,500 tons, and are expected to carry five medium and two heavy helicopters on a flight deck. What’s more, these vessels could potentially support limited operations of fixed-wing aircraft, including the F-35B warplanes which Singapore airforce is expected to purchase from the U.S. sometime in near future. Therefore, these vessels could potentially serve as aircraft carriers.

The RSN is also very well aware of the fact that wars these days are fought from a distant with the help of unmanned drones and unmanned vessels that carry cameras and weapons in order to see farther and respond quicker. Hence, the RSN plans to procure new vessels that will be having multiple unmanned air and surface vehicles to extend their reach and flexibility against threats. Take the eight new Littoral Mission Vessels (LMVs) for example. These LMVs will have a helicopter landing pad that will be able to carry an unmanned aerial vehicle. The aforesaid JMMSs and the new Multi-Role Combat Vessels (MRCVs) too will have unmanned air and surface vehicles.

Being Wealthy Helps

An Asian financial hub, the city-state of Singapore has a lot of wealth. The tiny landmass of the state and the already developed infrastructures allow the Singaporean government to allocate comparatively lesser wealth on infrastructures and other conventional sectors and to invest more on innovation and technology as well as defense and security. This is how the tiny state affords to make the quality defense procurements.

Singapore has been the Southeast-Asia’s largest military spender for several years now. Singapore was the top regional military spender in 2018 with an expenditure of US$10.8 billion and the Southeast Asian neighbour with the closest figures was Indonesia with an expenditure of US$7.4 billion. For 2019, Singapore has allocated US$11.4 billion for defense on its budget — something which amounts to about 19 percent of total government expenditures and around 3.3 percent of national GDP.

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