After the civilian-democratic transition in Myanmar, the western sanctions on trade and investment in the country were lifted. This led to a huge inflow of foreign direct investment in key infrastructural sectors and energy sector because of the nascent stage of economic progress in the conflict-torn country. Regional giants like China and Japan as well as ASEAN countries have been increasing their economic aid, assistance and cooperation with the country notwithstanding the humanitarian concerns raised by international community. The Chinese involvement in the region, especially its investment in big infrastructure and energy projects in Rakhine province have been a subject of international deliberation and criticism. However, Japan too has been competing with China to check its hegemonic ambitions under the One Belt One Road initiative. Consequently, it has been increasing its existing economic cooperation and financial investment in Myanmar since 2012. Japan’s overall investment pale in comparison to that of China (which over the past 30 years has invested, while it did peak to 1.48 Billion USD in 2017. As of July 2018, Japan was number 10 in terms of investment, while China was number 1.
Japanese involvement in Myanmar has various layers; investments in infrastructure projects ( a strong example being rail system in Yangon), Thilawa SEZ Project, (Japan’s Industrial Decisions firm as well as Marubeni are involved in two coal projects, as well as assistance in capacity building. Significantly, a survey last year revealed that Myanmar population prefers Japanese because investments have resulted in job creation, and assistance to small and medium enterprises. This is also because of the generous loan agreements and economic grants that Japan has made while having a balanced relationship with the erstwhile Junta and the resurgent democratic polity. Resentment against China is not restricted to Myanmar, but has been evident in Africa, South East Asia and even South Asia. The phenomena of Debt Trap Diplomacy has accentuated it as China takes back every last penny and that too at prohibitively high rates.
Japan’s involvement in Rakhine State
While Myanmar has been showcasing the Thilawa SEZ (49% is owned by JICA and three Japanese banks) as one of it’s successes. Japan has been pro-actively involved in development of the Rakhine State (while the state is rich in natural resources, a significant percentage of population is below the poverty line). Foreign Minister visited Japan twice last year and in January 2019, Ms. Toshiko Abe, State Minister for Foreign Affairs visited Republic of the Union of Myanmar and issues pertaining to the Rakhine State were discussed. During her visit to Japan in October 2018, Aung San Suu Kyi had praised Japan for being understanding towards Myanmar’s stand on the Rohingya issue. While Aung San Suu Kyi has been facing widespread criticism for her lacklustre and indifferent approach towards the grave human rights violations against rohingya population, she has been seeking support of the investors like Japan to emphasize the fact that Myanmar being a young democracy can not take decisive action against these violations and acting against military establishment would imperil the stability of democratic government. Nevertheless, Tokyo has been providing noteworthy assistance in state capacity building and economic revival of the Rakhine state. Only recently, the Japan International Cooperation Agency [JICA], and the Japan External Trade Organization [JETRO organized the Rakhine State Forum (February 21-23,2019). State Chancellor, Aung San Suu Kyi, made it a point to mention both these organisations during her address.
While China has invested in Rakhine State. A pipeline which commences from Kyaupkyu in Rakhine and extends till Yunnan Province in China, was inaugurated in April 2018 and China has also tried to play a role in resolving Rohingya Crisis. Tokyo’s approach towards Rakhine has been far more holistic. Japanese Envoy in an interview to the media, stated that the only way out was all round development – which included economics and politics. The Envoy also said that they would try to draw more investment
In 2018, Japan had announced assistance of over 20 Million USD for the conflict torn region. The Government of Japan and eight United Nations Agencies also signed a US$ 37 million value agreement to implement humanitarian and development projects in Shan, Kachin and Rakhine States.
While Japan is playing an important role in ensuring that Myanmar looks beyond China, it will also need to play a role in convincing Suu Kyi to adopt a different role towards Human Rights Issues and avoid curbs on the press (last year two Reuter’s journalists were arrested). While Suu Kyi has been trying to obfuscate, this will not be possible in the long run. The widespread concerns about the ongoings in Myanmar have a huge negative associative value for foreign investors who otherwise view an exceptional economic advantage in this highly under-developed and naturally endowed region with cheap labour. The fact, that some European companies have begun to exit from Myanmar, as a result of the Human Rights violations and EU is has threatened to withdraw the GSP is a strong reiteration of this point. Since investment inflows have a positive network effect that goes beyond geopolitical rivalries, it is important for the existing investors like Japan to urge the Myanmar goverment to take robust action to hold human rights violators accountable. This would go a long way in ensuring the sustainability of economic leverage that Myanmar possesses and lead to a paradigm of socio-economic stability in the region. Given the fact, that Japan, a democracy, is one of the key players in promoting the idea of a ‘Free and Open India Pacific’ (to check China’s rise) it is in a good position to do so. Myanmar will need to decide which path it needs to take – that of other authoritarian states in the region – or of a robust democracy, Japan can play an important role in the same.
*Prannv Dhawan leads the India Pakistan Research Project at the Council for International Relations and International Law. He is also a BA LLB Hons student at the National Law School University, Bangalore.
Indo-China integration meets Cambodia’s interests
Cambodia, which is located between Thailand and Vietnam and has a 440-kilometer coastal zone which is separated from the rest of the country by a mountain ridge, is in need of a “third neighbor” in order to survive economically and politically, and for improving its export opportunities.
Pnomh Penh’s hopes for partnership with the United States fell through. After Washington passed the Cambodia Democracy Act in 2018 in support of the Cambodian opposition, it became clear that the US was ready to use legal instruments against Pnomh Penh to pursue its interests in the region.
At present, Cambodia’s “third neighbor” is China. Cambodia is doomed to participate in the Chinese infrastructure project “One Belt, One Road” because otherwise it will not get access to South East Asia markets. The extent to which the Cambodian economy is sensitive to market changes was demonstrated by Italy, which initiated extra duties on Cambodian rice imports into the EU. Rice is the main item of Cambodian food exports. Rome thereby secured a review of the Cambodia-EU “Everything Except Weapons” trade scheme.
In the course of a visit to Beijing in January 2019 by Prime Minister of Cambodia Hun Sen, the Chinese side promised to allocate $ 588 million as aid for Cambodia by 2021, to increase rice imports to 400 thousand tons and boost bilateral trade volume to $ 10 billion by 2023 . This is designed to ensure the economic survival of Cambodia.
In foreign policy, Cambodia avoids aggravating relations with its neighbors lest there appear conflicts detrimental to the weak Cambodian economy, and underscores the importance of maintaining peace in the Asia-Pacific Region.
Phnom Penh is fully aware that it can improve its economic performance only on condition it maintains a long period of peace and strict neutrality. Cambodia is among the world’s fastest growing economies (7.5% in 2018). If the country is to preserve and build on the current pace of development, it will have to boost exports of manufactured goods (80% in the structure of exports) and rice, and should encourage tourism and attract foreign investment.
Phnom Penh is worried about two major problems in Asia – the North Korean issue and territorial disputes in the South China Sea as part of a greater US-China conflict.
Pnomh Penh sees the essence of the North Korean issue in that Cambodia traditionally maintains close economic and political ties with both Koreas. Cambodia and North Korea form a united front at international forums on the issue of human rights, North Korean military experts have assisted Cambodia with the development of a demining service, and North Korea has invested $ 24 million in the country’s tourism industry.
South Korea is the second largest investor for Cambodia after China. By 2018, the total volume of South Korean investments in Cambodia had reached $ 4.56 billion. For Pnomh Penh, Seoul is an influential economic player and cooperation with it contributes to the diversification of the Cambodian economy.
South Korean capital helps Phnom Penh to dilute the financial presence of Chinese investors in the Sihanoukville Special Economic Zone – the country’s main economic gateway. For Cambodia, the conflict between the two Koreas is fraught with significant financial and political losses.
In the opinion of Pnomh Penh, diplomatic clashes between the United States and China over territorial disputes in the South China Sea may exacerbate Cambodian-Vietnamese relations. Although relations between Cambodia and Vietnam have always been tarnished by conflict, Phnom Penh, following a policy of strict neutrality, has been promoting broader cooperation with Hanoi in recent years.
As Vietnam, unlike China, is moving closer to Washington, Phnom Penh does not want to find itself in a situation where he will have to make a clear choice in favor of one of the parties to the conflict. Militarization of Vietnam, whose territory blocks Cambodia’s access to the sea, will be ruinous for the economy of Cambodia.
Vietnamese seaports are the final point of the Southern Economic Corridor, which runs from Myanmar via Thailand and Cambodia to Vietnam. Phnom Penh pins big hopes on cooperation within the framework of the Southern Economic Corridor. An ASEAN report describes Cambodia as a perfect place for an export-oriented economy that serves as a binding link for the regional economy as a whole.
Given the situation, it can be assumed that Phnom Penh’s policy over the next few years will focus on diversifying the economy, attracting a greater number of foreign economic partners (Japan, Australia, Russia, the EU), strengthening regional integration within the Southern Economic Corridor and within the framework of the ASEAN, and minimizing US-North Korean, Sino-US, and Sino-Vietnamese differences.
First published in our partner International Affairs
Vietnam Fisheries Brace for EU Yellow Card Review
The tides wait for no one and each day fisheries, particularly those closest to the shores, are over-fished and harmed by industrialization. For emerging economies like Vietnam, the issuance of a yellow card by the European Union caught the attention of fishers and government officials alike, with a clear warning that the country has not been tackling illegal, unreported and unregulated fishing.
Tran VanLinh, the chairman of the Danang Fisheries, like others, is worried about the industry’s export future. After all, the fisheries sector is a cornerstone of the Vietnamese economy and has contributed to an average growth rate of 7.9 percent. Nevertheless, he understands that the yellow card offers not only a roadmap for the government but also for all people to address long-standing conservation and sustainability issues.
“After receiving the commission’s carding system notice, Vietnam has tried to satisfy all the requirements imposed by the EU. We do need to protect our sea and environment,” claims Linh.
The overall picture in the South China Sea or East Sea as Vietnam refers to this body of water, is grim. Total fish stocks have been depleted by 70-95 percent since the 1950s, and catch rates have declined by 70 percent over the last 20 years. Giant clam harvesting, dredging, and artificial island building in recent years severely damaged or destroyed over 160 square kilometers, or about 40,000 acres, of coral reefs, which were already declining by 16 percent per decade.
Challenges around food security and renewable fish resources are fast becoming a hardscrabble reality for more than just fishermen. With dwindling fisheries in the region’s coastal areas, fishing state subsidies, overlapping EEZ claims, and mega-commercial fishing trawlers competing in a multi-billion-dollar industry, fish are now the backbone in this sea of troubles.
Meanwhile, Vietnam’s fisheries employ more than 4.5 million people and the nation is ranked as the world’s fourth largest exporter of fish commodities after China, Norway and Thailand. In 2016, the country’s seafood products were exported to 160 countries and territories with the three major markets of the US (20.6%), EU (17.3%), and Japan (15.7%). Vietnam is currently the largest tra fish supplier and fourth biggest shrimp exporter in the world.
There’s even greater pressure placed on fishermen to meet Vietnam’s ambitious seafood sector target of earning 10 billion USD from exports this year, up 10 percent from 2018. According to the Vietnamese Association of Seafood Exporters and Producers (VASEP), the goal can be achieved largely from $4.2 billion from shrimp exports, $2.3 billion from tra fish exports, and some $3.5 billion from other seafood shipments.
Meanwhile, coastal fish stocks have become either fully exploited or overfished. As a consequence, the South China Sea is considered Vietnam’s vital fishing ground.
With a delegation of the EU’s Directorate of Maritime Affairs and Fisheries expected to arrive at the end of May, Vietnam is urgently adopting measures to convince inspectors that they have smartly corrected their fishery conservation course.
“The Danang Fishery Department has implemented numerous educational programs to teach fishermen about the new laws and to train them about the EU requirements,” adds Linh, a respected industry leader.
From Hai Phong, Da Nang, LySon, Phu Quoc and Vung Tau, more fisheries are attempting to reign in bad practices and reach towards modernization, eliminating the destructive fishing practices which affects fishery resources. However, more work is still required to revise their legal framework to insure compliance with international and regional rules, to increase the traceability of its seafood products, and to strengthen the implementation of its conservation and management of fisheries resources.
Mr. Le Khuon, chairman of the fishery association in An Vinh Village located in Quang Ngai Province and a former fisherman, who has stared down an aggressive Chinese fishing vessel or two near the Paracels, knows the hardships of fishing. “Of course the yellow card does impact on our local fishermen since we export sea cucumbers to the EU.”
Along with others in the area, Ly Son fishermen recognize the importance of marine protected areas since the coastal areas are overfished. “It’s a hard life and I have lost friends to the sea,” claims 42 year-old Tran Phuc Linh, who has also been harassed by the Chinese since he often fishes near disputed historic fishing grounds in the Paracel Islands.
In fact, the fishing incidents continue in the Spratlys, where China’s mega steel hulled vessels regularly intimidate Vietnam’s colorful wooden trawlers. Just two months ago, a fishing trawler moored at Da Loiis land, in the Paracel archipelago was chased by a Chinese Maritime Surveillance vessel before it crashed upon the rocks and sunk without loss of life to crew.
According to analyst and consultant, Carlyle A. Thayer, “the Chinese government, as a matter of policy, employs it commercial fishing fleet as a third arm of its maritime forces after the regular navy and civilian maritime enforcement agencies, now grouped into a national Coast Guard.”
Linh and his wife do not want their two teenage sons to make their living as fishermen. They know the perils at sea from the seasonal typhoons and the threats associated with patrol and interdiction of ships violating mutually agreed upon fishing restrictions.
Sent by their governments to find food for their people, fishers find themselves on the front lines of this new ecological battle. These fishing sentinels and their trawlers are fighting the maritime disputes between China and its neighbors.
This fishing competition for available fish has resulted in increased number of fishing vessel conflicts. These hostile sea encounters have been witnessed in Indonesia waters whereat least 23 fishing boast from Vietnam and Malaysia have been accused of poaching in that nation’s waters.
As a result, Indonesia’s fisheries minister, Susi Pudijastuti, ordered the dynamiting of these boats and over 170 fishing vessels have been sunk in their waters over the past several years. The increasing number of fishing incidents reflects not only deeply different interpretations and application of the law of the sea, but a fundamental conflict of interest between coastal states and maritime powers.
Even with these threatening clouds on the horizon, some fisheries are going about responsibly reigning in illegal fishing. In Da Nang, its 509 fishing trawlers (all longer than 15 metres) have installed with GPS. This includes the seven steel hulled vessels subsidized by the government’s generous loan program.
The mandatory installation of the GPS offers more assurance in the identification of catch origins and it also helps that more fishermen are also completing and submitting the required fishing diary or logbook.
Meanwhile, the government insists that statistics on fishing vessels, fishing logs and fishing yields of each commercial trawler are now part of a Vietnam Fish Base, a nationwide fishery software database in accordance with the law.
Within the disputed territory, there are over 1.9 billion people, seventy-five percent of them living within one hundred kilometers of the coast. Nearly eighty-five percent of the world’s fishers are concentrated in Asia, particularly in the South China Sea, according to the Food and Agriculture Organization of the United Nations.
Subsequently, fishing remains a politically sensitive and emotionally charged national security issue for all claimant nations. This ocean plundering presents the region with a looming food crisis. Any effort to balance the economic benefits with the security context within the South China Sea will require a coordinated, multi-level response from scientists, historically engaged in collaborative research and already addressing issues of sustained productivity and environmental security in the region.
It’s a prevailing view that the collapse of fisheries is the major driver of competition for marine resources. This continues to result in a lack of respect among claimants for mutually agreed-upon fishery restrictions within 12 nautical miles of outposts and in the recognition of management area within 200 nautical miles of coastline. Last year 86 Vietnamese fishing boats were destroyed by Indonesia for illegally catching fish in its waters.
However, senior Vietnamese officials are confident that these violations are now being eliminated, if not sharply reduced.
“ Because local governments and relevant agencies such as the Coastguard, and Border guard are conducting more surveillance and enacting stern measures in monitoring and investigating; fishing violations are reduced,” claims Nguyen Manh Dong, Director General of the Department of Maritime Affairs, and National Boundary Commission.
He’s quick to add that while the EU’s requirements have been fulfilled including port control, some cases still happen, particularly with Indonesia.
To offer additional counter-balance, Vietnam’s Fisheries Resources Surveillance Department has stated that it is working to raise awareness of maritime boundaries and international maritime laws among its fishermen, apart from conducting frequent patrols to prevent potential violations
The complicated nature of the Vietnam’s East Sea or the South China Sea (SCS) disputes, makes short term resolution of fishing disputes difficult. More parties, believe that proper management of these disputes to insure stability becomes a priority.
“Vietnam will never tolerate or permit activities related to illegal, unreported and unregulated (IUU) fishing,” adds Deputy Minister of Agriculture and Rural Development (MARD) Vu Van Tam.
For example, Binh Dinh province is adopting necessary measures to remove the “yellow card” status. All local fishing boats are required to obtain certificates of registration, inviting local authorities to review design documents, supervise the building, improvement and repairing of fishing vessels.
Among policy shapers, and marine scientists, there’s a general consensus that the best approach for managing SCS disputes and addressing IUU issues is to set aside the sovereignty disputes and jointly develop and manage the natural resources, such as fisheries. While advancing fisheries cooperation in the SCS has been increasingly recognized as a political, ecological, socio-economic and security imperative, a crucial question remains unanswered. What objective can be achieved through fisheries cooperation in the SCS?
Marine biologists like Professor Nguyen Chu Hoi advocate the creation of ecosystem- based fishery zones covering reefs that are vital to regional fish stocks, especially in the Spratlys and Paracels. This action requires the adoption of an urgent cooperative marine management system, regardless of the location of their territorial and maritime claims.
While the growing demand for fish by global markets can fray even the strongest fisher’s net, the challenge for Vietnam is the imperative for management of its declining fisheries in order to create long-term sustainability. The protection of the “commons” requires more than a pass fail report card from the EU.
Joining forces for sustainable development
Lao People’s Democratic Republic’s development story is one of a nation with its sights firmly set on building a prosperous future in concert with the broader region. The country’s willingness to embrace an ambitious national development plan has seen the country transition to a market-oriented economy, increasingly integrated into regional and global markets. Substantial reforms paved the way to World Trade Organisation (WTO) membership in 2013. Today, as an active member of ASEAN’s Economic Community, Lao PDR is working to deepen economic integration: to improve market access to regional partners and to achieve the transit routes crucial for any landlocked country to engage fully in international trade.
Lao PDR’s approach has delivered impressive economic growth, above 6.5
percent per year for over a decade and forecast to be 6.8 percent in 2019. Over
the past quarter of a century, extreme poverty has been significantly reduced.
Income per capita has increased, and access to education and health care
services has improved. Targeted development plans and industrial policies have
been developed to support the transformation of the economy. Lao PDR could
graduate from least developed country status by 2024 if these gains are
maintained, which would be a greater achievement still.
At the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), we take a regional approach to supporting our member States achieve sustainable development. Lao PDR’s recent journey is one on which we are keen to build. We work with the whole UN family to overcome challenges which transcend borders and to achieve a sweeping set of economic, social and environmental objectives captured by the United Nations 2030 Agenda for Sustainable Development. I am meeting the Laotian leadership this week with these objectives in mind and to join forces with national agencies and development partners to accelerate the implementation of the Eighth 5 Year National Socio-Economic Development Plan.
Our analysis demonstrates that across Asia and the Pacific, much more needs to be done to achieve all 17 Sustainable Development Goals. While Lao PDR has achieved a great deal, its economic growth has not been sufficiently inclusive or sustainable, which has led to inequality. The quality of education and lifelong learning needs to be significantly improved; to give young people opportunity, support entrepreneurship and enable companies to expand and create jobs. Transparency and predictability of policies and legal frameworks would improve the business environment. There is great scope for the Laotian economy to become more productive and diverse, and to attract investment to areas beyond resource extraction and large infrastructure projects.
To unleash this potential and achieve sustainable development, substantial investment is needed. The additional investment required across the whole of the region is $1.5 trillion a year. Our analysis shows the region has the fiscal space to afford this. Yet mobilizing these additional resources will require a concerted effort, particularly for Least Developed Countries. Reforms to increase tax revenue and private sector investment will be necessary in the face of declining overseas aid. For Lao PDR to achieve the Sustainable Development Goals, significant investment of an additional $3 a day per person is needed. Investment equivalent to some 3.6 percent of GDP per year could end poverty by paying for basic social protection and financing development programmes. To achieve universal education from pre-primary to upper secondary school by 2030, additional investment equivalent to 2.2 percent of GDP a year is needed to secure the country’s future.
These additional investments must be accompanied by measures to diversify the economy. Raising productivity in rural areas will be key, along with broad based policy interventions in addressing vulnerable groups and communities. Government efforts to promote green and sustainable agro-processing can be complemented by stronger links between agriculture, manufacturing and service sectors. Supporting Lao PDR’s thriving manufacturing base through special economic zones is important for employment but also for government revenue. These can also help encourage investment in the service sector and improve the quality of Lao PDR’s growth, but they must be complemented by improved transport connectivity. ESCAP is supporting the development of dry ports in the region, to make the shipment of sea cargo to inland destinations more efficient.
As we reach for a better future, Lao PDR has a role to play in our region’s effort to achieve the 2030 Agenda. This will require more transformative change, significant investment and a structural shift to activities which improve the quality of economic growth and preserve the country’s precious natural environment; especially along the Mekong, a river on which millions of livelihoods depend. I am looking forward to working with Lao PDR to strengthen its long-term development partnership with the UN family. This is our opportunity to take multilateralism a step further and, building on national and sub regional achievements, deliver sustainable development in Asia and the Pacific.
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