A Short History of the ASEAN Digital Future
This month, Malaysia celebrates its 62nd anniversary of Independence, led by 94-year old but digitally savvy Prime Minister Mahathir Mohamad. Singapore also celebrated its 54th National Day this month, with Prime Minister Lee Hsien Loong speaking in Malay, Mandarin and English about how to prepare Singapore for climate change. At the 74th anniversary of Independence, Indonesian President Joko “Jokowi” Widodo announced an ambitious plan to move the capital from Jakarta to Borneo.
Traveling around ASEAN this month made me realize that while the rest of the world is more preoccupied with the turbulent present, Southeast Asia is already thinking and preparing for the future.
The reason for this is pretty straight forward. At 600 million people with more than US$2.5 trillion in gross domestic product (GDP), ASEAN economies remain one of the youngest and fastest growing region in the world. ASEAN’s success since the 1960s has been built on trade, peace and stability, and dedication to economic growth rather than politics. Its future success hinges on its political neutrality, despite attempts by the Great Powers asking the region to choose sides.
In Hanoi for a Young Scholars Initiative meeting of young academics, I was struck by how Vietnam was already planning for a digital economy by 2030 and 2045.
Having touched 7.1 percent GDP growth in 2018, and with just under 100 million population, Vietnam has been a major beneficiary of China shedding its low-cost industries and the diversification of the Asian global supply chain.
In 2010, Vietnam achieved the World Bank’s middle-income status and at the current trajectory, could be larger than Singapore’s economy by 2029, according to a DBS study.
In order to maintain its growth momentum and to provide jobs for its growing youth, Vietnam envisaged four possible digital futures, as buyer or seller of digital products and services.
In the first Heritage scenario, using traditional engines of growth with low digital transformation, the additional growth could be minimal.
In the second scenario of Digital Exporter, using overseas companies hiring Vietnamese workers for exports, the projection shows some improvement, but only marginal benefits.
The third scenario of Digital Consumer leverages off Vietnam’s own large consumer market, but the amount of current jobs at risk would be one-third higher than the two earlier scenarios.
The fourth scenario of a Digitally Transformed Economy, across all industries and government services, predicted an increase of 1.1 percent additional annual GDP growth, but 38.1 percent of current jobs would be at risk of transformation or disruption.
In essence, Vietnam realizes that its own industries can be cannibalized by relying only on the foreign sector and should therefore have a total domestic transformation that engages digitally with the rest of the world. That scenario lays out a road map that would give priority to infrastructure, network security, increasing digital skills and capabilities, modernizing government, an industry 4.0 and national innovation plan, and significant tax and regulatory reform.
Arriving in Jakarta last week for a conference on digital finance, I was struck how traffic from the airport has significantly improved, while everyone was also very focused on how digital transformation, social justice and climate change would be critical to Indonesia’s future.
The move out of Jakarta, one of the most congested urban conglomerations in the world, would cost $33 billion over 10 years to build the new capital in Kalimantan. But another $40 billion would be spent on transforming Jakarta, as two-fifths of the city is below sea level and parts are sinking due to rising seas and soil settlement.
Indonesia is moving fast into the digital space, because its internet user growth rate is three times faster than the global average, and its internet user community is only 56 percent or 150 million out of its total population of 268 million. President Jokowi understands fully that “data is the new type of wealth for our nation, it is now more valuable than oil”.
But since Indonesia is one of the biggest markets for Google, Facebook, Youtube and WhatsApp, the key to future growth will be the access to data. Will Indonesian companies, government and start-ups have access to data so that they can compete equally with multinationals that are willing to pay for such data? If we as individuals cede our private data to these platform companies, which then sell them as “private income”, when will data become a public good for growth?
One reason why I am optimistic about ASEAN as digital economies is that they are actually more innovative than the present indicators suggest. If you look at the Global Innovation Index 2019, you would find that Switzerland is number 1, the United States (3) and Singapore (8), while Hong Kong, China and Japan are 13, 14 and 15th respectively. On the other hand, Malaysia ( 35 ), Vietnam ( 42 ), Thailand ( 43 ) and Philippines ( 54 ) are behind Latvia ( 34 ) and nearer India ( 52 ).
These scores are essentially weighted in ways like the famous IQ tests, which were essentially Euro-centric in bias. In the digital space, innovation and ability to capture markets are very much in the SPEED x SCALE x SCOPE framework. China was able to compete rapidly with the US, because of the scale of its internal market (800 million internet users), high speed broadband infrastructure available, and scope of hybrid services across multiple sectors (Alibaba and WeChat).
Clearly, within ASEAN, Indonesia, Vietnam and Philippines have scale, with populations over 100 million each. ASEAN’s real strength is the youth of the population, already digitally savvy and moving into middle and higher income ranges. Hong Kong and Singapore score highly, but that is due to the higher weighting given to institutions, infrastructure and market sophistication, as you would expect from world-class cities. But Singapore came only 34th in terms of creative output, and Hong Kong came 33rd in terms of knowledge and technology outputs.
It is precisely because the ASEAN countries have youth, diversity of culture and access to world-class knowledge, as well as strategic geographical location, that they will become the cutting edge digital future. And since they are, as prof. Anis H. Bajrektarevic rightfully claims, ‘champions of multilateralism’ so much needed in a ‘theatre of brewing expectations’, that of ‘still worryingly bilateral’ Asia.
No economy today can afford to be complacent. Least of all in terms of flawed indices. To think that Hong Kong, considered by the Heritage Foundation to be number one in economic freedom, can descend into protests because of an intergenerational dispute over the rule of law and inequality, means that we need a root-and-branch review of how to compete in a complex digital world.
An earlier version of this text appeared in Jakarta Post under the title: A digital August in ASEAN.
Management of Nuclear Mining in Indonesia
Nuclear energy in its development is very rapid and plays a major role in improving the quality, as well as the added value of various products in various activities to improve people’s welfare. In accordance with its nature, nuclear energy has two impacts, namely: the side of benefits to realize welfare; and on the other hand, it has potential hazards that must be managed properly. Based on this, Nuclear Mining Material as one of the strategic natural resources is a vital commodity that controls the lives of many people, must be controlled by the state with optimal management in order to obtain the maximum benefit for prosperity and welfare of the people as mandated in the 1945 Constitution Article 33 paragraph (2) and paragraph (3). Therefore, the use of nuclear technology for human life needs to be monitored and regulated with regulations that consider the value of benefits and potential radiation hazards caused.
In order for the use of nuclear power to be optimized, it is necessary to make regulations that regulate utilization governance and prevent bad things from happening due to radiation hazards as a consequence of nuclear utilization containing radioactive substances and nuclear materials. Law Number 31 of 1964 concerning Basic Provisions of Atomic Energy is one of the first steps to strengthen nuclear power in Indonesia by means of Institutional Strengthening that utilizes (1) nuclear materials such as uranium and other radioactive materials, (2) reactor development and reactor utilization for electricity, and (3) utilization and development of radioisotopes in aspects of health, agriculture, industry, and others. Then, since 1978 has ratified several international agreements including:
- Law Number 8 of 1978 concerning the Ratification of the Treaty on the Prevention of the Spread of Nuclear Weapons;
- Law Number 9 of 1997 concerning the Ratification of the Treaty on the Southeast Asia Nuclear Weapon Free Zone ;
- Law Number 1 of 2012 concerning the Ratification of the Comprehensive Nuclear-Test-Ban Treaty.
- Law Number 10 of 2014 concerning the Ratification of the International Convention for Suppression Acts on Nuclear Terrorism.
Indonesia does have Law Number 10 of 1997 concerning Nuclear Power. However, there are still many provisions that have not been regulated and provisions that do not keep up with the times along with the development of nuclear power in the world of science and technology. In fact, the elements contained in nuclear have not all been used by Indonesia and there are still illegal buying and selling practices to date. Whereas nuclear elements, such as monazite, contains U (0.1-0.3%), Th (± 6%), LTJ (60%), and phosphate. LTJ has enormous benefits and its supply is currently dominated by China. Based on the records of the Ministry of Industry, every production of 1 ton of tin is estimated to produce 22 kg of monazite, which means that 34,000 tons have been produced monazite in the last 17 years (there are 2000 tons of thorium and 170 tons of uranium). If there is a regulation related to this, it will certainly ensure legal certainty and governance, and this can be a huge economic potential for the country.
At this time nuclear energy has contributed about 11% of the world’s energy and there are 452 nuclear reactors actively operating and spread across 31 countries in the world with a total capacity of 399,354 MW. Each year it is estimated that more than 66,883 tons of uranium are needed to run these reactors. Now as many as 54 new reactors are being built in 19 countries, and it is estimated that by 2035 the world’s uranium demand will increase by about 30% to 72,000-122,000 tons. The existence of NZE (Net Zero Emission) targets by many countries, mostly by 2050, and only a few countries by 2060, causes the possibility of projected nuclear power plant construction to increase.
Indonesia is one of the countries that has committed to achieving the Net Zero Emission (NZE) target by 2060 through Presidential Regulation No. 98 of 2021 concerning the Economic Value of Carbon based on the principles of welfare and the principles of sustainable development. The consequence of setting this target is that Indonesia must gradually reduce the use of fossil energy sources and replace them with clean energy sources derived from new and renewable energy, with the aim of national interest and preservation of national functions for the sustainability of future generations.
Based on exploration data that has been carried out by BATAN (National Nuclear Energy Agency which has now merged into the National Research and Innovation Agency, Indonesia has the potential for Uranium and Thorium (elements of nuclear used) in the Kalan and Ketapang (West Kalimantan areas), Kawat (East Kalimantan), Katingan, Mentawa and Darab (Central Kalimantan ), Singkep (Kepulauan Riau), Bangka Belitung, Sibolga (Sumatera Utara) and Mamuju (Sulawesi Barat). If Indonesia can take advantage of the opportunity for these natural resources for national development and community welfare, then Indonesia can contribute as a supplier of nuclear mining materials later. The International Energy Agency (IEA) 2021 projects that by 2040 there will be an increase in the number of nuclear power plants that are likely to exceed the projected supply of uranium in the same period (World Nuclear Association, 2021). This is likely to have an impact on competition among nuclear power plant managers to get a guaranteed uranium supply.
Based on data owned by BAPETEN (Nuclear Energy Supervisory Agency), export and import activities for nuclear materials, in 2017 there were imports of 28.08 kg, in 2018 as much as 28.14 kg, and in 2019 as much as 41.69 kg. In Law No. 7 of 2014 concerning Trade there is no specific regulation on trade related to nuclear power. Whereas in the field of nuclear power also cannot be contained export and import activities, as well as their prohibitions and restrictions. Given that the Indonesian state has limited fulfillment of the needs of nuclear materials and radioactive substances that must be met from domestic production, export, and import activities, as well as the possibility of re-export of used sources are very potentially needed as a gateway to traffic between countries. In Law Number 6 of 2023 concerning the Stipulation of Government Regulations in Lieu of Law Number 2 of 2022 concerning Job Creation into Law, there are regulations related to the mining of nuclear-excavated materials. This arrangement partially deleted several articles of Law Number 10 of 1997 concerning Nuclear Energy, partly added new articles and partially replaced existing articles. However, unfortunately, the two laws have not explained specifically related to regulations regarding the licensing of exports and imports of nuclear-excavated materials directly related to nuclear materials and radioactive substances.
The problem faced by Indonesia today is that there is no positive law that can reach the development of scientific and technological advances related to nuclear power and has not been able to meet the needs of nuclear power safety, security, and facility arrangements. Then, there is no special criminal regulation to ensnare all forms of action faced related to the misuse of nuclear materials, radioactive substances, and ionizing radiation plants that can threaten the life of the nation, state, and society.
If the legal legitimacy of the management of nuclear mining already exists, it is not impossible that the use of nuclear power will increase in various sectors, especially in mining, radioactive mineral processing, nuclear energy, energy storage, and radioactive mineral-based batteries. National competitiveness as a positive impact of nuclear technology can also be stronger. In addition, Indonesia’s radioactive mineral-based natural resources can be utilized optimally, then business actors are potentially increasingly interested in investing in the nuclear industry, and public safety and security from radiation hazards are guaranteed. Absolutely, taking into account the balance of existing living environments, while maintaining the environment despite nuclear mining activities. This is also a demand against nuclear mining companies that must meet the provisions in Law No. 32/2009 on Environmental Protection and Management.
The author hopes that this paper can contribute to the preparation of laws and regulations on the management of nuclear mining materials so that Indonesia immediately has a legal rule for nuclear mining activities, as well as complementing Government Regulation Number 52 of 2022 concerning Safety and Security of Nuclear Mining which was published earlier.
Behind the cancellation of Tesla’s investment in Indonesia
Authors: Yeta Purnama and Wulan Fitriana*
In April 2022, the issue of Tesla’s interest in investing in Indonesia attracted the attention of the domestic public, following a meeting held by Elon Musk, the owner of a prominent electric car company, with the Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan. The meeting discussed nickel raw materials for the electric car supply chain.
This was then followed up directly by President Jokowi during the implementation visit to SpaceX in May 2022. During the visit, they also did not reach an agreement, although in August 2022 Luhut said the value of the nickel purchase contract from Tesla reached US$ 5 billion or the equivalent of IDR 74.5 trillion. However, until mid-2023, an official agreement on Tesla’s investment plans had not yet been announced.
Instead of setting investment in Indonesia, recently Tesla was even rumored to be opening an electric car factory in neighboring Malaysia. Even though Indonesia has been intensively lobbying with a nickel concession offer to Tesla, the offer does not seem convincing enough to involve Indonesia in fulfilling the supply chain for battery raw materials at the company. For Tesla, a sustainable company comes first Environmental, Social, and Governance (ESG) is the main reason to be considered. However, on the other hand nickel companies in Indonesia are still far away from being sustainable. This can be interpreted that one of the reasons for Tesla canceling its investment is because the company’s concern for ESG is still low.
Battery production ecosystem which is not sustainable
As a company that owns track record Pretty good ESG with shoes total 65/100 according to disclosure Refinitiv, there are at least two reasons why Tesla has not provided further information or even thwarted its intention to make Indonesia an investment destination. The first reason is regarding the poor production ecosystem. Several nickel mines in Indonesia have not even been included in the ESG rating agency which is an important aspect to attract international investors concern to climate change.
Second, half-hearted regulations in an effort to reduce emission reductions. For example, by perpetuating nickel mining companies meet energy needs by using coal-fired power plants to support smelter activities. The emission footprint in fulfilling the electric vehicle supply chain is a false solution for the government to reduce greenhouse gas emission reductions.
This is exacerbated by company non-compliance with regulations, one example is the downstream policy. It is known that illegal export of nickel ore occurred due to the export ban and required the process of refining nickel in the country. This fraud was also influenced by differences in the price of nickel ore at home and abroad. Miners tend to choose exports because the price of nickel ore in the domestic market tends to be lower than the export price.
This activity is known to have caused losses to the state due to loss of royalties and export duties from companies.
Even though the government has issued regulations as stated in the Minister of Energy and Mineral Resources Regulation Number 11 of 2020 concerning the Third Amendment to the Regulation of the Minister of Energy and Mineral Resources Number 07 of 2017 concerning Procedures for Setting Benchmark Prices for Sales of Metal Minerals and Coal. However, this has not been implemented properly in the field.
Based on the results of the 2021 evaluation, it shows that among the 73 companies, there are smelters, miners, and trader, there are as many as 65 companies that have been assessed according to the HPM, the rest are still not in accordance with the stipulated HPM and are even still under international regulations.
What needs to be done in the future
Inviting Tesla to become a net investor in the country is a fairly good effort from the government in diversifying cooperation partners, despite its dependence on investment from China which is quite problematic in the environmental and governance sectors. However, there are several things the government needs to do in the future to attract foreign investment, especially in maximizing the management of nickel resources in the country. First, it is necessary to carry out policy reforms that are truly serious in the energy transition effort.
One of them concerns the application of Risk-Based Licensing mandated by the Job Creation Law. This bill is not supported by the availability of a database on risk mapping, while environmental permits have been abolished, resulting in threats to environmental quality degradation.
Second, the government needs to retire dependence on fossil energy as early as possible, by starting a mix of energy transitions more quickly, including overcoming over supply electricity must pushed with policy. Because, currently the policies made by the government in making a road map for the transition of new energy and renewable energy in the EBET Bill are still half-hearted and there are still many fake solutions in the bill, for example such as geothermal and coal gasification which are actually efforts to extend the life of dirty energy in Indonesia. domestic.
Third, the government needs to carry out strict supervision and proper regulation. Especially regarding environmental and governance issues which are important aspects to create a more sustainable corporate ecosystem. Because of ideals net zero carbon will not be achieved effectively without involving a number of parties and stakeholders.
*Wulan Fitriana, Researcher at CELIOS.
ASEAN needs to walk a tightrope
The Quad leaders’ statement clearly reiterated the importance of the Association of South East Asian Nations (ASEAN) in the context of the Indo-Pacific. Said the statement:
“Today we reaffirm our consistent and unwavering support for ASEAN centrality and unity. We are committed to ensuring the Quad’s work is aligned with ASEAN’s principles and priorities and continues to support implementation of the ASEAN Outlook on the Indo-Pacific (AOIP)”
The statement also referred to Indonesia’s chairmanship of ASEAN in 2023.
This statement is important for several reasons. First, there have been differences between ASEAN and the US with several ASEAN leaders expressing concern over the consistent deterioration in ties between China and the US. Countries like Singapore have repeatedly reiterated, that they would not like to make choices between Beijing and Washington, since they share robust economic ties with both countries.
At the Boao Forum, often referred to as China’s Davos, held in March 2023, the Singapore PM again underscored the global ramifications of strained ties between China and the US. The Malaysian PM, Anwar Ibrahim perceived to be pro-US, expressed concern over US’ ‘decoupling’ from China.
Second, ASEAN countries which also share close economic links with the US have recently begun to speak about ‘De-dollarisation’ which refers to reducing dependence upon the US dollar for trade. The Malaysian PM, Anwar Ibrahim also spoke about Asian Monetary Fund (this idea was initially mooted by the Malaysian PM in the late 1990’s when he was Malaysia’s Finance Minister). Like many other regions, ASEAN is wary of US’ increasingly insular economic policies in recent years. While seven Asean countries — Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam – are part of the US led IPEF (Indo Pacific Economic Framework) they have complained about IPEF not having a trade component.
Third, Indonesia has taken a different stance from the west on the Russia-Ukraine war. Like India, which is the current chair of G20, Indonesia too has pointed to the need for addressing disruptions caused to the global supply chains by the Russia-Ukraine war. Yet, it is an important stakeholder in the Indo-Pacific and is also important in the context of the goal of reducing economic dependence upon China and altering global supply chains. Apart from Vietnam and India, Indonesia has been one of the favoured countries for companies seeking to re-locate from China.
In spite of all the above differences, several ASEAN states have begun to show greater interest in the Free and Open Indo-Pacific. ASEAN came up with its first Indo-Pacific vision in 2018, but it has clearly stated that it’s approach vis-à-vis the Indo-Pacific is different from that of the US and not targeted at China. In recent months however, some ASEAN countries have begun to express their discomfort with regard to China’s increasingly aggressive behaviour on the South China Sea issue. Philippines, a US ally, which had in recent years been trying to strike a balance between US-China, has once again strengthened security ties with US. In February 2023, Philippines provided the US military access to four more military bases in the ASEAN nation. The US defence department while commenting on Philippines decision to grant access to four more military bases said that this:
“will make our alliance stronger and more resilient, and will accelerate modernization of our combined military capabilities,”
In conclusion, the ASEAN grouping is very important in the current geopolitical context and while it needs to walk a tightrope between China and the US it is an important player in the context of the Indo-Pacific for several reasons. As mentioned earlier, ASEAN countries are especially important in the changing economic architecture, where many western countries are seeking to reduce their dependence upon China and many US firms are expanding their operations in ASEAN countries – especially Vietnam. Apart from this, several ASEAN nations do not want to adopt a confrontationalist stance with Beijing due to their economic interests as well as geographical proximity but are not comfortable with China’s assertive behaviour and thus need to find common cause with the Quad.
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