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Indonesia’s new electric car may disrupt its relations with Japan

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Authors: Muhammad Zulfikar Rakhmat, Dimas Permadi, and Ramadha Valentine

President Joko Widodo has recently signed a presidential regulation on electric cars. The regulation instructed several things, including forming a coordinating team to support the implementation of the electric vehicle program.

Jokowi hopes that electric vehicles will be able to replace fuel oil vehicles.

Due to air pollution in large cities such as Jakarta which continues to increase, Indonesia sees it important to begin using electric cars for the general public.

Jokowi also views the opportunity for Indonesia to develop electric cars because Indonesia has the main raw materials to build them. In Jokowi’s statement, he stated: “We know that 60 percent of the key to electric cars is the batteries and we have the components to make them [such as] cobalt and manganese in our country,”

To implement the agenda, the Indonesian government is likely to collaborate with various partners, including China. Although it is still a prediction, this was indicated by China’s intention to move its electric car companies to Indonesia, namely BYD Auto Co., Ltd and JIC. Moreover, Chinese car manufacturer Dongfeng Sokonindo (DFSK) also intends to produce DFSK E3 Glory cars in Indonesia which will be marketed in ASEAN. This strengthens the possibility that China will play a role in Indonesia’s plan.

China’s entry into Indonesia’s plan for electric cars could be a reasonable move and may be welcomed by Jakarta. Nonetheless, there is a potential that it may disrupt Jakarta’s long ties with Japan as its largest partner in the automotive sector.

Japan: Indonesia’s long-time automotive partner

When it comes to automotive, Indonesia has been relying hardly on Japan. As reported by the Association of Indonesia Automotive Industry, the majority of cars used in Indonesia are Japanese ones. CNN’s polling also shows that Indonesians prefer Japanese cars more than those produced by Europe, Korea, and China.

Another case which exemplifies the strong automotive ties between Jakarta and Tokyo is the Indonesian-made car “Proton” which was made under a special collaboration between Indonesia and Suzuki.

Considering the position of Indonesia as a country that has just stepped in to the business of electric cars, Indonesia seems to be very careful in involving foreign investors. Indonesia sees goods from China as relatively cheaper and of comparable quality.

In addition, Chinese companies applying for relocation in Indonesia was also considered as a serious step to strengthen the relations that had been built by the two countries.

Indonesia’s plan, which was conveyed by the Deputy for Infrastructure at the Coordinating Ministry of Maritime Affairs, Ridwan Djamaluddin, to involve China in making electric cars is likely to disrupt the stability of its long-time cooperation with Japan.

This could be true, especially if we look at how Indonesia has increasingly become a battleground between Beijing and Tokyo such as in the recent bidding for the construction of a railway between Jakarta and Bandung, whereby China succeeded in winning the bid. Japan, which has made a number of preparations to obtain Indonesia’s permission to participate in the project, feels disappointed as expressed by its Chief Cabinet Secretary, Yoshihide Suga.

Looking at this, electric cars can be another battleground between Japan and Indonesia.

Indonesia may take careful steps

To this date, it remains unclear whether Japan or China who will have a considerable take in Indonesia’s move towards electric cars.

Nonetheless, in the midst of the potential rivalry between Beijing and Tokyo, Indonesia may take careful steps. The government in Jakarta will try to ensure that it would not hurt the two sides. It is likely to weigh the interests and opportunities of both parties.

On the one hand, it needs to maintain close relations with its long time partner in the automotive industry, while on the other hand it sees considerable opportunities in cheap Chinese raw materials.

The three authors are analysts on Indonesian political economy

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Southeast Asia

Crisis and Future of the Regime Stability in Southeast Asian Countries

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The world has encountered a crisis several times. In facing a crisis, every nation’s leader will need to strive to prevent the existing disaster from having a major impact on the country’s economy. This is because the economic crisis can have consequences for the reputation and the stability of the political regime itself.

Unlike the crises caused by unregulated economic practices such as during the Great Depression in 1929 or the Global Financial Crisis in 2008, the catastrophe that the world currently confronting today is prompted by the COVID-19 virus. This new type of disease has eventually sparked into the global pandemic and already created tremendous negative disruption toward economics and businesses around the world.

Of course, the panacea for this problem is not easy since it takes the extraordinary capability of the state to bear with a load of health costs and prevailing economic burden to its society.

Most of the countries having a really hard time coping with this ‘black swan’ event. While, for some emerging economies with weak public health capacity, and slow policy process has already struggled with the socio-economic impact of the virus.

In this backdrop, although countries in Southeast Asian (SEA) regions have already made an impressive economic achievement post-Asian Financial Crisis in 1997, they have to swallow the bitter pill again as their economy agonized from this significant blow.

The countries within the ASEAN have suffered a great economic loss due to the pandemic. According to the latest forecasting report by the Asian Development Bank (ADB),the GDP growth rate of Indonesia and Laos has been contracted to minus 1 percent and 2.5 percent respectively. Other nations such as Cambodia, Malaysia, and Singapore have been predicted to befall averagely under minus 4 percent. While the Philippines and Thailand have even major severe shocks as their economy sharply contracting in excess of minus 7 percent. Only several states such as Vietnam, Brunei Darussalam, and Myanmar have performed slightly better.

This phenomenon is indeed very upsetting, especially because these countries are highly dependent on foreign investment, trade, and the tourism sector as the main engine to drive economic growth respectively.

The tricky part comes when the state cannot provide its citizen with adequate support and accountability. Apart from the debate about which ideological system is best in dealing with a pandemic, we need to understand well that political turmoil is often triggered by the inability of the state to meet the needs of its people. The public health emergency coupled with the economic crisis, and problematic policy selection can swiftly turn into unrest since the society vigorously looking for justice and protection over their wellbeing.

Compared to other ASEAN member states, Vietnam and Singapore are effectively tolerate the impact of turbulence because of their impressive management of public health systems. While other nations in the region seem to have different stories.

In Indonesia, regime stability has been affected by COVID-19. From the beginning of the outbreak, among other ASEAN member states, Indonesia was the latest one who got struck by the virus. But it turns out that Indonesia becomes a country with the largest infected cases in the region. The lack of government coordination and assistance in tackling the pandemic has made the economic condition of the country worsen. In addition, the most recent enactment of the omnibus law of job creation that predominantly in favor of businessmen and investors has triggered the wide-spread protest toward the government across the archipelago since early October.

Likewise, the Philippines also has to face the fatal economic damage caused by the pandemic as the unemployment number and poverty rates have significantly risen. Despite the government’s extreme militaristic measures to contain the pandemic, the number of infected cases and death ratio still upsurging, second only to Indonesia. Yet, this has sparked both national and international criticism on President Duterte’s repressive approach.

In Malaysia, the government must engage with the second wave of the pandemic. After generally succeed in the first attempt to tackling the outbreak, the infected rate has steadily increased particularly in Sabah, after holding local elections on 26 September. Apparently, the political upheaval began to appear when Prime Minister Muhyiddin Yassin insist to put the country under a state of emergency. Although in the end the proposal was later rejected by Malaysia’s King Sultan Abdullah, the declaration to suspend the parliament was roundly condemned by opposition figures in the country and also mounted concern among Malaysians.

Amongst other countries in the SEA region, Thailand currently in the state of a serious political crisis mode provoked by a series of anti-government demonstrations. The Thai people demanding to reform the Thai constitutional monarchy and removal of Prime Minister Prayuth Chan-ocha from his office. This situation has made Thai authorities announced the country to entered the emergency decree. Though the protester vigorously attacked the government solely for the political reform motives, the issue of the economy has virtually played a quite larger part. Previously, the country’s strategy in responding to the outbreak of the disease domestically had relatively efficacious. However, the long period of the lock-down policy has brought down deep frustration on the government since the economic inequality, poverty rate, and desperateness for the job among the young generations have ominously increased.

Conclusively, the pandemics of COVID-19 have become an interesting setting for testing the stability of the political regime in ASEAN. The virus has considerably contributed as a catalyst for the economic crisis. Clearly, the pattern of political turmoil and civil disobedience has gradually begun to appear as the countries started to be overwhelmed by the collision of the crisis.

It’s no doubt that Indonesia and the Philippines will deeply fall into another economic recession which can potentially ignite another massive civil unrest toward the regime. Malaysia similarly could face another heated political situation. Yet, the country’s capacity to handle the crisis still can make the regime to be relatively stable. While Thailand on another hand will face difficult circumstances. As the public has already tired of their flawed constitutional system, civil unrest will most likely continue to take the place. Consequently, the future political-economic outlook of Thailand in the near future will somewhat look worrisome.

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Southeast Asia

Quad, Quad Plus, and the Indo-Pacific: The Core and Periphery

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Indo-Pacific has been seen as one construct which identifies US strategy and brings in subscribers to the concept; thereby adding value to this concept. At the same time, it has been working on defining political, economic and security contours of this geo-political imagination. Indo-Pacific has defined as the fusion of two oceans -Indian and Pacific. It has brought the regional powers-India, Japan and Australia within the whole narrative. There are issues related to the Indo -pacific and how it will address security and political concerns but given the fact that Chinese aggression has brought in more countries into its fold, the idea is gaining momentum.

The pronouncements made by the UK, France and Germany as their approach towards Indo-Pacific shows that there is synergy which might emerge between the Euro- Atlantic and the Indo-Pacific. Indian Prime Minister Narendra Modi did propose that Indo-Pacific should become an inclusive concept and opened a window for China to be included into the configuration. However, this was never reiterated by Modi in the subsequent speeches and it seems that the bon homie between the two Asian powers dissipated because of Chinese aggressive moves in the Indian borders.

The evolution of Quad 1.0 which gave heft to Malabar exercises, and involvement of Singapore and Australia into larger scheme of things dissipated as the Australian government withdrew in later editions after succumbing to Chinese angst. The Quad 2.0 which gained steam in the early 2018 has now come a full circle with Australia again joining the Malabar exercises scheduled to be held later this year in the Indian Ocean. The latest approach has brought strategic momentum. The Quad 2.0 has outlined few of the larger objectives during the Tokyo submit earlier in October, and it is seen that in terms maritime security, space, cyber and encrypted communication networks there are possibilities between the four countries. India has already signed the BECA agreement and there is a possibility of greater understanding in technology sharing and intelligence domain between the four partners.

The Quad 2.0 is seen as having teething problems because of the changing political dispensation in Japan and the US while India and Australia are steadfastly showing their commitment to the cause. However, the Quad needs a blueprint and also a joint status paper which should outline the utility and purpose of this formation. With ASEAN the question of centrality has been resonating and even the former Singapore Permanent secretary has stated that Laos and Cambodia are unnecessary baggage in the ASEAN homogeneity and consensus as the two countries has been acting as surrogates of China. The problem of placing ASEAN centrality in larger objectives of Quad and Indo-Pacific would grow in future.

There have also been proposals of Quad plus which should include South Korea, Vietnam and New Zealand for the purpose of expanding the logistics and support network, and undertake concerted measures for protecting maritime commerce and build institutional linkages. While Quad Plus identifies the new players into this circuit but it fails to recognize Indonesia and other such regional players which might be useful in meeting the long-term objectives.

One of the aspects which has been highlighted that Indo-Pacific should work in the field of economic integration and bring about various regions such as South Asia, Southeast Asia into one umbrella of Indo-Pacific Economic Corridor. While digital and scientific cooperation has been envisaged but concerted plan of action for building resilient supply chains among the subscribers of the Indo-pacific might be a good initiative.

Along with Quad and Quad plus there are many trilaterals which have been taking shape and have made a unique strategic matrix. The trilaterals which have been taking shape include France, Australia and India. The other two trilaterals are Track II -Australia, Japan and India, as well as India, Australia and Indonesia, thereby expanding the expanse of the trilaterals acting as nodes in the overall edifice. Therefore, if Quad plus expands and Indo-pacific geographic outlines remains as envisaged then there would be a structural overlap between the two. India within its Ministry of External Affairs has already commissioned a new Oceania division which would look into the work of divisions such as ASEAN, Indo-Pacific and the Southern Asia. 

The need of the hour is to develop the priority areas for the Quad.  One of the areas that Quad can develop capacities is developing maritime security architecture with willing subscribers and logistics providers. Cyber is another area where Quad can develop joint partnerships and also support building better digital architecture. The important aspect is that within maritime security architecture Quad need to develop Quad grid which should integrate ports with facility for the navies of Quad countries to congregate, work out interoperability, and develop cooperation in maritime domain. This should include maritime theatre awareness and conducting joint Humanitarian Assistance and Disaster Relief (HADR) operations. The maritime Quad grid can comprise of Djibouti, Diego Garcia, Andaman, Darwin, Guam and Okinawa-the big ‘W’ in the Indo-Pacific. Also, developing cooperative mechanisms in sectors such as rare earths, interlinking defence research networks and securing channels of communication through sharing of satellite data would give required teeth to the Quad.

As already discussed, it is likely that Quad plus and Indo-Pacific would run parallel and even develop symbiotic relationship which might expand in political, economic and strategic domains. Quad would address defence and strategic requirements while a possible Indo-Pacific Regional Cooperation institution would address political coherence. In economic field the inclusion of India in Asia-Pacific Economic Cooperation (APEC) would help in transition of Asia-Pacific Economic Cooperation to Indo-Pacific Economic Cooperation. While these propositions are there on the table but the realization would be critical to make these ideas and geopolitical imaginations get a concrete shape.

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Southeast Asia

The Role of Malaysia in ASEAN

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The three important objectives of ASEAN, a. collaboration and cooperation; b. trade and economic growth; and c. peace and stability, have reflected in various initiatives and achievements by Malaysia. 

Regional Governance

Throughout history, regional governance was based on nation-states working together for their mutual security and prosperity. Geographical proximity plays a key factoring such governance.

Although non-interference, respect for territorial integrity and Westphalian understandings of sovereignty have acted as regulatory norms for ASEAN members, this has not prevented the countries from conforming the founding principles of peace and security. The member-States have successfully promoted the interests of one another, by keeping conflicts amongst themselves as well as with other countries, aside. The organization has been able to maintain peace and stability within the region, without the eruption of war among its member-states. Moreover, it has provided a unique framework for regional community-building.

Malaysia even plays a crucial role in the Southeast Asia region and has taken several governance initiatives to maintain peace in the region. Most importantly, Malaysia initiated the idea of ZOPFAN (Zone of Peace, Freedom and Neutrality) in the Foreign Ministers’ Meeting (Kuala Lumpur, 1971). Under the ZOPFAN, the member-states agreed to exclude foreign powers, especially the United States, U.S.S.R and People’s Republic of China from interfering with ASEAN countries and prevent them from using the region as a theatre for conflict.

Additionally, the Communications and Multimedia Minister Datuk Seri Dr Salleh Said Keruak from Malaysia also said, “We are united in ASEAN to solving regional issues such as overlapping territorial claims, the threat of terrorism, cross-border crimes and others.”

Regional Cooperation

Regional cooperation and integration (RCI) is a process by which national economies become more interconnected regionally. It is an effective mechanism for member state countries, mostly from a specific geographical region, to place their common interests in concurrence with their national interests and facilitate mutual cooperation and dialogue.

In furtherance of promoting such cooperation, Malaysia invoked the idea of a regional free trade zone in 1990, the East Asia Economic Group (EAEG). The objectives of EAEG were to boost economic cooperation, to promote and defend free trade, accelerate economic growth, introduce open regionalisms, and contribute to multilateral trading systems. This was a debatable yet innovative move to protect the regional interests and enhance the trade between the countries.

When Malaysia became the Chairman in 2015, it declared “Our People, Our Community, Our Vision” as the theme, which further points out the active participation of Malaysia to bring the people of the community, rather than the country, closer to each other, economically as well as culturally.

Research shows that Malaysia also played a key role in progressively advancing the establishment of the ASEAN Charter, which is a document that confers the legal personality of ASEAN. With the entry into force of the ASEAN Charter, ASEAN will henceforth operate under a new legal framework and establish a number of new organs to boost its community-building process.

The inherent power of the member states to facilitate governance for multiple diverse groups in their country has allowed them to strengthen their decision making. In the Malay language, the term muafakat best captures this strength, which loosely translates to consensus and cooperation but more than that, it is often used in the context of decision-making within societal structures. When such countries form a group, cooperation through mutual dialogue is bound to have a strategic role in regional cooperation. As observed by the grouping’s former Secretary-General, H.E. Ambassador Ong Keng Yong of Singapore, ASEAN continued to notch achievements after achievements based on the four “C’s”: community, Charter, connectivity and centrality. 

Active participation in ASEAN is one way of not giving in to the sway of any one power. ASEAN’s central nature over the years has ensured that it plays a crucial “manager” role in terms of dealing with competing influences in the region.

Another factor adding to the cooperation is the mention of “ASEAN Centrality” in several documents like the Charter. Centrality within ASEAN is defined as the proximity of the ties between ASEAN member states, intra-ASEAN coherence leading to centrality by way of enabling the organization to “gain access to resources, set the agenda, frame debates, and craft policies that benefit its member states.”

The principles of centrality also facilitated mutual dialogue between the states to tackle the COVID 19 issue. Joint statements and special summits were organized to establish collaboration between the states.

ASEAN like all previous regional efforts at community building before it will be expected to show to the world and its people, that it is a viable grouping that could face up to the challenges of consolidating political, security, economic and socio-cultural strengths for the benefit of not only its peoples but more importantly the community of nations outside the region and the world.

Humanitarian Assistance

Cooperation and assistance in humanitarian crisis and emergency is a feature which demarcates diplomacy from genuineness. Along with other member states, Malaysia has played a crucial role through financial and human resources in cases of emergencies. These included providing assistance to Indonesia, Myanmar, Laos, Cambodia and the Philippines which were affected by natural disasters like in Aceh (tsunami) and Yogyakarta (earthquake), as well as being the intermediary for peace talks between the Philippine government and the MILF (Moro Islamic Liberation Front).

Malaysia has been regarded as the most vocal country in criticizing and commenting on the issues surrounding the Myanmar-Rohingya crisis and plays a critical role in facilitating humanitarian assistance, both on its own and jointly with other ASEAN countries.

An active stand in such cases lays down the foundation for cooperation between countries. To truly honour the commitments for mutual security, a step in the right direction for human rights plays a key role. Assistance solely based on economic benefits may be beneficial in the short term, but such an alliance shall not survive in the long run.

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