The Pacific region in post-Cold-War period is fast changing its strategic complexion. This region had been under United States’ influence. But, the USA and its proxies like India Taiwan, and some other countries perceive that the region is in a state of flux. USA and its allies fear China may in future challenge USA’s undisputed dominance of the seas-lanes in the region.
China has maritime disputes over some islands in the region (Japan, Vietnam, Brunei, Taiwan, Indonesia, Malaysia and the Philippines). In East China Sea, there is dispute between China and Japan over islands of Diaoyu and Senkakus islands.
The USA assures China’s rivals that USA would be their `security provider’ in moment of need. The major stakeholders in the region ae the USA, China, Australia, ASEAN countries, Japan and South Korea. American presidents Bill Clinton and Barack Obama visited the region to strengthen partnership with littoral states.
The Indo-Pacific region is of great importance because of its impact on energy maritime and trade security. ASEAN and Asia Pacific Economic Cooperation are important politico-economic players in the region. The APEC members account for 40 per cent of world’s population, 54 per cent of the World’s Gross Domestic Product and 44 per cent of the World’s trade. The ASEAN accounts for about 8.8 per cent of World’s population and three per cent of the total and area of Earth.
To block China’s ascendancy, all littoral states including Japan, Australia, Taiwan, South Korea and other middle ranking regional powers are modernizing their navies. China wants to surpass the USA not only in terms of GDP but also in respect of naval power.
India: Emerging us proxy in Indian Ocean
Robert Kaplan, in his book, Monsoon: The Indian Ocean and Future of American Power, argues that the geopolitics of the twenty-first century will hinge on the Indian Ocean. USA’s new protégé is India. To woo India firmly into its fold, USA offered to sell India US$ 3 billion (per one unit) Terminal High Altitude Area Defense (THAAD) and Patriot Advance Capability (PAC-3) missile defence systems as an alternative to Russian S-400 system. India ditched Russia from whom it had decided to purchase five S-400s Russian S-400s air defence systems at cost of US$5.4 billion.
With US tacit support, India is getting tougher with China. There was a 73-day standoff on the Doklam (Donglang in Chinese) plateau near the Nathula Pass on Sikkim border last year. Being at a disadvantage vis-a-vis India, China was compelled to resolve the stand-off through negotiations. In later period, China developed high-altitude “electromagnetic catapult” rockets for its artillery units to liquidate Indian advantage there, as also in Tibet Autonomous Region. China intends to mount a magnetically-propelled high-velocity rail-gun on its 10,000-ton-class missile destroyer 055 being built.
China wants to bridge its aircraft-carrier deficiency through anti-ship ballistic missiles and Xian H-6K bomber armed with advanced air launched cruise missiles. Chinese defence systems include DF-, Dong-Feng 21 (DF-21; NATO reporting name CSS-5 – Dong-Feng (literally: ‘East Wind’). Dong-Feng 21 is a two-stage, solid-fuel rocket, single-warhead medium-range ballistic missile developed by China Changfeng Mechanics and Electronics Technology Academy. A variant is DF-26 with range increased to 3,000 km (1,900 mi) to 4,000 km (2,500 miles). China has two supersonic anti-ship cruise missiles, the YJ-12, with a range of 400 km, and the YJ-18, which can hit targets up to 540 km away. But they are no match for US subsonic
Harpoon anti-ship missile, which has been modified to give it a maximum range of about 240 km. An anti-ship variant of US Raytheon’s Tomahawk land attack cruise missile, with a range of over 1,600 km, has been delivered to the US navy.
At us prodding, India revised its maritime strategy “Freedom to Use the Seas’ in 2015 to “Ensuring Secure Seas”. India obtained access to the US naval base in Diego Garcia, and to the French naval bases in Mayotte and Reunion islands, besides Australian naval base in Cocos (Keeling). It signed an agreement with Seychelles to develop and manage facilities on its Assumption Island, another agreement with Mauritius to develop dual- use logistics facilities in the Agalega Island, obtained berthing rights in Duqm Port in Oman and Maputo in Mozambique. Besides, she took up development of the Sittwe Port in Myanmar as part of the Kaladan multi-modal transit transport project for building a multi-modal sea, river and road transport corridor for shipment of cargo from the eastern ports of India to Myanmar through Sittwe. It upgraded its existing listening post in northern Madagascar.
Chinese navy’s snooping in Indian Ocean is rising (Deccan Herald, March 3, 2019). Upon Indian navy’s protest, Chinese flotilla had to move away from Port Blair. Till 2025, China, currently in grip of corona virus, Bangkok unrest and Xinxiang Uighur, has to do a lot to end American one-upmanship.
China is suspicious of India’s role as a US proxy in the Indo-Pacific region. It regards the arc from The Bay of Bengal to East China Sea as a hot-spot of rivalry. China’s blue Book warns if India China itself and the USA failed to engage with each other more constructively in view of their overlapping interest, the Indian Ocean could end up `as an Ocean of conflict and trouble’. Chinese Battle Group and submarine often moved in Indian Ocean though after giving prior movement-notice to littoral states.
China has deployed `Xia’ class nuclear submarines with SLBMs in South China Sea. They can reach south-western quadrant of the Indian Ocean via Strait of Malacca or Sunda in a short time.
China is building energy relationship worldwide especially in Central Asia, Russia, Africa, Middle East and Gulf countries.
China gets about 70 per cent of its oil imports from West Asia and Africa through tankers. China is creating a strategic petroleum reserve and is building a fleet of super-tankers for transport of energy to China.
China’s ‘string of pearls’
The USA has over 800 naval bases while China has only two that is Mombasa and Djibouti, aside from controversial Hambantota (Sri Lanka). Yet, the US propaganda is that China is setting up bases along the sea lanes from Middle East to South China Sea. The bases have dual objectives to protect energy and strategic interests.
Doubtless the USA is the dominant super-power in the Indo-Pacific region. Majority of the littoral states including India. Australia, Taiwan, Vietnam, the Philippines, Spith Koprea are under American influence.
The USA has powerful naval bases at Diego Garcia, Busen, Guyan Island, Yongson base (South Korea) and Okinawa (Japan).The USA has stationed its littoral combat ships at Singapore besides accessing facilities of Vietnamese port Cam Rank Bay.
The revised Indian Maritime doctrine 2009 states that India wants to build a Blue Water Navy capable of defending not only its homeland d, but also wider security and economic interests in the Indo-Pacific region. In view of South East Asia and South China Sea region, India created regional Andaman and Nicobar Tri-Service Command in 2001 at Port Blair.
India’s Natural gas C Corporation Videsh Limited has oil fields in Russias Sakhalin region. Vietnam allotted two more gas exploration blocks to ONGC-VL during Indian president Pranab Mukherjee’s visit to Vietnam in September 2014.
Indian navy wants to attain underwater nuclear power projection capability by year 2025. By said year, Indian navy will have network-centric approach and land-attack assistance capability. The Indian Regional Navigation Satellite System has become operational since 2016. It will provide positional information of about 1500 kilometers around the Indian mainland.
India is already a partner in the US Security architecture of Indo-Pacific Region. Indian navy’s new acquisition project in the pipeline adds up to well over Rs. 300000 crore over the next 15 years.
Conclusion: Despite adverse advisory opinion on Chagos Island, including Diego Garcia atoll, by International Court of Justice, United States’ forces is still entrenched there. Besides, France maintains naval bases in the Indian Ocean and stations frigates off its Reunion islands. China has a string of naval assets in the region from Gwadar to Djibouti.
India’s ambition to dominate the Indian Ocean does not augur well for the region. It should let Indian Ocean remain the zone of peace.
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.
Green Finance for a Greener ASEAN: ASEAN’s way to Sustainable Development
Climate change is one of the most serious environmental risks to any living species on the planet. ASEAN countries are experiencing the effects of global climate change. Climate-related disasters within the regions include an increase in the frequency of drought, changes in rapid rainfall and record-breaking rainfall violations, an increase in strong wind speed and intensity, an increase in the frequency of floods and cyclones, extremely high temperature rise, and sea level rise. As a result, many countries, including ASEAN, are attempting to combat climate change by using just and sustainable policy tools such as green financing and issuing green bonds.
What exactly is Green Finance?
Green finance, according to the G20 green finance research group in 2016, is “the financing of investments that provide environmental benefits in the context of environmentally sustainable development.” Green finance comprises all activities undertaken by commercial and public entities in designing, marketing, implementing, and supporting projects with long-term consequences using financial instruments.
Pollution, prevention, recycling, wastewater treatment, and waste systems initiatives are mentioned under population, waste, and water. Green finance policy includes private equity funds, loan agreements, and environmental protection via financial services such as stocks and insurance.
Green finance policy also refers to policies and organizational strategies aimed at attracting private investment in environmentally friendly businesses such as energy conservation and sustainable energy. Financial markets are increasingly using sustainable development goals to evaluate green and sustainable finance.
ASEAN Green Bonds
ASEAN countries account for six of the world’s major green bond markets, with a combined value of $2.5 trillion in 2016 (ADBI). In 2018, ASEAN issued a record number of green bonds. It is also another contribution to market development aimed at making the economy greener and more resilient by lowering regional carbon emissions. It is also one of the best methods to mitigate the effects of climate change and create a long-term vision of sustainable development goals.
Governments, banks, and corporation issue Green Bonds to raise funds for climate change solutions. Bond issuers whose income are sourced from climate-aligned assets and green business, according to the assessment of the ASEAN green finance State of the Market report. This issuer is also known as a Fully aligned climate issuer. Bond issuers with a climate score of 75% to 95% are likewise deemed strongly aligned.
According to the diversification of the ASEAN green bond market, non-financial firms are the largest group of green bond issuers, accounting for 30% of total issuance in the area from the issued date. Nonetheless, the issuance of non-financial organizations ranged from four issuers of the six ASEAN countries with a green bond market: Singapore, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. Green loans are also the most robust financial market, accounting for US$1.1 billion, or 22.5% of ASEAN’s total.
Opportunities for Green Investment in ASEAN Countries
According to the report made by UN and DBS, the cost of implementing the Sustainable Development Goals for all middle-income countries from 2016 to 2020 is estimated at US$22 trillion. Using 2016 GDP to allocate to ASEAN nations in this area suggests more than $5 trillion in regional investment prospects. If investment expenditures are considered long-term, the costs of achieving SDGs might approach $5 trillion over the same time span.
The green investment prospects for ASEAN countries were analyzed in primary sectors such as renewable energy, energy efficiency, infrastructure, agriculture, and land use. The expected investment opportunity for developing solar, hydropower, and wind power projects based on renewable energy sectors is over US$ 400 billion. The expected investment prospects for developing ASEAN infrastructure projects linked to racial, telecommunication, climate mitigation, waste management, smart cities, and energy distribution are the biggest, with US$ 1,800 billion.
Using the expected assessment yields investment potential for ASEAN countries ranging from $2,650 billion to $3,000 billion between 2016 and 2030. There is empirical evidence that environmental and sustainable development policies are becoming increasingly rapid. On the other hand, technological prices are reducing quicker than expected.
The core framework for utilization of Green Finance
Although green finance resources are limited for optimal use in the construction of green infrastructure, the requirement for economic impact is to boost green finance investment. Furthermore, investment from both the public and commercial sectors will be required to close the green infrastructure deficit. Markets and public policy must generate opportunities for the government and private finance sectors.
The fundamental way to promote private sector participation in sustainable financing is to restructure investment tax credits and integrate both regulation and the private market into an efficient private-public partnership.
Because corporations worsen social exclusion and environmental degradation, green financial markets must be effectively controlled to support green projects. A stronger emphasis on developing environmentally and socially responsible productivity in resource-based businesses can contribute to higher living standards and a more robust economy in society.
These were large and complex questions facing ASEAN countries when implementing the green initiatives. At a minimum, they had to decide what, if any, fine-tuning adjustments needed to be made in their green finance strategies. The question is, where to next?
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