Asean

The ASEAN regional and global automotive competition

Automotive is a strategic sector for ASEAN economies, integrated through complex global value chains. The pandemic has transformed preferences of consumers and producers, opening the sector to new developments

The Covid-19 pandemic has forced people to rethink daily habits and priorities. In Southeast Asia, the cornerstone of global value chains, the automotive sector has proved particularly sensitive to these transformations. As reported by the consulting firm Deloitte, some significant trends emerge, on both the production and consumption side, which could strongly affect competition in the sector, with consequences at a global level.

For what concerns the demand, the preference for personal vehicle travel has increased since the pandemic. Before the health crisis, an average of 37% of consumers preferred to travel by their own means, but with the outbreak of the pandemic this percentage increased significantly, reaching 52%. Local consumers, according to Deloitte, are also rethinking the type of vehicle they would be willing to buy: fuel-efficient vehicles are gaining ground, but the lack of efficient infrastructure means that consumers continue to prefer hybrid electric vehicles (HEVs), compared to battery electric vehicles (BEVs). About 38% of respondents in the region prefer these fuel-efficient vehicles - particularly in Indonesia, the Philippines and Thailand, this preference was expressed by more than 40% of the sample analyzed. Furthermore, according to the report, since a large part of the population interviewed said they were unwilling to pay more for the purchase of electric vehicles, the government support for production and sales could be useful in encouraging their diffusion. 

As for the supply side, if ten years ago Thailand could claim the undisputed primacy in automotive production in Southeast Asia, things are bound to change. To fully grasp this transformation, it is good to observe the growth of local emerging markets from a genealogical point of view. The production of automobiles, assembly and the creation of intermediate parts has always been one of the favored sectors by regional economies. Southeast Asia represents, on a macroscopic level, one of the strategic hubs of global supply chains. Building a car involves a long and fragmented process, through integrated transnational networks that provide hundreds of thousands of jobs, attract billions of dollars in investment, and require skills and technologies that can foster long-term growth of economies. of the region. Countries such as South Korea and Japan have based their economic growth on a model that hinges on the production and export of automobiles, and this success has made them references to emulate in East Asia.

Thailand is an emblematic case. It is one of those emerging markets in Southeast Asia that has meticulously followed the instructions to the free market promoted by the International Monetary Fund and the World Trade Organization, opening the value chains to foreign investment and imports. For economies so dependent on interactions with foreign markets and investments, the health crisis represented a real shock, and Thailand's leadership in the automotive sector was challenged by the emergence of another challenger. Indonesia has taken a different path to launch its automotive sector and national economic growth. Exports to Jakarta took off thanks to strong domestic demand, which increased from 486,000 in 2009 to 1.2 million in 2014. The Indonesian experience, according to James Guild from The Diplomat, questions the development model prescribed by international institutions for the growth of emerging markets.

However, competition between car manufacturers is not just a local issue. Among the effects of globalization is the extreme mobility of investment flows, which also perform the strategic function of channeling geopolitical competitions. Southeast Asia has always been a particularly attractive destination for Japanese car manufacturers: around 90% of the vehicles produced and sold in Thailand come from Japanese manufacturers. However, Tokyo seems to want to stay in the footsteps of traditional gasoline fueling, while the preference of local fuel-efficient and hybrid consumers is growing, especially in Thailand. Chinese companies seem willing to seize this opportunity. Chinese company Great Wall fully entered the Thai market last year, acquiring a plant from General Motors in which it has invested over $ 700 million. The entire facility has been transformed into a state-of-the-art factory, with production lines powered by artificial intelligence, which began producing hybrids in June and plans to launch production of electric models by 2023. The Great Wall would take advantage of a Thai government program that offers concessions for the design of electric vehicles. Bangkok, in fact, aims to make 30% of locally produced vehicles electric by 2030, and the reluctance of Japanese manufacturers to resort to the electric breakthrough is diversifying competition.

Therefore, the Southeast Asian automotive sector is in transition. Consumption and production are slowly adapting to the new circumstances of the post-pandemic globalized economy, with different speeds depending on the emerging economies. It will be interesting to observe which directions the sector will take, which will tell something about the economic development of the entire region.  

The importance of connectivity between Europe and Asia

The European Union strategy to relaunch relations with the Asian continent

Asia has strategic importance for Europe. In recent years we have experienced that the economy and financial markets of Europe and Asia are increasingly interdependent and integrated. Changes in the economic performance of one region have a direct influence on the economic conditions of the other. With a population that far exceeds that of any other continent and its fast-growing economies, in 2019 alone, Asia was the recipient of 28% of EU exports and 40% of its imports. Not to mention that China is the only world power to close 2020 with economic growth, with a GDP increasing by 2.3%.

All facts that the EU could not ignore. Also for this reason, in 2018, European leaders adopted a joint communication, known as “Connecting Europe and Asia – Building Blocks for an EU Strategy”. The strategy proposed by the European Union focuses on building a deep interregional dialogue by creating sustainable connectivity systems and shared rules. This becomes possible, first of all, by restructuring the networks and connections system between the two regions, creating transport corridors, advanced digital connections and improving energy cooperation. Secondly, by setting up partnerships focused on connectivity, which hinge on common rules and standards, capable of enabling better management of the flow of goods, services, people and capital between Europe and the Asian continent. Finally, the European Union is committed to closing the gap in investments dedicated to connectivity with Asia, mobilizing resources and helping to strengthen cooperation with private investors and organizations of an international nature and multilateral development banks.

The strategy evolved with the promotion of an EU-Asia meeting (ASEAM) aimed at expanding connectivity between the two regions. It is an informal platform that also includes a parliamentary dimension (ASEP), which brings at the same table 53 countries from the two regions, about 60% of the global population and 65% of world GDP. Another permanent institution is the ASEF (Asia-Europe Foundation), which is responsible for encouraging intellectual, cultural and interpersonal exchanges between Asia and Europe. The relations between the two blocs were then strengthened with the conclusion of five strategic partnerships - including one with ASEAN - and free trade agreements with several Asian countries, of which the last, negotiated with the ASEAN, concerns the liberalization of interregional air traffic.

However, it is all too evident that improving connectivity costs money. The Asian Development Bank estimates that around 1.3 trillion euros per year are needed, to be used in infrastructure investments, economic growth and green policies. To this must be added investment of 1.5 trillion euros, in the period 2021-2030, to be addressed to the Trans-European Transport Network (TEN-T). The project will also be supported by the European Investment Bank (EIB), the European Fund for Sustainable Development (EFSD +), the European Bank for Reconstruction and Development (EBRD) and by private and international financial institutions.

In a moment of shuffling of the cards on the international scene, Brussels does not underestimate the advantages of connectivity with an emerging area of ​​the world: thinking about the future means relaunching relations with the Asian continent, promoting dialogue and strengthening ties between governments and institutions. financial and private sector actors. 

Rita Bonucchi: "ASEAN fosters innovation, it is impossible not to be there"

ITALY-ASEAN / We begin a cycle of interviews and insights on Italian companies and realities present in Southeast Asia. This interview puts the spotlight on the CEO of Bonucchi e Associati Srl, a consulting company based in Milan and Singapore.
Rita Bonucchi is CEO of Bonucchi e Associati Srl, a management consulting company based in Milan and Singapore (since 2011), which deals with international marketing, export and internationalization strategies, with a long and solid presence in Southeast Asia. She is an Export Strategist, experienced trainer, and Management Consultant. Since 2020 she has also founded BeaConsulting Pte Ltd in Singapore, focusing on local clients and projects.

How did your business in ASEAN start?

Nel 1993 ho avviato un’attività di consulenza per la pianificazione marketing. All’epoca, non essendo così sicura dei volumi di lavoro, ho accettato un progetto di supporto al procurement di guanti monouso. Questo settore era distante dal mio solito focus di lavoro.  Partendo da quella che fu una scelta casuale, ho iniziato a frequentare l’ASEAN dal 1993 e, in seguito a quell’incarico, avendo accumulato contatti e conoscenza di territorio, ho continuato a seguire altri progetti, che tuttavia restavano marginali rispetto alla mia attività principale.

In 2010 I supported the drawing up of a business plan for a consulting activity based in Malaysia. The following year my company, Bonucchi e Associati, came of age. From 1993 to 2010 we accompanied many companies in their internationalization strategies. So, I realized that the time to go abroad had come for us too. Internationalizing a service company is not easy, there are far fewer models. We decided to apply the same modus operandi that we use for our clients: checkup, selection of destinations, plan. The selection of destinations brought out ASEAN, also thanks to all that experience which began by chance. After an initial focus on Malaysia, it was clear that Singapore was the most suitable place for us. we have been investing in Singapore since 2011. Initially, we looked for partners and collaborators. Then we began to stabilize and set up a headquarters in Singapore, also investing in business trips. We went on more than four trips a year, with long stays, especially in summer.

In addition to this, a series of international projects for the European Commission took me to Indonesia, specifically to Bali. There I followed projects for SMEs and local artisans on empowerment for exports to the European Union. Following clients, missions, institutional projects, we reached another turning point in our history in ASEAN. In 2018 we became consultants for a government agency, Design Singapore, which deals with the promotion and development of Singapore design, locally and abroad. We are consultants for the internationalization in Europe of various Singaporean designers and architectural firms. Now we play a bigger role in this project, leading us to have even more specific needs. Until February 2020, I was flying to Singapore every month. A wide-ranging job with a very positive impact on our visibility in Italy, as part of this task, requires a matching between Singaporean designers and Italian producers.

What are the focal points of your work in Southeast Asia?

We do not have a closed sector specialization, but in the last ten years, we have focused our activity in ASEAN on a few sectors, including cosmetics and the whole beauty world. We handle the internationalization process in Southeast Asia of Cosmetica Italia, the association of cosmetics manufacturers within Confindustria. The other sector we focus on is Design: architects, engineers, manufacturers of systems, materials and products that have their destination within a building, up to furniture and furnishing textiles. We are now working a lot with the medical and agri-tech sectors. It is Singapore that guides us according to the new trends and fields it focuses on. We are equipped to follow the trends, also thanks to our local clients. Since 2020 we have found a 100% subsidiary company in Singapore, BeaConsulting pte ltd, focusing on local clients and projects. We operate both as an Italian company in Singapore and as a local company.

What are the reasons that led you to invest in Singapore?

ASEAN fosters innovation, that's where things happen. This is the strongest motivation. We can not be there. It is a conviction for us and our clients, not a simple geographical attraction. Not being present in ASEAN means losing not only a slice of the business but above all the main wave of innovation, in terms of quality. It is a privileged observation point, particularly in Singapore, where many currents meet, especially those relating to the digital world. All the typical tools of the Western world and China are present. There is an enormous local liveliness, very visible from the e-commerce sector. Not being there means missing a piece of opportunity.

Other reasons concern the lifestyle and the way of doing business. In Singapore I become more productive, I work on networks much more intensively. Times are compressed: from the beginning of a business proposal to its closure, it takes less time, compared to Italy. The environment is more international. Even if I work in Milan, I feel that Singapore's speed is higher. There is a more developed international community, a concentration of capital that is of particular interest to startups and which tends to increase along with the growth of venture capital. The speed in the establishment of companies is predominant. Over the past year, we have set up various companies for our clients and opened checking accounts without physically being in Singapore, with relatively simple processes.

We employ a model whereby SMEs land first in Singapore and then cover the rest of the ASEAN countries. A traditional model, which response to a single consideration: many of the SMEs we dialogue with are neither ready to choose a single country nor to bear the costs and commitment of a settlement in terms of industrial and intellectual property, legal certainty, starting a business. In our opinion, Singapore remains unbeatable. The time to open in Vietnam, Thailand, Indonesia, and Malaysia can always come. Often, we find partners in Singapore who help us cover the other markets in the region.

Today, how is the response from Italian clients?

Our ten years of experience in the field gives us the strength that clients need. We still cannot get to their settlement that quickly. In addition to finding a partner in Singapore, we encourage companies to set up there as soon as possible and take advantage of the regional advantages, not least the grants available for companies with foreign capital. However, this vision is not yet fully embraced by the companies with which we dialogue. It takes more effort to get them to decide on a direct settlement. The most frequent request remains the development of an export project and the search for distributors. For this kind of service, we are accredited with the main funding programs (Maeci/Invitalia, Simest and others). For some products, we also push for direct access to local e-commerce.

History of your entrepreneurial activity: present and future developments.

Our present leans on our collaborators in Singapore who have allowed us to move forward during this period. First of all, our Project Manager Marianna Fichera.

Bonucchi e Associati is both in Milan and Singapore. The method and the work team are the same, although we are based in two different locations. This is very unusual for companies of our size. We also have local partners who, from the very beginning, have helped us to take root. They are still our point of reference in both Singapore and Malaysia. We can work at different levels because we can count on different types of collaborators. Through our group of collaborators on-site we increase our focus on ASEAN.

Thanks to our role as the brand ambassador of MM Design in Singapore, an award-winning industrial design studio, and membership in various local associations, we have achieved important recognitions as consultants and experts. Local companies can obtain funding from various Singapore government agencies even when working with us. We are working to be equated with a local consulting company also for the benefits reserved for the clients themselves.

We recently changed our headquarters in Milan, replicating what we have in Singapore inside the National Design Center. Paperwork is the co-working space that houses our office for the local team in Singapore, allowing us to benefit from the innovative and vibrant reality of the hub for the Asian market. To reproduce the model already tested in Singapore, we moved our headquarters to YoRoom space, a community of companies, freelancers, and start-ups, where talents and ideas meet in the heart of the Isola/Garibaldi district in Milan.

For the future, we expect a balance of employees in Singapore and Milan, maintaining the concept of a single team, hoping to return to travel soon. Having also strengthened the network that allows us to work in other ASEAN countries, we will formalize and strengthen these relationships. Singapore, Indonesia, and Malaysia are very well manned, followed by Thailand and Vietnam.

Which impact did the Covid-19 pandemic have on business processes?

The pandemic came while we were on the launchpad for many projects. At first, it was complicated, especially for the event’s cancellation, but then we figured out how to adapt to the situation, changing the way we work. Now we have settled down again. 

The inability to travel from country to country is the biggest damage, so we are increasing the emphasis on Singapore. In all the projects, we initially focus on Singapore, expecting to be more incisive on the other countries as well. Before the pandemic, the work involved continuous movement. Now we have to wait and use our local references more. That very strong mobility is still unimaginable, which is one of the main characteristics of the ASEAN market. The lack of mobility was the most significant impact, which led us to concentrate on sectors that have their focus in Singapore: health-tech, agri-tech and food-tech, food security and supply chain, circular economy. 

Regarding the sector of sustainability, we are involved in Coffeefrom, a circular economy project that creates, for example, cups with coffee grounds. The pilot project is in Italy, and we have the task of replicating it starting from Singapore. With the Green Plan 2030, Singapore is certainly the most visionary country in this direction. In addition, agglomeration economies are created, there is a great opportunity both to meet companies in the sustainability sector and their stakeholders. There are venture capital funds exclusively dedicated to startups committed to sustainability, such as Pufferfish Partners. In the need to work remotely and not being able to physically participate in events, it has become more important to deepen and maintain the virtual network with these subjects.

The role of women in Singapore entrepreneurship.

In Milan, we are a group of women and in Singapore, we have maintained this prevalence. I am very dedicated to the enhancement of Italian female professionals present in Singapore. I am a member of the Italian Women’s Group Singapore (part of the Singapore Business and Professional Women’s Association), which unites more than 120 Italian women in Singapore: managers, entrepreneurs, and many women who have moved for family reasons. In the latter case, very often their professional skills are compressed. Many professions are not replicable in Singapore, for example, those related to the legal world. In other cases, the continued mobility of the spouse makes it impossible to replicate a certain type of activity. Some women who work or have worked with me come from this range. Until now it was possible to make them work with the letter of consent for a visa, which can no longer be requested from May of this year, making the situation even more critical.

In Singapore, there is a highly developed female entrepreneurship, where comes out the role of Christina Teo of she1K, a competition open to female startups. The initiatives financed by CRIB are also very interesting. Singapore is a multi-ethnic country, sensitive to equal opportunities. Unfortunately, many professionals exported from Italy suffer a compression. To the present day, it is a wasted asset. Some women move from Italy with a position of value and do not find the possibility of continuing to express it in this framework. Some women opt for creating their businesses. There are interesting activities related to jewellery production, such as Italian Hands by Ilenia Circolani, and psychomotor skills, such as Sparkd | The Brain & Fitness Hub, founded by Anna Milani. However, in other sectors, it is not possible to have the same opportunities as in Italy.

NFTs: a new normal for the ASEAN digital art market?

By Sabrina Moles

The decentralized and intermediary-free market based on blockchain is also gaining momentum in ASEAN. NFTs do not only protect copyrights in the digital world: for workers in emerging economies it is a real alternative to earning

The train of non-fungible tokens (better known as NFTs) has also arrived in Southeast Asia and it is already becoming the main tool for groped success in a new investment sector among art investors. First of all, let's clarify what NFTs are: as the name itself implies, these types of goods are not fungible, that is, interchangeable. This means that each NFT is not equal to the other, thus allowing investors to get hold of something unique and unrepeatable. Anything can be registered as an NFT in the blockchain, which more precisely is based on the system provided by Ethereum (the technology behind the second most widespread cryptocurrency after Bitcoin). The ecosystem created by Ethereum is defined by a blockchain without intermediaries where these ‘smart contracts’ circulate, are bought or sold.

It didn't take long for the NFT-effect to become the new trend around the world, becoming a topic of debate among cryptocurrency enthusiasts and investors as an exceptional tool in a scarce market. One of the biggest uses of NFTs today is in the digital art market. Thanks to this technology, files of any type are labelled, to which a certain value is attributed also by their being a unique, collectable piece. Works sold as NFTs, just like those existing on real economy markets, can be worth thousands, if not millions, of dollars. This is a revolution for the world of digital art, where it has always been easy to counterfeit and steal works. But that's not all: artists thus have more freedom to sell their works without having to go through the traditional channels of mediators and exhibitions. This creates a system that not only reduces operating costs but amplifies the opportunities to reach the ideal audience. As Singapore photographer Shavonne Wong told Art Sg: “NFTs have given me space where I can really do what I want, without outside direction. It's a very liberating experience. "Finally, NFTs are creating spaces to experience a new artistic experience that pushes the boundaries of the perception and conceptualization of physical works." With NFTs, there is a greater chance to explore the digital approach that I integrate into my artistic process and to show more works in motion graphics ", says Indonesian artist Radhinal Indra. For the most passionate about this new world of digital trading and investments, NFTs are a real revolution, which could soon land in the world of traditional finance. In this market, the opportunities for artists to earn money by selling works of art and unique pieces such as NFT are rapidly multiplying.

NFTs, as elements created and exchanged in the blockchain, can be produced through mining activities - a two-way process where those who offer hardware systems or help make part of the blockchain work obtain another cryptocurrency in exchange. The world of gaming is another function of NFT that is depopulating in ASEAN countries and in emerging economies in general, where 80% of the so-called "miners" come from. Even spending a certain amount of hours a day on a video game is equivalent, in fact, to a mining process. In Southeast Asia, for example, as Nikkei Asia recounts, the Axie Infinity game has become a stable income for many precarious workers in the world of work. As one of the interviewees, the Filipino Gilbert Jalovaal, tells us, at least two hours a day spent on the platform allow to extract enough NFTs that converted into local currency or Ethereum to reach figures far higher than his monthly salary.

Many different realities are jumping on the NFTs train, a free environment where - at least for now - the only limit seems to be the analytical tools to fully understand its potential. Decentralized finance, as the NFT-based system can be defined, is a process that is being enriched thanks to this heterogeneity of contributions. There are realities such as the Tropical Futures Institute, a multidisciplinary studio based in the Philippines, which have been researching and participating in the cryptocurrency ecosystem in the art world since 2015. Sometimes stories of great solidarity and collaboration emerge, such as the Filipina's project Narra Gallery has created a virtual fund dedicated to artists who wish to approach the NFT universe. Buyers can access the site and purchase the works through a cryptocurrency offer: a sort of virtual auction.

It is still too early to say whether the enthusiasm of the art world (and not) towards NFTs will have a future, just as it is premature to see them spread widely in Asia. For now, ASEAN countries offer some of the most creative spaces in this sense, and it will be interesting to observe how the NFT ecosystem will evolve in this part of the world. It is only the beginning of an experiment that is having great success but could explode like other "bubbles" of the past.

US and China to collide over digital trade in Southeast Asia

The US proposes a digital “Marshall Plan” in the Indo-Pacific. Biden wills to counterbalance the Chinese influence in the region, but Southeast Asia has very close relations with Chinese technology companies

The Biden administration is discussing a proposal for a digital trade deal in Asia-Pacific to revive the US role in the region. President Donald Trump had downsized Washington's international leadership with a series of unequivocal moves: among others, interventions against the institutions of the liberal international order and the abandonment of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in 2017. Joe Biden changes course, and after having spent the first months of his presidential mandate strengthening existing agreements and retracting the positions taken by his predecessor, he is considering launching what has been called a digital "Marshall Plan" for Asia and the Pacific. According to analysts, besides the economic interest of US brands and investors, strengthening Washington's presence in the region is also a way to counterbalance Chinese influence. Wendy Cutler, from the Asia Society Policy Institute in Washington, said the deal "would bring the United States back into the business game in Asia while considering the benefits of rejoining the Comprehensive Transpacific Partnership Agreement (CPTPP)."

Apparently, the goal is to create a paradigm of shared standards for the digital economy, which includes rules on the use of data, electronic customs agreements and trade facilitation. Countries such as Japan, Malaysia, Singapore, Australia and New Zealand would be included in the project. As the associate director at the Information Technology & Innovation Foundation Nigel Cory contends, when negotiating commercial treaties, the difficulty lies in having to reconcile different and sometimes divergent demands, such as those on work, services and environmental regulations. "It is a very challenging and complicated task" he noted, "while with specific agreements for digital commerce it is a little easier."

Moreover, Southeast Asia has already embarked on the path towards greater digital integration. The region is currently home to around 400 million internet users, 10% of whom landed online for the first time in 2020. ASEAN's efforts are moving towards greater international cooperation on the issue, both between member countries and between the 'Association and its dialogue partners. As the Singapore Minister of Communication and Information Josephine Teo pointed out, the fragmentation of the technological and digital space should be prevented by stepping up efforts towards partnerships that foster digital commerce in the area. “We should look for more partnerships, not fewer” he suggested, “instead of technological bifurcation, we are actually trying to have more interoperable systems and standards (...) [to] promote cross-border data flows and grow digital commerce that will help our businesses, both large and small ".

However, the anti-Chinese strategic interests of the United States are a controversial issue for Southeast Asia. Although the relationship between the ASEAN countries and China may be ambivalent, the possibility of being co-opted into the Atlanticist countries is not a trivial matter. The Chinese technology giants invest heavily in the region: between infrastructure, trade and financing they represent a real resource for local economies. Large Chinese companies such as Alibaba Group Holding Ltd. and Tencent Holdings Ltd. have spearheaded a wave of investment among ASEAN countries in recent years. This week, national representatives from some Asian countries expressed support for Biden's proposal, taking care to avoid any mention of Beijing's potential exclusion. Malaysian Commerce Minister Azmin Ali welcomed the idea and called on American companies to use his country as a "gateway" to Southeast Asia. All this just a few days after Kuala Lumpur's decision to choose Ericsson and not Huawei for the development of the 5G network infrastructure. Move that was noted in Washington. while Singapore has suggested that the deal has the potential to create "open and trusted global digital commons". In any case, as analysts have observed, greater exposure of Southeast Asia to Western rules can undermine the relationship with Chinese technology companies, advocates of a totally different approach to privacy, transparency and surveillance.

Some Chinese state media have negatively welcomed the White House proposal. They have accused the US administration of hypocrisy, accusing it of promoting a treatment that is only apparently on par with Southeast Asia, which lacks the adequate economic stability to enjoy fair trade with the US. According to the Global Times, the United States has adopted a zero-sum mentality to promote discord and instability in the region. One of the sectors in which ASEAN and China cooperate most profitably are digital infrastructures, which would create the preconditions for developing the virtual commerce sector. The economies of the Indo-Pacific seem willing to take advantage of cooperation with Washington, without giving up the intense relationship with Beijing. Regional stability remains the top priority of all the actors involved, which is why the most disruptive geopolitical consequences of a digital trade agreement with the United States will have to be mitigated.

Italy-ASEAN cooperation for a shared future

In September 2020, Italy became an ASEAN development partner. Bilateral relations will intensify in various areas: political, security, economic. Bilateral cooperation has all the potential to create opportunities for a shared future

Italy has excellent political and economic relations with ASEAN. On Wednesday 7th July, during a CeSI webinar, guests praised the intensification of bilateral cooperation, in view of the development partnership launched last year. In September 2020, Italy obtained the title of "ASEAN Development Partner", which implies greater proximity between the parties on various areas: connectivity, fight against climate change and sustainable development, management of natural disasters, protection of cultural heritage, strengthening the role of women, peacekeeping and limiting the spread of Covid-19. Italy has decided, with foresight, to enhance relations with the countries of Southeast Asia by focusing on multilevel cooperation.

During the webinar, the Ambassador of the Republic of Indonesia to Italy, Esti Andayani, noted that this is a golden period for Italy-ASEAN relations. Despite the outbreak of the health crisis, development cooperation has not waned. “No one is safe until everyone is safe. One of the lessons to be learned is that we should cooperate more in achieving sustainable development”, the Ambassador stressed. Although the pandemic has taken its toll, causing a sudden contraction in international trade, Andayani is optimistic about the future. The Director-General of the Foreign Ministry Luca Sabbatucci described Italy's approach to cooperation with the region. The Italian paradigm consists of the strengthening of plans for sustainable development, the green and digital economy and green energy. The bilateral efforts are based on the awareness that the two economies can support each other politically, diplomatically, culturally and commercially.

Italy has excellent relations with the 10 countries of the bloc and enjoys a very positive image among the locals. As Romeo Orlandi, the Vice-President of the Italy-ASEAN Association, points out "Italy has excellent bilateral relations, unpolluted by post-colonial grudges. There are no political tensions, much less military or security-related ones. The image of Italy as a country that expresses art and culture, where the quality of life is high and prestigious consumer goods are produced, is also strong among consumers. The lifestyle, cuisine and sporting events are appreciated”.

This attraction is mutual. Southeast Asia is appreciated by the Italian population for its culture, cuisine and traditions, but businesses recognise the value of relations with ASEAN too. However, stereotyped perception of the region still prevails, due to sometimes inaccurate media narratives and a fascination with the exotic that derives from the experience of European colonialism. As Giuseppe Gabusi of the Turin World Affairs Institute (TWAI) observes, "between the beaches of Thailand and Bali, the Buddhist temples of Myanmar and the shopping malls of Singapore, it is difficult to convey the real image of these countries". The approach needs to be transformed, to look at the partnership with ASEAN as a mutually fruitful interchange. As the EU Ambassador to India Ugo Astuto pointed out, the proliferation of think tanks and research institutes is recently contributing to a deeper understanding of Southeast Asia.

Italy also acknowledges ASEAN as a "positive example of multilateralism based on respect for international law", and aims to deepen relations with the region also in the security field. Shortly after accepting his candidacy as a Development Partner, a meeting was held between the representatives of the parties to discuss issues related to transnational security. On this occasion, Italy committed to working with ASEAN countries on capacity-building operations against terrorism, organized crime, drug trafficking and cybercrime.

Regional emerging markets have shown great dynamism, especially in tackling the difficulties caused by the Covid-19 pandemic. In this period, bilateral trade between Italy and the Asian bloc has continued, although it has undergone a negative downturn. According to data from the International Trade Center, the volume of trade in 2020 amounted to about 18.7 billion euros, with Italy in slight trade surplus (10.3 billion in exports in 2020). Italy is the fifth-largest European economy in terms of exports to Southeast Asia, after Germany, France, the United Kingdom and Switzerland, while Singapore, Thailand and Malaysia are the main trading partners, especially for machinery and electronic equipment. About 1.8 billion euros of products exported from Italy arrive in Singapore and are then sorted in other East Asian countries. ASEAN is the source of about 2.3% of Italian imports (8.4 billion out of a total of 370 billion in 2020), and destination of about 1.7% of exports (7.3 billion out of a total of 434 billion in 2020).

Multilevel cooperation will have to develop simultaneously in these areas: political, security and socio-economic. The proliferation of exchange opportunities can contribute to greater mutual understanding and create the right coordinates for a shared future.

Japan and the energy transition in ASEAN

Tokyo wants to play a leading role in the economic dynamics of post-Covid ASEAN and, thanks to the energy transition, aims to limit Chinese expansion in the area.

At the recent meeting of G-7 leaders, the complicated issue of climate change and the energy transition was also discussed. Political leaders have now realised that the issue needs to be tackled head-on to arrive at a solution that limits the negative effects of climate change as much as possible. If industrialised countries can deploy significant economic resources and know-how to ensure energy transition and achieve decarbonisation of their economies, the same cannot be said of middle-income countries that are going through a process of economic development, largely based on fossil energy resources, but lack both the economic resources and technological knowledge to deploy projects for the ecological conversion of their societies. Southeast Asia is in this condition and needs the support of developed countries to be able to implement the l’ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-2025 to reduce dependence on fossil fuels.

Therefore, Japan is preparing to invest in the ASEAN’s energy transition. In a recent meeting between ASEAN Ministers on Energy and the Minister of Economy, Trade and Industry of Japan, a joint declaration was issued that commits the parties to strengthen cooperation. Moreover, the Land of the Rising Sun will invest 10 billion dollars in transition support through the Japan Bank for International Cooperation (JBIC) and other financial institutions. This money will be aimed at increasing renewables, energy efficiency, the transition from coal to gas, the use of CO2 capture and storage technologies and finally the transfer of know-how. Tokyo would like to help each of the 10 ASEAN countries to draw up a road map to achieve zero emissions but does not specify a deadline for achieving the goal. However, only three ASEAN countries, Cambodia, Myanmar and Laos, have so far issued official statements on achieving carbon neutrality by 2050, and Japan is pressing all other members to draw up plans and timelines.

The investments in environmental sustainability promoted by Japan should not be seen as a stand-alone move, but are part of a larger logic system that the Asian country has long implemented. Indeed, in recent years, Tokyo has returned interested in Southeast Asia and has strengthened diplomatic and economic relations with the ASEAN countries. Specifically, Japan is very active in investments in the defence, infrastructure, resources and automotive sectors and has recently launched a tax subsidy plan to encourage the relocation of Japanese companies based in China to Southeast Asia. Tokyo believes that investing in ASEAN, relocating businesses and helping the region in the ecological transition, can be beneficial both for itself in terms of economic growth and to offset Chinese influence in the area. For example, decreasing the dependence of ASEAN countries on coal indirectly would mean limiting Chinese influence towards them as Beijing is a major investor and builder of coal-fired power plants.

It is clear that all these actions, in addition to having an economic implication, have a geopolitical value too. Tokyo looks with alarm at the Belt and Road Initiative of Beijing and, as a result, it was the only Asian country not to have joined the Asian Infrastructure Investment Bank created precisely to finance the new Chinese Silk Road. On the other hand, Japan can count on the Asian Development Bank based in Manila. The institute - which was founded in the 1960s and of which Tokyo has the largest shareholding and is therefore always the chairman - has helped to invest heavily in Southeast Asia and is now directing financial flows to support the energy transition in ASEAN.

Russian arms drive Mosca’s influence in Southeast Asia

Russia focuses on military cooperation in Southeast Asia. It holds the record in arms exports, and continues to deepen relations with some regional players through the so-called "defence diplomacy"

Over the past few days, Russian Foreign Minister Sergey Lavrov met with his Laotian counterpart Saleumxay Kommasith in Vientiane, the capital of Laos. Minister Kommasith thanked Russia for its help during the Covid-19 pandemic. The meeting was part of Moscow's broader "turn to the East" policy as a strategy for strengthening relations with the Asia-Pacific region, which hinges on Russia's leadership in arms sales and defence investments. This strategy has recently seen developments in Laos, with the start of the joint construction of an airport and defensive infrastructure.

Vladimir Putin recognises great potential in Southeast Asian countries and advances his strategic objectives by focusing on defense diplomacy. This emphasis on hard power is a peculiarity of the Kremlin's foreign policy, whose political culture values less the pervasiveness of soft power. According to several analysts, it is precisely Moscow's geostrategic ambitions and security imperatives that have allowed for a strengthening of cooperation with the Asia-Pacific region.

In recent years, Moscow intensified its efforts to sell arms to East Asia. However, the uncontested primacy in the sale of military supplies in the region seems to be showing signs of waning. Exports are in decline, mostly due to the Countering America's Adversaries Through Sanctions Act (CAATSA), passed in 2017 by the Trump administration. Faced with Russia's continued involvement in the wars in Ukraine and Syria and its interference in the 2016 US elections, Washington's reaction was not long in coming: the law imposes sanctions on anyone who has commercial relations with the Russian military-industrial complex. During 2015-19, Russia's arms exports to the Southeast Asian region amounted to $ 2.7 billion, down from $ 4.7 billion in 2010-14, according to Ian Storey of the Institute for Southeast Asian Studies (ISEAS). Between 2010 and 2019, Russia's global exports also declined, falling from $ 36.8 billion in 2010 to $ 30.1 billion in 2019, a drop of 18%.

The countries of Southeast Asia play a strategic role. The growth of national defence spending goes hand in hand with economic development. "Weapons have flowed into Southeast Asia in recent years in part because ASEAN nations can now afford to buy them," said Siemon Wezeman, a researcher at the Stockholm International Peace Research Institute (SIPRI). Trade with Russia has several advantages: arms prices are much more competitive than those of competitors such as the US, China and the European Union. In addition, "Russia is flexible on non-cash payment methods, which gives it an edge in developing economies," said Shinji Hyodo, director of policy studies at Japan's National Institute for Defense Studies. For instance, Indonesia is expected to pay half of its payment for Su-35 jets with exports of palm oil, rubber and other products. But the real strategic advantage is that Moscow does not require any ideological counterpart, contrary to what happens with the United States and the EU, which asks for political performances on human rights and democracy. This is why Myanmar cannot import weapons from the EU due to an embargo that has been in place since 1990. Similarly, the 2014 military coup in Thailand also led to restrictions on the part of European suppliers.

Vietnam and Myanmar are the main Russian arms destinations, followed by Malaysia, Indonesia and Laos. In Vietnam, Russia dominates 60% of defence imports. In Myanmar, the role of arms supplier is particularly controversial, due to the recent military coup. Last month, a Russian delegation secretly visited the coup military junta amid protests from human rights activists. Among the other members of the delegation, there was a representative of Rosoboronexport - a state agency that deals with exports of defence-related goods and services. The Burmese coup leader Min Aung Hlaing returned the visit on 22nd June, proving that the military cooperation between the two countries does not seem to show signs of abating. Indeed: Russia was among the countries that at the United Nations abstained from the assembly resolution calling for an arms embargo in Myanmar: Russia and China are in fact the country's two largest arms suppliers.

The countries of the region are working on an autonomous role in international relations, and the competitive advantages represented by Russia could be outclassed by different calculations. The urgency of dealing with security issues such as Myanmar and the South China Sea is combined with the desire to protect regional stability and the quiet life of its inhabitants. The Kremlin's defence diplomacy will have to diversify its offer of defence-related goods and services to compete with increased international competition.

Overview of labour market in ASEAN member States

By Carola Frattini

Work is the fuel of an economy and therefore it is important to have a picture of the labour market in ASEAN countries to understand its development and possible future scenarios.

Work is of vital importance in a state, and therefore it is at the heart of the Italian constitution. In particular, the labour market affects the economy of a country since it is the place where workers and employees interact with each other. A faster and stronger economic growth is fostered by a healthy labour market. A strong labour market also involves higher employment rates, higher wages and lower social inequalities between individuals. In addition, data on the labour market are also important for entrepreneurs who want to open a business in the country of interest and for investors who want to invest in local companies.

More than half of the world’s workforce is located in Asian countries and, in particular, 10% in Southeast Asia. Employment rate, unemployment rate and the labour force participation rate are fundamental statistics to understand the labour market of a country. Looking at the unemployment rate of the ASEAN countries over the last decade, it is possible to see that some of them experienced the lowest rates in the world. In general, in the period from 2006 to 2020 the unemployment rate has remained higher in Europe than in the ASEAN countries. This trend seems to continue since, according to data collected from the Italian Ministry of Foreign Affairs, the unemployment rate of ASEAN 2021 is 3.2% while the European rate is 7.3%. In addition, with a range between 67.5% and 84.4% Cambodia, Thailand and Vietnam have the highest participation rate in the workforce among ASEAN countries.

Many ASEAN countries, before Covid-19, showed promising signs of labour market development. For example, the Philippines, one of the three largest economies of Southeast Asia, was experiencing a period of expansion, accompanied by an increase in wages and a decrease in people engaged in "informal work". As a matter of fact, one of the problems of the Philippines' labour market has always been informal work, an employment relationship in which workers' rights are not respected. Unfortunately, Covid-19 has stopped and perhaps reversed these encouraging trends leading to a rise in the number of people involved in informal work but above all to an increase in the unemployment rate.

Although not all ASEAN member countries have yet published official and complete data on unemployment in 2020, it is irrefutable that some Southeast Asian countries experienced a strong increase in the unemployment rate according to a study by the "Asia-Europe Institute". However, an increase in the unemployment rate may have long-term effects. When an economy is hit by such a negative shock (one example can indeed be Covid-19 and its consequences) hysteresis of unemployment can result. Hysteresis of unemployment consists of a prolonged period of high unemployment due to an increase in the number of people in long term unemployment. This is a serious problem because people in long-term unemployed lose basic skills over the years and therefore it will be more difficult for them to be recruited and return to work. AS a consequence, reducing the unemployment rate will be a much more difficult task.

The labour market of ASEAN countries is also experiencing a relocation of jobs in different sectors due to Covid-19. During the pandemic, the tourism sector and all those sectors relying on interpersonal contact were the most affected and are also the ones that are now struggling to recover. The sectors which are catching up faster are those which require workers to have specific skills. This can become a problem for the matching efficiency of supply and demand in the labour market. Since the unemployment rate has risen, more workers are looking for a job, but they do not always have the required skills. This may lead to the persistence of long-term unemployment since workers are not qualified for the available positions.

Despite these potential problems, the International Labour Organisation seems to believe that the labour market of ASEAN’s member countries is already recovering, showing that Covid-19 has only slowed down and has not stopped its development.  

Per ulteriori informazioni sul mondo del lavoro nei paesi ASEAN

A new wave of Covid threatens the recovery in Asia

Several Asian countries coped efficiently with the outbreak of the health crisis, containing and preventing infections. The timeliness of the measures adopted is now threatened by the shortage of vaccines

A new wave of infections from COVID-19 has swept through the Indo-Pacific region in recent weeks. On the other side of the hemisphere, vaccines are being used, but the virus is spreading to several Asian countries. These include various ASEAN states such as Singapore, Vietnam and Malaysia. The first two were considered to be among the world's strongholds in the fight against COVID-19 in 2020. Their national authorities had been so virtuous in containing the epidemic that international media referred to a real "Asian model" of health crisis prevention. In addition to the well-known cases in China, South Korea and Taiwan, this model also included several ASEAN countries. At that time, international observers had long wondered about the political and cultural reasons for this success. However, this time, the main cause of the new emergency is clear: the shortage of vaccines.

According to the research institute Our World Data,, less than 20% of the population has been vaccinated in eight of the ASEAN countries - except Singapore, which vaccinated half of its citizens, and Myanmar, whose data are partial and only up to 15th May. Compared to estimates of more advanced countries, the disadvantage is clear: 52.71% of the US population is vaccinated, 46.6% of that of the European Union and 43.21% of the Chinese population. Initial supplying of vaccines has been a challenge worldwide, but it was the wealthiest and most affected countries that were quickest to acquire vaccine patents. Those in Southeast Asia, with lower infection rates, did not take advantage of this comparative advantage or hesitated in the face of the Sino-US competition shifting from trade to vaccine diplomacy.

"To end the pandemic, both defensive and offensive strategies are needed. The offensive strategy is vaccines," suggested Jason Wang, a professor at Stanford University School of Medicine. According to Prof. Wang, when the threat perceived by the population decreased, governments only responded to that threat in a reactive way. Therefore, the most common strategy in the ASEAN area was to close national borders, a functional defensive measure also aimed at appeasing some xenophobic drifts that were gaining space in the public discourse on the health crisis. Furthermore, as Peter Collignon, physician and professor of microbiology at the Australian National University said, "the reality is that those who produce the vaccines keep them to themselves". In seeking politically acceptable answers to this reality, representatives of national governments in East Asia thought that there was basically no reason to hurry. While in Europe and the United States the vaccine rush was also a source of national pride, the South Korean Minister of Health, as an instance, declared at the end of 2020: "We are coping with Covid-19 relatively well so we don’t have to begin vaccination in a hurry when the risks have not been verified yet”.

Currently, Vietnam, which received praise from the international community for the efficiency of its prevention, is experiencing the worst wave since the pandemic began. Since the new wave started at the end of April, it has risen from very few daily cases to having almost 500 every 24 hours, with an exponential increase in total infections in just two months (from 3,000 to 13,000 cases approximately). Thailand, Cambodia and Malaysia are also grappling with new restrictions, especially Kuala Lumpur, which has planned an extension of the national lockdown until at least 28th June.

Some countries in the area hoped to boost tourism by gradually reopening their borders. In Cambodia, the Philippines and Thailand, the sector’s contribution to the national economy is close to 20-30%, so a rapid recovery in international travel could have made a major contribution to the region's economic recovery. In contrast, international passenger traffic in Southeast Asia has been stuck at around 3% of pre-pandemic levels for several months, according to Channel News Asia. The situation can only worsen, as successful vaccination campaigns in other parts of the world will allow the tourism sector to recover, leaving several Asian countries behind.

Thailand is determined to implement the measures necessary for the economy to recover. On Wednesday 16th June, government representatives said they were ready to reopen the borders within 120 days for travellers showing a valid vaccination certificate. Phuket is the destination chosen for the pilot programme to welcome tourists from low- and medium-risk countries, provided they do not leave the island for at least 14 days. This is the “Phuket Sandbox plan”, which was approved in late May by the Thai government's economic task force, and comes just days before the start of a mass vaccination campaign. The hope is that this will help those who live off tourism-related activities and have suffered severely from the absence of the 40 million tourists a year who visited the country before the pandemic.

Bangkok's efforts may prove insufficient if countries continue to react unevenly to the new wave of COVID-19. A coordinated economic recovery cannot do without vaccine-related health security. The backlash suffered by ASEAN countries, and more generally by a large part of East and South Asia, risks slowing down the region's post-Covid economic recovery and making in vain the extraordinary timeliness with which several Asian governments stemmed the contagions in 2020.

Energy, ASEAN's countries bet on nuclear power

By Sabrina Moles

Five ASEAN countries (Indonesia, Malaysia, Vietnam, Thailand and the Philippines) have included the development of civil nuclear energy in their development strategies for the coming years

Energy security in ASEAN countries is an urgent problem for their development strategy. The need to respond to the energy challenges of the future is also increasingly linked to the climate issue and the zero-emissions target. In this complex political, economic and social framework, an option that has never been considered by the group until recent years is coming forward: nuclear energy.

ASEAN countries are catching up with high-income countries in the race for next-generation energy, financing ambitious projects for renewable energy. In this way, ASEAN aims to create an ecosystem of collaboration, exchange and growth in the energy sector, a strategy that it is now also trying to transfer to the nuclear sector. Among the determining factors emerges the energy demand of the countries of the region, which has increased by 80% since 2000. This is combined with the need for alternative and less-polluting energy sources, precisely because the rapid consumption growth has also given the boost to emissions with direct consequences also on public health. It is estimated that more than 650,000 people per year will die from harmful emissions in the ASEAN states by 2040, compared to about 450,000 in 2018. Driven by environmental, economic, and social needs, the region has recorded one of the most promising rates of growth in the renewable sector. The plans of the ASEAN countries are ambitious and aim to raise the share of renewable energies to 70% of the total energy mix. However, achieving zero emissions will require a major effort, which is why nuclear power seems to be a solution consistent with ASEAN's goals.

The post-Covid crisis has led governments to rethink their energy development strategy more pragmatically, including the nuclear option. Plants are becoming increasingly durable: in a few years, we have gone from around 40 years of plant life to more optimistic estimates of 90-100 years. The environmental impact of nuclear energy compared to its efficiency would further justify investments in this sector. According to the ASEAN Centre for Energy (ACE), nuclear power has the same climate footprint as wind power, when emissions from the raw material extraction process, maintenance and decommissioning of infrastructure are also calculated. Another element is the so-called CF factor (capacity factor). This measures the ratio between energy generated and energy that can be generated, giving a picture of the reliability of an energy source, how much output it produces based on its potential. . According to the calculations by the US Energy Information Administration (EIA), the CF of nuclear energy reached 93.5% in 2019, a level much higher than all other energy sources.  These figures reach a maximum of 52% for wind power, while they drop to 21% for solar power.

ASEAN countries are strongly interested in promoting nuclear energy, which they said was always - even before the pandemic - ‘underestimated’. For this reason, the plans promoted by the group of Southeast Asian countries include a clear roadmap for implementing nuclear energy projects in the region. An interesting element, mentioned many times in the Memorandum of Understanding signed in March 2021 with the World Nuclear Association (WNA), is the issue of public acceptance. A few paragraphs of the chapter on civil nuclear power in the document for phase II of the APAEC (ASEAN Action Plan and Energy Cooperation) for 2021-2025 are dedicated to the so-called ‘literacy’ of citizens on nuclear power. In Asia, nuclear concerns came after the Fukushima-Daiichi plant accident, followed by a wave of statements from the West about the recession from nuclear power. States such as Germany, Belgium, Spain, and the United Kingdom have already declared that they will shut down their reactors by 2030. However, the trend is not global, quite the contrary. There are just as many countries that are undertaking new projects, from the Middle East (United Arab Emirates, Egypt, Iran) to Asia, passing through Russia.

The new strategy will require not only communication, according to the Phase II document, but also other forms of preparation before construction begins. These include the creation of a solid knowledge base on the world of nuclear energy and international safety standards. Here the most important players on the scene can play a significant role: ASEAN already started relying on international cooperation to plan its nuclear future. Since 2016, a collaboration with the Government of Canada has begun under the "ACE-Canada" project. The joint work has resulted in the first real feasibility study for nuclear energy in ASEAN countries. Released in April 2018, the report gives an overview of the state of human and economic capital available to ASEAN to launch an energy development program. Collaboration with foreign countries allows the group's objectives to be framed in terms of sharing expertise not only from a technical point of view but also as capacity in legislation, the adaptation of local policies and communication of risks and benefits.

Half of the ASEAN countries have sufficient knowledge and resources to implement civil nuclear plans. Indonesia, Malaysia, Vietnam, Thailand and the Philippines are identified as leading the way in terms of advanced regulatory frameworks, capacity to build nuclear infrastructure and training of competent human resources on various project aspects (but not only). The plans of these five countries have already included the nuclear element in the development strategies for the coming years. The Philippines aims to activate the nuclear power plant of Bataan, in the north of the country, and never operational since its construction was completed in 1984. The choice to build nuclear power began during the 1973 oil shock as an energy security strategy and now returns to respond both to systemic risks in the energy market and to align with global climate targets. Indonesia's first power plant is scheduled to be operational in 2030, with two more due to arrive in 2035. Malaysia and Thailand are also looking to the same deadline: Malaysia is the most prepared for the leap to nuclear power, thanks to effective collaboration between the government and the body responsible for the nuclear power programme, the Malaysian Nuclear Power Corporation.

The nuclear option is also not excluded for Laos, Cambodia, and Myanmar. These countries have entered into nuclear agreements with Russia, although hydroelectric and solar projects with China prevail. This choice is also made given the availability of Chinese capital for these projects, while nuclear power plants have significant upfront costs for their construction that curb the ambitions of governments. This does not rule out the possibility that soon the commercialisation of Chinese reactors will also reach the southern neighbours, especially due to the potential of the so-called small modular reactor on which China is focusing as part of its strategy to open up global energy markets. Brunei and Singapore are the two great unknowns of ASEAN nuclear power. However, the Asian metropolis-state is working to develop significant know-how in the field of nuclear safety, and sustainable self-sufficiency seems to have become the new post-pandemic imperative.

East Timor 11th ASEAN’s member: is 2022 the right year?

After a long expectation, finally, East Timor could join ASEAN next year

An 11th Southeast Asian country is ready to sit at the ASEAN table next year: East Timor could become part of the most important political, economic and cultural organization in the Pacific region. East Timor has been officially recognised as an independent state less than 20 years ago, but its recent history is full of episodes of violence and conflicts, which developed in the last 30 years of the 20th century during the struggle for independence from Indonesia.

In 1975 the island of Timor was abandoned by the Portuguese, marking the beginning of the country’s decolonization process. However, the situation on the island was unstable due to the disputes between the country's three main parties, and Indonesia took advantage of this by occupying East Timor with its military troops. The following year, Indonesian dictator Suharto proclaimed Timor Timur a new province of Indonesia.

For about 24 years, there have been violent clashes in the area between Indonesian military forces and the socialist-revolutionary forces of the Revolutionary Front of Independent East Timor (FRETILIN), the movement formed by rebels demanding independence for Timor. Indonesia's control of the territory was repeatedly challenged by the United Nations, which, however, only intervened to resolve the conflict in 1999. In the preceding years, in fact, Indonesia received the support of numerous western states that were interested in maintaining good relations with Suharto's authoritarian government (only Australia, now one of East Timor's main trading partners, supports its independence).

However, it was in the 1990s that the atrocities committed by the Indonesian military came to light: thanks to a television report by Australian journalists, the images of the Santa Cruz massacre of 12 November 1991 in the capital Dili, in which the Indonesian military fired on the Timorese crowd causing the death of about 400 civilians, were broadcast all over the world.

Indonesia lost international credibility and the situation favoured FRETILIN, which in the following years found the support of the United Nations thanks to the International Force for East Timor (INTERFET), a military contingent composed of soldiers from 17 countries who in 1999 intervened to put an end to the conflicts.  

With the fall of Suharto's government, who resigned as President of Indonesia in 1998 following several scandals, his successor Jusuf Habibie held a referendum for independence approved with 79% of the votes of the inhabitants: East Timor is no longer under the control of Indonesia.

From 1999 to 2002 the United Nations Transitional Administration (UNTAET), the special United Nations mission was tasked with establishing peace dialogues between the ethnic groups present in East Timor to create an autonomous local government and lay a solid foundation for the development of the country, which at the time was one of the poorest in the world with a per capita income of around $350. Thanks to UNTAET, the economy grew by 18% in 2000 and public facilities such as schools and hospitals were built in the country.

Finally, 20 May 2002 marked the birth of the State of East Timor with the inauguration of the country's first government led by Xanana Gusmao, leader of FRETILIN.

The process of joining ASEAN began as early as 2000 when President Ramos Horta, during his speech accepting the Nobel Peace Prize, said that East Timor would soon seek to join the most important association in Southeast Asia.

With the political stability achieved during the Gusmao government and a stronger and growing economy, thanks to the revenues derived from oil and natural gas deposits in East Timor's territorial waters, the country believes it is ready to sit at the table with the ASEAN countries. East Timor was invited to participate in the organisation's summits and obtained observer status. In 2007, it signed the Treaty of Amity and Cooperation (TAC), which had hinted at its imminent entry into the association.

However, this did not happen.

East Timor's integration process has been stalled for more than a decade due to the misgivings of some member countries such as Laos and Singapore, which hindered its entry into ASEAN.

In November 2007, the member countries signed the ASEAN Treaty to bring the organisation closer to the European model, but for East Timor, there were additional points that had to be met to join the organisation.

Previously, in order to become an official ASEAN member, certain parameters had to be met, such as being a state present in the Southeast Asian region and participation in the organisation's fundamental principles (respect for sovereignty, independence, territorial integrity and non-interference in the internal affairs of a member state). Instead, the 2007 treaty introduced the requirement of a unanimous vote by all ASEAN members, a change that effectively interrupted East Timor's hopes of joining the organisation for many years. In 2011, the country submitted its official application to join ASEAN and only in the last two years have we only in the last two years has there been any sign of East Timor being accepted as an 11th member.

Despite the economic prospects for future foreign investments and the good commercial relations with Thailand, Indonesia and Singapore (as well as the flourishing relations with Australia), the latter has for many years been against the entry of East Timor into ASEAN, presenting among the reasons the weak political stability of the country and an economy still too dependent on international aid.

East Timor has improved its economic stability over the years not just relying on gas and oil reserves, but with investments in the international market and with the increase of its private and agricultural sector, with exports of products such as coffee and rice.

The good economic results led in 2014 East Timor to have a higher growth rate than Cambodia and in line with the parameters of Vietnam, Myanmar and Laos while for over 25 years, according to the Timorese Ambassador in Jakarta Ermenigildo Kupa Lopes, the country does not depend on international aid.

Political stability is another element that has traditionally been criticised and would make East Timor's entry into ASEAN more complex. However, if we look at the data of the Southeast Asian countries, Thailand and Myanmar do not stand out for their strong political stability either, ranking 141st and 171st respectively in the global ranking. A report published by the Economist Intelligence Unit also highlights that in terms of the degree of democracy of countries, East Timor is ahead of all ASEAN members and even ahead of some EU countries.

Despite the doubts expressed by Singapore, the support of the other ASEAN countries and in particular Indonesia and Cambodia makes East Timor's hopes more concrete. Last year, Hun Sen, the President of Cambodia, has confirmed that Cambodia will stand for East Timor, whose entry into ASEAN would be important from a geopolitical and economic perspective as well for fulfilling the dream to unite all the countries of Southeast Asia under the same organization. With Cambodia taking over the role of ASEAN presidency in 2022, the dream could come true.