Asean

The complex relationship between ASEAN and China

As economic interactions grow, the risk of Chinese commercial hegemony in the region arises

Good neighbourhood policies have become the priority of the Chinese government for the years to come. In order to tackle the diplomatic isolation pushed by Washington in the ongoing commercial spat between the two powers, Xi Jinping focused on strengthening economic ties with Southeast Asian countries, the most important hub for China's global projection. This policy has been confirmed by the recent visit of the Chinese foreign minister, Wang Xi, to Myanmar, Indonesia, Brunei and the Philippin. During this mini tour of ASEAN, Wang Xi reiterated the importance of a strengthened cooperation in the Indo-Pacific, aimed to overcome the health emergency and, above all, in prospective of the major coordination with the Belt and Road Initiative (BRI), the masterful Chinese initiative aimed at improving infrastructural connections with Eurasia.

Historically, relations between Beijing and the ASEAN countries have not always been idyllic. However, since the 1990s there has been a progressive economic and diplomatic rapprochement between the parties, culminated in the 2002 free trade agreement. Since then, China has not stopped courting ASEAN and other Indo-Pacific countries to further consolidate economic cooperation. Finally, in 2020, after eight years of negotiations, the Regional Comprehensive Economic Partnership (RCEP) was signed; a historic agreement that gave birth to the largest trading block in the world, capable deeply influencing the global economic balance. The signatories are the 10 ASEAN members plus China, Japan, South Korea, Australia and New Zealand, but not the United States, whose exclusion is a clear sign of their strategic loss of weight in the region.

The agreement’s timing is not accidental; it is the consequence of the health and economic crisis that hit the whole world, with the exception of China, the only G20 country with positive GDP growth in 2020. Indeed, since long ago Beijing has been pushing for a deeper economic interconnection with Southeast Asian countries. This trend, oriented towards privileged regional cooperation has been confirmed by the continuous growth, despite the health emergency, of the commercial exchanges between Beijing and the ASEAN countries, which have become China's major trading partner, surpassing the European Union. If, in fact, trade has increased by 7% compared to previous years, bilateral investments also marked a significant increase, reaching + 58% compared to 2019.

However, there is a downside: Beijing's recovery from the pandemic, faster compared to the rest of the world, with a prospect of 8% growth in 2021, in addition to the greater commercial influence in Southeast Asia acquired thanks to the RCEP, could make ASEAN countries increasingly dependent on the exports and foreign investments of its powerful neighbour. Especially after India’s decision to abandon the negotiations, China is the hegemonic actor of the agreement. Nonetheless, the benefits are numerous; by exploiting the complementarity of the different economic systems, the ASEAN countries with the support of the other members, will be able to more easily create regional value chains and will become a privileged destination for foreign direct investments, especially from Japan and South Korea, thus rebalancing Chinese influence. This will ensure an increase in the industrial capacity of the ASEAN countries and, in the long run, also a probable decrease in the average income gap in the region. 

In reality, the tendency to reallocate investments to ASEAN countries is not new; for some years, in fact, there has been an increase in FDI from Japan, South Korea and Taiwan higher than the share sent by the same countries to Beijing. This is mainly due to the increase in labour costs in China, but also linked to the need to diversify the production chain. Indeed, the inclination to reconsider the economic centrality of ASEAN is increasing; thanks also to the effective containment of the health emergency, this area of the world has not experienced significant economic and trade deficits. The case of Vietnam is peculiar; with a GDP of 2.6% higher than in 2019 it confirms itself as the only Asian nation, together with China, to have presented a constant economic growth during the health emergency. Yet, there is more. The economies of the whole region are expected to increase in 2021, particularly for Indonesia (+ 6.1%), Cambodia (+ 6.8%), the Philippines (+ 7.4%) and Malaysia (+ 7.8%)..

In conclusion, the world axis is moving eastward. Beijing is aware of this and does not hesitate to utilize its privileged position to carve out a leading role in the new scenario, bringing the ASEAN countries with it. For Southeast Asian countries, the goal will be to seek a delicate balance to secure their manoeuvrability in the continent and to continue to attract investments, without increasing too much Chinese influence in the region. 

By Emilia Leban

The potential Grab-Gojek merger: new power games between the two ASEAN tech giants

From private negotiations to the denial of a possible merger, Grab and Gojek compete for ride-hailing and delivery in Indonesia. 

According to people familiar with the talks, Grab and Gojek have made substantial progress over the past few months in elaborating a deal to combine their businesses and achieve the biggest merger of tech companies in Southeast Asia. Despite the attempt to mitigate the disagreements, the two tech giants still seem split on who should control Indonesia, the largest market in the region and Gojek’s home. Many parts of the deal are still being worked out between the leaders of each company and SoftBank Group Corporation, Grab's major backer.

Grab and Gojek have recently been at the center of a heated rivalry for dominance of the tech sector in the region. In fact, there has been talk of a potential merger for some time, especially after SoftBank’s CEO visited Indonesia in January 2020. The merger is widely supported by the investors of both sides. In this way the costly dispute for their respective market shares would end with the creation of one of the most powerful economic giants in the region.

Singapore-based Grab and Jakarta-based Gojek represent the two most valuable ride-hailing, delivery, financial payments and insurance startups in Southeast Asia. Grab, which is already present in eight countries of the region (Singapore, Malaysia, Indonesia, Thailand, Vietnam, Philippines, Myanmar, Cambodia), has recently been valued at more than $15 billion. Gojek, worth $10 billion, is active in five ASEAN countries: Indonesia, Singapore, Philippines, Thailand, Vietnam. Grab and Gojek are major players in most of the ASEAN markets. Furthermore, surveys confirm that l’Southeast Asia’s internet economy exceeded $100 billion in 2020.

Few weeks ago Anthony Tan, CEO and co-founder of Grab, following rumors of an imminent merger with Gojek, sent internal note to employees to deny new speculations. “Our business momentum is good and we are in a position to acquire,” said Tan, without making any reference to the possible merger between the two unicorns. Despite the enormous problems caused by the Covid-19 pandemic, the first crisis faced by the young startups in Southeast Asia, Grab's business has fully recovered at pre-pandemic levels. Tan also added that Grab has become the top company by revenue in the food delivery sector in Indonesia, the area of greatest competition with Gojek.

In response, Gojek's CEOs said there were no urgent reasons to merge with Grab; the company is well capitalized and there are enough resources to continue growing the business over the next years, including an enviable investor list, among which Google, Tencent, Facebook, PayPal.

Leaderships of Grab, Gojek and SoftBank declined to comment on the rumors spread by media about the possibility of a merger, which would see Grab in a dominant role. In addition to having a higher market value, Grab also operates in multiple countries.

Furthermore, according to Grab's proposal, Tan would become the new company's “CEO for life”, with Gojek executives called to manage Indonesia under the Gojek brand. Another version of the deal would see Gojek keep his active involvement in the merged entity, adding the creation of a joint branding in Indonesia.

The shareholding structure of the new merged company would represent the breaking point between the two parties. People familiar with the private talks said Gojek asked for 40% of the shares, an amount that Grab considers too much, considering the better financial conditions than its Indonesian rival, also in terms of revenue.

Despite the support of the investors, the paths of Grab and Gojek remain separate for now and the approval of a final agreement still seems a long way off. Antitrust issues also weigh on the merger. The crucial market is Indonesia, where both Grab and Gojek dominate both ride-hailing and delivery services. Meanwhile, Gojek wastes no time and has already signed a term-sheet with Tokopedia, the Indonesian e-commerce giant, in view of a probable $ 18 billion merger. The new power games taking place in the region could shuffle the cards and unveil new perspectives in the digital sector.

CAI: a turning point in EU-CHINA economic relations

The EU and China have reached an agreement in principle on investments that will allow European companies to access the Chinese market with greater freedom. 

In the form of intentions of principle, the achievement of the Agreement between the EU and China on December 30th, the Comprehensive Agreement on Investment (CAI), marks a fundamental stage in the economic relations between the two major world markets. Under the Agreement, China will agree to open its economy more to European investments, also and above all in specific sectors historically closed to the market. Furthermore, it will ensure that European companies are guaranteed fair treatment so that they can compete on an equal footing with Chinese companies. Finally, he agreed to discuss sustainable development, forced labour and ratify the fundamental conventions of the ILO.

There are several economic sectors in which China will guarantee greater openness and competitiveness for European companies. They range from the manufacturing industry (which accounts for half of European FDI in China) and the automotive sector to financial services, air and sea transport, communication and information technologies, health, the environment and sustainability. In each of the sectors above, not only will greater openness be guaranteed, but China will ensure that specific rules govern the market and that full competition exists between European and Chinese state companies, especially concerning transparency and subsidies, as well as prohibit forced transfers of technology. Besides, European companies will benefit from simplified procedures in obtaining authorisations and completing administrative functions and can access Chinese standardisation bodies.

Both the EU and China are committed to respecting the Paris climate agreements and therefore wanted to reiterate the centrality of sustainability in the recent Agreement. The two contracting parties have decided to commit themselves to respect sustainable development principles on investments. Issues relating to sustainable development will be subject to an application mechanism composed of a panel of independent experts, as is the case for all the EU trade agreements. It means a transparent resolution of disagreements with the involvement of civil society. It should be noted that this is the first time that China accepts such stringent ties with another trading partner. Consequently, China will have to modify its environmental and labour policy to raise the control standards compared to the current level, voluntarily kept low to attract more investments. In addition, it will have to respect its international obligations and ensure that its companies behave responsibly.

From a European point of view, the CAI ensures that China continues and does not go back on its liberalisation policy of investments carried out in the last 20 years, giving greater security to European companies. It allows the EU to use the resolution mechanism to breach commitments and benefit from removing various restrictions on market access, such as quantitative restrictions, capital limits, or joint venture requirements. On the other hand, the CAI preserves sensitive sectors such as energy, agriculture, fishing, audiovisual, public services.

If we analyse the CAI also in the light of the recent RCEP agreement, we can see how the Asian giant has clearly moved towards a path that leads to more generous market opening. It is significant to note that in a brief period of time China signed two major trade agreements: on the one hand with 14 countries in the Asia-Pacific region and on the other with the largest supranational organisation, the EU. It will be necessary to see how the US under the new Biden administration will respond to this Chinese market-friendly offensive and above all what the implications for transatlantic relations will be. In fact, China may have wanted to give Europeans more room for manoeuvre in its market to complicate US-EU relations, as this European move certainly upsets Washington. Still, it is defended in Brussels because the EU must have its own relationship with China independent of the US position. The real issue on which the EU should reflect is that there is no whole all-encompassing European policy towards China today, and efforts in this sense will be needed.

By Niccolò Camponi

How the United Nations are transforming agriculture in the ASEAN countries

The UN has long established a fruitful collaboration in the agricultural sector with ASEAN for the sustainable development of the most vulnerable populations. 

Agriculture represents a substantial share of the GDP of the vast majority of ASEAN countries, and it is one of the main sources of employment, directly or indirectly, for the approximately 300 millions inhabitants of the rural areas. While the economic and productive structure of ASEAN countries are different, the primary sector is one of the major sources of income in Indonesia, Vietnam, Myanmar and Cambodia. However, even if some of these countries are among the main global producers of commodities such as rice and coffee, their maximum production capacity is still far from being reached. To tackle problems related to low levels of productivity, limited access to international markets, poor dissemination of technologies, reduction of agricultural workforce (resulting from industrial development) and climate change, in the last years we have assisted to more and more investments in the agricultural sector. International organizations operating in the region can be considered contributors and facilitators of this process that has brought about a new agricultural spring in Southeast Asia.

Allies of ASEAN in this challenge to make the agricultural sector as sustainable as possible are the so-called Rome Based Agencies (RBAs) of the United Nations: the Food and Agriculture Organization (FAO), the International Fund for Agricultural Development (IFAD) and the World Food Program (WFP). These agencies offer a wide range of knowledge and expertise in the financial and technological sector, being recognized at the international level as the highest authorities in the field of food security, agriculture and nutrition.

The WFP’s primary mission is to intervene in emergency situations to provide food assistance that can guarantee social and economic development in the long run. It is currently engaged in assistance projects in five countries of the Association (Philippines, Myanmar, Lao, Indonesia and Cambodia). FAO and IFAD, on the other hand, work at the implementation of long-term projects for agricultural development that respectively have the objective of defeating famine and malnutrition in the world and making the rural economies more inclusive, productive and sustainable.

FAO, which all ASEAN countries are member of, has a fruitful history of bilateral cooperation with the Association itself, to which it provides consultancies on policies, analysis and assistance in the agricultural sector, particularly collaborating with the ASEAN Economic Community (AEC). ASEAN and FAO, through a Memorandum of Understanding signed in 2013, have joined their forces to increase the cooperation in agriculture and forestry with the goal of reducing famine in the region, progressing on food security, and preventing and monitoring transnational animal diseases.

IFAD is currently engaged in a collaboration with the ASEAN Secretariat to support two specific objectives: the ASEAN Programme on Sustainable Management of Peatland Ecosystems to limit the environmental impact of agriculture, and the ASEAN Economic Blueprint 2025 to develop digital technologies. In cooperation with the ASEAN Member States, IFAD is facilitating the data collection and analysis related to land management to monitor and prevent fires and smog, as well as to strengthen regional coordination for their prevention. Furthermore, IFAD assists small farmers in the use of digital technologies for agricultural production, helping in the creation of new partnerships between public and private sector, and providing the necessary instruments to implement these techniques through targeted training courses.

Through these examples of multilateralism, ASEAN receives from the UN system an important support in the race to transform agriculture into an efficient and productive instrument to improve the livelihoods of its population and to enhance sustainable development models, as indicated in the 2030 Agenda. The close cooperation between regional and global organizations, particularly on issues relating to the improvement of people’s living conditions, remains one of the most effective development policy instruments, making the rapid transfer of new technologies possible even in the poorest and most remote rural areas of the world. 

By Luca Menghini

Common security – EU and ASEAN

Europe and Southeast Asia are strengthening their strategic partnership in the field of security, extending their cooperation to non-traditional issues

Both European Union and ASEAN are aware that the stability of a member State is closely interconnected to what other countries do; therefore, they have decided to recognize the creation of a common security ecosystem as a fundamental principal of their partnership. The cooperation between the two organizations in this field has strong traditions and it’s demonstrated, among other things, by the regular involvement of the EU High Representative for foreign affairs and security policy in the ministerial meetings of the ASEAN Regional Forum (ARF). Over the years, European officials have both contributed to the implementation of the ARF’s plans and they have co-chaired some initiatives of this Regional Forum. In addition, since 2014, ASEAN has been taking part, represented by its high officials, in orientation courses on the common defense of the European Union.

In recent years, these two organizations have extended their shared security objectives to non-traditional issues, including the war against terrorism, the fight against transnational crime, social crisis management, conflict prevention, maritime security and the management of hazards from chemical, biological, radiological and nuclear materials. This new kind of political cooperation culminated with the drafting of an ASEAN-EU Plan of Action (2018-2022) during the 22nd EU-ASEAN Ministerial Meeting. In this occasion the two organizations decided to improve their relationship to an official strategic partnership. The decision was later confirmed on December 1, 2020, when the two organizations officially became strategic partners.

Maritime security is arguably the most important issue on which EU and ASEAN are currently cooperating. In 2020, the maritime security became one of the priority areas of intervention since all the major economies of ASEAN face the South China Sea, which is fundamental for international trade. As a result, every problem that occurs in that area immediately affects the economy of the countries involved and threatens the peaceful equilibrium of the region. The EU, as one of ASEAN’s most important trading partners, is also interested in the peaceful resolution of territorial conflicts in the area. On the practical side, the two organizations have created a permanent EU-ASEAN Committee on issues such as piracy, port security and joint resource management. The goal of the cooperation is to avoid conflicts for the dominion of the seas and above all promote respect for the "Law of the Sea".

Terrorism is one of the main challenges that both European and ASEAN countries are facing. The latter experienced terrorism brutality for the first time in 2002 due to the terroristic attacks in Bali and Denpasar carried out by the terrorist organization Jemaah Islamiyah. The massacre prompted the ASEAN Secretariat to draw up a Joint Declaration on Cooperation to Combat Terrorism. This is a declaration of intent stressing the conviction that terrorism must be fought jointly and internationally. Following this declaration, the fight against terrorism has become one the main issues discussed at each EU-ASEAN joint meeting. Moreover, the latest ASEAN-EU Plan of Action introduced meetings between counter-terrorism experts from both delegations. In addition, Indonesia, the Philippines, Malaysia and Thailand are benefiting from the implementation of ad hoc measures through the EU Project for the Prevention and Combating of Violent Extremism.

Currently the European Union and ASEAN are working together not only as organizations, but also bilaterally between individual member States. Another important milestone in the field of common security was reached through an agreement between the EU and Vietnam. In fact, Vietnam has signed a memorandum of understanding to take part in civilian and military operations, deployed from the Indian Ocean to East Africa, carried out by the European Union. The arrangement is the first of its kind between Brussels and a single ASEAN country: moreover, it shows the will of Vietnam and the European Union to maintain peace and security within their borders and worldwide. 

By Carola Frattini 

RCEP: sfide e opportunità per l’Indonesia

L’Indonesia cerca di trarre vantaggio dall’adesione alla RCEP mentre è alle prese con problemi di infrastrutture e investimenti

La firma della Regional Comprehensive Economic Partnership (RCEP) avvenuta il 15 novembre segna un’importante tappa nella storia recente dell’Indonesia. Dopo otto anni di negoziati, i dieci Stati membri dell’ASEAN insieme a Cina, Giappone, Corea del Sud, Australia e Nuova Zelanda, hanno finalmente firmato un accordo commerciale destinato a diventare il più grande della storia. Il trattato infatti creerà un mercato di circa 2,1 miliardi di consumatori, equivalente al 30% del PIL globale.

L’obiettivo della RCEP è quello di creare un partenariato economico reciprocamente vantaggioso per ciascuno dei Paesi partecipanti grazie all’abbassamento delle tariffe, alla semplificazione delle procedure doganali e alla stesura di regolamenti economici comuni. Per l’Indonesia, l’adesione alla RCEP non solo aprirà le porte a una vasta gamma di opportunità commerciali future, ma nell’immediato servirà al Paese per rimettere in sesto un’economia pesantemente colpita dalla pandemia di Covid-19. Molti economisti stanno tuttavia ancora cercando di prevedere tutte le possibili implicazioni che un accordo così ambizioso comporterà per il mercato indonesiano.

Uno degli obiettivi immediati della RCEP è consentire alle merci di circolare in modo più efficiente attraverso i 15 Paesi membri. Ciò comporterebbe un indubbio vantaggio per Jakarta, poiché le attività commerciali di queste nazioni hanno rappresentato il 57% delle esportazioni totali dell’Indonesia e il 67% delle sue importazioni totali nel 2019. Inoltre, il 66% degli investimenti diretti esteri proviene da diversi Paesi firmatari quali Singapore, Cina, Giappone, Malesia e Corea del Sud. Tuttavia, per sfruttare al meglio i vantaggi dell’accordo, l’Indonesia ha bisogno di adeguare il suo sistema infrastrutturale.

Anche prima della pandemia di Covid-19, la crescita economica del Paese è stata spesso rallentata da questo fattore. Nel 2017, la Banca Mondiale ha stimato che l’Indonesia dovrà investire circa 500 miliardi di dollari nei prossimi 5 anni per colmare il suo divario infrastrutturale. Secondo gli esperti, una delle possibili soluzioni è quella di sfruttare maggiormente le iniziative infrastrutturali lanciate dai governi dell’Asia-Pacifico. Questi includono la cinese Belt & Road Initiative, la Partnership for Quality Infrastructure del Giappone, e l’istituzione della Banca Asiatica di Investimento per le Infrastrutture sponsorizzata da Pechino. 

La partecipazione a queste iniziative multilaterali non è tuttavia esente da rischi, e il governo indonesiano deve tenere conto dei risvolti geopolitici. In quanto uno dei principali Paesi del Sud-Est asiatico, l’Indonesia ha un mercato interno che fa gola alle altre potenze del continente asiatico e del mondo. Un esempio è il progetto della ferrovia ad alta velocità Jakarta-Bandung, la cui gara per la costruzione ha causato frizioni tra il Giappone e la Cina, entrambe interessate all’appalto. A vincere alla fine è stata Pechino, che ha offerto tassi di prestito più bassi e una tempistica più breve il completamento dell’opera.

La partecipazione alla RCEP contribuirà senza dubbio ad aumentare degli investimenti esteri diretti verso l’Indonesia. In passato, le rigide leggi sul lavoro hanno indotto molte aziende straniere a ridurre i propri investimenti; per risolvere questo problema, il governo ha introdotto quest’anno una nuova riforma, la Legge Omnibus, che mira a facilitare le attività economiche nel Paese modificando ben 76 leggi esistenti. Sono incluse tra le varie norme la riduzione della burocrazia, l’allentamento delle restrizioni sugli investimenti stranieri e l’abrogazione di alcune leggi sul lavoro.

Nonostante gli sforzi del governo, il progetto ha ricevuto severe critiche da vari gruppi sociali, poiché il disegno di legge taglia alcune protezioni sociali e allenta le norme ambientali, aumentando il rischio deforestazione e inquinamento. Tuttavia, è ancora troppo presto per vedere l’impatto a lungo termine del disegno di legge, in quanto tutto dipende dalle modalità di attuazione. La Legge Omnibus potrebbe effettivamente portare a un clima migliore per gli investimenti in Indonesia e quindi creare più posti di lavoro, ma deve essere sostenuta da una solida esecuzione e da un ampio monitoraggio da parte del governo.

Sulla base di quanto descritto è chiaro che fare affidamento solo sulla RCEP non è sufficiente, né per la ripresa post-pandemia, né per lo sviluppo economico a lungo termine dell’Indonesia. Per trarre il massimo vantaggio da questo accordo, il Paese deve sostenerlo con una solida pianificazione infrastrutturale e un quadro normativo moderno, entrambe grandi priorità per l’attuale governo. Una volta raggiunti questi obiettivi, l’Indonesia otterrà significativi benefici economici, aumentando la propria competitività e integrandosi maggiormente nella regione Asia-Pacifico. 

By Rizka Diandra 

Translated by Andrea Passannanti 

Behind the camera

Challenges and opportunities for Southeast Asia’s movie industries.

Manila in the Claws of Light is like an Italian Neo-Realist film set in Hell”.

This was the comment regarding the film of Lino Brocka, the most famous Filipino director and producer. The movie received critical acclaim already in 1975 when it was released. From the East: FAMAS (Filipino Academy of Movie Arts and Sciences Awards) awarded it the prize of Best Movie, Best Director, Best Photography Direction, Best Actor, and Best Supporting Actor. But also from the West: it was added to the list of Best Movies in The World, screened at the Cannes Film Festival in 2013, and written about in an extensive article in the New York Times. In its Blu-Ray version, the movie is introduced by Martin Scorsese.

In the golden years of Italian cinema, it was quite unusual to hear about Southeast Asian actors and directors. However, the receptivity of Brocka and others in Europe from the 2000s is the sign of the new interest in the Asian continent’s seventh art. The most striking case is probably Parasite, the movie by the South Korean director Bong Joon-ho which was in 2020 the first movie in the world to be awarded the Oscar prize as Best Movie and Best International Movie simultaneously. 

Compared to Japan and Korea, there are still many difficulties for ASEAN countries to break into the Western film market. However, despite obstacles, some of them have managed in recent years to fit into the Cinema International Festivals circuit.

Indonesia is a good example with its Gundala, a superhero movie sprung from the creative vein of the director Joko Anwar. The main character is based on one of the protagonists of the Indonesian comic artist Harya “Hasmi” Suraminata, or “Indonesian Stan Lee” thanks to his 50+ years of experience in drawing cartoons. Gundala is probably the most famous superhero in Indonesia, and Anwar decided to pick him as a subject for his film. Released in 2019, Gundala drew more than one million visitors to movie theatres in just one week. The premiere was held at the Toronto International Film Festival. It is not uncommon to find it in several Italian Far East Asia Festivals held throughout the year, together with Impetigore, a horror masterpiece from the same director. In 2020 Gundala was also dubbed in French and released on Blu-Ray by Condor Films, an industry well known for distributing Cannes or Sundance Film Festival award-winning movies.

The documentary genre is well represented by Midi-Z, a movie director born in Myanmar but a naturalised Taiwanese citizen. His Ice Poison, released in 2014, was selected by Taiwan to compete for the Foreign Language Academy Awards. A sensible choice considering its debut at the Berlin Film Festival and its award as “Best International Feature Movie” at the Edinburgh International Film Festival. Midi-Z himself was nominated as “Taiwanese Director of the Year” at Taipei’s 53rd Golden Horse Awards. Despite he is a naturalised Taiwanese citizen, Myanmar is a constant theme of his works: from Return to Burma (2014) to Road to Mandalay (2016).

Despite Southeast Asian movies’ versatility, not a lot of them can reach European movie theatres if we exclude Film Festivals. Not only weak demand from the market, but also the lack of funds and government support for the creative movie industry play a major role. Italy, in this sense, is privileged: there are important spaces for Asian movies in many Italian cities, first and foremost the Venice Film Festival. For some years now, Rai (Italian State Broadcaster) too offers attractive spaces on a global level for moviegoers, where they can find special products as well as niche curiosities. A crucial role for Italy, that if used properly, might lead even more people to enjoy the ASEAN countries’ rich film repertoire.

By Valentina Beomonte Zobel

EU and ASEAN increase interregional cooperation

The European Union and ASEAN upgrade their relations on environmental sustainability, economics, security and connectivity

After six years of consultations, at a meeting on Tuesday December the 1st, the European Union and the ten countries of the ASEAN group updated the status of their relations, passing from a "Dialogue Partnership", to a much more consistent "Strategic Partnership".

Interactions between the European Union and ASEAN have a long history behind them, being characterized by trade, foreign direct investments and bilateral agreements between the EU and individual members of the Association. Nevertheless, the wish to strengthen relations through a more advanced partnership was officially expressed by the European Commission only in 2015 and two years later, in 2019, ASEAN and the EU foreign ministers agreed on the principles for the elaboration of the Strategic Partnership. 

The last meeting confirmed the commitment of the parties in organizing regular summit meetings and in strengthening cooperation in four strategic areas: environmental sustainability, economy, security and connectivity. The co-chairs of the ministerial meeting, the High Representative of the Union for Foreign Affairs Josep Borrell and the Singaporean Foreign Affairs Minister Vivian Balakrishman, both welcomed the move, calling it "a historic event".

The outcome of the negotiations has long been uncertain due to disagreements over palm oil, a product that is still essential for the economies of Malaysia and Indonesia but adverse to the EU because of the environmental impact of its production. As part of the shared effort, however, both parties agreed on the establishment of a joint committee, entirely dedicated to the sustainable reformulation of the vegetal oil industry. Furthermore, concerning sustainable development, EU and ASEAN leaders have referred to some previous international agreements, such as the Paris Agreement on climate change and the Sendai Framework Convention for the reduction of the risk of environmental disasters. The idea is to establish a dialogue as complete as possible, encouraging the inclusiveness of topics such as climate change, the preservation of the oceans and biodiversity, the increase of renewable energy and respect for human rights. ASEAN, then, welcomed the EU commitment to promote "greener" cities, through the implementation of the "ASEAN Smart Green Cities" program.

The Covid-19 pandemic was the second item on the agenda. Recognizing its unprecedented impact, leaders encouraged greater cooperation to increase their respective crisis response capacities, combining public health and sustainable development. The EU has already offered ASEAN 800 million euros to deal with the health emergency and has pledged to donate another 20 million and support the "South East Asia Health" project. Both parties have also agreed on a joint approach to ensure fair and collective accessibility to vaccines, defined as "global public goods". In this context, the European Union will provide a contribution of 500 million euros in grants and guaranteed loans to support COVAX, the multilateral facility designed to accelerate the development, production and global distribution of vaccines.

The leaders also recognized the importance of an increasingly solid economic cooperation, especially aimed at the recovery of the post-Covid-19 world economy. The commitment made by the parties will be directed to further efforts towards the negotiation of an ambitious free trade agreement between the EU and ASEAN, focused on greater economic integration and trade liberalization.

By recalling the EU-ASEAN declaration on cooperation in the field of cybersecurity, adopted in 2019, the parties also remarked the importance of strengthening cooperation in this area, in order to promote open, secure, accessible and peaceful information. The security issue is further taken up by the intent to consolidate joint efforts to counter terrorism and transnational crimes as well as to ensure lasting peace and stability in the region.

In conclusion, in a separate statement, ministers pledged to promote connectivity between the EU and ASEAN to support post-pandemic socio-economic recovery in a more sustainable and inclusive way. Therefore, the idea is to simplify and diversify the transport networks, encourage the use of clean and renewable energy, ensure food, energy and health security and promote political exchange in the fields of education, research, tourism and technology.

The negotiations emphasised the pragmatic approach of the European Union and ASEAN, aimed at solving single yet very important problems. The pandemic has spared no one and the Strategic Partnership underlines the urgency to combine two of the largest existing economic blocs, which together cover almost 30% of world GDP and could be decisive for the economic recovery of the whole world. In a nutshell, as Gunnar Wiegrand, the EU’s Director of Foreign Affairs for Asia and the Pacific recalled, it was a historic meeting "between two anchors of stability in a world of growing uncertainty".

By Emilia Leban

Aboard the ASEAN Express

A journey to discover Southeast Asia’s hidden gems

The nature lover cannot miss out on the Philippines and Indonesia’s heavenly beaches and unspoiled natural environment. Consisting of more than 7.000 islands and surrounded by the Pacific Ocean, the Philippines have earned several nicknames linked to tourism, which amounted to 12,7% of the country’s GDP in 2019 (according to the Philippine Statistics Authority): the capital of the western Pacific, the centre of Hispanic Asia, the Pearl of the Orient Seas, capital of fun, and many others. It is the perfect destination for scuba diving and snorkel lovers. In particular, Cebu island is well renowned for its coral reef and sea caves that attract thousands of photographers from all over the world every year. The more adventurous dare to get right into Sagada’s tribal region, or to explore UNESCO sites such as Chocolate Hills or Batad and Bangaan rice terraces to learn about the history and traditions of ethnic villages still living there. Indonesia does not even need any particular introduction.

L’amante della natura di certo non può farsi sfuggire le spiagge paradisiache e la natura incontaminata di Filippine e Indonesia. Circondate dall’Oceano Pacifico e composte da più di 7.000 isole, le Filippine si sono guadagnate numerosi appellativi legati al turismo, settore che nel 2019 ammontava per il 12,7% del PIL del Paese (dati del Philippine Statistics Authority): capitale del Pacifico occidentale, centro dell’Asia ispanica, Perla dei Mari Orientali, capitale del divertimento, e molti altri. Le Filippine sono la meta ideale per gli appassionati di scuba diving e snorkeling: in particolare, l’isola di Cebu è una meta prediletta sia per le sue barriere coralline, sia per le grotte marine che attraggono ogni anno migliaia di fotografi da tutto il mondo. I più avventurosi si addentrano fin nella regione tribale di Sagada, oppure esplorano i siti UNESCO come le Chocolate Hills o le terrazze di riso di Batad e Bangaan, per conoscere la storia e le tradizioni dei villaggi etnici che ancora vi si trovano. 

Its pristine white beaches are a destination for more than six million tourists every year and feature in several well-known international movies. For those who prefer quietness and less crowded places, Java, Sumatra or any of the other 17,505 islands of the world's largest island country might be a good fit.

For culture lovers, Vietnam and Thailand might be an obvious choice. But did you know that the less popular Cambodia hosts Angkor Wat, the largest archaeological site in Southeast Asia and the biggest religious monument in the world? Its name, which translates to “temple city” in Khmer, references the fact that it was built by Emperor Suryavarman II as the state temple and political centre of his empire. The colossal site stretches for 1.626 km2 and it has become so embedded with nature after more than 900 years that it is hard to tell where the rock ends and the roots of ancient trees begin. Originally dedicated to the Hindu god Vishnu, with time Angkor Wat became a Buddhist temple and is so important today that is even represented on Cambodia’s national flag.

For the traveller who cannot help but dream of bright lights and the buzz of the metropolis, Malaysia and Singapore are the right destinations. The days when these seas inspired Emilio Salgari’s novels are lost in memory. Kuala Lumpur, Malaysia’s capital city, is booming, especially in the high-tech sector: according to the World Bank, the export value of high-tech products in 2015 stands at 57 billion dollars, the second highest in ASEAN after Singapore. Iconic sightseeing spots include the Petronas Towers, the tallest twin towers in the world, and the Genting Highlands Resort, an integrated hill resort development comprising hotels, shopping malls, theme parks and casinos, perched on the peak of Mount Ulu Kali at 1,800 meters asl.

For those who prefer contemporary architecture instead, Singapore provides several genuine examples where human genius joins nature: Gardens by the Bay, a nature park spanning more than a hundred hectares that is part of the nation's plans to transform its "Garden City" to a "City in a Garden"; the Helix Bridge, a DNA molecule shaped bridge; the Esplanade – Theatres on the Bay, the performing arts centre; and many more.

The charm of wild beaches, the heady scent of incense in temples, the chaos of the city, and much more: Southeast Asia really knows how to touch travellers’ heartstrings, even those of the most demanding.

By Valentina Beomonte Zobel

37th ASEAN Summit: challenges and new opportunities

Covid-19 pandemic, RCEP and the South China Sea: the ASEAN countries at the core of the Indo-Pacific region. 

The 37th ASEAN Summit was held online from the 12th to the 15th of November, the last of the Vietnamese presidency, which will now be replaced by Brunei. The opening ceremony of the Summit between ASEAN member countries was marked by the speeches of the President of Vietnam, Nguyen Phu Trong, and the Prime Minister, Nguyen Xuan Phuc. Both leaders emphasized the resilience of ASEAN in the face of the unprecedented challenges posed by the pandemic.

First of all, specific attention was paid to the delicate issue of the South China Sea. ASEAN member countries reaffirmed their intention to maintain peace and stability in the area through the elaboration of a Code of Conduct for the South China Sea to be stipulated with Beijing. The negotiations are struggling to take off, but the document should be ready by the end of 2021, according to the statements made during the Summit. The Code of Conduct aims at guaranteeing the free trade of goods in this disputed stretch of water, respecting the rules and agreements of the International Law of the Sea. 

The ASEAN leaders also discussed the shared response to the Covid-19 pandemic, introducing the l’ASEAN Strategic Framework for Public Health Emergencies. All the joint initiatives on health emergencies in the region will be based on this framework, which is intended to improve ASEAN’s preparedness and responsiveness to public health emergencies. The Covid-19 Response Fund is also included in this document, arranged by the ASEAN countries in April. The Fund’s budget amounts to 10 million dollars, with the specific function of providing assistance to the nations most affected by the pandemic. Although very different from the Next Generation EU recovery plan in terms of scope and purpose, this fund represents an important first step for Southeast Asian countries towards the definition of shared instruments to manage crises.

Along with the health emergency, the pandemic crisis had a destructive impact on the societies and the economies of the region. Therefore, the epidemiological response to the pandemic must go hand in hand with the socioeconomic recovery strategy in Southeast Asia. In this regard, the ASEAN countries representatives established the ASEAN Comprehensive Recovery Framework with the aim of planning the recovery phase. The strengthening of regional health systems, the increase of economic cooperation within ASEAN, the promotion of digital transformation, and the attention to sustainability and environment are among the main measures included in the Recovery Framework. Its goal is to manage the delicate recovery period using a cooperative approach with a focus on the regional dimension of the crisis.

Furthermore, this Summit saw witnessed the establishment of the first ASEAN Women Leaders’ Summit. For the first time ever, the representatives of ASEAN women leaders made their voices heard at a summit entitled “Women's Role In Building a Cohesive, Dynamic, Sustainable And Inclusive ASEAN Community In a Post Covid-19 World”. It emphasized the role of women in promoting sustainable development in the post-pandemic world. All the women leaders strongly stated that the pandemic threatens to reverse the region’s difficult achievements in terms of gender equality and women empowerment. Therefore, it was loudly pointed out that ASEAN have to mitigate the negative impacts of COVID-19 on women, placing them at the heart of the reconstruction and recovery processes.

The 23rd ASEAN Plus Three Summit was also a remarkable moment. The summit between ASEAN, China, Japan and South Korea focused on the urgent need to strengthen cooperation for economic and financial resilience. ASEAN and its regional partners confirmed their willingness to increase joint efforts in restoring economic growth in the entire region by strengthening regional trade and economic cooperation. These actions are also intended to promote business and investment opportunities. Furthermore, all the efforts aim at strengthening SMEs, vulnerable social groups, start-ups and economic sectors hardest hit by the pandemic, but also the development of the digital economy.

The Summit’s final day marked another historic date. On November 15, 2020, during the 4th RCEP Summit, the Regional Comprehensive Economic Partnership (RCEP) was signed. Launched in 2012 during the 21st ASEAN Summit, the RCEP is a mega trade agreement signed by the 10 ASEAN member countries and China, South Korea, Japan, Australia and New Zealand. The new economic block will represent 30% of the global economy and will include about 2.2 billion consumers, creating the largest free trade area in the world, larger than European or North American trade areas.

The ASEAN Summit revealed once again the centrality of the Southeast Asian countries in the new regional and global context. In the South China Sea issue, the ASEAN nations will be key in balancing China. With the RCEP, Asia pushes on free trade and multilateralism, reintroducing an important trend that was hampered by the Trump Administration in the last years. Definitively, ASEAN showed itself to be united and strong facing the new challenges and problems, confirming its role as a forum for dialogue and cooperation for Asia and the entire world. 

By Annalisa Manzo

A green future for ASEAN: responding to climate change through sustainability

The region focuses on technological innovation and respect for the environment

On Tuesday the 10th of November, the third round table of the Digital High Level Dialogue organized by The European House Ambrosetti in collaboration with the Italy-ASEAN Association was held on the theme of the relations between Italy and the Association of Southeast Asian Nations. The region is revealing to be a promising area for import/export activities, as well as a good destination for investments in sustainable development and circular economy. For instance, the experience of ASEAN countries in managing the Covid-19 pandemic has shown us how international problems can be addressed through collective actions and with a resilient approach. However, the threat of climate change persists and it requires the adoption of appropriate solutions by institutions and companies.

A hopeful sign comes from the “Renewables 2020” report of the International Energy Agency (IEA), according to which in 2020 we have witnessed an increase in renewable energy worldwide, accounting for 90% of the new energy generated globally with the remaining 10% derived from gas and coal. The growth forecasts for 2021 also suggest an equally optimistic result: Renewable Energy Sources (RES) will become the main source of electricity production on a global scale by 2025.

As far as ASEAN countries are concerned, climate change is a challenge to their very existence. Indeed, the region is known for its humid tropical climate, characterized by an average temperature of over 18ºC and by continuous monsoon rains. However, the consequences of pollution, rising sea levels and increasing CO2 emissions already appear in a disruptive way through natural disasters and the so-called "climate migration" which affects the region’s socio-economic dimension. According to a study by the Asian Development Bank (ADB), the region’s GDP could shrink by 11% by 2100 in the absence of suitable measures.

However, ASEAN governments are moving on the right track by enhancing their intention to adopt sustainable, inclusive and long lasting development models. They will meet at the 38th edition of the ASEAN Ministers on Energy Meeting (AMEM) which will take place from the 17th to the 20th of November, a moment of discussion on the issue of “Energy transition to sustainable development” to assess to what extent "sustainability" and "circular economy" are becoming a priority within the institutional agendas.

During the meeting, in order to underline this path of growth towards sustainable development, statements from companies in the region have been crucial relatively to sectors that, alongside the action of governments, are showing a clear interest upon increased green development. This is the case reported by Claudia Anselmi, CEO of Hung Yen Knitting & Dyeing Co., a leading company in the textile industry founded in Vietnam in 2008 by the Italian group Carvico, and remarked for its sustainable approach aimed at reducing waste and improving the efficiency of the production chain. However, for what other sectors are concerned, as pointed out by Alberto Maria Martinelli, President of the Italian Chamber of Commerce in Singapore, green investments are necessary to achieve sustainable infrastructure and technologies. The case of the agricultural sector, which is increasingly threatened by natural disasters and in which digitalization can play a fundamental contribution through the use of predictive models, serves as an example. This phenomenon, known as “digital agriculture”, is becoming increasingly central in the debate over the protection of populations threatened by natural disasters, and is in line with the 2030 Sustainable Development Goals of the United Nations.

Therefore, there is no doubt that climate change has existed way before the outbreak of the Covid-19 pandemic, but only the latter has succeeded in disclosing the need for sustainable global change. For that reason, Italy and the ASEAN countries are showing that they are able to seize this opportunity through greater investment in technological innovation and an eco-friendly approach aimed at strengthening international cooperation.

The importance of the Pan-Asia Railway Network for Southeast Asia

The high-speed rail network connecting Kunming to Singapore will increase economic integration in East Asia

The Kunming-Singapore railway, also known as Pan-Asia Railway Network, is one of the most ambitious infrastructure projects currently under construction in Asia and it was designed with the aim of connecting Southeast Asia to the southern provinces of China. Consisting of a huge network of railway lines, with some of them already operational, once completed the Pan-Asia Railway Network will connect the city of Kunming, capital of the Yunnan province and the economic center of Southern China, to Singapore, passing through Thailand, Cambodia, Vietnam, Laos and Myanmar.

The project’s foundation dates back at the end of the 19th century, when French and British colonial powers agreed on a joint development transport network in order to connect southwestern China to the Indochinese peninsula. The goal was to facilitate the European’s export of goods and manufactured products to the region, as well as to exploit the huge mineral resources of Yunnan; however, the many conflicts that occurred over the next century dealt a severe blow to European commercial ambitions. After the Second World War, the newborn countries in the area were too busy to achieve their independence processes instead of building a functional transport system. Also due to the low economic importance of Southeast Asia which did not justify such a huge investment, the project was delayed for decades.

At the very beginning of the 21th century, China has emerged as the new superpower in the continent. All the countries in the area have benefited from its impetuous economic growth, so much so that in the early 2000s both ASEAN and China realized it was time to improve regional infrastructures. With the launch of the “Belt and Road Initiative” in 2013, the strategic relevance of Kunming-Singapore has further increased. The Chinese government has invested significant amounts of money with the ambition to connect the whole continent: Beijing is focusing strongly on Southeast Asia, directing almost a third of the total investments of the BRI towards ASEAN countries.

Several projects have been proposed to complete the Pan-Asia Railway Network, which today sees three giant routes under construction: the main section will link Kunming to Singapore via Bangkok; the eastern route from Kunming to Ho Chi Minh City via Hanoi; and the western route, from Kunming to Yangon in Myanmar, still in its planning stage.

The Pan-Asia Railway Network will have a significant geopolitical impact for the ASEAN countries located in the Indochinese peninsula: a project of this magnitude represents a unique opportunity to strengthen their economic ties within the region and with the rest of the international community. The approximately 5,500 km of future railway lines will contribute to increasing circulation of goods, people and ideas in East Asia in the next decades, generating a positive outcome for all the parts involved.

However, such a huge project doesn’t come without any significant drawbacks. In many cases there was no lack of delays or postponements in the implementation phase due to various structural difficulties. For instance, the complex geomorphology in Myanmar and Laos’s territory is causing a lot of difficulties for local engineers and, on the other hand, various ethnic groups living along the route of the new railways are protesting against the impact that construction sites will bring in their communities. In addition, existing rail networks in Thailand, Vietnam, Malaysia and Cambodia are still unable to ensure the functioning of a high-speed trains, partly because many railways are single-track and partly because they are poorly maintained. Cambodia in particular has the widest infrastructural gap, with much of the infrastructure built by the French colonial authority out of use for decades.

Also, the main concern for some Southeast Asian governments is that China may leverage investments to gain financial and political influence in addition to operational control. In fact, Beijing does not provide grants but loans to third countries, and it can therefore take over the project whether the receiving country is unable to repay its debt. United States are also concerned about a weakening of its relations with the ASEAN countries and in particular with Singapore, which is Washington's most faithful ally in the region and the one with the greatest strategic importance. The possibility of directly connecting Singapore to the People's Republic assigns to the project a strong geopolitical importance, because if Beijing succeeds in bringing the city-state into its orbit, it would weaken the American strategic primacy and it would have more opportunities to operate within the Indo-Pacific region.

Despite these concerns, Chinese infrastructure projects will continue to have great importance for the ASEAN countries, because they still rely on Beijing's investments and on the opportunities that the huge Chinese market can guarantee them. The Chinese giant’s firepower will be key to further developing infrastructure in the East Asian region, however Southeast Asian nations must balance their relations with China in order to avoid losing geopolitical weight while taking advantage of the economic opportunities arising from the relationship with Beijing.

By Diego Mastromatteo