Asean

Lorenzo published in Asean, Economy and trade

A common currency for ASEAN?

With global inflationary pressures, the idea of a single currency for countries in the Southeast Asian region is back on the agenda. But obstacles remain.

Editorial by Lorenzo Lamperti

A common currency for the ASEAN region. Among the first to launch the proposal was the former Premier of Malaysia, Mahathir Mohamad, after the Asian financial crisis. Proposal reiterated in 2019, when he spoke of a common trade currency pegged to gold, "not to be used locally but to regulate trade." The hypothesis has come back to the fore in these weeks marked by global economic turmoil and inflationary pressures. Raising it again was notably Vijay Eswaran, a Malaysian businessman and Executive Chairman of the multinational QI Group, based in Hong Kong but operating in some 30 countries. "Why the push for a common currency in ASEAN? Just look at Europe, where the euro is the best example of a common currency. In the 20 years since its introduction, the euro has contributed to the stability, competitiveness and prosperity of European economies. The single currency has helped keep prices stable and has protected euro area economies from exchange rate volatility," Eswaran says in a commentary published in the Jakarta Post in recent days. Many Asian emerging market economies hold large reserve assets denominated in U.S. dollars as a means of self-insurance against potential financial instability. According to the businessman, "with this dependence on the dollar, Asian countries are highly exposed to shocks from changes in economic policy and conditions relative to the United States." A common currency, Eswaran continues, "could help eliminate exchange rate uncertainty, guard against speculative attacks, and increase ASEAN's bargaining power," with long-term interest rates "likely to fall and become less volatile" and intra-regional trade flows facilitated. There could also be benefits for individuals, with greater accessibility for services such as health care, education and tourism. "Labor and talent could be more easily exchanged, leading to more job opportunities and greater economic integration among ASEAN countries," Eswaran concludes. The biggest obstacle to concrete developments in this regard, however, remains the great diversity in economic development among member countries. Suffice it to say that Singapore has a per capita income 60 times that of Myanmar.

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Redazione published in Asean, Culture and society

Art of the Loom: the Future of Sustainable Fashion

The fashion industry accounts for about 10% of global carbon emissions and 20% of wastewater. This should not come as a surprise as synthetic textiles are the mainstay of the fast fashion industry. But Bangkok is working hard to make it sustainable

Article by Dr. Vilawan Mangklatanakul

How many times do you wear a piece of clothing before throwing it away?

A study of 2,000 women by the British charity Barnado’s reveals that one piece of clothing is worn an average of seven times before being thrown out. Fast fashion has made it possible for one to constantly change their looks on the cheap. The Instagram culture is fueling the drive to buy new clothes often. Outfits that “no longer spark joy” can be easily discarded. But this “out of sight, out of mind” mentality is quickly inundating landfills across the world with unloved garments.

The fashion industry accounts for about 10% of global carbon emissions and 20% of wastewater. This should not come as a surprise as synthetic textiles are the mainstay of the fast fashion industry. Fabric like polyester and spun from plastic threads, break down into microplastics which get into the soil and water, ultimately entering the food chain. In fact, microplastics have become a leading marine pollutant. Even if countries have good marine debris and wastewater management, microplastics from synthetic fibers in the laundry could still threaten the well-being of life below water.

As a contrast and a blessing in fact, natural yarn used in Thai silk and cotton garments are biodegradable and therefore do not break down into microplastics.

Thai consumers are equally addicted to fast fashion. But there is hope on the horizon because a growing number of fashion-loving Thais are choosing homegrown designers who make clothes out of traditional Thai textiles. 

For environmentally and socially conscious customers, Thai handloom fabrics are a part of the answer. Traditional Thai fabrics are spun from silk, cotton or hemp. Moreover, they are ethically made and help develop communities. In Thailand, handlooms are strongly grounded in local villages and organized around women-led initiatives. In fact, they empower women to be the decision makers and breadwinners for their families. Income generated by these enterprises goes back directly to improving the education and healthcare of community members.

 

Ban Hat Siew in Sukhothai province, Northern Thailand: a Tai Phuan woman meticulously patterning a “Pha Sinh Teen Chok,” a kind of sarong for ceremonial use. 

 

Credit: takemetour website:

Ban Phon in Kalasin province, Northeastern Thailand: a Phu Tai woman weaving Phrae Wa silk in Kalasin. 

 

The making of artisanal Thai fabrics is also closely associated with nature.  

For silks, villagers grow mulberry trees and harvest the leaves for feeding silkworms. Leftover waste from growing the silkworms then becomes good quality fertilizer. In contrast to chemical dyes, colors derived from natural sources such as indigo for blue, ebony seeds for grey and black, lac for red, are non-toxic, so they can be discarded without causing harmful pollution. Old traditional techniques therefore, continue to prove better for both the planet and the people. 

However, Thailand’s traditional textile industry might have not seen the light, save for one woman and her powerful vision. 

While accompanying His Majesty the Late King Bhumibol the Great on his many trips to distant villages in Thailand, Her Majesty Queen Sirikit the Queen Mother would receive many gifts of traditional hand-woven fabric from the local women.

The intricate and meticulous designs made a lasting impression on the Queen, whose appreciation for the art of the loom became well known, and wherever she went, villagers would come and present their creations. She inquired them about each piece, paying ample attention to each of their stories. 

Her Majesty grew concerned to hear that this traditional Thai art form was in danger 

of disappearing. Farmers were more interested in sending their children to cities for better opportunities. Handloom was a skill and knowledge passed from one generation to the next. 

What if these women were to organize themselves around a cottage industry to weave in between crop growing seasons as a way to supplement their families’ income? It could be a way to save this cultural heritage from dying out, while supporting rural community employment in the process. 

Her Majesty Queen Sirikit launched the SUPPORT Foundation to institutionalize the royal initiative to develop the cottage craft industries around the country. By providing an outlet for their products to reach the market, the SUPPORT Foundation played a crucial role in making sure the villagers actually had alternative means of income besides farming. As a result, a number of them started to develop the business of handloom fabrics in earnest.

 

The SUPPORT Foundation of Her Majesty Queen Sirikit of Thailand 

Credit: Facebook page of the SUPPORT Foundation

 

Meanwhile, Her Majesty became the trendsetter of traditional Thai fashion. Her elegant outfits made from traditional fabrics from different regions of the country inspired city ladies to send Thai silk and cotton fabric to their dressmakers. She founded a fashionable movement that aroused a sense of pride in the nation’s cultural heritage. In turn, the demand for traditional Thai fabrics transformed small household looms into commercially viable enterprises. Later government policies such as One Tambon One Product (OTOP) would formalize state support for micro enterprises involved in traditional arts and crafts, featuring handlooms as a major product. 

Such is the story of Baan Hua Fai, a village in the Khon Kaen Province in the Isan region, or the northeast of Thailand. The celebrated local mudmee, or ikat, pattern of Thai silk was family wisdom passed on from mother to daughter, made for special occasions such as weddings or given as gifts. When Her Majesty the Queen Mother visited the region in 1983, she was very impressed with the unique artistry of Baan Hua Fai’s silk and invited them to send samples to Chitralada Palace. Soon thereafter, the villagers were granted royal patronage under the SUPPORT Foundation.

 

Examples of local mudmee from Baan Hua Fai Village. 

Credit: Tourism in Isan Website http://i-san.tourismthailand.org/6906/

 

Over the years, Baan Hua Fai has grown to be a village cooperative of almost 200 members, most of them women. Today, it has become a model OTOP enterprise that welcomes visitors and serves as a learning and collaborative center for design and production techniques. Younger generations are adopting new business models according to changing tastes and the marketing environment. They sell products online via Facebook and Instagram, and collaborate with Thailand’s top designers.

The next phase in the growth trajectory of traditional Thai fashion is for it to truly “go global”. In the footsteps of her grandmother, Her Royal Highness Princess Sirivannavari Nariratana spearheaded the creation of the Thai Textiles Trend Book. As the Editor in Chief, Princess Sirivannavari oversaw the compilation of “Thai tones” as well as patterns and material that would make traditional Thai textiles marketable beyond Thailand. Made available for free in both print and electronic version on the Ministry of Culture website, the Trend Book offers ready references for weavers, designers, students and anyone developing new ideas for Thai textiles.

 

Book launch event: “Thai Textiles Trend Book SS 2022” 

Credit: Hommes Thailand website https://hommesthailand.com/2020/12/thai-textiles-trend-book-ss-2022/

 

Besides drawing upon Her Majesty The Queen Mother’s legacy for inspiration, Princess Sirivannavari’s envisions sustainability to be interwoven with traditional Thai craftsmanship and local wisdom. The use of natural pigments, fibers and low carbon production techniques corresponds to the Bio-Circular-Green Economy Model of sustainable consumption and production that the Thai government is promoting. Thailand’s village handloom enterprises also represent success stories in achieving the United Nations Sustainable Development Goals (SDGs). These include SDG 1 (No Poverty), SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth) and SDG 12 (Responsible Consumption and Production), among others.

The story of Thailand’s sustainable fashion industry gives us an important lesson – that we can look back into our past to find answers for the future. For Thailand, the Royal Family has been instrumental in preserving traditional knowledge and local wisdom, which have shown the way for our people to live in balance with the natural environment for centuries.

It is almost innate in the real Thai way of life.

* * * * *

Dr. Vilawan Mangklatanakul, Deputy Permanent Secretary for Foreign Affairs of Thailand, a career diplomat since 1995, has built her expertise in Thailand’s foreign policy and international law, having served as the Director of the Office of Policy and Planning, the Director-General of the Department of International Economic Affairs, and Director General of the Department of Treaties and Legal Affairs.

In November 2021, the 76th session of the United Nations General Assembly elected Dr. Vilawan to serve as one of the 34 members of the International Law Commission (ILC) for the term 2023 – 2027. She is Thailand’s first and only woman candidate from the Asia-Pacific Group, and the first woman international lawyer from ASEAN to be elected to such a position. During her campaign for the ILC, Dr. Vilawan advocated for women’s empowerment and for communities to be better prepared for future challenges.

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Valerio Bordonaro published in Asean, Economy and trade

Room for Italy and the EU in ASEAN's green revolution

Southeast Asian countries must and will accelerate on the green transition. A great opportunity to be seized also by Italian companies

Editorial by Valerio Bordonaro

Southeast Asian countries must accelerate the energy transition and stay true to climate change mitigation goals. According to a report by the International Renewable Energy Agency (IRENA), an average annual investment of $210 billion is needed to be invested in the renewable energy, energy efficiency and related infrastructure sectors by 2050 to limit a global temperature increase to 1.5 degrees C. Such an investment would be more than two and a half times the amount currently planned by the governments of ASEAN countries. The Southeast Asian region is home to 25% of the world's geothermal generating capacity, but the region also has significant coal reserves. Indonesia, for example, has enacted a new clean energy regulation. It is one of the world's largest exporters of coal, which currently supplies about 60 percent of the country's electricity needs. The recent measure is designed to diversify the energy mix and increase the share of renewable energy to 23% by 2025. So far it stands at about 12%. The regulation also stipulates that no new coal-fired power plants will be built, although those already in operation may continue to remain in operation. Emissions from these power plants, however, will have to be contained. The government has also established a new pricing system for clean energy sources to encourage investment. To increase investment, the government will also provide tax incentives, including financing. According to the report, if Southeast Asian countries really want to contribute to the fight against climate change, collective and concerted action is needed; recent steps in this direction appear concrete. According to IRENA, the region aims to derive 23% of its primary energy from renewable sources by 2025. And investment is on the rise, with ample room for cooperation even for international governments and businesses, starting with Europe and Italy.

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Pierfrancesco Mattiolo published in Asean, Global Lens

The Chip4 alliance and its impact on ASEAN semiconductors

The semiconductor game gets political and becomes a team sport. At least on one side of the field. The four-party alliance wanted by the US aims to contain China. On which side will the ASEAN countries play?

Semiconductors are essential to the life and growth of digital society. A secure supply of these products is now a priority - and a headache - for governments around the world. There is still a global crisis in this industry's supply chains - a crisis that is part of a broader context of 'globalisation in turmoil' - which makes it difficult for other sectors to procure the necessary components. The problem is made even more complex by its political fallout. Indeed, the United States and China compete in the data economy and the development of new applications of artificial intelligence. This leads the two giants to demand a huge amount of chips and try to limit their rival's grip on the market. In the last months, Washington has taken the first steps towards the formation of a four-way semiconductor alliance with its historical partners on the China Sea - Japan, South Korea and Taiwan - in order to be able to develop 'democratic' supply chains, from the factory to consumers, without necessarily involving China. Beijing looks at the US initiative with concern, fearing being 'excluded' from the most important value chains in the globalised world.

The fragility and strategic importance of semiconductor supply chains have prompted governments to take action to secure their technological sovereignty. Many countries have taken steps to strengthen chip production in their own territory, in collaboration with the giants of the sector: just to mention two initiatives, Taiwanese TSMC is building a 12 billion production plant in Arizona with the support of the state and federal governments; Intel and the Italian government are closing negotiations for the creation of a production site in the Veneto region. Nevertheless, the semiconductor value chain cannot be enclosed within the borders of a single country, nor can it be so easily reorganised. Each stage of the production chain requires strong specialisation of entire industrial districts and high-tech equipment. At the moment, it does not seem possible to make chips without the involvement of East Asian countries. Therefore, governments are also trying to strengthen their international partnerships to secure supplies and overcome certain bottlenecks in production. Each of the Chip4 economies is particularly strong in one of the links of the chain and the alliance would be able to organise supplies between partners without relying heavily on external players. There are not only economic considerations behind Washington's initiative, however. The four countries are like-minded democracies that watch with some attention the growing Chinese influence not only in the region but also in the digital economy and some of its cutting-edge sectors. In a scenario of growing tensions with Beijing, the Chip4 countries might have an interest in not being dependent on the Chinese semiconductor industry.

Yet, it is not so easy to marginalise China from the value chain, especially for South Korea. Indeed, 60% of Seoul's chip exports go to its neighbour. Participating in an alliance that could be perceived as anti-Chinese would expose Korean manufacturers to trade retaliation, hence exclusion from a sizeable market. At the same time, Beijing might not be able to give up semiconductors made in Korea, as certain advanced technologies are only developed there or in the United States - and Washington has imposed sanctions and export control measures against Chinese companies as late as 2020. In other words, trying to exclude a country from the supply chain and, more generally, weaponising the sector for political objectives will always entail heavy costs and could make the semiconductor crisis even worse. Technological sovereignty could turn out to be an unachievable and, indeed, costly goal - there are not only duties imposed by governments, but also subsidies to attract private companies to their territory - as the disruption of the supply of even a minor component may paralyse the entire sector worldwide. The US initiative could also involve some ASEAN countries at some point. The semiconductor industry is developing fast in the region and some countries already play a key role - especially Malaysia and Singapore. In some cases, these are partners that Washington also recognises politically. Sooner or later, the US may try to involve them in initiatives like Chip4. All major ASEAN economies have an ambivalent relationship with China: on the one hand, a key economic partner; on the other, an increasingly assertive neighbour. Therefore, the same dilemma faced by Seoul today could arise for their governments. In any case, it must be remembered that the global semiconductor industry cannot prosper without a liberalised trading system shielded, as much as possible, from political tensions, due to the dense network of interdependencies between countries. The escalation of tensions between Washington and Beijing in this field would, in any case, have profoundly negative effects on the sector and would make its crisis even more complicated.

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Redazione published in Asean, Culture and society

ASEAN’s coffee revolution

By Chiara Suprani

While local consumption of the beverage continues to increase, regional producers from Vietnam are concerned about the looming coffee crush that threatens to send prices soaring

Asia is the renowned home of plantations and tea rituals, yet according to the International Coffee Organization, the Asia-Oceania region has increased its coffee consumption by 1.5 percent over the past five years, exceeding by one percentage point the growth in consumption in Europe (which remains higher for the time being) over the same period. For some, the issue can be traced to the rise of the middle class, which would be more inclined to explore new trends and consume Western products. For others, however, the trend would go far beyond mere curiosity: it is such a cultural issue that it causes consumers to seek out and drink on local "beans." Not only that, Southeast Asian people see coffee as colonial heritage. In the 19th century, France harvested seeds known as "cherry buds", due to their crimson colour, in Vietnam, and the Netherlands exported large quantities from Indonesia.

Although the culture of coffee, especially the one of the most prized variety of arabica coffee, is known to be linked to the economies of South America, yet floods in Colombia and poor 2021 harvests from Honduras, Guatemala and Nicaragua have in the past two years redirected the origin of supplies.

For some countries in the Association of Southeast Asian Nations, the past few years have been propitious for the coffee trade. Vietnam as of January 2022 was the second largest coffee exporting country in the world, after Brazil. Indonesia from February 2021 to January 2022 exported seven million 60 kg bags of coffee, surpassing Uganda. While the Philippines, which is also among the exporting countries, is the second largest coffee importing country in ASEAN from 2017 to 2021, the eighth in the 2020/21 period.

Vietnam's "cherry blossoms"

In Vietnam, coffee is also ingrained in the country's culture. In the lexicon, bribes are called "coffee money" while socializing is called going to "ca phe ca phao." Famous for its Robusta variety of coffee, Vietnam exported 1.24 million tons of coffee worth $2.82 billion during the opening eight months of the year, representing increases of 14.7 percent in volume and 39.6 percent in value over the same period the previous year. Still, Hanoi worriedly looks at the outlook for the upcoming months. Rising global prices are already affecting the sector, which will see a decline in coffee seed production next year. Local availability will be reduced, with farmers' withholdings plummeting from 13 percent to 2 percent of their annual production. The collapse in supply of the Robusta variety, which accounts for 90 percent of domestic production, has pushed prices in Dak Lak province, which covers one-third of the country's crop, up to 49,100 Vietnamese dong (US$2.10) per kilogram. A record-breaking price.

Indonesia: the coffee mecca

Indonesia is the second largest coffee-producing country in Asia. Iman Kusumaputra is one of the co-founders of Kopikalyan, Indonesia's answer to Starbucks, and he pointed out in an interview with Nikkei that "if production used to be mainly export-oriented, now farmers keep the best quality coffee for themselves." In addition, Indonesia's framework as the world's largest archipelago nation, allows the country to grow many varieties of coffee, each reflecting the characteristics of the island where it is planted. Another aspect that has likely contributed to Indonesia's coffee consumption rising to 5 million 60 kg bags in 2020/21 is the search for a non-alcoholic beverage to share in social moments in a predominantly Muslim country.

Thai weed cafes

On June 8 this year, the Thai government declared that it is no longer illegal to grow and trade marijuana and hemp products. It had been expected that this move, in a conservative, Buddhist country, would have limited consequences for the trade, given the ban on recreational use and production of drugs with a THC level greater than 0.2 percent. In recent months, however, in an effort to reactivate post-pandemic tourism, numerous weed cafes have sprung up around Bangkok. In 20/21, coffee consumption in Thailand amounted to nearly 1.5 million 60kg bags. The relaxation of anti-Covid measures along with the legalization of marijuana has incentivized young domestic entrepreneurs to open new establishments that could combine these two sectors.

It remains to be seen whether the forecast for September will prove correct. If so, in countries such as Germany, the United States and Italy, among the main importers of coffee from Vietnam, prices will soar. And the availability of the product will decrease also given the growing trend of domestic coffee consumption in Southeast Asian countries.

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Alessio published in Asean, Economy and trade

ASEAN leads global trade

Between 2021 and 2026, South-East Asia looks set to be the region with the strongest export growth in the world

All indicators confirm: the growth engine of the coming years will increasingly be South-East Asia. According to the Trade Growth Atlas report by global logistics provider DHL, the ASEAN bloc of countries is expected to lead the world in terms of export growth from 2021 to 2026. Behind the South-East region, South and Central Asia are expected to assert themselves. ASEAN is expected to register a growth in export volume of 5.6% over the five-year period, followed by South and Central Asia with 5% and Sub-Saharan Africa with 4.4%, as the global trade balance continues to be rewritten. South-East Asia and South and Central Asia are thus increasingly set to be 'new poles' of trade growth. At the forefront are Vietnam and the Philippines, which have very high GDP and export growth estimates in the coming years, partly due to the diversification of production and global supply chains. More and more international giants, starting with technology and digital giants, are strengthening their presence in a region where the middle class is constantly expanding.

According to DHL research, however, the pandemic will not be as severe a setback to global trade as initially predicted. And even despite the war between Russia and Ukraine, recent forecasts indicate that global trade is expected to grow slightly faster in 2022 and 2023 than in pre-pandemic years. This is also thanks to the surge in e-commerce sales, whose cross-border growth is expected to continue. Global sales could reach $1 trillion in 2030, up from $300 billion in 2020. And ASEAN can also play a key role on this front, given the sharp rise of the sector in the region. South-East Asia is becoming an increasingly important exporter of sophisticated capital goods, such as industrial equipment and engines. In short, growth is not only quantitative but also qualitative.

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Michelle Cabula published in Asean, Economy and trade

From durian a lesson in the pros and cons of free trade

Since the Regional Comprehensive Economic Partnership (RCEP) came into force on 1 January, exporting has undoubtedly become easier for ASEAN countries. The recent boom in durian sales in China offers important insights into the sustainability of the agreement and the challenges of establishing a free trade area with a market as big as China's.

The RCEP currently accounts for 30% of the world's GDP and is the world's largest trading bloc. For the ten ASEAN economies, joining the agreement has been a major boost to the export of their products. Alongside the almost complete dismantling of tariff barriers, the faster customs clearance of perishable goods is a big advantage when freshness is essential to ensure the high quality and competitiveness of the product. This is the case with durian, which has become the most imported fruit in China, both in terms of volume and value.

According to Chinese customs statistics, fresh durian imports reached 821,600 tonnes in 2021, totalling USD 4,205 billion, registering significant increases compared to previous years. Compared to 2017, imports of the 'king of fruits' grew fourfold and a further acceleration in sales is expected this year.

Although costs have reduced following the entry into force of the RCEP, this has not impacted prices, which continue to rise in parallel with the surge in demand for the product by Chinese consumers. To date, a durian generally costs more than USD 7 per piece, but the high price has not stopped demand in supermarkets and the spread of durian dishes such as cakes, durian milk crepes and even durian hotpots, enthusiastically reviewed by consumers on Chinese social media and popular in upscale restaurants.

In response, South-East Asian producing countries are expanding their production capacity. From 2019 to 2021 alone, Thailand has increased its durian production by about 30 per cent. "China's imports are already high, but China's per capita consumption is expected to grow further. Thai farmers are highly motivated to expand production", an official of the Thai embassy in China explained to Nikkei. 

Malaysia is deforesting part of its tropical rainforests to make room for plantations of 'Musang King' durian, the most prized and fashionable variety, not without causing irreversible consequences on the ecosystem and local communities, according to some experts. A joint statement signed by thirty-six civil society organisations and promoted by the environmental group B.E.A.CC..H identifies deforestation as the main cause of the recent floods in the Gunung Inas area, Baling district, which swept through 42 villages and residential areas, affecting 1,500 villagers and causing the loss of three lives. Laos and Vietnam are also receiving increasing flows of large-scale investment, including from the Chinese side, for the expansion of durian cultivation.

The shared fear is that the fashion for durian in China may one day wane, or that Beijing may use import restriction measures as a diplomatic tool, as it did last March with the ban on Taiwanese pineapple imports. In other words, China's inclusion in the main regional economic integration platform, in the name of greater trade and investment cooperation, seemed desirable in the eyes of many. On the other hand, there is a risk that this could increase the economic dependence of ASEAN countries on China, leaving room for sudden disruptions, even in the currently most profitable market niches, such as that of durian.

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Lorenzo published in Asean, Politics and strategy

Southeast Asia at the center

First the IPEF ministerial, then the China-ASEAN Expo: the region pursues its line of neutrality and international cooperation.

Editorial by Lorenzo Lamperti

The war in Ukraine has sharpened a trend that had been going on for some time: the demand, implicit or not, to choose "sides." Not only on Russia, but also in reference to China. However, ASEAN seems to have long ago chosen a side, namely that of neutrality and pacifism. A path that is placing Southeast Asia, one of the fastest growing regions in the world, at the center of international trade (and other) relations. The plastic demonstration comes during this month of September, with two relevant events within a week. Between Sept. 8 and 9, representatives from Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam attended the first ministerial meeting of the Indo-Pacific Economic Framework for Prosperity (IPEF), the trade cooperation platform launched a few months ago by President Joe Biden's United States, in Los Angeles. At the end of the summit, the 14 countries that are part of the project agreed on key guidelines for negotiating the four main "pillars" of a future agreement: trade (including data flows and workers' rights), supply chain resilience, green energy and environmental standards, and anti-corruption and tax measures. On the other hand, the 19th China-ASEAN Expo and China-ASEAN Business and Investment Summit is scheduled from Friday, September 16 to Monday, September 19. The event takes place in Nanning, Guangxi Autonomous Region, with the physical participation of more than 300 companies and another 2,000 companies in virtual mode. Malaysia, as the country of honor, will host a series of activities on the theme of the 10th anniversary of the development of two industrial parks (in Qinzhou in Guangxi and Kuantan in Malaysia), called to further deepen economic and trade exchanges and cooperation between China and ASEAN, including under the Regional Comprehensive Economic Partnership (RCEP). Beijing has long been ASEAN's largest trading partner. In the first seven months of 2022, the interchange has further increased. It signals an important bond for both sides. The possibility of "adding on," for other international players, is real. And it is demonstrated by the cooperation being deepened between ASEAN and the European Union. "Replacing," on the other hand, appears much more complicated.

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Alessio published in Asean, Economy and trade

ASEAN Locomotive speeds up

With a global contingency that is complex to say the least, Southeast Asia is one of the most attractive regions for international investors

Editorial by Alessio Piazza

A tourism boom, robust restart of domestic demand, wealth of raw materials and increasingly welcoming rules for international players. Southeast Asia is one of the most attractive regions for global investment. It was before, it is even more so in the current contingency, made even more complex by widespread inflation and unknowns about supply chains. Starting with energy. While global equities are struggling after the latest moves by the U.S. Federal Reserve, Southeast Asia's growth prospects in fact make the ASEAN region a favorite among investors. Bloomberg estimates that most major economies in the region are expected to grow by at least 5 percent in 2022, thanks to the lifting of restrictions imposed during the Covid-19 pandemic. And global funds have poured a net $2.4 billion into the region, not counting Singapore. According to the South China Morning Post, the composition of Southeast Asia's equity benchmarks, with a relatively high proportion of banking stocks, is also favorable amid rising global interest rates. While most global central banks have been forced to tighten fiscal policy to deal with rising inflation, driven in part by years of pandemic stimulus, the problem has been less acute in Southeast Asia. Indonesia, whose stock market is among the best performing in the world this year, only began raising rates in August. And, in general, rates are still much more affordable than in several other parts of the world. Malaysia has more than doubled its annual target for tourists following an above-estimated rebound in recent months, while Thailand expects to raise as much as $11 billion thanks to a sharp increase in foreign visitor arrivals in the second half of the year. But Indonesia is also accelerating and, most recently, has also attracted the attention of Saudi Arabia on its startups with a potential unicorn future. Not to mention Vietnam, which is becoming a manufacturing destination for more and more international giants. The ASEAN locomotive has restarted.

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Michelle Cabula published in Asean, Economy and trade

ASEAN and Agriculture 4.0: between global challenges and food insecurity the agtech market flourishes

Asia, the world's most populous continent, is also home to more than half (425 million) of the world's people still suffering from hunger. Recent environmental, health and political challenges have served as a 'wake-up call', highlighting the need to rethink production and supply chains. In South-East Asia, this has given a strong impetus to the digital transformation already underway in the agricultural sector, triggering a true Agriculture 4.0 revolution.

"Agriculture is a way of life in ASEAN”. Eight out of 10 countries in the region depend on agriculture and its production, and in some, such as Myanmar and Laos, the sector accounts for over 40% of GDP. However, traditional production techniques cannot cope with the increasingly sophisticated demand for food of an ever-growing population. The Asian Development Bank estimates that to keep up with the expansion of the middle class and the growth in demand for food, production would have to increase by 60-70% compared to ten years ago. South-East Asian countries are therefore increasingly turning to agtech solutions that allow them to produce more (and sustainably) with fewer resources in order to ensure food security in a context of increasing instability.

Singapore, one of the most densely populated areas on the planet, relies on vertical farming to overcome the scarcity of land for agricultural use. There are now more than a dozen rooftops used for urban agriculture, designed to guarantee a harvest of 2,000 tonnes of vegetables per year. Using hydroponic technology, the ComCrop company manages to produce vegetables without the use of harmful pesticides or herbicides, while at the same time reducing water consumption by 90% compared to traditional agriculture. Production, transport and storage costs are also significantly lower: produce grown on the city's rooftops is available in local shops more quickly and at lower prices.

In addition to limiting insecurity due to high external dependency in terms of food supply, new technologies also protect crops and animals from potential environmental hazards. Blue Ocean Aquaculture Technology (BOAT) has transformed an industrial space in the Tuas area of Singapore into an indoor 'futuristic fish farm' system. By exploiting nano-oxygen technology, the company is able to sustainably produce up to 18 tonnes of fish per year, safe from problems such as water pollution and plankton blooms.

The work of pioneering companies such as ComCrop and BOAT aligns perfectly with the Food Security Roadmap, the Singapore government's plan to independently provide 30% of the city-state's nutritional needs by 2030, which includes the allocation of more than USD 40 million aimed at ensuring the resilience of the agricultural industry and the efficient management of resources.

The success of agtech is also transforming the lives of many workers in the region. Pham Thi Huong told Nikkei Asia that he gave up her job on coffee plantations in the central highlands of Vietnam to dedicate herself to growing strawberries on rocks in a greenhouse in Orlar. The Australian company, in collaboration with the Dutch Business Association of Vietnam, has in fact devised a new form of vertical farming that uses rocks treated with a patented mix of microbes to provide nutrients for the crops, in the absence of soil and with minimal use of water.

In the Thai province of Prachuap Khiri Khan, Kirana Leesakulpran, 48, who has been in the shrimp farming business for almost 30 years, has turned her business around by integrating some automatic feeders and a paddle aerator system in her factory. "Since implementing this new technology and system, we’re able to produce more. We earn more profit and it makes our lives as farmers more sustainable," she commented, explaining how water purification times have been reduced from three to seven days and productivity has increased significantly, while at the same time reducing feed waste, which is one of the biggest costs in the industry.

For people whose livelihoods depend on farming and animal husbandry, the balance between productivity and sustainability plays a key role in ensuring access to nutritious food in sufficient quantities. Against the backdrop of a general surge in food prices and rising fuel and fertiliser prices due to the conflict between Russia and Ukraine, farmers in South-East Asia are faced with extreme weather events and endemic food insecurity problems. This is prompting governments and local companies to rethink production and supply systems, opting for the integration of digital technologies and artificial intelligence into production chains. Given the region's strong technological vocation, South-East Asia is a fertile ground for the development of innovation in the agri-food sector; global and regional challenges will provide an important test bed for the nascent agtech and foodtech markets.

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Carola Frattini published in Asean, Culture and society

Southeast Asia's rush to digitization

ASEAN countries are growing rapidly on the digital front, while at the same time trying to keep a tight rein on the Internet lives of their citizens

In the field of technology and digitization, various governments of ASEAN countries have two competing goals. On the one hand, they promote and support greater digitization, especially with a view to expanding their economies. "Keeping up with the times" from a digitization perspective is a basic requirement for these growing economies. On the other hand, however, there is a strong tendency of some governments in limiting the population's access to the Internet. 

Concrete demonstration of this behavior can be found in the example of Vietnam. Vietnam's economy is growing strongly; Vietnamese exports in the first quarter of 2022 grew by 12.9 percent over the past year. To sustain this strong growth, modernization of the country's digitization systems is needed. For this reason, Vietnamese Prime Minister Pham Minh Chinh last month had several meetings with representatives of companies such as Apple, Google, and Facebook. In reality, the relationship between the Vietnamese government and these tech giants is far from simple and straightforward. Indeed, on the one hand, the Vietnam market is a great source of revenue for these tech companies. On the other hand, however, there are stakes that are often imposed on international digital companies and restrictions on access to digital platforms. 

According to journalist Lien Hoang in an article in Nikkei Asia, the same companies that Vietnamese Prime Minister Phạm Minh Chính met with in Silicon Valley are lobbying in Vietnam to avoid further restrictions in the digital field. In fact, the Vietnamese administration would like to make even more stringent changes to Decree 72, which regulates the management, provision and use of Internet services, information and online games. The most stringent changes would be two. The first concerns the introduction of fines in case a content that is not considered suitable by the Vietnamese government is not blocked by online platforms within 24 hours. The second novelty would be to require companies to store data collected online in Vietnam within national borders. This measure would thus introduce a ban on transferring this data outside the state's borders. Hanoi is ready to do business with big tech companies but at the same time wants to maintain firm control over the digital lives of its citizens.

The issue of net freedom is not only present in Vietnam, but is a more generalized and relevant problem in other ASEAN countries. As can be seen from the chart below, many Southeast Asian countries do not score high in the degree of "internet freedom" (internet freedom). Myanmar ranks second to last among Asian countries with an internet freedom index of 17, only 7 points higher than China. In contrast, Vietnam earns an internet freedom index of 22 out of 100, representing the third-to-last country in Asia in terms of digital freedom. Thailand and Cambodia also do not achieve very high indices of their citizens' online freedom. On the other side is the Philippines with a score of 65 out of 100, which is thus rated as the country where citizens have the most freedom to freely use digital platforms. To have a yardstick for comparison, states such as Italy, France, Germany have an "internet freedom" index around 76-78 out of 100. In general, as stated by various experts, heavy restrictions in the context of digital platforms could in the future prove extremely counterproductive and contradictory to the goal of many ASEAN countries to develop digital economies. Therefore, it is likely that the issue of "internet freedom" will be of utmost importance to Southeast Asian countries in the coming years. 

Immagine che contiene testoDescrizione generata automaticamente
Fonte grafico: https://www.statista.com/statistics/373347/degree-of-internet-freedom-in-asia/ 
Per approfondire e vedere sulla mappa: https://freedomhouse.org/explore-the-map?type=fotn&year=2021

 

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Lorenzo published in Asean, Politics and strategy

ASEAN and EU even closer

A summit with an unprecedented format between the two blocks is scheduled for December to discuss trade cooperation and supply chains

Editorial by Lorenzo Lamperti

War in Ukraine, Asia-Pacific tensions, inflation and energy dilemma. The shadows over the near future worry many, and multilateral cooperation becomes even more urgent. The European Union and ASEAN have demonstrated many times before that they understand this need and are now moving to accelerate bilateral cooperation. In this spirit, a summit of national leaders from the two blocs was held for the first time on Dec. 14 to discuss trade expansion and infrastructure assistance. Previous summits between the two groups have been attended by heads and senior officials of the EU executive body, but this time the heads of state and national leaders of ASEAN and EU countries will be directly involved. It signals a desire to ensure greater political alignment, in addition to existing economic and trade alignment. The goal is to develop and secure global supply chains threatened by the economic and geopolitical turmoil of recent months. Europe will encourage Southeast Asia to play a central role in the West's supply chain, based on the idea of "friend-shoring" between nations with shared values. In return it should offer infrastructure aid and economic cooperation agreements. Perhaps by pursuing negotiations for new free trade agreements with ASEAN member countries. Agreements are already in place with Singapore and Vietnam but efforts are also being made to accelerate with Indonesia, the Philippines, Malaysia and Thailand. An expanded free trade network would diversify supply chains and reduce dependence on energy resources from other countries such as Russia. In 2021, the EU and ASEAN traded $250 billion worth of goods, but the room for improvement is still wide. No later than Aug. 4, EU High Representative for Foreign Affairs and Security Policy Josep Borrell reiterated his commitment to deepening relations with the ASEAN region. A need increasingly clear to the governments of the various European countries, which like those of their Asian counterparts have no intention of returning to a world divided into blocks. 

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