Asean

Redazione published in Asean, Global Lens

ASEAN and the Indo Pacific Economic Framework for Prosperity

Looking at its initial stage and various forward looking engagements, it will be crucial to see how member nations adapt to the key objectives of this partnership

By Aishwarya Nautiyal

Indo Pacific strategy has not only shown a new synergy among QUAD partners but has given a footprint towards the new Indo Pacific Economic Framework recently launched by US President Joe Biden allowing 12 nations as the participating member also opening doors for any new nations willing to join in future. Among major economic powers like the US, Australia, India, South Korea and Japan, interestingly ASEAN member countries like Malaysia, Philippines, Singapore, Brunei, Indonesia, Thailand and Vietnam have been in the forefront of this newly documented framework. It is crucial to understand that the collective economy of member nations represents nearly 40% of the world’s GDP. This opens the door for an opportunity for countries in the Pacific and Indian Ocean region who are also involved in various economic and security partnerships towards a collective effort to “grow faster and fairer”. Although it is interesting to see that it isn’t an official trade pact, trade has become a “pillar” in this whole framework along with other key elements.

      Though at the initial stage many later negotiations and amendments can be discussed among member nations, the key scenarios have been focused upon certain themes such as Supply Chain, Infrastructure, Green energy, decarbonization, tax and anti corruption and flow of free and fair trade. Thus this can be seen as a counterbalance to RCEP which is a free trade agreement as it outweighs both population and GDP. ASEAN countries that have not been included are Myanmar, Laos and Cambodia. Whereas China has raised its criticism for further economic decoupling perhaps it has also been excluded in this partnership. Interestingly countries such as the United States and India who have not participated in RCEP have been in the forefront in this new framework. India’s vision towards “Look East Policy” has brought ASEAN members to its core of foreign policy thus this new initiative brings the cooperation between India and ASEAN with a vision for strengthening a multilateral framework with other major economies to Pacific Ocean region. 

        Looking at future geoeconomics and geopolitics, the key pillar lies towards a resilient and fair economy which was also a highlight of President Biden’s statement during the East Asia Summit. This can also be seen as a possible replacement of the Comprehensive and Progressive Trans Pacific Partnership (CPTPP). Interestingly launch of IPEF just a day before QUAD summit in Tokyo, Japan has brought two platforms where economic base along with QUAD partners has initiated a new American led engagement to redesign partnership in various level among regional and global partners extending from East China Sea to South China Sea and further to Bay of Bengal and Arabian Sea. Bay of Bengal is a very crucial juncture between India and ASEAN nations. The crucial Strait of Malacca is a key for various goods and energy trade. Apart from India-ASEAN partnership IPEF gives a chance to expand beyond regional to global cooperation.

     Economic integration by creating new technological innovations also creating an industrial supply chain in which India is actively looking to become a new focal point with the future participation of various ASEAN nations in several industrial and technological investments such as semiconductors. Whereas India has been keenly working on enhancing economic connectivity by boosting investments in various infrastructure projects connecting ASEAN nations with the North East part of India. On the other hand US’s willingness to extend cooperation to strengthen the digital based economy and trade inclusive of purchase, sales, data flow enabling global value chain and smart services through several platforms and applications. The key idea is to ensure downstream costs for businesses and enhance the ability for processing of data and analysis, securing a secure platform for business continuity whereas access to key raw materials such as semiconductors, minerals and energy technology boosting the key pillars of IPEF is supply chain resilience.

       On the other hand, decarbonization and building new infrastructure to overcome key issues of global warming and rising levels of pollution by providing finances and technology to share technical assistance and mobilize concessional finances by adopting durable infrastructure for renewable energy. Tax and anti corruption is aimed to promote free and fair competition overcoming issues of taxation, money laundering and bribery through multilateral standards and agreements adopted by the members of IPEF. Looking at its initial stage and various forward looking engagements, it will be crucial to see how member nations adapt to the key objectives of this partnership and the level of confidence building with various engagements in near future ensuring regional and global geographic and economic obligations by creating new opportunities and avenues for future nations willing to be a part of comprehensive economic cooperation of IPEF.

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Sabrina Moles published in Asean, Economy and trade

The global inflation challenge: how Grab and the ASEAN gig-economy are struggling to survive

Rising fuel prices are the first real shock that Asian unicorns are facing since they expanded in the region. A vicious circle that challenges the resilience of the gig-economy made in ASEAN

Inflation is unforgiving. Even in the ASEAN countries. Especially if your business model has always focused on investor hype and extremely competitive consumer prices. This is what is happening to the ride-hailing giant Grab, a former unicorn now located in Singapore, and nowadays listed at Nasdaq index. The cleaver on fuel prices is straining the company's revenue across the region. Since Grab's core business are food delivery and ride-hailing services, it is no surprise that the crisis is hardly hitting its drivers and couriers.

According to the CEO and co-founder of the company Anthony Tan "Grab's mobility offer will stabilize in the second half of the year". But how? The company has planned incentives for workers and betting on the market recovery. A message that takes time with risk-averse investors but does not reassure customers: "It has been so difficult to find a car lately, it takes up to half an hour of waiting ", complains a premium user at Rest of World. While in the West many employees are trying to make ends meet with some extra income from gig-economy jobs, in Asia - where this market is still immature, albeit growing - the profession becomes less attractive. Once a viable and very profitable alternative to other traditional uses, a job in the gig-economy for ASEAN citizens is now more a risk than a solid investment.

Inflation hits the ASEAN countries

Today a delivery man in the Philippines spends 67% more on fuel than in February, while revenue is threatened by the general price surge. In Malaysia, travel prices during peak hours are estimated to have risen by up to 400%. Even those who rely on delivery services today find everything more expensive. Not only have the prices for raw materials increased - to this must be added the cataclysms that are causing the price of Filipino coffee to rise, for instance - but also the commissions are starting to become too expensive for small businesses.

From the customers’ point of view, without the economic advantages of the first, even the taxi service loses its appeal. As a study on ride-hailing trends in Southeast Asia reveals, the use of vehicles with driver is often a valid alternative for commuters. A rather common trend in Manila, where ride-hailing apps allow you to avoid the chaos (and disruptions) of the metro. In Indonesia, the overcrowded and sparse public transport that pushes users to the apps to book a taxi. Finally, it is curious that research in the area has revealed how, in the absence of these services, many customers would simply return ... to move on foot. According to studies for sustainable mobility there is a limit, estimated between 2 and 5 km, which would not justify the use of the car as the main means of transport: a possible point against traffic in those Asian cities where it is increasingly urgent. impose limitations on climate-altering emissions. And, therefore, another challenge in the horizon of Uber model for individual mobility.

Not to mention that ASEAN governments have opposed Grab while entering their markets. Unequal competition against taxis and contracts with few (or no) guarantees for workers are just some of the factors that prevent a peaceful relationship between these companies and the regulatory authorities. The system has proved fragile at times of crisis, and it is not yet clear whether the strategies adopted will be able to plug the fiscal deficit.

The vicious circle of the gig economy

Less revenue, more costs. Fewer workers, more inefficiencies. Grab isn't the only company caught in the tech unicorn trap. Even the Indonesian Go-Jek has to deal with skyrocketing prices, while resisting thanks to the strong support of Jakarta and customers who see the company as a bulwark of progress made in Indonesia. FoodPanda is in turn a victim of the race to the bottom attempted to penetrate the Grab empire, so much so that today the expansion strategy in Asia has become more cautious while the company looks for new ports elsewhere (for example in Eastern Europe).

Grab's pattern of expansion into Southeast Asia has often been referred to as "aggressive". The startup managed to penetrate the markets of the region thanks to competitive prices, the flexibility of working conditions and some local regulatory gaps. In addition, there has never been a lack of investor support, which has enabled the company to go from unicorn to ride-hailing leader in less than ten years. Between 2013 and 2014, Grab entered the Philippines, Thailand, Vietnam, and Indonesia, beating multinational Uber within a few months. In 2021 the company went public for a value of over 40 billion dollars and the shares immediately increased by 21%. But all that glitters is not gold: the company says it does not expect to make profits by 2023 and the current consumer crisis could further distance this horizon.

Grab's ambitions, and its promises, remain high: it would like to extend to all countries where it operates even the most advanced services, such as insurance and digital payments (currently reserved only for some locations). And he hopes to overcome this inflationary winter with subsidies that keep workers and do not bring down the quality of service. Above all, tariffs must remain extremely competitive - as Asian consumer preference studies suggest. A series of challenges, those of 2022, which test a whole (new) way of doing business and whose survival could determine the rewriting of the rules of doing business.

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Agnese Ranaldi published in Asean, Culture and society

The new "Asian values" and LGBTQI+ rights

Among ASEAN countries, the issue of legal and political recognition of the LGBTQI+ community experienced several setbacks but also steps forward

In June, Pride Month celebrations bloom around the world. Some Southeast Asian countries have made progress on civil rights, but most of them are still reticent to embrace the political claims and demands for recognition of the LGBTQI+ community. Cultural and religious circumstances and restrictive laws intersect with the bitter experience of Western colonization, providing political arguments for detractors of social movements fighting for the free expression of gender identity and sexual orientations. But recovering "Asian values," according to some analysts, may lead to accelerated openings on civil rights.

Also through the work of major international organizations, such as the United Nations, LGBTQI+ rights have been recognized as human rights under international law. In 2007, the Yogyakarta Principles, a compendium of guidelines addressed to states in the international community on the prevention of discrimination based on sexual orientation and gender identity were adopted: for "a different future, in which all persons born free and equal in dignity and rights" can enjoy the Arendtian right to have rights. But as we venture into national and local contexts, it seems that the recommendations of high politics become increasingly opaque. Southeast Asia is one of the regions that expresses this contradiction most forcefully.

In ASEAN, there have been many steps forward on the issue of legal and political recognition of the LGBTQI+ community, but also several setbacks. In Brunei and Indonesia, same-sex relationships are banned and in the Sultanate can even involve the death penalty. Indonesia has one of the highest levels of intolerance of same-sex couples in Southeast Asia: according to a 2019 Pew Research Center survey, 80% of respondents were against the acceptance of homosexuality in society. Recently, a news program airing on Youtube was at the center of a scandal for inviting a gay couple on the show. Deddy Corbuzier's "Close The Door" talk show is often the subject of controversy for having public figures speak on sensitive issues, and this time it infuriated many members of Indonesia's large Muslim community. President of the Indonesian Ulema Council Cholil Nafis was very upset when he said that "Islam forbids LGBT people. It is like a sick part of the body that needs to be amputated, not celebrated."

Singapore also does not rank among the most progressive countries when it comes to LGBTQI+ rights. The Asian city-state has a law in place that criminalizes sex between men, although "it is not strictly enforced." Thailand, often referred to as an "LGBTQI+ paradise" because of the relative freedom with which people can express gender and sexual orientation, is working on legalizing same-sex marriages. Kittinun Daramadhaj, president of Thailand's Rainbow Sky Association, said that gender equality in Thailand is "a fake equality, because we are happy with LGBT people, but we have no legal mechanism to protect their rights." Recently, after a Constitutional Court ruling that Thai laws should be expanded to provide more rights for the LGBTQI+ community, does something seem to be changing in Thailand. According to some observers, the country is well on its way to becoming the first in Southeast Asia to legalize same-sex unions, with a bill now going through parliament. The proposal is not about actual marriage, but would allow gay couples to adopt children and manage their assets jointly.

Another virtuous example of social recognition of LGBTQI+ people comes from an unsuspected country: the Philippines. Despite a history of authoritarianism and the deep pervasiveness of Catholic doctrine, the Southeast Asian archipelago has a record of inclusiveness for gender-fluid and queer people. This record also owes much to the legacy of traditional religions, which survived the advent of Spanish imperialism and the arrival of Catholicism and continued to guide the relational dynamics of society. Filipino-born director, producer and writer Vonne Patiag focuses heavily in her work on personal stories of marginalized identities. In an article in the Guardian, he gives the example of bakla, often considered a third gender in the Philippines, described almost as "an intersectional celebration of Asian and queer cultures." This is a gender identity based on performative cultural practice rather than sexuality, transcending male-female duality in a rejection of ante-litteram binarism. According to Vonne Patiag, "bakla is a Tagalog word for the Filipino practice of male cross-dressing, indicating a man who has 'feminine' manners, dresses like a 'sexy' woman or identifies as a woman." Baklas, historically, also hold important leadership roles at the societal level. Despite this pattern of gender fluidity, and although homosexuality is legal in the Philippines, marriage for same-sex couples is still not recognized, and legislation for the conversion of transgender people is still quite ambiguous.

According to Brian Wong, a PhD candidate in Political Theory at Balliol College, Oxford, and a Rhodes Scholar from Hong Kong, "it was contact with the West that gradually reduced Asia's permissiveness toward same-sex relations." Episodes of homophobia, according to the scholar, would have a correlation with the colonial experience, which would undermine the uniqueness of the debate on gender identity and sexual orientation in East Asia. Therefore, Wong calls on the Southeast Asian community to reclaim those "Asian values," which some detractors would like to confuse with conservative paradigms of thought, which should instead be drawn upon to take the state of rights of LGBTQI+ communities in Southeast Asia further.

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Redazione published in Asean, Politics and strategy

Italy-ASEAN relationship at a turning point

Editorial by Benedetto Latteri

Ambassador of Italy to Indonesia, Timor-East and ASEAN
*Originally published in The Jakarta Post

The recent visit of the Italian Vice Minister of Foreign Affairs Manlio Di Stefano to Jakarta and his attendance at the second ASEAN-Italy Development Partnership Committee Meeting represents pivotal progress toward the consolidation of the relationship between Italy and ASEAN. The reasons that led my country to the decision to apply for the development partnership status are evident to anyone who is familiar with international dynamics: ASEAN is a key partner in a strategic region, the Indo-Pacific, a region that hosts the world’s largest and fastest growing economies and a vast share of global trade passing through its waters. ASEAN is one of the most successful examples of regional integration, as well as a trusted provider of stability and economic growth. Its contribution to upholding freedom of navigation, preventing conflicts and promoting pluralism and tolerance has been unprecedented. At the same time, worrying developments are emerging in the Indo-Pacific: increased tensions over trade and supply chains, as well as intense competition on the political and security fronts. Consequently, regional and global powers, including the European Union and its member states, look at the Indo-Pacific with increasing attention, trying to strengthen cooperation with ASEAN, which represents an excellent framework to defuse geopolitical tensions. Since the first Italy-ASEAN Joint Committee in April of last year, we have been intensely negotiating the areas of joint cooperation. It’s been a long and challenging process that culminated yesterday with the adoption of a 62-paragraph document, the Practical Cooperation Areas (PCAs). The PCAs reaffirm our commitment to work together in a wide range of fields. The document defines the future direction of the development partnership by delineating a strategy that will require a comprehensive engagement and therefore a very significant effort from both sides. Just to give an idea of the depth and magnitude of our future cooperation, the fields of cooperation include peace and security, maritime cooperation, good governance and human rights, trade, investment and private sector development, energy, food, agriculture and forestry, tourism, science, technology and innovation, information communications technology, digital integration and e-commerce, people-to-people exchanges, disaster management and humanitarian assistance, health, environment and climate change, culture, connectivity and sustainable development. Even before the approval of the PCAs, Italy and ASEAN had launched or discussed a variety of initiatives on cultural heritage, cybercrime, environmental protection, sustainable fishing and coastal development and space cooperation. Furthermore, on July 5 and 6, the sixth edition of the High Level Dialogue on Economic Relations between Italy and ASEAN will take place in Kuala Lumpur, the first one to be held in person since the COVID-19 pandemic began. The event gathers ministers, CEOs and senior officials from Italy, ASEAN member states and the ASEAN Secretariat with the aim of strengthening economic ties between our countries. We believe that this initiative will contribute to unveiling the opportunities that the ASEAN market offers to our investors and build up “win-win” economic partnerships with Southeast Asia. As everyone can see, the cooperation that Italy and ASEAN envisage for the next five years is not limited to a few topics or sectors. To succeed, Italy and ASEAN will need to be fully committed to their partnership. In this context, we wish to commend the Cambodian presidency of ASEAN for the fruitful collaboration that we have been able to establish in 2022. And we are looking forward to working with the presidency of Indonesia in 2023 with which, I’m sure, we will continue to successfully advance our common goals of peace and development through mutual cooperation and support. The presence of the Italian vice minister of foreign affairs in Jakarta, especially in a moment of extreme crisis in Europe, sends a very clear message: Italy is fully committed to the region and counts on her ASEAN friends for the success of our cooperation in the years to come.

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Michelle Cabula published in Asean, Economy and trade

The rush of Japanese companies to South-East Asia

The pandemic has ignited a new awareness of the importance of personal and environmental hygiene. A number of Japanese companies, relying on an ever-widening pool of middle-income consumers, are expanding their operations in the ASEAN region

While the pandemic curbed the growth of countless sectors, the emergency situation gave impetus to the sudden expansion of some specific market segments, among which personal hygiene and home-care products stand out. This is the case of a number of Japanese companies that have relaunched their activities after an initial halt, leveraging the new awareness brought about by the pandemic among the growing middle class. Takafumi Ohno, who heads Lion's international business headquarters, has pointed out that the company wants to focus on the great potential of the beauty market in South-East Asia.

In September, the company, already established in the household products sector, launched Azzura, its first cosmetics brand. The brand made its debut in Indonesia, but the intention is to reach other countries, such as Malaysia, in the coming years. Offering mid-range pricing and targeting a growing number of young working women, Lion is confident of conquering also this new market segment, where demand is growing rapidly in the face of little competition from local and foreign brands. At the end of last year, again thanks to Lion, SunoHada, a Japanese skincare brand, arrived in Singapore, while Rawquest skincare, produced by its South Korean subsidiary, arrived in Thailand.

For Earth Corporation, a leading household insecticide company, there are also good opportunities to accelerate business expansion in South-East Asia. Taking advantage of the increased focus on the risk of transmission of infectious diseases through insects due to the recent pandemic experience, the time seems right to enrich its product offering and finalise expansion operations in countries such as Malaysia, Cambodia and the Philippines. The goal is to increase revenues from the sale of repellents in the region by 15 per cent by the end of 2023, from the current figure of ¥16 billion ($130 million), as stated by Earth's president, Katsunori Kawabata.

Recent expansion projects of Japanese companies in the region hint not only at a broadening of the consumer base, but also at participation in virtuous initiatives that benefit local communities. One of the most significant projects sees chemical and cosmetics company Kao launching a collaboration with Wota, a start-up affiliated with the University of Tokyo that aims to provide solutions to combat the global water crisis. The two partners announced that "Kao and WOTA will join forces in a business partnership aimed at solving global issues related to water and sanitation" through a series of initiatives, including the installation of handwashing facilities in places without access to running water. "We will expand our business so people in such places can use water and soap for better hygiene”, said Atsushi Koizumi, Executive Officer and head of the company's global business promotion center.

Currently, the two companies are engaged in a pilot test in Indonesia involving the installation of WOSH stands, equipped with their own water tanks and a technology able to filter, disinfect and make the water previously used for washing hands potable again. The hope is that the effort in the direction of solving a widespread social problem in some parts of South-East Asia - such as the lack of water supply systems - will also have a positive impact on the demand for soaps and detergents and reward sales.

The pandemic has profoundly changed the sensibilities and needs of Asian consumers, simultaneously rekindling the ambitions of those operators wishing to offer high value-added products to meet the increasingly demanding requirements of the growing middle class. Although China has recently surpassed Japan as a "top partner" in the opinion of people in the Southeast Asian region, in an attempt to expand their business and mitigate the consequences of the demographic decline in the domestic market, more and more Japanese companies are choosing to bet on the emerging ASEAN economies.

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Redazione published in Asean, Global Lens

Readdressing India-ASEAN Defense Cooperation

The cooperation is not only limited to military engagement but has moved forward with future looking prospects in space and intelligence

By Aishwarya Nautiyal

ASEAN Regional forum which is a major platform of ASEAN security dialogue for consultation and cooperation at a highest level of defense engagement has seen an active participation of India prioritizing relations between ASEAN-India highlighting the importance of the forum as a key towards regional engagement with a vision of mutual security and growth maintaining the equilibrium through port visits and military exercises. India’s Act East Policy has brought new platforms like SIMBEX and SITMEX with Singapore and Thailand through military drills ensuring readiness to maintain regional peace and security. Maritime engagement by taking advantage of the strategic geographic location of Andaman & Nicobar (India) islands and its neighbors such as Thailand, Malaysia, Indonesia, Myanmar, Singapore that provides a key focus to Malacca cooperation and promoting a secured line for international trading channels.

      India has also been looking forward to providing various defense platforms such as Brahmos missile systems to the Philippines which nearly cost around 375$ million for the navy. On the other hand India and Singapore have shown a significant growth in bilateral security cooperation engaging in various naval exercises including new naval cooperation where India gained access to Changi naval base for its ships with refueling rights and logistics support. The agreement also provides a provision for mutual restock and rearm on each other's military bases. One of the significant developments can be seen with India-Vietnam defense cooperation where India gained access to Cham Ranh Bay naval and air base also providing training and advanced weapon systems to Vietnamese defense forces. Till now 550 Vietnamese submariners have gained in-depth training and knowledge at INS Satavahana submarine training base along with 100$ million credit to buy Indian defense equipment. Vietnamese pilots regularly get trained for Sukhoi platforms whereas private enterprise engagement can also be seen with Larsen and Toubro to equip Vietnamese Border Guards with 12 offshore vessels.In 2016, a new credit line of 500$ million has been provided for procurement of new defense platforms.

     The cooperation is not only limited to military engagement but has moved forward with future looking prospects in space and intelligence. India’s decision to establish a satellite tracking and imaging system around Ho Chi Minh city with the funding from ISRO of 23$ million for tracking and exchanging data with Vietnam and sharing future surveillance and intelligence linked up with stations in Biak in Indonesia and Brunei. Looking at a new geo strategic convergence several warships from Eastern naval command of India have been dispatched with an aim to engage bilateral exercises with Philippines, Singapore and Indonesia. Recently, Malaysia tends to procure Lightweight fighters and has engaged Indian fighter jet TEJAS to participate in procurement tender along with other global competitors. This is the first time that an Indian origin jet has been involved in a global tender. Mekong- Ganga Cooperation in which India and Vietnam are both members along with other other ASEAN members such as Thailand, Myanmar, Cambodia, Laos. The key focus of this engagement lies towards cooperation in exchange of culture and tourism along with educational and transportation development.

      India Thailand shares their maritime boundary through a crucial trading route of Malacca Strait. This brings both the countries at a focal point of ensuring safety and security of the Bay of Bengal region. The relations between two countries have been centuries old with several historic commonalities within their cultural relations. India has been providing regular engineers and medical delegations in various exercises conducted between two nations including Ex- Cobra Gold one of the largest military exercises. The 31st edition of India-Thailand Coordinated Patrol (CORPAT) was one of such engagements where HTMS Krabi along with INS Saryu and Dornier Patrol Aircraft have been engaged for 3 days near strategically located Andaman Sea. Bridging the friendship between two militaries along with several issues such as unregulated fishing, drug trafficking, piracy, terrorism, smuggling and illegal immigration including relief operations at sea have been a key fundamental in understanding interoperability between two navies in CORPAT.

      With India looking forward to expansion of its geostrategic footprint in Southeast Asia, energy rich Brunei seems to feature in a prominent position in India’s Act East policy. Till now the relations haven’t been in focus and have not been able to realize it’s full potential but with new vision India is looking forward to increase the level of intensity and vitality of connecting with Brunei as a crucial maritime partner. The port led development where Maura port can be a new focal point of Indian policymakers along with India- Brunei agreement in 2018 to boost defense relations including exchange of information, exercises, training and defense industrial development. Being at a crucial juncture of changing global dynamics from Europe to the Middle East, South Asia is becoming more and more crucial in balancing and benefitting through various platforms in which defense and intelligence cooperation has its own pivotal role ensuring trust between regional partners.

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Redazione published in Asean, Politics and strategy

L’ASEAN è sempre più al centro

Editoriale di Lorenzo Lamperti

Dopo la pandemia e in seguito alla guerra in Ucraina, l’Asia e in particolare il Sud-Est asiatico stanno diventando sempre più cruciali per gli equilibri politici e commerciali globali

La tendenza era già chiara prima. Ma ora lo è probabilmente ancora di più. Il Sud-Est asiatico e l’ASEAN sono destinati a essere sempre più fondamentali per gli equilibri commerciali e politici globali. La regione è già un motore fondamentale della crescita globale ed è destinata a diventare la quarta economia mondiale entro il 2030, soprattutto grazie al suo crescente status di hub commerciale e dell’innovazione. Non solo. Da Sud-Est arriva una forte spinta a digitalizzazione e sviluppo sostenibile. Le due componenti non sono scollegate, visto che proprio il focus sulla tecnologia consente l’utilizzo di sistemi smart per rafforzare la transizione energetica. La necessità di tenere sotto controllo l’inflazione e di diversificare le catene di approvvigionamento sta focalizzando ancora di più l’attenzione sull’area ASEAN, che sta proponendo misure spesso efficaci per calmierare l’aumento dei prezzi ed è diventata un’alternativa fondamentale a livello produttivo. Paesi come Vietnam e Malesia sono ormai al centro delle mappe delle forniture globali. I flussi di investimenti esteri nella regione sono in costante aumento, con le società di venture capital che scommettono con sempre maggiore convinzione sulle startup locali. Secondo i dati della società di ricerca Preqin, i fondi di capitale di rischio incentrati sul Sud-Est asiatico e sull’India hanno raccolto finora 3,1 miliardi di dollari nel 2022, avvicinandosi già ai 3,5 miliardi di dollari raccolti in tutto lo scorso anno. In confronto, la raccolta di fondi da parte dei fondi di venture capital focalizzati sulla Cina è scesa bruscamente da 27,2 miliardi di dollari nel 2021 a soli 2,1 miliardi di dollari. Come ha notato in un editoriale il Jakarta Post, la popolazione della regione è giovane, esperta di tecnologia digitale e sempre più prospera. Per le aziende, ciò significa che l’ASEAN non solo rappresenta una base da cui diversificare l’offerta, ma offre anche una diversificazione della domanda e della forza lavoro. Entro il 2030, si prevede che i consumi saranno più che raddoppiati, raggiungendo i 4 mila miliardi di dollari, mentre 40 milioni di persone si aggiungeranno alla popolazione in età lavorativa. Inevitabile che il Sud-Est asiatico sia un’area in cui ora tutti vogliono essere presenti.

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Pierfrancesco Mattiolo published in Asean, Economy and trade

Asia seeks answers to the energy dilemma

The effects of the Russian-Ukrainian war on the global fossil fuel market are also affecting Asian countries and pushing governments to change their long-term strategies.

The Russian-Ukrainian war has led to a serious increase in energy prices, in Asia as well as in the rest of the world. In the short term, this increase will weigh most heavily upon the weaker sections of the population - also affected by the war-induced increase in the prices of many food products. In the long run, however, it could also represent an opportunity. Governments and companies may decide to reduce their dependence on fossil fuels, whose prices have soared, and rely more on renewable energy sources. Can we take comfort in thinking the glass is half full? Not really. The ability to turn the energy crisis into an opportunity varies greatly depending on where in the world you are and how far-sighted public decision-makers will be in dealing with the immediate effects of the crisis. Examining the impact that the war is having on Asia's energy market today can be useful in predicting what far-reaching consequences we will have tomorrow. Advanced and developing economies, well-equipped and less prepared governments, international security tensions and the tangible effects of the climate crisis. The continent has all the relevant elements to be an excellent case study of the immediate and upcoming effects of conflict.

The Russian-Ukrainian war will have three immediate effects on Asian economies. First, global energy prices will remain high and volatile throughout 2022, leading to a generalised increase in inflation; second, efforts to finally overcome the Covid crisis, whose economic effects are still intense in some countries of the region, will have to be reviewed and increased; finally, governments will change their energy strategies, probably increasing the share of energy produced through coal and liquefied natural gas (LNG), so as to reduce the use of oil and gas transported by pipeline - the two fossil fuels most affected by the reduction of Russian exports caused by the war and sanctions.

In ASEAN, each country is experiencing the effects of the crisis differently. Oil and gas producing countries such as Indonesia, Malaysia and Vietnam will be able to use their new revenues to finance measures to support the people most affected by inflation. There are also some pre-existing differences in the mix of fossil sources consumed: some countries were already consuming a relatively little amount of oil and energy (Indonesia, Malaysia, Philippines), while others are more exposed (Singapore, Thailand). Another element to consider is the weight of exports on the national economy: some countries also have to worry about inflation in their trading partners. EU consumers, who are particularly affected by the economic effects of the war, may buy fewer Asian products. In particular, the Philippines and Vietnam appear to be in difficulty. Manila is struggling with soaring inflation, a worsening trade deficit, the devaluation of the peso and a still high number of Covid cases. Hanoi, on the other hand, has always suffered from a certain vulnerability to external economic shocks and these last few years of global crisis represent a perfect storm for its export-oriented economy.

Yet, we should keep in mind that energy is not only a production factor but also a strategic asset. The concept of energy security frequently appears in the speeches of world leaders, and the Russian-Ukrainian war has made the issue even more urgent. The conflict is also complicating the relations between the United States and the Asian powers, China and India in particular, on the issue of reliance on Russia's natural resources. Moscow is trying to break its isolation by diverting its fossil fuels from Europe to New Delhi and Beijing. India imports 80% of the oil it consumes, 3% of which comes from Russia, and seems intent on increasing this percentage in the short term. Modi's government seems indifferent to Moscow's choices or US pressure and wants to continue to cooperate with Russia. China also keeps an ambiguous stance toward Russia and is not eager to question the agreement made before the outbreak of the war to increase gas supplies. However, China does not seem to have much choice: even before the war, Beijing wanted to reduce its dependence on coal and LNG, whose market is dominated by the United States and Australia. The energy crisis also raises the stakes in the dispute over the South China Sea: its seabed is rich in fossil resources and a large number of LNG and oil cargo ships pass through its waters.

The energy crisis is, however, particularly relevant in terms of climate change. If economies relied more on renewables rather than fossil fuels, they would be less exposed to rising prices for the latter - prices that have once again proved extremely volatile. The war has been a wake-up call for the world's politicians and should prompt them to reset their environmental policies in favour of sustainability: perhaps renewables are not less reliable or more expensive than fossil fuels, as it is sometimes argued. But they could also choose to go in the opposite direction. For instance, there are some worrying developments in India. The country is on track to meet its emission reduction targets under the Paris Agreement - the only major economy in the world to do so - but it is now devoting significant resources to buying oil directly from Russia and distributing it at a subsidised price to mitigate the effects of the energy crisis. Increasing the use of LNG may also prove unsustainable in the long term, both economically and environmentally. Its price has sharply risen and its eventual inclusion among green energy sources generates controversy.

Energy security or combating climate change? Short- or long-term remedies? The Russian-Ukrainian war has presented Asia with an energy dilemma that is not easy to solve. In any case, the crisis will hit economies hard all over the world, and political leaders will have to find ways of protecting the weak without losing the increasingly complex environmental challenge while navigating a turbulent international scenario.

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Valerio Bordonaro published in Asean, Economy and trade

The moves of the Southeast on inflation

Governments in the ASEAN area are adopting a series of targeted strategies to protect consumers from rising prices. Often effectively

The war in Ukraine is having an inevitable and strong impact on economies around the world. The side effects on the food chain, energy supplies and inflation are evident at different latitudes. Including Europe and Southeast Asia. In this case, perhaps European governments could draw some inspiration from the moves of Asian governments, which are taking a more focused approach than their Western counterparts to contain global inflationary pressure - a strategy that appears to be working, at least for now. While inflation remains a serious economic challenge in Asia, in many countries the measures taken have helped protect the public from some price hikes and have meant that most central banks in the region have not had to raise rates of interest as quickly as it has elsewhere. The various efforts have also shifted some of the cost burdens from consumers and small businesses to state budgets. Indonesia, a country with a history of financial volatility and price fluctuations, last week increased energy subsidies by $ 24 billion to contain energy costs, following the lifting of a controversial export ban on palm oil. Although the impact of rising prices continues to be felt particularly on small and medium-sized businesses, household demand remains strong and inflation is within the 2-4% range set by the central bank of Jakarta. Malaysia's heavy fuel and transportation subsidies likely reduced the country's inflation by about 1.5 percentage points, which was only 2.3% in April. In Thailand, headline inflation just exceeded the central bank's target of 1-3% and the head of the bank pledged to continue supporting the economic recovery. The burden of containing prices in Europe and the United States has been largely borne by monetary policy, with the central banks of the United States, United Kingdom and Canada now engaged in aggressive interest rate hike cycles. In Southeast Asia, however, most central banks have only recently begun a very cautious shift from extremely low interest rates, with an increase that should be more gradual than in the Occident.

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Annalisa Manzo published in Asean, Economy and trade

Asia's focus on infrastructure to recover

The scale of projects will require not only government support, but also private sector support, as well as bilateral and multilateral funding

Infrastructure upgrading is at the top of the 2022 agenda for Southeast Asia and South Asia. The urgency starts with a basic fact: from 2020 to 2040, one-third of the world's population growth will come from the young economies of South Asia and Southeast Asia, namely India, Pakistan, Bangladesh, Indonesia, Malaysia, the Philippines, and Vietnam. United Nations projections also estimate a net development of urbanization, with some 462 million people moving to cities by 2040, or a 52 percent increase in the urban population, on top of the current 895 million. These phenomena will undoubtedly put great pressure on existing infrastructure, requiring greater investment to maintain not only existing demand but especially future demand.

The largest infrastructure gap is in India, followed by Pakistan and Bangladesh. In Southeast Asia, it is the Philippines and Indonesia that have the largest infrastructure gaps to fill, especially road infrastructure. However, India maintains the lead in the quantity of roads built, but it is the quality of the expressways that is of concern. Vietnam has also invested heavily in the construction of expressways, markedly improving the infrastructure system. The Philippines is focusing investment on air transport, which is critical for domestic mobility, trade, and tourism. Pakistan is the country lagging furthest behind in investment in air infrastructure. In contrast, rail infrastructure receives little investment in both South Asia and Southeast Asia, with the exception of Malaysia and Indonesia. 

The infrastructure gap is thus at the center of the political agendas of these countries, many of which have already devised policy support and government investments to address the problem. The Indian government has announced PM Gati Shakti worth $1.3 trillion to upgrade national infrastructure over the next 25 years and attract Foreign Direct Investment. In support of this long-term national plan-in the fiscal year 2023 budget-India has called for a 35.4 percent increase in investment, placing infrastructure construction, particularly highways, railways, and logistics, at the center of its economic development agenda, with figures significantly higher than previous budgets. Spending plans include the construction of 25,000 km of new highways and 100 new freight terminals in three years. Sectors such as water and power are also receiving proper attention.

In Southeast Asia, Indonesia aims to invest $400 billion by 2020 and 2024 to improve airports, electricity, and mass transit. Vietnam is continuing its feverish infrastructure development to increase its competitiveness. Major projects include the construction of more than 5,000 km of expressways by 2030; 172 national highway routes with a total length of 29,795 km; three urban ring roads in Hanoi with a total length of 425 km; and two more in Ho Chi Minh City with a total length of 295 km.

Pakistan, with the second largest demand gap, has found support in its alliance with China-through the China-Pakistan Economic Corridor (CPEC)-to improve its infrastructure. Bangladesh has also introduced the Delta Plan 2100 to implement 65 infrastructure projects.

Funding is the crux of these countries' infrastructure plans. The scale of the projects will require not only government support but also private sector support, as well as bilateral and multilateral funding. This issue is particularly felt by India, the Philippines, and Indonesia.

India aims to issue green bonds to support the construction of climate-friendly infrastructure, including as a financing vehicle for sustainable development. In 2021, India issued $6.8 billion in green bonds, compared to China's $66.1 billion. Southeast Asian nations are also turning to green bond issuance to support infrastructure ambitions. The Philippines, for example, is considering issuing sovereign green bonds to help private funds assess sustainable infrastructure investment needs in the archipelagos. 

Reducing the infrastructure gap is an urgent goal for these countries. With increased awareness and priority secured, 2022 will mark the tipping point for improving connectivity, and thus the productivity and trade competitiveness of these economies that are strategic to international balances. 

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Lorenzo published in Asean, Politics and strategy

Cooperation yes, opposition no

Most ASEAN countries have joined the launch of Biden's Indo-Pacific Economic Framework. But they say no to the logic of a clash between blocks

There are all but three. Only Myanmar, Cambodia and Laos are not part of the Indo-Pacific Economic Framework for Prosperity (IPEF), the cooperation program launched by US President Joe Biden from Tokyo, during his trip to Asia. Malaysia, Singapore, Indonesia, the Philippines, Brunei, Vietnam and Thailand, on the other hand, joined India, Japan, South Korea, Australia and New Zealand in a group that comprises 40% of world GDP. The program intends to strengthen supply chains and collaboration between partners, particularly in the areas of digital commerce and the energy transition with a focus on the development of renewable energy. Countries in Southeast Asia have made it clear multiple times that they would like to see greater USA trade engagement and in the past have expressed their frustration at Washington's withdrawal from the Trans-Pacific Partnership (TPP) by the former. US President Donald Trump in 2017. At the same time, the White House tries to convince ASEAN, through the IPEF, that the USA is ready to do its part to support the region's commercial, infrastructural, environmental and digital development and contain the economic impact of the war in Ukraine. Still, the Biden administration made it clear in advance that it was not a free trade agreement and that therefore the framework will not lead to a lowering of tariffs on imports. The neutrality of the Association was however reiterated and exemplified by the words with which the Premier of Singapore, Lee Hsien Loong, announced joining the program launched by Biden. "Asia does not need a NATO equivalent," said Lee, also referring to the Quad summit. And he clarified the inclusive will of Southeast Asia by asking at the same time as the launch of the IPEF for the go-ahead for China to join the TPP. Cooperation yes, opposition no.

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Agnese Ranaldi published in Asean, Economy and trade

Why Asia is thinking about going nuclear

In Singapore, Minister of State for Trade and Industry Alvin Tan spoke to parliament about alternative energy options such as hydrogen, geothermal, and nuclear. Other countries are following.

East Asian countries are considering the nuclear option in response to the shortage in global energy supply brought about by the Russian-Ukrainian conflict. This is an attractive option for many regional governments that are struggling to deal with economic consequences of the health crisis to promote domestic growth.

The latest report of the Intergovernmental Panel on Climate Change (IPCC) is blunt about the environmental and social emergency that awaits the international community in the near future. There is an urgency for decisive measures to drastically reduce greenhouse gas emissions by 2025 if we are to attempt to meet the Paris Agreement target and limit global warming to 1.5 °C above pre-industrial levels. At COP26 in Glasgow last November 2021, participating countries were encouraged to rapidly move away from fossil fuels to avoid climate disaster, and to consider the use of nuclear power.

East Asia - due to its geographical characteristics and socio-economic structures - is among the regions most susceptible to environmental and climate deterioration. The consequences of global warming are dangerously impacting on the living conditions of regional communities, forcing many people to migrate and others to deal with rising sea levels and extreme weather phenomena.

For these reasons, national governments have made sustainability and de-carbonization imperatives of their policy agendas. The economic difficulties that followed the pandemic and geopolitical contingencies in Eastern Europe have challenged these good intentions, because beyond environmental concerns, economic growth remains the main objective of these emerging markets.

Who are the supporters of the nuclear turnaround

China recently approved the construction of six new nuclear reactors to advance its de-carbonization policy. The severe power shortage experienced last fall 2021 had forced China's local governments to ration power access. This would have confronted national authorities with the pressing need to find energy solutions that meet the massive national demand without sacrificing climate commitments.

Japan, although still traumatized by the Fukushima disaster of 2011, is considering going nuclear to withstand the impact on energy prices brought about by the war in Ukraine. New Prime Minister Fumio Kishida is quite supportive of this transition, according to Nikkei Asia. He told reporters on April 8 that he aims to "maximize the use of renewable energy and nuclear power following the ban on Russian coal imports."

South Korea's newly elected president, conservative Yoon Suk-yeol has promised a nuclear turnaround to emancipate the national economy from carbon. The plan to overhaul the energy mix has been called "inevitable" for Seoul to meet its climate goals.

In Singapore, Minister of State for Trade and Industry Alvin Tan spoke to parliament about alternative energy options such as hydrogen, geothermal and nuclear. Although a 2012 study had determined that conventional large nuclear reactor technologies were not appropriate for the small Asian city-state, today the infrastructure can be much smaller and more sophisticated, and Singapore could also benefit from this industry.

The Philippines is also entertaining the idea of veering toward nuclear power. Energy Secretary Alfonso Cusi is a strong supporter of this energy option, and told the ANC TV channel last year that it is a strategic alternative to reduce oil imports. In February, President Rodrigo Duterte signed an executive order to include nuclear power in the national energy mix.

Other countries in the region, including Indonesia, Malaysia, Thailand, and Vietnam, are exploring or implementing plans to produce nuclear power, although many projects remain on hold due to cost and safety issues.

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