Asean

Alberto Botto published in Asean, Politics and strategy

United States moving closer to Southeast Asia

Washington tries to relaunch ties with ASEAN countries.

Although the Afghanistan crisis has dealt a severe blow to the Biden administration, Kamala Harris’s visit to Southeast Asia is proof of US interest in strengthening strategic and economic relations with Asian countries.

August has been a busy month for the Biden administration in Asia: while in Afghanistan the United States had to leave the country within the terms established by the Taliban, in Southeast Asia there were several meetings aimed at strengthening Washington's relations in the Asian area.

At the beginning of the month, Secretary of State Antony Blinken welcomed Retno Marsudi, Foreign Minister of Indonesia, to Washington in order to discuss the main issues concerning the area. Among the main themes were the Covid-19 crisis (in the summer the average daily cases in Indonesia reached forty thousand) and the battle against climate change.

Blinken reiterated the strong link with the country with the largest economy in the Asian area, underlining that “Indonesia is a strong democratic partner for the United States: we work together on several fronts". On the other hand, for the United States, the dispute with China reaches not only the technology field and customs duties but also the South China Sea conflict, a thorny issue that affects Washington from both an economic and strategic point of view.

U.S. interest, which seemed at least partially vanished during the Trump administration, was revived with a series of on-the-spot visits. The first was that of Defense Secretary Lloyd Austin in Singapore.

The attempts to reconnect with the Asian area by the administration of the new President of the United States tend to recover the "Pivot to Asia" strategy of Barack Obama, which failed during the four years of Trump presidency, a period in which the relations with China became increasingly tense and in which affairs with Southeast Asia had appeared to have cooled.

Vice President Kamala Harris' visit to Vietnam and Singapore last week came after the criticized withdrawal from Afghanistan. Harris tried to reassure regional partners about Washington's long-term interest in the region, but did not find a triumphal welcome, particularly in Vietnam. Premier Pham Minh Chinh took advantage of the delay in Harris' arrival, caused by two possible cases of the so-called "Havana syndrome", to meet with Beijing Ambassador Xiong Bo and ensure that Vietnam will not enter any "anti-Chinese alliance”.

After all, uncertainty reigns in the region: since China is an essential economic partner for ASEAN and the countries of Asia-Pacific, it will not be easy for President Biden to tip the balance in favor of the United States.

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Redazione published in Asean, Editorials

Editoriale | Commercio e sviluppo, l’Asia si parla

Si è svolto l’Eastern Economic Forum 2021, che ha riunito le economie dell’Asia Nord-orientale e a cui hanno partecipato anche diversi Paesi ASEAN

Editorial by Lorenzo Lamperti, Editorial Coordinator Associazione Italia-ASEAN

Russia, Cina, Giappone, Corea del Sud, Mongolia, Kazakistan, India, Cambogia, Thailandia e Vietnam. Sono alcuni dei Paesi che hanno partecipato all’edizione 2021 dell’Eastern Economic Forum, evento che si tiene ogni anno nella città di Vladivostok, non lontano dalla penisola coreana. Si tratta di un appuntamento tradizionalmente votato all’obiettivo di aumentare gli investimenti regionali e internazionali nell’Estremo Oriente russo, che negli ultimi sei anni sono quasi raddoppiati raggiungendo gli 80 miliardi di dollari. Ma l’Eastern Economic Forum partecipa anche al rafforzamento dell’integrazione regionale in senso esteso. All’edizione di quest’anno sono intervenuti anche Xi Jinping e Narendra Modi. Il Presidente cinese ha sottolineato la necessità di aumentare la cooperazione tra i diversi attori asiatici, concentrandosi su Belt and Road e il ruolo dell’Unione Economica Eurasiatica, con la quale la Cina ha firmato un accordo di libero scambio nel 2018. Il Primo Ministro indiano ha evidenziato la volontà di concludere positivamente i negoziati con l’UEE. Lo sguardo arriva anche al Sud-Est asiatico. Il Ministro dell’Industria del Vietnam, Nguyen Hong Dien, ha sostenuto la necessità di arrivare all’istituzione di una zona di libero scambio tra i dieci Stati membri dell’ASEAN e l’UEE, cosa che porterebbe alla creazione di un mercato da 11 trilioni di dollari di pil e con una popolazione di 850 milioni di persone. Diversi Paesi dell’area stanno d’altronde cercando di attrarre investimenti esteri. Tra questi l’Indonesia, che sta ampliando l’operatività delle sue 19 zone economiche speciali. La partecipazione contemporanea di leader di Paesi coinvolti in frizioni diplomatiche, come per esempio Cina e India, a eventi come al forum di Vladivostok non dovrebbe sorprendere più di tanto. L’accordo sulla Regional Comprehensive Economic Partnership (RCEP) dovrebbe chiarire che i governi asiatici si muovono in maniera molto pragmatica quando si tratta di commercio e sviluppo economico. Una dinamica talvolta dimenticata in Occidente. Alla RCEP potrebbe tra l’altro unirsi anche la regione amministrativa speciale di Hong Kong, alla ricerca di un riposizionamento come hub chiave dell’Asia orientale.

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Redazione published in Asean, Economy and trade

Between Scylla and Charybdis: ASEAN’s odyssey in quest of prosperity

By Dmitrii Klementev

An ongoing competition between China and the United States, definitely, provides a unique window of opportunity but also exacerbates the fragmented nature of the region

Southeast Asia, comprising 10 member states of the Association of the Southeast Asian Nations, has recently become one of the most dynamically growing regions in the world. To a large extent, the members of the Association owe their success to trade and an increased flow of foreign direct investments (FDIs). In turn, the economic success of the integration has reshaped the existing global value chains and attracted considerable attention from the leading actors in world politics. Traditionally, the US and China open the list of the most engaged state actors in Southeast Asia, followed by South Korea and Japan, usually referred to as the US allies. This article aims to examine the motives of the main actors’ investment policies in Southeast Asia as well as their consequences for the future of regional integration.

At the turn of the 21st century, since the Soviet Union had collapsed and the Cold war had been over, the rise of China became one of the key factors which radically changed the role of Southeast Asia in the global system of struggle for power. In 1999 China launched its “Go out” policy with the overall goal to promote the competitiveness of Chinese business abroad. In 2013, the Belt and Road initiative was set up to raise investments in the regional infrastructure. In order to finance the projects, implemented in the framework of the initiative, the Asian Infrastructure Bank was established. Moreover, the Maritime Silk Road, an integral part of the Belt and Road initiative, was put in place passing through Southeast Asia and particularly through the Strait of Malacca. The Strait remains of vital importance for the Chinese energy security as long as about 80% of the country’s crude oil imports come through it1. In 2020, China and ASEAN alongside some other states of the region signed the Regional Comprehensive Economic Partnership, which also included an Investment Chapter.

Despite the fact that China has been unable to become the leading investor in Southeast Asia so far (in 2019 Chinese share in the regional FDI inflows accounted for less than 7%2), this activity was enough to raise concerns among the US and its allies. Traditionally, the return of the US to Southeast Asia is associated with the Obama administration. At that time, the American share of FDI in ASEAN was the third largest one coming after the EU and Japan3. However, by 2019 the country managed to become the most important foreign investor in the region with a total share of 15.2%4. Unlike its competitor, the US invests mainly in the manufacturing sector (Table 2), considering the region as a “production platform”. Some of the US allies stick to the same approach. For instance, South Korea also integrates ASEAN countries in its value chains through investments.

Until recently China itself, was the first destination for the US FDI. A major redirection of the American FDI from China to ASEAN occurred as a result of the US-China trade war. In 2018, reciprocal tariffs introduced by Beijing entailed higher production costs for American companies in China. After a new round of tensions, the US business resorted to different sourcing policies investing in alternative manufacturing facilities in the countries with lower production costs. For instance, the US invested in such countries as Indonesia, Cambodia, Vietnam and the Philippines. Later on, this practice was officially called the “China plus One” strategy. 

Thus, one can conclude that a real struggle for influence in Southeast Asia has begun among the leading economic powers in the world and FDIs constitute the main weapon of it. Nevertheless, as it was emphasized above, until recently, ASEAN countries have managed to use this struggle and the incoming investments as a stimulus of their economic growth. However, the question is whether all ASEAN member states benefit equally from FDIs and how these investments might affect the future of the integration in Southeast Asia?

It is important to delineate the nature of ASEAN as an integration body as such. Despite significant economic success the Association consists of countries, which differ greatly in the level of their development. For example, on the one hand, its ranks include Singapore with GDP per capita which amounts to 59,797.8 US$. On the other hand, there is Myanmar with GDP per capita being equal to 1,400.2 US$ (Table 1). As a result, there are countries (more developed: Singapore, Brunei, Malaysia, Thailand, the Philippines, Indonesia) which are benefiting more from FDI inflows and those which are considered as less attractive for investors. More investments also contribute to unequal economic growth rates of the countries, exacerbating the existing differences within the integration. In addition to it, ASEAN members have different historical and cultural backgrounds. With no doubts, all these factors do not play in favor of the Association. 

To conclude, in the current situation ASEAN countries find themselves caught between Scylla and Charybdis like the mythical hero from Homer’s “Odyssey”. An ongoing competition between China and the United States, definitely, provides a unique window of opportunity but also exacerbates the fragmented nature of the region. A potential solution for ASEAN would be to strengthen its coordination of investment policies at the integration level, so that all its members could benefit from it more or less equally. 

1 https://www.degruyter.com/document/doi/10.1515/asia-2017-0049/html

2 https://www.aseanstats.org/wp-content/uploads/2020/11/ASEAN_Key_Figures_2020.pdf

3 https://www.aseanstats.org/wp-content/uploads/2020/11/ASEAN_Key_Figures_2020.pdf

4 https://www.aseanstats.org/wp-content/uploads/2020/11/ASEAN_Key_Figures_2020.pdf

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Michelle Cabula published in Asean, Culture and society

In Southeast Asia, Generation Z rides the digital wave

In times of pandemic and rampant unemployment, young people in the ASEAN region have been able to reinvent themselves using new technologies and online streaming platforms. For companies that want to intercept the needs of this market segment, it is essential to know its characteristics and understand the values that animate this new generation of "digital natives".

In Southeast Asia, notably one of the world’s most highly digitized regions, the pandemic pushed 40 milion new users online online in 2020 alone. According to a report by Google in collaboration with the Singapore sovereign wealth fund Temasek and the US consulting firm Bain & Company, eight out of ten people in the region believe that the technology was of great support during the pandemic, thus becoming an integral and indispensable part of everyday life.

The so-called Generation Z, which includes those who were born between 1997 and 2021 and have no memory of the world before the advent of Web, is the protagonist of this trend. Traditionally associated with "hyperconnectivity, a constant attachment to their smartphones and the ability to easily learn new technologies and navigate websites and apps", they are the most assiduous frequenters of social media and meticulously take care of their online presence. In addition to embracing distance learning and revolutionizing their consumer experiences, contributing to the recent e-commerce boom, the GenZers have been able to show creativity by monetizing the sharing of their daily life in an attempt to cope with the surge in unemployment.

"I'll be uploading videos on just about anything, which includes beauty, random topics and also anything interesting (I hope) that I can set my mind to film." writes Shu Faye Wong, who to entertain its 20,253 followers on Twitch dedicates daily four to eight hours to streaming. Making money from online content sharing has become increasingly easy: since 2016 on Twitch one can use Bits, or virtual goods, to support favorite creators and streamers through donations of different value. Thanks to this feature, the Malaysian streamer received up to 3.000 ringgit (US$700) as a gift from a single user. The charm of these innovative opportunities for immediate gain does not spare even the most adult generations. For about a year now, Nauman Pasha from Singapore, a 32-year-old former digital manager, has made gaming his new full-time profession and can now count on the support of over 40,000 followers.

Also on the supply side, the potential of online entertainment in the ASEAN area is catalyzing increasing interest: Several companies are determined not to miss out on the opportunities of a market which is estimated to be worth more than US$300 billion by 2025.. "All eyes are on Southeast Asia as the world’s next consumer powerhouse, with its young population and increasing purchasing power," recalled Nick Waters, CEO of Dentsu Aegis Network Asia Pacific. “All eyes are on Southeast Asia as the world’s next consumer powerhouse, with its young population and increasing purchasing power”, pointed out Nick Waters, CEO of Dentsu Aegis Network Asia Pacific.

The Chinese video streaming platform iQIYI controlled by Baidu even plans to launch - in partnership with G.H.Y Culture & Media, one of the regional leaders in the production and distribution of films and dramas - an agency that deals with finding the most promising regional webstar to make them young ambassadors for the expansion of its business to the entire Asian continent. Similarly, 72% of the most famous brands have decided to allocate a significant share of their marketing budget to web influencers.

In an effort to meet the tastes and expectations of what is about to become the largest consumer base, however, companies must take into account some peculiarities that distinguish the Genzers from the Millennials of the previous generation. The primary value is authenticity: rather than being dazzled by celebrities, they prefer stories of ordinary daily life told by young people similar to them, of which they imitate consumer decisions as if they were friends in the offline world. It is in fact 1.3 times more likely that a "digital native" chooses to buy a product recommended by one of his favorite influencers. A survey conducted by Dentsu Aegis Network and Econsultancy also showed that GenZers represent "the most environmentally and socially ‘aware” market share, as their purchases are in parallel oriented to the values of ethics and sustainability in production.

Webstar life is no longer a "child’s play". And surfing the Internet is no longer just a hobby: thanks to the new features, the web opens up new opportunities for profit both for businesses and for users, being them content creators or receivers. The next challenge will be to reconcile the opportunities of accelerated digitalisation with the fulfilment of future consumers' expectations within the new paradigm of online interaction.

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Agnese Ranaldi published in Asean, Politics and strategy

ASEAN, the challenge of regional stability after Kabul

Governments of Southeast Asia closely observe recent development in Afghanistan. To fight internal radicalization, ASEAN countries will have to work on social inclusion

The Talibans returning to power in Afghanistan and the attacks conducted by terrorist organizations in Kabul raise security concerns in Southeast Asia. According to analysts,, for the ASEAN countries this is a topic of paramount importance, having recorded several episodes of violence linked to radicalization and terrorism in the past. Therefore, the political transition in Kabul is also carefully observed in Southeast Asia, already struggling with new waves of infections from Covid-19, the effects of the economic recession and the political crisis in Myanmar.

A inizio agosto, i Ministri degli Esteri dell’Associazione hanno ribadito “l’importanza di un approccio collettivo e globale per affrontare (…) l’estremismo violento che favorisce il terrorismo e la radicalizzazione”, rivedendo l’agenda politica dell’Associazione alla luce delle nuove priorità poste dagli sviluppi in Afghanistan. In una dichiarazione alle Nazioni Unite dell’ottobre 2020, la Cambogia sottolineava la necessità di una risposta globale alla minaccia di questo fenomeno transnazionale, ribadendo con forza a nome dell’Associazione l’idea per cui il terrorismo non debba essere associato ad alcuna religione, nazionalità, civiltà o comunità etnica. La rappresentanza cambogiana sottolineava anche come la pandemia da Covid-19 e la conseguente recessione economica abbiano posto i Paesi di tutto il mondo di fronte a nuove sfide nella lotta al terrorismo. La pandemia “ha rivelato diverse fragilità del nostro mondo” ha dichiarato l’Ambasciatore Sovann Ke, “e ha aggravato quelle condizioni che favoriscono il terrorismo”. Per queste ragioni, il ritiro degli Stati Uniti dal Paese dopo vent’anni di occupazione potrà avere ripercussioni sulla conflittualità sociale e religiosa nel Sud-Est asiatico.

As Chris Devonshire-Ellis emphasized on ASEAN Briefing, there are several "fractures within the region that could cause problems if the insurgents decide to seize the opportunity". The Indonesian government, as an instance, supports a moderate view of Islam and recently has outlawed the political group FPI, Front Pembela Islam (or Front of Islamic Defenders) by ministerial decree, due to the intransigence of its ideology. The government has claimed that the FPI has threatened national values, committed illegal raids and acts of terrorism, and that its leader Rizieq Shihab has sworn allegiance to the ISIS caliphate. Stricter versions of Islam are also gaining ground in Malaysia, according to Devonshire-Ellis. Thailand and the Philippines have also been shaken for years by religiously motivated separatist claims, even if in the first case they have a more nationalist than religious matrix.

Southeast Asia has always been home to a great variety of religious communities that coexist peacefully. Where violence occurs, they often arise from the intersection of various types of requests, which go beyond mere belonging to a specific community of believers: economic suffering, marginalization, stereotypes and social stigma. The fundamental theme appears to be social inclusion. Although it is too early to measure the effect that the Afghan case will have on Southeast Asia, "surely what is important" to consider "is the impact" that the affair will have "on ideas," Norshahril Saat told Nikkei Asia, exponent of the think tank ISEAS-Yusof Ishak Institute of Singapore. For this reason, the importance of conveying counter-narratives that fight the fascination of terrorist propaganda is recognized by ASEAN as the favorite channel for the fight against radicalization. The Association reaffirmed its commitment with local communities to develop common strategies that counter violent extremism, promoting alternative ideas and enhancing the inclusion of young people, women, religious, cultural and educational leaders.

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Sabrina Moles published in Asean, Culture and society, THE ROAD TO DUBAI

Water governance in ASEAN countries

By Sabrina Moles

From climate change to the economy, from human security to neighborly relations. Water management challenges bring the ten Southeast Asian countries closer together

There is no life without water. Today, the management of water resources is one of the most delicate issues for Southeast Asian countries, where new and old challenges threaten an already very complex economic, political, and social environment. ASEAN is home to countries where the issue of water management is critical and threatened by climate change, while some member states have already developed the technical and logistical expertise to tackle water management challenges. This is precisely because water management affects a wide range of very different sectors, which are at the same time deeply interconnected and essential to development. Consequently, cooperation becomes one of the strengths of the group. But there is still a long way to go.

First, the pandemic has brought water security to the fore in terms of health, as underlined by the OECD report on management, access and safety of water sources. In 2012, the ASEAN Declaration on Human Rights explicitly guaranteed "the right to safe water and sanitation", but the 2021 budget shows that only a few member states include the right to water in their legislation and have been able to implement truly inclusive projects. In many areas of Southeast Asia, the provision of water services is inadequate and uneven, with unequal access between urban and rural areas. It is estimated that at least 1.7 billion people in Asia do not have access to basic sanitation, while in Southeast Asia alone, levels of contaminated water and unfit for human consumption are estimated to range between 68% and 84%.

Access to safe water resources is also a socio-economic problem, with the weakest sections of the population being penalized. Water privatization has, in some cases, contributed to poor coverage and high prices. An example is that of Indonesia where, since 1997, the British and French companies Thames Water and Suez have signed a 25-year public-private partnership contract for water supply of the capital city, Jakarta. Back then, only 42% of its residents had access to water at home, while many others still relied on bottled water or groundwater (also one of the main reasons why the city is sinking). The project promised that by 2017 it would reach 98% coverage but, in 2020, only 59.4% of the inhabitants could access clean water. This is not an exception. In most Southeast Asian countries, sanitation is underfunded and unevenly distributed, although access to safe water is on the rise in all ASEAN countries, with Cambodia (65%) and Laos (77% again). 5%) among the most penalized.

Another increasingly important element in a water resource management perspective is energy. For instance, the Mekong region offers enormous opportunities for the construction of dams and hydroelectric plants. Opportunities that have been seized mainly by Chinese investors. There are many multilateral mechanisms that have emerged over the years to discuss, study and implement projects around Mekong water management, as in the case of the Mekong River Commission (MRC). In this sense, Vietnam has emerged as a leading force inside these cooperation projects. Energy is understood as a potential push for development in a still very poor area. Indeed, the duties of the MRC include the drafting of ten-year or five-year plans on the various areas of use of the water resources present. According to the data, the energy demand downstream of the Mekong will grow at a rate of 6-7% per year: a trend that has stimulated the conversion of river water into hydroelectric energy, for a total of 89 completed projects and another 30 still in the planning phase.

The fact that the sources of the Mekong are in Chinese territory has often generated friction and provided the ASEAN countries with a reason for cohesion. Among the most controversial structures is the Jinghong Dam in the province of Yunnan, which alternately acts as a “tap” for the countries further south. The latest case dates to July, a particularly anomalous period for rainfall in China, when some "damages to the infrastructure" drastically reduced the water supply along the lower Mekong basin. Consequently, any intervention by Beijing on the waters of the Mekong can have a huge impact on the supply chain of the entire southern sector.

It is also a problem of climate instability. A challenge that exacerbates the impact of the flood and dry periods of Southeast Asian water basins and rivers Across the region, at least 34% of the population is frequently exposed to floods, while droughts have affected over 66 million people in the last 30 years. In a report produced by ASEAN and ESCAP (United Nations economic and social commission for Asia and the pacific), the trend is rapidly growing, with a significant increase by + 17%). Moreover, 4 out of 5 economic damages affect agriculture. From this it follows that the weakest sections of the population are among the most penalized, and are exposed to food insecurity caused by the destruction of crops. This is a very important factor, since the economy of the ten countries largely depends on the agricultural sector. As many as 61% of the labor force in Laos is employed in this sector, and remains stable at 47% in Vietnam, where a severe drought in 2016 led to the loss of more than 60% of revenue.

The management of water resources is therefore an essential factor in many areas: it follows that the problems related to the supply of safe and accessible water can become a conflict accelerator both at the domestic or regional level. It is estimated that 80% of conflicts in the world take place precisely in areas where the level of environmental degradation and the effects of climate change are more pronounced. All this also intersects with the risks associated with the loss of biodiversity.

With the worsening of extreme climatic phenomena and the reduction of water resources in the region, the ten ASEAN countries have begun to focus on regional cooperation to create resilient environments, economies, and supply systems. Among the solutions proposed by the group emerges the awareness that ex post intervention is no longer sufficient. In the intentions, priority should be given to prevention, such as monitoring climate trends and changes in the territory, to implement an alarm system before the phenomena turn into irreparable problems. This should lead to the creation of both technical intervention mechanisms and financial support for the categories most at risk, in particular small farmers and primary sector workers. Examples are the 2020-2025 Drought Management Strategy promoted by the MRC with the support of ASEAN and the United Nations.

The key to these risk absorption and prevention plans led to discussions on financial solutions capable of predicting the extent of damage and how to distribute aid. Among the objectives that emerge, the mitigation of climate change and universal access to water stand out as starting points for thinking about new plans for the management and exploitation of water resources at the regional level. The problem in this sense is not so much represented by the lack of funds (which are often part of aid packages promoted by international organizations), as by the careful management of the same to carry out projects capable of being first of all economically and structurally sustainable. in time.

Finally, the challenge will be to continue cooperating as a group on the delicate topic of water management, regarding the underdeveloped countries in the region, which in large part belong to the group. In this scenario, given the complexity of the sectors it involves, water management is threatened by new challenges. At the center of the debate will be the health crisis, the decline in GDP growth (down to a forecast of 4.3% for the second half of 2021 in ASEAN-5 compared to April of the same year), and the exacerbation of extreme climatic phenomena that are disrupting ecosystems.

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Agnese Ranaldi published in Asean, Economy and trade

South Korea relaunches trade with ASEAN

A few months before the presidential elections of 2022, Moon Jae-in relaunches trade relations with the ASEAN economies. Amidst economic and diplomatic challenges, Seoul’s government is trying to honour the commitments made at the beginning of its mandate

South Korea inaugurated tatalks to revive trade relations with ASEAN. At the beginning of its mandate, Moon Jae-in’s government was committed to developing the country's diplomatic potential, promoting solidarity and cooperative relations with the Asian neighbourhood. During the last months before the 2022 presidential elections, Moon Jae-in seems to be willing to honour this commitment, as evidenced by recent diplomatic contacts with North Korea and declarations about the desire to update the free trade agreement with ASEAN economies.

The free trade agreement with Southeast Asia was signed in 2007, and today ASEAN is one of South Korea's main trading partners – right after China. Bilateral trade with Beijing amounted to approximately $241.4 billion in 2020 and accounted for 24.6% of the trade between South Korea and the rest of the world. On the other hand, ASEAN has carved out a 14.6%, despite a global health crisis and the recession that followed. From 2006 to 2019, the volume of trade between the parties grew by about 60%, having risen from 61.7 to 151.2 billion dollars, according to the International Trade Center database. When global trade contracted due to the Covid-19 pandemic, the volume of transitions between the two countries dropped to 143.8 billion in 2020. Despite this, ASEAN remains a significant economic partner, of which Vietnam is the major flagship: with 69.1 billion dollars, Hanoi represents 28.4% of the total bilateral trade.

The main vector of trade relations with Southeast Asian countries is the "New Southern Policy", officially launched by Seoul in November 2017. "The Korean government will strongly push its New Southern Policy to achieve decisive progress in its cooperation links with ASEAN, "said President Moon Jae-in, at the Korea-Indonesia Business Forum in 2017," It is my wish that the New Southern Policy can create a community for people, which unites people with people and minds to minds; a peaceful community, contributing to peace throughout Asia; a community of shared prosperity in which the ASEAN countries grow together through mutually beneficial economic cooperation ”. The desire to deepen trade relations with the countries of the region is also part of this renewed cooperative approach with Southeast Asia. South Korea had agreed with ASEAN to further reduce their tariff barriers in 2016, but the update of the free trade agreement then took a back seat to the Regional Comprehensive Economic Partnership (RCEP), which was finally signed at the end of 2020.

Unfortunately for the Korean government, despite efforts to strengthen cooperation, on trade and investment in the ASEAN area, Seoul is still lagging behind Beijing and Taipei. "Amid the intensifying trade friction between the US and China, ASEAN nations have emerged as an alternative market," said Kim Bong-man, head of the international affairs division of the Federation of Korean Industries. "To broaden the nation's trade ties with the ASEAN market, the National Assembly should ratify a series of trade agreements," he continued, "including the comprehensive economic partnership with Indonesia and a bilateral free trade agreement with Cambodia ".
The renewed diplomatic activism of the Korean government – which recently celebrated the possible rapprochement with North Korea, with the restoration of the communication line interrupted a year ago – is also aimed at Southeast Asia. A few months after the end of his mandate, amid the efforts to recover the national economy and the geopolitical challenges posed by the Sino-US tensions, Moon Jae-in seems to want to honour the commitments made at the time of his inauguration. “He is not trying to overcome the challenges alone, but rather the solidarity and cooperation that will make us stronger in overcoming the pandemic. Let us embrace this recognition and strive to make it a reality” the President said in Davos</a last January. The economic diversification projects promoted by Seoul to free itself from excessive economic dependence on Beijing seem to be reconciled with the fervour of post-Covid-19 diplomacy.

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Michelle Cabula published in Asean, Politics and strategy

In the 5G race, ASEAN chooses the path of pragmatism

By Michelle Cabula

ASEAN hosts a series of pioneering projects that have earned it the reputation of a “laboratorio globale dell’innovazione digitale”. Here national ambitions are intertwined with the logic of the US-China technological competition, but governments look to costs and efficiency to choose the partners with which to design their national telecommunications systems.

In Southeast Asia, the pandemic was not enough to stop the 5G race. Indeed, the Covid-19 has made it clear that access to a fast and stable connection has become essential to carry out most of the daily activities, thus highlighting the urgency of developing infrastructure that can withstand the accelerated digitization. 

In Thailand, Advanced Info Service (AIS) and True Corp., the main mobile operators in the country, collaborate with health facilities ensuring their access to 5G coverage, indispensable for benefitting to the maximum of some innovative solutions of robotics and telemedicine. At Chulabhorn Hospital, which is set to become the first hospital in the country to provide a comprehensive medical care service that integrates 5G technologies in all its dimensions, robots support the medical staff and the results of a CT scans of lungs are delivered within half a minute. In line with the goal of reaching a total 5G coverage by 2025, Singapore is activating to support research on artificial intelligence and cybersecurity with a $50 million investment plan, as announced by Deputy Prime Minister Heng Swee Keat on 13 July. In general, the vision expressed in the ASEAN Digital Masterplan 2025 adopted earlier this year demonstrates how the completion of the transition to digital communities and economies, with an eye to the security and inclusiveness of technologies, represents an ambition shared by all governments in the area.

The ASEAN digital market, which is growing at an unparalleled rate in the world, is expected to add about a trillion dollars to regional GDP over the next ten years. A potential that does not leave China and the United States, global champions of the telecommunications sector, indifferent. Their political and commercial tensions are poured into Southeast Asia triggering a race to provide Internet connection and 5G services. In the ASEAN context, however, geopolitical pressures have produced different results than elsewhere. Generally, governments have approached the issue of supplier choice pragmatically, avoiding openly advocating for one of the two competing technological superpowers. Despite Washington’s push on its main partners in the area, no country has opted for a total renunciation of the network equipment of the two Chinese manufacturers ZTE and Huawei within their national strategies. Except for Vietnam, where anti-Chinese sentiment has prevailed and Beijing’s technologies are currently banned, at least de facto.

In general, however, Chinese providers can boast a number of collaborations in the area. In May 2019, at the same time that the United States decided to blacklist Huawei, the Chinese ZTE signed a Memorandum of Understanding with Ooredoo Myanmar to collaborate in the development of 5G. In addition, Huawei Asean Academy will help provide 30,000 Thai workers with training aimed at developing functional digital skills to support the Eastern Economic Corridor infrastructure project. Huawei Technologies is also among the partners involved in the design of a 5G Cybersecurity Test Lab in Malaysia, as well as in the development of Forest City, the first smart city built on four artificial islands within the Malaysia Iskandar Special Economic Zone, located along with one of the Belt and Road Initiative routes.

However, the Malaysian government itself decided to diversify its 5G network. On 1 July, it was announced that the Swedish Ericsson (among the eight suppliers, including the Chinese Huawei, who had participated in the tender) has been chosen as the recipient of the $2,6 billion contracts designed to secure a fifth-generation connection to 80% of the population by 2024. The range of 5G licenses in the different countries remains quite varied. In Singapore, the construction of the 5G network was entrusted to a composite partnership between Singtel, the joint venture Starhub-M1 and Ericsson and Nokia. Even in this case, rather than the desire to join the anti-Chinese campaign promoted by Washington, the decision seems to be dictated by practical considerations, such as the compatibility between the 4G hardware used previously and those of the new generation. The case of the Philippines is particular: the main telecommunications service provider (DITO) is in fact a consortium that includes Udenna Corporation alongside China Telecom; nevertheless, it benefits from some Nokia NetAct solutions provided by the Finnish company for the management of daily network operations, including monitoring and software management.
While the choices of governments are limited by the absence of competitive alternatives to the Chinese offer and the need to simultaneously maintain good relations with both technological superpowers, on the other hand, ASEAN countries prove to be key players in the search for a balance between the US and Chinese influence. In a context where technological ambitions are realized through pragmatic cooperation that transcends the geopolitical camps, it is tried to curb the logic of commercial escalation carried out by Beijing and Washington.

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Lorenzo published in Asean, Editorials

Editorial | USA - China, in the South-East the challenge is (also) digital

It is not only geopolitics, in the ASEAN region the giants of Washington and Beijing compete for a fast-growing market

Editorial by Lorenzo Lamperti, Editorial Coordinator Associazione Italia-ASEAN

South China Sea, diplomatic relations, strategy and geopolitics. All true, but the rivalry between the US and China in South-East Asia also concerns purely economic issues. In particular, the competition between the technological giants of the two countries. Yes, because the digital market in the ASEAN area is experiencing a very strong growth, made even more impressive and rapid by the Covid-19 pandemic. It is not a coincidence that a bit all the big companies are investing in the area: Amazon, Facebook, Google and Microsoft on one side, Alibaba and Tencent on the other. For example, as Nikkei Asian Review underlined, on cloud computing: Singapore is one of the main headquarters of data centres at world level. Mark Zuckerberg’s company is building one, its first in Asia, from 170 thousand square meters in the city-state making about billion dollars of investment.

It is not the only case. Amazon will open a new center in Jakarta by early 2022. Microsoft has announced the opening of two plants, in Indonesia and Malaysia. Chinese actors don’t just stand by and watch. Alibaba already has three data centers active in Indonesia and by the end of the year it will open one in the Philippines. The company founded by Jack Ma also announced investments of over USD 1 billion over the next three years in Asia-Pacific startups. Tencent has also taken root in the South-East, with offices spread across several countries of the region. On the other hand, the growth prospects are considerable: 650 million people and a constant increase in the penetration of connection and digital devices. An unparalleled trajectory in the world that offers a wide range of opportunities for e-commerce, fintech and online entertainment. It is therefore no coincidence that there is strong competition to win the trust of the local middle class.

However, the South-East is not just a battleground between the US and Chinese technological giants. Local realities are emerging on a regional scale and are attracting the attention of international realities. For example, Singapore Grab’s super app benefits from Amazon andMicrosoft’s cloud services. Alibaba and Amazon are competing for the supply of services to the Indonesian Tokopedia. 

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Redazione published in Asean, Economy and trade

TPP: from the backyard to the epicenter of world politics

By Dmitrii Klementev

It is likely that the interest towards the CPTPP will only increase in the near future. Here is why

The Indo-Pacific represents a tangle of different institutional formats which allow maintaining a fragile balance of power among major geopolitical players in the region. The foundation of this framework was largely laid in the second part of the 20th century. However, at the turn of the century it experienced a rebirth. The end of the Cold War followed by the rapid economic and technological growth of the Asian countries have preconditioned the shift of the center in the world system of international relations (IR) to the Indo-Pacific, for control over which the struggle between the leading powers has already begun.  

In 2002, the history of the Trans-Pacific Partnership Agreement (TPP) started with Chile, New Zealand and Singapore signing the Trans-Pacific Strategic Economic Partnership Agreement, which was later joined by Brunei. In 2008, the US decided to adhere to the initiative and use the agreement to contain the Chinese influence in the region. However, in 2017, the Trump administration left the deal that seemed to bring the negotiations on the TPP to a standstill. At that time, the agreement had already 11 members apart from the US and the decision to continue talks were eventually made. Joining the negotiations Japan took the lead. 

Finally, in 2018 the remaining countries signed a renewed version of the TPP, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which entered into force the same year after being ratified by the six signatory-states. CPTPP covers a wide range of issues, including trade in goods, services, investment, customs checks, labor and environment provisions. Altogether the eleven countries’ economies account for more than 13% of global GDP and 15% of global trade, that makes the agreement comparable to the largest free-trade areas of the world.

Nevertheless, at that point the US was no longer the party to the treaty, even despite the fact that “America is back” has become the leitmotif of the Biden’s administration, which replaced D. Trump in the office in 2021. The absolute majority of experts in the White House were quite skeptical about the prospects of renewing talks with the CPTPP members in the near future. However, if the possibility of rejoining the CPTPP has been frequently questioned by the US officials, the very goal of engaging economically in the Indo-Pacific region through “alternative measures” has always been considered a top priority. The newly adopted Interim National Security Strategy Guidance lists the Indo-Pacific in the first place among the US “vital national interests”.

It is worth mentioning that to date, the United States has been not the only country that paid attention to the CPTPP initiative. On February 1, 2021 the UK expressed its will to join the agreement. This step has become well-enshrined in the logic of the revised system of foreign policy priorities of the United Kingdom, set up after the decision to leave the EU. In March 2021 the British Government presented a new edition of the Integrated Review, which stated explicitly the UK’s goals up until 2030. In particular, the Review emphasized the necessity to “forge new trade deals… adapt to major challenges in the world…, including the growing importance of the Indo-Pacific region”. With regards to the latter point, the British government considered ASEAN and the CPTPP as two key initiatives to focus on. For the UK, potential accession to the CPTPP is assessed unambiguously positively, as it will allow the country to replace the previous free trade frameworks that it possessed as a member of the EU.

Based on the dynamics examined, it is likely that the interest towards the CPTPP will only increase in the near future due to a number of conclusions. First of all, the above analysis demonstrates that the Indo-Pacific countries are capable of making independent foreign policy choices and can be considered as credible partners. Such a circumstance also testifies to a strengthening multipolar order. Second, an increased interest towards the CPTPP will be also explained by the ongoing transition to a new system of IR centered on the Indo-Pacific region. Third, the more important geopolitical dimension of trade tools makes them indispensable for promoting states’ interests in the international arena today. In addition, the spread of such practices gives a hope for the formation of a more or less rules-based order in the future centered on “mega-trade FTAs”, such as CPTPP.

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Redazione published in Asean

EMERGENZA COVID-19 IN ASEAN: RICHIESTA DI AIUTO

Il Ministero degli Affari Esteri e della Cooperazione Internazionale (MAECI) ci segnala la drammatica situazione che il Sud-Est asiatico sta attraversando, trovandosi ad affrontare una nuova fase della pandemia di COVID-19, caratterizzata da un incremento preoccupante dei contagi e dei decessi, specie tra le fasce più vulnerabili della popolazione. L’impegno delle Autorità locali nella lotta alla pandemia si scontra con la limitatezza dei mezzi a disposizione, sia in termini di dosi vaccinali che di materiale sanitario.

In tale contesto, il Ministero sta ricevendo diverse richieste di aiuto da parte dei Paesi dell’ASEAN. Fra questi in particolare l’Indonesia, che ha fatto pervenire alle istituzioni UE e alle Ambasciate degli Stati Membri presenti a Giacarta la lista dei materiali sanitari necessari.

ELENCO DEI MATERIALI NECESSARI IN INDONESIA


Il Ministero ha pensato di sondare la disponibilità dei Soci, dei Partner e di tutti i contatti dell’Associazione Italia-ASEAN di farsi carico dell’acquisto del materiale richiesto.

In questa fase l’Associazione potrebbe raccogliere le manifestazioni di interesse e trasmettere al MAECI un quadro completo (specificando il tipo di materiale e il quantitativo che ciascuna azienda sarebbe disposta ad acquistare).

Ove sulla base delle informazioni ricevute emergesse la possibilità di raccogliere un quantitativo significativo di beni, il MAECI potrebbe valutare di organizzare un volo umanitario e farsi carico delle relative spese.

Tale gesto di solidarietà, oltre a valorizzare il ruolo dell’Associazione nella regione, rappresenterà un esempio concreto di sinergia fra istituzioni e società civile nel rafforzamento delle relazioni bilaterali e nella promozione del Partenariato di Sviluppo tra l’Italia e l’ASEAN, che si fonda anche sull’assistenza umanitaria.

Specifichiamo che le imprese dovrebbero far pervenire il materiale necessario presso la base di pronto intervento umanitario di Brindisi, gestita dal Programma Alimentare Mondiale, dove il personale incaricato dalla Farnesina di seguire i trasporti umanitari italiani si occuperebbe della presa in carico e della predisposizione per la spedizione. Una volta confermata la fattibilità dell’operazione e prima che si proceda all’acquisto dei beni, il Ministero manderà tutti i dettagli da comunicare alle aziende interessate, che dovrebbero idealmente individuare un punto di contatto per la definizione degli aspetti tecnici della spedizione, in stretto raccordo con i competenti servizi del MAECI.

Rimanendo a disposizione per eventuali comunicazioni, vi ringraziamo per il supporto e la disponibilità in questa fase così complessa per i Paesi ASEAN.

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Carola Frattini published in Asean, Culture and society

The development of the ASEAN Collective Investment Scheme

The Philippines is now officially part of the ASEAN CIS framework and its entry into the scheme is the latest step towards enhancing capital market connectivity in the region.

Gli organismi di regolamentazione del sistema di investimento collettivo dell’ASEAN (CIS) hanno annunciato l’entrata delle Filippine nel framework. L’11 maggio 2021 i 4 membri hanno firmato un memorandum d’intesa supplementare che ha formalmente ammesso le Filippine nel framework e ha segnato la ben sperata espansione. Gli investitori delle Filippine saranno autorizzati ad offrire fondi nei paesi che partecipano all’ASEAN CIS framework. Così, le società di investimento delle Filippine inizieranno ad offrire fondi agli investitori in Malesia, Singapore e Thailandia. Ruenvadee Suwanmongkol, segretario generale del SEC tailandese, parlando del l’ingresso delle Filippine nel quadro, ha sottolineato l’importanza dell’ASEAN CIS framework con queste parole:

“Siamo lieti di accogliere le Filippine come nuovo firmatario dell’ASEAN CIS framework, che promuove una maggior interconnessione, inclusività e resilienza dei mercati capitali dell’ASEAN. Questo nuovo partenariato creerà maggiori opportunità commerciali e rafforzerà la cooperazione economica tra gli Stati membri dell’ASEAN, arricchendo, nel contempo, il pool di fondi disponibili per gli investimenti nell’ASEAN. Ci aspettiamo la partecipazione di più Stati membri dell’ASEAN in questo framework nei prossimi anni.” 

ASEAN CIS framework è diventato ufficialmente operativo nel 2014. L’idea alla base dell’ASEAN CIS framework è che le unità di un fondo autorizzato in uno dei paesi partecipanti al CIS possono essere offerte in un altro paese CIS dopo l’approvazione di entrambi i paesi interessati. I risultati più evidenti di questa cooperazione sono la ridotta burocrazia e maggiori opportunità per la distribuzione transfrontaliera dei fondi, l’accesso ai prodotti, la diversificazione degli investimenti e delle alternative per gli investitori al dettaglio. Più nello specifico, ASEAN CIS framework è regolamentato attraverso una combinazione di leggi del paese d’origine del fondo e del paese in cui viene offerto il fondo straniero. Gli organismi di regolamentazione sono la Securities and Exchange Commission delle Filippine, l’Autorità monetaria di Singapore, la Securities Commission della Malaysia e la Securities and Exchange Commission della Thailandia.

One of the scopes of the ASEAN CIS is to facilitate and expand the possibility of collective investment schemes between the CIS’ countries that at the moment are Thailand, Malaysia and Singapore and the Philippines. Above all, the ASEAN CIS framework is born from the desire to obtain mutual fund recognition and to harmonize the offering of funds in Asian countries. In fact, many Asian countries do not recognise each other funds or do not have agreements to make their capital markets to collaborate. For example, the security and exchange commission of Thailand offers foreign funds through the ASEAN CIS Framework and through the Asia Region Funds Passport or foreign exchange traded. So, in Thailand foreign funds can be offered only through two methods. This again highlights the importance of the ASEAN CIS framework since for some countries is one of the few methods employed to allow for foreign funds. Moreover, this similar types of agreements start to be stipulated not only between ASEAN member states but also with other Asian countries. An example of this is Thailand, that early this year has announced the Hong Kong-Thailand Fund Passport that serves for the mutual recognition of funds.

More specific and technical information on this topic can be found at this link.

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