Asean

Pierfrancesco Mattiolo published in Asean, Politics and strategy, THE ROAD TO DUBAI

Sustainable Development in EU-ASEAN free trade agreements

By Pierfrancesco Mattiolo

The EU aims at a 'values-based' trade policy and promotes environmental protection and social rights with its free trade agreements. This approach has influenced negotiations with ASEAN countries.

International trade and sustainable development are inherently linked. Increased traffic of goods brings greater economic opportunities for both the EU and ASEAN countries. Yet it could also encourage the exploitation of natural and human resources in violation of international standards. Brussels accepted the challenge and upped the ante: recent free trade agreements (FTAs) include TSD (Trade and Sustainable Development) chapters to increase commitment and cooperation in achieving the United Nations Sustainable Development Goals (SDGs). Alessia Mosca - Vice-President and Secretary-General of the Italy-ASEAN Association, - spoke on 4th June at a conference organised by the Collegio "Bernardo Clesio" of the University of Trento on this issue, describing how the European trade doctrine has evolved in recent years and how relations with ASEAN countries have developed. The topic is also relevant to other regions: Mosca discussed with Paolo Garzotti - Head of the Latin America Unit at the European Commission's DG Trade and former Deputy Head of the EU mission to the World Trade Organisation (WTO) - who is currently involved in negotiations with the Mercosur countries.

The European Commission had already made clear its intention to pursue 'a Trade and Investment Policy Based on Values' in the strategy document Trade for all, including as objectives of its trade agenda the promotion of sustainable development, human rights and good governance. The document is dated October 2015, within a few weeks the EU-South Korea Free Trade Agreement (already in force provisionally since 2011) would be formally ratified, the first of the so-called ‘second generation agreements’. This new generation of FTAs differs from the previous one since it includes chapters on subjects never covered before: trade in services, protection of intellectual property and, indeed, the promotion of sustainable development through trade (TSD).

The concept of "sustainable development" embraced by the EU is the one defined by the UN in the 2030 Agenda for Sustainable Development, also signed in 2015, and combines the protection of the environment with social and economic growth. Looking at the TSD Chapters of the second-generation agreements, for instance, we find provisions that require partners to comply with international climate agreements or to ratify and implement International Labour Organisation (ILO) conventions. Last February, the Commission reaffirmed in its Trade Policy Review that it would not only continue to pursue the UN's Sustainable Development Goals through trade policy but it would also be more assertive in enforcing FTAs and TSD chapters.

As far as relations with ASEAN countries are concerned, the EU has signed two FTAs with Singapore (EUSFTA, 2018) and Vietnam (2019) to date, while the one with Indonesia is at an advanced stage of negotiation. Consistent with the line expressed by the Commission, all these agreements include a TSD chapter. For the EUSFTA, negotiations on the chapter were particularly straightforward, as Singapore was already aligning with core ILO standards, and also produced rules on fisheries and logging. The Agreement with Vietnam also provides a noticeable level of commitment to labour rights (which Hanoi has followed up by by ratifying important ILO conventions) and environmental protection. Singapore and Vietnam are respectively the EU's first and second trading partners among ASEAN countries in terms of trade in goods and services, and the two FTAs will set a key precedent for future negotiations with other countries in the region. However, it is not enough to put commitments in writing: particular attention will have to be paid to the effective implementation of the TSD Chapter and, if necessary, to the enforcement of the Agreements. The involvement of civil society in the partner countries will be essential to measure the progress made in practice and, precisely for this reason, the FTAs provide for ad hoc stakeholder consultation tools.

While negotiations on the trade agreement with Indonesia are at an advanced stage, the other tables opened by Brussels with the ASEAN countries are at a standstill (Malaysia, Thailand, the Philippines). It is precisely on the TSD chapters that differences in views between the EU and its partners on specific issues become visible. For example, the issue of vegetable oils is not easy to handle for the Commission, as it seeks to strike a balance between the demands of European public opinion and the sensitivities of Jakarta and Kuala Lumpur - sensitivities that sometimes even lead to legal action at the WTO. However, it is important to recall that FTAs are not the only instrument with a TSD approach used in the region: Generalised Schemes of Preferences (GSP) have proven to be an effective means to grant privileged market access to the EU market to countries such as Cambodia, Myanmar (both beneficiaries of the most favourable regime, EBA - Everything But Arms, which grants duty and quota-free exports to Europe) and the Philippines. In order to continue to benefit from the GSP, however, the partners must commit to adopting and implementing sustainable development policies. Otherwise, the scheme will be revoked, a measure adopted against Cambodia after a long process of scrutiny and confrontation and that could also be taken against Myanmar. The dilemma facing the EU is not an easy one to solve. On the one hand, it is necessary to be rigorous in imposing on ASEAN countries the respect of environmental and social obligations, in line with the European ambition to have a "value-based" trade policy, in which the commitments on SDGs taken at bilateral and multilateral level with the partner are binding. On the other hand, it is also necessary to bear in mind these countries' needs and the risk that, in the absence of an agreement with the EU, they may end up in the commercial sphere of other powers. Deepening the relationship between Europe and each ASEAN country is a necessary precondition for greater cooperation on the challenges of the 2030 Agenda.

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Agnese Ranaldi published in Asean, Economy and trade

EU-ASEAN agreement on air transport to boost economic recovery and tourism

The EU and ASEAN signed the first historic bloc-to-bloc air transport agreement to increase inter-regional connectivity. It will be a vector for the economic recovery of Southeast Asia and the relaunch of post-Covid tourism

ASEAN and the European Union concluded negotiations on the Comprehensive Air Transport Agreement (AE CETA) during the extraordinary meeting of their respective senior transport officials, held virtually on 2nd June 2021. The signing of the agreement comes after eight rounds of negotiations that began in 2016 and were led by Singapore and the European Commission. The negotiations lasted a long time, as air rights are a sensitive issue: airlines are often regarded as external projections of respective nations, as many of them enjoy direct support from national subsidies. The AE CETA is the world's first air transport bloc-to-bloc agreement, thanks to which ASEAN and EU airlines will enjoy more opportunities to operate passenger and freight services between the two regions and on trans-regional routes. Adina Valean - European Commissioner for Transport - said that the agreement provides essential guarantees of fair competition for our airlines and European industry while strengthening our mutual trade and investment prospects.

The agreement aims at increasing the competitiveness of the respective air transport services. Indeed, respective companies will be able to carry out any number of services between the territories of the European Member States and Southeast Asia, and up to 14 weekly passenger services and any number of cargo services. Strengthening relations between the European Union and ASEAN will bring about a series of concrete benefits: the efficiency of the respective sectors will improve, market access will be facilitated, new business opportunities will be created based on the principles of fairness and transparency, as well as a more homogeneous regulatory framework for the labour market. The European Commission estimated that in the first seven years after entry into force, the agreement could create up to 5,700 new jobs and generate up to € 7.9 billion in economic benefits.

The AE CETA is a further sign of the intensification of inter-regional relations between Europe and Southeast Asia and contributes to enhancing their political and economic relations. The agreement is part of other initiatives such as the regional integration support program (ARISE Plus) and the commitment to strengthen cooperation on climate change (which includes the carbon offsetting and reduction scheme for international aviation, the EU-South East Asia Aviation Partnership). Dato Lim Jock Hoi - ASEAN Secretary General - commented on the agreement by saying that with $ 10.5 billion in foreign direct investment flows and $ 226.2 billion in trade in goods in 2020, the EU is already the third source of investment and the third trading partner for ASEAN The agreement would significantly strengthen air connectivity between ASEAN and Europe and bring the two regions even closer.

The deal will provide more connections and better prices for passengers. In this regard, increasing connectivity between the two regions will also reinvigorate the tourism sector, which has been hit hard by recent containing measures imposed due to the Covid-19 pandemic. The president of the Cambodian section of the Pacific Asia Travel Association, Thourn Sinan, said that one of the shortcomings in the tourism sector is that air connections are still limited. “In the past, we relied heavily on the countries around us (...) I see it, if the government could connect Cambodia to Europe or major European cities with direct flights, it would be a godsend for Cambodia, given the huge EU market, with the potential for agricultural and industrial products Cambodians”, he added. As reported by The Star, tourists are a great asset to the economies of Southeast Asia. Suffice it to say that leisure and business travel accounts for around 5-10% of national GDP in countries such as Malaysia, Singapore and Thailand.

Singapore Transport Minister S. Iswaran enthusiastically welcomed the conclusion of the agreement. Indeed, negotiations were led by representatives of the Asian city-state. He said: "The successful conclusion of the ASEAN-EU global air transport agreement It is a historic achievement and a milestone in our bilateral ties. It is the first such region-to-region agreement and a declaration of commitment by ASEAN and EU Member States to work together to overcome the current crisis of Covid-19, reconnect and resume cross-border travel".

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Michelle Cabula published in Asean, Culture and society, THE ROAD TO DUBAI

An urban sustainable development to save Asian cities from environmental catastrophe

By Michelle Cabula

In some of the major Southeast Asian cities, the impact of climate change risks undermining growth and strong economic dynamism. However, businesses and financial operators have the opportunity to play a key role in sustainable development and recovery strategies.

The Environmental Risk Outlook 2021 published by the consulting firm Verisk Maplecroft on 13rd May highlights an alarming fact: currently, the quality of life of 1,5 billion people living in the world’s major metropolitan areas is at the mercy of "high or extreme" environmental risks. These include pollution, water scarcity, extreme temperatures, natural disasters, and climate change-related risks.

Asia is "in the eye of the environmental storm" - 99 out of the 100 most vulnerable urban centres are in the continent - ASEAN member countries are particularly sensitive to the alarm raised by the report. In Southeast Asia the climate emergency is intertwined with the recurring threat of extreme weather events (such as typhoons), and exacerbates their effects, resulting in increasingly devastating and complex phenomena from which local emerging economies may struggle to recover. The most vulnerable cities in the area include Indonesia's Surabaya and Bandung, along with the capital of Malaysia Kuala Lumpur, and Singapore. Jakarta has a double record: the Indonesian capital faces recurring earthquake disasters and flooding, and increasingly severe air pollution while sinking below sea level at an unparalleled rate worldwide.

These data suggest a worrying scenario, in which not only ecosystems but also future perspectives of economic and social development would be put to the test. This is particularly true in an area that aims to become increasingly attractive to investors. The growing burden of climate risk in the cost-benefit analysis risks making investments in vulnerable cities and areas less secure and profitable, and therefore less attractive. This could affect long-standing efforts to make Southeast Asia a prime destination for financial flows.

The  methodology adopted in the report is in line with the recent trend of integrating non-financial parameters in the analysis of investment decisions, the development of operating standards to which companies must aspire, aware that the demarcation lines between environmental, political, social and economic risks are more and more blurred. The new paradigm of sustainability and financial responsibility provides for the integrated assessment of Environmental, Social and Governance (ESG) issues and aims to harmonize the pursuit of economic objectives with the protection of the interests of other stakeholders involved.

As stated by Fabio Panetta, economist and member of the Executive Board of the European Central Bank (ECB), the application of the ESG model to the world of finance "is an important innovation to place the financial system at the service of collective well-being" and "has become a key tool for dealing with climate risks, which have become progressively more serious due to the emergence of irreversible environmental damage". The potential of green and sustainable finance for recovery and long-term growth was also seen by the ASEAN Capital Markets Forum (ACMF). In a virtual meeting held in March, the ASEAN Finance Ministers approved the Action Plan 2021-2025, which places the promotion of growth and recovery in a sustainable key among its strategic objectives. At the same time, the Asian Development Bank (ADB) is working closely with local governments, developing strategies to channel private sector funds into green infrastructure development that can ensure a sustainable recovery from the pandemic crisis.

Will Nichols, Head of Climate and Environment research at Verisk Maplecroft, predicts that the issue of environmental sustainability in Asia's major urban centres will become crucial not only in the public debate and political agenda but also in business strategies. On the one hand, it is in the interests of companies and investors that want to make their businesses more resilient and competitive to align themselves with increasingly demanding environmental standards. On the other hand, a careful allocation of resources that takes into account the need to mitigate environmental risks would make it possible to strategically finance activities capable of producing a real positive impact on the development of Southeast Asian countries. This would make urban contexts more livable and safer and contribute to improving the quality of life of those who live there.

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Niccolò Camponi published in Asean, Culture and society

The importance of the Mekong for ASEAN

The Mekong is one of the most important rivers in Southeast Asia and the one with the greatest environmental, economic and geopolitical significance. The Mekong is a vast ecosystem with very rich biodiversity that must be protected to combat climate change. It also has an economic value as the main waterway: the river provides large quantities of fish and contributes to the irrigation of vast rice fields, enabling over 60 million people to live off it.

The river originates in China (where it is called Lacang), for a long stretch it crosses it before marking the border with Myanmar and entering Laos, where it is shared with Thailand, and after flowing through Cambodia ends its journey in a wide delta near Ho Chi Minh City in Vietnam. The river then reaches, in addition to China, five ASEAN countries: Myanmar, Laos, Thailand, Cambodia and Vietnam. Since the river crosses several states, it is at the centre of various geopolitical interests. In this regard, it should be remembered that for several years now, China has been pursuing a policy in Southeast Asia aimed at binding the continental countries of the area more closely to itself, based on the construction of infrastructures in exchange for political support at an international level. This policy, with the sole exception of Vietnam, is succeeding in Myanmar, Laos, Thailand and Cambodia. The latter has so favoured Chinese investments that it has been repeatedly accused of becoming a "client state" of Beijing - in fact during its presidency of ASEAN in 2012 - it supported Chinese positions in the South China Sea to the detriment of those of other ASEAN countries.

The Mekong is at the centre of this Chinese penetration strategy and several dams are among the most important infrastructures being planned or under construction. In this case, it can be said that the geopolitical, economic and environmental elements are inextricably linked: when China decided to build 11 dams in its stretch of river, it alarmed the countries downstream because by controlling their sources and thus indirectly the flow of water, it could hold them in check, with potential limitations in the flow of water in case of diplomatic tensions. In addition, China has also favoured the planning of other dams in Laotian and Cambodian territory, which some consider being a strategy of exchanging infrastructure for political support. Precisely, the dams are at the centre of the environmental debate as they could be the cause of the continuous drop in the river level and the resulting droughts (of which the worst occurred in 2019), which could ultimately undermine the productivity of large rice fields and therefore lead to the impoverishment of the communities that live thanks to the river.

Vietnam, during its ASEAN chairmanship in 2020, tried to raise the issue of river management and make it fully part of the ASEAN agenda. Malaysia, Singapore, the Philippines and Brunei are also interested in the fate of the river as they are major importers of rice produced by the Mekong countries. Currently, there are already two frameworks that seek to promote regional management of the Mekong with different objectives: the Chinese-led Lancang Mekong Cooperation, established in 2016, which aims to facilitate the flow of water from China by building dams, and the US-backed Mekong-US Partnership, established in 2020, which seeks to promote sustainable development in the region. From these two frameworks, it is clear that broader geopolitical interests that overwhelm the ASEAN states are at stake.

The Mekong, as highlighted, has its multifaceted importance for Southeast Asia and if ASEAN takes on the task of managing the problems related to the river, it will at the same time contribute to both strengthening its own regional integration and limiting Chinese influence in the area. It will also contribute to the environmental protection of a large area and ultimately to the fight against climate change. The greatest risk for the moment is that the river will become a second hotspot for relations between ASEAN and China (and also the USA) after the South China Sea.

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Agnese Ranaldi published in Asean, Economy and trade

ASEAN e-commerce needs to consider women inclusion

E-commerce is growing rapidly in Southeast Asia, but women are not always the full beneficiaries. Here is how the industry can become a pivotal factor of gender equality for Southeast Asian female workers. 

E-commerce could boost economic recovery and impact the conditions of Southeast Asian women workers, according to a report from the International Corporation (IFC). There is a strong incidence of female entrepreneurs in the economies of the area. For instance, on Lazada’s e-commerce platform, about one-third of Indonesian businesses and two-thirds of businesses in the Philippines are women-owned. However, these companies tend to be smaller, have lower average sales, and have fewer employees.

The IFC, a member of the World Bank, is the largest global development institution. Last week it published the report Women and e-commerce in Southeast Asia, which observes the development trends of the digital economy in the region. The focus is on the driver of the post-pandemic recovery: the spread of online transactions. "In Southeast Asia, e-commerce became a lifeline for individuals' daily essentials as well as a natural business strategy pivot for vendors and brands when offline operations were affected by COVID-19 safety measures", said Chun Li, CEO of Lazada Group.

In general, we have observed ambivalent effects of the COVID-19 pandemic on the economies of Southeast Asia. On the one hand, it has blown away some sectors of traditional economies, which were substituted by the flourishing reality of digital entrepreneurship. Lockdowns and containment measures have required small and large businesses to adapt to a new model of work, production and consumption, where e-commerce has emerged.

On the other hand, the pandemic has exacerbated gender inequalities, , burdening Asian women workers much more than their male counterparts. This shows that technological progress is not a channel for social emancipation: precise political interventions are needed so that material (and digital) availability is converted into real opportunities, especially for women. Female participation in the future of work is listed among the United Nations sustainable development goals, which promote systemic action in support of socio-economic development that cannot be separated from the full involvement of the female workforce. At the regional level, many steps have been taken in terms of policies for female inclusion, but these efforts have not yet translated into progress towards a real increase in the economic and professional weight of Asian women. The most urgent challenges concern labour force participation, gender discrimination in employment, financial inclusion and representation in senior management positions.

Several considerations apply to the digital economy. The e-commerce market in Southeast Asia has tripled since 2015 and is expected to triple again by 2025. The IFC report focuses on how to broaden the beneficiary base of this digital boom and believes it is crucial to overcome discriminatory barriers that prevent women from fully participating in the benefits of the digital economy. The report suggests how e-commerce can offer a solution to the eternal trade-off between family and work, which women are often called upon to deal with. According to the Asian Development Bank, increasing female participation in the workforce and closing the wage gap would have a huge impact on the growth of the region in general: the estimated benefits have been quantified at $ 3.2 trillion in the economies of Asia-Pacific.

Southeast Asia is one of the few regions where the presence of women in the labour market is declining, but it has at least one feature in common with most economies in the world: the vast majority of the unpaid domestic work is done disproportionately by women. In the IFC report, there is the significant testimony of an entrepreneur who says: "My home was far from my workplace and my little one was still a child. Eventually, I decided to quit my full-time job. But I was used to working, so I started selling online”. An example that many others could follow.

If care work employs mostly women, and mostly for free, e-commerce can be a game-changer. It would guarantee more flexibility for Asian workers and allow them to emancipate themselves economically by running a business activity with leaner production models. On the other hand, without adequate public measures to support the substantial inclusion of women in the digital economy, the risk may be to create profitable digital services without questioning the structural discriminations that prevent women's full inclusion in the job market. Asian women workers may be asking for e-commerce as well as "bread and roses" (a song manifesto for the income and dignity of American workers at the beginning of the last century), but the lack of careful political intervention to accompany its development could be a missed opportunity for gender equality.

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Stefano Rinaldi published in Asean, Politics and strategy

ASEAN: Believing in the power of ideas

Investment in technology and human capital is giving Southeast Asia a competitive edge in the new digital age

Southeast Asia may soon become a benchmark for the rest of the world in the creation of Knowledge-Based Economies, the most relevant concept for economic progress in the new millennium. A recent report by the United Nations shows that several champions of innovation and entrepreneurship are Asian, with some absolute excellences. Singapore is ranked second in the world - only behind Sweden - for technology transfer; Malaysia is depicted as the top country among emerging economies for human capital and innovative policies.

Significant progress can also be seen in Indonesia and the Philippines, where technological development over the last few decades is resulting in an important entrepreneurial dynamism, as well as bridging several institutional gaps.

In particular, recent studies confirm that in Indonesia the increase in the number of innovative enterprises is leading not only to a technological competitive advantage but also and above all to sustainable economic growth.

The report emphasises the role of three main factors as drivers of economic growth: the quality and access to telecommunications infrastructure (ICTs), the rate of growth of human capital through digital literacy and the free flow of information within countries.

First and foremost, a good telecommunications infrastructure guarantees fast, secure and cheap network access for all. In this respect, the governments of Singapore and Malaysia are among the most promising.

The issue of human capital is closely related: massive investments in training, research and development and digital skills in schools, as well as in orientation courses aimed at better understanding the dynamics of the labour market, always lead to an unprecedented use of the media. This raises awareness to citizens, as well as fostering the free creation and sharing of new ideas from which innovative companies are born and bring wealth, in a virtuous circle.

Southeast Asia is laying strong foundations for moving from a low value-added manufacturing-based economy to an economy to a dynamic knowledge-based economy, where the primary role is played by information transfer and Knowledge-Intensive Entrepreneurs, in a perspective of ‘creative destruction’ of knowledge, here recalling Schumpeter’s works. These entrepreneurs - as in the case of e-commerce and the sharing economy - have created digital ecosystems that permeate every dimension of users' lives, from payments and travel to necessities.

In addition, the pandemic has had important consequences in Southeast Asia: a region inhabited by 600 million people, where proximity and daily physical exchange was a way of life, has seen a radical change in its habits. The latest data show that digitalisation has only brought prosperity to those nations that had previously invested in ICTs, training and research and development.

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Emilia Leban published in Asean, Politics and strategy

Philippines, Singapore and Malaysia: who are the new italian Ambassadors

Marco Clemente (Manila), Massimo Rustico (Kuala Lumpur) and Mario Vattani (Singapore) are the new Italian ambassadors in the ASEAN area. That's who they are

Ambassadors have changed in three Italian offices in ASEAN countries. Massimo Rustico was chosen for the Kuala Lumpur office, Marco Clemente for the Manila office and Mario Vattani for Singapore. Here is a short biography of them.

Ambassador Massimo Rustico, born in 1958, entered diplomacy in 1987 after graduating in economics and commerce from La Sapienza in Rome. He began his career in 1989 as the second commercial secretary in Kuwait, before moving to the Permanent Representation of Italy to the UN in New York in 1991. In 1994 he was appointed Consul in Tehran and after the Consulate was abolished, he was assigned to the Embassy as First Secretary. Then he moved to the Consulate General in Houston, where he became Consul General in 2002. Since January 2006 he has been Consul General in Istanbul. Promoted to Minister Plenipotentiary in 2009, in March 2010 he was appointed Coordinator for the internationalisation of Italian companies operating in the construction and large-scale works sector. In the same year, he was temporarily assigned to the National Association of Building Constructors (A.N.C.E.). He then moved to work directly for the Director-General for the Promotion of the Country System, maintaining the same position at the A.N.C.E. until 2015. Finally, he became Ambassador Extraordinary and Plenipotentiary of Italy to Hungary on 14th November 2016. Now he will land in Malaysia: once again - as in Kuwait, Iran and Turkey - he will carry out his duties in a predominantly Muslim country.

Ambassador Marco Clemente, born in 1959, graduated from LUISS in Rome and entered diplomacy in 1985. Initially assigned to the Directorate-General for Emigration, then he was posted to Canberra as the first Secretary of Legation. In September 1990 he was appointed Consul in Caracas. He became Legation Counsellor in 1995 and worked in the Directorate-General for Political Affairs until 1998. Later, in 1999, he was appointed Regent at the Consulate General in Johannesburg and the following year, in 2000, he was confirmed as Consul General. Promoted to Embassy Counsellor in 2002, he was appointed Chargé d'Affaires with Letters to Yerevan (Armenia) in June 2003 and subsequently confirmed in 2006 as Ambassador to Armenia in 2006. Returning to Italy in 2007, he was assigned to the Directorate-General for European Countries until 2008, when he was promoted to Minister Plenipotentiary. Released from his post in 2008 to serve at the Ministry of Defence as Diplomatic Advisor, he was appointed Ambassador to Tallinn on 1st December 2012. Now the new assignment in Manila, a country with which Italy (where the Filipinos are the fourth most numerous community of migrants) has deep relations.

Mario Vattani, born in 1966, entered diplomacy in 1991. His first assignment was in Washington D.C. From 1999 to 2001 he was the Italian Consul in Cairo, while from 2001 to 2003 he was Diplomatic Counsellor at the Ministry of Agriculture and Forestry Policies. In 2004 he was at the Diplomatic Institute, seconded to Tokyo for a study programme and in 2005 he was promoted to Embassy Advisor and confirmed in Tokyo as First Commercial Advisor. In 2008 he served in the Municipality of Rome as Diplomatic Advisor to the Mayor. In May 2011 he was appointed Minister Plenipotentiary and took up his post as Consul General in Osaka. Since 2014 he has been serving at the Farnesina for coordination in the Asia-Pacific sector. In continuity with his commitment in the region, therefore, the appointment in Singapore.

In a period of economic and political rapprochement with ASEAN, the change of guard in the Italian representations does not go unnoticed. It is still too early to foresee the implications of the changes in the diplomatic corps, but it is undoubtedly expected that there will be an even greater commitment on the part of Italy in Southeast Asia. The new Ambassadors have the unavoidable challenge of implementing the partnership by helping Italian exports to this increasingly crucial region and promoting stability in all crisis areas.

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Annalisa Manzo published in Asean, Economy and trade

Funds to support women workers in Asia

Funds for Asian women workers: the post-pandemic recovery in Asia focuses on the economic resilience of women

Fashion company PVH has just launched its first funding initiative to support women employed in global value chains. The so-called Resilience Fund for Women in Global Value Chains is a joint action of BSR, the United Nations Foundation’s Universal Access Project, and Win/Win-Win Strategies in collaboration with their founding partners and stakeholders. A pioneering initiative that starts from South Asia and intends to invest in the health, safety and economic resilience of women, the backbone of global value chains.

The Fund's goal is to raise at least USD10 million in joint funding over three years to support locally developed solutions to the systemic problems that make women more vulnerable to crises, as demonstrated by the Covid-19 pandemic. Starting from the disproportionate impacts that Covid-19 has had on women workers involved in the supply chain, the Fund intends to address these problems and provide them with the necessary financial resources. It will help strengthen women's economic resilience, long-term health and well-being and will reform corporate philanthropy with its democratized and locally driven approach.

The Resilience Fund for Women is launching its first phase in South Asia, with expansions to other regions planned by the beginning of 2022. Unlimited funding is foreseen for organizations in South Asia, relying on the experience of local actors to understand women workers’ needs and thus better target the resources of the Fund. Its representative advisory board, placing local institutions and feminist leaders as equal partners with investors in determining fund management, aims to respond flexibly to the changing realities to be faced.

The Fund is open to investors across a wide range of sectors. They are entrusted with the task of building new links with women’s funds and local organizations that focus their activities on the safety, protection, sexual and reproductive health of women, all considered as factors of long-term economic resilience.

The RISE Fund (Responsive Interventions Supporting Entrepreneurs), recently launched by the Australian government's Investing in Women initiative to assist the recovery of women’s SMEs in Southeast Asia, stands in the same direction. The funding project provides capital injection in two phases, integrating a wider range of public efforts and other donations to mitigate the economic impact of the Covid-19 pandemic. Women’s SMEs represent an important source of economic dynamism, resilience, and unexplored market opportunities, which will instead be crucial factors for the post-pandemic recovery in Southeast Asia.

To glue these initiatives is the growing focus of ASEAN on women. A key signal in this regard was the l’ASEAN Regional Study on Women, Peace and Security, launched on International Women's Day 2021. The first study on women, peace and security in ASEAN underlines the renewed institutional commitment in support of gender equality and women's leadership, involving these core principles in the ASEAN Comprehensive Recovery Framework and the ASEAN Vision post 2025.

The adoption of significant financial measures configures a promising future for the protection of Asian women workers. Improving working conditions, empowerment and economic support for women are essential goals in the post-pandemic recovery in Asia.

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Alberto Botto published in Asean, Economy and trade, THE ROAD TO DUBAI

Embrace the circular economy: a requirement for Southeast Asia

The development model of Southeast Asia is preparing for the historic turning point of the circular economy. This is how the countries of the ASEAN bloc are moving to incentivize a system that will bring advantages on profits and the environment

Increase profits, reduce waste and save the world: these are the objectives of the circular economy, the economic system based on the concept of eco-sustainability and waste reduction, which could become the ace in the hole for Southeast Asian countries in the coming years.

In fact, the ASEAN countries have been affected for years by serious problems of pollution, waste of unused resources and the accumulation of plastic debris in the sea. Problems that ASEAN itself dealt with in a 2019 report entitled "Asean Framework of Action on Marine Debris", which lists the problems of the Asian region in terms of marine waste and possible environmental policies to be adopted to curb them.

According to the World Economic Forum, by 2050 an economy based on the consumerist model of "take, make, dispose" will no longer be sustainable and the circular economy could be the best tool to combat pollution and waste. The data show that only 20% of all materials produced globally are reused, while 80% are not recycled: today we can afford it, but tomorrow this will not be possible. Demographics are a further cause for concern in Southeast Asia: by 2050 the urban population will increase by over 260 million inhabitants and it is, therefore, necessary for these countries to start introducing environmental policies aimed at implementing, within companies, a circular economic structure that will allow an estimated 80 to 99% material recovery.

The countries of Southeast Asia are not only concerned about population growth but also about the damage caused by pollution and climate change, which could affect them deeply. According to the consulting firm Maplecroft, by 2050 the damage caused by climate change could result in a loss of 3% of the GDP of the Southeast Asia region, compared to an estimate of 1-2% for global GDP. In the report, two of the cities at particularly high risk are Jakarta and Manila: Indonesia and the Philippines- as reported by the 2015 research 'Plastic Waste Inputs from Land Into the Ocean' - are the second and third largest countries in the world in terms of production of plastic waste dispersed into the sea.

In order to combat pollution, Indonesia published a report at the beginning of the year conducted by the Ministry of National Development Planning analysing the potential effects of adopting a circular economy on five key sectors of the economy. The effects are twofold: on the one hand, an improvement in environmental conditions and, on the other hand, a considerable increase in profits. According to the report, in fact, by 2030 Indonesia could boost its economy by $45 billion</a, and create almost 4.5 million new jobs.

In 2020, another major project was set up to kick-start the green turn in Asia: the "Closing the Loop" project, supported by Japan and involving four cities in Malaysia, Indonesia, Thailand and Vietnam. The aim of the project is to create an organisational plan to combat plastic waste by identifying areas at risk in cities, where large amounts of plastic waste are most likely to form and accumulate so that municipal authorities can adopt circular economy strategies for waste management.

Despite the good intentions, probably dictated more by the possibility of GDP growth than by environmental reasons, the road for the Southeast Asian countries is still uphill and there are many measures that still need to be implemented by their respective governments.

Although Indonesia was joined by Vietnam, Singapore and the Philippines, which announced in 2021 that they intend to implement new green policies and ad hoc strategies to embark on the path towards the circular economy and its 5 Rs "reduce, reuse, recycle, regenerate and renew”, several risks remain for governments.

According to some experts, the biggest risk for Southeast Asian countries would be the lack of involvement of small and medium-sized enterprises (90% of registered companies in the region) in the ecological transition.

Even if it is theoretically easier for a small company to change its policies compared to a large company, the lack of adequate incentives and economic support to implement programmes focused on the circular economy risks leading many SMEs to abandon the green turn. A good solution to this problem has been implemented in Vietnam, where low-interest loans are offered to companies that want to develop carbon-neutral projects.

Numerous studies, especially those carried out by the Ellen-MacArthur Foundation for the past ten years on the circular economy, show that a change of direction in the countries of Southeast Asia is necessary because following a linear economy will no longer be sustainable in the near future.

The sooner measures are taken to bring about concrete changes in the environment, the sooner there is a better chance of achieving the results these countries have set for 2030 in terms of reducing pollution and plastic waste. All this together with a dual incentive for transition and economic growth.

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Agnese Ranaldi published in Asean, THE ROAD TO DUBAI

Green finance leads decarbonization of Southeast Asia

Decarbonization and energy transition are key issues in Southeast Asia. The major players on the ground are Japan and China, whose rivalry in green finance can positively affect the region

On 7th May, the Asian Development Bank (ADB) announced that it would cease funding coal-fired power plants, fossil fuel extractions and activities for the production and exploration of oil and natural gas. The news is part of the ADB's Strategy 2030 published in 2018, in which the bank committed to cumulatively invest USD80 billion in sustainable financing between 2019 and 2030.

Since the second half of the 18th century, mankind has used fossil fuels to produce energy. Technological development gave impetus to the second industrial revolution in Europe, enabling the creation of the steam engine, which cut down the costs of transport and began to weave the first webs of what would soon become the globalised economy. Human progress continues to be measured in revolutions: now, it is the turn of a global renewable energy industry revolution and production processes that drastically limit our impact on the planet.  

For developing countries such as the economies of Southeast Asia, this is a major challenge. On the one hand, these areas are particularly exposed to environmental disasters caused by anthropogenic climate changes; on the other hand, the economies of Southeast Asia are still in an undeveloped but emerging stage. For this reason, the tension between national choices and international sustainability imperatives plays a crucial role. In fact, coal remains the favourite source in the regional energy mix, for governments and businesses. The demand for electricity is growing fast in emerging markets, which is why it is a priority for governments to ensure supply at affordable prices. There is a misalignment between the political need to stimulate domestic demand while maintaining the production process competitive, and the need of foreign investors who stop financing activities that use obsolete technologies. In this regard, Tim Buckley of the Institute for Energy Economics and Financial Analysis said that if these banks stop financing it, coal is dead: "Coal is not bankable without government subsidised finance."

Indeed, the latest annual report from the International Energy Agency (IEA), published earlier this year, highlights how the massive population growth in Southeast Asia will play a crucial role in shaping global energy policies. In this regard, the Asian Development Bank had already scheduled with ASEAN a plan for sustainable infrastructure projects in April 2019: the ASEAN Catalytic Green Finance Facility, a green finance mechanism in the hands of regional governments, focused on developing climate-friendly projects, under the ADB supervision.

However, ADB is not the only one to have focused on Southeast Asia for its sustainable investments. The Japanese-based bank is called upon to compete with the Chinese-led Asian Infrastructure Investment Bank (AIIB), a multilateral financial institution focused on promoting infrastructure projects in Asia "with sustainability at its core".

China's role in Southeast Asia's decarbonization programs is ambivalent. As reported by Channel News Asia, the IEA claims that more than 80% of the growth in coal use will come from Asia and that this increase will be driven by China. In order to accelerate the post-pandemic recovery, Beijing increased the use of coal, aiming at stimulating its economy by fueling domestic demand. In addition, China remains faithful to the Marxist assumption that it is good to use the material tools available to the status quo before carrying out a revolution, in this case, an energetic one. The leadership's medium-term plans include an ambitious ecological transition, which aims to make the country carbon-neutral by 2060. Tim Buckley commented, in this regard, that China is a leader in every industrial sector that is critical for the decarbonization of the world, and this should allay Western fears about the reliability of the Party-State's commitments.

The substantial antagonism between China and Japan would seem to point towards virtuous competition in Southeast Asia, with the emphasis on sustainable infrastructure investments aligning with the urgency of environmental concerns in the region. For structural reasons such as geographical, economic and political-institutional issues, Southeast Asia remains a context particularly exposed to the consequences of the climate crisis, exacerbated by the irresponsible use of obsolete energy resources. Therefore, for national governments, the tension between unsustainable growth imperatives and the disruption of environmental disasters remains a historical challenge. This is why green finance can take on the role of game-changer in the region, shifting the balance in favour of more sustainable policies and practices in the near future.

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Agnese Ranaldi published in Asean, Economy and trade

The AEC Blueprint 2025 and its opportunities for the EU

While the ASEAN Economic Community (AEC) sums up the results achieved with its AEC 2025 plan, the European Union would better protect the special space it has carved out in its relations with Southeast Asia.

The mid-term review of the AEC Blueprint 2025 was held on 28th April, with the participation of an EU delegation in ASEAN. The activities of the ASEAN Economic Community (AEC) are coordinated through this development plan, designed relying on the studies on regional economic environment provided by the Economic Research Institute for ASEAN and East Asia (ERIA), the S. Rajaratnam School of International Studies (RSIS) and the Institute of Southeast Asian Studies (ISEAS), which helped define the AEC guidelines for the coming years. The AEC Blueprint 2025 was developed on the basis of the previous AEC 2015 and it aims at achieving some general objectives: an integrated and cohesive economy; competitiveness, innovation and dynamism in ASEAN; sectoral connectivity and cooperation; greater inclusiveness and people-centered approaches; and finally an ASEAN that aspires to become a relevant global player. Furthermore, it is not only a significant document for the economies of Southeast Asia but also for international partners such as the EU.

The review evaluated the results obtained in the first years of implementation. According to Secretary General Dato Lim Jock Hoi, who spoke at the meeting, it would be appropriate to shed light on three fundamental dimensions. First of all, despite the positive performances, these results are not enough: the Association needs to improve the responsiveness to cross-cutting issues and cross-sector coordination. Secondly, even if the primary goal remains to achieve greater economic integration, ASEAN must always keep in mind that the external environment is evolving and that if urgent challenges such as climate change intensify, it is necessary to adjust the 2025 plan accordingly, incorporating these new instances. Third, ASEAN needs to consider the material characteristics of its markets and address gaps and complexities through regional cooperation.

A delegation from the European Union was also present at the launch of the mid-term review, which welcomed the constancy that the Association has shown in maintaining these economic and commercial commitments. Just ten days earlier, on April 19th, the EU had inaugurated its Strategy for Cooperation in the Indo-Pacific, which recognizes the growing economic and geopolitical importance that the region has been demonstrating in recent years. The European Union and ASEAN share the most mutually advantageous relations, having worth to the latter around 123 billion euros in exports in 2020, according to estimates by the International Trade Center. Furthermore, not only does the Indo-Pacific region account for a significant share of world GDP and nearly two-thirds of global growth, it also has some of the biggest fractures in the global geopolitical mesh. Amidst issues relating to disputes with China in the South China Sea, a particular exposure to the most disruptive consequences of climate change, and the fact that regional actors have different preferences compared to countries with which to cooperate more actively, Southeast Asia is very much more than an economic hub for Europe.

Therefore, closely observing the political and economic dynamics of the ASEAN countries is essential to be able to glimpse the direction that the global economy could take in the future. Not only does the Southeast Asian region have a huge and developing market despite the pandemic but the way in which these economies react to the threat of environmental disasters, and to issues related to the inclusion of marginalized social categories, is the perfect synthesis of the global challenges that await us all. This is why the AEC Blueprint 2025, a proper regional project, has its own relevance also for the Union, which seems to have carved out a role as the main supporter of the economic development of Southeast Asia. Although they are regional organizations of a different nature, ASEAN and EU represent the most advanced economic integration projects in the world, and also share some of the value paradigms on which they are based: multilateralism, rule of law, free market. Hence, the Union should take the opportunity of these affinities to protect the advantage acquired over economic partners that are geographically closer, but ideologically much further away.

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Emilia Leban published in Asean, Economy and trade

Looking for Start-Ups in the Southeast Asian market

Grab, Gojek, Sea and Tokopedia: international finance bets on start-ups made in ASEAN

Wall Street recognized the potential of Southeast Asian start-ups. It is a much larger and much more populous region than Europe or North America and its economy, despite the pandemic crisis, is growing at a rapid pace. Nevertheless, to be successful in this market you need to master its main characteristics. It is no coincidence that Uber's businesses were entirely bought out by its local variant, Grab, in 2018. As well as China's Alibaba has struggled long to outclass Lazada, a regional e-commerce company.

In recent years, the landscape of Southeast Asian tech start-ups has expanded more and more. Digital services such as ride-hailing or delivery have become increasingly popular. Since 2015, venture capitalists, technology groups (including Alibaba and Tencent, Google and SoftBank) and Wall Street veterans have invested $ 26 billion in the region. The capitalization of the Sea group, a Singaporean e-commerce company listed in New York, has quadrupled in the last year, reaching USD 125 billion. Grab also recently went public for nearly USD 40 billion, backed by BlackRock, the world's largest asset manager. Gojek, the Indonesian ride-hailing alternative has been valued at over USD 10 billion and could merge with Tokopedia, an Indonesian e-commerce company, before accepting being listed in New York. Traveloka, a company specialized in airline reservations, is also about to go public on Wall Street. The most valued and used e-commerce services in the region together exceed the value of USD 200 billion.

All of these companies started by carving out a niche market. Then, they evolved to become direct competitors of the American and Chinese companies of the same kind. Grab is present in eight countries, and in addition to transport it offers food delivery services, digital payments, insurance, investments and health consultancy. It also plans to launch a digital bank in Singapore this year. One of its co-founders, Tan Hooi Ling, describes it as a mix of Uber, DoorDash (a US-made food delivery app) and Ant (Alibaba's financial branch). In short, a super app that includes services normally distributed on multiple platforms. Same goes for Gojek, which offers a similar catalog of services.

However, the exponential growth of these platforms is not predetermined. If the quality of the infrastructures and communication networks does not improve, many of the potential users will be cut off. Especially if companies find it unprofitable to offer their services in certain areas. The problem was raised in reference to the particular geographic conformation of Indonesia which hosts more than 6,000 islands and does not have the infrastructural network of neighboring China. Not to mention that a large part of the population has a very low income, with little money available to shop online. And even if the emerging platforms managed to overcome these obstacles, sooner or later, they would inevitably find themselves overlapping one another. Grab and Gojek already compete for the same market. 

Risks that are amply justified by the excellent results. After all, high growth translates into tolerant investors; Sea's revenues increased by 101% last year and Grab expects to reach a balanced budget by 2023. Indeed, many investors argue that the Southeast Asian market is so vast and varied that it is impossible to form monopolies. This confirms the words of Gojek founder Kevin Alawi, "it is not a market in which whoever wins takes everything". A prospect that presents many opportunities for Western investors, especially in a post-pandemic context and the recovery of domestic consumption.

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