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High Level Dialogue on ASEAN-Italy Economic Relations: the speech by Ambassador Michelangelo Pipan

The speech by Ambassador Michelangelo Pipan, President of the Italy-ASEAN Association at the High Level Dialogue on ASEAN-Italy Economic Relations in Manila

When the Italy ASEAN Association was founded with the intent of promoting relations between Italy and the ASEAN countries, back in 2015, the world was a very different place: in virtual absence of major troubles the economy was booming, interest rates were low thanks to equally low inflation, free trade was reigning, globalisation was the name of the game. In that context the Association’s job in pursuing its goals was rather straightforward, although everything but easy: as Italian businesses were far from tapping the extraordinary opportunities offered by the ASEAN countries, it was necessary to attract their attention to and increase their awareness of the vast openings existing in each and every ASEAN member country and the very favourable atmosphere provided by the ASEAN stance towards international trade, let alone the strong sympathy everything Italian enjoyed in the area. In 2015 ASEAN became a Community also in the economic field, making possible a practically unhindered circulation of goods and capitals. Then came the RCEP agreement opening up an enormous common market in this part of the world. Those achievements consolidated the ASEAN role and made its member countries an even more appealing partner, one that could not be overlooked. In fact the Italian government did not fail to realise that and sought the status of ASEAN’s Development Partner, which was achieved in 2020. Since its inception the Association pursued its mission mostly implementing awareness activities with the support of its members, some of the major Italian Corporations, and in cooperation with the Italian official bodies. We soon realised that it was of the utmost importance to bring the Italian CEOs to ASEAN to meet their counterparts, to see with their own eyes the dynamism of the people, governments and entrepreneurs in these countries. That’s how the cooperation with TEH Ambrosetti was initiated and the HLDs started. 

Fast forward nine years, so much has changed on the global stage. After the disruption brought about by the pandemic and the subsequent expectations arising from the unprecedented financial resources made available by many governments and international organisations, war broke in Eastern Europe, then in the Middle East, in South Sudan, inflation rose, so did interest rates, trade barriers started to be Introduced and then strengthened . The world is now a totally different place. But how have these portentous events changed the landscape for us, for the perspectives of the relations between the EU and ASEAN? How are they affecting the work of our Association? Well, if anything, I am convinced that ASEAN as well as our work have become more relevant, because in a scenario where containment, confrontation, inward looking attitudes seem to take hold in so many places and cause a dangerous fragmentation of the international order., Asean stands out for the perseverance in sticking to its founding principles: a stalwart champion of free-trade as a means to growth and peace - convinced that stability can be achieved through development and vice versa ,an unconditional supporte of multilateralism, ASEAN’s policy remain that of resorting to discrete diplomatic dialogue for the solution of controversies, a policy so intrinsically linked to the success of the association that has been dubbed “the ASEAN Way”. In recent times, this has been coupled with the “ASEAN Centrality” a concept that - extending the other basic ASEAN principle of non-interference - signifies the unwillingness of the block to be pushed to take sides in the major power’s contest for predominance in the area. No wonder only a few days ago, when participating to the 14th ASEAN- UN summit in Vientiane , the SG of the UN, Mr Gutierrez, praised the Association as a “wonderful model for the world….a bridge builder and a messenger for peace “, lauding is commitment to multilateralism and its efforts to defuse tension by prioritising dialogue and respect of international law. At the same time in spite of geopolitical uncertainty and conflicts, the World Bank estimates that global trade to GDP ratio has reached 74%, exceeding pre pandemic levels. According to other authoritative sources world exports have grown 1,8% last year and are looking to grow 3.5% in 2024. In this scenario it has been said by experts on the area that “South East Asia is poised to be the biggest winner in global trade over the next decade, even amid (possible) escalating confrontation between the major powers”. Moreover, last year the six major ASEAN economies attracted more FDI than China (that incidentally looks to become soon the major foreign investor in the area). On top of this ASEAN continues to look ahead and is drafting a new ASEAN Community Vision 2045 to be adopted next year. At the same time the EU is advancing its work for the establishment of FTAs with more ASEAN nations, including the Philippines our host this year. All this considered, the work of our Association has become even more essential, in my view, for the reciprocal benefit of Italy and the ASEAN countries. A lot can be achieved thanks to a strong complementarity: we have In front of us a rich tapestry of opportunities can can be woven on the solid framework of the EU-ASEAN relations. It is thus a great privilege to hold the 8th edition of the HLD in Manila and we are most thankful to the Philippines government to host it. We are also extremely grateful to the many organisations and individuals whose commitment contributed to make it happen. I align myself to the individual thanks that were presented earlier by Mr Tavazzi. I know from personal experience- back in 1981 Manila was the first posting abroad of my diplomatic career- of the many opportunities for bilateral cooperation the stand in front of our two countries and the rest of ASEAN. Having expanded considerably since then, they are clearly spelled out in today’s program and reach out to the most contemporary fields of activities - let me remind you that the World Intellectual Property Office has chosen the Philippines as pilot country for measuring the contribution of the creative industry to GDP. I trust they will get a significant impulse today thanks to your discussions. In conclusion, I wish you the best of success and thank you for your kind attention.

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Redazione published in Asean, Politics and strategy

ASEAN and BRICS

We publish here an excerpt from Chan Chian Wen's editorial, which appeared in Nikkei Asia

A common critique of BRICS lacks the cohesion necessary for long-term stability. However, ASEAN's five-decade track record proves otherwise. This group of 10 Southeast Asian economies serves as a real-time case study of how political and economic diversity can coexist while fostering peace and prosperity. ASEAN comprises Muslim-majority, Buddhist-majority, and Christian-majority countries, all with multi-ethnic and multi-cultural societies. These nations don't even share the same political systems. Yet, ASEAN's continued existence and prosperity serve as a powerful rebuttal to the notion that a diverse mix of countries cannot function effectively together. ASEAN's proven record of neutrality has long supported regional stability; now it should extend its influence to help reduce conflict risks beyond its borders. While BRICS aims to foster economic multipolarity, it is often viewed by Washington as aligned with its geopolitical rivals, Moscow and Beijing. ASEAN, without such baggage, is uniquely positioned to ease concerns over BRICS being perceived as anti-Western. ASEAN can also benefit from BRICS's growing commodity exchanges, which provide an opportunity to boost sustainable economic growth and improve food security. By protecting commodity-dependent economies from excessive speculation, BRICS exchanges help mitigate price volatility, a key threat to ASEAN's stability. Furthermore, BRICS countries play significant roles in global supply chains for both raw and value-added commodities. Many experts believe the world is on the cusp of a new commodity super-cycle, driven by decades of underinvestment in resource extraction and refining infrastructure. BRICS, with its significant lead in this space, is well-positioned to cushion the socio-economic fallout of such a cycle -- an advantage that ASEAN lacks. With global trends shifting toward electric vehicles, lithium batteries, nuclear energy, semiconductors and electrification, ASEAN risks falling behind without deeper engagement with BRICS. Additionally, BRICS offers access to alternative platforms for financial transactions, such as blockchain. By linking settlement currencies to neutral reserve assets like gold, ASEAN could reduce its exposure to the risks of sharp fluctuations in the U.S. dollar. For ASEAN to maintain true neutrality, it must adopt a platform-agnostic approach to financial transactions in global trade and investment. In conclusion, it is not in ASEAN's best interest to passively observe attempts to reverse the trend toward multipolarity, including the forging of closer ties between BRICS and ASEAN.

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Redazione published in Asean, Economy and trade

The surge of investment in Southeast Asia

Growing role of private equity and venture capital in ASEAN countries

By Luca Menghini

In 2023, the private equity (PE) and venture capital (VC) sectors in ASEAN countries witnessed significant developments, despite facing substantial headwinds in the global economic landscape. The ASEAN region, with its continuously expanding and growing middle class and a very young population, continues to attract numerous investors, particularly in the technology, healthcare, and infrastructure sectors. These sectors are crucial drivers of growth in an increasingly competitive market and in a constantly evolving global market.

The Southeast Asian private equity market ended 2023 with a total of 22 deals amounting to $3.9 billion. This figure represents a decline compared to previous years, largely due to macroeconomic challenges such as inflation and high interest rates. However, experts remain optimistic, given the young workforce and increasing demand for innovative solutions, which is expected to drive future growth. Venture capital performed very strongly, with assets under management reaching a record $27.3 billion in 2023, highlighting the resilience and potential of the region's startup ecosystem.

The healthcare sector emerged as a key area for private equity investments in 2023, accounting for 36% of total deals. The growing demand for an improved healthcare sector capable of offering more advanced services, driven by the fact that the average ASEAN population is aging and simultaneously becoming wealthier and able to afford higher-level care, has created numerous opportunities for investors. In addition to healthcare, the other sector that attracted the most attention was technology and telecommunications, which accounted for around 31% of private equity investments.

Investments in infrastructure were a dominant theme in 2024, with the sector accounting for 78% of total private equity deals in the second quarter of this year. As Southeast Asian countries prioritize the transition to a low-carbon economy, opportunities in renewable energy and sustainable infrastructure projects have attracted the interest of numerous investors. Additionally, the region's strategic location as a hub for global trade has made investments in digital technologies and, more generally, in digital transformation, along with physical infrastructure, vital for its economic future. This has led private equity activities to focus on sectors aimed at redesigning and transforming regional supply chains and increasing commercial connectivity.

Despite the encouraging and optimistic trends, the private equity and venture capital sectors in the ASEAN landscape are facing significant challenges. The macroeconomic environment remains uncertain, with concerns related to inflation and interest rate fluctuations creating unfavorable conditions for transnational deals and agreements in general. Additionally, the number of exits is in sharp decline, fundraising has decreased, and investors are adopting a more cautious approach. Exit conditions remain difficult, with many private equity firms opting for secondary sales over initial public offerings (IPOs) due to a sluggish public market.

Nonetheless, there is a high level of available liquidity, which remains ready to be used, positioning investors optimally to capitalize on future opportunities. Experts predict that the consumer goods sector, education, and financial services will see an increase in investments in the coming years as ASEAN economies stabilize and continue on high-growth trajectories.

Looking ahead, the continued development of the Southeast Asian private equity and venture capital markets will be shaped by digital transformation, innovations in healthcare, and the need for sustainable infrastructure. These sectors offer the greatest promise both for investors and governments seeking to strengthen the region's competitiveness in the global economy. With a young, tech-savvy population and a rapidly growing middle class, ASEAN is positioned to remain a bright spot for private equity and venture capital investments in the years to come.

In conclusion, while the private equity and venture capital sectors in ASEAN are not without their challenges, the region's growth prospects remain strong and stable. The focus on infrastructure, healthcare, and technology, along with the availability of capital, allows Southeast Asia to continue being a key destination for investments in global markets. Investors are likely to maintain a cautious but optimistic approach as they navigate the opportunities and risks that come with investing in one of the most dynamic regions in the world.

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Redazione published in Asean, Culture and society

The Role of Artificial Intelligence in ASEAN

Artificial intelligence is set to radically transform Southeast Asia, with estimates suggesting a potential increase in regional GDP of up to $950 billion by 2030

By Luca Menghini

In recent years, the role of artificial intelligence (AI) has captured the attention of governments and industries worldwide, and Southeast Asia is no exception. ASEAN’s ability to harness AI’s potential has become a relevant topic, especially considering the region's diverse economies, ranging from countries with advanced digital infrastructure, such as Singapore, to emerging economies still working to overcome digitalization challenges.

Although AI can bring significant economic benefits, the challenge of governance and innovation requires a collective response from ASEAN member states. A crucial moment for AI governance in the region was marked by the publication of the "ASEAN Guide on AI Governance and Ethics" in February 2024. This guide presents a comprehensive approach to establishing a region-wide framework based on principles such as transparency, fairness, and accountability. The aim is to balance regulation with innovation, considering the diverse socioeconomic conditions of member countries.

The guide promotes the voluntary adoption of these guidelines, offering recommendations at both regional and national levels. This makes it a flexible but essential tool for aligning AI development with ethical and sustainable practices. Some member states, such as Singapore, have already developed national strategies. Singapore's "Model AI Governance Framework," updated in 2023, represents an example of how a government can implement AI policies to foster technological growth and responsible use. Indonesia and the Philippines are also following this example, aiming to propose a regional AI regulatory framework by 2026.

Artificial intelligence is set to radically transform Southeast Asia, with estimates suggesting a potential increase in regional GDP of up to $950 billion, or 13%, by 2030. However, the disparity in investments and infrastructure among ASEAN countries poses a challenge to fully realizing this potential. Singapore attracts most AI investments in the region, surpassing large economies like Indonesia and Malaysia. In 2023, Singapore secured $8.4 billion in venture capital for AI, compared to $1.9 billion for Indonesia and just $95 million for Vietnam.

Efforts to close this gap include collaborations with major AI companies, such as the partnership between Singapore, Malaysia, and Nvidia to build supercomputers and enhance AI-related manufacturing. These initiatives are crucial for positioning the region as a hub for AI innovation, particularly in sectors such as healthcare, agriculture, and finance. Local AI developments, such as PhoGPT in Vietnam, show how ASEAN countries are starting to carve out a niche in the global AI ecosystem, addressing the region’s specific needs.

Although the benefits of AI are evident, concerns are growing about the environmental impact of data centers and the high energy consumption required to train large language models. It is expected that AI development will double the number of data centers globally by 2030, with a corresponding increase in electricity consumption. For ASEAN, this poses a sustainability challenge, especially in countries heavily reliant on fossil fuels.

The ASEAN Guide on AI Governance has begun to address these concerns, promoting AI practices that take environmental and sustainability factors into account. With AI’s growing importance, member states will need to shift toward advanced technologies that consider environmental implications, potentially making AI a key element in both economic growth and climate resilience.

To fully exploit AI’s potential, ASEAN countries must collaborate more effectively, especially in areas like cross-border data flows, skill development, and regulatory harmonization. The new AI Guide suggests the creation of an ASEAN working group to oversee AI governance initiatives and facilitate knowledge sharing between more advanced economies, like Singapore, and less developed ones, such as Cambodia and Myanmar.

Initiatives aimed at building a workforce prepared for AI are of fundamental importance. Singapore’s AI apprenticeship programs serve as a model for improving and expanding the regional workforce, a crucial factor in mitigating the negative effects of automation. Expanding such programs across the region could help ensure a more equitable distribution of AI benefits.

The rise of AI in ASEAN presents both a significant opportunity and a challenge. On the one hand, it offers a path to substantial economic growth and technological leadership. On the other, it requires careful governance to ensure ethical, sustainable use and equitable access across the region. The recent steps taken by ASEAN, including the publication of the AI Governance Guide, demonstrate a commitment to responsible AI development. However, to truly accelerate the AI era in the region, ongoing developments, investments in innovation, collaboration, and inclusive growth will be necessary.

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Scam Cities’ issue in Asia

This is how Southeast Asian countries are trying to counter the phenomenon

Article by Francesca Leva

A phenomenon that has emerged in Asia, specifically in South-East Asia, since the outbreak of the COVID-19 pandemic is the one of the so-called “Scam Cities”. A UN Office on Drugs and Crime report estimated that “the scam industry is earning criminal groups the equivalent of billions of US dollars.” Moreover, these earnings are comparable to the gross domestic product (GDP) of certain countries in the region. The study indicated that in an undisclosed Southeast Asian nation, conservative estimates placed the scammer's earnings between US$7.5 billion and US$12.5 billion, which is nearly half of that country's GDP in 2021.

The victims of this human trafficking activity are typically young citizens from China Mainland, Hong Kong, Taiwan, Thailand, the Philippines, and other Southeast Asian countries. However, as this activity expands, more and more victims are recruited from India, Africa, and Latin America. With the promises of a profitable new career - as well as VISAS, paid flights, and proof of accommodation – individuals are lured into moving to a new country to pursue a promising career. However, upon arrival, the victims are then directly transferred to prison-like compounds, usually located outside casinos or on the outskirts of the cities. There, individuals are turned into prisoners and forced to buy their freedom back by working for the owners of these activities. The illegal activities individuals are forced to undertake vary from online scams for money, romance-investment scams, crypto fraud, money laundering, and illegal gambling. Phil Robertson, Asia director for the advocacy group Human Rights Watch, declared that: “The litany of rights violations are shocking, including false recruitment, stripping people of their passports and other identity documents, abductions and trafficking, confinement, debt bondage, forced labor, physical beatings, and sexual abuse”.

Police authorities identified some hotspots in the eastern Shan State in Myanmar, situated adjacent to China in the northern region, along with various locations in Cambodia such as Poi Pet, Sihanoukville, and Svay Rieng, as well as other sites, including those in the Philippines and the Golden Triangle Special Economic Zone in Bokeo, northwest Laos. However, many of these cities are located alongside or in the Special Economic Zones (SEZs), which, due to the relaxed regulation devised to attract investments, turn into lawless areas controlled by private security firms, over which local police have no control.

Interestingly, this phenomenon poses a threat to China for both internal policy reasons and cross-border security, making it a geopolitical issue. For the former, gambling has been outlawed by the Communist Party since 1949, both in China and abroad: engaging in any type of gambling, including online gambling, gambling outside the country, or establishing casinos abroad to target Chinese nationals as main clientele specifically, is deemed unlawful. This is mainly due to the fact that Beijing considers capital outflows and illegal gambling as a threat to its social stability. This has transformed Asia’s gaming industry: most of the casinos that opened in Southeast Asia were explicitly opened to attract Chinese citizens, and this strategy has proven to be effective: every year, almost 1trn yuan ($144bn) leaves China for gambling purposes, and an estimated fifth of outbound flights from China is for gambling trips. In the SEZ along the Chinese border, the business is flourishing: Golden Triangle Special Economic Zone in northern Laos is the Kings Romans Casino is controlled by Zhao Wei, a Chinese national who craftily devised its activities as “patriotic.” Jason Tower, country director for Myanmar at the United States Institute for Peace, declared: “A lot of these individuals set up patriotic associations overseas and try to demonstrate, in a very public manner, allegiance to Communist Party initiatives – and they fund those initiatives […], they extend the reach of the international front on Taiwan issues. They go after Westerners who criticize China on Xinjiang or Tibet. And they’re making it difficult and costly for the state to crack down because it would mean making some of the Chinese state initiatives look bad.”

In Myanmar, fraudulent hubs are overseen by local militias in collaboration with the military junta governing the nation, fostering a symbiotic relationship that yields benefits for both sides. Situated near the Chinese border, these hubs endanger Chinese nationals drawn to them and pose a threat to cross-border stability, leading to mounting impatience from China. This discord creates an opportunity for dissenting factions within Myanmar, as opposed to military authority, to eliminate these fraudulent hubs—as witnessed in October 2023—and convey solidarity to China. This alignment could potentially translate into future backing from China, shaping the course of the civil conflict in Myanmar.

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ASEAN's Global Vision

An excerpt from the final communiqué of the ASEAN Foreign Ministerial, which took place last week in Laos

We stressed the importance of strengthening ASEAN's unity and centrality in our engagement with external partners, including through ASEAN-led mechanisms such as ASEAN Plus One, ASEAN Plus Three (APT), the East Asia Summit (EAS), ASEAN Regional Forum (ARF), and ADMM-Plus, in order to build mutual trust and strengthen an open climate and an open, transparent, resilient, inclusive, and rules-based regional architecture, with ASEAN at the center, upholding international law. We stressed the need to promote an environment conducive to peace, stability and prosperous development for all, ensuring a culture of dialogue and cooperation rather than rivalry, strengthening mutual trust and respect for international law. We reaffirmed that ASEAN will act in accordance with ASEAN's centrality in external political, economic, social and cultural relations by remaining actively engaged, outward-oriented, inclusive and non-discriminatory, in line with the ASEAN Charter. We noted with satisfaction the encouraging progress in ASEAN's relations with our Dialogue Partners, Sectoral Dialogue Partners, and Development Partners through existing frameworks and the implementation of Action Plans, Practical Cooperation Areas, and Development Cooperation Programs based on mutual interest and mutual benefit in contributing to ASEAN Community building and development cooperation efforts. We have agreed to further strengthen partnerships and cooperation with our partners thus contributing to our proactive response to regional and global challenges and opportunities. We are committed to fostering an outward-oriented community that supports the region's sustainable growth and resilience through inclusive cooperation and collaboration with external partners. We noted the growing interest from countries and regional organizations outside the region to develop stronger substantive collaboration and cooperation with ASEAN, including through requests for formal partnerships. We affirmed the importance of pursuing an outward-oriented policy and agreed on the need to reach out to new potential external partners on the basis of shared interest, constructive engagement and mutual benefit. We noted the growing global relevance of ASEAN and its unique “convening” power in the context of the emerging multipolar global architecture.

Full communiqué here

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Redazione published in Asean, Global Lens

ASEAN and the possible Trump bis

We publish here the excerpt of an analysis by Joshua Kurlantzick for the Council on Foreign Relations

After the debate for the United States presidential elections, even in South-East Asian countries people are starting to wonder about the possible meaning of a possible return of Donald Trump to the White House. In recent years, with the exception of the Philippines under Ferdinand Marcos Jr., who strongly sided with the United States, the countries of the ASEAN area have attempted to maintain their traditional multipolar approach between the two great powers. This is demonstrated very well by the actions, always based on the principle of neutrality, of Indonesia and Vietnam. But a second Trump administration could increase tensions between the United States and China to the point that even Southeast Asian countries, long adept at striking a balance, may find it difficult to avoid taking sides. A second Trump administration is unlikely to focus much on the region. In his first term, Trump forged personal ties with some Southeast Asian leaders, such as former Philippine President Rodrigo Duterte. Overall, however, Trump has given the region a relatively low priority. Furthermore, his protectionist approach to trade stood in stark contrast to the economic integration that had occurred throughout East Asia. In this vacuum, however, it was the great powers such as Japan and China that led the economy. Trump gave many speeches in the 2023-2024 election season and talked a lot about China. He made little, if any, mention of a future approach to Southeast Asia. In addition to trying to keep the Philippines firmly in the U.S. camp, a second Trump administration would likely put enormous pressure on states like Indonesia, Malaysia, Vietnam, Singapore and perhaps others to go along with U.S. efforts to push multinationals, including those based in Southeast Asia, to leave China, moving their supply chains. Trump, intensely focused on the belief that virtually all foreign countries trade unfairly with America, may be even less shy, in a second term, about imposing tariffs on the same Southeast Asian states.

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Italy-ASEAN: in Manila the eighth High Level Dialogue

Back in November is the High Level Dialogue on ASEAN Italy Economic Relations, the initiative that The European House - Ambrosetti and the Associazione Italia ASEAN have been implementing since 2016

Di Lorenzo Tavazzi, The European House – Ambrosetti

The landmark event for bilateral relations between Italy and ASEAN countries is back: the High Level Dialogue on ASEAN Italy Economic Relations, the initiative that The European House - Ambrosetti and the Associazione Italia ASEAN have been carrying out since 2016 and this year reaches its eighth edition.

Each year the High Level Dialogue is hosted by an ASEAN country: this year it will take place in Manila, Philippines, at the Dusit Thani Hotel, on Tuesday, November 5 and Wednesday, November 6, 2024, with the support of the Philippine government, through the Department of Trade and Industry (DTI), as co-organizer of the event.

The Dialogue, since its first edition in 2017 in Indonesia, and subsequent editions in Singapore, Vietnam, Malaysia, and Thailand, along with two digital editions in 2020 and 2021, has brought together more than 3,500 presidents, CEOs, and government and institutional leaders from ASEAN countries and Italy. The 2023 edition alone, held in Bangkok, was attended by more than 450 high-profile delegates.

This year's Dialogue will address a number of priority issues for the development of Italy-ASEAN relations with a dual character in partnership opportunities between Italian companies and their counterparts in Southeast Asia. These include: the supply chain of critical raw materials for the strategic sectors of the future, artificial intelligence and digital innovation, the role of the blue economy for economic cooperation, the evolution of the creative industry, opportunities for technological and industrial collaborations in space, defense and high-tech manufacturing, financing and services to support the development of sustainable businesses and infrastructure. 

Within this framework, the specificities and opportunities offered by the Philippines, with which Italy celebrated 75 years of bilateral relations in 2022, will also be explored.

Participation in the High Level Dialogue is free and by invitation only. 

To register for the event: Registration

To get more information about previous editions of the event: High Level Dialogue website

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Thailand and Malaysia towards joining BRICS

We publish here an excerpt from an article by Maria Siow published in the South China Morning Post

The prospect of Southeast Asian countries joining BRICS has sparked heated debate among analysts: supporters argue that membership could unlock lucrative trade and geopolitical opportunities, while skeptics warn that it risks dragging the countries into the orbit of China and Russia and further eroding regional unity. Thailand and Malaysia have announced in recent weeks that they will apply to join the platform, following in the footsteps of Laos and Myanmar, which declared their interest last year. Contrary to fears that BRICS membership will erode ASEAN's unity and centrality, several Asian analysts believe the Association has the flexibility and resilience to maintain its relevance to member states. Many ASEAN members also belong to other organizations such as the Organization of Islamic Cooperation, the Indian Ocean Association and the Asia-Pacific Economic Cooperation forum. Other multilateral institutions to which Asean members already belong are the Asian Development Bank, the World Bank, the International Monetary Fund and the Asian Infrastructure Investment Bank. "BRICS membership will provide access to a new source of financing for the many development needs of countries in the Southeast Asian region," said Jayant Menon, senior fellow at the ISEAS-Yusof Ishak Institute in Singapore, referring to the New Development Bank established in 2015 by the BRICS countries. Indonesia and Vietnam also said they are considering the benefits of BRICS membership. Joining the group of emerging economies could provide better access to lucrative markets, increased foreign investment, and opportunities for collaboration on infrastructure projects. BRICS membership can also be seen as a strategic move to diversify economic partnerships and reduce dependence on Western-led financial institutions. The move, if managed effectively, could strengthen Southeast Asia's voice and influence in global affairs. Indonesia also aims to join the OECD within three years, as reiterated by the country's coordinating economy minister in May after the organization's secretary-general visited Jakarta and met with President Joko Widodo. According to OECD projections, Indonesia's gross domestic product will reach $10.5 trillion by 2050, making it one of the largest economies along with China, the United States and India.

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Friends of all, enlisted by none

Vladimir Putin's recent visit was not a choice for Vietnam, but a necessity for its diplomatic line

Editorial by Lorenzo Lamperti

There is often an "exclusive" view of diplomatic relations in the West. Almost as if maintaining or pursuing better relations with one or the other relationship means making a field choice. A black-and-white view that does not help to understand the perspective of many emerging countries, the so-called "Global South." And particularly Southeast Asia, a region that is the litmus test of the desire for multipolarity and multilateralism. A desire rooted deep in ASEAN's approach and reflected, while maintaining different traits and specificities, in its member states. The one who perhaps most embodies this posture is Vietnam, with its "bamboo diplomacy." The idea behind it: be a friend to all, enemy to none. Just like the bamboos, Vietnam believes that with this approach it can grow flexibly but firmly. A belief that has proven correct so far. Hanoi has managed to maintain close political-defensive ties with Russia and economic ties with China. But it has also successfully pursued a path of deepening relations with other Asian neighbors and with the West. Over the course of a few years, Vietnam has elevated bilateral relations with Japan, South Korea, Australia and the Philippines. But it has also signed two important free trade agreements with the European Union and the United Kingdom. Not only that. During its chairmanship of ASEAN, the RCEP, a trade agreement that brings together most of the Asia-Pacific countries, was also signed. When Joe Biden headlined a historic visit to the Vietnamese capital last September, Hanoi also took the partnership with its old rival to the highest level. Further deepening the already thriving trade relationship-Vietnam is increasingly a regional epicenter of investment and a global manufacturing hub. A process that in recent times increasingly involves major international tech giants. All this, however, does not mean that Hanoi has made or is willing to make a field choice. The U.S. president's visit was not a prelude to "enlisting" Vietnam in an anti-Russian or anti-Chinese perspective, as some may have thought given the criticism of Vladimir Putin's recent trip to the country. For Vietnam, receiving the Russian president was not a choice but a necessity to continue to protect its international relations, providing some reassurance to the historic partner after the two steps in the direction of Washington. Relations with Moscow, however, have not prevented the Vietnamese government from showing closeness to Ukraine as well. In the past two years, the PM has met twice with Ukrainian President Volodymyr Zelensky, and Hanoi has also sent humanitarian aid to Kiev. All while trying as always to foster dialogue and political resolution of the conflict. 

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Redazione published in Asean, Economy and trade

Between the folds of the Funan Techo

Everything you need to know about the canal under construction in Cambodia. A key commercial infrastructure as well

By Francesco Mattogno

For the past couple of months in Cambodia, Vietnam, and a bit in all the states crossed by the Mekong River, there has been a lot of talk about a canal that does not yet exist, except on paper. Officially it is called the Tonle Bassac Navigation Road and Logistics System Project, but to everyone it is simply the "Funan Techo." In the Cambodian government's intentions, the canal will connect the port on the Mekong River in the capital Phnom Penh to the port in Kampot, a city overlooking the Gulf of Thailand (or Gulf of Siam), and thus the sea.

The Funan Techo will be 5.4 meters deep, 100 meters wide, 180 kilometers long, consist of two lanes, and its construction will be fully financed by China. Beijing will invest $1.7 billion on the project, entrusted to the state-owned China Road and Bridge Corporation (CRBC). A subsidiary of CRBC, China Harbour Engineering, has also entered into an agreement with a local developer to help build the Kampot Port (estimated to cost $1.5 billion), right where the Funan Techo will flow. Construction on the canal is expected to start by the end of 2024 and take a maximum of four years, Phnom Penh says.

The strong Chinese presence within the project is just one reason why it is being much discussed. The Funan Techo is designed to reduce Cambodia's logistical dependence on Vietnam, through which all Cambodian goods transported by ship on the Mekong for international trade are forced to pass. It is a matter of geography: the river, one of the largest and most important in the world, flows throughout Cambodia but before flowing into the sea it crosses Vietnamese territory for more than a hundred kilometers.

This condition gives Vietnam some political and economic leverage over Cambodia, whose companies are forced to bear high transportation costs (with consequences for the competitiveness of its exports) and live with the perennial risk of a naval blockade. It has already happened 30 years ago, in 1994, when at a time of high tension between the two countries Hanoi decided to stop Cambodian boats from sailing along the Vietnamese section of the Mekong for months. Today, relations between Cambodia and Vietnam are good, but although in 2009 the two neighbors also signed a treaty for freedom of navigation on the river, Phnom Penh has never stopped looking for an alternative. And here it is.

It is not just a matter of economic security. The Funan Techo is also a vehicle to foment nationalism and legitimize the new course of Prime Minister Hun Manet, who in August replaced his father Hun Sen, who remained in power for 38 years. This is evidenced by the very name given to the channel. "Funan" recalls the ancient Funan Kingdom (born in the first centuries A.D.), which is believed to be a precursor to the Khmer Empire, while "Techo" is a term that is part of Hun Sen's honorary title. According to Cambodian analyst Chhengpor Aun, with the construction of the canal Phnom Penh will try to symbolically restore the loss of the Mekong Delta, which France formally handed over to Vietnam in 1949 during its colonial rule.

For weeks the Cambodian government has continued to list the benefits of building the canal, which will "facilitate irrigation of the land" and result in the creation of "10,000 jobs." Phnom Penh estimates that costs for shipping goods will be reduced by 30 percent, and shipments will be more agile and faster. However, it is too early to say how much these projections will be reflected in reality. As several experts have pointed out, for example, the depth of the canal will not allow too heavy cargo to be transported, and this means that many products will equally have to pass through Vietnam (which, in any case, immediately complained about the project). 

Beyond the economic issues of whether or not it is convenient for Cambodia to build it, the Funan Techo presents environmental issues. The fear is that the canal, with its very high embankments, will impede natural flooding of the plains surrounding the Mekong (crucial for the agricultural sector), alter the water flows of other tributaries, and increase the salinity of soils. Phnom Penh has pledged to conduct all relevant environmental impact assessments with "48 international experts."

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Redazione published in Asean, Global Lens

Modi wants India and ASEAN closer together

Among the Indian PM's third term goals is to strengthen relations with Southeast Asia

Can Narendra Modi's third term as prime minister bring India and ASEAN closer together? A commentary by Syed Munir Khasru, published in the South China Morning Post, wonders. India's "Act East" policy is poised for recalibration. New Delhi's economic and strategic engagement with Southeast Asia soared during its first two terms, albeit with some shortcomings that require course correction. Modi may now reinvigorate this key foreign policy as India seeks to establish a stronger presence in the Indo-Pacific. On the economic front, trade and investment ties with Southeast Asian countries have received a major boost, with annual bilateral trade soaring from about $80 billion in 2014 to more than $110 billion by 2021-22. However, the existing trade agreement with the Association of Southeast Asian Nations-the Asean-India Free Trade Area-is seen as strongly favoring the Asean side, frustrating India. India's exports to Southeast Asia increased moderately in FY2023 to $44 billion from $42.3 billion in the previous year. Meanwhile, imports from ASEAN countries increased at a faster pace, from $68 billion to $87.6 billion, resulting in a substantial trade deficit of $43.6 billion for India. The need to address the trade imbalance is even more urgent considering that in 2011 the trade deficit was only $5 billion. But the Modi government has not seized all opportunities for economic rapprochement with ASEAN countries due to reluctance to undertake market reforms and tariff liberalization. On the strategic front, India's efforts under the Act East policy helped bring seven Asean members into the Indo-Pacific Economic Framework, an initiative to strengthen economic cooperation between the two regions. Participation in these complementary Indo-Pacific strategies allows for greater coordination of respective interests in this strategically vital region. Initiatives involving connectivity, such as the $484 million Kaladan multimodal transport project linking India to Myanmar and the trilateral India-Myanmar-Thailand highway, are examples of what collaboration between ASEAN and India can achieve in this area.

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