Japan and ASEAN: back to basics?

After decades of estrangement, Japan and ASEAN seem willing to rebuild their lost relationship.

However, the honeymoon phase between Japan and ASEAN soon petered out with the outbreak of the 1997-98 Asian financial crisis. In keeping with one of the founding principles of the Fukuda doctrine, according to which Japan would be by ASEAN’s side "not only in fair weather but in adverse circumstances as well", Southeast Asian countries, hit hard by the crisis, were expecting financial assistance from the Japanese which, however, failed to materialize. Japan's inability to deliver on the ambitious promises made by Fukuda twenty years earlier has undermined the relations between Japan and ASEAN ever since and, albeit cordial, the relationship between the two blocs is way far from its former glory.

Tuttavia, l’idillio tra il Giappone e l’ASEAN si ruppe con lo scoppio della crisi finanziaria asiatica del 1997-98. In ossequio a uno dei principi cardine della dottrina Fukuda, quello secondo cui il Giappone sarebbe stato al fianco dell’ASEAN “non soltanto nei momenti felici ma anche in quelli più bui”, i Paesi del Sud-Est asiatico, duramente colpiti dalla crisi, si aspettavano un sostegno economico dal gigante nipponico che, tuttavia, non si materializzò mai. L’incapacità del Giappone di far fede alle ambiziose promesse fatte da Fukuda vent’anni prima ha, da allora, incrinato i rapporti tra il Paese del Sol Levante e l’ASEAN e, benché cordiali, le relazioni tra i due blocchi sono ben lontane dai fasti di un tempo. 

However, one aspect where relations between Japan and ASEAN have continued to flourish is certainly the commercial one. With an exchange of goods at over 231 billion US dollars in 2018 alone, Japan comes in as the fourth largest trading partner of South-East Asian countries, while ASEAN is the second largest trading partner of Japan, just behind China. Unlike the US or the PRC, which have huge domestic markets, Japan needs to sell its products en masse outside national borders. In this respect, with a potential pool of over 650 million consumers, ASEAN is a mother lode of opportunities for Japanese exporters. South-East Asian countries are well aware of the immense market potential they represent for Japan and its companies, and thus have an interest in increasing their economic attractiveness. After the signing of the Japan-ASEAN free trade treaty in April 2008, the two powers have constantly attempted to reinforce their commercial integration, contributing to negotiating the Regional Comprehensive Economic Partnership (RCEP) which, when established, will form the largest free trade area on the planet, with the inclusion of all the major East Asian economies, from ASEAN countries, through China, South Korea and Japan to Australia and New Zealand. In addition, it was recently reported that Japan and Southeast Asian countries have amended the 2008 FTA agreement to introduce new provisions that will further ease trade in services and investments, as well as the free movement of natural persons.

To seal the growing commercial cooperation between Japan and ASEAN, the Japanese PM Shinzo Abe intends to rebuild the special alliance between the two blocs even on a strategic level. Tokyo's renewed interest in South-East Asia is increasingly becoming a defining feature of Abe's foreign policy in the Pacific and several highly topical episodes are proof of that. For example, to diversify its supply chains in the event of new global crises analogous to the contemporary one, Japan has decided to distribute over 2 billion dollars to Japanese companies that will move their factories from China to Japan or to Southeast Asia. In the same vein, the proposal to work on a joint ASEAN-Japan Economic Resilience Action Plan, along with the publication of the annual Japanese government white paper on trade which identifies ASEAN as a strategic partner for closer cooperation in the field of digital economy, are a testament to the growing recognition on the part of Japanese authorities of the strategic importance of Southeast Asian countries in the post-Covid recovery phase and, more in general, in the global context of the 21st century.

Under Abe's premiership, Japan seems to have finally rediscovered the importance of South-East Asia as an economic and geopolitical platform in the Pacific and ASEAN countries are proving to be more than willing to go back to cultivating a privileged relationship with the Japanese giant. Increasing commercial and political collaboration between these two international players can do nothing but help maintain a regional balance in Asia-Pacific.

Article edited by Andrea Dugo.

Thailand's response to the Covid-19 crisis

Thailand's response to the Covid-19 crisis Thailand has effectively addressed the economic and health consequences of the coronavirus pandemic standing out as a model for all.

On July 9th, the Italy-ASEAN Association organized a webinar on Thailand and its response to the crisis caused by Covid-19 with the President of the Italy-ASEAN Association, Enrico Letta, the Ambassador of Thailand in Italy, Chirdchu Raktabutr, the Ambassador of Italy to Thailand, Lorenzo Galanti, the President of the Foreign Affairs Commission of the Thai Senate, Pikulkaew Krairiksh, the Thai Minister for Social Development and Human Security, Chuti Krairiksh and Ducati's CEO, Claudio Domenicali. The meeting was moderated by the Vice-President of the Italy-ASEAN Association and former Ambassador of Italy to Thailand Michelangelo Pipan.

Although Thailand was the first country after China to confirm a Covid-19 case on its territory in early January, the management of the coronavirus pandemic by Thai authorities has since then emerged as one of the greatest success stories in South-East Asia and beyond. At the moment, in fact, Thailand is only the 99th most hard-hit country in the world, with an extremely low total number of cases, at about 3200 units as opposed to a population of over 70 million inhabitants, and a proportion of deaths in relation to the overall population among the lowest in the world. These enviable epidemiological outcomes are the result of effective governmental action, which imposed restrictive measures in a timely fashion, but are also a by-product of the incredible social discipline of Thai citizens.

On the economic front, Thailand has greatly suffered from the collapse of international trade and international tourism, both of which are key sectors for the economy of the Kingdom. The most recent estimates from the Thai Central Bank and from the World Bank project a GDP contraction between 5 and 8 percentage points in 2020 and a partial recovery between 4% and 5% in 2021. The Thai government has thus responded to the grave economic crisis by launching a 64 billion US dollars stimulus package, amounting to 16% of the country's GDP, designed to assist families, businesses and local development projects in the area. In spite of the inevitable economic devastation caused by the coronavirus pandemic, thanks to the financial solidity of the Kingdom, which can count on a 44% debt-to-GDP ratio, the Thai government is confident it can control the damage and get the economy back on its feet in a relatively short time. 

The evolution of the Covid-19 crisis in Thailand has shown a certain resilience of the country to external shocks. On both the economic and health front, Thailand has shown great resistance and flexibility in its response to the pandemic. However, the current goal of the Thai government in the medium-term is to carry out a cautious reopening to international trade and tourism, while at the same time seeking to reduce its excessive dependence on external factors. The government has shown intention to pursue a political strategy based on the notion of "immunity", combining health security, economic resilience and preparation for external crises. The Thai government thus intends to strengthen its economic self-reliance, in an attempt to limit excessive exposure to international upheavals, while maintaining a high degree of openness of the national market to foreign trade and tourism.

Thailand has proven itself to be a resilient country in its approach to the coronavirus pandemic, doing everything possible to limit the economic and health consequences of the Covid-19 crisis. The challenge for the Kingdom in the coming years will be to further increase its resilience to external shocks in the event of new crises of analogous seriousness.  

Article edited by Andrea Dugo.

Asian Film Festival 2020

A great opportunity to experience and learn about the fascinating Asian cultures..

The seventeenth edition of the Asian Film Festival will premiere 27 full-length films and 3 short films from 10 East Asian countries (Japan, South Korea, China, Philippines, Hong Kong, Taiwan, Indonesia, Malaysia, Thailand, Vietnam). It will take place from July 30th to August 5th in Rome, at the House of Cinema (Casa del Cinema) of Villa Borghese. 

The Asian Film Festival, organized by Antonio Termenini with the support of the Italy-ASEAN Association, will present a selection of Asian experimental and independent cinema, with great attention given to debut and young directors in the Newcomers section.

The screening of no less than 8 full-length feature films from the Philippines, to celebrate 100 years of Filipino cinema with the best of the latest productions, is significant. These include Lav Diaz's The Halt, lasting 4 hours and 40 minutes (almost a short film by the director's standards!), which was presented at Cannes in 2019 but which then remained essentially invisible: a powerful and provocative movie that imagines a grim future too similar to the present. Another important movie is Kaputol, by Mac Alejandre, which mixes past, present and future, reality and fiction, creating movies within the movie, to tell a painful story of disappearances and hopes. The closing night will then feature Kalel, 15 by Jun Lana, a story of a difficult adolescence in the slums of Manila.

The Asian Film Festival will take place in Rome at the House of Cinema (Casa del Cinema) in Largo Marcello Mastroianni 1, from July 30th to August 5th 2020. The ticket for a single screening is 5 euros, the full ticket is 25 euros, and a full ticket for students is 15 euros.

Info: www.asianfilmfestival.info

China and ASEAN, from mutual skepticism to gradual cooperation

After decades of slowly drawing closer together, China and ASEAN continue to intensify their cooperation.

Over the past few decades, relations between the People's Republic of China and ASEAN have changed dramatically. At its dawn in 1967, ASEAN, which was created not only with the purpose of greater economic cooperation but also to counter the expansion of Soviet communism in the South-East Asian region, was viewed with suspicion by China. At the time, the People's Republic of China (PRC), a major USSR ally, saw the creation of the Association as a direct affront to the survival of the two regimes. Soon enough, though, with the crisis of Sino-Soviet relations and the ensuing thawing between China and the US, the climate of hostility between PRC and ASEAN gradually tapered off. As early as the mid-1970s, in fact, some ASEAN member states began to establish diplomatic relations with China. What was crucial in strengthening relations between China and ASEAN, however, was the outbreak of the 1997-98 Asian financial crisis. South-East Asian countries, hit hard by the crisis and profoundly disappointed with the lack of financial assistance from historical allies such as the United States and Japan, greatly appreciated the Chinese initiative to support the Thai economy with over one billion dollars in aid and the commitment by the PRC not to devalue the yuan. Equally valuable to South-East Asian eyes was, in those same years, the Chinese proposal to create a China-ASEAN Free Trade Area, the first proposal by any country that envisaged an agreement with the entire Association and not just with its individual Member States. Despite being aware of the risks of an excessive economic strengthening of the PRC, the ASEAN countries decided to welcome Beijing's conciliatory approach and to sign a free trade agreement with China in 2002. 

However, growing Chinese assertiveness in the Asia-Pacific, coupled with Beijing's increasing economic weight in the region, have made relations between the two powers more uncertain in the last decade. In spite of Beijing's multiple reassurances, some ASEAN member states are concerned about an excessive balance of power shift in China’s favor. At the same time, ASEAN and its members are also aware of the immense economic potential that can derive from an ever-closer cooperation with China and so is Beijing. The enormous economic prosperity that trade integration has brought to both blocs has certainly not gone unnoticed to either. The volume of bilateral trade between China and ASEAN grew from a mere 7.9 billion dollars in 1991 to over 483 billion in 2018, making China the first trading partner of ASEAN by far and, in turn, making ASEAN China's largest trading partner, at least after the outbreak of the Covid-19 pandemic. China, with its huge market of 1.4 billion potential consumers, has become a privileged destination for ASEAN products and in parallel South-East Asian economies have become precious recipients of around $10 billion worth of Chinese FDI in 2018 alone. To celebrate this growing cooperation, on his official visit to South-East Asia in October 2013, Chinese President Xi Jinping presented the Belt and Road Initiative (BRI) project, which has the aim of, among many others, building "a close-knit China-ASEAN community". South-East Asian countries have welcomed the proposal ambivalently, on the one hand highlighting the great development opportunities associated with it, but, on the other, remaining vigilant about the risks of Chinese dominance in the region. Albeit acutely aware of the enormous benefits their economies can reap from the BRI, the primary interest of ASEAN countries still resides in no single power acquiring too much influence and thus being able to upset the power balance in the Southeast Asian region. In fact, to thrive, ASEAN and its member states need to maintain good relations with both the US and China and, in turn, they need relations between the US and China in Asia-Pacific to remain balanced and stable. Any further step in the direction of integration between China and ASEAN must necessarily take this into account.

In recent decades, the relationship between ASEAN and China has evolved from one characterized by mutual skepticism towards a dynamic and stimulating partnership. Net of some concerns that persist in China-ASEAN relations, this evolution is a testament to the importance of international cooperation. The challenge for the People's Republic of China and for South-East Asian countries in the coming years is to deepen their commercial and political collaboration in the respect of regional power balance in Asia-Pacific. 

High Level Dialogue on ASEAN-Italy economic relations

South-East Asia: a unique opportunity for Italian companies.

The Italy-ASEAN Association and The European House Ambrosetti, under the patronage of the Italian Ministry of Foreign Affairs and Confindustria, hosted on July 2nd, the 2020 High Level Dialogue on Italy-ASEAN economic relations: a digital round-table intended to replace the physical event that was originally scheduled in Kuala Lumpur, Malaysia. Speakers included the President of the Italy-ASEAN Association, Enrico Letta, the Undersecretary of State at the Ministry of Foreign Affairs and Italian Cooperation, Manlio Di Stefano, the Secretary General of ASEAN, Dato Lim Jock Hoi, the Italian Ambassador in Malaysia, Cristiano Maggipinto, and the Vice President for Internationalization of Confindustria, Barbara Beltrame. Guests also included 370 company representatives, including managers and entrepreneurs, and over 200 participants, who contributed to generate a thought-provoking and engaging webinar.

The last five years have been crucial in the strengthening of the relationship between Italy and South-East Asian countries. Since the meeting between the President of the Italian Republic Sergio Mattarella and the Secretary General of ASEAN in 2015, on the occasion of the "First Bilateral Dialogue between Indonesia and Italy", awareness has grown around the importance of the relations between Italy and South-East Asia. The improvements in the diplomatic and commercial relations in recent years have been evident, and the post-Covid era will present even further integration opportunities. 

While the world still grasps with the far-flung effects of Covid-19, the ASEAN region managed to counter an effective response to the crisis. The region has been able to respond and mitigate the impact of the Covid-19 crisis with strength and resilience, thanks primarily to enhanced forms of regional cooperation, among which several online summits among country leaders and meetings with representatives from the US, EU, China, Japan and others. According to ASEAN Secretary General Lim Jock Hoi, even greater regional economic integration will be needed for the recovery phase. The focus will be on the digital economy: according to a report published by Facebook and Bain & Company, by 2025 consumers in the area will spend about three times more on digital platforms than in 2018. 

As emerged from the guests’ remarks, ASEAN member countries see Italy as a key partner in the global scenario, thanks also to the many areas and sectors of common interest, including the electronics, digital, textile, and agri-food sectors. In the post-Covid-19 recovery phase, Italy and ASEAN will have the chance to further strengthen bilateral ties. Both ASEAN Secretary General and Undersecretary Di Stefano stressed the need to work together to promote economic integration, investments, the Industrial Revolution 4.0 and the fight against climate change.  

The event confirmed the growing and mutual interest of the Italian country system towards the ASEAN area. Several participants stressed the importance of greater collaboration between Europe and South-East Asia in an international context of growing rivalry between China and the United States. Cooperation between ASEAN Countries, Italy and Europe will be crucial to strengthen the principles of multilateralism and free trade. 

Article edited by editorial Staff

United States and ASEAN, a dynamic relationship

In the new and complex geopolitical scenario, both the US and ASEAN have an interest in rediscovering their mutual strategic importance. 

The relationship between the United States and South-East Asian countries has undoubtedly been at the heart of the creation and development of ASEAN since the late 1960s. Although the Association of Southeast Asian Nations was born in 1967 out of the community-oriented impulse of its five founding members and out of their common attempt to halt the advance of Soviet communism in Southeast Asia, it is clear that the United States’ contribution has been fundamental for ASEAN’s development. The common anti-Soviet sentiment made ASEAN a valuable American ally in East Asia in the 1970s and 80s: it is in fact no coincidence that in May 1986 the then-President of the United States Ronald Reagan defined “support for and cooperation with ASEAN […] a linchpin of American Pacific policy”. However, the end of the Cold War represented the end of the honeymoon between the United States and ASEAN. Although formally the relations between the two blocs never ceased, the collapse of the USSR marked the end of the expansion of Soviet communism, thus eclipsing Asia among American strategic priorities. Soon enough though, as early as the mid-2000s, the emergence of international terrorism and, more markedly, China’s comeback on the global geopolitical scene, forced the US to reassess the strategic importance of Asia-Pacific and, therefore, of ASEAN. The advent of the Obama administration certified this change of pace in American politics. In fact, breaking patterns with his last predecessors, Obama immediately recognized the centrality of the Asia-Pacific region and plainly stated that ASEAN would come to shape the 21st century.

However, the rediscovery of Southeast Asia for the United States is not purely geopolitical. In fact, ASEAN represents the US’ fourth largest trading partner, with a total volume of exchanged goods and services of over 330 billion dollars in 2018 alone. ASEAN runs a trade surplus with the United States of over 85 billion dollars per year and has been a privileged destination for US FDI, for a total stock of over 271 billion dollars to date. The growing economic weight of ASEAN, combined with its immense potential to balance Chinese ambitions in the region, render it a natural ally fot the US in the Asia-Pacific region. Similarly, the United States represent a valuable commercial partner and a useful geopolitical ally for ASEAN. By virtue of the US’ status as ASEAN's third commercial partner and thanks to its essential role in maintaining a stable balance of power in the Pacific region, both of which are vital elements for the long-term prosperity of the Association, South-East Asian countries have an interest in maintaining a strong and lasting relationship with the US, both on the economic and international relations terms. However, the recent advent of Donald Trump to the White House has contributed to further changing the scenario. The skepticism of the current US President towards multilateral solutions, which prompted him to sit out the US-ASEAN summit twice, made many people turn up their noses in South-East Asia. Despite the innate bilateralism that drives Trump's political agenda, however, the American diplomatic-military apparatus knows well the strategic importance of ASEAN for the United States. These two souls determine a certain ambivalence in US approach to South-East Asia, which has manifested itself several times, even within the Trump administration itself. Secretary of State Mike Pompeo not only reiterated his full support for ASEAN regional institutions, but on the occasion of a joint video-conference held on April 22 between the representatives of the two powers to discuss the effects of the Covid-19 crisis, he launched the “US-ASEAN Health Futures initiative”, a $35 million plan designed to support ASEAN countries in the fight against coronavirus, which adds to the over $3.5 billion that the US has already invested in the South-East Asian health sector in the past 20 years.

With the end of the Cold War and the bipolar world order, relations between the United States and ASEAN have experienced more than three decades of ups and downs. The complex, at times ambiguous, American strategy in the Pacific has led to a dynamic and evolving relationship between the two. However, if ASEAN and the United States wish to maintain their presence in the Pacific, they must necessarily rediscover each other's economic and geopolitical centrality, collaborating to build a more balanced regional and international system. 

Article edited by Andrea Dugo.

Covid-19: the challenge for Indonesia

How the world’s largest archipelago is dealing with the pandemic

On July 1st, Indonesia ranked as the country with the highest number of Covid-19 cases in ASEAN, with more than 55,000 confirmed cases. The most impacted city is the capital Jakarta, which is also one of the most populated cities in South-East Asia. Compared to its neighboring partners, the country opted for a different approach to address the pandemic. With the aim of keeping the nation’s economic activities afloat, the central government decided not to impose a lockdown policy, opting to apply a ‘large-scale social restriction’ instead.

Three months after the implementation of this plan, several provinces in Indonesia – Jakarta included – started to ease some social restriction measures. Workplaces, educational institutions, worship places, and public transportation, are gradually reopening, despite still adhering to a strict health protocol. If a new cluster of infection will break out, an ‘emergency brake’ policy will be put in place to stop the reopening of these places.

Although the government did not apply a nationwide lockdown, the country’s economy has not been immune to the economic side-effects of the pandemic. According to Statistics Indonesia (BPS), in the first quarter of 2020, Indonesia’s GDP grew only by 3%, the lowest record since 2001. However, based on the forecast conducted by the Economist Intelligence Unit, Indonesia is one of the three G20 countries – alongside China and India – that is not expected to go through an economic recession this year, with a projected GDP growth of 0.2%. 

Currently, the government has put forward a total of 677.2 trillion rupiah (equivalent to 42.7 billion euro) as part of the national economic recovery program. This program will be essential in supporting the healthcare sector, increasing the coverage of social protection schemes, expanding unemployment benefits, and providing tax incentives as well as credit for businesses. Indonesia is also maintaining strong bilateral and multilateral relations in the effort to face the ongoing crisis, not only within ASEAN countries but also with other actors such as China, Japan and South Korea. Hence, if the global markets regain momentum in 2021, Indonesia might return on its growth trajectory: a GDP increase of 5%, according to a report from the Asian Development Bank.

Despite the uncertain times that Indonesia – and the entire world – are experiencing, the government is doing its utmost to reboot the economy. The challenges the country is facing are demanding but the dynamism of the Indonesian economy could prove to be successful in overcoming these difficult times. It will be crucial for Indonesia to invest in its youth and the growing digital sector to turn the crisis into a new phase of development.

 

Article edited by Rizka Diandra 

Singapore and the Covid-19 emergency

Singapore’s experience with the virus reveals the complexity of the pandemic and the importance of a cautious approach to its management.

On June 25th the Italy-ASEAN Association organized a webinar on Singapore and its response to the pandemic with the Italian Ambassador in Singapore, Raffaele Langella and the President of the Singapore Institute of International Affairs, Simon Tay. 

When Singapore confirmed the first case of Covid-19 on January 23rd, the government rapidly implemented effective measures that contributed to contain the virus and significantly limit the number of infected people. Subsequently, between February and March, Singapore experienced a second moderate wave of contagion, attributable to flows of Singaporeans repatriated from abroad. Until the beginning of April, Singapore had less than 1000 cases and only 3 deaths due to the virus. However, in April, Singapore was hit by a third wave of Covid-19. This time the vast majority of cases occurred among the more than 300,000 migrant workers living in large dorms at the outskirts of the city, and the number of infections increased rapidly within a few weeks. As a result of this new surge, the Singaporean government was forced to impose more restrictive measures on the movement of citizens. Since 7 April, Singaporean citizens have had to comply with preventive measures called circuit breakers, which include the closure of all non-essential activities and the obligation to respect social distancing measures.circuit breaker​, che prevedono la chiusura di tutte le attività non essenziali e l’obbligo di rispettare il distanziamento sociale. 

In economic terms, Singapore's GDP is expected to fall by between -7% and -4% this year. Therefore, the government has responded with a significant increase in public spending, through four economic stimulus packages to support the economy, amounting to about 19% of Singapore's GDP. The intervention aims at supporting families, businesses and workers with measures such as subsidies, moratoria, tax deductions and favorable financing conditions for the most affected sectors (in particular tourism and aviation).  

The evolution of the health emergency in Singapore has shown both strengths and weaknesses of the city-state. Technological infrastructures and high level scientific research have enabled the government to respond effectively to the first cases of coronavirus in the country, revealing a certain scientific reactivity. This has allowed many economic activities to continue despite the pandemic, reducing the impact of the virus on the productive fabric of the country. However, the pandemic also showed some weaknesses of Singapore’s country system. As a commercial and financial hub, its dependence on regional and global interconnections has weighed and will weigh heavily on the government's ability to revive the country. Air and naval traffic has dropped dramatically, and this threatens to create serious problems for Singapore's economy. Moreover, the case of the immigrant workers has revealed one of the few weak points of the city-state: a direct dependence on foreign labor that is fundamental for the effective functioning of a smart-city like Singapore. 

It will be crucial for Singapore to reopen its economic system to international trade as soon as possible, in order to intercept new trends and strengthen the global dimension of the Singaporean economy.

Article edited by Tullio Ambrosone

Behind the origins of the EU-Malaysia tensions

Diverging views on palm oil fuel could prevent further collaboration.

Based on the European External Action Service’s data, the EU is Malaysia's third largest trading partner and accounted in 2014 for 9.9% of Malaysia's total external trade in goods. At the same time, Malaysia ranked as the EU's 23rd largest trading partner, the second largest trade partner in the South East Asia region. 2010 marked the start of the negotiations of the EU-Malaysia Free Trade Agreement; however, negotiations came to a halt, due to differing views on palm oil, and on how to reconcile economic interests with environmental imperatives.

The crux of the conflict between the EU and Indonesia lies in the EU's decision to phase out palm oil-based biofuel as an energy source. The Renewable Energy Directive (RED) I of 2009 encouraged and facilitated Southeast Asian countries like Malaysia and Indonesia to export palm oil to the EU. However, in recent years Europe has operated a radical change in discourse concerning palm oil, which is today widely considered dangerous for environmental protection.

Indeed, the main reproach made to the palm oil industry is the fact that it is a land-intensive production. The main consequences of this model are massive deforestation, soil degradation and a worrying increase of air pollution, namely through greenhouse gas emissions.

Pressure from European consumers finally convinced the EU Parliament to progressively ban the use of palm oil by 2030, and to revise the Directive (RED II) in 2018 to define benchmarks for biofuels. This change complicated relations between the EU and Malaysia. In fact, Malaysia and Indonesia (the two countries together produce more than 85% of the world’s palm oil) considered this move as a protectionist measure and asked support to other ASEAN countries to bring the case in front of the World Trade Organisation. After month of negotiations with the Energy Commissioner Kadri Simson, Malaysia stepped back from its initial intentions, but until the case has been resolved, it will keep penalising EU products in retaliation, and slow down any discussion regarding the FTA.

Not only does palm oil contribute around 5 per cent of Malaysia’s annual GDP, but also provides millions of people with stable job and wages. For this reason, it is also a matter of political and social concern.

The Malaysian government wants to persuade the EU that Malaysian palm oil was much greener than its critics claim, and to push the Union to revise its decisions by 2021. Until then, controversy between economic priorities and environmental commitments will keep hindering progress toward negotiations for an FTA.

 

Article edited by Valentina Beomonte Zobel.

The new China-Laos railway

The new infrastructure will be completed by the end of 2021, and it will bring substantial changes to trade in South-East Asia.

The project accords perfectly to the Laotian Government’s strategy to turn Laos from a landlocked country into a land-linked hub. The rail is the longest one outside China in Asia, linking China to Thailand through Laos: a 414-km railway, that will run from Boten (border gate between northern Laos and the Chinese province of Yunnan), to Vientiane (Laos’ capital, at the border with Thailand). Works began at the end of 2016, but unavoidable delays occurred due to the Covid-19 emergency. Despite this, operations re-started after only 23 days, allowing the project to stay on track as initially scheduled.

Economic and geopolitical advantages of the new railway will be remarkable for both China and South-East Asia. For the first time ever Yunnan, already a crucial region for connecting China and ASEAN, will be linked directly to Thailand by land. The railway will allow Chinese products to reach not only Laos and Thailand’s markets, but also those of Malaysia and Singapore. This will be possible without relying on costly air or naval transport anymore. A logistic operation that has no precedents for China, and that will allow the country to expand more than ever in the region. The project is part of the China’s Belt and Road Initiative, but it will not be devoted only to the exchange of goods and people. On the contrary, it will also be an important health support for developing countries. More cooperation in the health sector, possible thanks to the China’s Health and Silk Road project, will be offered through substantial aid to those ASEAN countries more hit by the pandemic and by the lack of adequate healthcare facilities.

According to the World Bank, the new railway could dramatically contribute to the development of the Laos economy, if followed by meaningful reforms. The elections of new leaders and of a new politburo, scheduled for early next year at the Party National Congress of the ruling Lao People’s Revolutionary Party, are likely to bring the right momentum to introduce those reforms.

From new infrastructures comes a new kind of traffic, not only in goods and people but also for mere transit. Laos industries should not waste this moment: if they will be able to seize it, they will create a new economic corridor under a high-quality logistic planning. In fact, another report from the World Bank assigns Laos a good score in the section “Ease of trade across borders”. With the right strategic approach by public and private sector, several experts believe that the new railway will represent an important incentive to diversify Laos economy, still dependent from a limited number of commercial sectors.

 

 

Article edited by Valentina Beomonte Zobel.

Global Economic Recovery – New Goals & New Drivers

On June the 9th and 10th, the International Conference on Global Economic Recovery – New Goals & New Drivers was held in Beijing, organized by the China Center for International Economic Exchange, within the Global Think Tank Online Forum on International Cooperation to Combat Covid-19.

The Vice-President of the Italy-ASEAN Association, Professor Romeo Orlandi, attended the event. Here is the transcript of his speech:

It is obviously difficult to ascertain whether the recovery after the Covid-19 pandemic will be quick, full, partial and which shape it will take. Still, some forecasts are possible, based on current data and past experiences. Very likely, the L shaped recovery will be avoided. Actually, in this case it would be a stagnation, not a recovery. We have already signs in China, in Asia and in some European countries that probably and hopefully the worst is behind us. A fast rebound is on sight, as envisaged by the majority of international organizations and governments. If so, we have a couple of questions to be answered. Will the recovery compensate the recession? In addition, is a new crisis a clear and present danger? The first answer is quite easy: in a short period, the recovery will not regain what we have lost in terms of GDP. The negative impact has been – and still is – so deep that wiping out the loss would be a dream. Statistically, too, that will not be possible. Moreover, there is a good possibility of another crisis, due to the dynamics of the economy and the unpredictability of the Coronavirus. The best guess is a W shaped recovery, which means we are supposed to live with uncertainty, in both good and difficult times. Crisis and recoveries will probably be on governments’ agendas and on ordinary people’s lives for quite some time.

As a consequence, we will be asked to manage a complex situation, where concepts like collaboration and sharing will not simply sound as tools of propaganda. Take the case of the decoupling. Many augur that the economies of the industrialized countries should and must separate their destinies from those of emerging countries. The rationale for this position is in front of our eyes: a decline in China and Asia’s supply have repercussions on the global value chain. This is an obvious result of the globalized delocalization originated in the West. A virus in Asia affected the whole world. Then, with the spread of the epidemic, also the industrialized countries were affected with a tremendous slowdown in economic activities, a painful and blatant crisis of demand. So, what is the good in finding the culprit, to point the finger to others? Is it a wise policy to cancel the integration of different economies and replace it with protectionism and trade war? It is not a matter of right or wrong. It is crucial to consider if we can go back to the old times. Reshoring is now deemed fashionable, aimed at creating new employment in industrialized countries. Will it be possible? Are we going to see the restoration of smoking chimneys now dismissed? Are we ready to create overnight another “factory of the world”, the same we witnessed in Asia over the last few decades? The answer is probably not. You cannot build another industrial powerhouse overnight. So, my final remark, is that the only way to pass this tragic moment is to negotiate, continuing trade talks and accept the best sides of globalization without demonizing it after having created it.

 

Women’s conditions in ASEAN during Covid-19

The sanitary emergency poses new challenges to gender equality

Gender equality is still an unresolved issue in ASEAN countries: a report from the World Economic Forum shows that, without major changes, it will take another 163 years to close the gender gap in South-East Asia and the Pacific, more than in any other region of the world. Despite significant differences within individual countries (from the Philippines ranked 16th in terms of gender equality, to Myanmar occupying the 114th position), this report sheds light on the gender inequality that characterizes the majority of ASEAN countries.

With the advent of the Covid-19 pandemic and of its consequences, these barriers to women’s empowerment have become even stronger. As reported by UN Women, in the Asia-Pacific region, women had to take on greater domestic responsibilities during the lockdown, including child care and assistance to the elderly. Because of this, not only women have been more exposed to the virus, but also domestic inequalities have worsened; having to take care of the family and of household chores, women have had less time to work, differently from their male counterparts. Moreover, in ASEAN countries the health sector is characterized by a wide pay gap between men and women, as well as by a low representation of women in decision-making positions. Although more than 80% of nurses and health assistants in the front line in the fight against the virus are women, men occupy 72% of top positions in health leadership, and receive higher remuneration compared to their female colleagues.

Nevertheless, the Covid-19 pandemic has also resulted in changes and potential opportunities for the women of the region. The transition to the digital economy, and the massive increase in the use of e-commerce and online communication platforms, opened a sector in which women can become entrepreneurs and increase their participation in the economy. For example, the rapid growth of e-commerce in Indonesia has fostered female entrepreneurship. To facilitate women’s entry into this sector, ASEAN countries should develop policies aimed at reducing the digital gap between genders. A number of social and institutional initiatives that promote the viewing of women as key resources for building a sustainable economy also encourage greater female empowerment. For example, in Cambodia, women entrepreneurs engaged in sustainable businesses will be able to get financial support for their ideas through the funds of the Women’s Livelihood Bond, a bond series issued by the Impact Investment Exchange.

Despite the obstacles posed by the Covid-19 emergency, ASEAN countries are determined to achieve greater gender equality, by providing useful tools to close the current gender gap. In addition to seeing a greater number of women in leadership positions in 2020, recently the ASEAN Women for Peace Registry convened an online meeting to discuss initiatives to promote the role of women in South-East Asia. This is an occasion that bodes well for the future of gender policies in the region and strengthens the ASEAN’s women hopes.

Article edited by Elena Colonna.

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