Agri-food and Made in Italy at the core of trade with ASEAN

Italian excellences attract new consumers in South-East Asia

On 13 October, following the meeting regarding the new opportunities for the agri-food supply chain of Emilia-Romagna in ASEAN, it emerged with a certain degree of consensus how much the countries of the region are fascinated by the brand "Made in Italy" and by our nation.  

The new Free Trade Agreement (FTA) with Vietnam, which entered into force on the 1° of August, promotes new opportunities for trade interactions between the two regions and underlines the increased attention that the country has shown towards Italian products. In this regard, the creation of an FTA between the EU and ASEAN would be useful to eliminate phenomena of Italian Sounding. The latter is an unfair widespread practice by foreign companies that offer reproductions of Italian food and wine excellences with the aim of attracting new consumers. 

Ms Formentini, a member of the ASEAN Desk at the European Commission, explained how to recognize these products by paying particular attention to means of identification such as PGI (Protected Geographical Indication) and PDO (Protected Designation of Origin). Italy is the European country with the largest number of agri-food products with Protected Designation of Origin and Protected Geographical Indication recognized by the European Union, comprising 299 products. Even today, there are products that continue to receive the coveted awards, among which the Lucan Oil that brings up to 18 products of excellence from Basilicata.

The ASEAN countries are not unresponsive to these goals and show great interest in agri-food products of Italian origin on grounds of their renowned international reputation. However, the risks of free trade in substitute goods should not be underestimated. Opening up barriers and increasing imports of goods may have negative consequences for indigenous products belonging to the same production chains. Just think about the opinions that circulated in 2017 about the consequences of the export of buffalo mozzarella from Italy on the trade of fresh cheeses in Canada or the possible imitation of the famous dairy from Campania after the entry into force of CETA. These safeguards must also be guaranteed for PGI and PDO products from Emilia-Romagna. For instance, after the crisis triggered by the Covid-19 pandemic, the region has shown great interest in seizing the opportunities arising from any free trade agreement in order to expand its network of commercial contacts and ensure an agile recovery for companies. Entrepreneurs are displaying great capacity in reaction to this critical moment and a strong sense of openness to a constantly developing region of the world.

ASEAN is one of the few areas in the world to have shown readiness to manage the health emergency and is similarly willing to contact new interlocutors. At this regard, it was held on 9 August in Thailand the fair "Food and Hotel" organized by Bellavita Expo with the participation of the Italian-Thai Chamber of Commerce. It is the main trade fair in the hospitality and gastronomy sectors in Thailand and Southeast Asia, during which the best Italian food and beverage products were described and advertised for over 29,000 professionals. The event wanted to give a decisive boost to signal the growth of the food and hospitality sector in Thailand, with the hope of offering exceptional opportunities to Italian companies to enrich their knowledge with professionals in the sector by promoting their businesses on the ground.

Therefore, the latest developments create optimistic forecasts of the popularity of products of Italian origin and provide hope for the progress of trade relations between the EU and Southeast Asia, as well as the spread of Italian food and wine excellences in the world.

By Hania Hashim 

Brunei Darussalam’s journey to realize economic transformation

The country’s strategy in order to reduce unemployment and depletion of oil reserves 

Despite being a small country, Brunei is rich in potential. It is widely known for its petroleum and gas reserves, which have fueled the nation’s economy for over 85 years. In 2019, the GDP per capita under the current sultanate reached 13.469 billion USD, making it the second wealthiest country in ASEAN, following Singapore. Furthermore, Brunei Darussalam is known for its excellent living standards. Its Human Development Index value is 0.845 – the same as Hungary – which places the country at the 43rd position worldwide. 

Brunei Darussalam is looking forward to achieve its ambitious long-term development plan: Wawasan 2035. Its goal is to be recognized, both regionally and globally, as a dynamic and sustainable nation with a highly educated society. The national plan is also in line with the United Nations 2030 Agenda for Sustainable Development, which the country fully supports. Indeed, it has submitted its first-ever Voluntary National Review – a mandatory document required from all nations as part of their obligation in implementing the Agenda.

Nevertheless, the country is still facing disruptive internal challenges, such as the increase in youth unemployment over the last ten years. Based on a report from the International Monetary Fund, the latest figure for 2019 amounts to 29.8 percent, making it the highest rate among other ASEAN Nations. According to experts, this phenomenon is mainly due to intensified reliance on the public sector. For instance, the latter has always been well subsidized which generates outcomes such as higher salaries and more attractive benefits for job hunters. On the other hand, working in the private sector is considered more demanding, leading to an increase of requests for vacancies within the public sector.

At this regard, His Majesty Sultan Haji Hassanal Bolkiah established the Manpower Planning and the Employment Council (MPEC). The aim is to address the issue on three aspects: supply, demand, and enablers. Through up-skilling and re-skilling programs, the government hopes to strengthen the mindset and job ethics of the workforce. Cooperation between ministries and private sector is also established with the purpose of increasing the number of high-quality jobs in the country. Furthermore, the government is promoting the creation of programs, such as the “District Connect and Institution Outreach” program, in order to match the skills and qualifications of the workforce with the requirements from various industries.

Another critical issue is related to Brunei Darussalam’s number one natural resource: oil. According to the BP World Energy Outlook, the country’s oil reserves are projected to run out by 2035. This forecast imposes an alert for the government, as oil exports made up almost 50 percent out of the total trade activities. As a response, the government sought to reduce its reliance on the hydrocarbon industry, and to diversify the country’s economy towards other sectors, such as tourism, ICT, as well as halal food manufacturing.  

The diversification effort is reflected in Brunei Darussalam’s foreign policy strategy. In the past couple of years, the country is increasing its involvement in various multilateral organizations – namely the ASEAN Free Trade Area, the Asia Pacific Economic Forum, and the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA). Moreover, the country has strengthened its economic ties with China, its largest and most important investor. In the Inaugural Meeting of the Joint Steering Committee held early this year, the two countries agreed to further deepen their cooperation on the Brunei-Guangxi Economic Corridor (BGEC). This initiative so far has generated over 500 million USD of joint-investment commitments to develop several strategic industries in the country, specifically in bio-innovation, agriculture, and aquaculture.

Based on these data, it is clear that transformation is essential to ensure the sultanate’s long-term stability. Fortunately, Brunei Darussalam’s government possesses both resources and capabilities to implement its strategic priorities. Extensive measures have been taken with the aim to address the root causes of both issues, and it is highly likely that these efforts will lead to a positive outcome. Despite the current challenges, the future of Brunei Darussalam seems bright and, if the country maintains its progressive pace, it will be able to realize its ambitious 2035 plan.

By Rizka Diandra 

Off on the Phad Thai foot

Southeast Asia is increasingly establishing itself in Italy and Europe thanks to its rich culinary offer.

“Don't eat anything your great-great grandmother wouldn't recognize as food” said the American writer Michael Pollan. Who better than Italians, always ready to criticize any foreign dish, to agree? And yet, in the latest years Southeast Asian cuisine is overcoming geographical boundaries and winning over even the most sceptical hearts. Not only are countless Thai and Vietnamese restaurants opening all around Italy, but even new TV series are being made to portray the scents, taste, and colours of Asian dishes. But which are the most popular in Europe and Italy today, that even your great-great grandmother would be fond of?

One could fill lots of book trying to illustrate the richness and variety of ingredients in Vietnamese cuisine, and it still wouldn’t be enough. When France colonised Vietnam and its neighbours in 1887, it formed the Indochinese Union and heavily influenced this region’s cuisine. But before that, the culinary heritage of Vietnam was influenced by China, which provided a fundamental contribution to the birth of Vietnamese popular dishes. Wontons, wheat noodles, chili peppers and corn can be found in both countries’ culinary heritage. When the French arrived, the ingredients list expanded to include potatoes, asparagus, onions, coffee, and many others. And today, two of the most beloved typical Vietnamese dishes both by locals and Europeans are the outcome of French influence!

The first one is Bánh mì, a delicious baguette-shaped bread made with rice flour instead of wheat flour. Fillings can be very fancy, but the most cherished one is a combination of grilled meat, coriander, pickled vegetables and sauces. The second dish is the world-renowned Pho: a soup of Vietnamese rice noodles and meat broths. It is common belief that the word Pho (pronounced fuh) derives from the French pot au feu (stew). The presence of beef meat, rarely seen in other typical Asian dishes, is further evidence of the influence left by the French colonisation.

As far as Thai cuisine is concerned, the birth of new Thai restaurants everywhere in Italy (not only in Rome and Milan) is a clear sign of its increasing success. Besides the classic Phad Thai (stir-fried rice noodles with vegetables, eggs, roasted peanuts, fish sauce, tamarind juice, garlic, chilli pepper, lime and palm sugar), there are many more creative combinations of flavours that are winning hearts in the West to the extent that Thai Massaman curry, the “king of curry”, was awarded first place in the CNN’s “The world's 50 best foods” list. The reason? “Even the packet sauce you buy from the supermarket can make the most delinquent of cooks look like a Michelin potential”.

While it is still hard to find Indonesian or Singaporean restaurants in Italy, the interest toward Southeast Asian countries’ cuisine seems to be a fast-growing trend. Suffice it to say that many other dishes in the aforementioned list come from ASEAN countries. Even Netflix, the media giant always very careful about its viewers’ needs, own two series that frequently portrait the cuisine in Bali, Yogyakarta, Cebu, and other Southeast Asian locations: Street Food Asia and Chef’s Table.

All encouraging signs that show once again the increasing interest in ASEAN countries’ history, traditions, and rich culinary offer in Europe and worldwide.

By Valentina Beomonte Zobel

Innovation and Renewal in Singapore

In the current global context, the future of the Singapore model will depend on its ability to harness new technology and its own capacity for change  

The extraordinary transformation of Singapore from small trading post of the British Empire into vibrant centre of the nascent global economy is a source of pride for Singaporeans and a matter of interest for the rest of the world. At the time of its expulsion from the Federation of Malaysia in 1965, the ‘City of the Lion’ was a small island at the far end of the Malay peninsula, without natural resources, leave aside its strategic geographical position and the still unexplored potential of a young and diverse population (mostly made up of Chinese migrants). Yet, in the two decades immediately after independence, the Singaporean economy grew every year at an average rate of 8.5% and the fledgling city-state went from third world to first in just one generation. 

Several experts and scholars have tried to identify the secret of Singapore's success: geographic location or demographic structure; cultural identity or political regime; all very important factors but perhaps not the decisive ones. "The simple answer - according to former Singaporean diplomat Kishore Mahbubani - is extraordinary leadership." A ruling class educated in the best universities in the United Kingdom and returned to Singapore with the ambition of putting traditional British pragmatism at the service of the nascent national sentiment. Lee Kuan Yew himself, founding father and Prime Minister of Singapore, the man who ruled the city-state directly and indirectly for over 50 years, argued that the success of the Singapore model stemmed from its ability to respond effectively to new situations.

Indeed, Singapore's grandiose development might not have been possible if its leaders had not been driven by an abiding faith in technological innovation and a firm belief that economic success also depends on the ability to innovate and renew oneself. It is also due to this 'faith' that a city-state known all over the world as a commercial and financial hub never wanted to renounce to its manufacturing sector. Manufacturing, a major growth engine in the 1960s, has undergone a major technological transformation and it represents today a high added value sector worth around 20% of GDP. Meg Whitman, CEO of Hewlett Packard Enterprise, one of many big companies which have decided to bet on Singapore, has dubbed the city-state a miniature Silicon Valley. Very recent news seem to confirm this view: forced out from the Great America of Donald Trump, Chinese tech companies ByteDance and Tencent have decided to throw in their lot with Singapore and invest several billion dollars in the ‘Little Red Dot’.

For many years now Singapore has ranked in the top spots of the Global Competitiveness Index and the Ease of Doing Business Index, just to name two of countless global indicators celebrating the city-state as one of the best places in the world for doing business. The result is partly ascribable to its advanced financial and judicial system, but cutting-edge physical and digital infrastructures also play a role. It is precisely on the latter that the government wants to focus to overcome the Covid-19 crisis, which is dragging the city-state into the worst economic recession since 1965. Singapore, in the words of Prime Minister Lee Hsien Loong, must prepare for "a very different future," one which, according to a senior official, will be made of "bits and bytes, submarine cables and data", not just cargo and containers.

The cabinet had been working on it for some time: Covid-19 made it necessary to accelerate. In fact, already a year ago, the Enterprise Development Board, the government agency that guides the country's industrial development, presented to potential foreign investors some of the early achievements: the highest concentration of submarine cables in the world, the fastest broadband connection and a mobile penetration rate of 159%. The Digital Readiness Index 2019, an indicator developed by Cisco to identify the countries which are best prepared to accept the challenges of digitization, placed Singapore in the first place. Thanks to the growing tension between the United States and China and the exasperation of the situation in Hong Kong, even large multinationals of the likes of Amazon and Alibaba could not resist the call.

Five years ago, Kishore Mahbubani, in a book with a very suggestive title, "Can Singapore Survive?", singled out three major perils that the city-state would have to face in the years to come: a challenge from populist politics, the geopolitical clash between the United States and China , and a 'Black Swan', an extremely rare and hardy predictable event that would have put the Singapore model into question. The prophecy may have come true in 2020, at least with regards to its international dimension. After an initial moment of loss, Singapore seems coming to his senses: a city-state connected to the world, albeit through new digital ways, without giving up on the ambition to be everyone's friend and nobody's enemy. The faith in innovation which made possible Singapore’s astounding growth could now allow its survival.

By Francesco Brusaporco

New prospects and future opportunities for trade in Vietnam

The EVFTA paves the way for new investment opportunities for European countries and companies

Once again, the COVID-19 pandemic does not hinder moments of dialogue and discussion about new agreements with ASEAN countries. On the 8th of October, the webinar "Vietnam: the new trade agreement with the EU and opportunities for Italian companies" was held, organized by Assolombarda in collaboration with the Italy-ASEAN Association, in light of the entry into force of the Free Trade Agreement between the European Union and Vietnam. 

Indeed, following the experience of the pandemic, it is increasingly clear that international cooperation is now a valid and effective solution for the economic recovery of states. This is the case of the EVFTA, which significantly improves dialogue between the European and Vietnamese institutions. The agreement guarantees a number of opportunities to companies that decide to look towards Vietnam from Europe and that are willing to join new market segments within an area of increasing economic vitality. Actually, the country plans to grow by 2.7% in 2020, preventing the possibility of a recession, unlike many other developing countries that after years of continued growth, instead, will register a negative sign this year. In the context of geopolitical and trade tensions between China and the United States, Vietnam has become the preferred destination of many companies, including Chinese ones, which in doing so are able to sidestep Washington’s tariffs. 

Specifically, the new legislation over customs offers Vietnam consistent tariff concessions compared to other agreements. In this regard, the Director of the Vietnam Chamber of Commerce and Industry (VCCI), Thu Trang Nguyen, highlighted the advantages of the commercial arrangement compared to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP). The European Union has eliminated 85.5% of tariff lines towards Vietnam compared to 78%-95% guaranteed by the CPTPP. At this rate, by 2027, almost all products of Vietnamese origin exported to the EU will be taxed at 0%, with the exception of the so-called "sensitive goods", such as food and tobacco. These are ambitious trade targets for the EU and Vietnam, unlike the CPTTP, which takes about 10 years to generate the same effects. The agreement includes technical rules regarding the new customs norms and introduces tools that guarantee the fluidity of trade through the valorization of economic integration and the promotion of sustainability and the circular economy.

In tal senso, il Paese sta facendo passi da gigante nel settore energetico, potenziando e incentivando l’uso delle fonti di energia rinnovabile, come ad esempio le cosiddette “solar farms” che provvedono a soddisfare le esigenze energetiche garantendo un impatto minimo sull’ambiente. Il Vietnam intende, infatti, rilanciarsi da subito su questo fronte mirando ad un aumento della percentuale di energia solare ed eolica dal 10% attuale al 15%-20% entro il 2030 e al 25%-30% entro il 2045.

Si tratta di elementi che fanno ben sperare circa il futuro del Vietnam. Il Paese presenta ad oggi grandi potenzialità sulla scena economica internazionale e l’accordo pone finalmente le basi per una sempre migliore cooperazione bilaterale. L’EVFTA procede quindi in linea con gli altri accordi conclusi dalla UE negli ultimi anni e dovrebbe favorire la rapida ripresa economica del Vietnam, rendendolo una delle mete favorite per gli investimenti esteri e per il commercio di beni e servizi. Ad oggi, la crisi innestata dalla pandemia continua a porci di fronte ad un futuro incerto ed offuscato ma, attraverso accordi commerciali di questo calibro e migliorando la cooperazione internazionale, la ripresa potrà essere rapida e sostenibile.

By Hania Hashim

Regional security in ASEAN

In order to tackle the emerging geopolitical challenges, ASEAN should move towards deeper forms of cooperation in defence and security 

The Bangkok declaration, founding document of the Association of South-East Asian Nations, states that regional peace and stability are among the two main goals of the organization. However, the structure of the Association itself somehow hampers the process of advancing significantly towards a common security and defence community. 

ASEAN was born from the union of a series of cardinal principles on which the trust among member states was built. This approach - called The ASEAN Way – is founded on the recognition and adherence to the principle of national sovereignty, which entails non-interference in internal affairs, abstention from the use of force to settle disputes and unanimity in the decision-making processes. Security and common defense have thus always been sensitive issues in the region, and progress in these directions tended to be modest.

In the last decades, Indonesia has been one of the main actors advocating for accelerating the integration process in this field. In 2003, at the 9th ASEAN Summit in Bali, the Indonesian government reached its goal of including the ASEAN Security Community among the three founding pillars of the organization. The ASEAN Political-Security Community – as it is named since 2015 - represents a notable step towards for member states, establishing a useful platform to solve disputes and to encourage dialogue and cooperation in defense and foreign policy. Since 2010 then, meetings between ASEAN Defence Ministers with the counterparts of different international partners, among which China, US, Japan and Australia, have acquired always more importance and centrality. 

Despite these last years’ progresses, ASEAN still struggles to push forward a concrete agenda in strengthening regional cooperation in defense. As for the European Union, also ASEAN member states are skeptical about deeper forms of integration in the military sector. The current level of cooperation involves consultation with partners and dialogue, yet member states are still reluctant to the formulation of a common long-term strategy. On the delicate issue of the South China Sea, which involves several ASEAN nations including Indonesia, Malaysia, the Philippines and Vietnam, the long-term common strategy that would be necessary to meet the challenge is struggling to emerge. 

Today, in an evolving and uncertain geopolitical context, ASEAN countries need to deepen and intensify their internal discussions on common security. The role of the US in the Pacific is rapidly changing, China is moving in the South China Sea and the Covid-19 pandemic has disrupted the regional and global equilibrium. The economic and geopolitical dimensions are always more interrelated, and it is thus time for ASEAN to also invest in the common security and defense sector. 

Despite the outbreak of the global pandemic, 2020 presents particularly interesting opportunities in terms of defence for South-East Asian countries. Two ASEAN’s countries, Indonesia and Vietnam, are members of the UN Security Council, which represents a unique opportunity to advance the priorities of the region in the most influential diplomatic arenas. The South-East Asia region is acquiring increasingly more economic and commercial relevance at the global level, and needs now to start building common geopolitical instruments to tackle the increasing challenges. It will be therefore essential for ASEAN to continue its course towards the establishment of a concrete defense and security community, with the goal of guaranteeing the principles of peace and stability that underlie the Association itself. 

By Tullio Ambrosone and Luca Menghini

2nd Digital Round Table on economic relations between Italy and ASEAN

At the center of the discussion technology and innovation, with a focus on investment opportunities in ASEAN Countries

On Wednesday 30th September, the 2nd round table of the Digital High Level Dialogue on the relations between Italy and ASEAN took place, organized by The European House Ambrosetti in collaboration with the Italy ASEAN Association. Now that Italy has officially become an ASEAN Development Partner, the importance of the South-East Asian region for Italian trade and exports is growing. In particular in the fields of manufacturing, technology and connectivity, Italy and ASEAN now have a unique opportunity to advance relations and achieve important common goals. 

Preponderant since the outbreak of the pandemic has been the theme of the digital revolution. During the most acute phases of the crisis, the role of connectivity has been fundamental to uphold a resilient approach, allowing to not interrupt the production cycle and pushing companies to rethink their development models. Despite the overall decline in economic activity, the digital sector grew significantly during the pandemic and is now one of the most dynamic sectors, especially in Southeast Asia. More and more companies are aiming to expand the offer of digital services in the region, investing in artificial intelligence and big data, and ASEAN governments seem willing to support this process to reap the benefits of the digital revolution. In the post-pandemic phase, it will therefore be essential to increase investments in the digital sector in order to foster the economic recovery. 

In particular, during the event, several speakers highlighted the need to diversify investments in technology to exploit all the possibilities that this sector can offer. Particularly interesting was the theme of smart-cities and the technological development of urban centers. As densely populated countries, several members of ASEAN find it very difficult to manage the increasingly chaotic and dynamic megalopolises of the region. In this sense, technology offers extremely interesting tools, from mobility management to infrastructure, energy supply and the food sector. According to several experts who intervened, more investment in digitization will be crucial to increase the competitiveness and productivity of companies, and to create more innovative and sustainable social ecosystems. The space to intervene is vast, and Italian companies should also focus on the rich markets of Southeast Asia to diversify investments and ride the growth wave of ASEAN countries. 

Finally, particular attention has been paid to the situation of the aviation sector, one of the most affected by the consequences of the pandemic. The entry bans for foreign citizens imposed in many countries during the most serious phase of the health emergency, together with the restrictive measures still in place to contain the spread of the virus, have put a strain on the airlines and therefore the entire aviation sector. Among the speakers, Emanuele Lourier, Sales Manager of Leonardo, presented two possible scenarios for the near future of this sector. The first would see a recovery of air traffic starting from 2022, with a gradual return to 2019 levels; the second, more pessimistic, foresees a recovery of the sector in 2023, with a return to effective growth only in 2024. However, despite the difficulties of recent months and the challenges of the coming years, air traffic in Southeast Asia is expected to grow by several percentage points over the next ten years, in line with population growth. This sector, too, can therefore still offer interesting opportunities for companies that are willing to focus on the long term. 

Despite the pandemic is complicating international relations, Italy and ASEAN continue to focus on multilateralism and free trade to get out of this crisis. Only through greater forms of cooperation the two regions can relaunch growth and build an innovative and sustainable economic model. The next years will be fundamental in this sense, it will be up to governments and companies to lay the foundations for recovery, aware of the potential that cooperation between Italy and ASEAN can offer.

 Article edited by editorial Staff 

The Road Ahead for Malaysia

Income gap and sustainability issues remain a challenge as the country works to achieve its 2030 goals

Over the years, the economic development of Malaysia has been nothing but impressive. Since its independence from the UK in 1957, the country has been focusing all of its effort on strengthening the economy and improving the welfare of its citizens. For almost 5 decades until 2018, Malaysia recorded a stable GDP growth at an average rate of 6.1% per year, according to a report from OECD. The country also has a relatively high human development index at 0.804 – the third-highest in ASEAN after Singapore and Brunei Darussalam.

On top of these notable achievements, Malaysia set a high bar also for its medium and long term objectives. Not only does the country aim to achieve high-income status by 2024, but it is also working towards achieving sustainable growth and equality across all income groups, ethnicities, and regions – as outlined in the Shared Prosperity Vision 2030 document. Nevertheless, in working towards these goals, the country still needs to tackle several challenges both at home and abroad.

One of the most pressing issues in Malaysia is structural differences. Officially, Malaysia’s social fabric is divided into two segments: the majority Bumiputera or the Malay population, and the minority ¬non-Bumiputera, which mainly consists of Chinese and Indian populations. Historically speaking, economic disparity has always been an issue between the two groups, as national wealth used to be largely concentrated in the hands of the market-dominant Chinese population. However, although progresses are being made with regards to equal opportunities between groups, today the divide is still evident. The income gap between Bumiputera, Indians and Chinese has increased four times in the past 27 years. For this reason, the government is trying hard to create a balance between all ethnic groups, in particular by adopting the Bumiputera empowerment agenda, which aims to boost the population’s socio-economic standing. Moreover, the government is also committed to putting more attention on the development of other non-Bumiputera populations, to ensure everyone receives equal access to education, work, and opportunities.

Another issue that might hinder economic development is palm oil, and its effects on Malaysia-EU trade relations. Palm oil is one of Malaysia’s primary industries , accounting for 2.8% of the country’s GDP, and Malaysia is the world’s second-largest producer of palm oil after Indonesia. Since 2010, the Malaysian government and the EU have been working towards establishing a Free Trade Agreement. However, negotiations are on hold due to diverging views on the environmental impact and the sustainability issues associated with the production of palm oil. The initial reaction of the European Parliament on the issue was to ban the use of palm oil for biofuels by 2030. However, looking at the economic consequences of this decision, the EU decided instead to limit the amount of high-risk Indirect Land Use Change (ILUC) biofuels in entering its market. By definition, ILUC occurs when agricultural lands previously used for growing food are converted for biofuel production, resulting in the release of carbon emissions into the air. Biofuels categorized under the high-ILUC risk categories are those that are produced from areas that have a higher concentration of carbon such as forests, wetlands and peatlands.

Although this decision created a degree of leniency, it is still difficult for Malaysian palm oil to qualify under the low-ILUC risk category. The government is now working towards expanding the production of sustainable palm oil. This is done by restricting the development of peatlands, banning the conversion of forest reserves for palm oil, and certifying local plantations with the Malaysian Sustainable Palm Oil (MSPO) certification. Doubts remain on whether or not this certification system can be recognized by the EU, and a win-win solution is yet to be agreed. Experts are advising both parties to reassess their terms of engagement in order to create a more favorable outcome for both the palm oil industry and the global environment. 

Considering the above-mentioned elements, Malaysia faces a challenging situation. The income gap and sustainability issues remain detrimental, as they can significantly affect the country both internally and externally. However, the government is highly committed in addressing these problems, and the country appears to be on the right track to recover from the Covid-19 pandemic and continue the path to achieve its 2030 goals.

By Rizka Diandra and Alessio Piazza 

An Open Economy: Indonesia’s Latest Goal

After having successfully achieved unity and democracy, now the country strives for economic openness 

Indonesia is a country with over 14,000 islands, 700 languages, and 1,300 ethnic groups. Yet, despite its size and heterogeneity, Indonesia managed to find strength in its national motto ‘Bhineka Tunggal Ika’ that means ‘Unity in Diversity’. The country is now ranked as the world’s 16th largest economy and is predicted to rise to the 7th position by 2030, based on a report from McKinsey. However, this success didn’t come overnight. According to Kishore Mahbubani, a distinguished fellow at the Asia Research Institute and a former diplomat in the Singapore Foreign Service, one of the reasons behind Indonesia’s success is that the country had the right leader in each point of history.

Soekarno, the first president of Indonesia, created unity among the people. He was able to unite the country through Pancasila – the Indonesian state philosophy- and he also established the country’s national language: bahasa Indonesia. His successor, Suharto, with an authoritarian approach managed to deliver economic growth to the country (6.6% on average during his regime), putting it on a favorable development path. Finally, in 2014 Susilo Bambang Yudhoyono, President for two terms, delivered significant progress in democracy and international cooperation. Also thanks to Indonesia’s leadership in ASEAN, the country was admitted to the G20, obtaining a permanent and visible role in the global arena.

Today, the current administration, led by President Jokowi, is faced with one major challenge: economic openness. Indonesia is still somewhat reluctant to open its market to competitors, and the reason behind this is rooted in the country’s history. Indonesia has a legacy of economic nationalism that began in Soekarno’s era when the struggle for national liberty was also seen as an economic one. Protectionist measures and hostile policies towards foreign investors were in place, with the hope of making Indonesia a self-sufficient nation. This all changed under Suharto’s leadership when his administration proposed different policies aiming at a gradual integration into the global economy. 

The current aim is to promote and strengthen Indonesia as an open economy, with economic development at the core of the strategy. The government is focusing on the completion of various Free Trade Agreements, among which the Regional Comprehensive Economic Partnership (RCEP) and the Indonesia-EU Comprehensive Economic Partnership Agreement. The latter in particular, according to the programme of the next trio of Presidencies of the Council of European Union, will likely be concluded in 2021. Negotiations between the two sides are entering the 10th round this autumn, and looking at the previous results, several areas recorded good progress, among which the removal of technical barriers to trade, subsidies, and investments. On the other hand, negotiations on trade in goods, intellectual property rights, and sustainable development might require more time to reach an agreement.

The government’s effort is also reflected in Legatum Institute’s 2019 Global Index of Economic Openness. Indonesia ranked 68th out of 157 countries, jumping six places in the last decade. Overall, Indonesia has managed to secure numerous trade deals, mostly with its ASEAN counterparts and other Asian countries. However, some critical elements continue to persist. Tariffs and import quotas are still being applied to protect the domestic market. In addition, a World Bank report also shows Indonesia’s FDI being less than half of the global average – at 2% of its GDP. According to experts, this lack of FDI might slow down development in several sectors, especially infrastructures.

Nevertheless, in spite of Indonesia’s structural differences, and the lingering issue of economic nationalism that might hinder the country’s development, Indonesia is well on its way to becoming a major actor in the international scenario. Actions taken by the government show that President Jokowi’s administration is giving priority to the opening up of the Indonesian market, to grasp the benefits of international trade. At this moment, the real challenge for Indonesia is to balance the domestic and foreign capital in the country, in a way that can actually benefit the economic system. Once the equilibrium point is met, no doubt it will transform Indonesia, unfolding all its true potential. 

By Rizka Diandra and Tullio Ambrosone 

The Reasons for Thai Resilience

Diplomatic acumen and economic choices will determine Thailand's ability to continue its development story

Even in an exceptionally diverse context such as Southeast Asia, Thailand still stands out for several reasons. First, "the Land of the Free" - the actual meaning of Thai Land - is the only ASEAN country which never fell under the colonial yoke of the West. Second, the extraordinary complexity of Thai culture is held in high regard by Western tourists and Asian powers alike. Finally, thanks to a favorable geography and a shared history, Thailand can make a great contribution to bridging the gap between China and India and finding a common ground among the often-squabbling ASEAN countries.

The figures of the economy have certainly contributed to creating the myth of Thai exceptionalism: GDP grew on average by 7.5% per year through the period 1960-1996, making Thailand one of the greatest success stories of international development. A smart policy mix of incentives and investments have persuaded numerous car manufacturers to move their production plants to the country, transforming Bangkok into the "Detroit of Asia". The rapid growth of the average income enabled Thailand to join the middle-high income country club in 2011. A few years later, the government drafted the Thailand 4.0 masterplan, betting on smart cities and the Internet of Things to avoid the "middle income trap".

In fact, over the last two decades, Thailand's GDP slowed down, following the ups and downs of global trade, while the country was facing the return of poverty and a threatening growth of inequalities. The Covid-19 pandemic has exposed the structural weaknesses of the Thai economy and its excessive dependence on external demand. The unexpected yet inevitable shutdowns of national borders, for instance, caused the collapse of the tourism industry, worth about 15% of Thai GDP, putting 2.5 million jobs at risk. The Bank of Thailand has projected an 8.1% decrease of the GDP in 2020: the lowest point after the 1997-1998 Asian financial crisis.

The compounded economic and health crisis found the cabinet of Prayuth Chan-o-cha already confronted with the thousands of Thai students who have taken to the streets since February to protest against the government of the former-general-who-became-Prime-Minister. The protests have been characterized by an explicit criticism of the King Maha Vajiralongkorn, a rather unusual occurrence in a country where those who breach the strict lese-majesty law face up to 15 years of prison. In general, however, the protests are a dramatic manifestation of the enduring tension between the progressive quest of the working classes and the youth and the more conservative stances of the military and political elites.

Thailand enjoys a relatively young population (about 1/3 is under 25 years old), fairly good infrastructure (constantly expanding), and a rather beneficial geographical position, right in the centre of the Beijing-Delhi-Jakarta triangle. Such "Optimal general features,” together with the traditional resilience of the main economic indicators and a few significant socio-economic trends, as the presence of a robust urban middle class, help explain the renewed interest of investors in the Thai market. The recent economic choices of the government, which seems to reflect a changing attitude towards internal consumption and expansionary fiscal policies, may open a new window of opportunity for Italian companies exporting industrial machinery and consumer goods to Thailand.

As a matter of fact, the full recovery of the Thai economy will depend on the ability of the government to leverage the distinctive strengths of the country which Kishore Mahbubani, former Singaporean top diplomat and keen observer of regional affairs, singles out in 'The ASEAN Miracle.' Its unique national sentiment, a mindful use of soft power and well-demonstrated mediation skills will prove essential for Thailand to overcome the difficult economic and social contingency and enable the country to carry on its history of growth and development.

By Francesco Brusaporco

Italy and Indonesia: a great potential

The recent experience with Covid-19 has improved the political and economic dialogue between Italy and Indonesia 

The Italy-ASEAN Association organized a meeting on Indonesia and its response to the crisis caused by the Covid-19 pandemic. The meeting saw the participation of the Italian Ambassador in Indonesia, Benedetto Latteri, the Indonesian Ambassador in Italy, Esti Andayani, the Vice-President of Confindustria responsible for internationalization, Barbara Beltrame, the Indonesian Deputy Minister for Foreign Affairs responsible for European and American Affairs, Ngurah Swajaya, and finally the Vice-President of KADIN, Shinta Kamdani.

The experience of the pandemic has greatly affected Indonesia’s economy, weakening key sectors such as trade and tourism. To date, the virus has spread to all provinces across the country and the most affected areas are those of Jakarta, North Sumatra and East Java. This phenomenon led to a 5.3% contraction in GDP and a 30% reduction in trade volumes in the first half of 2020. However, this emergency has highlighted Indonesia’s increased degree of resilience in dealing with the crisis, laying the foundations for a renewed spirit of cooperation between Indonesia and Italy.

Indonesia exports a variety of products to Italy ranging from tropical fruits and vegetable oils to cosmetics, electrical machinery and componentry. The EU is Indonesia’s third largest trading partner, generating a total trade value of EUR 23.8 billion in 2019. The two countries appear to have complementary import and export needs and intend to seize the opportunities given by the new international context in order to develop successful trade strategies.

To ensure a more intense flow of investments between the two countries, the EU is also showing more flexibility towards its companies, supporting them in the economic recovery and relaunching the importance of foreign trade and internationalization. The European institutions recognize the strategic importance of ASEAN and they are enhancing international negotiations with the purpose of promoting intense cooperation, in contrast with the emergence of protectionist measures by other partners. Free trade will be the key to emerge from the crisis and will be the most effective tool to promote the economic growth of the two countries.

There are two international agreements, still being negotiated, which represent an interesting opportunity for Indonesia and the EU: the Regional Comprehensive Economic Partnership, a trade agreement including 15 Asian countries, and the Indonesia-EU Comprehensive Economic Partnership Agreement. The latter focuses on trade relations between Indonesia and the EU, and aims to ensure a more solid and productive relationship between Indonesia and European countries. The topics covered range from the removal of duties to the promotion of the flow of investments, from the protection of intellectual property to the strengthening of international cooperation. With the conclusion of these agreements, the value of trade between the two regions would increase significantly and ensure mutual benefits.

Therefore, it may be held that although the pandemic has generated significant consequences for the Italian and Indonesian economy, this experience has also opened the doors to new opportunities for the two countries. In fact, it has highlighted the mutual willingness to explore respective markets, adopting a renewed approach that, echoing the words of the Indonesian Ambassador in Italy Esti Andayani, aims to "transform pessimism into optimism".

Article written by Hania Hashim 

Italy, Asia and botany: a long history

The year 2020 marks the centenary of the death of Odoardo Beccari, a scientist who has remarkably contributed to the South East Asia’s knowledge of biodiversity 

The 2020 marks two important events which connect Italy and South East Asia. The 500 years from the circumnavigation of the globe by the Portuguese Ferdinando Magellano, with the report by the Italian Antonio Pigafetta. The diary documented the cities, people and costumes of South East Asia. Moreover 2020 marks the death of the Italian Botanist Odoardo Beccari.

Odoardo Beccari is not particularly known outside the scientific circle, however his articles on the description of new plant species made him one of the most relevant tropical botanists between the nineteenth and twentieth century. His reports and articles have inspired the milieu, names, and adventures of the pirate Sandokan, written by Emilio Salgari.

Originally from Tuscany, with the Marchese Giacomo Doria, organized their first trip to explore the land of Sarawak (Borneo). In the journey they stop in Sri Lanka, Singapore, and arrived in Kuching, capital of Sarawak, on the 19th June 1865, as guests of the Raja James Brooke. The two explorers moved to mount Battang, approximately 300 m asl, starting their collections. Other explorations followed in South East Asia and Africa, with other important Italian scientists. The Beccari collection are today deposited at the National Herbarium in Florence while the zoological and anthropological collections are exhibited at the Genoa Museum.

For the centenary of his death, several events will be held. The National Herbarium, in Florence, will inaugurate an exposition on the life and works of Beccari (25 October 2020 - 28 February 2021). The Italian version of most famous Beccari Book Nelle foreste di Borneo, has been reprinted. Nelle foreste di Borneo

Kuching (Sarawak) where the twenty-year-old Beccari arrived to start his work in the tropical forest, has planned four events to commemorate the botanist. The 25th of July the Minister of Culture, Art and Tourism of Sarawak has inaugurated the Beccari Discovery trail, 3.2 km on the Batang Mountain, where Beccari built his base camp (Villa Vallombrosa). In September the ‘Hidden Valley of the Rattans’ in Kubah National Park will be inaugurated, in collaboration with the Sarawak Forestry Department. For 2021 (some events have been postponed due to the pandemic) a conference in honour of Odoardo Beccari titled ‘Wandering in the forest of Borneo’ has been organized in collaboration with Sarawak Biodiversity Centre.

Beccari described his travels and observations in the book ‘Wanderings in the Great Forest of Borneo’, which became the only scientific italian best-seller known abroad. In that book, Beccari wrote that in the future, with economic development in Malaysia, those forests would have been studied by local botanists. Today, local botanists are celebrating the Italian botanist for his great contribution on the understanding of Borneo biodiversity.

Article written by Daniele Cicuzza 

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