Economic Pragmatism and Regional Economic Integration: The Case of Cambodia


July 12, 2018

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Economic Pragmatism and Regional Economic Integration: The Case of Cambodia

by Chheang Vannarith

Chheang Vannarith, Visiting Fellow, ISEAS-Yusof Ishak Institute, explains that “International economic cooperation and regional integration are key principles of Cambodia’s foreign policy.”

Asia Pacific Bulletin, No. 429

Cambodia’s foreign policy strategy has been chiefly shaped and driven by “economic pragmatism,” meaning the alignment of foreign policy with economic development interests. The Cambodian government’s two main approaches to regional economic integration are (1) transforming the international environment into a source of national development and (2) diversifying strategic partnerships based on the calculation of economic interests. International economic cooperation and regional integration are key principles of Cambodia’s foreign policy, which emphasizes shared development and win-win cooperation.

As a less developed country in the region, Cambodia has a strong interest in promoting and realizing a more inclusive, fair, and just process of regional community-building that narrows the development gap and implements people-centered regional cooperation. Linking regional integration with national economic policies is critical to sustaining dynamic economic development.  Key tasks include improving regulatory harmonization and harnessing and synergizing various regional integration initiatives.  It is particularly important to link ASEAN community blueprints with sub-regional cooperation mechanisms such as the Greater Mekong Subregion (GMS) program and Mekong-Lancang Mekong Cooperation (MLC).

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Samdech Prime Minister Hun Sen–Father of Cambodia’s Socio-Economic Development

The Cambodian government perceives regional integration as a means to further advance its national development interests. ASEAN, GMS and MLC are the main gateways for Cambodia to reach out to the region and beyond. The ASEAN Economic Community Blueprint 2025 aims to achieve five goals: (1) an integrated and cohesive economy; (2) a competitive, innovative and dynamic ASEAN; (3) enhanced connectivity and sectoral cooperation; (4) a resilient, people-oriented, and people-centered ASEAN; and (5) a global ASEAN. GMS operates under the principles of non-interference, consultation and consensus, mutual interest and equality, win-win cooperation, shared development, and common destiny. GMS gives emphasis to practical or functional cooperation, aiming at achieving concrete results in poverty reduction. MLC promotes regional connectivity, production capacity, cross-border economic cooperation, trade and investment facilitation, customs and quality inspection, financial cooperation, water resource management, agriculture, forestry, environmental protection, and poverty reduction.

In the Rectangular Strategy Phase III, issued in 2013, a five-year strategic development plan, the Cambodian government set out a vision that states, “by the end of the first half of the 21st century, Cambodia is to reclaim full ownership of its own destiny, while becoming a real partner in regional and global affairs.” It further states that Cambodia is now “actively integrating itself into the regional and global architecture, and playing a dynamic role in all regional and global affairs on equal footing and with equal rights as other nations.”

The Cambodian government stresses several key benefits of regional integration, including regional peace and stability, the development of both hard and soft infrastructure, energy and digital connectivity, free and effective movement of trade and investment, human capital development, the expansion of regional production bases and networks, and stronger regional cooperation and coordination in agricultural development. Strengthening regional cooperation — especially in the Mekong region in rice production and trade facilitation — would contribute to improving farmers’ standard of living. Creating an association of rice-exporting countries will strengthen the global position of the Mekong countries.

Although there have been remarkable achievements over the last two decades in forging regional cooperation, integration, and connectivity, there are several challenges that Cambodia needs to overcome. Those challenges include socio-economic inequality within the country and the region, weak institutions and governance, and the lack of national capacity in implementing regional projects. Income disparity within the regions and localities contributes to political instability, trans-boundary crimes, illegal labor migration, and human trafficking.

Institution-building based on good governance remains a key challenge to the effective implementation of regional policies. The national capacity of each member country of the GMS in transforming and integrating its regional development agenda into a national development action plan is limited. The lack of resources in realizing regional development projects requires more investment and participation from the private sector.

Local government plays a significant role in regional cooperation and integration. Recognizing the role of local government in socio-economic development, in 2008 the government adopted two Organic Laws and established a National Committee for the Democratic Development of Subnational Administrations. These measures are aimed at decentralizing power and creating a sub-national governance system. Delegating power and resources to local governments at the commune, district and provincial levels not only contributes to national development but also connects governments with neighboring countries, especially in the border areas.  For instance, the Cambodia-Laos-Vietnam Development Triangle was formed in 2002 to link 13 border provinces of the three countries.

A major challenge is that both the central government and local governments in Cambodia lack sufficient institutional capacity and resources to effectively implement the country’s regional cooperation and integration agenda which includes the budget infrastructure connectivity projects. It is therefore necessary to forge a closer partnership between the public and private sectors, especially in infrastructure development and connectivity.  Decentralization, delegating more authority to local governments, can facilitate public-private partnerships and stimulate national public administrative reform. Cambodia’s Ministry of Economy and Finance crafted a policy paper on public-private partnership for public investment project management, 2016-2020, which aims to “create an enabling environment for promoting the participation of the private sector and financial institutions in public investments.”

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Phnom Penh, Cambodia

To enhance Cambodia’s competitiveness, and thereby to improve the depth and quality of its participation in regional economic integration, Prime Minister Hun Sen said at the GMS Business Summit in Hanoi in March 2018 that it was necessary to strengthen efforts in regional economic integration and connectivity through prioritized areas of finance, economy, e-commerce and cross-border trade.

The seize the opportunities arising from fourth industrial revolution and digital integration in ASEAN the Cambodian government is focusing on four pillars.  According to a speech by Prime Minister Hun Sen at the 2018 Cambodia Outlook Conference in Phnom Penh, these are:

(1) Developing a skilled workforce by emphasizing education in science, technology, engineering, and mathematics (STEM) and technical and vocational training, supporting linkages between education and enterprises, and creating a national accreditation system.

(2) Promoting a research and development network, a high-quality physical infrastructure, and a public-private partnership mechanism to support the establishment of research and development, the facilitation of information sharing and technology transfer, and the penetration of foreign markets.

(3) Further strengthening institutional, policy and regulatory frameworks by bolstering the implementation of intellectual property law, related regulations, and other regulatory frameworks in order to encourage and support entrepreneurs and scientists to innovate and sell their technology products and services.

(4) Inspiring public participation in the science and technology sector, promoting public awareness of the importance of STEM, and nurturing the talents of its population.

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Young and Better Educated Cambodians

As a small and open economy, Cambodia has taken a proactive approach in promoting regional integration based on the principle of win-win cooperation.  The government has taken measures to diversify the sources of growth by investing in knowledge-based economy and strengthen public-private partnerships. However, the lack of institutional capacity at both national and local levels remains a key constraint.

Foreign Affairs: Time for East Asia


July 9, 2018

Time for East Asia

By Bunn Nagara@www,thestar.com.my

READ : https://asia.nikkei.com/Spotlight/The-Future-of-Asia-2018/Mahathir-revives-Look-East-policy-to-join-ranks-of-economic-giants

AS an indication of how out of touch some international pundits of Asia are, they still call North-East Asia (China, Japan and Korea) “East Asia.”

East Asia as a region comprises the sub-regions of North-East Asia and South-East Asia, the latter being the countries of ASEAN and Timor-Leste.

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The ASEAN region developed steadily with peace and prosperity as its watchwords. It became known as a region consistently posting some of the highest growth rates in the world.

Yet ASEAN and its member countries were severely constrained by a lack of economic weight and global reach.

ASEAN’s diplomatic clout is fine, but South-East Asia as a region falls short of economic heft in a rapidly globalising world. Nonetheless, the forces of globalisation themselves would take care of that with growing economic integration within East Asia.

North-East Asia included two of the world’s three largest economies, so as a region it had no problems of limited reach or heft. Despite global constraints, China on the whole continued to grow.

As the economies of North-East Asia and South-East Asia grew more integrated, growth in East Asia as a whole would soon reach an altogether different plane.

Studies generally find intra-regional trade surpassing foreign direct investment (FDI). A 2009 study found that tariff reductions as well as closer monetary cooperation among East Asian countries made sense.

A report by the Asian Development Bank Institute last year acknowledged the impressive growth of East Asia’s intra-regional trade ratio over the past 55 years.

It noted how trade had become “more functionally linked to international production networks and supply chains” as well as FDI in the region. This is indicative of East Asia’s deepening regionalisation. Typically, after Japan’s export of capital to South-East Asia in the 1970s and 1980s, China took up the slack as Japan’s economy leveled off from the early 1990s.

In 1990, ISIS Malaysia and Prime Minister Tun (then Datuk Seri) Dr. Mahathir Mohamad worked on a proposal for an East Asia Economic Grouping (EAEG). It was time for East Asia to come into its own.

When Chinese Premier Li Peng visited Kuala Lumpur in December 1990, Dr Mahathir proposed the EAEG to him. Li Peng accepted and supported it.

The idea had not been discussed within ASEAN before. Indonesia, the biggest country and economy regarding itself the region’s “big brother,” felt miffed that it had not been consulted about the plan.

Singapore’s position, traditionally more aligned to a US that was not “included” in the East Asia proposal, was slightly more nuanced. Lee Kuan Yew, upon becoming Senior Minister just the month before – and on the cusp of the Cold War’s demise – still preferred an economic universe defined by the West.

At the time this was the European community and the Uruguay Round as an outgrowth of the General Agreement on Tariffs and Trade (GATT).

It was still three years before the European Union (EU), and four years before the North American Free Trade Agreement (NAFTA).

Generally the world was still beholden to Western economic paradigms and game plans. The EAEG was thus seen as the work of some upstart Asians, in turns brash and occasionally recalcitrant.

Most of the six ASEAN countries, like South Korea, accepted the EAEG even as they tried to learn more about it. But it was still at best tentative.

The EAEG’s critics, however, proved more vocal. US President G.H.W Bush and Secretary of State James Baker wanted to crash the regional party by becoming a member also, or else would see the idea crash.

The Uruguay Round was then seen to be quite rudderless, and APEC, itself formed just one year before, appeared fumbling in the doldrums.

The EAEG, misperceived as an “alternative”, would be thinking and acting outside the box. An energised Asia owing nothing to Western patronage was far too much for an Occidental-conceived world order to contemplate, much less accept.

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Prime Minister Hun Sen and China’s President Xi Jinping

Malaysia tried to soothe anxieties about the EAEG by emphasising its soft regionalism. It was to be only “a loose, consultative” grouping and no more.

Why should a booming, rapidly integrating East Asia be deprived of a regional economic identity, when Europe and North America could develop their own?

Unfortunately the EAEG’s public relations campaign proved too little too late. The idea, albeit now conceived as an ASEAN project, lacked traction and ground to a halt.

Singapore saw its merits and tried a different tack. Prime Minister Goh Chok Tong proposed an East Asia Economic Caucus (EAEC) within APEC, allaying fears of an insecure US that this would remain within the ambit of a US-dominated APEC.

Several political speeches and conference papers later, the EAEC idea also failed to germinate. A Bill Clinton Presidency was lukewarm-to-cool to the idea, still without the encouragement Japan needed for a nod.

A flourishing East Asia would be left without a regional organisation of its own, again.

In 1997 the devastating Asian economic and financial crisis struck, hitting South Korea, Thailand and Indonesia particularly badly. If the EAEG had been in place by then, greater regional cooperation and coordination would have helped cushion the shocks.

Suddenly, South Korea took the initiative to push East Asia into forming a regional identity: ASEAN Plus Three (APT). This grouping would consist of the same EAEG countries.

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Indo- Pacific Partnership –An Alternative to China’s One Belt One Road Initiative (BRI)

Japan this time was more accommodating, and the APT was born.

For decades, “the West” led by the US was identified with open markets and free trade. But now a Trump Presidency deemed protectionist, even isolationist, is hauling up the drawbridge and raising the barricades with tariffs and other restrictive measures.

These are aimed at allies and rivals alike, whether in Europe or Asia. Equivalent countermeasures have been launched, and the trade-restraining spiral winds on.

China, by now identified globally as a champion of open markets and free trade, has called on Europe to form a common front. Strategic competitors are making for strange trade bedfellows and vice-versa.

Dr Mahathir was on his annual visit to Tokyo last month for the Nikkei International Conference on the Future of Asia. He duly revisited the idea of an East Asian economic identity and community.

For emphasis, he added that he preferred this to a revised Trans-Pacific Partnership that the US has now rejected. How would an EAEG now play in today’s Japan and East Asia? More to the point, how would it play in Washington? The answer may still determine its prospects in Tokyo and East Asia as a whole.

It is possible that the US has become too tied to the idea of battling trade skirmishes, if not outright trade wars, with any presumed adversary to have time to frown on an EAEG.

Dr Mahathir has noted how this is the time for such a regional grouping, since we still need it and particularly when the US is helping to justify it. It is also conceivable that Japan today is more open to the EAEG, just like with the APT post-1997.

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America First Fallacy– In fact it is US retreat from global engagement

 

The more the rhetoric of a US-China trade war rages, the more likely East Asia can finally develop a regional economic identity of its own.

Even a US-EU trade conflict will do. East Asia should not be too choosy about its benefactors.

Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia.

Bunn Nagara

ASEAN Car, National Car and What else–Let’s Get Real, not Sentimental


June 29, 2018

ASEAN Car, National Car and What else–Let’s Get Real, not Sentimental

by Bunn Nagara@www,thestar.com.my

The international marketplace can be an unforgiving arena, if the hard economic realities of global markets are replaced by sentimentality or nostalgia. 

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A “national car” in Vietnam or Malaysia tends to miss the wood for the trees. Larger regional realities determine the local prospects, not the other way round. All goods and services are subjected to tough market realities.–Bunn Nagara

THERE is a pattern and a rhythm in global markets that, when acknowledged and heeded, can yield profits – but when denied or confronted may lead to loss and pain.

Asia’s two largest economies, China and Japan, are set to face off in South-East Asia in at least one sector: automobiles.

The signs of this looming challenge are becoming observable, as the portents of the rivalry settle steadily into place. A “national car” in Vietnam or Malaysia tends to miss the wood for the trees. Larger regional realities determine the local prospects, not the other way round. All goods and services are subjected to tough market realities. A temporary reprieve may come only with costly subsidies or tariffs which then render items uncompetitive over the longer term.

Among the realities of the global auto market are, first, that the motorcar is the single most costly consumer item commonly sold across borders. Second, of all the global consumer items traded daily, the car is probably the least nationally oriented. Parts come from all over the world, plants are established abroad for cost and other reasons, and companies from abroad buy proud “national” firms producing even the most prestigious brands.

Britain’s Jaguar Land Rover was bought by America’s Ford, and then by India’s Tata. Britain’s most prestigious marques, Rolls Royce and Bentley, were bought by Germany’s Volkswagen which also bought Italy’s supercar Lamborghini and France’s pride Bugatti, besides Spain’s Seat and Czechoslovakia’s Skoda.

Lamborghini was previously taken over by the Swiss (Mimrans), then the Americans (Chrysler), and then Indonesians (V’Power) and Malaysians (MyCom).

China’s Geely bought Sweden’s Volvo, the London Taxi Company, Germany’s prestigious Daimler (Mercedes) Benz, the US “flying car” company Terrafugia – and Malaysia’s Proton and Lotus.

Proton had earlier acquired Britain’s iconic sports car company, Lotus. Ownership “promiscuity” in the auto industry across borders is spread all round.

Some of these acquisitions may not be 100% but they are still substantial. Geely, for example, owns 49.9% of Proton and 9.69% of Benz, both being the single largest stake in these companies. Among the earliest across borders was General Motors’ acquisition of Germany’s Opel in 1929, after which Opel models were still sold in the UK as “British” Vauxhall. Last year Opel was acquired by France’s Groupe PSA which incorporates Peugeot and Citroen.

The pace and number of cross-border auto acquisitions continue to grow, along with the scale. It is a game for the super cash-rich, making independent national operations unviable while squeezing the prospects of new startups. In ASEAN countries today, mega competition on Level Two between Japanese and Chinese auto firms is shaping up. Even Korean companies are only looking in to see if there is a possible opening.

Sales of individual cars to consumers on Level One continue for all marques, but sales of whole auto companies (Level Two) are the new name of the game. Apart from direct competition between Japanese and Chinese corporations, competition is growing between their locally named subsidiaries – and between rival compatriot firms. The result may see South-East Asian auto companies functioning largely as proxies of parent Chinese and Japanese firms.

SAIC Motor, China’s biggest auto firm which also assembles US and European brands, wants Thailand as the regional production hub for export to other countries. Japanese companies had set that example in this region and are still trying to keep the “flag flying.” Toyota has raised its stake in the Philippines, as has Mitsubishi, with increased investments in factories for larger output. However, higher levels of local technical input are still limited at best.

The international auto acquisitions market has also involved prestigious car design firms. Vietnam’s first car company Vinfast proudly announced engaging Italy’s Pininfarina, which designed Ferrari and Maserati models – and which was bought earlier (76%) by India’s Mahindra.

Developing countries may be smitten by the “national car” bug, while developed countries are more interested in producing sophisticated high-value systems that can be incorporated into all cars: among them, AI for self-driving cars. These high-end components are the real value-added skills in auto production today, rather than basic parts assembly so commonly found in Third World car factories.

Ultimately, the issue is the degree of local content along with the technical input rather than a hidebound obsession with a “national” car. Production and ownership promiscuity across borders means that cars no longer have distinct nationalities.

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Thailand produces some two million cars a year, more than half for export, about as many produced as all the other ASEAN countries combined. It has no national car project since it manufactures only automotive components and assembles cars from other countries. Nonetheless its automobile sector is widely regarded as economically successful, employing more than half a million people and accounting for 10-15% of GDP. Most of the world’s auto parts and automobile manufacturers operate in the country.

A lack of high-end technical inputs for greater value-added has however been limiting to growth. Lately the auto sector pledged to scale up the technical ladder, with attractive government-supported incentives for environmentally clean designs.

Indonesia has ambitious plans for boosting its auto sector, encouraged by rising local demand since 2012 but still hampered by limited exports. It therefore risks mistaking local demand for overseas demand, which has been only 20% of Thailand’s.

Within ASEAN, Indonesia is the biggest country with the biggest population and economy, but its auto sector has not been competitive internationally. Government support through protectionism is no answer. Now the Indonesian auto sector may be facing another challenge – competition from elsewhere in ASEAN such as Vietnam. Its structural inefficiencies remain a persistent problem.

A study by Prof Sadayuki Takii found that the problems include weak or minimal local content and government protection contributing to a lack of competitiveness. The same conditions may be found in other ASEAN countries.

Another reality in the global auto market is how successful companies come from countries with a sizeable domestic market providing healthy competition nationally. Through the years, market discipline made these companies competitive internationally and fit to compete against companies in other countries. Protectionism however works in the opposite direction.

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Indonesian President Joko Widodo has been toying with the idea of an “ASEAN car,” which would bring together engineering skills across this region to produce a competitive world-class item. This desire still exceeds the capacity or the prospect, unfortunately.

Countries in ASEAN still need to get over the lack of substantive technology transfer if they are to acquire the real skills that make the auto sector competitive. Increasing investments by Japanese and Chinese firms at largely parts assembly level are contributing to the problem. But who can say no to immediate investments offering more jobs?

Beyond technology transfers, local players also need to become innovative on their own. That has yet to happen. Another problem to resolve is the growing competition between ASEAN countries. The competing concepts of “regional car” and “national car” are in a zero-sum game.

The Philippines also wants to be the regional auto manufacturing hub within a decade. This national-centric approach, typical of the region, retards regional integration and prospects for the ASEAN Economic Community.

The more likely prospect is to become local outposts for larger Chinese or Japanese firms.

Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia.

Bunn Nagara

Bunn Nagara

 

The 32nd ASEAN Summit’s Economic Priorities and Implications for US-ASEAN Economic Relations


May 3, 2018

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Number 422 | May 2, 2018
ANALYSIS

The 32nd ASEAN Summit’s Economic Priorities and Implications for US-ASEAN Economic Relations

By Kaewkamol Karen Pitakdumrongkit

The Summit’s Economic Priorities for ASEAN

The leaders of the ten member countries of the Association of the Southeast Asian Nations (ASEAN) gathered at the 32nd ASEAN Summit in Singapore from April 25 – 28, 2018 under the theme of “Building a Resilient and Innovative ASEAN.” Among the economic cooperation priorities agreed to were the continued advancement of the ASEAN Economic Community (AEC), pursuit of the Regional Comprehensive Economic Partnership (RCEP), and establishment of an ASEAN Smart Cities Network (ASCN).

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These agreed outcomes are steps in the right direction concerning regional integration. Although AEC – aimed at transforming the region into a single market and production base – was officially established in December 2015, more work is needed in areas such as trade facilitation and services liberalization. Another outcome was continued pursuit of RCEP, a trade mega-deal among ASEAN and its six dialogue partners (i.e. Australia, China, India, Japan, New Zealand, and South Korea) proposed to consolidate the existing ASEAN+1 free trade agreements (FTAs) to tackle a “noodle bowl” problem. If successfully concluded, it will encompass 45 percent of the world’s population and one-third of the world’s GDP.

Proposed by the Singapore Chair, ASCN is an initiative to foster smart and sustainable urban development. Recognizing that digital technologies have weaved their way into the economy and people’s lives, this program is aimed at leveraging technology to improve quality of life in increasingly urbanized Southeast Asia. The ASCN will cut across several sectors (e.g. transport, environment, and healthcare) and can in the future be applied beyond the 26 pilot cities. The initiative also holds the potential to improve life even in remote areas, for example, smart sensors installed in households send consumption data to the power distribution centers, enabling the latter to better distribute electricity and avoid power shortages. ASCN can help accomplish the AEC 2025’s goal of “A Resilient, Inclusive, People-Oriented, and People-Centered ASEAN.”

Beyond living standard improvements, ASCN can enable businesses to better participate in transnational production networks, helping to achieve another AEC 2025 objective of “A Competitive, Innovative, and Dynamic ASEAN.” For example, Singapore’s Intelligent Transport System feeds in real time traffic data to alert commuters of accidents on major roads. Although the immediate beneficiaries are drivers and motorists in the city-state, the system facilitates trade. The data enable truck drivers to avoid congested routes or accidents and deliver cargo to the ports on time, increasing businesses’ participation in the global supply chains.

The Future of US-ASEAN Economic Relations

The economic priorities agreed to at the 32nd ASEAN summit can be seen as parts of the regional states’ efforts to enhance their economic cooperation in the “America First” era. The fact that the US’ Indo-Asia-Pacific Strategy has not been clearly articulated elevates the importance of regional integration as the nations turn to rely more on the combined size of regional economies as a means for further liberalization.

However, it is wrong to think that Southeast Asia’s economic integration will leave little room for the United States to participate. The development of its regional economic architectures has been based on the principle of “Open Regionalism” which embraces an open system and regards regional arrangements as building blocks for wider economic integration. According to the ASEAN Leaders’ Vision for A Resilient and Innovative ASEAN adopted at this Summit, “ASEAN shall keep our markets open and competitive, deepen economic integration . . .[and] forge high quality and mutually beneficial economic agreements with external partners. . . to strengthen resilience against rising protectionism and global volatilities.” Such commitment has been reflected by RCEP, other FTAs and Comprehensive Economic Partnerships (CEPs) among individual ASEAN members and their extra-regional partners, and the engagement of non-ASEAN countries in several programs such as the Master Plan for ASEAN Connectivity 2025.

“It is wrong to think that Southeast Asia’s economic integration will leave little room for the United States to participate.”

As the door will not be closed for Washington, American policymakers have to think how to further engage their fourth-largest trading partner to reap the benefits of the latter’s combined GDP of more than $2.4 trillion and market of 632 million people. There exist several ways to do so. First, the United States can participate in the ASEAN Smart Cities scheme as more than half of the ASEAN population do not have access to basic Internet services. With their comparative advantage in digital technology, U.S. policymakers should encourage American firms to build such infrastructure. Also, cooperation under the US-ASEAN Connect Initiative created in 2016 should be further enhanced. Moreover, Washington should rely more on American research institutions to provide inputs helpful for its decision-making process. Furthermore, regular Track 1.5/2.0 dialogues between American and ASEAN academic and think tank communities should be developed and enhanced. These platforms can be used to discuss issues too sensitive to be raised at the Track I (government-to-government) level. This would enable both Washington and Southeast Asian countries to test ideas and explore optimal solutions before forwarding them for consideration in the inter-government talks.

Southeast Asia’s transnational supply chains have been deepening and regional efforts at economic integration have been increased as reflected in the announcements of the 32nd ASEAN Summit. There is still room to expand US-ASEAN trade and investment as well as other forms of commercial interaction. Washington should speed up its effort to roll out programs enhancing such economic ties. Doing so could help the United States reap more benefits from the world’s most dynamic economic region.

About the Author

Kaewkamol Karen Pitakdumrongkit is an Asia Studies Visiting Fellow at the East-West Center in Washington DC. She is also Deputy Head & Assistant Professor at the Centre for Multilateralism Studies, at the S. Rajaratnam School of International Studies (RSIS) of Nanyang Technological University, Singapore. She can be contacted at PitakduK@EastWestCenter.org.

The East-West Center promotes better relations and understanding among the people and nations of the United States, Asia, and the Pacific through cooperative study, research, and dialogue.

Established by the US Congress in 1960, the Center serves as a resource for information and analysis on critical issues of common concern, bringing people together to exchange views, build expertise, and develop policy options.

The Asia Pacific Bulletin (APB) series is produced by the East-West Center in Washington.

APB Series Editor: Dr. Satu Limaye, Director, East-West Center in Washington
APB Series Coordinator: Peter Valente, East-West Center in Washington

The views expressed in this publication are those of the authors and do not necessarily reflect the policy or position of the East-West Center or any organization with which the author is affiliated.

Taking a Break from April 13-18, 2018


April 12, 2018

Taking a break from blogging

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I am taking a break from April 13-18. I shall be away from Phnom Penh to see the beautiful countryside and meet the folks who are the backbone of the Cambodian economy.

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I wish my Cambodian readers, friends and associates  a Happy and Peaceful Chhol Chhenam Khmer which falls on April 14, 2018.  –Din Merican

Southeast Asia’s middle classes and the spectre of authoritarianism


April 12, 2018

Southeast Asia’s middle classes and the spectre of authoritarianism

A survey by Hakuhodo Institute of Life and Living in ASEAN (HILL ASEAN) found that the middle class has been expanding rapidly in  ASEAN countries, including Singapore, Malaysia, Thailand, Indonesia, Cambodia, Laos and Vietnam.

In 1848, Karl Marx opened his manifesto with an eloquent sentence: “A spectre is haunting Europe—the spectre of communism.” One hundred and seventy years later, Laos,Cambodia, and Vietnam are among the fastest growing economies of twenty-first century capitalism and the Chinese Communist Party plans to abandon the post-Mao doctrine of putting its assembly above any individual leader. Communism, which once materialised so prominently in East Asia, is little more than a faded ghost, haunting no one. Yet another spectre has taken its place in Asia—the spectre of authoritarianism.

Whether in terms of China’s attempts to establish a life-long chairmanship, Philippine’s systematic dismissal of habeas corpus or—as my work Owners of the Map analyses—Thailand’s new forms of constitutional dictatorship, a new wind of authoritarianism is blowing over East Asia. Contrary to existing theories of the “end of history” or of “democratic transition” this wind does not waft against the wish of the middle classes, but rather with their support, and it is not a temporary breeze, destined to died out, but rather a stable wind, one that carries forward an alternative system of governance.

Much has been written on this trend as the result of geo-political, military, and economic push and pull between the patronage of the United States and that of China. These explanations, while important, miss a central element evident to anyone who spends time with office managers, business executives, and traditional elites in Thailand: the growing popularity of authoritarian ideology among local middle class, a popularity that finds its roots in the shifting local meaning of words like corruption, good governance, and rule of law.

During the last decade, the understanding of corruption among Thai middle classes underwent a radical transformation. Corruption today does no longer refer to someone misusing public office for private gain. The word’s semantic universe has expanded to include three major components. Firstly, a traditional understanding of corruption as taking advantage of your position to steal money or gain. Secondly, an idea of moral corruption, related to the intrinsic immoral nature of one’s personality. And, thirdly, a vision of electoral corruption that reframes any redistributive policy favouring the working masses as a form of vote-buying. Under these new meanings, elections themselves become a corrupt practice, one that favours populist leaders who, through policies, gain popular support without necessarily producing “good governance.”

The discourse of good governance itself has become central to Thai middle classes’ ideological flirtations with authoritarianism. This mantra entered the country after the 1997 economic crisis, pushed by the IMF and the World Bank. These institutions understood the concept as a technocratic category, one that mostly meant efficient and transparent governance. In Thailand, however, the concept was translated by conservative political ideologues as thammarat, the governance of Dhamma, transforming good governance into righteous governance, a governance that does not rely on electoral support but rather on alignment with the monarch, the thammaraja.

While these semantic shifts in ideological categories may take local forms, they do not occur in an international vacuum. Previous authoritarian phases in Thailand—particularly the period between 1945 and 1992—had been supported, both economically and ideologically, by the United States and its anti-communist rhetoric. Since the 2014 coup, the junta has been looking to China for similar patronage.

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Cambodia is experiencing a rising middle class which has fueled a boom in smart phone access, now the primary access point for the internet.Young Cambodians today are speaking English fluently. Photo/Ian Taylor

The alignment between the two governments has not just been the result of real politic and shifting international alliances but also rooted in parallel claims about the rule of law and corruption. In 2002, the 16th Chinese Communist Party Congress endorsed a new rhetoric of legalism, as a more efficient system to deal with equal and fair participation. Political scientist Pan Wei, in a famous article that took the shape of a political manifesto for legalism stated that “rule of law directly answers the most urgent need of Chinese society—curbing corruption in times of market economy. Electoral competition for government offices is not an effective way of curbing corruption; it could well lead to the concentration of power in the hands of elected leaders.”

The middle class president

Jokowi’s developmentalist democracy goes beyond a simplistic personal attribute or set of beliefs: it is inherent to his class status.

 

 

 

 

 

While not as sophisticated as Professor Pan, and not with the same ability to govern as the Chinese Communist Party, the system emerging in Thailand since the 2014 coup looks quite similar: a legalistic system in which non-elected officers create and enforce the law, above and beyond the electoral will of their population. The Thai transition from a polity in which people make the rules through elected parliamentarians to one in which the rules are imposed from above for the people and parliament to follow, has been legitimised on a basic principle: the superiority of unelected “good people” over elected politicians in preventing corruption and establishing good governance.

It would be easy to dismiss these changes has temporary push backs. Yet, my work argues, something deeper is changing around Southeast Asia, something that we will not see or understand unless we stop working under preset theories of democratic transition and we engage ethnographically with the shifting landscapes of class alliances, everyday ideologies, and forms of governance. These transformations, in fact, are particularly resistant to quantitative analysis and questionnaires. Often they do not imply the emergence of new terminologies or ideological concepts but rather the re-signification of words like corruption, good governance or rule of law. It is only when we spend long stretch of time with people and participates to their lives that these new meanings emerge.

The risk of failing to see these transformations is a familiar one to people in the US: becoming aware of the emergence of a new political and social order when it is too late to do anything about it.

This post first appeared at the University of California Press blog.