ASEAN at 50: Challenges and Opportunities for Cambodia


April 18, 2017

ASEAN at 50: Challenges and Opportunities for Cambodia

by Kimkong Heng

http://ippreview.com/index.php/Blog/single/id/406.html

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In August 2017, ASEAN (the Association of Southeast Asian Nations) will be 50 years old. ASEAN was established on August 8, 1967 in Bangkok by the five founding member countries, namely Indonesia, Malaysia, the Philippines, Singapore, and Thailand. The major aims for the birth of ASEAN were to encourage economic cooperation, promote regional peace and stability, and create platforms for mutual assistance and collaboration in economic, social, cultural, technical, educational and administrative areas. The concepts of non-interference in one another’s internal affairs, and the peaceful settlement of interstate disputes are, among others, the fundamental principles to which ASEAN tries to adhere.

Throughout these 50 years, ASEAN has both faced challenges and at the same time enjoyed prosperity as it weathered many storms in its own region, the larger Asia-Pacific region, and the global arena. Cambodia, which will celebrate her eighteen years in ASEAN late this April, has had to confront the challenges and seize the available opportunities this regional group has had to offer. To informally commemorate the 50th anniversary of ASEAN and to toast Cambodia’s 18th birthday in ASEAN, this article will examine the potential challenges and opportunities Cambodia, a small state and the youngest ASEAN member, has experienced and will likely experience in the immediate and distant future.

Fifteen years ago, a Cambodian scholar predicted that Cambodia would face three categories of challenges while it was trying to secure its place in the regional association. In the short-term, during its preparation for ASEAN membership, Cambodia would face many obstacles including its lack of human and financial resources, poor legal framework, and weak institutional organization. In the medium- to long-term, Cambodia would have to address economic, diplomatic, and financial challenges, as well as tackle challenges related to national prestige, borders, sovereignty, legal and institutional framework reform, and lack of strategic thinking.

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Cambodia at Sunrise–Calm, Serene and Captivating

Over a decade later, many ASEAN observers and commentators also saw challenges which lay ahead for Cambodia as she prepared to join the ASEAN Economic Community (AEC). Sowath Rana and Alexandre Ardichvili, for example, listed six main human resource development (HRD) challenges Cambodia would face as it joined the AEC in 2015, including the education and employment mismatch, higher education challenges, technical and vocational education and training challenges, HRD challenges in the private sector, limited awareness and engagement in ASEAN and AEC processes, and technology infrastructure challenges.

Amongst all the challenges, however, this article argues that the strategic challenge — mediating ASEAN and China over the South China Sea issue — is Cambodia’s greatest challenge at present. Cambodia has been criticised twice for her decision to ally herself with China and block ASEAN from issuing joint communiqués which criticize China for her assertiveness and expansionist policy in the South China Sea. With the South China Sea dispute still on the horizon, Cambodia is likely to face this strategic challenge again because this small state cannot afford to lose China for ASEAN or vice versa.

Cambodia has taken advantage of her ASEAN membership to salvage her once non-existent relations with ASEAN member states and ASEAN Dialogue Partners.

Although Cambodia is not one of the claimant states involved in the South China Sea conflict, her membership in ASEAN puts her in a difficult position to help settle the disagreement between her ASEAN counterparts and her closet ally, China. Thus, it is a big challenge for Cambodia to strike a good balance in her endeavors to help mediate between the conflicting parties. As China is described and seen as Cambodia’s most trustworthy friend and largest provider of aid, loans, and grants, the possibility of seeing Cambodia jump on China’s bandwagon could not be higher.

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GDP Real Growth in Excess of 7.5 per cent p.a over the last 2 decades

Furthermore, to expect Cambodia to act against her own national interests in order to preserve ASEAN’s centrality is highly unlikely to happen, even though ASEAN remains the cornerstone of Cambodia’s foreign policy. In this regard, the next chapter of Cambodia’s foreign policy will definitely play out in favor of China despite peer pressure from the ASEAN states.

Opportunities for Cambodia

Despite these many challenges, there are enormous opportunities for Cambodia as an ASEAN member. From economic to social advantages, and from diplomatic to strategic benefits, Cambodia has enjoyed and will continue to enjoy tremendous opportunities as the country strives to keep up with its more developed ASEAN friends and exert its influence on the region.

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Angkor Wat in Siem Reap–Steadfast, Dependable and True Symbol of an Emerging Cambodia

Economically, Cambodia has greatly benefited from ASEAN as it joined the ASEAN Free Trade Area in 1999 and the World Trade Organization in 2004. It has also attracted foreign direct investment from ASEAN member states, particularly Thailand and Vietnam. While Thailand and Cambodia have agreed to strengthen cooperation in bilateral trade and investment, the two-way trade volume between Vietnam and Cambodia, according to Khmer Times, reached USD 3.37 billion in 2015 and USD 2.38 billion in 2016. These figures, however, were below the 2015 target of USD 5 billion both countries have pledged.

In terms of social prospects, Cambodia’s ASEAN membership has helped to increase opportunities for Cambodians through the mobility scheme for skilled labor, improved access to cheaper and a wider range of imported goods and services, and improved education and health services in the Kingdom. More importantly, by joining the ASEAN and later the AEC, people-to-people connectivity between Cambodia and the other ASEAN members has increased.

As for the diplomatic gains, Cambodia has taken advantage of her ASEAN membership to salvage her once non-existent relations with ASEAN member states and ASEAN Dialogue Partners, particularly Australia, China, Japan, and the United States. Until more recently, Cambodia’s foreign policy has significantly been strengthened and Cambodia has put in a great deal of effort to upgrade its diplomatic relations with its nearest neighbors, ASEAN members, and regional and global powers.

Noticeably, Cambodia-Russia bilateral relations have recently been restored and strengthened, with exchanges of high-level visits and greater mutual support and cooperation between the two countries. Likewise, Cambodia-China bilateral relations have reached a new historic high, with Xi Jinping’s first presidential visit to Cambodia last year, immediately following Cambodia’s refusal to partake in an ASEAN joint communiqué critical of China’s claims and policies in the disputed territory in the South China Sea.

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Phnom Penh –The Pulse of The Kingdom of Cambodia

Strategically, Cambodia’s geopolitical location and ASEAN status, together with current political developments in the region, have granted this small state a special privilege to assert its influence and exercise its power in the regional group and the wider Asia-Pacific region. If Cambodia were not an ASEAN member, she would have found it hard to capture Chinese attention and enjoy China’s financial aid — with its controversial no-strings-attached policy — arising from Cambodia’s intervention in the territorial dispute over the South China Sea.

Thus, in spite of the great challenges, Cambodia seems to be able to grasp considerable opportunities along its zigzag ASEAN path. In this respect, it might not be wise to weigh the challenges against the opportunities for Cambodia because it has been a mixed blessing for the country. It would be best, nevertheless, for Cambodia to continue to engage with countries in the region and regional initiatives like the Greater Mekong Subregion and ASEAN, or else it will run the risk of becoming too dependent on China.

Kimkong Heng is an Assistant Dean, School of Graduate Studies and a doctoral candidate in International Relations, Techo Sen School of Government and International Relations, The University of Cambodia, Phnom Penh, Cambodia.

ADB Identifies the Keys to Economic Progress


April 9, 2017

ADB Identifies the Keys to Economic Progress

by Philip Bowing

http://www.asiasentinel.com/econ-business/adb-identifies-keys-economic-progress/

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Get your investment priorities right. That is the message which emerges from a detailed study by the Asian Development Bank of the ways for countries to transform themselves from low to lower-middle, upper middle and finally high income. Those priorities change over time but none in itself is self-sufficient.

The good news is that most of Asia has already moved out of the low-income bracket – much though that may surprise hundreds of millions in India, Bangladesh and Pakistan for example. The main reason is that the ADB, like other such institutions, using a fixed Purchasing Power Parity measure of income which is absolute, not relative. Thus we are told that the Netherlands reached lower-middle income status in 1829 while Argentina get there in the late 19th century.

Yet at the time those were among the top two or three most prosperous societies in the world. So it is a measure of Asian progress that almost all countries are now at least at the level of the richest 150 years ago. But it may be scant comfort to Mumbai slum dwellers or Bangladeshi farmers to know that they have now reached the income levels of Argentinians more than a century ago.

Categorization is also at times problematic. Thus by some measures Malaysia, Kazakhstan and Turkmenistan are high-income (manly thanks to oil and gas) but are treated as Middle Income by the World Bank.

So what are the most important factors that lead countries up through the income rungs, absolute and relative? For those in the low- and lower-middle brackets, by far the most crucial issue is standard of education. Thus of major Asian countries today, India has most to gain from raising the number of school years. Raising educational scores (as judged by maths and science tests) could double Indian income levels over 30 years.  Philippines and Thailand would also benefit exceptionally from raising their educational sights.

However, for those with already high levels of education such as Kazakhstan, they need to find other avenues to progress further.

For the lower income countries, human capital is first priority, but it also needs to be accompanied by physical capital – the roads, transport and communications systems needed to spur output and trade. These physical investments become even more important as countries climb the middle-income ranks, as China has shown with infrastructure and housing spending making possible a boom in car and consumer durables production and bringing outlying areas to play a larger role in the national economy.

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Phnom Penh, 2017

In recent years, Cambodia has moved closer to lower-middle-income status through resounding economic growth. This has been driven by solid performances in garment manufacture, tourism, paddy and milled rice, and construction.–Asian Development Bank

Clearly, the inference from the ADB is that in Southeast Asia the Philippines and Indonesia stand out as in need of both human and physical capital investment to speed income gains while Thailand needs to focus on education. Bizarrely, however, as noted elsewhere in the ADB report, much of the region, including the Philippines, Cambodia, and Thailand, (but not India and Indonesia) exports capital even though returns to domestic investment should be higher. The problem seems to lie in the longer term nature of investment in human capital and infrastructure.

For those already at the top of the middle-income range and moving into the high bracket, the biggest gains need to come not from a greater quantity of investment but in raising Total Factor Productivity – the output per unit of invested capital. The conclusion here is very clear. Those such as South Korea which made the most difficult transition – to the highest level – showed TFP contributing 1.2 percentage points to income growth compared with just 0.4 percent for those stuck in the upper middle range.

The report identified several factors contributing to TFP growth: research and development spending; access to foreign investment bringing new skills and increasing the complexity of production skills; scope for entrepreneurship, and allowing creative destruction of older industries. Infrastructure investment also needed to keep up with technological change. The report noted that income convergence in the European Union had primarily been the result of TFP growth rather than high investment.

China scored highly on R&D. human capital, patent applications and industrial complexity though by implication the size and power of its public sector and aversion to closing factories could hold it back.

For China, as for some other countries such as Korea, Taiwan, Japan and Thailand, rapidly aging populations increase the importance of TFP in maintaining growth in the face of static or declining work forces. Meanwhile the country in Asia nearest to high income seems unlikely to make that jump while entrepreneurship, competition and access to capital are hobbled by race-based politics and commercial structures.

From Economic Analysis to Inclusive Growth


January 23, 2017

From Economic Analysis to Inclusive Growth

by Kemal Dervis

Most economies are seeking a recipe for inclusive economic growth, whereby high rates of investment, rapid innovation, and strong GDP gains are pursued alongside measures to reduce income inequality. Conservatives insist that growth requires low taxes and incentives such as flexible labor markets to encourage entrepreneurship. But reducing inequality requires higher levels of government spending and taxation (except when government is pursuing deficit spending to stimulate a depressed economy).

Related imageFree Education for All–Investment for an Educated Citizenry

The Scandinavian economic model is often invoked to bridge this gap. The Danish “flexicurity” system, in particular, has historically delivered solid economic performance alongside low inequality. Leading economists such as Philippe Aghion have published excellent analyses of how this model could balance growth, equality, and overall satisfaction of citizens elsewhere in the world.

These economists argue that labor markets with few restrictions on hiring and firing, low taxes on entrepreneurship, and generous incentives for innovation are compatible with a relatively equal income distribution, high social spending by government, and equalizing social policies such as universal free education.

This model has sustained an ongoing debate in Europe, one that is now relevant in the United States, because Donald Trump’s new administration has promised to help globalization’s “losers” while improving innovation and growth. But in the US, it is far more difficult, politically, to argue for generous public spending on education, health care, and financial security for retirees, because doing so always raises the specter of high taxes.

An inclusive growth model would seem to have to square the policy circle. It would have to increase substantially public spending, particularly on education, unemployment benefits and training, and health.

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Inclusive Green Growth?

It is useful to look at the numbers from the oft-cited Danish and Swedish examples. Generally speaking, these countries have excellent economic indicators. Although GDP growth is not higher than in the US, most people share a high standard of living, and surveys show that Scandinavians (particularly Danes) are some of the happiest people in the world. But, as the following chart shows, these countries also have some of the highest government spending- and taxation-to-GDP ratios in the OECD.

spending to taxation ratios

Hypothetically, if the US adopted Denmark’s universal free education policy, but kept its tax-to-GDP ratio unchanged, its fiscal deficit would exceed 6% of GDP. The US has run deficits that high only during World War II and the Great Recession of 2008-2009, when a huge stimulus package was implemented to spur recovery. So, just providing universal free education in the US would run the country’s deficit up to the highest level ever recorded in normal times.

In the context of this comparison, it would seem that the circle cannot be squared without a major macroeconomic shift. Scandinavian countries are smaller and can more efficiently collect revenues and administer public services. But even if the US approached this efficiency – a difficult feat in such a large and diverse country – social solidarity still would demand high effective taxes, as it does in Denmark and Sweden.

Another crucial component of the Scandinavian model is labor-market flexibility. On the OECD “Employment Protection Legislation” index, the US scores a 1.2 on a 0-5 scale, where zero indicates full flexibility. Meanwhile, France and Germany come in at 2.8, Italy at 2.9, and Denmark and Sweden at 2.3 and 2.5, respectively. This shows that, though Scandinavian labor markets are more flexible than elsewhere in continental Europe, the US labor market is far more flexible – and provides less security – than any of them.

Such broad static accounting suggests that we should proceed cautiously in applying lessons from the Scandinavian model to large countries like the US. Then again, to assess a model’s long-term impact on citizens’ welfare, we would need a more dynamic analysis over the course of at least a decade. Only then could we gauge how strongly investment and innovation would respond to incentives, how much free universal education would cost in the medium term, or how demographic structures would affect different social policies.

Economic analysis alone cannot settle the political debate between right and left. What it can do is help to narrow and focus that debate. The key is for participants on both sides to be more explicit about the values and objectives they believe that society should pursue, and to quantify their assumptions about how dynamic performance will respond to particular incentives. Only then can a democracy choose effectively between potential paths.

Good economic analysis can enable “constructive populists” to debate the “post-fact, fanciful populists” who seem to be on the rise, with a realistic alternative discourse – one that is transparent and based on credible expectations of economic policies and outcomes. In other words, economic analysis can facilitate good choices; it cannot make them.

After War, A New Legacy of Peace in Laos


September 8, 2016

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COMMENT: This scourge of war afflicts not only Laos, but also Cambodia and Vietnam. Lives and limbs were lost, dreams destroyed and hardship and trauma endured  as a result of the LBJ -Nixon-Kissinger pursuit of the Vietnam War.

It is indeed appropriate that in the last days of the Obama Presidency  the United States has renewed and intensified its efforts to deal with this horrible legacy of American aggression. In stead of feeling sorry and expressing remorse, America and American business must now partake in the economic development of Cambodia, Laos and Vietnam. –Din Merican

After War, A New Legacy of Peace in Laos

by Channapha Khamvongsa, the Executive Director of Legacies of War

When I was 6 years old, my family fled Laos, a country in Southeast Asia the size of Minnesota. As refugees welcomed by the United States, my parents’ wish for their children was to not look back, but to take every opportunity provided in our new homeland to live a happy, fulfilled life .

It wasn’t until I was an adult, long after we settled in Virginia, that I learned of the painful past my parents had left behind.

During the Vietnam War, the U.S. dropped more than 2 million tons of bombs over Laos — more than the number of bombs dropped on Germany and Japan combined during all of World War II. Sadly, the people in Laos continue to feel the tragic consequences, long after the last bomb fell.

 
White House staff and others listen to President Obama make a statement after touring the Cooperative Orthotic and Prosthetic Enterprise visitor center today in Laos. Cluster bombs hang from ceiling. (Photo by Pete Souza)

Too many of these bombs did not detonate at the time. The war left most of the land contaminated with active, unexploded ordnance (UXO), in the form of cluster bombs, bullets, grenades, and mines.

They’ve taken the lives of over 20,000 Lao — often a child playing outside, or a farmer who has no choice but to cultivate on contaminated fields. As a Lao American, I felt I couldn’t help but do something.

So I devoted the past 12 years of my life to promoting greater awareness of the aftermath of war and to advocating for the resources needed to address its painful legacy.

That’s why I’m so proud to say that this week, President Obama became the first U.S. President to visit Laos, where he discussed his work to address this legacy of war and a new path forward to rebuild our relationship with Laos.

Part of my job is to visit with dozens of families in Laos who have lost a child, father, mother, husband, wife or neighbor to a 40-year-old bomb. Just last week, I met five boys who were recently involved in an accident. Their bodies were covered with fresh wounds and stitches that will leave scars for years to come. Fortunately, they survived, but they might not be so lucky next time.

Every day, teams of clearance technicians go out into the fields to detect and safely clear these bombs. It’s painstaking work. But in a country that depends on agriculture for economic development, it couldn’t be more important.

Under President Obama’s administration, and with our advocacy and support from Congress, funding for UXO clearance and support has more than tripled. And today, the President announced that the U.S. will double its annual funding toward this effort over the next three years.

These critical resources support the teams of clearance workers, as well as additional projects like a national survey to locate unexploded ordnance, support for survivors, and better public awareness on how to avoid these bombs.

The President wrote a note in the guestbook at the Cope Centre in Vientiane, Laos.

When our family left Laos, I never thought I would see my birth country again.

And I never thought that an American President would come to Laos to acknowledge the wounds that we still suffer from a decades-old war while offering resources to build a new legacy of peace. I am grateful for his leadership and so especially proud today to be American and Lao.

Kop chai lai lai — thank you.


Read the transcript of the President’s remarks at the Cooperative Orthotic and Prosthetic Enterprise (COPE) Centre in Vientiane, Laos:

“Good morning, everybody. As you saw, we just had the opportunity to learn more about the very important work that’s being done here at the COPE Center, and about the magnitude of the challenge posed by unexploded ordnance.

For many people, war is something that you read about in books — you learn the names of battles, the dates of conflicts, and you look at maps and images that depict events from long ago. For the United States, one of the wars from our history is the conflict called the Vietnam War. It’s a long and complicated conflict that took the lives of many brave young Americans. But we also know that despite its American name, what we call it, this war was not contained to Vietnam. It included many years of fighting and bombing in Cambodia and here in Laos. But for all those years in the 1960s and ’70s, America’s intervention here in Laos was a secret to the American people, who were separated by vast distances and a Pacific Ocean, and there was no Internet, and information didn’t flow as easily.

For the people of Laos, obviously, this war was no secret. Over the course of roughly a decade, the United States dropped more bombs on Laos than Germany and Japan during World War II. Some 270 million cluster bomblets were dropped on this country. You can see some of these displays showing everything that landed on relatively simple homes like this, and farms and rural areas. By some estimates, more bombs per capita were dropped on Laos than any other country in the world.

For the people of Laos, war was also something that was not contained to a battlefield. In addition to soldiers and supply lines, bombs that fell from the sky killed and injured many civilians, leaving painful absences for so many families.

For the people of Laos, the war did not end when the bombs stopped falling.Eighty million cluster munitions did not explode. They were spread across farmlands, jungles, villages, rivers. So for the last four decades, Laotians have continued to live under the shadow of war. Some 20,000 people have been killed or wounded by this unexploded ordnance, or UXO.

For the people of Laos, then, these are not just statistics. These bomblets have taken the lives of farmers working in the fields, traders gathering scrap metal, children playing outside who thought these small, metal balls could be turned into a toy.

And for the people of Laos, this is also about the ability to make a good living. In communities that rely so much on agriculture, you can’t reach your potential on land that is littered with UXOs. As one farmer said, “We need our land to be cleared of bombs. If it weren’t for the bombs, I would multiply my production.”

We also know that the people of Laos are resilient. We see that determination in members of the clearance teams that we met, men and women who have worked for years — this very young lady says she’s been at it for 20 years — all across this country to find UXO and eliminate them one by one. And I’m glad that we could be joined by them today.

We see the determination in the survivors of UXOs. Some of you heard me talking to Thoummy Silamphan, who joins us here today. When he was just a young child, he was badly wounded by a UXO explosion and lost his left hand. But rather than losing hope, he’s dedicated his life to providing hope for others. Through his organization, the Quality of Life Association, Thoummy has helped survivors get medical care, find work, rebuild their lives with a sense of dignity.

And we see that determination in the many organizations like this one. Here at COPE, you provide assistance to those who have suffered because of UXO while shining a spotlight on the work that still has to be done. And in that effort, I’m very glad that America is your partner.

When I took office, we were spending $3 million each year to address the enormous challenge of UXO. We have steadily increased that amount, up to $15 million last year. This funding — together with the work of the Lao government, UXO Lao, other international donors and several non-governmental organizations — has allowed us to fund clearance efforts while also developing plans for a nationwide survey that can help locate UXO and focus clearance efforts on areas that have the most potential for economic development.

So yesterday, I was proud to announce a significant increase in America’s commitment to this work. We will invest $90 million over the next three years to this effort. Our hope is that this funding can mark a decisive step forward in the work of rolling back the danger of UXO –- clearing bombs, supporting survivors, and advancing a better future for the people of Laos.

As President of the United States, I believe that we have a profound moral and humanitarian obligation to support this work. We’re a nation that was founded on the belief in the dignity of every human being. Sometimes we’ve struggled to stay true to that belief, but that is precisely why we always have to work to address those difficult moments in history and to forge friendships with people who we once called enemies.

That belief in the value of every human being is what motivates the teams of Americans who travel to remote parts of this land to find the remains of hundreds of Americans who have been missing so that their families can receive some measure of comfort. That belief has to lead us to value the life of every young Lao boy and girl, who deserve to be freed from the fear of the shadow of a war that happened long ago.

Doing this work also builds trust. History does not have to drive us apart; it can sometimes pull us together. And addressing the most painful chapters in our history honestly and openly can create openings, as it has done in Vietnam, to work together on other issues, so that violence is replaced by peaceful commerce, cooperation, and people-to-people ties.

And above all, acknowledging the history of war and how it’s experienced concretely by ordinary people is a way that we make future wars less likely. We have to force ourselves to remember that war is not just about words written in books, or the names of famous men and battles. War is about the countless millions who suffer in the shadows of war — the innocents who die, and the bombs that remain unexploded in fields decades after.

Here in Laos, here at COPE, we see the victims of bombs that were dropped because of decisions made half a century ago and we are reminded that wars always carry tremendous costs, many of them unintended. People have suffered, and we’ve also seen, though, how people can be resourceful and resilient. It helps us recognize our common humanity. And we can remember that most people want to live lives of peace and security. We embrace the hope that out of this history, we can make decisions that lead to a better future for the people of Laos, for the United States, for the world.

Thank you very much, everybody.”

Malaysia on the right track? No


August 4, 2016bee

Malaysia on the right track? No, it has been derailed due to Corruption and Inept and hen-packed leadership

by  Soo Wern Jun

(received by e-mail)

Prime Minister Dato’ Seri Najib Razak said Malaysia is on the right track towards becoming a developed nation. He was speaking at a dinner function at the Malaysian Embassy in Jakarta yesterday.

He cited government’s policies and measures, such as fuel subsidy reduction and the Goods and Services Tax (GST), which he said, spurred progress to benefit the people.

Comparisons were drawn with Indonesia that has a population of 261.21 million while Malaysia has 30.84 million.  He said Indonesian President Joko Widodo praised the Malaysian government’s measures and remarked that the challenges faced by Indonesia were greater, even though its policies were similar to Malaysia’s.

Does Najib realise that Indonesia has a population eight times bigger than Malaysia? Should Malaysia strive to be better, should it not compare itself with a developed nation instead?

Najib’s pedestrian solutions and quick fixes

Najib and Jokowi think that reducing fuel subsidy and implementing GST would help the countries achieve developed nation status. This could also be the very reason to why both nations are still struggling with high poverty levels.

According to the World Bank, Indonesia’s poverty rate may have declined by one per cent annually from 2007 to 2011, but has fallen by an average of only 0.3 percentage points per year since 2012.

“Out of a population of 252 million (as of May 2016), 28.6 million Indonesians still live below the poverty line and approximately 40% of all people remain clustered around the national poverty line set at 330,776 rupiah per person per month ($22.60) or RM89.50,” stated the World Bank.

While Malaysia tends to boast about its success in reducing poverty rates, why the high number of soup kitchens and non-government organisations setting up food banks to help feed those who are living below poverty line? As indicated by the World Bank, Malaysia may have a poverty of less than one per cent, but pockets of poverty remain and income inequality is high relative to other developed countries.

This is only one indication that Malaysia is far from achieving a developed nation status as it struggles to achieve income equality and become a high-income earning nation.

Education is another reason to why the country is far from achieving a developed nation. The fact that parents continue to send their children abroad to further their studies proves that the country still does not have a stable and good education system.

As highlighted by the World Bank, although Malaysia performs well in access to education, the quality of education remains low and appears to be declining rapidly by design.

“In the 2012 PISA (Programme for International Student Assessment), Malaysian students only outperformed Indonesian peers but lagged even lower income countries like Vietnam by a wide margin.

“Malaysian education system is most centralised and quality of teachers reportedly low with the report concluding that ‘there is an urgent need to transform Malaysia’s education system so that it produces quality graduates required by a high-income economy’,” the World Bank stated.

Critics also say too much emphasis on wealth may not be helpful in achieving the status of a developed country – as is proven with the current state of the country.

According to a research by the GlobalNxt University, achieving the income target may not be sufficient to be classified as a developed country. Citing Singapore as an example, it says the island state has exceeded that benchmark some time ago with current per capita income of staggering US$47,210 (RM191,984.23), but in many respects is still not a developed country.

Singapore is listed as a high-income economy as the country is small and per capita income may not truly reflect its real development.

Also, the process of development involves transformation of the entire society and the citizens of a developed country are expected to be highly sophisticated and generous.

Malaysians are still struggling with racial and religion problems which are still deeply influenced by the introduction of the New Economic Policy (NEP) in 1970 to 1990.

While the NEP had a goal to reduce poverty and to increase the participation of Malay community in overall economic activities, it has deepened the problems of racism and had widened the gap between the rich and the poor.

Malaysians are still grappling with racial and religious problems which are still deeply influenced by the introduction of the New Economic Policy (NEP) in 1970 to 1990.

While the NEP had a goal to reduce poverty and to increase the participation of Malay community in overall economic activities, it has deepened the problems of racism and cronyism and had widened the gap between the rich and the poor in particular among the Malays.

The United Nations Educational, Scientific and Cultural Organisation (UNESCO) acknowledged Malaysia’s commitment and clear policy to drive science, technology and innovation – a key that placed the country on the right track to achieve developed-nation status.

Are the development of science, technology and innovation seen spread equally nationwide?

The country’s Internet speed is still far lacking behind Indonesia’s, while there are far too many undeveloped areas in the country that have yet to see Internet connectivity. Is Malaysia really on a right track towards becoming a developed country?

 

A Toast to the Right to Development


New York

June 22, 2016

A Toast to the Right to Development

by Martin Khor

http://www.thestar.com.my

Many problems threatening the world can be addressed through the lens of the Right to Development – that should be celebrated on its 30th anniversary.

THE Declaration on the Right to Development is 30 years old. Adopted by the United Nations General Assembly in 1986, it has had an illustrious history, having great resonance among and giving a boost to people fighting for freedom and more participation in national affairs, as well as to developing nations striving for a fairer world economic order.

It has been invoked by the leaders and diplomats of developing countries on numerous occasions, when they try to convince their counterparts of the developed countries to show more empathy for the needs of the poorer countries.

It has a central place in the Rio Principles of the 1992 Earth Summit, and most recently it was mentioned in the 2015 Paris Agreement on climate change.

On this 30th anniversary, it is fitting to recall the important elements of this right to development. It is human and people-centred, an inalienable human right “to participate in, contribute to, and enjoy economic, social, cultural and political development, in which all human rights and fundamental freedoms can be fully realized.”

Politicians and policy makers should take human beings as the central focus of their development policies, and ensure they can actively participate in the process of development and development policy, as well as benefit from the fruits of development. (Article 2.3).

But the Declaration also places great importance on the international arena. States have the duty to cooperate with each other in ensuring development and eliminating obstacles to development (Article 3.3).

And effective international cooperation is essential in providing developing countries with appropriate means and facilities to foster their comprehensive development (Article 4.2).

The right to development recognises that there are national and international obstacles to the realisation of the right to development, and it calls for states to take steps to eliminate these obstacles.

It is useful to identify some present global problems and how they affect the right to development.

First, the global economy in crisis. The economic sluggishness in developed countries has had adverse impact on developing economies.

They are facing low commodity prices, and reduced export earnings. They face great fluctuations in the inflow and outflow of funds, due to absence of controls over speculative capital flows and fluctuations in the value of their currencies due to lack of a global mechanism to stabilise currencies.

Some countries are on the brink of another debt crisis. There is for them no international sovereign debt restructuring mechanism and countries that do their own debt workout may well become victims of vulture funds.

Second, the challenges of implementing appropriate development strategies.

There are challenges in developing countries to have policies right in agricultural production, ensuring adequate incomes for small farmers, and national food security.

Industrialisation involves the challenges of climbing the ladder, moving from labour-intensive low-cost industries to higher technology industries and overcoming the middle-income trap.

There are the challenges to providing social services like health care and education and water supply, lighting and transport as well as developing financial services and commerce.

This policy-making is even more difficult due to premature liberalisation, some of which is due to loan conditionality and to trade and investment agreements which also constrain policy space.

In particular, many investment agreements enable foreign investors to take advantage of imbalanced provisions and shortcomings in the arbitration system that cause countries to lose a lot in compensation and also have a chill effect on their right to regulate and to formulate policies. A review is needed.

Third, climate change is an outstanding example of an environmental constraint to development and the right to development. There is an imperative to cut global emissions as sharply and quickly as possible. But which countries and which groups within countries should cut emissions, and by how much?

The danger is that the burden will mainly be passed on to developing and poorer countries and to the poor and vulnerable in each country.

The Paris Agreement of December 2015 was a success in terms of reaching a multilateral deal.

But it is not ambitious enough to save humanity, and it also failed to deliver confidence that the promised transfers of finance and technology will take place. Much more has to be done and within a few years.

Fourth, the crisis of anti-microbial resistance brings dangers of a post-antibiotic age. Many diseases are becoming increasingly difficult to treat because bacteria have become more and more resistant to anti-microbials.

The World Health Organisation Director General has warned that every antibiotic ever developed is at risk of becoming useless and that we are entering a post-antibiotic era.

The World Health Assembly in 2015 adopted a global plan of action to address anti-microbial resistance but the challenge is in the implementation.

Developing countries require funds and technology such as microscopes and diagnostic tools; they also need to have access to existing and new antibiotics at affordable prices.

Fifth, the challenges of implementing the Sustainable Development Goals, which are closely linked to the right to development.

For example, Goal 3 is “to ensure healthy lives and promote well-being for all at all ages”. One of the targets is to achieve universal health coverage, that no one should be denied treatment because they cannot afford it. But unless there are sufficient funds, this will remain an unfulfilled noble target.

The treatment for HIV/AIDS became more widespread only when generics were made available at cheaper prices, and since then millions of lives have been saved.

Many of the new cancer drugs and the new “biologics” are priced above US$100,000 (RM408,850) for a year’s treatment. Unfortu­nately, due to global patent rules, most patients have no access to cheaper generics.

For the SDGs to succeed, finance and technology have to be transferred to developing countries and some international rules on trade and intellectual property have to be altered if they are found to be obstacles to the right to development.

All the above global challenges have to be diagnosed as to where they comprise obstacles to realising the right to development, and the obstacles should then be removed.

That is easier said than done. But the Declaration has thrown light on the way ahead.

Martin Khor (director@southcentre.org) is executive director of the South Centre. The views expressed here are entirely his own.