What did ASEAN Summit 2015 achieve?


April 29, 2015

What did ASEAN Summit 2015 achieve?

by Prashanth Parameswaran

With the conclusion of the 26th ASEAN Summit chaired by Malaysia, what did this series of meetings achieve?

Leaders at ASEAN Sunnit 2015When evaluating ASEAN summits, it is useful to consider not only measures actually adopted – whether in the form of documents, housekeeping items, or proposals being forwarded on to other bodies – but also established ideas put off until future meetings and newer ones tabled for discussion in order to get the full picture. Since the ten-member grouping operates by consensus and rotating chairmanships, there are usually different speeds at which it moves depending on the issue in question and the extent of agreement or disagreement therein.

Aside from the chairman’s statement usually adopted – with the obvious exception of Cambodia in 2012 – a few other documents were adopted at the 26th ASEAN Summit. One was the Langkawi Declaration on the Global Movement of Moderates, an initiative championed by Malaysia over the past few years to promote moderation as a tool for bridging differences. The Declaration was viewed as one of ASEAN’s contributions to global peace and security. Another was the Declaration on Institutionalizing the Resilience of ASEAN and its Communities and People to Disasters and Climate Change. This builds on the ASEAN Joint Statement on Climate Change 2014 adopted at least year’s summit in Myanmar. The region is also extremely susceptible to natural disasters, and Malaysia was on the receiving end of this last year with the worst flooding in decades affecting hundreds of thousands of people.

Malaysia also continues to use its ASEAN chairmanship year to strengthen regional cooperation against the Islamic state threat, which it has been busy countering at home including during the run-up to the summit itself. As I have written earlier, Malaysia was already set to convene a Special ASEAN Ministerial Meeting on Radicalization and Extremism in October. But there were also discussions over the past few days about potentially holding an informal ministerial meeting with Brunei, Indonesia, the Philippines, Thailand, Australia and New Zealand next month as well.

Some measures that some had hoped would move forward were put off until future meetings. One of these was the proposal for a common ASEAN time zone. ASEAN currently has four different time zones, and the idea would be to get other ASEAN members to adjust their time to a single agreed one, most likely the current time zone in Brunei, Malaysia, the Philippines and Singapore, which is GMT + 8 and similar to the one in China. The alignment would facilitate business dealings and would help forge a more cohesive ASEAN Community expected by the end of 2015. The idea was originally proposed by Singapore back in 1995, but differences still remain within the grouping on the matter.

IMT - GTOther ideas were also floated that were significant. According to Malaysian Foreign Minister Anifah Aman, several proposals in the form of “non-papers” were discussed. Among these was an idea to streamline ASEAN meetings – including reducing the number of ASEAN summits from two to just one per year – which is reportedly still under discussion. Another was on strengthening the East Asia Summit (EAS), which I touched on briefly here. This year is the 10th anniversary of the EAS, and several countries have been suggesting ways to make it a more effective institution, which they hope will take place under Malaysia’s chairmanship.

As expected, the South China Sea question received significant attention but saw little progress. The media did release parts of a draft ASEAN statement where the group did share concerns expressed by some states on China’s extensive land reclamation activities in the South China Sea, which it said threatened peace, security and stability. And Najib also repeated the call for an “expeditious resolution” of a code of conduct while stressing that ASEAN would engage China in a “constructive way. But beyond these steps, little progress looks likely at this stage, which is not surprising considering ASEAN’s lowest common denominator position on the issue, China’s continued stonewalling on a code of conduct, and the balance Malaysia tends to strike in its own policy, all of which I have addressed before in separate pieces (see here, here and here).

26th ASEAN Summit hosted by Malaysia is a logistical nightmare


April 22, 2015

Published: Wednesday April 22, 2015 MYT 12:00:00 AM
Updated: Wednesday April 22, 2015 MYT 7:20:00 AM

26th ASEAN Summit hosted by Malaysia is a logistical nightmare

by S Paul

ASEAN SUMMIT KE-26I READ with concern the report “Tale of two locations at this ASEAN Summit” (The Star, April 21). [Read http://www.thestar.com.my/Opinion/Columnists/Mergawati/Profile/Articles/2015/04/21/Tale-of-two-locations-at-this-Asean-summit/ ]

Malaysia is playing host to the 26th ASEAN Summit this weekend. All the previous 25 ASEAN AnifahAman2summits were held in one location but Malaysia has chosen to be different. The said meeting will be held both in Kuala Lumpur and Langkawi, which is giving everyone a massive headache.

In these trying times, the Government has time and again pleaded with the rakyat to be frugal and advised us to spend prudently. At the same time, the Government should “walk the talk”. Hence, I cannot understand why the Foreign Affairs Ministry has chosen to incur unnecessary expenditure not only for its officials but also the members of the other ASEAN delegations, media personnel and the ASEAN Secretariat personnel.

 Mind you, some 3,000 officials and secretariat staff will be involved in the summit so one can imagine the cost, as well as the inconvenience, in moving from one location to another. The Foreign Ministry owes the rakyat an explanation.
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Najib’s Slow Death


April 4, 2015

Najib’s Slow Death

by Roger Mitton@http://www.mmtimes.com/

Living under the tawdry and sinking regime of Prime Minister Najib Razak must seem to Malaysians like death by treacle.

Rosmah and Najib 1mdbThey are drowning in a gluey black sea of venality the likes of which has not been seen in this region since the days of President Ferdinand Marcos in the Philippines.

The mounting litany of shameful episodes that have riven that nation all appear to be traceable to the hapless Prime Minister, who is also the head of the dominant political party, the United Malays National Organisation (UMNO).

Things are so bad that last week the UMNO-owned newspaper, Utusan Malaysia, carried an outrageous editorial that tried to exonerate Najib and shift the blame elsewhere.It failed, of course, because it was arguing against facts that indicate to all Malaysians that Najib is steadily sinking into the treacly pit of corruption and maladministration into which he has plunged his country.

If you think this is over the top, just consider a few of the more damning indictments against the Prime Minister and his band of gangsters, cheats and philanderers. First, there are the missing billions of taxpayers’ money. It is hard to truly comprehend the full magnitude of this gigantic, nepotistic malfeasance, and even the illustrious New York Times took three pages to try to do it.

Riza and Jho LowSuffice to say that Najib’s stepson, Riza Aziz, the offspring of the PM’s second wife Rosmah, is the man apparently responsible for most of the woes brought about by this debacle – otherwise known as 1MDB.

The initials stand for 1Malaysia Development Berhad, a sovereign wealth fund that has lost billions due to corruption and mismanagement, and is still weighed down by massive nonperforming loans. The fund appears to be almost entirely controlled by Najib, Aziz and a flamboyant Penang conman called Jho Low – no relation to Jennifer Lopez, though he mixes with Paris Hilton and other Hollywood starlets.

Why and how? There is no clear answer, except to recall that Najib is under the sway of Rosmah, a shopaholic wrecking ball, who shrugs off ridicule and ignores how her actions thwart her husband’s premiership. In truth, the personal damage to Najib is piffling compared to the disastrous effect the huge 1MDB losses are having on the already fragile Malaysian economy.

An opposition MP has called the fund fiasco “the mother of the mother of the mother of all scandals in the history of Malaysia”. He may be right. Certainly, there are already worries that if and when 1MDB collapses, the nation’s financial system may take a hit that will dwarf the effect of the Asian Financial Crisis in 1997.

And bear in mind that Malaysia’s resource-dependent economy is already in trouble due to the depressed price of its key exports, petroleum oil and palm oil. Last month (January), Najib announced US$1.5 billion in spending cuts and said Malaysia’s economic growth would fall from 6 percent to between 4.5pc and 5.5pc this year. The economic woes have been compounded by diminishing political support at home.

In the last general election two years ago, Najib vowed to reverse the drop in votes that his UMNO-led coalition had witnessed under his predecessor, PM Abdullah Badawi.It did not happen. His government ceded even more seats and lost four state assemblies and the overall popular vote to the opposition People’s Alliance, led by Anwar Ibrahim.

Since that chastening experience, Najib has clung onto the UMNO leadership by appeasing his key support base, the nation’s Malay-Muslim majority, and marginalising the minority Chinese and Indian communities.

This shocking move was his only option, or else he would have faced the same fate as Abdullah, who was elbowed out after his election failure by UMNO party men.Concurrently, Najib has reversed his promise to dump the colonial-era Sedition Act, and instead applied it with increasing frequency against oppositionists, lawyers, journalists and academics.

Most recently, Anwar has been jailed for five years after a dubious sodomy conviction, while one of the nation’s popular cartoonists has been detained for drawing caricatures that lampoon the farcical Anwar trial.

Not only do these actions signal a premier running scared – as would be expected after the 1MDB catastrophe and his election setback – but they are grotesquely hypocritical.

1MDB-The ScandalTarring Anwar with sodomy conveniently distracts attention from the fact that Najib, a notorious philanderer in his early days like most UMNO leaders, may be complicit in the murder of a Mongolian model. The demise of this woman, the lover of the PM’s closest adviser and many Malaysians suspect also Najib’s mistress, is under investigation due to a $155 million kickback in an intertwined submarine deal negotiated when Najib was Defence Minister.

All of this led Utusan to issue its absurd editorial that – wait for it – blamed America for the country’s woes. It even accused Washington, which has criticised Anwar’s jailing, of copying the opposition leader’s behaviour.

According to Utusan, “The US wants to ‘sodomise’ our legal and judicial system, even though the majority of Malaysians agree with the court’s decision.” Well, that is a moot point. Certainly the voting pattern suggests most Malaysians would happily accept Anwar as their next PM.

daim-mahathirIn any case, Najib’s survival may depend more on UMNO elders like former PM Mahathir Mohamad, and former Finance Ministers Daim Zainuddin and  Tengku Razaleigh Hamzah. Since they have all turned against him, though, the omens are not good.

Time for Indonesia to play a bigger role in ASEAN


April 1, 2015

Time for Indonesia to play a bigger role in ASEAN

by Pattharapong Rattanasevee

http://www.asiasentinel.com/politics/indonesia-asean-role/

Jokowi 5ASEAN would benefit from stronger leadership. But Indonesia, best placed to take up that role, appears unwilling despite the fact that it could be the leader that ASEAN needs. However, it intentionally refrains from asserting its influence over the association.

This is due to Indonesia’s internal weaknesses, ASEAN’s norms of non-interference and equality among members, and the remaining antagonism among ASEAN member countries. While President Joko Widodo has shown an increasing willingness to play on the international stage with statements urging the country to become a maritime power, the situation leaves a power vacuum within the association and intensifies the academic debate about leadership in integrating regions.

There are three possible and intertwining explanations of leadership in ASEAN. Sectoral leadership refers to leadership exercised through areas or sectors of competence, or depending on which country is in a better position to take the lead at the time. Indonesia’s foreign-policy orientation is frequently concerned with political and security issues. For example, it greatly influenced ASEAN positions on the Cambodian conflict and the South China Sea dispute. Thailand, Malaysia and Singapore like to push economic issues. These countries played a vital role in moving onto the path of economic integration. All were notable proponents of the ASEAN Free Trade Area. The Philippines is often more concerned with social and cultural issues, demonstrated by its initiation of ASEAN Socio-Cultural Community (ASCC).

ASEAN-10Cooperative leadership is formed among a group of countries that share a common vision and wish to play a strategic role in the region. This is based on the notion that no single ASEAN country can fulfill the leading role, so it should be built on the basis of two or three countries that are able to forge solid cooperation among their leaders and consolidate their domestic politics. This form of leadership is perhaps similar to the case of the European Union where Germany and France appear as a coalition leader.

Periodical leadership assumes that leadership is attached to individuality or charisma. This notion is heavily centered on some notable leaders of ASEAN, such as Indonesia’s President Suharto, Singapore’s Prime Minister Lee Kuan Yew and Malaysia’s Prime Minister Mahathir Mohammad.

Soeharto-LeeKuanYew-MahathirThe sectorial explanation of leadership may be prevalent because Indonesia still lacks competence, for example in socio-economic areas. The cooperative model may have emerged because ASEAN is actually a collection of weak and vulnerable countries domestically. The periodical leadership is also visible because ASEAN is arguably an elitist organization and very much attached to leader’s charisma. But, without a doubt, ASEAN requires the presence of undisputed leadership for which Indonesia seems to be the only candidate.

ASEAN requires a clear and dominant leader that can serve as an institutional focal point and regional paymaster to facilitate and drive regional projects. Most multi-lateral or regional organisations include a country with more power relative to its other members. In every international bargain with competing national interests, there is an influence of structural powers (derived from material and resource capacity such as the size of land, population and economy).

Even the European Union, which has much more solid and effective institutions to drive decision-making, is heavily influenced by French and German leadership. Regional integration is a scene of competing national interests and the position of leadership is normally taken by the governments of large, prosperous and powerful member states.

As the world’s fourth largest state in terms of population and the region’s largest country, which comprises about 40 percent of ASEAN’s total population, Indonesia is the elephant in the room. Indonesia initiated and proposed the foundation of ASEAN as a means to end regional conflict. As a consequence of a painful experience of colonization, it was the country that continued to stress non-alignment, with the hope of removing the exercise of external powers from the region. While the coercive action towards East Timor and the severe financial crisis in the late 1990s spelled the decline of Indonesia’s position in ASEAN, its recent democratic consolidation is bolstering its reputation in regional affairs.

The invisibility of leadership in ASEAN is a result of Indonesia trying to ensure regional unity. Without the low-posture politics of Indonesia, the association would not be able to create multilateralism and a neutral context in which smaller states could feel more comfortable when dealing with bigger countries. But, considering the remaining antagonism among members and its considerable institutional weaknesses, this raises the importance of leadership in ASEAN.

ASEAN’s future cannot rely wholly upon Indonesia’s structural leadership. It has to be invested with some sort of soft power that could help amplify international images and credibility, as well as tone down antagonism and resistance within the organisation. Indonesia should seek to play a more active leading role and exercise more of its power over the association.

In the foreseeable future, ASEAN will continue to be shaped by the politics of Indonesia. The recent political developments in Indonesia will provide a vital ingredient in building up confidence and credibility, as well as enhancing the pursuit of leadership in ASEAN.

Pattharapong Rattanasevee is a lecturer at Burapha University, Chonburi, Thailand.This originally appeared on the East Asia Forum, a platform for analysis and research at the Crawford School of Public Policy at the Australian National University.

Lee Kuan Yew and the Asian Model


March 31, 2015

Lee Kuan Yew and the Asian Model

by Martin Khor@www.thestar.com.my

Lee-Kuan-YewAn important legacy of Lee Kuan Yew was the formulation of one of the Asian models that have been driving successful Asian economies forward.

HUNDREDS of obituaries and articles have been written about Lee Kuan Yew, who was laid to rest last weekend.

The articles were overwhelmingly in tribute of the vision, leadership qualities and achievements of Singapore’s founding father, who left his imprint on so many aspects of the island state’s system and way of life.

The tributes were mixed with criticisms of the political authoritarianism that was mixed with the spectacular economic growth.

There will be many PhDs written, which would make judgments on his side of the story and that of the critics. As for Lee’s own assessment, he summed it up thus: “What did I achieve? A successful Singapore. What did I give up? My life.”

On the TV news of LKY’s passing, I was impressed by an interview with a young man who runs an Internet views service. He said this was the time to pay tribute to Lee and his achievements, after which would come a period of collective reflection on what happened in the past five decades and how Singapore should go forward.

The times have changed. Singapore too is changing and will doubtless change even more. One of LKY’s major achievements was to be a pioneer of combining the roles of the state and the market in a way that succeeded in generating and sustaining high economic growth, and with widespread social benefits. He did it in a way that was suitable, or that was adapted, to the situation of a nation with a small population, no natural resources and no significant market.

He opted for the model of being a “global city”, that used the world as a source of capital, technology and markets, with foreign companies providing the engine, the world’s population providing the market, and Singapore providing its geographical location and skills.

Singapore also diversified from trade to oil refinery and industry and to being also a global financial centre. It is the combining of state and market that made it part of the East Asian models of development.

This strategy is based on having the state play the leading role not only in setting the overall framework for development but also sometimes playing a direct role in it.

By also involving the private sector in an important role, this model is different from the old state socialism, and by being based on the manifold roles of the state; it is also different from laissez faire free market capitalism. While most manufacturing companies are private and foreign-owned, the state in Singapore has played important roles in selected industries, in banking, in transportation and a range of other services.

Public housing was based on a combination of the state being the developer, construction being undertaken by private contractors, and the ordinary people being the owners by paying the mortgage through their salaries, the whole enterprise organised by the Housing Development Board and the Central Provident Fund.

The state’s overwhelming role in the social sector was based partly on subsidies but also significantly on self-financing by individuals, through the CPF scheme that includes withdrawals for housing and medical needs.

The Economist magazine in 2012 credited Singapore for starting what it called “the new kind of state capitalism” which it said had become the fashion in emerging markets and had come to be a major challenge to Western liberal capitalism.

In fact, there are important variations of this so-called “state capitalism”.Singapore relied on foreign companies to lead its industrial revolution (while the state focused on providing services). Japan and South Korea built their own domestic industries, with eventually world-beating private companies that were egged on by a lot of state assistance and nurturing.

In Malaysia, we have our own model, with the state taking over ownership of the once foreign-owned plantations and tin mines, through state-owned commercially run companies. It has its own national oil company and a production and benefit-sharing arrangement with the global oil multinationals and foreign companies predominant in several industrial sectors; while the state also has its own enterprises in banking, real estate development, telecommunications, utilities, agriculture and manufacturing, usually in competition with local and foreign private firms. The Malaysian model is a hybrid of state and private enterprises, often having both co-existing and competing in commercial activities.

China is said to have been inspired by the Singapore model. After Deng Xiao Ping’s visit to Singapore in 1978, he began the change in the old China model, which through many metamorphoses is now an evolving system of its own – a confusing and complex mixture of state and private enterprises, but always with the leading role of the state.

It has become its own unique hybrid model, combining the Singapore model of attracting foreign investors with the Japan-Korea model of establishing domestic enterprises and industries which dominate the local market and then increasingly penetrate the world market in trade and investment.

The Western countries which now espouse “free market economics” grew on the basis of “state capitalism” in their formative years. Indeed, often a much cruder form of it. Example: the East India Company owning economic sectors in many Asian colonies, supported by military colonial rule and massive economic subsidies.

Having helped their companies to grow into giants, it appears they now want to forbid others from taking policy measures to do so.Even now, the Western countries give massive financial and other forms of support to their agriculture sector. Free market economics is rejected by their states in sectors where they are unable to freely compete.

The East Asian models are now being challenged by Western attempts to de-legitimise the economic role of the state, the latest being free trade agreements such as the Trans Pacific Partnership Agreement, in which the state’s policy space to set the rules in investment policies, government procurement and key services such as finance and telecommunications is being narrowed.

The TPPA also has a section not present in previous FTAs, which seeks to discipline how governments treat their state-owned enterprises (SOEs). It forbids the state from giving any advantages to these enterprises, and the SOEs are not allowed to give an advantage to locals when they buy or sell services and products.

The concept that the “free economy” is best and the state has no role except to enable it has been promoted in developed countries for export to developing countries as the recipe for development. But they did not practise it when they were developing and still do not practise it in areas where they cannot compete.

Martin Khor is Executive Director of the South Centre, a research centre of 51 developing countries, based in Geneva. You can e-mail him at director@southcentre.org. The views expressed here are entirely his own.

Follow the Money


March 24, 2015

Follow the Money

by Tricia Yeoh@www.thesundaily.com

DG of Bank NegaraAT its annual report launch, Bank Negara Deputy Governor gave a relatively healthy assessment of the country’s economy. So glowing was the report, however, that several members of the audience felt compelled to ask his opinion of 1MDB, the proverbial elephant in the room.

He essentially responded by saying that “sovereigns” (meaning government-backed entities) are not monitored as closely as are “corporates” (meaning the private sector) in their respective issuance of bonds and similar financial instruments. This is presumably because a bond or debt obligation issued by a government authority is usually assumed as low-risk, given that they are backed by the taxing power of the said government.

What Bank Negara said was essentially correct, since its responsibility is limited to ensuring the stability of the Banking Sector. As long as 1MDB – which is a government entity, given it is wholly owned by the Finance Ministry – is able to pay back loans owed to local banks (like Maybank and RHB), then the Banking Sector is safe. But ay, there’s the rub.

As at March 2014, 1MDB’s accounts showed a whopping debt of RM41.9 billion. (Which is, by the way, just short of the entire 2015 budgetary allocation to the country’s development, totaling RM50.5 billion. It is also eight times more than what is allocated to safety and security in 2015, totalling RM4.9 billion).

Ultimately, if it is unable to pay off its multiple loans owed both locally and abroad, does it not mean that the government would have to cough up the sum? And this is already happening as events continue to unfold on a daily basis.

Most recently, Putrajaya confirmed RM950 million was given as a standby credit for 1MDB, which is basically when a fixed amount of credit is made available to the borrower as and when required for a given period of time. These are monies that could have been put to better use, surely.

Tengku Razaleigh HamzahWorse, frustration with the powers that be will surely grow if the additional RM5.6 billion revenues collected from the Goods and Services Tax (GST) that is about to be implemented are shown to be used for such unpalatable purposes. Just this week, former Finance Minister Tengku Razaleigh Hamzah said in Parliament that the people had the right to know if GST “benefited the country or (would be) used only to pay the interest to debtors and bondholders”.

In one of the many conversations I had recently on the “1MDB losses”, a friend reminded me of a joke that is hauntingly relevant. A woman invested RM100 into the bank, expecting her funds to be safe and secure. Upon finding out the money was gone, she screamed hysterically to the bank officer, “You’ve lost my money!” to which he politely replied, “Your money is not lost, ma’am. It’s just somewhere else.” Likewise, the question we ought to be asking ourselves is: Where did the money go?

That is something the Auditor-General’s office will have to answer as they dutifully scrutinise the accounts of the much talked-about entity over the next few weeks.

Even if some of these funds can be restored, the concern still remains: How should government finances remain sustainable over a long-term period? IDEAS, in a policy paper released this week makes some suggestions, pertaining to an existing but very little-heard of national trust fund called the Kumpulan Wang Amanah Negara (or KWAN).

The KWAN was set up in 1988 with the original intention of saving for the future, especially from our depleting national resources. However, its total wealth for all of its 26 years of existence comes up to only RM9 billion. This is a relatively meagre amount when compared with the Norwegian Global Pension Fund, which has more than double that amount despite having started later than the Malaysian KWAN. In fact, it only represents 1.5% of the total petroleum revenue accumulated over the last 26 years.

Although our dependence on the oil and gas sector has fallen slightly over the last few years, its revenues still contribute some one-third to our overall national income. Credit is due to the non-resource sectors (manufacturing and services), given their continual growth as a proportion of total GDP, which is encouraging.

But given the spendthrift tendencies of our government of late (our operational expenditure expanded on average 11% annually from 1971 to present, and more alarmingly by more than 20% in 2011), it is important to strengthen existing infrastructure.

For instance, we propose that the KWAN governance mechanism needs to be made much more robust in the way the fund is managed, how deposits and withdrawals are regulated, and finally, how it is accountable to taxpayers.

Some of the key disciplines of a well-governed fund (as outlined by the Natural Resource Governance Institute and the Columbia Centre on Sustainable Interest) are that it should have clear and well-enforced objectives, fiscal rules, investment rules, division between the authority and various managers, and finally have regular and extensive disclosure to the public whilst ensuring independent oversight bodies exist.

Many of these governance mechanisms do not exist for the KWAN. For instance, the deposit and withdrawal rules are too general and need to be more quantifiably specific. Other oversight agencies ought to be brought in; currently only the Finance Ministry and Bank Negara are involved – parliamentary committees should also be included as an additional measure.

Finally, its reports should be publicly downloadable online and a website should be dedicated to publish all relevant details of the fund.

It is not just 1MDB or Pembinaan PFI or KWAN that must be examined closely; all other state-owned enterprises and funds (and there are many) ought to be monitored with a fine-tooth comb. The adage is true: it really is your and my money. As taxpayers, we should demand nothing less.

Tricia Yeoh is the Chief Operating Officer of a local, independent think-tank. Comments: letters@thesundaily.com