AEC building block of ASEAN community?


August 14, 2016

AEC building block of ASEAN community?

by Dr. Munir Majid

http://www.thestar.com.my

THE AEC (ASEAN Economic Community) could turn out to be the saviour of ASEAN. Whatever its shortcomings, it is real, unlike largely mere words of the ASEAN Political and Security Community, and the tamasha (carnival) of the socio-cultural communion.

Even so, there are developments worth noting which would make the AEC, or the ASEAN community, not what is envisaged in the fine official plans.But first let us acknowledge the so many things that are happening in the ASEAN economy, facilitated by economic ministers and officials, but most of all driven by business people who see its huge potential.

Business people appreciate all too well the size of the ASEAN market (at 640 million people, the third largest in the world), the total economy (US$2.6 trillion, the world’s seventh biggest), healthy growth rate of 4%-5% (which could make the ASEAN economy number four in the world in a little over a decade), and the powerful demographics (65% of the population under 35 years of age).

Despite complaints about non-tariff barriers and measures (NTBs and NTMs) that impede virtually zero tariffs for trade in goods in most places, despite still limited openness for trade in services, for investments in some strategic sectors, and for mobility of skilled labour, there is a dynamism in business activity not much seen elsewhere in a lacklustre global economy.

In economically under-rated Laos (with GDP of US$13.5bil the smallest in ASEAN, not counting Brunei), there is potential and activity that belie its size.

The proposed Kunming-Vientiane high speed railway, with a price tag over half the size of the country’s economy, will transform the country.Already, huge projects in special economic zones are taking place whose activities cut across mainland South-East Asia.

For Laos, conversion from being land-locked to being land-linked, is not just a slogan. The connectivity from north to south, and east to west, is driving economic activity in what is commonly called the Mekong sub-region way beyond it, even into extra-ASEAN territory. There is a “T” in the traditional CLMV (Cambodia, Laos, Myanmar and Vietnam) countries – Thailand – which is very much in the mix.

The kingdom has great ambition to be ASEAN’s logistical hub, based on its central location in mainland South-East Asia, bordering Malaysia, Cambodia, Myanmar and Laos, with access to the Mekong, the Gulf of Thailand and the Andaman Sea.

But not just Thailand. Under Prime Minister Modi India, which has been “Looking East” for a mighty long time, is moving to “Act East”.

Last November it was announced that India is providing a US$1bil line of credit for a 3,200km highway linking the country with Myanmar and Thailand. Once completed it would add to pre-existing, largely historical, land and maritime linkages.

Cambodia –The Hub of Mainland ASEAN

While significant, this is some way behind what is already happening in the CLMV ASEAN sub-region, which is served by improving north-south connectivity and the East West Economic Corridor stretching 1450km from Danang in Vietnam, through Laos and Thailand, terminating at Mawlamvine Port in Myanmar. Distance to global markets from Laos has already been considerably shortened, as with the other countries.

According to one calculation, with the East West Economic Corridor, existing global sea routes have been shortened by 3,000 nautical miles, “or a 10-day sea journey from east to west and vice versa” – generating enormous savings of freight and time costs for all investors along the region.

What with tax breaks and governmental support, many businesses are seizing the opportunity.This “Greater Mekong sub-region” is getting linked up with China, particularly the provinces of Yunnan and Guangxi. Its growth rate is higher than the overall ASEAN average.

This whole area, with the two Chinese provinces, has a population of more than 400 million people. One calculation has it that it is more than half the size of the ASEAN economy. Thus there is an economic reality in mainland Asean with a gravitational pull towards China.

Of course all this is part of the AEC scheme. Construction materials and equipment, for example, moving seamlessly from Thailand to Laos for development projects. Car parts going from Laos to Thai assembly plants. Connectivity across ASEAN member countries.

Open regionalism, linking up with China and to a lesser extent with India which, after all, is part of RCEP (Regional Comprehensive Economic Partnership).

Business is agnostic. Investments are being made. Economic activities are taking place. The Greater Mekong Sub-Region is throbbing.However, from the viewpoint of the AEC and Asean generally, a few points need to be observed. The first is that antecedent to Asean economic centrality there are centrifugal forces pulling outwards.

This means policies for an ASEAN single market and production base must be enhanced so that whatever hubs that develop occur also because of the Asean economy even if there will always be extra-regional and global market attractions as well. Therefore removal of all those NTBs and NTMs remains essential for natural economic flow.

The ASEAN Business Advisory Council, as the lead and apex private sector body, is pushing hard for elimination of NTBs and NTMs in four key sectors – healthcare, retail, logistics and e-commerce, and agri-food.

The working groups, which ASEAN economic ministers again agreed last week should be formed, must get cracking. The official sector is also doing its bit with the launch in Vientiane last week of the ASSIST (Asean Solutions for Investments, Services and Trade) web portal where sustained complaints against NTBs and NTMs will be posted.

This kind of name and shame way is a good start, but much more needs to be done particularly at the front end of such barriers.

A second observation to be noted is the possible bifurcation of ASEAN. Mainland and maritime South-East Asia not quite gelling together economically, with trade, investment and movement of peoples between the two areas becoming secondary or minimal as they forge different hubs and look more to extra-regional economic relationships.This would be nothing new for Singapore which has always looked outward.

Indonesia is huge enough to go ahead with its maritime development plans at whatever pace it can achieve.

The Philippines has always been a bit apart, but it is well integrated in trade with China whatever South China Sea problems it faces with the Asian giant. In any case, with a population in excess of 100 million there is plenty of unfulfilled potential in the domestic economy.

It is Malaysia that could be squeezed. With a relatively small population of just over 30 million, ASEAN offers the country a huge hinterland which it could benefit enormously from if the economy is not caught in the middle income trap, moves into higher value products and services, invests out of sectors it no longer is competitive in, and becomes a hub in modern services using advanced technology.

The great irony will be what is now called a two-speed ASEAN will become a two-part ASEAN, with mainland South-East Asia no longer looking like the poor cousin.

The final and most significant point to note is that the centre of economic gravity is China, whether for mainland or maritime ASEAN. Through sheer economic and financial resources, and total strategic commitment, such as through OBOR (one-belt-one-road) and the AIIB, it has caused a frustration of the ASEAN community, including of the AEC, without actually willing it.

This does not mean there will be no ASEAN community, based largely on economic foundation, but it will be one subsumed within a Greater China political economy, and not in the way intended.

This will be neither a good nor a bad thing. It all depends on the basis of relationships countries in the region, not just Asean, have with China, and what hold China would exercise over them.

The realist therefore might contend the ASEAN community 2025 Blueprints, including on the AEC, would need to take into greater account the Greater China superstructure than they have done. It would be useful if top ASEAN policy makers could have this conversation, but I doubt they ever will except in national confines.

 

ASEAN Chair Laos faces a serious test in Diplomacy


July 20, 2016

ASEAN Chair Laos faces a serious test in Diplomacy

by Caitlin McCaffrie

ASEAN-Prachatai

At a time when the region faces a multitude of challenges, some are questioning whether the chair is up to the job.

2016 is a big year for ASEAN. It began with the quiet launch of the ASEAN Economic Community (AEC), which was followed by the Sunnylands Summit; the first time all ASEAN leaders met a US President on US soil. Now the region is facing intense scrutiny over its approach to the South China Sea dispute, as well as severe droughts threatening the Mekong region.

However, there are many who doubt whether this year’s chair of ASEAN is up to the job. The role of ASEAN chair rotates annually, and this year it has fallen to the Lao People’s Democratic Republic: a one-party, authoritarian state with no political opposition, dismal media freedom and rampant corruption.

ASEAN is a quiet organisation that takes pride in not making too many waves. It makes decisions by consensus, and all members have the equal capacity to block a policy proposal, with the chair mainly serving as a coordinator and host-nation for summits. For a long time, the identity of the chair was never cause for much international interest. That changed in 2012, when Cambodia took its turn.

2012 has gone down in ASEAN history as its least functional. It was the first time that the group failed to agree on language to include in their final joint statement concerning the South China Sea, a fact which has been widely attributed to Chinese pressure on Cambodia to stymie such language. At the time China was one of Cambodia’s biggest aid donors.

After Cambodia’s disastrous chairmanship, Brunei, Myanmar then Malaysia have taken the reins, without major incident. However, the South China Sea issue has been dominating regional debates this year, and the issue is currently before the Permanent Court of Arbitration (PCA) at The Hague.

Laos takes over as ASEAN Chair from Malaysia

A ruling on the Philippines’ argument disputing the validity of China’s nine dash line claims is expected by June 2016, but China has refused to participate in proceedings and has made it clear it will not recognise any ruling made by the court.

In February ASEAN announced the group was “seriously concerned” over China’s actions in the South China Sea, however the real test will come after the ruling is issued. Should the PCA find in favour of the Philippines’ claim, as many are predicting it will, the question will be whether ASEAN will support the Philippines in any attempt to enforce the ruling against China.

Laos’ significant economic reliance on China will likely put it in the same position as Cambodia was four years ago. With Brunei, Malaysia, Vietnam and the Philippines each claiming part of the sea, if Laos does bow to Chinese pressure on the nine dash line, ASEAN will face potentially destructive internal division.

Another issue that ASEAN would do well to tackle this year is the severe drought that has hit the Mekong region, where temperatures are soaring and the monsoon season has been delayed. On this issue, Laos may have to tread carefully, as their Don Sahong and Xayaburi dams are two of the most controversial of the 70 new dams expected to be operational along the Mekong by 2030.

Experts have suggested that the dams could jeopardise the livelihoods of the estimated 60 million people. Laos’ vested interest in hydropower brings its ability to deal with the drought impartially into question.

2016 is also a critical year for ASEAN as it has launched the AEC, a community 10 years in the making, whose future currently rests on Laos’ shoulders. The AEC is very ambitious for ASEAN, usually a cautious institution. However, the announcement of the launch of the AEC was only a first step, and it is still very much a work in progress.

Questions have been raised over whether Laos is equipped to deal with the range of issues it faces as chair this year. Already international media groups are asking whether they will be given sufficient access to cover the many ASEAN meetings which will be held in Vientiane. Laos is known for being a harsh climate in which to be a foreign journalist, announcing in January 2016 that the Foreign Ministry has to vet all articles produced by foreign media and journalists need to apply for visas 15 days in advance (when non-journalists can get a visa on arrival).

The Laos government denied it restricts foreign media, offering the illuminating statement: “We don’t have restrictions but procedures,” clarifying that the above rules only apply to film-makers, but that journalists covering the summits would need to be escorted by officers and have their questions and subjects vetted by the Foreign Ministry.

Some have labelled 2016 as Laos’ “coming of age”, and others have warned of the threat the country’s chairmanship poses to the region as a whole. Either way, it is certain that a great many challenges face Laos as it chairs ASEAN this year. There is certainly no guarantee that it is in a position to effectively manage the competing priorities of 10 member states.

Caitlin McCaffrie lives and works in Phnom Penh and has a major interest in Southeast Asian politics.

http://www.newmandala.org/will-laos-be-a-lousy-asean-leader/

 

BREXIT and British Nationalism: Emotion versus Economics


June 3, 2016

BREXIT and British Nationalism: Emotion versus Economics

Danish experience and an anti-EU vote

by Joergen Oerstroem Moeller in Singapore

“There is no compelling economic case for ‘Brexit’. Economic facts point unequivocally to Britain losing from leaving. The size of the loss is open for dispute; the direction is not. By contrast, the economic arguments for departure are vague and half-formed. Some Brexiteers say the UK would be less constrained by red tape. Yet Britain already is one of the least regulated economies. There is not the slightest evidence why a departing UK would have more or better opportunities for non-European Union trade

In a media maelstrom people fall back on whom they trust. Voters all over the world are losing confidence in mainstream politicians, giving their support to so-called plain speakers who (however improbably) appear to care for ordinary citizens, like the UK’s Boris Johnson and America’s Donald Trump.”Joergen Oerstroem Moeller

It hardly helps the Remain camp that, in the past, Prime Minister Cameron has been less than clear about his commitment to Europe. Not so long ago he was seen as a eurosceptic.

As a dedicated European, I fear the Leave campaign (BREXIT) will prevail on June 23. This prognosis of the British referendum outcome is based on experience of four Danish votes on European issues – in June 1992, May 1993, September 2000 and December 2015 – two of which took place when I was state secretary in the Danish Foreign Ministry.

We can’t rely too much on opinion polls. According to an old saying, politicians shouldn’t call referendums unless, from the beginning, they can be sure of the outcome. Yet three of the Danish referendums led to a No vote, despite a big Yes majority when they were announced.

There is no compelling economic case for ‘Brexit’. Economic facts point unequivocally to Britain losing from leaving. The size of the loss is open for dispute; the direction is not. By contrast, the economic arguments for departure are vague and half-formed. Some Brexiteers say the UK would be less constrained by red tape. Yet Britain already is one of the least regulated economies. There is not the slightest evidence why a departing UK would have more or better opportunities for non-European Union trade.

Yet – precisely because so much of the argument turns on economic questions – I conclude that the answer might be No to the EU. Many voters agree neither that the referendum should be fought on economic issues, nor with Prime Minister David Cameron’s dire analysis of the consequences of EU rejection.

Forecasts from the UK Treasury are played down as high-level conjecture, hotly contested by other experts. Danish referendum experience tells us, alas, that anti-establishment dissenters refuting official theses command great media attention, leaving the electorate baffled and reaping great gains for the anti-government cause.

In a media maelstrom people fall back on whom they trust. Voters all over the world are losing confidence in mainstream politicians, giving their support to so-called plain speakers who (however improbably) appear to care for ordinary citizens, like the UK’s Boris Johnson and America’s Donald Trump.

Such no-longer-fringe politicians address issues such as migration. They ply the electorate with talk of the ‘good old days’– in Britain’s case, the empire and the special relationship with the US. In fact, almost all Commonwealth countries, along with President Barack Obama, have made clear they would prefer Britain to stay in. But that cuts no ice with the voters.

The populists’ trade is in lines such as, ‘There will be mistakes made in the future, but let them be our own mistakes.’ That counts for much more than statistics about growth and costs of living.

It hardly helps the Remain camp that, in the past, Prime Minister Cameron has been less than clear about his commitment to Europe. Not so long ago he was seen as a eurosceptic.

When the Prime Minister tabled his list of proposed reforms, this implicitly did not exclude recommending departure if the result was unsatisfactory. Cameron has frequently stated that Britain could survive outside the EU without dire hardship. All this resonates badly with his present tone sketching cataclysm outside the EU. Short though the electorate’s memory may be, voters remember enough of what Cameron said before to hold him to at least some of the findings.

The 23 June vote is politically and psychologically complex. It is not a general election where party loyalty plays a role and simple questions decide the outcome. A cocktail of sympathies, emotions and sentiments are at work, reflecting attitudes towards politicians, neighbouring countries and the world.

Reflecting this broad interplay of forces, pro-EU campaigners are deluded if they think they can win the referendum solely on economic arguments. They will have to engage on the emotional questions too. Otherwise, on 24 June, Britain may find itself out in the cold.

Joergen Oerstroem Moeller is Senior Research Fellow, ISEAS Yusof Ishak Institute, and Singapore Management University, and a former State Secretary at the Danish Foreign Ministry. This is No.75 in the series – the 100th article will appear on 23 June.

OMFIF’s series on the UK EU referendum presents a wide variety of perspectives from Britain and around the world ahead of the June 23 poll. We are assuring a balance between many different points of view, in line with OMFIF’s overall neutral stance on the issue.

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© 2016 OMFIF

 

ASEAN: Laos–What’s Next?


May 21, 2016

ASEAN: Laos–What’s Next?

by Oliver Tappe

From transforming urban landscapes to high-speed rail and Chinese investment, in Laos development can be a double-edged sword.

hubschrauber

In November 2015, the people of Vientiane and countless visitors celebrated the annual That Luang Festival, the largest religious festival in Laos.On the third day, the traditional game of tikhi, a kind of hockey (see Simon Creak’s excellent historical analysis of the ‘national game’ in his book Embodied Nation), was held between teams of government officials and local people.

According to a Vientiane Times article, the result of the match indicated the city’s fate in the year to come. A victory by the local people’s team would foretell 12 months of happiness and well-being for the citizenry. A win by the officials “was seen as an indication that the townsfolk would be fairly governed for the coming year, thus ensuring contentment whatever the outcome.”

 

It was a series of matches, and I did not follow all the results. That left me wondering what 2016 will bring for Laos: good governance, and/or prosperity?

In his speech on the occasion of National Day, only a few days later on 2 December, President Choummaly Sayasone made it clear that both would be the case. Forty years of rule by the Lao People’s Revolutionary Party allegedly witnessed social and economic development – though with the goal of leaving the ranks of Least Developed Countries by 2020 yet to be achieved. “The people’s democratic political system has been improved and strengthened consistently,” said the President.

For Choummaly and the Party-State leadership, the last four decades appear a success story, a win-win situation for government and people, as represented by the auspicious tikhi game.

At present, ‘development’ manifests itself as a rapid transformation of Vientiane’s urban landscape and its rural outskirts. Construction sites for new roads and massive buildings dominate the municipality.

Chinese and Vietnamese investors have joined the current land run in Laos, one scandalous example being the grounds of the old National Museum, which will have to make way for a Chinese hotel complex (as will the National Library across Nam Phu Square). Thousands of Vietnamese labour migrants flock to the project sites, operating in a legal grey zone with the usual 30-day visa (and various additional “fees” for local authorities and police). They keep the border checkpoint at the Friendship Bridge busy with their frequent visa runs.

Visitors are struck by huge buildings suddenly appearing where there were rice fields before. The That Luang Marshes – traded with Chinese investors for a stadium on the occasion of the 2009 Southeast Asian Games – provide a surreal impression with their apparently over-scaled building projects.

 

Another “special achievement” (according to Choummaly) will be the new railroad crossing the country from Vientiane to the Chinese border as part of China’s ambitious Kunming-Singapore railway project.

The groundbreaking ceremony was held on National Day, of all days, with Somsavat Lengsavad – also responsible for the notorious Golden Triangle special economic zone in northwest Laos – acting as the real strongman of Lao PDR.

The scale of the project is stunning: 427 kilometres of rails, including 72 tunnels a totalling 183km; an estimated workforce of 100,000 (hardly to be recruited among the Lao population); and 150 hectares of land in Vientiane reserved for the new train station (for more detail see here and here).

All this will suffice to raise concerns among the Lao population, not least because of previous ‘development’ projects that often entailed land appropriation with only meagre and belated compensation.

Increasing state debt is another reason for scepticism. From the estimated costs of the railway project of US $6 billion, Laos will take a share of 480 million, which in 2013 would have made up more than 20 per cent of the country’s Gross Domestic Income!

China will provide an equivalent loan, to be covered by five potassium concessions. Potassium is in great demand as fertiliser for the Chinese agricultural sector. However, world market prices plummeted recently, so that Chinese companies will have to dig over quite a lot of soil to cover their costs.

Since large potassium reserves are located in the Vientiane Plain – densely populated and critical for wet-rice production – we can expect further dispossession and problems with wastewater and salinisation. The impending devastation of fertile soil in Laos for the export of Chinese fertiliser will be a sad irony.

Moreover, infrastructure and mining projects are important drivers of deforestation in Laos. It is no coincidence that the huge amount of illegal timber exported in recent years corresponded with an increase in Chinese and Vietnamese investments in mining, agriculture, forestry and hydropower in Laos.

In October 2015, a leaked, unofficial World Wildlife Fund report caused some commotion when calling attention to the rampant illegal logging going on in Laos – not uncommonly related to concessions where the respective companies extend their assigned logging areas far beyond the concession borders and into natural preservation areas.

In some cases, more than 90 per cent of the logging happened illegally. According to the WWF’s estimates, ten times more timber crossed the Lao-Vietnamese border than the official harvest in Laos.

Despite a logging ban issued in August 2015 by the Lao government, reports of trucks transporting timber across the border to Vietnam continue to raise concerns about ongoing deforestation. Logging in Laos – with 96 per cent of the total harvest exported to Vietnam and China – is largely uncontrolled, and includes protected species.

The Food and Agriculture Organization’s recent estimation of a 69.9 per cent forest cover – by taking a generous >10 per cent canopy density as vantage point – is certainly not very helpful for raising awareness of deforestation. Official data from Laos (>20 per cent canopy density) suggest a forest cover of about 40 per cent only.

All these data have to be taken with a pinch of salt, anyway, since they include tree plantations (like rubber) and regenerated (and even yet-to-be regenerated) woodland. Yet, it is evident that well-stocked forests with canopy closure of more than 70 per cent are rapidly disappearing, especially in southern Laos. Forest quality, in general, has also deteriorated in the last couple of decades, with dense forest having declined from 29 per cent in 1992 to 8.2 per cent in 2002.

It is hard to believe that illegal logging on such a scale could be possible without the collusion of Lao authorities. And it is very likely that the forest along the planned railroad track from Luang Namtha to Vientiane will disappear in a flash.

Who will benefit from these first results of the huge railway project? Probably not the local population in the Lao uplands. Some 3,058 hectares of land will be reserved for the project, with 50 meters on each side of the track fenced for security reasons – and deforested for sure. Somsavad’s  statement that the railroad will yield economic growth of 32 per cent, and be used by 4 million Lao passengers sounds bizarre (remember: Laos’ population is around 7 million).

Rather, the railroad will serve Chinese economic and geopolitical interests, not least given the immense corresponding Chinese investment in Thailand for the connection from Nongkhai to Bangkok (and further south towards Kuala Lumpur, Malaysia, and Singapore).

Land grabbing, deforestation, and pollution will continue to disquiet the population of Laos. However, open criticism of the Lao government is rare, the disappearance of Sombath Somphone three years ago remaining a constant warning for any civil society actor. Not surprisingly, the Lao government refused to include the ASEAN People’s Forum (APF) in the ASEAN summit to be held in November 2016.

Among the official justifications given for not organising a meeting of Southeast Asia civil society organisations were the lack of preparation time and insufficient funding. In addition, a Lao spokesperson asserted that “foreigners would like to use the ASEAN Peoples Forum to criticise ASEAN governments, and ASEAN governments do not agree”, and that Laos could not guarantee the safety of “extremist” activists. This is alarming news for any civil society actor within Laos and beyond.

The first thing in 2016, though, is the next Party Congress where – as usual – little shifts in the central committee will fuel speculations about rifts within the Lao political elite. Certainly tensions between influential families exist, mainly related to their respective business interests – everyday staple for gossip among citizens and expats in Vientiane.

Yet it can be expected that the ruling Party will maintain its disciplining function and be careful to negotiate individual economic claims to uphold the illusion of a strong, united leadership. Again emphasis will be put on the solidarity between Party-State and the and the “Lao multiethnic people” for the goal of future prosperity.

As President Choummaly puts it: “The trust of our people in the new regime and future of the nation has been lifted to new heights.”

Oliver Tappe is a senior researcher at the Global South Studies Center at the University of Cologne, Germany.

Forty years of Lao PDR: what’s next?

Whither ASEAN–The View of a Pessimist?


April 30, 2016

Whither ASEAN–The View of a Pessimist?

by Philip Bowring

http://www.asiasentinel.com/politics/obituary-association-southeast-asian-nations/

As 2016 chair of the Association of South East Asian Nations (ASEAN), the Laotian People’s Democratic Republic is leading the group toward political irrelevance. And that is doubtless how China, the hand controlling the Laotian glove puppet, would like to see it.

The three minnows of ASEAN, Brunei, Cambodia and Laos, have just undermined ASEAN’s efforts to present some sort of a united front questioning China’s claims and activities in the South China Sea. Feeble though these have been, with endless talk of a developing a Code of Conduct making scant headway, they have at least been commonly agreed.

Meanwhile China has continued aggressive actions, reclaiming land, driving Filipinos from the Scarborough Shoal which lies well within the Philippine Exclusive Economic Zone and sending fleets of fishing boats protected by armed Coast Guard vessels operating 1,000 miles from the China coast to steal the fish from the exclusive zones of Indonesia, Malaysia and Vietnam.

But creating facts in the sea while stalling the Code of Conduct, is not sufficient for China. On April 24 in the Laotian capital Vientiane, China’s Foreign Minister Wang Yi announced, with an understandable sense of triumph, that an “important consensus” had been reached with the three that disputes over the South China Sea should be resolved entirely on a bilateral basis and not involve ASEAN.

According to the Chinese, the consensus criticized any efforts to “unilaterally impose an agenda on other countries” and vowed that national sovereignty would prevail over the regional grouping. None of the other parties has contradicted Wang.

Timed for Hague Decision 

This China-created “consensus” was timed in advance of the decision expected in June from the Permanent Court of Arbitration in The Hague on a Philippine case against China. Beijing refuses to accept the jurisdiction of the court but needs to find some diplomatic support given that the court is widely expected to rule largely in the Philippines’ favor.

The statement also comes at a time when Indonesia, which long claimed not to be involved in the South China Sea disputes, is making more determined efforts to protect its fisheries and is growing concerned about the proximity of China’s nine-dash line claim to its gas fields off the Natuna islands.

In February, ASEAN expressed serious concern about developments in the South China Sea, with only Laotian and Cambodian opposition preventing a stronger statement. But now the three minnows have effectively said that neither ASEAN nor international courts play any role in regional issues.

In which case, why bother to treat ASEAN as having any political or diplomatic role? Just leave ASEAN as a loose economic grouping with some extra benefits such as visa-free travel and stop pretending that it is anything more. It has long been clear that the overriding national interests of the states abutting the South China Sea were not fully shared by Myanmar or Thailand, let alone landlocked Laos.

As it is, tiny Laos with its long Chinese border, is already the focus of massive Chinese investment and is a bridgehead for the advance of Chinese road and rail systems into Thailand. The Hun Sen regime in Cambodia was installed by the Vietnamese (?) but has come increasingly under Chinese influence thanks to money and historic Khmer suspicion of Vietnam.

Brunei Sultan Blazes Islamic Path

As for Brunei, making sense of the decisions of its autocratic Sultan Hassanal Bolkiah is never easy. Two years ago he announced that full Islamic law would be introduced in three stages, culminating in such features as cutting off limbs and stoning adulterers and homosexuals. At the same time, he is trying to reduce dependence on oil and make his petty kingdom into an Islamic version of Singapore, which would call for a far more open society than he consents to envision. All this is very confusing particularly given the Brunei royal family’s past reputation for gross extravagance and as a paradise for beautiful rent-seeking women who dare serious sexual harassment from randy royal children.

Brunei’s EEZ is known to contain oil and gas it needs to replenish its dwindling reserves. Much of its 200-mile EEZ lies within China’s nine-dash line so Brunei’s interest should be in expressing solidarity with Malaysia, the Philippines and Vietnam. But Chinese money may have been more persuasive. Or the Sultan may figure that being a tool of China makes it less likely that Brunei, population 250,000, will eventually be swallowed by Malaysia or Indonesia.

The current divide makes it a good occasion to re-think both the name and the concept of the region. The very name Southeast Asia is of recent creation – by the British in the 1940s to describe territories occupied by Japan from Burma (previously part of British India) to the Philippines vis so-called Indochina, the Malay Peninsula and the Indian (or Malay) Archipelago (Indonesia). ASEAN in turn was invented in the 1960s as an anti-Communist bloc from which grew something bigger but more oriented towards trade.

ASEAN Minus Five?

Trade cooperation is still needed but as a political tool for its three largest states, Indonesia, the Philippines and Vietnam, which between them account for 75 percent of its population, ASEAN is now counter-productive. Likewise Malaysia needs close South China Sea allies not merely to defend its own islands and exclusive zones but to protect the integrity of a nation divided by roughly 600 km of sea, some of which lies within China’s nine-dash line.

In other words, these four states plus Brunei, if it could be released from the clutches of a newly medieval ruler, need a new grouping, could find sensible compromises on their own overlapping claims and confront China with a firm and united voice.

Convincing Indonesia of the merits of such as idea would be difficult. Jakarta not only hosts the ASEAN secretariat, such as it is, but harbors a sense that it is both the leader of the group and voice of moderation on all issues. That may have been the case in the past when it still basked in its non-aligned legacy and China was on the margin of regional affairs. But now China’s power and expansionist interests have divided ASEAN and made a myth of Indonesian assumptions of quiet leadership.

Wang Yi’s April 24 statement was a blunt description of a reality that has long been evident but fervently denied by foreign ministries in many capitals wedded to ASEAN illusions. It can be denied no longer. China has spoken: ASEAN is irrelevant.

Brexit – Lies, lies and statistics


April 25, 2016

Brexit – Lies, lies and statistics

THE debate in Britain on whether the country should get out or remain in the European Union (EU) is fascinating on a number of scores.The statistics often adduced on the cost and benefit of doing one or the other have become mired in a sea of lies and contradiction. Many are confused, and are turning away from the numbers, often disbelieving them.

It has become a strategy the quitters have stumbled upon. They started it by contending the EU cost Britain £350mil a week. Money, they evocatively proclaimed, that is better spent on the ailing National Health Service. When their contention was contradicted, as the UK actually gets back quite a bit of that money, they quietly dropped that particular number.

They still played around with the aggregated £18bil number, ignoring EU rebates and discounts which left the net contribution at £8.5bil.There is no consensus number on how much economic activity and growth the 500 million EU market generates for Britain against that net contribution, but the remain side are clear, should Britain decide to leave on June 23, there would be a loss of over a million jobs, including 100,000 in the City of London. Denied of course by the quitters.

By the time the UK Treasury came out this week with its excellent study on the cost of leaving, all numbers were already wobbling. Thus some sobering numbers from the Treasury report, a £36bil hole in government revenue which would have to be filled either by a rise of 8 pence on basic rate of income tax or 7 pence on VAT, were dismissed as scaremongering.

The calculation that British households would be £4,300 poorer and the economy 6.2% smaller by 2030 was considered as not worthy of consideration coming, the quitters pronounced, from the “unreliable” UK Treasury – with no concern for the reputational damage to an important institution in government whose work is otherwise generally acclaimed.

Instead, an honest admission in that report that Britain was not likely to keep immigration numbers below 100,000 a year while remaining in the EU, was seized upon as failure by Prime Minister David Cameron to fulfill a previous promise.

The End of British Influence in World Affairs–BREXIT

Indeed it is the emotive issues like sovereignty, immigration and David Cameron’s benefit of a few thousand pounds from his father’s off-shore company, that are moving the masses. Never mind no wrongdoing on Cameron’s part was revealed by the Panama Papers – it was the big OC: off-shore company!

This is where the remain side may be losing out, the appeal to emotion, sometimes to some rather base instincts. The speech by Boris Johnson, leading leave proponent, at the start of the official campaign on the referendum a week last Friday, was full of it. It was rabble-rousing, filled with references to French knickers and how empty in the head Romanians were. Who could the remain side rouse the populace against?

Britons, Obama wants to work with Europe for Geo-Political Reasons

President Barack Obama can come along and intone how important the British voice is within Europe, how Britain’s weight would be much reduced outside the EU, and why the European venture started: to stop wars between its big powers and to unite the continent for the benefit of its peoples.

But who among the hoi polloi is going to listen to him, set against how Britain has lost its sovereignty to those bloody foreigners and un-elected bureaucrats in Europe? The scary thing is even the better informed have come to hold this deep grudge against the EU.

By discrediting the numbers the leave side has made the emotive issues the centerpiece, the matters of concern and for decision.Some rather excellent arguments the more level-headed informed public would consider quite persuasive get lost in the jingoistic din.

For example columnist Martin Wolf, who writes for the Financial Times, quite brilliantly made the point as Britain will always have the “perpetual option” to leave, the real question is why it should want to leave now, especially as the quitters have absolutely no idea how they want the UK to be associated with the EU afterwards. And would the other partner in an acrimonious divorce be ready to give any kind of good deal?

On the other hand, he demonstrates with supporting statistics, not all drawn from the Treasury, how exercising the option to depart would deliver immediate losses.But how many people read and understand Martin Wolf? The remain side has to make points such as his in SMS form: Don’t be stupid; We are going to lose our jobs; We have to pay more tax! For good measure, if there is something that could diminish the EPL – such as a freeze on mobility of football talent and higher ticket prices from lower British-centric earnings – the remain side might be on to a winner.

While there is no doubt the statistical cost and benefit analysis, and the geopolitical as well as geo-economic issues, do matter, and will have resonance with sober and informed voters, there are also those who are not particularly bothered about Britain’s voice in the world.

They have to be reached in language and on matters that more immediately concern them. Indeed, Alaister Campbell, the veteran communications practitioner, makes the point that there is a huge gap in the remain campaign – it is not hitting social media and has not addressed opinion formation that is derived from views chat and peer groups are exchanging.

For us in Malaysia, it is interesting to observe how even with an informed and sophisticated electorate, facts and figures can be manipulated and made confusing, even to the point of not accepting self-evident truths.How appeal to base instincts becomes an easy populist option which disfigures facts and, more damagingly, other people. The them, against us. We do this too often in Malaysia, even without the kind of existential debate now taking place in Britain.

For ASEAN, while it should guard against any sense of superiority and complacency, I must confess to a sense of amusement when it was put to me that perhaps our regional association is better founded than the EU. This is a turn-up for the books, as ASEAN has been frequently perceived, especially in academic circles in the UK, as insufficient and deficient.

There is the suggestion that perhaps ASEAN has been wise to proceed with its “community-building” in the way it has done, step-by-step, without rushing, with not too much legalese.

We must, however, not get too carried away. We can not make too much progress just to be safe. There are other regional organizations or associations to choose from which could become more eminent. The challenges within the “ASEAN Community”, such as has been achieved, must be addressed, like the development gap among member states and enhancing the business performance of MSMEs (micro, small and medium enterprises).

Slow and steady may be good, but it should not become somnambulistic. The EU might be going through a rough time – and the British in particular are now tossing and shaking it about – but the historic magnitude of its achievement should not be under-rated. Against this, Asean still has some considerable way to go.

Tan Sri Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB ASEAN Research Institute.