Indonesia–The Emerging Tiger of ASEAN


March 10, 2015

Indonesia–The Emerging Tiger of ASEAN with some challenges ahead

by Ajeya Bandyopadhyay, Kolkata, India | Opinion–http://www.thejakartapost.com

Indonesia's Open Government Partnership

Indonesia has experienced impressive growth in recent years. On the basis of purchasing-power parity (PPP), the gross national income per head doubled to US$4,730 during the decade to 2012.

The proportion of the population living in poverty fell by almost half, from 24 percent in 1999 to 12 percent in 2012 (World Bank). The booming young population joining the workforce created huge demand for real estate and brought foreign investment in construction and consumer goods.

Yet Indonesia’s growth has been quite uneven and perhaps unsustainable in the long run. Real consumption grew by about 4 percent a year on an average in 2003-2010. More alarmingly, for the poorest 40 percent of households it grew by only 1.3 percent.

In contrast the consumption by the richest 20 percent grew by around 5.9 percent. In other words the income disparity between rich and the poor is rising rapidly. Indonesia’s Gini Coefficient, a measure of income inequality, jumped from 0.29 in 2000 to 0.38 in 2011. High income inequality in the long run, hurts higher growth potential and disrupts social cohesion.

Growth momentum in the Indonesian economy has moderated somewhat over the past several months due to a weaker performance by the export sector, together with the impact of tighter monetary policy as the central bank has hiked interest rates to control inflationary pressures. This has resulted in GDP growth rate lowering from a 6 percent a year ago to around 5 percent year-on-year (year on year) till the end of 2014.

Although Indonesia made considerable progress in macroeconomic stabilization under former president Susilo Bambang Yudhoyono, a key challenge for the present administration will be to implement crucial microeconomic reforms.  In other words, the crucial symptoms of a country falling into the so-called ‘middle income trap’ are quite apparent in all corners of the economy.

Over 3 million migrants from the countryside arrive each year in Jakarta and other cities. Many of them take recourse of jobs in low-end services, hawking food by the roadside or selling things from handcarts. They are part of Indonesia’s vibrant informal economy, which accounts for nearly 70 percent of the country’s GDP.

The “local content” restriction is acting as a deterrent for many manufacturers to open factories in Indonesia.

A large workforce engaged in the informal sectors rarely earns the minimum wage or gets access to government benefits.

The World Bank estimates that labor productivity in Indonesia’s low-end services is about double that of agriculture but it is still one-fifth of that in manufacturing. In nutshell, it means that poverty will fall much faster if agricultural laborers shift to manufacturing instead of low-end services. However, the manufacturing sector in Indonesia still remains highly uncompetitive due to decrepit infrastructure, rigid labor laws and the government’s protectionist policies.

Even though the share of Indonesia’s labor force in agriculture has been in decline for decades, manufacturing share has not changed really much at all from the 13 percent in 2012. Local manufacturing remains mostly confined to palm oil and a few other primary commodities.

To a large extent, the “local content” restriction is acting as a deterrent for many manufacturers, especially in the consumer goods category, to open factories in Indonesia. In contrast services now employ about 44 percent of the labor force, up from 37 percent a decade ago.

Jokowi WidodoAlthough it is too early to predict, it can be stated with a reasonable degree of certitude that Indonesia is likely to miss the bus in manufacturing if infrastructure and human skills continue to remain the biggest challenges. A very high level of energy subsidies (on fossil fuel and electricity), around Rp 300 trillion in 2013 equivalent to 3 percent of GDP, also pose a significant burden on the taxpayers.

Already under implementation, a phased and sequenced approach to energy subsidy reform, while protecting the most vulnerable consumers, will encourage energy efficiency, shift consumer behavior and free up resources for critical social investment.

Widening access to affordable housing, clean water, sanitation, education and healthcare might slowly start to trickle down the benefits of rapid economic growth to the less fortunate and create adequate purchasing power to sustain the next generation of industrialization.

But the defining question remains if the current level of investment (as a percentage of GDP) is adequate to support the next level of strong growth. Historical precedents reveal that sustained higher levels of investment are crucial, along with the improved efficiency of investment. China is a golden case in point with investment to GDP ratio being 46 percent in 2012.

Fortunately, Indonesia, among other middle income countries of East Asia (excluding China) is maintaining a nearly 33 percent investment rate which is above the 25 percent threshold prescribed by the Growth Commission as the necessary condition for robust and high growth.

ria-bintan

Apart from creating world-class infrastructure — roads, airports, power plant, telecom and information super-highways, a significant proportion of investment and budgetary support should also be channelized into R&D, innovation and enrichment of human capital through high quality technical education and modern skill building.

Reforming the investment climate is essential; so are the conditions for innovation, to attract leading companies and a world-class talent pool. The present government should play a decisive role in determining Indonesia’s future economic policies: whether to pursue a strategy of globalization by encouraging greater international integration or adopt a more nationalist, protectionist approach. Each approach has its own pros and cons.

But what is apparent is that, the government needs to undertake a bunch of crucial policy and institutional reforms bundled with critical investment in hard and soft infrastructure.

All these should be accomplished with a sense of utmost urgency before it gets too late for the country to get out of the middle-income trap and graduates into a high income, industrialized nation providing a better quality of life to its citizens.
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The writer is presently a senior executive of Ernst & Young (India), advising government, multilateral and bilateral clients in the area of public policy, economic growth, energy policy and governance. He worked quite extensively in the South and Southeast Asian region, including Indonesia. This is a personal view.

Cambodia Realigns Its Foreign Relations


March 7, 2015

Cambodia Realigns Its Foreign Relations

by Murray Hiebert, Phuong Nguyen, YaleGlobal

http://www.asiasentinel.com/politics/cambodia-foreign-relations/

Samdech Techo Hun SenSamdech Techo Hun Sen of Cambodia

Cambodia’s foreign relations map has undergone dramatic shifts in the past six months. In the aftermath of Cambodia’s elections in July 2013, Beijing promptly recognized the results and congratulated Prime Minister Hun Sen and his ruling Cambodian People’s Party for their victory.

However, as anti-government protests led by the opposition Cambodia National Rescue Party grew in the weeks that followed, with protesters condemning the elections as fraudulent and calling on Hun Sen to step down, China has since largely remained silent and kept the prime minister at arm’s length.

At the same time, the Cambodian government in the past few months has moved to consolidate its relations with Vietnam following several years of deteriorating ties between the two neighbors. Phnom Penh made this move despite the anti-Vietnamese sentiment in Cambodia fed by opposition leader Sam Rainsy that has gained traction since the elections.

An ongoing political crisis and China’s apparent hedging on Hun Sen are behind this emerging geostrategic realignment.

Hun Sen is struggling to deal with growing opposition to his rule and grievances from the public on labor rights and governance at a time when Cambodia is at a critical political and economic crossroads. The country is seeking to become more integrated with the rest of Southeast Asia and the world in the years ahead. Cambodia’s youth are increasingly more educated and exposed to democratic norms and the outside world.

Hun Sen, whose strong-arm tactics largely worked in the past, now faces what is perhaps the most serious challenge to his rule in decades and is seeking outside recognition to boost his domestic legitimacy. The truth is, even if his party manages to win the next elections, Hun Sen must continue to deal with growing demands for greater transparency, better rule of law and more democracy.

China, until recently Cambodia’s most important patron, has not been willing to offer Hun Sen much political backing. While the two governments continue to maintain high-level meetings and exchanges, there has been a shift in Beijing’s policy toward Cambodia. Shortly after Hun Sen announced he would not step down in the face of opposition-led protests, an article in China’s state-controlled Xinhua in late December quoted Khmer analysts calling for national referendum on whether to organize new elections. Chinese leaders probably will not give Hun Sen the cold shoulder anytime soon, but they seem to be charting a middle course and slowly moving away from their past policy of wholeheartedly endorsing his government.

The social and political changes taking place in Cambodia have not been lost on Beijing. Chinese leaders could be hedging their bets on Cambodia’s political future to avoid the kind of strategic blunders they made in Myanmar in recent years. Beijing long threw its support to Myanmar’s military regime and was taken unaware by the sweeping reforms President Thein Sein launched in 2011. Chinese leaders did not begin to face up to the new political reality in Myanmar until Thein Sein suspended construction of the multibillion dollar Chinese-backed Myitsone dam.

As part of its new policy, China is engaging different actors in Myanmar’s emerging political scene, from parliamentary speaker Shwe Mann and army chief Min Aung Hlaing to opposition leader Aung San Suu Kyi. Chinese leaders who have largely given Thein Sein the cold shoulder are now considering an official invitation for Aung San Suu Kyi to visit China. Neither President Xi Jinping nor Premier Li Keqiang made a stop in Myanmar during their diplomatic blitz across Southeast Asia in 2013. Interestingly, Cambodia was not included in that itinerary either, despite being a staunch ally and a popular investment destination for Chinese businesses.

Meanwhile, relations between Vietnam and Cambodia have blossomed during the past few months. Hanoi has provided Hun Sen with much needed outside recognition and a boost to his legitimacy. In late December, Hun Sen visited Vietnam ahead of the 35th anniversary of the ouster of the Khmer Rouge by Hanoi’s troops, and Vietnamese leaders lavishly congratulated him for his role in rebuilding Cambodia.

Two weeks after Hun Sen’s trip, Vietnam’s Prime Minister Nguyen Tan Dung visited Cambodia, where the two leaders co-chaired a bilateral trade and investment conference – the largest since 2009 – and pledged to boost economic ties in banking, finance, agribusiness, tourism and telecommunications. At the end of 2012, Vietnamese businesses had invested around $3 billion in nearly 130 projects in Cambodia, making Vietnam one of the country’s top foreign investors. China, in comparison, invested a total of $9.17 billion in the country between 1994 and 2012.

Hanoi is closely watching the political turmoil in Cambodia, but still jumped at the chance to patch up ties with Phnom Penh following several years of irritation over border demarcation and Cambodia’s siding with China over the South China Sea disputes. In the foreseeable future, Hanoi still has an interest in sustaining regime stability in Cambodia and the ruling party’s grip on power given how overtly anti-Vietnamese Sam Rainsy has shown himself to be.

For instance, Rainsy has recently declared that Vietnam is encroaching on Chinese territory in the South China Sea, in the same fashion that he alleges the nation is grabbing Cambodian territory.

Offering Hun Sen political support when he most needed it, as well as strengthening bilateral economic ties, seemed like a logical choice for Vietnamese leaders. Hanoi is also concerned about the increasingly anti-Vietnamese rhetoric among the Cambodian population. Launching the new Cho Ray Phnom Penh Hospital, a joint venture between Vietnam’s Saigon Medical Investment and Cambodia’s Sokimex, was perhaps an effort to soften anti-Vietnamese sentiment through joint cooperation in the health sector.

But realistically, Hanoi’s support alone is insufficient to assure Cambodia’s and Hun Sen’s autonomy among foreign powers. Beijing’s noncommittal stance in recent months might also have prompted Hun Sen to look for support beyond his traditional patrons. For instance, he shrewdly used Japanese Prime Minister Shinzo Abe’s visit to Cambodia in November 2013 to boost his domestic legitimacy – by asking Abe for advice on electoral reforms – and his position vis-à-vis China.

Hun Sen and Abe issued an unusual statement on bilateral maritime security cooperation, underscoring the need to settle disputes peacefully and according to international law. The two countries agreed to boost military ties, with Japanese experts, including those from Japan’s Self-Defense Forces, expected to provide training to Cambodian military personnel for future United Nations peacekeeping operations. And in stark contrast to what happened at the ASEAN Regional Forum in Phnom Penh in 2011, Cambodia did not object to tabling a discussion on China’s Air Defense Identification Zone over the East China Sea during the Japan-ASEAN summit in Tokyo in December 2013.

Cambodia is evolving quickly, both politically and economically, and it remains to be seen whether Hun Sen can retain power for several more election cycles. Beijing’s new strategic calculus in Cambodia has suddenly left Hun Sen feeling vulnerable, at least for the moment. This has prompted Hun Sen to work to boost his standing among other regional actors, particularly Japan, Vietnam and ASEAN, by offering them his support on issues of contention with China such as territorial disputes in the East and South China seas.

(Murray Hiebert is senior fellow and deputy director of the Sumitro Chair for Southeast Asia Studies at the Center for Strategic and International Studies (CSIS) in Washington, DC. Phuong Nguyen is a research associate with the CSIS Sumitro Chair.)

Reasons why TPPA must be defeated


January 4, 2015

This commentary is intended for  Prime Minister Najib and Din Merican lastestour MITI Minister. To both of them, this is my message on TPPA. Thread carefully.Please don’t sell Malaysia’s interest to Obama and his cohorts and corporate America. What did Najib say to the US President during his golf diplomacy in Hawaii on this subject? I wonder since his administration, like the Obama’s, is always opaque when it comes matters of public interest.–Din Merican

Reasons why TPPA must be defeated

by Bernie Sanders

The Trans-Pacific Partnership is a disastrous trade agreement designed to protect the interests of the largest multi-national corporations at the expense of workers, consumers, the environment and the foundations of American democracy. It will also negatively impact some of the poorest people in the world.

Najib dah sampaiWhat was the Deal with Obama?

The TPP is a treaty that has been written behind closed doors by the corporate world. Incredibly, while Wall Street, the pharmaceutical industry and major media companies have full knowledge as to what is in this treaty, the American people and members of Congress do not. They have been locked out of the process. Further, all Americans, regardless of political ideology, should be opposed to the “fast track” process which would deny Congress the right to amend the treaty and represent their constituents’ interests.

The TPP follows in the footsteps of other unfettered “free trade” agreements like NAFTA, CAFTA and the Permanent Normalized Trade Agreement with China (PNTR). These treaties have forced American workers to compete against desperate and low-wage labor around the world. The result has been massive job losses in the United States and the shutting down of tens of thousands of factories. These corporately backed trade agreements have significantly contributed to the race to the bottom, the collapse of the American middle class and increased wealth and income inequality. The TPP is more of the same, but even worse.

During my 23 years in Congress, I helped lead the fight against NAFTA and PNTR with China. During the coming session of Congress, I will be working with organized labor, environmentalists, religious organizations, Democrats, and Republicans against the secretive TPP trade deal.

Let’s be clear: the TPP is much more than a “free trade” agreement. It is part of a global race to the bottom to boost the profits of large corporations and Wall Street by outsourcing jobs; undercutting worker rights; dismantling labor, environmental, health, food safety and financial laws; and allowing corporations to challenge our laws in international tribunals rather than our own court system. If TPP was such a good deal for America, the administration should have the courage to show the American people exactly what is in this deal, instead of keeping the content of the TPP a secret.

10 Ways that TPP Would Hurt Working Families

1. TPP will allow corporations to outsource even more jobs overseas.

According to the Economic Policy Institute, if the TPP is agreed to, the U.S. will lose more than 130,000 jobs to Vietnam and Japan alone. But that is just the tip of the iceberg… Service Sector Jobs will be lost. At a time when corporations have already outsourced over 3 million service sector jobs in the U.S., TPP includes rules that will make it even easier for corporate America to outsource call centers; computer programming; engineering; accounting; and medical diagnostic jobs.

Manufacturing jobs will be lost. As a result of NAFTA, the U.S. lost nearly 700,000 jobs. As a result of Permanent Normal Trade Relations with China, the U.S. lost over 2.7 million jobs. As a result of the Korea Free Trade Agreement, the U.S. has lost 70,000 jobs. The TPP would make matters worse by providing special benefits to firms that offshore jobs and by reducing the risks associated with operating in low-wage countries.

2. U.S. sovereignty will be undermined by giving corporations the right to challenge our laws before international tribunals.

The TPP creates a special dispute resolution process that allows corporations to challenge any domestic laws that could adversely impact their “expected future profits.” These challenges would be heard before UN and World Bank tribunals which could require taxpayer compensation to corporations. This process undermines our sovereignty and subverts democratically passed laws including those dealing with labor, health, and the environment.

3. Wages, benefits, and collective bargaining will be threatened.

NAFTA, CAFTA, PNTR with China, and other free trade agreements have helped drive down the wages and benefits of American workers and have eroded collective bargaining rights. The TPP will make the race to the bottom worse because it forces American workers to compete with desperate workers in Vietnam where the minimum wage is just 56 cents an hour .

4. Our ability to protect the environment will be undermined.

The TPP will allow corporations to challenge any law that would adversely impact their future profits. Pending claims worth over $14 billion have been filed based on similar language in other trade agreements. Most of these claims deal with challenges to environmental laws in a number of countries. The TPP will make matters even worse by giving corporations the right to sue any of the nations that sign onto the TPP. These lawsuits would be heard in international tribunals bypassing domestic courts.

5. Food Safety Standards will be threatened.

The TPP would make it easier for countries like Vietnam to export contaminated fish and seafood into the U.S. The FDA has already prevented hundreds of seafood imports from TPP countries because of salmonella, e-coli, methyl-mercury and drug residues. But the FDA only inspects 1-2 percent of food imports and will be overwhelmed by the vast expansion of these imports if the TPP is agreed to.

6. Buy America laws could come to an end.

The U.S. has several laws on the books that require the federal government to buy goods and services that are made in America or mostly made in this country. Under TPP, foreign corporations must be given equal access to compete for these government contracts with companies that make products in America.

Under TPP, the U.S. could not even prevent companies that have horrible human rights records from receiving government contracts paid by U.S. taxpayers.

7. Prescription drug prices will increase, access to life saving drugs will decrease, and the profits of drug companies will go up.

Big pharmaceutical companies are working hard to ensure that the TPP extends the monopolies they have for prescription drugs by extending their patents (which currently can last 20 yea rs or more). This would expand the profits of big drug companies, keep drug prices artificially high, and leave millions of people around the world without access to life saving drugs. Doctors without Borders stated that “the TPP agreement is on track to become the most harmful trade pact ever for access to medicines in developing countries.”

8. Wall Street would benefit at the expense of everyone else.

Under TPP, governments would be barred from imposing “capital controls” that have been successfully used to avoid financial crises. These controls a range from establishing a financial speculation tax to limiting the massive flows of speculative capital flowing into and out of countries responsible for the Asian financial crisis in the 1990s. In other words, the TPP would expand the rights and power of the same Wall Street firms that nearly destroyed the world economy just five years ago and would create the conditions for more financial instability in the future. Last year, I co-sponsored a bill with Sen. Harkin to create a Wall Street speculation tax of just 0.03 percent on trades of derivatives, credit default swaps, and large amounts of stock. If TPP were enacted, such a financial speculation tax may be in violation of this trade agreement.

9. The TPP would reward authoritarian regimes like Vietnam that systematically violate human rights.

The State Department, the U.S. Department of Labor, Human Rights Watch, and Amnesty International have all documented Vietnam’s widespread violations of basic international standards for human rights. Yet, the TPP would reward Vietnam’s bad behavior by giving it duty free access to the U.S. market.

10. The TPP has no expiration date, making it virtually impossible to repeal.

Once TPP is agreed to, it has no sunset date and could only be altered by a consensus of all of the countries that agreed to it. Other countries, like China, could be allowed to join in the future. For example, Canada and Mexico joined TPP negotiations in 2012 and Japan joined last year.

Bernie Sanders (I-Vt.) was elected to the U.S. Senate in 2006 after serving 16 years in the House of Representatives. He is the longest-serving independent member of Congress in American history. Elected Mayor of Burlington, Vt., by 10 votes in 1981, he served four terms. Before his 1990 election as Vermont’s at-large member in Congress, Sanders lectured at the John F. Kennedy School of Government at Harvard and at Hamilton College in upstate New York. Read more at his website.

 

US Asian Foreign Policy


October 26, 2014

US Asian Foreign Policy

by Dr. Munir Majid@www.the star.com.my

“US foreign policy in Asia, therefore, has to be delicate and sensitive enough to adjust to what can be described without exaggeration as seismic economic change. On the one hand, it should not be drawn too deeply into exclusively political-security manifestations despite China’s unacceptable belligerent and assertive actions. On the other, America must adjust to Asia’s economic rise.”–Dr. Munir Majid

Tan_Sri_Dr_Munir_MajidTHE United States is a global power. Asia the largest continent on earth. The Asian economies of the proposed RCEP (Regional Comprehensive Economic Partnership) alone now constitute 30% of global output, with consistently the highest growth rates and holding the largest reserves in the world.

It is not likely the United States would have missed Asia in the conduct of its foreign policy in pursuit of its interests. The interminable discussion, particularly among academics, on the US pivot or rebalance to Asia, following President Barack Obama’s use of the former term, can be overdone. It can result in the wood being missed for the trees.

That discussion, furthermore, leads to concentration on the military and security aspects of US foreign policy in Asia. US policy-makers lend their weight to this, with statements such as those by former US Secretary of State Hillary Clinton at the Asean Regional Forum in Hanoi in 2010 or previous Defence Secretary Leon Panetta at the Shangrila Dialogue in 2012.

Clinton had said freedom of navigation and the peaceful settlement of disputes were vital to US interests in the region. Panetta said that in the rebalance, US naval forces in the Pacific would be increased to 60% from the present 50%.

All this was said in relation to China, in the context of disputes the rising Asian power has with a number of states in the East China Sea and South China Sea. It did not take a leap of imagination to leave the impression the new emphasis of US foreign policy in Asia is primarily political-security in nature – and is intended to contain China as it became more assertive in the sea disputes.

A number of reasons has conventionally been offered for China’s greater assertiveness. It is a rising power; these things historically happen. On the other hand the US is a declining power; often a parallel is drawn with the conflict between Sparta and Athens in the 5th century BC which ended the latter’s domination of ancient Greece.

It is also asserted that there has been a loss of central control in China of the country’s bureaucratic political structures which allowed the fisheries department, for instance, to go ahead of the foreign ministry in asserting the sea claims. Unlikely as it may sound, this is not impossible especially as another reason offered is not mutually exclusive: the desire, at China’s centre, to shore up legitimacy at home at a time of increasing domestic stress, such as contending with the social consequences of slowdown in GDP growth from 10% to 7.5%.

All these reasons are not implausible, although I would add ASEAN’s desultory approach in pursuing the code of conduct under the terms of the Declaration of the Conduct of Parties in the South China Sea of 2002 until the Scarborough Shoal stand-off in 2012 between China and the Philippines, and the failure of foreign ministers from the regional grouping to agree on a joint communique for the first time in that same year, gave Beijing time and space to fashion that greater assertiveness whatever its leitmotif.

In the context of US foreign policy in Asia, the China Question has become predominant again as it was all those years ago in regard to recognition of the communist regime, its representation of China at the United Nations and final establishment of diplomatic relations with Beijing in 1979.

The objective of balancing, if not containment of, China cannot become the sole reason for the United States’ greater involvement in Asia. It delivers a political-security good which most countries in the region secretly desire, but it cannot become the sum total of US foreign policy in Asia.

The drama of the sea disputes has obscured the good reason for US’ greater interest in Asia which is primarily economic, the region’s dynamism which has moved the centre of global economic gravity eastwards to the Asia Pacific. While the political-security interest may secure economic benefits, it can also spoil their achievement if relations between US and China are possessed by such a concern alone.

What has been happening in Asia is that both US and China are driving each other into positions which are antagonistic and not cooperative. Leaving aside military chest-thumping and bellicose diplomatic language, they are also trying to exclude, or at least marginalise the other, in the organisation of Asia-Pacific regional economic cooperation.

The RCEP (negotiation for which involves Asean and six Asia-Pacific states) does not include the United States. China has not been invited to join the Trans-Pacific Partnership (TPP) negotiations. Vietnam, for instance, is a negotiating partner which would not pass the same pre-qualification as China if the US had some such objective test. It is realpolitik – and the compliment is returned with the RCEP.

Other Asian states are being forced into making a choice between the two constructs, whether they are members, or potential members, of both. Even if it is argued the two groupings will ultimately coalesce, the burning issue is the standards and style of trade and investment relations which differ, with the TPP particularly bearing heavy American imprint.

The US has done well in signalling its economic interest in Asia with the rebalance, often considered as the second pillar of the pivot to Asia. Understandably, having been at the centre of the international economic system that had driven Asian growth, it now wants, as a long-established Pacific nation, to share in further regional prosperity – by still being at that centre and by entrenching as well as by strengthening the rules of economic conduct.

Asian restoration

The latter gives rise to problems in the pursuit of US foreign policy objectives in Asia. It is a new Asia the US is dealing with, not the Asia of yore when the American writ was overwhelming.

It is a more confident Asia. Indeed the whole sweep of the change in the centre of economic gravity is something of an Asian restoration. Earlier this month, the International Monetary Fund ranked China’s economy as the world’s biggest in purchasing power parity terms. American predominance in at most the last century is over. The Chinese economy which was the biggest in many more hundreds of years is now back.

The Economist observed: “The brief interlude in which America overshadowed it (China) is now over.”

Asia has also looked on as the American capitalist system came close to meltdown in the 2008 crisis because of many excesses embedded in the rules of the economic game. Rules and forms of crisis management which America taught Asia never to entertain were employed to save the economy. There have not been contrition and enough humility afterwards.

Indeed it would seem to Asia some of those rules are being strengthened with a vengeance in American trade and investment proposals, such as to be found in the TPP, particularly in respect of corporate rights against the state. Have not any lessons been learned both from recent economic experience and from the historic rise of Asia in the desire – perfectly understandably – to further Americans interests?

Yet the system America offers is still the best to achieve optimal economic outcomes. But it has to be substantially adjusted to avoid considerable social and political cost, and to reflect that other countries, especially in Asia, have grown up and grown big.

US foreign policy in Asia, therefore, has to be delicate and sensitive enough to adjust Barack Obamato what can be described without exaggeration as seismic economic change. On the one hand, it should not be drawn too deeply into exclusively political-security manifestations despite China’s unacceptable belligerent and assertive actions. On the other, America must adjust to Asia’s economic rise.

Schemes of trilateral or quadrilateral alliances, even of a “soft” kind, involving the United States, Japan, India and/or Australia, are provocative. While it is always stated by the advocates they are not against China, this is what Beijing reasonably feels. At the very least they isolate China. Alliances have a history of bringing about precisely the outcomes they purportedly want to avoid.

CHINA-RUSSIA-UN-DIPLOMACYChina for its part should not continue to be a stick in the mud, carping and complaining, self-righteous in proclaiming always that others are in the wrong, never Beijing. Whereas China’s actions in the South China Sea particularly have been bullying and abominable. Its sovereignty over areas it claims is not God-given. It is disputed. Other states have rights. It cannot go about behaving in the vein that might is right. It must recognise international laws and the friendships it eschews.

Actually, both America and China must give substance to the new type of great power relationship which was identified in the Obama-Xi Jinping meeting in Sunnylands, California in June last year. As Henry Kissinger wrote in the Washington Post in March this year the US must articulate its own vision for the evolving international order that is acceptable to both countries.

On the other hand, China should not expect to replicate principles of that kind of relationship which it had first forged with Russia in the mid-1990s. That model would not fit. Russia is not the United States. As the status quo global power and the revisionist rising regional power due weight must be recognised in each other. A very difficult process no doubt but neither should be in denial of the other’s position and a creative relationship can be forged without recourse to tired old foreign policy constructs.

ASEAN_logo_1ASEAN too has a role beyond tedious repetition of the ASEAN platform being the basis of regional cooperation and security. That platform will float away if there was not a stronger foreign policy positioning – particularly on the South China Sea disputes. There is some belated effort on the code of conduct but to always work from the technical and official position on these issues upwards without clear leadership at the top is disappointing to say the least. How many times have Asean leaders focused for more than half an hour on the South China Sea issues? There has to be deep concentrated effort.

The fear of failure cannot rule the day. If ASEAN states cannot take on at least one major foreign policy position in their region, how could they expect the US and China to negotiate on the more daunting evolving international order?

The states of Asia as a whole, of course, must also play the responsible part of grown-up countries to ensure their new found prosperity and outstanding economic prospect are not upset by stupid swagger and assertive expression. They must remember they still have some way to go. Future prospect is not current reality.

And, as the present global superpower, the US has a complex role quite unlike the situation in the past when its word was law. It is a different world. Therefore it cannot be the same America.

 

Without Bureaucratic Cobwebs, ASEAN cooperation can now move forward


October 10, 2014

Without Bureaucratic Cobwebs, ASEAN cooperation can now move forward

by Tunku A. Aziz@www.nst.com.my

tunku-azizWHEN ASEAN came into being on August 8, 1967, it was largely driven by considerations of peace and security among neighbours in a troubled region. We Malaysians had just emerged, with scars to show, from Indonesia’s “Konfrontasi”. There were admittedly serious concerns about countries in Southeast Asia being drawn inexorably into the Communist orbit, but Malaysia refused to be stampeded into embracing the “Domino Theory”.

Although the Malayan Communist Party-inspired insurgency was far from over, we were confident that we were in effective control of our country’s security and with the right mix of poverty eradication and industrial development policies, we could manage our own affairs without unwelcome United States intervention.

Malaysians were with their elected government. Embracing the US would have been the kiss of death for us, an emerging nation in search of a role and an identity. We had to develop our own home- grown model for regional cooperation.

We created ASEAN, then made up of Thailand, Malaysia, Singapore, Indonesia and the Philippines, in the confident expectation that it offered the best hope for our vision of a conflict-free region. However, ASEAN’s founding fathers, in envisioning their grand design, had not given sufficient thought to the role that their civil servants would be playing in policy formulation and implementation. The passage towards some semblance of unity of purpose was excruciatingly slow. ASEAN official inertia had to be experienced to be believed.

The private sector in ASEAN wanted to move at a much faster rate and felt that the civil servants were not only dragging their feet but were being totally obstructive. The ASEAN Chambers of Commerce and Industry (CCI) were quick to see the business potential presented by a regional market of more than 250 million people, and took to the new opportunities like duck to water, only to find that the bureaucrats had forgotten to fill up the pond.

Several industry-based working groups were formed and important trade links were made with the US and European Union chambers of commerce and industry. I remember a trip to Washington DC in the ‘70s by the ASEAN CCI and being received in the White House where a meeting with US officials and senior business leaders was arranged in the Franklin Room.

US Vice-President Walter Mondale was to host the meeting but he had to be called away on urgent state business. We were going all out to promote ASEAN to the American business community, but soon realised that we were so far ahead of the ASEAN governments that we were put in an embarrassing position. We cajoled, huffing and puffing, but to no avail. We were stuck in a bureaucratic maze.

We were running out of patience and the inevitable clash was not long coming. On Dec 12, 1979, some 12 years after the formation of ASEAN, 250 top ASEAN business leaders from all the national chambers met in Singapore. This was the opportunity I needed as chairman of the ASEAN CCI Working Group on Industrial Complementation to read the riot act.

Let The Straits Times of Singapore of December 13 echo my disappointment. Under the headline, “ASEAN civil servants rapped — ‘Too rigid an attitude towards cooperation”, it reported:

“Malaysian business leader, Tunku Abdul Aziz, yesterday lashed out at civil servants of Asean for their rigid, uncompromising and hopelessly impractical attitude towards closer regional cooperation.

Tunku Abdul Aziz said: “I have detected of late evidence of disenchantment and disquiet within the private sector with the way in which the question of economic and industrial cooperation is being handled by the economic ministers through their Committee on Industry, Minerals and Energy (Coime).

“A measure of the general euphoria prevailing throughout the ASEAN private sector is that until a few months ago, most of us were satisfied that Coime understood its role and was prepared to exercise its power and authority in a way that would satisfy private sector aspirations.

“What we did not know, of course, was that this body of hardened bureaucrats, sitting collectively in splendid isolation and insulated from the reality of a real world, was no more ready to deal with its appointed task than the Ayatollah is ready to grant the Shah of Iran the freedom of the city of Teheran.”

Questioning the effectiveness of the guidelines laid down by ASEAN civil servants on industrial complementation of regional projects, Tunku Aziz said:

“In spite of the usual pious declarations of selfless devotion to economic cooperation, these guidelines must be seen for what they are. They are rigid and uncompromising and are so obviously intended to protect the national position at all costs.

“These guidelines are a blight on the concept of regional cooperation. It is not surprising that we are beginning to wonder whether our governments are intellectually ready to cope with the rather special demands of a concept that requires a high degree of political will.

“Let us hope the governments of ASEAN will recognise the importance of private sector participation and involvement at all levels of policy formulation so that what emerges is a concerted effort distilled from the best available talents from both the government and the private sector.”

The Business Times Malaysia in its editorial, “ASEAN — useful plain speaking”, said that: “It needed to be said, sooner rather than later. But no one did until Wednesday when Tunku Abdul Aziz, in his capacity as Chairman of the ASEAN CCI’s Working Group on Industrial Complementation, hit out at the official Committee on Industry, Minerals and Energy in which rests the responsibility for reviewing ideas for reviewing ideas in these fields.”

The Asian Wall Street Journal waded in to support my “blast”, reporting my attack on the official guidelines that “are intended to regulate and control rather than promote and encourage private sector participation in and contribution to economic cooperation. These guidelines are a blight on the concept of regional cooperation”.

The tenor of my speech took ASEAN ministers and their bureaucrats by complete surprise, but it had the desired effect. Governments understood our position better and helped to remove much of the cobweb that had befuddled their collective mind.

Today, ASEAN is jogging along nicely and thriving. Successive regional leaders, 4th PM of Malaysiaparticularly Tun Dr Mahathir Mohamad, can take pride in nurturing ASEAN to become a regional force for good.

ASEAN has been well-served by many distinguished secretaries-general, but in my considered opinion, the best ever was undoubtedly Dr Surin Pitsuwan of Thailand, the quiet and thoughtful man of diplomacy, the United Nations Secretary-General we never had because he was in the wrong party and the government of Thailand did not support his candidature for that high office — a great loss to the world.

The ASEAN bureaucrats of my time very nearly scuttled the vision and hopes of millions of Southeast Asians for their rightful place in the larger global scheme of things. Mercifully, in spite of them, ASEAN has arrived.

Symmetrical characters, parallel fates


August 19, 2014

Symmetrical characters, parallel fates

COMMENT by Terence Netto@www.malaysiakini.com

Men of destiny seek proof of their greatness by exercising a license to go too far, and as the fear grows that destiny may have played a terrible joke on them, they double and redouble the stakes on the wheel of fortune. In this way they destroy themselves.-Terence Netto

hype_najib1Now that the cat has sprung out of the bag and is dashing about among a wider public, the only news would be if anyone has died of shock from the revelation that Dr Mahathir Mohamad has withdrawn support for Prime Minister Najib Abdul Razak.

After months of premonitory sniping at the Premier by his satraps, notably A Kadir Jasin and Zainuddin Maidin, the man himself has come out in the open with a formal declaration of hostilities. There is no more cogent example of déjà vu nor self-parody than the producer himself reiterating he is about to re-start a familiar business – the demolition of a sitting PM.

A fortuitous benefit of this incipient extravaganza – to the federal opposition, Pakatan Rakyat – has been the confirmation that their self-destructive shenanigans in Selangor have furnished the opportunity to the premier demolisher of incumbent PMs to fix on this as the most opportune time for the unleashing of his decanal decapitation of national head honchos, not to mention a few deputies as well.

The wonder is that anyone at all, at this advanced juncture of their career trajectories, could be surprised at how the two protagonists, one of the drama about to start and the other of an already running one in Selangor, confirm a truism of classical Greece – that character is fate.

Character here is taken to mean the way in which a person confronts the things that happen to him, a number of which may come about as a consequence of his characteristic behavior. Fate is the sum of the decisive things that happen to a person, whether as a result of his characteristic behavior, or fortuitously, at the behest of some transcendent power.

That the characters of Mahathir and Anwar Ibrahim have fed off each other is by now a staple of Malaysia’s modern history. Malaysians are beginning to realise that the one’s career could not have been possible without the other and vice versa.

Truly, the reformasi movement would not have been catalyzed into something urgent and insistent without what Mahathir did to Anwar in September 1998 and how the latter reacted to the events.

Before September 1998, the movement was an inchoate yearning; after Anwar’s jailing and obloquy, reform became a national agenda. Mahathir would not have been able to prolong his tenancy of the PM’s office – 22 long years – without Anwar’s lieutenancy for 16 years of that tenure.

Certainly, the accretion of power to the office of the PM and UMNO President could not have taken place without Anwar’s tacit support, as heir presumptive to Mahathir.

The long running drama of their interaction since they first met in 1971 and their influence on the life of this nation over the last four decades is so pivotal that our history itself becomes confused with their own biographies which goes to illustrate historian Thomas Carlyle’s theory that humanity advances by means of these demi-gods or ‘heroes’.

Succumbing to the danger of self parody

But as the philosopher Ralph Waldo Emerson cautioned: “Every hero becomes a bore at last”: the two are presently in danger of inducing a yawn in arenas they once bestrode as giants. If it happens it would be due to their succumbing to the danger of self-parody each is tempted to flirt with, Mahathir more so.

Tun Dr. MahathirMen of destiny seek proof of their greatness by exercising a license to go too far, and as the fear grows that destiny may have played a terrible joke on them, they double and redouble the stakes on the wheel of fortune. In this way they destroy themselves.

By claiming at the commencement of his unseat Najib campaign, after the fashion of Brutus, that it is not because he loves his leaders less but that he loves the people and country more, Mahathir is parodying what Anuar Musa, then a young delegate from Kelantan to the UMNO general assembly in 1983, who quoted from the Shakespearean play Julius Caesar the words Brutus used before stabbing Caesar. The Roman emperor was surprised that a friend like Brutus could be part of squad of assassins with regicide in mind.

Anuar cited the quotation in the course of rhetorical flights faintly critical of Mahathir’s leadership of UMNO. Mahathir’s response was characteristically brusque. “Brutus stabbed Caesar” he reminded the UMNO delegates. In other words, back-stabbers are back-stabbers, their lofty motives notwithstanding.

If Mahathir unseats Najib, the wheel would have come full circle in his career: he began his ascent to the top of the greasy pole by destroying one UMNO President (Tunku Abdul Rahman) and is set to end his career by destroying the son of the man (Abdul Razak Hussein) who gave him the chance to rise after a display of Oedipal rage against the Tunku.

If PKR allows Anwar to convert the party into his personal fiefdom, his thrust to the top of the totem pole that began with his rebellion against nepotism, cronyism and corruption in 1998 would flirt with what could well be a fatal contradiction. Not for the first time in history would pivotal allies-turned-adversaries have symmetrical characters/parallel fates.