Is Lee Kuan Yew’s strategic vision for Singapore still relevant?

April 12, 2019

10 April 2019

Author: by Han Fook Kwang, RSIS

 

ttps://www.eastasiaforum.org/2019/04/10/is-lee-kuan-yews-strategic-vision-for-singapore-still-relevant/

The thinking of Singapore’s late founding prime minister Lee Kuan Yew has shaped the country’s foreign policy since its independence in 1965. But the world is changing with the shifting geopolitical balance of power, disruptions caused by digital technology, the rise of populism and the backlash against globalisation. Is Lee’s thinking and strategic vision still applicable in this new world?

On the fourth anniversary of his passing, the question looms large for Singapore. As a small state dependent on the outside world for economic growth, and on larger powers to keep the regional peace, it is particularly vulnerable to how the international order is changing.

There are four elements of his approach to foreign policy that continue to be relevant but will also come under great pressure in the years to come.

First is the idea that a small state like Singapore needs a credible armed forces to deter would-be aggressors. It was a priority when the country suddenly became independent in 1965 and found itself having to build an army from scratch.

 

Lee’s firsthand experience of Japanese occupation in 1941 as well as the 1965 forced separation from Malaysia had a profound impact on his thinking about security. Singapore has since been unrelenting in building up its armed forces, allocating 30 per cent of government expenditure this year on defence, security and diplomacy.

Developing this military capability has also meant closer ties with the United States from which Singapore buys most of its military equipment, including advanced fighter aircraft. Singapore’s close security ties with the United States are a key part of Lee’s strategic vision but will also come under pressure as the balance of power shifts to a rising China.

Whatever happens, Singapore’s commitment to its own defence that Lee first defined will not change. ‘Without a strong economy, there can be no defence’, Lee asserted, ‘[without] a strong defence, there will be no Singapore. It will become a satellite, cowed and intimidated by its neighbours’.

The second pillar of Lee’s foreign policy stems from his realist view of how a small state can best survive in a world dominated by more powerful actors. Creating space for Singapore has been an unending effort for Singaporean officials, resulting in the many linkages the country has internationally, and its support of multilateral organisations such as ASEAN, the ASEAN Regional Forum and the Comprehensive and Progressive Agreement on Trans-Pacific Partnership.

Lee believed regional peace and stability was best achieved by having the major powers engaged in the region. Not just the United States but also China, Japan, Australia, India and European countries.

Despite the United States being the pre-eminent power in Asia throughout his years in office, he did not anchor Singapore solely in the US camp. Instead he worked hard to expand Singapore’s international space, for example working closely with Chinese leaders to expand economic and political ties.

But China’s rise and its growing assertiveness in pursuing territorial claims in the South China Sea will test how ASEAN, including Singapore, manages the new reality. For Lee the answer lies in continued US engagement in the region. ‘If there is no counterbalance from the US, there will be no room to manoeuvre for smaller Asian countries. When you have two trees instead of one, you can choose which shade to be under’. If Lee were alive today, he would continue looking for more shade.

The third element of Lee’s strategic vision is how to realise Singapore’s strategic goals through developing close relationships with leaders that mattered to Singapore. The best example was Lee’s personal friendship with then Indonesian president Suharto.

They could not have had a worst start after Singapore executed two Indonesian saboteurs in 1968. But the two leaders worked at it, the friendship blossomed and they met regularly over two decades to resolve issues between the two countries.

China–Singapore and US–Singapore ties similarly benefited from Lee’s personal relationship with many of their leaders who respected his deep insights and forthright views. When the world is more uncertain, it is even more important to be able to reach out to reliable friends.

Finally, Lee’s strategic vision of Singapore’s place in the world cannot be divorced from how he saw the country’s own identity: a vulnerable nation that had to be exceptional in Southeast Asia to survive. ‘I decided we had to differentiate ourselves from [others] or we are finished’, he reflected.

Exceptionalism has profound implications for Singapore’s foreign policy and will invariably create problems with neighbouring countries from time to time. When you are different you have to work harder at your relationships, and Singapore’s leaders will have to manage them deftly.

But the greatest challenge to Lee’s vision of Singapore’s exceptionalism will come internally. Can its people and government maintain the high standards, even as other countries progress to narrow the gap? If they do not, all the other elements of Singapore’s foreign policy fall apart. That is what it means to say that foreign policy begins at home.

Han Fook Kwang is Senior Fellow at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore. He was co-author of several books on Lee Kuan Yew including The Man and his Ideas and Hard Truths to Keep Singapore Going. As then Managing Editor of Singapore Press Holdings, he led the editorial team for One Man’s View of the World.

A version of this article originally appeared here on RSIS.

Can Thailand’s junta manage the election’s outcome?

26 March, 27, 2019

20 March 2019

by James Ockey, University of Canterbury

ttps://www.eastasiaforum.org/2019/03/20/can-thailands-junta-manage-the-elections-outcome/

For Thailand’s junta, the 2019 election is to be carefully managed so that the government can return to power with enhanced legitimacy, both among its own people and the international community. Yet the National Council for Peace and Order (NCPO) may have miscalculated its ability to control the elections effectively and so enhance its legitimacy.

The constitution and electoral laws were carefully designed to disadvantage the two large parties, Pheu Thai and the Democrats. Meanwhile, the junta leaders are allowed to appoint the 250 senators who will join with elected MPs to choose the prime minister. The constitution also allowed junta leader Prayut Chan-o-cha to be nominated for prime minister without membership in a party. This gives him greater flexibility in seeking the additional 126 elected MPs whose support is necessary for him to remain in his current position.

While writing a favourable constitution and electoral laws proved possible, managing the campaign process is much more difficult. Yet strong efforts are being made. Elections are under the purview of the Election Commission of Thailand (ECT). PNet, an NGO that independently monitors the election process, recently awarded the ECT an ‘F’ grade for its performance, stating that it ‘has failed to demonstrate it is not under undue political influence’.

So far, the ETC has decided that a government handout to the elderly and the poor just prior to the beginning of campaigning did not violate election laws and that the pro-government Phalang Pracharat Party (PPRP) had not accepted illegal donations at a fundraiser. Most recently, it ruled that the prime minister could actively campaign with the party that nominated him (a step too far even for Prayut himself, who instead has chosen to follow the party on the campaign trail).

In contrast, in the case of the anti-government Thai Raksa Chart party, the ECT recommended dissolution without following its own procedures in a rush to judgement. The Constitutional Court would later follow that recommendation.

In January and February, I interviewed candidates from a range of parties, in all four regions of Thailand. None expressed any faith in the ECT. Candidates of pro-regime parties thought the ECT was ineffective. Candidates of anti-regime parties not only questioned the ECT’s capability, but also feared that it was focused on identifying any small violation of the law that would justify banning opposition candidates and parties.

Opposition parties also have to defend themselves from the National Broadcasting and Telecommunications Commission (NBTC). The NBTC sought to shut down the opposition-oriented Voice TV for 15 days during the election, only to see the decision reversed by the courts. Other threats have come from criminal investigations, with leaders of the Future Forward party charged under the Computer Crime Act.

Ironically, but perhaps not surprisingly, attempts to manage the outcome of the election appear to have created a backlash against the regime. Recent polling done by the Nation newspaper shows the PPRP winning just 62 of 350 constituency seats, with the anti-regime Pheu Thai party winning 136. A recent rally of the PPRP in Korat drew just a few hundred supporters, leaving thousands of empty seats.

Perhaps more interesting are the results of a recent King Prajadhipok Institute poll, which indicate that 96 per cent of eligible voters intend to vote. One would not expect that level of enthusiasm if voters were happy with the government and the status quo.

Political parties also seem to be reacting to anti-government sentiment. The Democrat party, which is likely to win the second most seats after Pheu Thai, recently announced that it would not support the return of Prayut as prime minister. The Democrat Party had previously been deliberately ambiguous regarding its stance. It also set conditions for potential pro- and anti-government coalition partners.

In an interview with Bloomberg, Bhum Jai Thai (BJT) party leader Anuthin Charnvirakul stated that the party will wait for the outcome of the election before finalising its stance, so that it can take into account the voice of the people. BJT has long been considered to be firmly on the government side. Answering this way, even as a campaign tactic, indicates concerns with being seen as too firmly on the side of the junta.

Despite these indications of very limited support for the government, it is expected that the junta will continue to manage the outcome. In the interviews I conducted in January and February, academics and candidates suggested that the junta will expend resources to convince both small parties and individual MPs to join the pro-government side after the election, ensuring support will go well beyond the elected members of the PPRP.

One leading member of a large party noted that the ECT has 60 days to certify the results of the election. They raised concerns that during that period anti-government parties might be dissolved to ensure the junta remains in power.

While Prayut is likely to return to power, it will not be with the clear mandate he seeks. The manipulation of the elections to ensure his return is more likely to result in a decline in legitimacy and support at home, although even a manipulated election may help relieve international pressure to return to democracy. Under such circumstances, concerns about future government stability are likely to remain.

James Ockey is Associate Professor at the School of Language, Social and Political Sciences, University of Canterbury

 

 

Liberalisation and empowerment the path to Malaysian prosperity

March 25, 2010

25 March 2019

Author: Editorial Board, ANU

https://www.eastasiaforum.org/2019/03/25/liberalisation-and-empowerment-the-path-to-malaysian-prosperity/

It’s nearly a year since the Malaysian people overwhelmingly cast aside the domineering, divisive and corruption-riddled government of Najib Razak for an alternative led by Mohamad Mahathir that promised renewed focus on the people’s interests. The new Pakatan Harapan government undertook to restore good governance, raise the bar for ministers and civil servants, recover embezzled funds and deliver them back to Malaysians as cost of living relief.

Translating rhetoric into action has thus far proven an uphill battle for an inexperienced government accustomed to life in opposition. It’s struggling to turn the vision into concrete reforms, as it tries to navigate a hostile upper house and entrenched vested interests. Progress has been confined to a handful of easy wins and the multiplication of committees to continue decades-old debates about well-understood policy failings. Malaysians are becoming restless for the government to deliver on the promise of a ‘New Malaysia’ that secures livings standards regardless of ethnicity.

Efforts to deconcentrate centralised power structures and break up state monopolies are central to reinvigorating the economy. This will enable more effective governance and help tackle endemic corruption. Malaysia’s Federal Government commands over 88 per cent of total government revenue and expenditure (the share is closer to 50 per cent in federations like Australia and the United States), leaving almost 170 states and local authorities with limited resources to address local needs. Imperious policymaking from the administrative capital of Putrajaya coupled with non-elected local governments bedevil the effective delivery of local services including law enforcement, education and healthcare.

This week’s lead article by Wing Thye Woo argues that ‘[g]rowth requires state governments that are empowered to plan and implement their own development strategies’. This would require a significant shift from the highly political allocation of development finance that penalised opposition-led states under the former government.

Government-linked corporations (GLCs) dominate the Malaysian economy and that needs to change. GLCs command a majority share of market capitalisation and key sectors of the economy including natural resources, utilities, construction and finance. Policies that reinforce GLC dominance stifle innovative and dynamic small and medium enterprises and competitiveness.

As Woo says, ‘GLCs may perform well in theory, but they don’t in practice — officials inevitably use them for political patronage and personal corruption. GLCs are political creatures, not economic instruments … Downsizing the state-related sector through privatisation is necessary for economic efficiency, political accountability and income equality’.

The government has acknowledged the problem but has been tentative in its approach to this critical reform. Its first substantive policy announcements and budget provided a major setback, reinforcing the role of GLCs in ethnic Malay development strategies and increasing government dependence on GLC dividends. It’s unclear whether the government now has the clout and political fortitude to pursue a privatisation and competition agenda.

Decentralisation is more than just government ownership and power-sharing; it encompasses a shift in the mentality of government from one underpinned by heavy-handed direction to one of empowerment. This requires the creation of institutional and regulatory environments that empower people to shape the policies that affect them, private business and entrepreneurship to fuel the engine room of economic growth, and all levels of government to deliver an enabling environment in which private actors flourish.

Empowerment means replacing ethnic discrimination with inclusive approaches to policy making, lifting up all low-income households. It means constructing a tax and transfer system that reduces rather than perpetuates inequality and cost of living pressures, positively reshaping the social contract between taxpayers and government. And it requires liberating the education system from the mechanistic, dictatorial, one-size-fits-all approach that has prioritised a one-eyed conception of nation-building over the development of inquisitive and adaptable minds.

Effective governance starts with a recognition that meaningful reforms may not please everyone but if done well can benefit all. It requires the strength of conviction to stay the course in the face of interest group pressures, avoiding discouraging U-turns like abandoning intentions to sign the United Nations International Convention on the Elimination of All Forms of Racial Discrimination. It entails more than a solitary sugar tax to raise funds for development and social welfare when the tax revenue share of GDP is a third of the OECD average. And it requires delivering substantive reforms to education in the light (or in spite) of next month’s special task force report.

The government’s recent by-election defeat in Semenyih provides a wake-up call that its support among middle-class Malaysians depends on improving its performance not on disparaging its predecessor. That means harnessing the electorate’s heightened expectations towards charting a more prosperous course for the economy, governance and for the Malaysian people.

The EAF Editorial Board is located in the Crawford School of Public Policy, College of Asia and the Pacific, The Australian National University.

 

Decentralisation the best bet for Malaysia’s growth

24 March 2019

Author: by Dr. Wing Thye Woo, Sunway University

Malaysia’s burgeoning middle class has high expectations for future economic development. But the nation won’t escape the ‘middle-income trap’ and won’t have socially-inclusive growth under current government policies. A range of reforms that deliver decentralised decision-making is needed to build the knowledge-led economy to propel Malaysia to the next level of development.

Malaysia’s current policy framework has its roots in the 1970 New Economic Policy (NEP) and its socio-political counterpart ‘Ketuanan Melayu’ (Supremacy of Malays). NEP has succeeded in building a large Malay middle class that is informed, skilled and confident about its identity. But it’s also well aware that these two policies rooted in the past are not capable of transforming Malaysia into a developed nation.

To meet these aspirations, reform is urgently needed in three key economic areas. Each area requires a common reform component: the careful entrenchment of decentralised decision-making.

First, the state’s administrative structure inhibits innovative policymaking and prevents effective oversight. The federal government is much larger and more cumbersome than state governments and has disproportionate power.

Contrasting budgets and spending power reveal the imbalance between federal and state governments. The federal government has legal authority to impose income and sales taxes. But state governments must rely on land-related transactions and fees on small-ticket items like hawker licenses for independent revenue. The provision of most public services is done through branches of federal ministries operating at the state level.

State expenditure is determined by fiscal allocations from the federal government to state governments, and the amounts allocated depend on political considerations. Under the former Barisan Nasional (BN) government, opposition-controlled states received budgetary allocations that were proportionately much smaller than BN-controlled states. State governments are banned from borrowing to finance development projects, and that means they are unable to raise revenue to build the infrastructure needed to clear production bottlenecks in local industries.

Growth requires state governments that are empowered to plan and implement their own development strategies. Effective decentralisation requires each state government to have its own civil service. States will also need much larger shares of tax revenue, based on factors like developmental stage and tax revenue contribution. They should also be allowed to borrow to finance local infrastructure projects — with the commitment that there will be no federal bailouts — and be invested with significant responsibilities that are currently held by federal ministries.

The second key task is reforming government-linked corporations (GLCs). GLCs are crowding out the private sector, reducing economic dynamism. They also enable corruption that increases income inequality.

GLCs may perform well in theory, but they don’t in practice — officials inevitably use them for political patronage and personal corruption. GLCs are political creatures, not economic instruments.

Competition between GLCs and private firms is intrinsically unfair and harmful for overall growth. No matter how inefficient GLCs are, they can always count on government bailouts. They undermine economic dynamism by buying up their more efficient private competitors. Worse still, they prevent the development of a dynamic Malay business community by pulling capable Malays entrepreneurs away from starting private businesses and into cosy, life-long GLC jobs.

Downsizing the state-related sector through privatisation is necessary for economic efficiency, political accountability and income equality. The only two considerations in choosing buyers should be the size of the bid and the promotion of industry competition. A well-prepared and transparent privatisation process is more important than a speedy one.

The third key economic reform task is diversifying and expanding the banking system. The financial sector’s monopoly structure damages economic performance and worsens income inequality by suppressing the operations of small and medium-sized enterprises (SMEs).

The 1997 Asian financial crisis convinced the Malaysian government that the banking system would be less prone to crisis if regulators could more easily monitor them. The result was the forced consolidation of smaller banks into 10 big banks in 2000.

This action made state investment companies the controlling shareholders in most commercial banks, effectively creating a state-owned banking monopoly. These banks are slow in adopting better payment practices and providing new financial products, shoddy in their treatment of small retail customers, and biased in lending towards GLCs. The small number of banks and the extent of state control in the largest banks are to blame.

One serious defect of the bank consolidation was that Malaysian SMEs began experiencing difficulties in getting capital from the large banks, replicating the international experience that SME financing comes mostly from small and medium-sized banks. In response, the Malaysian government established the state-owned SME Bank in 2005. But the SME Bank is not meeting the sector’s capital needs. It also has the highest non-performing loan ratio in the banking industry. The slow growth of the SME sector means new Malay bus­­­inesses are not emerging and the distribution of income is worsening.

Reforming the banking sector will mean allowing private small and medium-sized banks to exist again, reducing the government’s bank share holdings, and removing restrictions on foreign banks and their activities.

The NEP is essentially ‘Ketuanan Centralisation’ (Supremacy of Centralisation) in the economic sphere, manifesting as ‘Ketuanan Federal Government’ in governance, ‘Ketuanan GLC’ in production, and ‘Ketuanan Monopoly Bank’ in finance.

NEP cannot mobilise the entire brain-power of Malaysia for knowledge-creation because it prevents entrenchment of excellence in socio-economic institutions, and induces brain drain and capital flight. For Malaysia to escape the middle-income trap, ‘Ketuanan Centralisation’ must be purged from the public policy framework to make way for knowledge-led growth.

Wing Thye Woo is President of the Jeffrey Cheah Institute on Southeast Asia and Director of the Jeffrey Sachs Center on Sustainable Development at Sunway University and Professor of Economics at the University of California at Davis; he holds adjunct academic positions at Fudan University and Chinese Academy of Social Sciences.

 

 

Investing in care key to boosting economic growth

March 23, 2019

19 March 2019

Authors: Elizabeth Hill, Marian Baird and Michele Ford, University of Sydney

https://www.eastasiaforum.org/2019/03/19/investing-in-care-key-to-boosting-economic-growth/

The need to increase women’s labour market participation and economic security is on the ‘to do’ list of most governments and major global institutions. By 2025, global GDP could increase by 26 per cent — US$28 trillion — if women participated in paid work to the same extent as men.

But if this goal is achieved, who will look after the children, the elderly, the disabled and ill? Although both women and men participate in care, global estimates show that women assume responsibility for around three-quarters of all unpaid domestic and community labour.

Tensions between women’s participation in paid work and unpaid care work are especially acute in Asia and the Pacific. In this region, women perform more than four times as much unpaid labour as men. Managing this unpaid workload makes it difficult for women to increase participation in paid employment at a level commensurate with their increasing levels of education and training.

Home to over half the world’s population, the Asia Pacific is diverse and changing rapidly, with economic growth delivering new opportunities for women. Hundreds of millions of young rural women have been drawn into factory work, English-speaking women are employed in call centres and back-office processing centres, and highly educated women are engaged by local and global firms in the full range of professional services. This changing employment landscape, alongside other social and economic changes, has significant implications for households and for the care work traditionally performed by women.

Data from Indonesia, the Philippines, Vietnam and Myanmar reveal some of the key points that must be addressed if women’s participation in paid work is to increase. In all four countries women’s labour-force participation remains below men’s, even though it has increased steadily since 2000. High rates of informal employment, common to the region, mean that most women in paid work remain beyond the purview of labour laws and have little or no access to critical social protections like paid maternity leave.

Even when women are formally employed and covered by workplace laws, problems with implementation are pervasive and leave black letter law impotent in the daily lives of many women workers. The gender pay gap, limited access to career progression and associated under-representation in senior management roles weaken many women’s attachment to the labour market.

Demand for care is also intensifying. Despite falling fertility rates, care for children remains a pressing issue in Indonesia, the Philippines, Vietnam and Myanmar. Rapidly ageing populations also raise the demand for care services. Between 6 and 10 per cent of the population in all four countries is projected to be over 65 years of age by 2026.

Governments are vital in delivering social services to help households reconcile their work and care responsibilities. Currently most Southeast Asian governments report low public expenditure on such essential care infrastructure as public childcare, aged care services, age or disability support pensions and maternity leave.

Governments are beginning to pay attention to these issues, but Indonesia, the Philippines and Vietnam still spend less than the regional average on these services. Yet recent International Labour Office calculations show that even low-income countries can afford the cost of social protection for the most vulnerable citizens.

Inadequate government provision of social services infrastructure leaves millions of households across Southeast Asia reliant on low-paid, unregulated and mostly female domestic labour. The unregulated nature of this work leaves many care workers vulnerable to exploitation and abuse. The long hours associated with many of these jobs makes it difficult for these women workers to manage their own care responsibilities. Decent jobs for informal and formal domestic care workers will be essential in making sure that all women are able to reconcile their work and care duties.

Investment in care infrastructure must be part of the workforce participation agenda. Official efforts to improve economic empowerment and security for women requires unpaid care work to be recognised, reduced and redistributed. This will require considerable expenditure on essential care infrastructure and may challenge small and low-income countries in Southeast Asia. But failure to build gender equitable workplace and public care infrastructure will leave global calls for an increase in women’s labour market participation floundering.

Care infrastructure includes legislated workplace policies that allow for family and community care, publicly funded formal care services, and decent work and wages for the care workforce.

While care work is essential to the gender equality equation, it is rarely included in standard prescriptions for increasing women’s economic participation. This is partly because women’s unpaid household labour is not included in GDP, leaving care work invisible to policymakers. But the significant gains to national prosperity and well-being attached to women’s increased economic participation make this an urgent issue.

Workplace and public policy design that promotes recognition and redistribution of care between men and women is essential for gender equality at work and in the home. If women are to take up their rightful place in the region’s workplaces, men will have to step up and take on additional care work. Generating a global understanding that care roles can and should be shared between men and women can act as the first step towards more gender-equal work and care.

Elizabeth Hill is Associate Professor of Political Economy at the University of Sydney.

Marian Baird is Professor of Gender and Employment Relations at the University of Sydney.

Michele Ford is Director of the Sydney Southeast Asia Centre and an ARC Future Fellow at the University of Sydney.

This article is abridged from a version that appears in the latest issue of East Asia Forum Quarterly, ‘Investing in Women‘.

 

 

Time for bolder steps from ASEAN

March 4, 2019

By : Ponciano Intal Jr, ERIA

ttps://www.eastasiaforum.org.

ASEAN is now facing circumstances that are fundamentally different from anything it has dealt with before. They require a much more proactive approach on international and regional integration strategies. ASEAN is unlikely to maintain its centrality unless its leaders are prepared to take bold steps, beyond ‘business as usual’.

 

ASEAN has come a long way from its beginnings in 1967. It transformed an area of turmoil, antagonism and violence into a zone of cooperative peace and prosperity, and disparate economic backwaters into an increasingly integrated global growth powerhouse. A region that was a Cold War pawn is now central to the economic and political-security architecture of the Asia Pacific, and Southeast Asian peoples, once largely cut off from one another, are becoming a strong socio-cultural community.

A major reason for this remarkable transformation is that ASEAN leaders collectively stepped forward when faced with tremendous challenges. ASEAN crisis-points in the past are frequently forgotten when assessment is being made of its capacity to deal with new challenges. For example, leaders replaced Preferential Tariff Arrangements with the ASEAN Free Trade Area (AFTA) in 1992 when faced with potential ’fortresses’ in the European Union and the North American Free Trade Agreement. AFTA is still driving regional integration and the ASEAN Community, despite the 1997 financial crisis and the shift in investment flows out of ASEAN and into surging China.

But the new challenges require an even bolder response.

The realignment of great power relations in the Asia Pacific is causing great geopolitical uncertainty. The digital and fourth industrial revolution is expected to accelerate, generating significant regional unease about its impact on lower end employment. On the other hand, there is transformative potential for greater productivity in firms and industries, better growth opportunities for small and medium enterprises, and enhanced resiliency and sustainability across the ASEAN economies.

The surge in protectionism and anti-globalisation in much of the developed world underlines the priority of pursuing inclusive growth, economic openness and regional integration in ASEAN and the wider region through the proposed Regional Comprehensive Economic Partnership (RCEP). The rules-based multilateral trade regime and economic order is vital to ASEAN’s prosperity, but is under threat. The vulnerability of many ASEAN countries to climate change also demands sustainable and resilient development.

The next two decades will see history’s largest increase of middle and upper-middle classes in the India–ASEAN–China corridor, dubbed the ’golden arc of opportunity’. ASEAN needs to be well positioned to take advantage of this opportunity. With far less technological capability and skilled manpower than China or India, ASEAN has to improve markedly its technological prowess, human capital, institutions and infrastructure.

So what can ASEAN leaders do to overcome the immense challenges the region faces?

Nimble and proactive diplomacy that asserts ASEAN centrality and harnesses the collective leadership of middle powers can do much for peace, security and prosperity in the wider region. Bringing together middle powers to raise their concerns will help constrain China–US competition and confrontation. ASEAN can also provide a strong and unified voice to ensure an inclusive regional architecture emerges.

Asian collective leadership is now essential to maintaining and strengthening multilateral rules and trading systems that ASEAN and the wider region rely on for economic prosperity and political security. Successfully concluding RCEP is just the start. But it will be important to ASEAN’s global credibility and voice in brokering a way forward with reform of the multilateral trade regime.

The biggest threat to ASEAN’s open and inclusive development is that to the rules-based multilateral trading system and international economic order. This system is a core interest of ASEAN and other countries in this region. The trade war has highlighted deficiencies in the World Trade Organization and international trading system that need to be addressed. ASEAN and Indonesia through their prominent participation in the G20 process have a common and urgent interest with like-minded partners in framing Asia’s proactive response to this challenge.

A more vigorous and active regional and international diplomacy will only be successfully built on stronger ASEAN foundations. Leaders will need to implement the ASEAN Economic Community Blueprint and other measures that realise an integrated, connected and seamless ASEAN single market and production base. This would help ASEAN compete with China and India’s more liberal trade and investment environments and allow deeper integration across the region.It will also help ASEAN stand firm in its international diplomacy.

Deeper ASEAN integration means making fully operational national single windows, the ASEAN Single Window, national trade repositories, the ASEAN Trade Repository, the ASEAN Customs Transit System, and ASEAN self-certification schemes.

It also means ensuring transparent and streamlined non-tariff measures and a more concerted effort to strengthen regional and national standards and conformance quality infrastructure and systems. Leaders should also develop a strong and liberalised services sector and an open investment regime with freer flow of data and payments, institutionalise ASEAN’s Good Regulatory Practice, and implement a quality Regulatory Management System in each ASEAN country. There also needs to be greater commitment to skills mobility and development within the region, including greater focus on lifelong learning and skills training.

It is also essential to prepare for, adapt to and harness the digital and fourth industrial revolution. This requires creating stronger institutions and policies, with many already embedded in the ASEAN Community Blueprint. Embracing the digital revolution and adapting to new technologies under Industry 4.0 would drive ASEAN forward in upgrading its economies, enhance resilience and sustainability, empower its people, strengthen people engagement and connectivity, improving governance, and strengthen ASEAN’s innovation ecosystem.

Put together, these measures will revitalise ASEAN into a vibrant and influential grouping that is set for success in the decades to come.

Ponciano Intal Jr is a Senior Economist at the Economic Research Institute for ASEAN and East Asia.

 

 

 

 

The emergence of Suukyinomics

March 3, 2019

 

1 March 2019

Author: by Naing Ko Ko, ANU

http://www.eastasiaforum.org

State Counsellor Aung San Sun Kyi’s National League for Democracy (NLD) administration in Myanmar has been heavily condemned by international policy analysts for its absent economic vision and lack of a tangible policy on minority management. But it seems now there is a plan: Suukyinomics, a brand that began with the announcement on 28–29 January 2019 to amend the 2008 military-backed constitution.

 

Suukyinomics is built on the rule of law and institutional economics. It consists of two broad plans. The Myanmar Sustainable Development Plan (MSDP) aims to achieve a peaceful, prosperous and democratic country. The Myanmar Investment Promotion Plan (MIPP) aims to transition Myanmar to a middle-income economy and persuade foreign investors to part ways with US$200 billion over the next two decades.

The MSDP is structured around three pillars, five goals, 28 strategies and 251 action plans. All are firmly aligned with the United Nations’ Sustainable Development Goals and the 12 Point Economic Policy of the NLD government. The MSDP aims to institute strong macroeconomic management and good governance, prudent fiscal discipline and the maintenance of a fiscal deficit no more than 5 per cent of GDP.

The MIPP aims to integrate domestic and foreign investment promotion in line with the directions of the National Comprehensive Development Plan (NCDP) and the Investment Policy of 2016. The MIPP also aims to improve the business environment — by 2020, Myanmar’s rank in the World Bank’s ease of doing business index should drop to below 100.

The Investment Promotion Committee (IPC) will be established to facilitate implementation of the MIPP and is chaired by U Soe Win, the Union Minister of Planning and Finance. Whether it will be a success depends on the effectiveness of Myanmar’s 1.8 million bureaucrats who continue to be criticised for the quality of service delivery. The government of Myanmar is the largest employer in Southeast Asia and its union civil servant board (UCSB) is unnecessary — it is militant and has inflexible business practices.

There are three shining spots to be found in the NLD’s economic reform during the period 2016–19. The first is related to the rule of law. Anti-corruption efforts have been particularly successful. President U Win Myint’s recent dismissal of ex-advocate general of Yangon Han Htoo and ex-lieutenant colonel Yan Naing Tun represent a milestone in the recent five-decade history of judicial practice and public administration. U Win Myint and the NLD’s senior leadership have done well to clean up tainted politicians even within their own party, expelling elected members accused of misuse of entrusted power for private gain.

The NLD has also made successful gains in modernising the Central Bank of Myanmar (CBM). After being heavily criticised by local banks and the private sector for unseating the governor of the CBM U Kyaw Kyaw Maung, reformers U Soe Thein and U Bo Bo Nge were appointed as deputy-governors of the CBM with the remit of correcting institutional difficulties. The CBM is vigorously stabilising the economy by controlling inflation, reducing the money supply and regulating its money and financial markets after issuing the Burmese Way to Basel Regulation in July 2017.

The CBM-floated foreign exchange rate now permits 13 foreign banks to loan project financing and trade financing. Recently, the CBM allowed for the Japanese yen and Chinese yuan to be used as convertible currencies to tackle the dollarisation of trade at Myanmar’s borders. In contrast to previous administrations, the reference exchange rate of the kyat for account transactions against the US dollar and other currencies is released daily on the CBM website. A financial stability report and Myanmar’s monetary report are released periodically.

The third shining spot is infrastructure. Roads are being built and rail tracks upgraded nationwide. Some of Myanmar’s coastal areas and border trade routes are also undergoing development thanks to Chinese investment.

According to Aung San Suu Kyi, it is the right time to invest in Myanmar. Still, provision of meaningful assistance for the stateless people of Arakan, Kachin and other minority groups in Myanmar’s border regions remains unaddressed.

Suukyinomics itself is ambitious and its outcomes will be tested in coming years as the NLD attempts to amend the militarised 2008 constitution. Whether the NLD remains in power come 2020 will partly depend on Aung San Suu Kyi’s tactical skill, strategic manoeuvring and the success or otherwise of this new economic plan.

Naing Ko Ko is a PhD Candidate at the Regulatory Institutions Network, College of Asia and the Pacific, The Australian National University.