2023/71 “Review of Foreign Minister Wang Yi’s Visit to Southeast Asia in August 2023” by Lye Liang Fook
EXECUTIVE SUMMARY
- Wang Yi travelled to Singapore, Malaysia and Cambodia in his first foreign visit after his re-appointment as foreign minister, underscoring Beijing’s strong commitment to Southeast Asia by sustaining the tempo of high-level engagements.
- The visit was also possibly meant to highlight continuity—and absence of disruption—to China’s foreign relations and its Southeast Asia policy following Qin Gang’s removal as foreign minister.
- During his visit, Wang Yi sought to cultivate good relationships with new and next-generation Southeast Asian leaders, especially in Cambodia and Singapore, with a view to ensuring that the positive momentum in ties continues.
- Apart from strengthening China’s ties with the respective Southeast Asian countries, Wang Yi took the occasion to criticise the US’ policy on Taiwan and the South China Sea, as well as Washington’s export restrictions against China.
- Since Southeast Asia’s importance to Beijing has increased in light of US-China tensions, China may be trying to condition how Southeast Asia ought to behave. However, its efforts are undercut by Beijing’s aggressive moves in the South China Sea, its own long-arm jurisdiction through the set-up of overseas police stations, and its economic coercion against certain countries.
- For a longer-term sustainable relationship, China should appreciate that Southeast Asia has the “capability and wisdom” to do what is right, and this includes their strategic choice to be friends with all its key partners.
* Lye Liang Fook is Senior Fellow at the Regional Strategic and Political Studies Programme at ISEAS – Yusof Ishak Institute.
ISEAS Perspective 2023/71, 11 September 2023
INTRODUCTION
Chinese Foreign Minister Wang Yi visited Singapore, Malaysia and Cambodia on 10-13 August 2023. His visit coincided with the 65th anniversary of China-Cambodia relations as well as the 10th anniversary of the China-Malaysia Strategic Comprehensive Partnership, and came on the heels of the upgrading of Singapore-China ties to an “All-Round High-Quality Future-Oriented Partnership” in March 2023.[1] This was also Wang Yi’s first foreign trip after his re-appointment as foreign minister, which went to demonstrate the high priority China gives to the region and the commitment it has to strengthen ties with Southeast Asian countries. The visit was also possibly meant to highlight continuity—and absence of disruption—to China’s foreign relations and its Southeast Asia policy following the removal of Qin Gang as foreign minister. Wang Yi is concurrently a politburo bureau member and Director of the Party’s Foreign Affairs Commission, which added further significance to his visit.
This Perspective examines China’s key objectives and messages during Wang Yi’s trip to the three Southeast Asian countries, and situates his visit in the broader context of China’s approach to Southeast Asia and the intensifying US-China strategic rivalry.
SOUTHEAST ASIA’S IMPORTANCE TO CHINA
Chinese leaders often refer to the Southeast Asian region or ASEAN as a “good neighbour, good partner and good friend”,[2] highlighting the region’s geographical proximity to China and Beijing’s willingness to strengthen ties with these countries. Southeast Asia is important to China for several reasons. The region comprises a diverse number of smaller states, with some of them, such as Vietnam, Laos, and Myanmar, sharing a land border with China. All of them want to grow their ties with China and Beijing is likewise keen to engage with a dynamic region of 680 million people. The ten ASEAN member countries collectively have become the largest trading partner for China since 2020 and a major recipient of Chinese foreign investment and development financing. Strategically, the region sits astride critical sea lanes of communication, namely, the Straits of Malacca and South China Sea (SCS), where a large proportion of China’s oil and gas, and other goods traverses. Furthermore, Southeast Asia is at the confluence of big power competition and its strategic importance to China has grown as US-China tensions continue to rise. Beijing has been continually strengthening ties with Southeast Asian countries to draw them closer and to prevent them from siding with the US against China.
The importance of Southeast Asia in China’s foreign policy is manifest in Beijing’s efforts to maintain annual high-level visits and diplomatic engagements with countries in the region. Wang Yi’s visit to Cambodia, Malaysia and Singapore in August 2023 was therefore part of an increasingly regularised mechanism of China’s engagement with Southeast Asia. Despite all the travel restrictions and disruptions due to the Covid-19 pandemic, Wang Yi had consistently prioritised Southeast Asia and paid official visits to all ASEAN countries in 2021 and 2022.
During his short stint as foreign minister, Qin Gang also focused on Southeast Asia in his travel calendar. He made Indonesia his first stop in his tour of the region in February 2023.[3] Apart from meeting his Indonesian counterpart Retno Marsudi, Qin Gang visited the ASEAN Secretariat in Jakarta where he urged ASEAN to maintain its “strategic independence”,[4] similar to Beijing’s call on other countries to uphold “strategic autonomy”.[5] Beijing views Indonesia as the most influential country in Southeast Asia and ASEAN, and therefore seeks good and stable ties with Jakarta. Moreover, as the current chair of ASEAN, Indonesia can help shape ASEAN’s relations with its dialogue partners, which include China.
At the leader’s level, Chinese President Xi Jinping made a state visit to Myanmar in January 2020, against the backdrop of the Trump administration taking tougher measures against China. It was the first time Xi toured a Southeast Asian country in his first overseas trip of the year as president.[6] When Xi resumed his overseas travel post-Covid, Southeast Asia continued to be a key area of focus, and the region constituted one of the three foreign destinations Xi made in 2022. In November 2022, Xi attended the G20 Summit in Bali, then flew to Bangkok for the 29th APEC Economic Leaders’ Meeting.[7] This was Xi’s first visit to Thailand as president.[8] Xi also invited the general secretary of the Vietnam Communist Party as the first foreign leader to visit China after the Chinese Communist Party’s 20th National Congress in October 2022.
Since the start of 2023, China has continued to build on its ties with Southeast Asia through high-level visit exchanges. When Philippine President Ferdinand Marcos, Jr. travelled to China in January 2023, Chinese state media highlighted that this was his first bilateral visit to a non-ASEAN country.[9] In February 2023, Cambodian Prime Minister (PM) Hun Sen was reportedly the first foreign leader to visit China after the Lunar New Year.[10] Three years ago, Hun Sen was the first foreign leader to visit China when Beijing was scrambling to contain the Covid-19 outbreak. His visit was then perceived as a lending of support to Beijing’s effort to curb the pandemic spread and a demonstration of the “unbreakable friendship” and “mutual trust” between the two countries.[11] In March 2023, Singapore PM Lee Hsien Loong and Malaysian PM Anwar Ibrahim also visited China and spoke at the Bo’ao Forum for Asia in Hainan.
It is worthwhile to mention that Southeast Asia was among the largest recipients of Chinese Covid-19 vaccines in both donation and purchase.[12] They were also the early beneficiaries of Beijing’s relaxation of Covid-19 restrictions for outbound travel. In February 2023, China approved outbound group travel to seven Southeast Asian countries; namely, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore and Thailand, from a list of 20 countries.[13] Brunei and Vietnam were added to this list in March 2023.[14] Countries whom China had differences with or which had imposed travel restrictions on Chinese travellers such as the US, Australia, Germany, the United Kingdom, India, Japan and South Korea were only added to the list several months later in August 2023.[15]
KEY OBJECTIVES AND MESSAGES OF WANG YI’S SOUTHEAST ASIA TRIP
Cultivating relationships with new and next-generation Southeast Asian leaders
A key objective of Wang Yi’s trip was to strengthen political ties with existing and incoming leaders in Cambodia, Malaysia and Singapore; these countries have recently been or are currently in the midst of leader transition. China has been consistently pragmatic and ideologically agnostic in building good relationships with the ruling elites in other countries. In Cambodia, apart from calling on King Norodom Sihamoni, Prime Minister (PM) Hun Sen, and Deputy Prime Minister (DPM) and Foreign Minister Prak Sokhonn, Wang Yi met with Hun Sen’s son, Hun Manet, then prime minister-in-waiting, on 13 August 2023.[16] Wang Yi was the first foreign leader that Hun Manet has met since his father announced that he was stepping down as prime minister. Earlier, in February 2023, Hun Manet had accompanied his father to call on Chinese President Xi Jinping in Beijing. China wants to ensure that the strong ties between China and Cambodia under Hun Sen would continue under Hun Manet as prime minister. The Chinese foreign ministry’s readout of the visit hailed the “overwhelming victory of the Cambodian People’s Party (CPP) in the general election”, which it said “has shown the right choice made by the Cambodian people and their trust in and support for CPP”.[17]
In Malaysia, Wang Yi met Malaysian PM Anwar Ibrahim and his Malaysian counterpart Zambry Abdul Kadir. In a break from the diplomatic norm of meeting Malaysian leaders in Putrajaya, Wang Yi made the effort to travel to Penang to meet Anwar, who was campaigning in the state elections.[18] During the meeting, Wang Yi highlighted that Anwar is “an old friend of the Chinese people”, China is a “reliable and good friend of Malaysia”, and that the two countries enjoy a “special and friendly relationship with robust bilateral cooperation”.[19]
In Singapore, Wang Yi called on PM Lee Hsien Loong, Foreign Minister Vivian Balakrishnan and DPM Lawrence Wong who was referred to as the “leader of Singapore’s fourth-generation leadership team”.[20] Affirming the positive momentum in bilateral relations, Wang Yi expressed hope that China-Singapore relations will continue to be at the “forefront of China’s relations with neighbouring countries”.[21] This remark casts the China-Singapore relationship positively, adopting an entirely different tone compared to 2016 when bilateral ties were at their lowest point. In a relevant development, the Chinese foreign ministry spokesperson in May 2023 commented that the remarks by DPM Wong on democracy at the Nikkei Forum was based on “Singapore’s own successful practice” and “speaks to the aspirations of many countries”. The same spokesperson added that China and Singapore have both found “democratic paths that suit them and have their own characteristics”.[22] By giving credit to Singapore’s democratic path, Beijing is also simultaneously boosting its own political system’s legitimacy and rejecting the monopoly of the Western liberal democratic model. It repudiates US attempts to forge closer partnerships with democratic countries through the Summit for Democracy of which two have been held so far.
Promoting China’s regional cooperation agenda
Another thrust of Wang Yi’s visit was to strengthen its regional cooperation agenda through various multilateral platforms. His visit can be viewed as part of diplomatic activities to commemorate the 20th anniversary of China’s accession to ASEAN’s Treaty of Amity and Cooperation and the 10th anniversary of China’s Belt and Road (BRI) Initiative, even though the BRI has had a mixed record since its launch, and official support for the initiative seems to have waned over time.[23] A key message arising from Wang Yi’s visit was that countries in the region should cooperate even closer with China in the interest of peace, stability and development.
In the three Southeast Asian countries he visited, Wang Yi expressed China’s commitment to engage ASEAN and maintain ASEAN centrality, which is a refrain in Chinese messaging towards the region.[24] There is a view that Wang Yi’s visit was meant to shore up ASEAN ties ahead of the resumption of negotiations on a Code of Conduct in the SCS hosted by Manila in August 2023.[25] While this may be true, one should not overestimate this point as the three Southeast Asian countries hold different positions on the SCS. As non-claimant states, Singapore takes a principled position that upholds international law in peaceful resolution of disputes while Cambodia is a loyal friend of China within ASEAN on the SCS issue. Malaysia, although a claimant state, prefers not to play up its differences with China over the SCS. Earlier in April 2023, PM Anwar Ibrahim invited domestic backlash when he told Chinese President Xi Jinping that Malaysia was prepared to negotiate with Beijing on its state energy company Petronas’ exploration in the South China Sea,[26] thereby inadvertently acknowledging Beijing’s claim over Malaysia’s exclusive economic zones.
Apart from ASEAN, China is keen to be part of other regional arrangements where it can play a role and remain influential. In particular, Beijing wants to be a member of the Digital Economy Partnership Agreement (DEPA) first signed by Singapore, Chile and New Zealand in June 2020 to promote secure digital trade. This topic was raised in Wang Yi’s discussion with DPM Wong in Singapore. DPM Wong reportedly informed Wang Yi that Singapore welcomed China’s application in accordance with the rules and procedures of the agreement.[27] DPM Wong further expressed Singapore’s in-principle support for China joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). However, whether China can eventually become a member of DEPA or CPTPP will depend on whether it can meet the criteria of membership as well as obtain the necessary support of current members of these two organisations.[28]
The BRI was mentioned in Wang Yi’s visits to Malaysia and Cambodia as these two countries host several BRI projects. These include the Sihanoukville port and Sihanoukville Special Economic Zone in Cambodia and the East Coast Railway Line as well as the twin parks, namely, the Kuantan Industrial Park and Qinzhou Industrial Park, in Malaysia which are often touted as examples of successful collaboration under China’s BRI. However, it is important to note that these projects have experienced delays, were affected by Covid-19 lockdowns, and are still works in progress. Nevertheless, as a global-wide initiative launched by Chinese President Xi Jinping with great fanfare in 2013, Beijing is likely to press ahead with BRI. In fact, China is preparing to host the 3rd Belt and Road Forum in Beijing in October 2023.
Criticising the United States
In a departure from its usual diplomatic practice, Wang Yi specifically criticised the US while in Singapore. Usually, in a bilateral visit, China would focus on issues of common interest, and not bring in third parties. And even if third parties are mentioned, they are normally implicitly, not explicitly, referred to. However, in his meeting with PM Lee Hsien Loong, Wang Yi reportedly lashed out at the US for “conniving and supporting the Taiwan independence forces” and “violating China’s red line”.[29] He further criticised Washington for “coercing other countries to engage in unilateral protectionism against China”, a reference to how other countries had imposed export restrictions on sensitive technologies to China. In his view, these actions demonstrated that the US had become the “biggest unstable factor in the world today”.[30]
China appears to be responding in kind as US leaders have also criticised Beijing on numerous occasions in public during their visits to other countries.
The US was not mentioned in Chinese foreign ministry’s readouts on Wang Yi’s discussions with PM Anwar Ibrahim and PM Hun Sen.[31] It would appear that the readout’s highlight of Wang Yi’s criticism of the US while he was in Singapore was not only aimed at Washington but could also be meant as a warning to Singapore, given that the latter is often seen as a reliable partner of the US in Southeast Asia. In the past, Singapore has borne the brunt of Beijing’s criticism when it was seen as standing with the US against China.[32] This happened when Singapore reiterated the importance of freedom of navigation and a rules-based international order in 2016. That was the year when the arbitral tribunal ruled in Manila’s favour in the arbitration case on the SCS, which China then dismissed as “a piece of waste paper”.
US behaviour in the SCS was also a subject of Wang Yi’s criticism during his visit. In a statement issued by China’s foreign ministry, Wang Yi held Washington responsible for continuing to “stir up trouble” in the SCS by using the Second Thomas Shoal issue to pit China against the Philippines. He reiterated China’s willingness to resolve existing disputes with the Philippines through bilateral dialogue and added that the region has the “capability and wisdom” to maintain peace and stability in the South China Sea.[33] In other words, from China’s perspective, extra-regional powers like the US has no role to play on this issue.
CONCLUSION
Wang Yi’s Southeast Asian tour took place against the backdrop of intensified great power rivalry. China is closely monitoring where the countries in Southeast Asia stand with regard to this competition and is actively cajoling them not to side with the US. Beijing is expected to do more on this front as Washington is stepping up efforts to rally more Asian allies and partners over to its side.[34]
However, Beijing’s efforts to condition Southeast Asian countries or ASEAN into a certain type of behaviour that it finds acceptable is easier said than done. This is because China’s actions in areas of direct concern to Southeast Asia undermine what it seeks to achieve. Foremost among them is Beijing’s aggressive moves in the South China Sea such as its resort to lasers,[35] water cannons[36] and dangerous manoeuvres to prevent the Philippines from resupplying its personnel on the Sierra Madre on Second Thomas Shoal. These actions have emboldened the Philippines to strengthen its military and defence ties with the US, an outcome Beijing is strongly opposed to. China’s recent unveiling of a new 10-dash line map has further raised concerns in Southeast Asia and beyond. Taken together, these actions further weaken China’s call on relevant countries to resolve matters bilaterally and to expedite discussions on the Code of Conduct on the South China Sea.
China’s actions in other areas have also added to these countries’ wariness of Beijing. While China has accused the US of long-arm jurisdiction,[37] it is not entirely blame-free on this front either as it has reportedly established over 100 quasi-official overseas police stations including in Cambodia and Brunei, which undermines the sovereignty of the host countries.[38] In addition, recent examples of Beijing’s use of economic coercion against countries like South Korea, Australia and Lithuania serve as timely reminders that the Southeast Asian countries of the Philippines and Singapore too were victims of such coercive tactics in the past.[39]
Southeast Asian countries will need to be adept at navigating the increasingly complex US-China relationship. As these countries act on their respective national interests, their foreign policy decisions could at times appear to be aligned or non-aligned with either power, depending on the issue. China and the US therefore should regard Southeast Asia and the countries in the region on their merits and not merely through the lens of great power competition. Instead of the refrain that China and Southeast Asia have the “capability and wisdom” to address their own problems, a better starting point for Beijing would be to appreciate that Southeast Asian countries have the “capability and wisdom” to do what is right for their own interests and for regional peace and stability. This includes their strategic choice to be friends with not only China but other key partners like the US, Australia, the EU, India, Japan and South Korea.
ENDNOTES
For endnotes, please refer to the original pdf document.
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2023/70 “What the Gereja Kristen Indonesia (GKI) Yasmin Case Says about Religious Freedom in Indonesia” by Alamsyah M. Djafar and A’an Suryana
EXECUTIVE SUMMARY
- After waiting for 16 years, the Gereja Kristen Indonesia (GKI) Yasmin congregation in Indonesia can finally practise their faith peacefully in a new church building. This is the outcome of GKI Yasmin’s agreement with several stakeholders (including the Bogor City Government) following a protracted conflict concerning the legality of the church’s previous building permit.
- This case had been a prolonged embarrassment for Indonesia, as it attracted international and domestic criticism of the central and regional governments for their perceived poor handling of the case.
- The GKI Yasmin case is just one among many cases relating to the construction of houses of worship in Indonesia. On this issue, the authorities tend to defer to the demands of local residents of the majority faith, and would thereby persuade or coerce the minority faiths to relocate their houses of worship. The authorities portray this as a sound compromise solution, in the sense that it accommodates majority demands while also acknowledging the rights of minority faiths to practise their religions in their own houses of worship.
- However, this approach of applying the majoritarian principle is not ideal, as it infringes on the rights of minorities to practise their faiths. The state needs to promote “champions of peace” to influence the community to be more tolerant of minorities. In fact, the state must also be prepared to act firmly against intolerant conservative groups because, in many cases, it is these groups that are responsible for provoking communities to commit acts of intolerance and even violence against minority faiths.
*Alamsyah M. Djafar is PhD Candidate in Political Science at the Faculty of Social Sciences (FOSS), Universitas Islam Internasional Indonesia (UIII), Indonesia. He is also a Senior Researcher at Wahid Foundation, a human rights non-governmental organization (NGO) in Indonesia. A’an Suryana is Visiting Fellow at the Regional Social and Cultural Studies (RSCS) Programme, ISEAS – Yusof Ishak Institute, Singapore. He is a lecturer in Political Science at FOSS, UIII.
ISEAS Perspective 2023/70, 8 September 2023
INTRODUCTION
After waiting for 16 years, a church congregation in Bogor City, West Java Province, finally found a new home at which to practise their faith: a new church building located just a kilometre away from where their previous church stood. This congregation, the Gereja Kristen Indonesia (Indonesia Christian Church) Yasmin, known as GKI Yasmin, had to face fierce resistance from local Muslim residents when they held religious services in their old church building. They were forced to perform religious services elsewhere, including on footpaths and other places. The congregation fought socially and legally for recognition of their right to practise their religion in their old church building, turning their resistance into a prolonged saga that made headlines in local and international media.
On Easter Sunday, April 2023, all stakeholders finally buried the hatchet, when many high-ranking government officials and religious figures turned up to mark the opening of a new church building for GKI Yasmin. Among them were Coordinating Minister for Political, Legal, and Security Affairs Mohammad Mahfud Mahmodin, Home Affairs Minister Tito Karnavian, Chair of the National Commission on Human Rights (Komnas HAM) Atnike Nova Sigiro, and Bogor Mayor Bima Arya Sugiarto.
Coordinating Minister Mahfud claimed the opening of the new church building was the outcome of extensive dialogue among all stakeholders in the conflict, saying it was evidence that the state did help resolve such conflicts. Minister Tito added that the way the conflict was resolved could serve as a model for other regional governments to follow: resolution emerged after the local government granted the use of a piece of land to GKI Yasmin, meaning the congregation no longer needed to insist on performing religious services in the old church building that was the cause of disputes with local Muslim residents. KOMNAS HAM Chairperson Atnike Nova Sigiro argued that while this kind of settlement was not ideal, it was a realistic compromise.[1] This paper asks: Did the way the Indonesian state resolve this problem provide a good model for the central and regional governments to solve similar cases in the future?
Construction of places of worship occupies top position in Indonesia in terms of the highest number of violations of freedom of religion and belief. Between 1945 and 2005, there were 978 cases of rejection and dispute over the construction of places of worship, especially churches. A total of 520 cases, or more than 50 percent of the total cases, occurred after Reformasi (between 1998 and 2005).[2] Between 2009 and 2018, there were 163 violations (in the form of church closures, property vandalism, and others), with church buildings often being the targets. Among these cases included the ‘sealing’ of the church building used by GKI Yasmin Bogor City in 2008.[3]
GKI YASMIN: LONG ROAD TO FREEDOM
The GKI Yasmin saga began in 2006 when the then-Mayor of Bogor, Diani Budiarto, approved the congregation’s proposal to build a church in the Yasmin Garden housing complex in Bogor City. Muslim residents, supported by a conservative group, Forum Komunikasi Muslim Indonesia (Forkami, Indonesian Muslim Communication Forum), opposed the congregation’s plan to build the church, and started to organize a series of protests. These resulted in the Bogor Mayor rescinding the church’s building permit in 2008. The mayor claimed that the permit was revoked because some of the signatures presented were forgeries.[4]
GKI Yasmin filed a lawsuit against the mayor’s decision to the Bandung Administrative Court. The court determined in favour of the church, and so the church established a temporary building where the congregation could start holding religious services. But Forkami and Muslim residents continued to stage frequent protests in front of the building. The congregation halted construction and ceased holding religious services for fear of their safety.[5] Instead, they chose to perform religious services elsewhere. In 2010, the Supreme Court reaffirmed the Bandung Administrative Court’s decision, giving the congregation legal backing to resume the construction of their church building. But the church never materialized due to the fact that the Bogor City Government sealed off the building, purportedly for safety reasons, despite the ruling by the Supreme Court.
In 2012, the Bogor City Government, backed by the central government, proposed that GKI Yasmin be granted a new piece of land for the construction of their church building, but on the condition that the congregation left the former building. The congregation rejected the proposal.
In 2019, Bima Arya, then Mayor of Bogor, proposed three solutions to resolve the protracted conflict:[6] First, the congregation would be allowed to use the old church (but at the risk of being targets of bullying or intimidation by Muslim residents); Second, the government would build both a church and a mosque in the old location to appease Muslim residents; or third, the government would grant a new piece of land as an alternative to the old location and permit GKI Yasmin to build a new church building there. After 30 official meetings and over 100 informal meetings, almost all parties approved granting the new location for the congregation. Most congregation members also agreed with the solution; to be sure, some rejected the outcome of the negotiation and still firmly wanted to hold religious services in the old location.[7] Finally, the Bogor City Government and the GKI Synod Council signed an agreement in June 2021, and the city government then granted the new land to the congregation for their new church building.[8]
INTERNATIONAL AND DOMESTIC PRESSURE
The GKI Yasmin case was a stubborn pebble in the shoes of the Indonesian government. International institutions and foreign governments frequently criticized Indonesia for handling the case poorly. The reproach began during the presidency of Susilo Bambang Yudhoyono (SBY) between 2004 and 2014, and continued into President Joko ‘Jokowi’ Widodo’s first term. For example, the Civil Society Coalition for the Third Universal Periodic Review (UPR) argued that the SBY administration had not improved the government’s policies on promoting and protecting human rights, including the freedom of religion.[9] In response to foreign pressure, SBY acknowledged on 15 February 2012, in front of 128 ambassadors of friendly countries, that religious freedom, including the GKI Yasmin case, was a concern for the Indonesian government. The case created a negative international image of the Indonesian government. However, SBY argued that because it was a legal conflict among stakeholders in Bogor, including the Mayor of Bogor, the central government could not intervene. Instead, he appealed to all stakeholders to seek an amicable solution to the conflict.[10]
Following the election of Jokowi in 2014, several international institutions continued to express concern that the new government had failed to significantly improve Indonesia’s human rights situation, especially for people of minority faiths to practise their religion. For instance, in 2017, Christian Solidarity Worldwide complained that the Indonesian government had not fully implemented all the United Nations’ UPR recommendations to improve the protection of the rights of minority faiths. In the GKI Yasmin Church case, in particular, the regional government did not follow up on the decision by the Supreme Court to ensure the rights of the church congregation to practise their religion in their own church.[11] Instead, the Bogor City Government insisted on continuing the shutdown of the church, claiming the closure was needed to prevent horizontal conflict between church-goers and members of Muslim groups who were against the establishment of the church in the area.
Increasing international pressure boosted the morale of domestic actors, especially non-governmental organizations (NGOs), in advocating for the rights of Indonesian minority faiths. Setara Institute and Wahid Foundation were among the organizations routinely monitoring the implementation of religious rights in Indonesia, and they often voiced concern over the government’s handling of the GKI Yasmin case.[12]
Adding to the pressure, GKI Yasmin and another Christian congregation facing a similar problem in Bekasi (Huria Kristen Batak Protestant [HKBP] Filadelfia) joined forces in staging routine rallies in front of the State Palace in Jakarta. Between 2012 and 2019, the two congregations held street protests and religious services in front of the State Palace for a total of 209 times.[13] These protests enjoyed widespread media coverage.
Although this international and domestic pressure was often ignored, it did raise awareness in the government that the situation was getting serious.
‘HARMONY POLICY’ AND THE CONSTRUCTION OF HOUSES OF WORSHIP
The GKI Yasmin case is just one of many cases related to the construction of houses of worship in Indonesia. When addressing this problem, the Indonesian government often relies on forced relocation, persuading or even coercing members of minority faiths to relocate their houses of worship, following the demands of local residents of the majority faith. The government often sees this ‘solution’ as the middle ground in the sense that it accommodates the majority demands while acknowledging the right of a minority faith to practise their faith in their own houses of worship. The government argues that this policy is needed to avoid violent conflict, create public order, and “build harmony” (“membangun kerukunan”)among different faiths.[14]
This ‘harmony policy’ was developed during the New Order era (1965-1998) and is still in use today. Then-Minister of Religious Affairs, Mukti Ali, first introduced this policy in the late 1970s and promoted the ‘trilogy of harmony’ concept. Through this concept, Indonesian citizens were encouraged to promote internal harmony among religious peoples, between religious peoples, and between religious peoples and the government. The harmony concept re-emerged strongly during SBY’s administration. In the view of his government, religious harmony was “a state of inter-religious relations based on tolerance, mutual understanding, mutual respect, respect for equality in the practice of their religious teachings and cooperation in social, national and state life within NKRI based on Pancasila and the 1945 Constitution”.[15]
This harmony concept was further manifested in SBY’s government in the 2006 Joint Ministerial Decrees No. 8 and No. 9, which rule on the establishment of houses of worship. The two decrees were issued jointly by the Minister of Religious Affairs and the Minister of Home Affairs, providing guidelines for heads of regional governments in “maintaining and empowering religious harmony, and in regulating the construction of houses of worship”. One of the contentious articles in the decree is that when wishing to build a house of worship, a congregation must submit a document that includes the list of names, the signatures, and the identity cards of at least 90 people who will use the house of worship. The document needs to be approved by local officials, including officials from the regional governments. It also needs to be approved by at least 60 residents of the neighborhood where the house of worship is to be located, as well as the approval of the head of the village. This is a tough requirement, because residents surrounding prospective locations of houses of worship often reject proposals to build houses of worship of a different faith.
In addition to these documents, the congregation also needs written recommendations from the regional office of the Ministry of Religious Affairs and the Forum for Religious Harmony (FKUB). FKUB consists of representatives of people of different religions in the respective regions. After all documents are secured, the proposal still needs final approval from the head of the regional government, and within 90 days. The joint decrees also oblige the head of the regional government to find a new location if the existing house of worship needs to be moved to conform with changes in a master plan.
The harmony concept aims to promote peace and security in the community, but it is often implemented at the expense of minority faiths. When there are disputes between the majority faith and a minority faith, for example, in the construction of places of worship, the government often forces the minority faith to give way, claiming that the majority’s demands need to be fulfilled to avoid physical conflict; however, this policy results in loss for the minority faith in the sense that their freedom to practise their religion is violated. In other words, the approach of the state only benefits the majority group and discriminates against the rights of minorities and vulnerable groups.[16] The government’s claims are justified in some cases, as religious disputes have previously resulted in widespread violence and fatalities, as happened during the riot in Maluku Province at the end of the 1990s, which resulted in the death of some 5,000 people and the displacement of 700,000 people, or as occurred during fatal clashes between Shi’a and Sunni Muslims in Sampang District, Madura Island, East Java Province in 2012 that led to one death, 14 injuries, and the destruction of 49 houses. However, there are often other reasons for the government to resort to relocation policy, such as electoral ones: heads of regional governments seeking second terms in office often try to appease the majority faith in order to win the election, albeit at the expense of minority faiths.
Nevertheless, the Indonesian government has applied this policy in many religious disputes. Besides GKI Yasmin, in Greater Jakarta alone, four churches have been affected by it. For example, demands by conservative Muslim groups and coercion by the government saw three churches in Bekasi City[17] (part of Greater Jakarta) relocating in 2015 to an area near a public cemetery.[18] The South Jakarta City Government forced the Batak Karo Protestant Church Council (GBKP) congregation to practise their faith somewhere else because the government had in fact not issued a permit allowing them to use the building as a place of worship.[19] There are some exceptions, however. Despite demands by Muslim groups, the local government in each case refused to relocate the Catholic Church of Santo Joseph Karimun Riau in Riau (2020)[20] and the GKI Citraland church in Surabaya, East Java (2021).[21]
While all the problems above occurred in Muslim majority areas, Muslims have also faced similar problems in areas where non-Muslims make up the majority faith. An influential religious figure recalled that it was not easy for Muslims to build mosques in predominantly non-Muslim areas such as Papua, Bali, East Nusa Tenggara, and North Sulawesi. Although Indonesia is a predominantly Muslim country with some 241.7 million Muslims (87 percent of the total Indonesian population of 276.5 million in 2022),[22] there are also many islands where the majority of the local population are Protestant, Catholic, or Hindu.
DIALOGUE AND TOUGH MEASURES
Dealing with the problem of construction for places of worship is not easy. If the government backs minority faiths in building houses of worship amidst strong protests from local residents of the majority faith, it can pose security risks. Relocating the house of worship to government land is then a safe option for the government: it appeases the majority, while the minority can still practise their faith in their new house of worship.
But still, this policy does not address the initial violation of a human right. The government acts like firefighters, even though it is supposed to uphold the rights of its citizens, especially the rights of minority faiths to practise their religion wherever they see fit. This does not imply that the government must automatically approve requests from religious congregations to build places of worship at any site they desire. The site chosen for a place of worship must adhere to, among other requirements, regulatory requirements for spatial design (urban planning) and the 2006 Ministerial Joint Decrees No. 8 and No. 9.
This is a recurring problem for the Indonesian government. It sounds cliché but promoting dialogue among people of different faiths is crucial to the improvement of social relations. At the very least, mutual understanding increases when people of different faiths get to know each other better. Through dialogue, people can come to understand the aspirations and dreams of others. The government should help to spur such dialogue.
Efforts to build dialogue should be conducted simultaneously with law enforcement. The law must be enforced to create a deterrence effect. The GKI Yasmin case was a prolonged human rights case because the government used a soft approach towards the intolerant conservative group. The government should have instead taken firm action against the intolerant conservative group when they conducted hate speech and even intimidated the GKI Yasmin congregation.[23] Instead, prior to the case settlement, the Bogor City Government succumbed to the intolerant group’s demands for security and electoral reasons by shutting the church between 2008 and 2021, despite the decision of the Supreme Court granting approval for church construction in the original site. The Bogor City Government should take inspiration from governments in other places in Indonesia who uphold constitutional laws when faced with opposition against the construction of minority faiths’ houses of worship. Opposition actors who engage in acts of intimidation and violence should be reported to the police for investigation.
Scholar Khamami Zada also argues that producing ‘peace champions’ is important in reducing conflicts.[24] These peace champions should be respected figures in community, whose thoughts and ideas tend to be followed by people in the community. Government or security officials need to request that these respected figures, such as respected ulema or preachers, serve as peace champions to promote peace in the community. For example, Bogor City Government promoted influential Muslim figure Mustofa Abdullah bin Nuh, and this move was crucial in persuading conservative Muslim groups to accept the solution proposed by the government: the construction of GKI Yasmin’s new church building on a site located just one kilometer away from the old church building. On the other hand, Melissa Crouch proposes that the government and security officials get tougher on vigilante groups that provoke conflicts.[25] Tough measures in the form of arrest and legal prosecution can serve as deterrence for such groups.
CONCLUSION
This article argues that the forced relocation of minority faiths by the government is not a good model. Giving way to the majoritarian principle only infringes upon the rights of minorities in practising their faith. The state should instead promote peace champions to influence the community to become more tolerant while being firm on vigilante groups. Equally important is the dissemination of religious tolerance to all people, beginning at a young age in schools and within families. The role of religious figures is crucial for raising tolerance towards people of different faiths.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/69 “Vietnamese Perceptions in a Changing Sino-US Relationship” by Sharon Seah and Indira Zahra Aridati
EXECUTIVE SUMMARY
- Sino-Vietnam and US-Vietnam relations have been progressing exponentially in recent years. Both former foes of Vietnam have invested in their respective bilateral relationships with increases in trade, investments and assistance. Vietnam is seen by both countries as an important and strategic partner in the region and an ASEAN heavyweight.
- Sino-Vietnam diplomatic, trade and political relations have been progressing from strength to strength since normalisation in the 1990s, but irritations continue over cross-border issues, and disputes in the South China Sea.
- US-Vietnam bilateral relationship is underscored by a deepening of cooperation in recent years in areas such as trade, maritime security, transnational crime, climate change, clean energy transition, health and education, and in the enhancing of regional connectivity and resilience in the Mekong.
- Using data from the State of Southeast Asia Surveys from 2020 to 2023, the authors investigate Vietnamese opinion leaders’ perceptions of China and the US, in view of the changing geopolitical relationship.
- The data demonstrates that while Vietnamese opinion-leaders’ views of China have oscillated over the past four years, trust in the US remains consistent.
ISEAS Perspective 2023/69, 4 September 2023
INTRODUCTION
Vietnam’s relationship with the two major powers – China and the US – is complex. To be sure, it is the only country in Southeast Asia which has fought the two most recent wars in modern history —with the US ending in 1975 and then with China in 1979. Vietnamese foreign policy promotes diversification and multilateralisation of international relations, based on the principles of “independence, self-reliance, peace, cooperation, and development”.[1] Informed by its history, this strategy enables Vietnam to maintain neutrality in its flourishing partnership with both China and the US.
SINO-VIETNAM RELATIONS
Vietnam has had a long, fractious relationship with China, suffering wars and incursions from its bigger neighbour throughout history. The most recent of these incursions was in February 1979 when the Chinese People’s Liberation Army (PLA) invaded northern Vietnam in response to Vietnam’s military intervention of Kampuchea in 1978. At the risk of oversimplifying this complicated Cold War period, it would suffice to say that until the “Kampuchea question” was resolved, Sino-Vietnamese relations remained in limbo. Hence, it was not until 1991, when the Paris Peace Accords were concluded, and Vietnam left Cambodia, that a normalisation of Sino-Vietnamese relations could occur. Since then, diplomatic, trade and political relations between China and Vietnam have been progressing from strength to strength.
Even before normalisation, Vietnam’s formal ties with China could be traced back over 70 years when the two Communist Parties established links with each other. The continuing strength of Sino-Vietnamese communist ties was demonstrated by a visit by Vietnamese Communist Party Chief Nguyen Phu Trong to Beijing immediately after the 20th Chinese Communist Party Congress in October 2022. Nguyen became the first foreign leader to visit Xi after the latter’s confirmation as third-term President.[2] The strength of these ties can be seen even as recently as when China asked Vietnam to uphold ideological ideals in relations with each other and in resolving regional issues.[3]
Beyond ideological linkages, Vietnam has also progressively become an important economic and trading partner to China. Pham Minh Chinh travelled to China in June 2023 in what was the first official visit by a Vietnamese Prime Minister to Beijing in seven years.[4] Trong’s visit to China last year also reflected new heights in bilateral economic cooperation, with 13 agreements being signed on a range of cooperation areas – two of which promote partnerships in economics and trade, and in strengthening supply chains.[5] Similarly with PM Chinh’s visit, China expressed interest to promote “strategic synergy” in bilateral relations.[6]
The year 2023 marks the 15th anniversary of the China-Vietnam Comprehensive Strategic Cooperative Partnership – the highest hierarchy in Vietnam’s diplomatic relations. Sino-Vietnamese relations are thus important due to geographical proximity, shared ideological beliefs, and the evolving nature of relations between the US, Soviet Union and Vietnam.[7]
US-VIETNAM RELATIONS
This year also marks the 50th anniversary of the Paris Peace Accords that were signed in January 1973 which effectively put an end to the Vietnam War. Since the establishment of formal diplomatic relations in 1995, US-Vietnam relations have changed dramatically, transforming the two from former foes to comprehensive partners; the two countries celebrated the 10th anniversary of the US-Vietnam Comprehensive Partnership in April 2023.[8] The US hopes to upgrade this relationship to a strategic partnership, but Hanoi remains concerned about upsetting its powerful neighbour.[9] An upgrade, as some have suggested, would in any case be framed as a normal trajectory of the growing US-Vietnam relationship rather than as an “alliance” to contain China.[10] Reports suggest that an elevation in the US-Vietnam relationship may take place in the coming weeks, with President Joseph Biden making an official visit to mark the occasion.[11]
The exponential rise in the strategic importance of the US-Vietnam bilateral relationship is underscored by a deepening of cooperation in areas such as trade, maritime security, transnational crime, climate change, clean energy transition, health and education, and in the enhancing of regional connectivity and resilience in the Mekong. Vietnam is viewed increasingly by Washington as an important member of ASEAN. Vietnam was named a “like-minded partner” in the US’ Indo-Pacific strategy[12] and a member of the Indo-Pacific Economic Framework for Prosperity. The importance of Vietnam to the US is evidenced in the number of visits that senior members of the US administration have made despite the pandemic, including by Defense Secretary Lloyd Austin and Vice President Kamala Harris in 2021, Foreign Secretary Antony Blinken in April 2023, Treasury Secretary Janet Yellen in July 2023, and President Joseph Biden’s recently announced plans to visit Vietnam later this year. Vietnam signed a Trade and Investment Agreement with the US in 2007 and has since become the US’ 10th largest goods trading partner and the US’ 28th largest goods export market in 2020.[13]
VIETNAMESE PERCEPTIONS
Data from The State of Southeast Asia Survey by ISEAS – Yusof Ishak Institute found that Vietnamese opinion leaders’ perceptions of China have oscillated since the survey was first conducted in 2019. Yet, perceptions of the US remain strong in the same period during which the survey was taken.
Since the launch of the survey in 2019, Vietnam has consistently ranked in the top four highest number of respondents.[14] It reached the highest number in 2021, when the survey was first offered in Vietnamese. Respondents hailed from different affiliations, with all years having representation across all categories of academia, think-tanks, and research institutions; the business or finance sector; civil society, NGOs, and the media; and regional or international organisations. They also encompassed all age groups from 18-21 to those above 60.
PERCEPTIONS OF CHINA
Cross-border threats such as the COVID-19 pandemic, as well as geopolitical and geo-economic tensions, are all significant drivers that have influenced Vietnam’s perception of China. Points of contention revolve around maritime and territorial disputes, in particular in the South China Sea where Vietnam is a major claimant. This is corroborated in the survey findings, which shows that despite variations year-on-year, Vietnam consistently ranked among the top three ASEAN countries with the highest levels of distrust (respondents who chose “no confidence” or “little confidence”) in China to “do the right thing” in the wider interests of the global community. As illustrated in Figure 1, Vietnamese levels of distrust in China also rank higher than the regional ASEAN average throughout all years of the survey period.
How confident are you that China will “do the right thing” to contribute to global peace, security, prosperity, and governance?
Figure 1: Vietnamese Perceptions of China Compared to the ASEAN Average
When asked about reasons for their distrust of China, a consistent majority of Vietnamese respondents (above 45% since the question was first asked in 2020, as shown in Figure 2) indicated their concern about China’s economic and military power, which could be used to threaten their country’s integrity and sovereignty.
China’s economic importance to Vietnam is beyond doubt. It is Vietnam’s largest trading partner and the first market to reach US$100 billion trade turnover in 2018.[15] In 2022, bilateral trade between the two reached US$234.9 billion, placing Vietnam as China’s sixth largest trading partner globally and the first among ASEAN countries.[16] China has also consistently ranked as one of Vietnam’s top investors, with registered capital amounting to US$2.46 billion in 2020, US$2.92 billion in 2021, and US$2.5 billion in 2022.[17] Investments range across multiple sectors, from manufacturing to human resource development to BRI infrastructure projects such as the Cat Linh–Ha Dong tramline[18].
Despite these positive trends, China’s implementation of its zero-Covid policy still negatively impacted Vietnam’s trade flows and supply chains; Vietnam’s labour-intensive economy is heavily dependent on China for raw materials and equipment, and the latter’s restrictions disrupted local productivity. In addition, there is a significant trade imbalance between China and Vietnam, with trade deficits increasing and hitting a record US$60.2 million in 2022.[19]
Anxiety over China’s growing power has also been exacerbated in recent years due to the assertiveness over its claims in the South China Sea. Since 2013, China has engaged in land reclamation and artificial island-building, and have so far constructed 27 large artificial islands across the Paracel and Spratly Islands.[20] Subsequent fortification, including the deployment of vessels near these outposts, have also posed a threat to regional security and stability, drawing criticism from countries in the region and beyond.[21] In 2020-2022, negotiations between ASEAN and China on a draft code of conduct in the South China Sea stalled, with meetings having shifted online due to the Covid-19 pandemic.
Why do you distrust China?
Figure 2: Percentage of Vietnamese Respondents Who Distrust China and Reasons Why[22]
More recent Vietnamese perception of China offers some hope, most evidently in the 2022 survey which showed the highest levels of trust, at 24.3% (as shown in Figure 3). When asked about why they trust China, 2022 respondents cited China’s military power as an asset for global peace and security at 34.4%, its vast economic resources and strong political will to provide global leadership, and China being a responsible stakeholder that respects and champions international law – both at 25.7% (also shown in Figure 3).
Why do you trust China?
Figure 3: Percentage of Vietnamese Respondents Who Trust China and Reasons Why[23]
Although levels of trust the following year dropped back down to 4.4%, it would appear that the 20th Chinese Communist Party Congress provided China with a more positive image for those who expressed confidence in Chinese leadership (33.3%), as seen in the 2023 survey results in Figure 3, a much higher proportion than the regional ASEAN average of 8.3% who say the 20th Congress made China stronger and stable.
PERCEPTIONS OF THE US
When asked the same question about the US, survey results showed a stark contrast, with Vietnam consistently ranking among the top two countries with the lowest levels of distrust of the US – except for 2023 when it ranked fourth – throughout the four years of the survey. Figure 4 shows that Vietnamese levels of distrust towards the US are also well below the ASEAN average.
How confident are you that the US will “do the right thing” to contribute to global peace, security, prosperity, and governance?
Figure 4: Vietnamese Perceptions of the US Compared to the ASEAN Average
Vietnam is a crucial partner for the US, with its significance going beyond the context of major power rivalry in the region. This is proven by the expansion of cooperation areas between the two, along the lines of the seven pillars of: 1) addressing the legacies of war; 2) promoting shared prosperity; 3) growing security cooperation; 4) commitment to addressing climate and clean energy; 5) strengthening health cooperation; 6) supporting a resilient Mekong Region; and 7) investing in the next generation.[24]
Vietnamese perceptions of the US have been positive through the recent years, with a majority of respondents from 2020 to 2023[25] saying they are either confident or very confident in the US “to do the right thing”, as seen in Figure 5. When asked about reasons why Vietnamese respondents trust the US, the consistent majority (always above 55%) cited its vast economic resources and political will to provide global leadership. The percentage of those who view the US’ military power as an asset for peace and security has also more than doubled from 12.8% in 2020 to 28.6% in 2023. In the past few years, the US and Vietnam’s security partnership has continued to expand, with both sides being committed to a free and open Indo-Pacific region. From 2017 to 2022, the US has given Vietnam around US$92 million in security assistance under the Foreign Military Financing Programme, to promote Vietnam’s maritime security.[26]
In terms of economic cooperation, there has been a notable rise in bilateral trade to reach US$139 billion last year or 300 times greater than when diplomatic relations were normalised in 1995.[27] US Treasury Secretary Janet Yellen’s visit to Hanoi in July 2023 further emphasised Vietnam as a critical player in the global semiconductor supply chain, with her vowing US support for economic and trade resilience in the post-pandemic world.[28] Yellen also called Vietnam a “key partner in advancing a free and open Indo-Pacific”, thus giving strategic weight to Hanoi. In turn, Vietnam sees the US in the same frame as providing a balance of power in the region that is increasingly dealing with an assertive, and at times aggressive, China. For this reason, despite concerns about how China would view an upgrade in the US-Vietnam relationship, the prevailing narrative of “escaping China’s orbit” [29] may bolster support for an upgrade especially on the occasion of the 10th anniversary of the US-Vietnam Comprehensive Partnership this year.
Why do you trust the US?
Figure 5: Why Vietnamese Respondents Trust the US
Conversely, Figure 6 shows that for the smaller group of respondents who express their distrust in the US,[30] there are two main reasons: firstly, the US’ lack of capacity and political will to exercise global leadership, with these percentages growing from 17.9% in 2020 to 29.6% in 2023, and secondly, the US’ economic and military power having the potential to threaten Vietnam’s national interest and sovereignty, with the percentages growing from 10.3% in 2020 to 33.3% in 2023. The concern that the US is distracted with its internal affairs, highest in 2020 (56.4%) at the end of the Trump Administration, dropped to 25.9% in 2023 in the third year of the Biden Administration.
Why do you distrust the US?
Figure 6: Why Vietnamese Respondents Distrust the US
IF FORCED TO CHOOSE, CHINA OR THE US?
If ASEAN were forced to align itself with one of the two strategic rivals (China or US), which should it choose?
Figure 7: Comparison of ASEAN Average and Vietnamese Respondents’ Alignment Choice
If forced to align with either China or the US, an overwhelming majority of Vietnamese respondents consistently chose the latter with percentages far outstripping the regional ASEAN averages through the past four years. Notwithstanding the slight improvements in China’s trust perception among Vietnamese respondents, the impact on foreign policy has yet to manifest. Vietnamese perceptions towards China and the US will likely continue to oscillate within the ranges in the coming years as the geopolitical environment evolves. It is not in Vietnam’s national interest to be seen choosing between one or the other major powers but rather to work with both to advance its foreign policy objectives.[xxxi]
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/68 “Southeast Asia’s Stakes in Pricing Carbon” by Vinod Thomas
EXECUTIVE SUMMARY
- Southeast Asia is on the frontline both as a victim of climate disasters, and as a contributor to greenhouse gas emissions causing runaway climate change.
- Especially given constraints on a low-carbon energy transition, it is in the region’s interest to price carbon emissions either through carbon trading, or better, implement a carbon tax.
- Singapore has implemented a carbon tax, and Indonesia made a start on coal, but it is time for all countries in the region to adopt a sizable carbon price to discourage fossil fuels and encourage renewables.
- While global estimates of avoided climate damages from carbon pricing far exceed the costs of pricing carbon, the perceived conflict between short-term growth and carbon pricing is sharp in Southeast Asia.
- To allay fears of losing competitiveness, it pays for ASEAN, in fact ASEAN+6, to move in unison, even if differentiated by broad income levels, with Asia-Pacific’s finance ministers championing the reform.
* Vinod Thomas is Visiting Senior Fellow at ISEAS – Yusof Ishak Institute. He was formerly Director-General, Independent Evaluation, at the Asian Development Bank; and Director-General and Senior Vice President, at The World Bank Group. The article draws on the author’s recent book, Risk and Resilience in the Era of Climate Change (2023), click here.
ISEAS Perspective 2023/68, 25 August 2023
INTRODUCTION
The trajectory of climate change holds extremely high stakes for Southeast Asia[1] as the region is the biggest incremental contributor to GHGs, and the most vulnerable to climate disasters.[2] The region’s climate actions have not been impressive thus far, and carbon emissions and deforestation continue to go in the wrong direction. With business as usual, the region’s GHG emissions could approach 8 GtCO2e by 2030.[3] But the region has recently given attention to decarbonization as well as adaptation in the face of growing awareness of the dangers from a rise in sea levels and extreme weather events.
Except for the Philippines and Myanmar, others in the region have announced Net Zero or carbon neutrality commitments. The biggest breakthrough will come from a rapid transition to low-carbon energy use and a sharp cut in the energy intensity of economies. Especially for this region starting with a high share of fossil fuels in the energy mix, carbon pricing—through carbon markets or carbon taxes—could be a valuable step in decarbonisation and achieving anything close to ASEAN’s target of 23% of renewable energy mix by 2025.[4] Importantly, the implicit price for clean air also motivates investing in clean energy, and governments can raise money to finance green investments.
ECONOMIC RESPONSES
The goals of climate mitigation and economic growth can be achieved by imposing a price on CO2 emissions that reflects their damages. Over 60 systems of carbon pricing exist today but cover only one-fifth of global GHGs.[5] In June 2021 G-20 finance ministers endorsed the application of carbon pricing as an instrument for shifting to low carbon growth trajectory.[6] Of 38 OECD countries and G20 countries combined, covering 80% of world emissions, only 10 countries were pricing carbon at half the mid-range of the estimated cost of CO2 emissions for 2020.
One approach is using an emissions trading scheme giving policymakers control over resulting emissions levels. There are complexities in designing carbon trading. But it can encourage polluters to switch to more sustainable energy sources, since the price of pollution has now risen.[7]
Another way is to tax businesses and households that pollute. Economists have long favoured carbon pricing because of its efficiency in discouraging effluents,[8] but it would be only a part of the package of needed measures.[9] The tax rate needs to be chosen, and effectiveness of implementation and the use of the tax revenues assured. If the tax is big enough, producers would cut pollution to avoid paying it. Conversely, if the tax is too small to be meaningful, it would just lead to inaction or leakage.
The highest rate has been set by Denmark for 2025 increasing to €150/tCO2 or US$165 n 2030.[10] But the global average is only US$6 a ton of CO2. Singapore is rightly emphasizing carbon taxation as part of its climate policy. High and effective carbon taxation across major polluters like China, the US, India, Russia and Japan (which together account for 60 percent of global effluents) could move the needle on global pollution.[11]
One advantage is that the tax revenue raised could be used to support cleaner fuels. Importantly, a high-enough price of carbon will boost incentives for investment in low-carbon or carbon-reducing technologies, creating environment-friendly operations. Governments can also finance adaptation such as coastal embankments and disaster risk reduction more generally. A part of the revenues can also finance safety nets for the poor.
It is worth remembering that one fifth of global emissions are import-related. It would make sense that a carbon tax also targets discharges contained in imports that are usually excluded from country contributions. There are well-known difficulties in implementing such a tax, issues of rules of origin being one. But the divergence between consumption and production-based emissions has been rising. For example, instead of a 3 percent increase in production-based emissions since 1990, the US would have a 14 percent increase if the measurement is consumption-based.[12]
The IMF has a concrete proposal for a global minimum carbon price.[13] It would set price floors of $75, $50, and $25 per ton of carbon for the US, China and India, respectively. This could help achieve a 23% reduction in emissions by 2030. Southeast Asia could see benefits via revenue generation and its allocation to green investments. A domestic tax in Southeast Asian countries should also prevent border taxes being imposed by the European Union (EU) or the US.
The main benefit of carbon pricing is the avoided damage.[14] Under the EU’s emission trading system, modest annual reductions of some 1% annually were noted, but that is across countries and sectors employing low rates and low coverage. By one estimate, the EU’s emission trading was instrumental in cutting GHG emissions of power generation and energy-intensive industries by 43% over the past 16 years. In Sweden (with the highest rate in the world, after the Danish now), GDP increased by 78% during 1990-2017, while domestic GHGs decreased by 26%.
On the cost side, European countries indicate a zero or modest positive impact on GDP and employment. British Columbia’s carbon tax has cut emissions without hurting growth. In Canada, for a C$50 carbon tax, petroleum and coal, agriculture, power and chemicals were estimated to face unit production cost increases of 5%; 40 industries by more than 1%, and the rest by 0.6%: the economy 2.4%. In the US, the electric power industry would suffer a far greater impact from a carbon tax than would most others.
A carbon tax must be complemented by tough environmental regulations in order to be effective. The tax revenues can be used to protect vulnerable segments of the population or to reinvest in green sources of energy. Pricing also gives a boost to investors inclined to promote renewables, protect forests, or invest in clean technologies.[15] All this is relevant for Southeast Asia.[16]
A CARBON TAX IN SOUTHEAST ASIA
Singapore only has 0.1 percent of the global carbon footprint, but its emissions per person is 27th highest out of 142 countries (2018). The country depends on natural gas and has geographical limitations in switching to solar and wind. But all this is even reason to scale up carbon tax and encourage energy producers to cut emissions.
In 2019, Singapore set the carbon tax at S$5 or US$3.7 per tonne.[17] This was at the low end of a range that spans Japan’s US$2.60 (S$3.50) per tonne to Sweden’s US$137 (S$184) per tonne. On the other hand, Singapore’s tax covers four-fifths of the country’s emissions compared with only one-third in the EU. A solid case can be made for Singapore to raise carbon tax to S$50 per ton. In 2020, the government announced S$25 for 2024, and S$45 by 2026, and possibly S$80 by 2030. Complementing the tax should be investments in solar and wind, including buying clean energy from neighbouring countries.
Under its Tax Regulation Harmonization Law (2021), Indonesia – the world’s top coal producer – had originally intended to implement a carbon tax from April 2022, which would have charged US$2.10/tCO2e on coal plants. Though higher commodity prices arising from the war in Ukraine caused an indefinite delay in the tax’s introduction, the Indonesian Government seems committed to its implementation. Thailand, Vietnam, and Malaysia have not adopted carbon pricing, but changes may be on the horizon. Malaysia and Thailand are considering putting emission trading and have established voluntary carbon exchanges. A carbon credit system is being considered in the Philippines.
In implementing a carbon tax, the coverage of polluters and the tax rate are decision variables. It would make sense to target the largest polluters and ones with elastic emission schedules, so that emissions are indeed cut significantly. In Singapore, power generation accounts for 40% emissions and is likely responsive to a carbon price, especially with the adoption of new technologies. Transport is less so across Southeast Asia.
The impact on business is an important consideration.[18] It is not uncommon to let companies using international carbon credits to offset a part of their taxable emissions. There is also a good rationale to have safety nets for low-income segments facing utility price increases. Carbon revenues can be used to cushion the consumer impact. Some ask if “emission intensive trade exposed” enterprises should be exempted from the carbon tax based on concerns of competitiveness and leakage effects. It turns out that for this purpose, border carbon adjustments are better than carbon tax exemptions for the domestic exporting firms. A border carbon adjustment would put a carbon tax on imported energy-intensive and trade-exposed products. Or perhaps better, and certainly simpler, an output based rebate would compensate vulnerable domestic exporters based on their production.
ROADBLOCKS
Industrial firms argue about losing their competitive advantage to exporters from countries with a lower carbon price. This concern can be minimized if ASEAN as a block adopts carbon pricing. Canada, EU, Japan, Singapore, and others also allow some exemptions to prevent “carbon leakage”, where firms consider relocating elsewhere. Political pressures from global events also complicate the picture: for example, energy prices in 2022 led the EU to sell millions of carbon permits, causing a 10% drop in carbon prices.
The impact of higher prices on low-income groups needs to be addressed. The EU excludes transport, where higher costs would be passed on to voters directly. Singapore provides rebates for consumers hit by utility price rise. The Californian system, which covers a small number of big emitters making up 80% of the state’s emissions, uses proceeds from the sales of carbon permits partly to subsidize electric cars.
Australia illustrates the difficulties even when new revenues are used to compensate consumers. Tax increases were very gradual, yet the carbon tax remained politically vulnerable. When a new conservative government took office, it repealed the 2012 tax just two years after it was instituted. Sweden handled some of these political constraints well.[19] Taxes were started on fuels for transport and heating in 1991, going from below US$30 to over US$120 per ton of CO2. Industry faced a favourable rate initially, but increases were phased in. The tax was also presented as part of a larger package aimed at lowering overall taxes, combined with social safety nets.
CONCLUSION
The question is if a full-fledged application of market interventions could make a dent on the climate crisis.[20] This paper favours all countries adopting carbon pricing through a significant carbon tax that is levied on the pollution source. This needs to be complemented by a high enough quantitative restriction on fossil fuels, in addition to eliminating all subsidies for this pollution source. Southeast Asia needs to cut its carbon emissions and be part of the climate solution that is critical for its own survival. A swift and ambitious move on the adoption of a region-wide carbon tax, even if differentiated across countries, would be a way forward. [21]
Though a carbon tax is no different from the penalty imposed on negative externalities, ranging from water pollution to the purchase of cigarettes, there is the fear of the unknown. The biggest is the concern over losing competitiveness in the short term. The idea of a uniform move, even if differentiated by broad income levels, should address this worry, especially if ASEAN plus China, Japan, Korea, India, Australia, and New Zealand decide on a carbon price policy. Asia Pacific is a region that has everything to lose from runaway climate change but is heavily constrained on making a swift low-carbon transition. That is more reason to do what it can by way of carbon pricing to open unexpected avenues of cleaner energy—all the while raising much needed tax revenues. The leadership for this move must come squarely from the finance ministers of ASEAN+6.
REFERENCES
Amro. 2022. “Carbon Pricing in ASEAN+3 Economies: Progress and Challenges”. https://www.amro-asia.org/carbon-pricing-in-asean3-economies-progress-and-challenges/
Asian Development Bank. 2022. Carbon Pricing for Energy Transition and Decarbonization. November.
Bain and Company. 2023. Southeast Asia’s Green Economy 2023 Report. https://www.bain.com/insights/southeast-asias-green-economy-2023/
Black, Simon, Ian Parry, and Karlygash Zhunussova. 2022. “More Countries Are Pricing Carbon, but Emissions Are Still Too Cheap.” IMF Blog (blog). July 21, 2022.
European Commission. 2015. EU ETS Handbook
Enerdata 2022. 27 June. https://www.enerdata.net/publications/daily-energy-news/denmark-will-introduce-corporate-carbon-tax-2025.html
Farand, Cloe. 2021. G20 backs carbon pricing, ‘raising stakes’ among emerging economies. Climate Home News. December 7.
Green, Jessica F. 2021. “Does Carbon Pricing Reduce Emissions? A Review of Ex-Post Analyses.” Environmental Research Letters 16 (4): 043004
Hsiang, Solomon, and Robert E. Kopp. 2018. “An Economist’s Guide to Climate Change Science.” Journal of Economic Perspectives 32 (4): 3–32. https://doi.org/10.1257/jep.32.4.3.
Jorgenson Dale W. and Peter J. Wilcoxen, “The Economic Effects of a Carbon Tax,” in Henry Lee (ed.), Shaping National Responses to Climate Change, Washington, The Island Press, 1995, pp. 237-260.
Koval, V.; Laktionova, O.; Udovychenko, I.; Olczak, P.; Palii, S.; Prystupa, L. 2022. “Environmental Taxation Assessment on Clean Technologies Reducing Carbon Emissions Cost-Effectively”. Sustainability.
Lawson, Michael.; Phua, D.; Rogers, Claire.; Meng, Su.; Robinson, Phiippa.; Chiu, Phoenix.; Thomas-Walters, Lachlan. 2023. “Developing Carbon Trading Markets in Southeast Asia”. King & Wood Mallesons. February 16.
National Climate Change Secretariat. 2023 “Carbon Tax”. Singapore.
Nogrady, Bianca. 2021. “China launches world’s largest carbon market: but is it ambitious enough?”. Nature. July 20.
Parry, Ian. 2022. “Now is the Time to Impose Carbon Taxes over the Global Economy.” Economist Impact. November 17.
Parry, Ian, Simon Black, James Roaf. 2021. “Proposal for an International Carbon Price Floor Among Large Emitters”. June 18.
Prakash, Amit. 2018. Boiling Point. Finance and Development. IMF. September. https://www.imf.org/en/Publications/fandd/issues/2018/09/southeast-asia-climate-change-and-greenhouse-gas-emissions-prakash
Prasad, Monica. 2022.” Hidden benefits and dangers of carbon tax”. PLOS Climate. July 7.
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Stiglitz, Joseph E and Nicholas Stern. 2017. Report of High-Level Commission on Carbon Prices. Carbon Pricing Leadership Coalition. May 29.
Terrascope Team. 2023. Carbon Pricing in Southeast Asia and its Impact on Businesses”. Blog. June 12. https://www.terrascope.com/blog/carbon-pricing-in-southeast-asia-and-its-impact-on-businesses https://www.terrascope.com/blog/carbon-pricing-in-southeast-asia-and-its-impact-on-businesses?hs_amp=true
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ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/67 “Polarisations in Indonesia: Distinguishing the Real from the Rhetorical” by Max Lane
EXECUTIVE SUMMARY
- The polarisation perceived in mainstream electoral politics since the 2014 Presidential election campaign has turned out to be more rhetorical than real, reflecting mainly the opportunistic tactical calculations of the two rival candidates involved.
- This was revealed with the rapprochement in 2019 between Joko Widodo and Prabowo Subianto and by the abandonment of past tactical alliances for new ones, as the 2024 Presidential election now approaches.
- Real polarisations do affect Indonesian political life, however, and are not the ones portrayed in the Presidential election campaigns.
- One such polarisation is between the social and political outlook of critical civil society and the political establishment embodied in the parliamentary political parties and government figures. This polarisation is easy to map as it is reflected in open opposition to major policies and laws passed by parliament and implemented by the government, albeit by societal elements not yet active in the electoral arena.
- Another polarisation is a more deeply sociological one which is reflected in a contestation between worldviews, namely between one that is a modernising, secular and socially liberal, versus the other that is traditional, religious and socially conservative.
* Max Lane is Visiting Senior Fellow at ISEAS – Yusof Ishak Institute. He is the author of “An Introduction to the Politics of the Indonesian Union Movement” (ISEAS 2019) and the editor of “Continuity and Change after Indonesia’s Reforms: Contributions to an Ongoing Assessment” (ISEAS 2019). His newest book is “Indonesia Out of Exile: How Pramoedya’s Buru Quartet Killed a Dictatorship”, (Penguin Random House, 2022).
ISEAS Perspective 2023/67, 18 August 2023
INTRODUCTION
Between 2013 and 2020, almost all analyses of mainstream Indonesian politics argued that politics was sharply polarising.[1] It was also argued that this polarisation reflected a tension between secular and conservative Islamic politics as well as between democratic and authoritarian politics.[2] What gave rise to this analysis was the contestation in 2013-2014 and again in 2019, between Joko Widodo and Prabowo Subianto for the Indonesian Presidency. The focus was purely on rhetorical polarisation, rather than real polarisations in society – polarisations to be discussed later in this essay.
The Presidency is an important position in Indonesian governance although it should be noted that neither a budget nor any substantial policy change can be implemented without the approval of a parliamentary majority. It was superficial from the start for commentators and academics to use the Presidential contest for framing all aspects of the country’s politics. No doubt, with just two candidates standing for the Presidency, it was easy to fall into the trap of concluding that there were only two poles to Indonesian political contestation.
THE JOKOWI VS PRABOWO “POLARISATION” WAS RHETORICAL
There was indeed a sense of polarisation generated by the 2014 and 2019 election campaigns. As noted above, there were only two candidates for both of these elections. One candidate, Jokowi, was a small-town businessman and ex-mayor of Solo, with no substantial connection to the New Order authoritarian era.[3] The other, Prabowo, was a general from the Suharto era, who was widely held responsible for the kidnappings of anti-Suharto activists in 1997 and 1998 and also for being behind the instigation of anti-Chinese riots in 1998.[4] Furthermore, he was from a family that had become extremely rich during the Suharto era.[5]
The first perception of polarisation was based on these differences: new era vs Suharto era, democratic era vs authoritarianism. But while Jokowi was a furniture manufacturer with no political involvement, long before he went into politics, he already had a close relationship with Suharto-era General Luhut Panjaitan.[6] Luhut himself had also been a business partner with Prabowo, with forestry concessions in Kalimantan.[7] Luhut was later to be the “de facto” Prime Minister during Jokowi’s two presidencies.[8]
The contrast between democratic and authoritarian era figures was emphasised in two ways. The first was through reference to the allegations made about Prabowo’s human rights record, especially in 1997 and 1998, and also occasionally references to Prabowo having contemplated a coup against President Habibie.[9] Prabowo was investigated on these questions and had to leave the Army, after which he left Indonesia to be an advisor to the Jordanian Army for several years.
Jokowi rarely, if ever, made reference to these issues in his public comments. Even in the 2014 Presidential Debates on TV, it was left to Jokowi’s Vice-Presidential running mate, Jusuf Kalla – very much himself a Suharto-era figure – to make the single reference to the 1997-98 allegations against Prabowo.[10] Jokowi said nothing in the national TV debates on human rights violations. However, a section of his supporters based in civil society (but not the PDIP) campaigned strongly in support of Jokowi on this issue.[11] Anti-Prabowo academics outside Indonesia also campaigned strongly on this through their social media presence in Indonesia.[12] The fact that it was not something prioritised when Jokowi spoke to the nation on national TV in the presidential debates was also a pointer to the need for a nuanced reading of the political situation.
The second perception was that Jokowi and Prabowo, at least in 2013-4, had different stances on the question of direct elections for President and Vice President and other executive positions. During the Suharto era and the first few years of the post-Suharto era, the President was chosen by the People’s Consultative Assembly (MPR). Direct elections for the Presidency were legislated under Megawati Sukarnoputri and implemented at the end of her Presidency. Jokowi supported direct elections and Prabowo questioned it. Critics of Prabowo claimed that Prabowo’s stance was evidence of his authoritarianism – however, as we know, there are many political systems considered as democratic where the head of government is chosen by parliament, such as the Westminster system. The anti-democratic character of the election of the President under Suharto was not because the MPR elected the president, but because the regime’s control of electoral politics meant that it also controlled the MPR. After 1998, such control of the parliament by the executive was no longer possible. There was no evidence that Prabowo was advocating a return to that situation, and in any case, soon after the 2014 election, Prabowo turned to support direct elections at all levels.[13] The agreement was for parliamentary and presidential elections to be held at the same time, indicating that the basis for Prabowo’s questioning of direct elections was more related to the problems of two waves of elections, rather than that, indirect elections would facilitate a return to authoritarianism.
A more nuanced look at the two candidates and their positions reveals that on these issues, they are not really polarised. This is even more the case if the context is examined. Authoritarianism seldom just grows out of a political figure’s personality, but out of the political situation at hand. There was no political situation in 2013 or 2019 that even remotely came near to one that required an authoritarian response. There was no growing popular opposition or any destabilising rift among the elite that would call for strong-man rule. Prabowo himself never campaigned on that basis but rather, demagogically of course, campaigned against massive monetary “leakage” mainly to non-Indonesian business interests.[14] This was especially so in 2013 and 2014, when his position implied a criticism of Yudhoyono, not Jokowi who had not yet held power. Prabowo’s record indicated that he would be open to authoritarian measures if required, but over the last ten years nobody has seriously campaigned that such actions were required.
The third perception of polarisation, both in 2013-14 and 2019, has a more complex basis and, while still essentially rhetorical, does overlap with a real and significant socio-cultural differentiation. Its manifestation during both elections was in Prabowo’s tactical alliances. Prabowo aligned himself very clearly with conservative elements in political Islam, especially the Front Pembela Islam (FPI) and Alumni 212.[15] Both these organisations had come into political prominence during the campaign against the Governorship of The Greater Jakarta Region, where they opposed the Christian Chinese Indonesian politician, Basuki Tjahaja Purnama. Purnama had been accused of blasphemy against Islam after making comments on Qur’anic verses. Prior to this both the FPI and Alumni 212 forces had no significant national profile.[16] It appears that Prabowo, or his advisors, concluded from the large FPI/212 mobilisations, that these organisations would be a significant force in helping Prabowo win the elections. This happened in both 2014 and 2019, but was greater on the latter year. In 2019, Prabowo ended his campaign with a massive rally of FPI, Alumni 212 and other Islamist supporters, filling Jakarta’s Istora Sports Stadium with white-cloaked men. This very prominent alliance, playing a central role in Prabowo’s campaign, also heightened the sense of polarisation. Again, however, Prabowo himself did not give any prominence to demands for a greater religious character to the Indonesian state or society. The sense of polarisation between secular and religious issues was a consequence of the actual alliance itself, not any overt religious campaigning by Prabowo. As with the campaigning for Jokowi, supporters of Prabowo, not the candidates themselves, would take up the more polarising issues, giving these a heightened profile, as if the candidates were likely to move in a certain given direction if they won.
Both Jokowi’s first and second term have shown that serious human rights reform was not a priority. The government’s actions in the recognition of serious human rights have been very limited and basically tokenistic. Prabowo’s joining the Jokowi government as Defense Minister, with his party,has shown that Prabowo and Jokowi have similar basic political outlooks.
Furthermore, during the whole period of Jokowi’s second term as president, there has been no friction or any sign of “polarisation”. When the government did eventually announce in 2023 its policy of compensation for some victims of past human rights abuses, including those of 1965 (although unspecified), neither Prabowo nor Gerindra raised any differences in opinion.[17] In the first weeks of the manoeuvring around the 2024 Presidential nominations, the democratic versus authoritarian “polarisation” has also not resurfaced.[18]
Neither have there been any signs of Prabowo or Gerindra flirting again with the FPI or 212. Instead, in the context of Prabowo once again standing for the Presidency, he has sought to be seen as being in harmony with Jokowi, even more so than the Indonesian Democratic Party of Struggle (PDIP) itself. Additionally, Gerindra has formed a coalition with National Awakening Party (PKB) in support of Prabowo’s Presidency.[19] The PKB is more associated with the traditionalist Nahdatul Ulama, with some outspoken liberal figures, than the Arabist FPI or 212 Islamist organisations. PKB’s support is primarily in East and Central Java, while the FPI and 212’s main bases of support are in West Java and parts of Sumatra. Prabowo is not making the same mistake of overtly aligning with Islamist currents that will alienate voters in Central and West Java, in many parts of eastern Indonesia, and in north Sumatra.[20]
Although the need to compete for votes in 2024 may yet spur candidates, or their various supporters, to take up inflammatory postures opportunistically, appealing to religious, ethnic or other such sentiments, there are still no signs of the kind of rhetorical polarisation associated with the 2014 and 2019 campaigns.
REAL POLARISATIONS AND POLITICAL LIFE
The fact that mainstream electoral politics has been characterised by rhetorical, rather than real polarisation does not mean than serious ideological or cultural differentiations do not exist in society, even to the extent of a polarisation. In fact, it can be argued that there are two such ideological polarisations, interacting with each other, but not substantially manifested in mainstream, that is electoral, politics. These are between:
- An organised civil society oriented to social justice, democratic rights and socially liberal political outlook and a political establishment solidly oriented to the current hierarchy and values inherited from the New Order era of crony capitalism.
- An increasingly modernising, secular and socially liberal world view, especially in urban centres, and a very traditional, religious and socially conservative world view.
The first of these polarisations is relatively easy to document. Criticisms by civil society organisations, trade unions and other grassroots bodies, of the political establishment embodied in parliamentary parties and government figures are articulated openly.
In recent years, there has been an easily visible polarised response around the major legislation unanimously passed by parliament and signed into legislation by the President: the law on the Corruption Eradication Commission (KPK), the Job Creation Law and the new Criminal Code.[21] While it is clear with these that there are two very distinct poles, there is a great and fundamental power imbalance between the two. The reality is that it is the establishment parties that dominate the formal political processes, recruit memberships on a large scale (whatever the ideological shallowness of this recruitment) and also dominate the media. Figures from the political parties spend thousands of hours on television as talking heads while civil society figures get much less air time. This therefore raises a question of whether this polarisation is felt across society or only across politically active society. One legacy of the 32 years of Suharto’s authoritarian rule was the disorganisation of society and the fundamental retreat from the political life of the population. This points to another more specific polarisation, perhaps better described as a contradiction, namely the tension caused by a perspective advocated by civil society organisations which has no representation in the formal, i.e., electoral political world. The current attempt to form and run a Labor Party campaign in the 2024 elections, whether this time around it wins votes or not, reflects the reality of a polarisation around policy, or even ideology, however embryonic.[22] The Labor Party, whose support comes from some (but not all) sections of the trade unions and civil society organisations, has already announced that it cannot support any of the current three figures being proposed as Presidential candidates because these all support the Job Creation Law, which it opposes. The existence of this polarisation and also its depth and strength are visible and relatively easily to monitor.
The second polarisation – between modern, secularising, social liberalism and traditional, religious social conservatism – is more difficult to analyse and assess precisely. It is not reflected in mainstream electoral politics. While it is true that the Islamist party, the PKS, refused to vote for a new law against Sexual Violence because it did not criminalise sexual intercourse outside marriage, a few months later the whole parliament voted for such a criminalisation in the New Criminal Code.[23] To the extent that there may be differences around such a question, it is more of degree than being actually polarised. Of course, part of this polarisation is visible to the extent that it overlaps with some civil society organisations concerns with democratic and human rights, such as LBGT rights, while religious organisations and some traditional pro-family groups are very hostile to recognition of such rights. Homosexual sexual relations are even more criminalised in the new Criminal Code.[24]
However, assessing a polarisation between secular and religious consciousnesses is more complicated. Some of the more explicit political manifestations of this are perhaps easy to identify, such as a steady, if gradual decline, in the votes for political parties that explicitly identify with Islam.[25] However, even those parties that don’t do so – such as PDIP, Nasdem and Gerindra – still make sure that they appear as religious. It is also not sufficient to look at polls and other manifestations of people identifying as religious – as Muslim, Protestant, Catholic, Hindu, Buddhist, or Aliran Kepercayaan (native religions).[26] The issue is not one of identification but changes in behaviour that reflect changes in ideological outlook or world view. Such changes in consciousness are rarely a planned process but rather the outcome of deeper sociological changes.
At this point in attempting to assess the processes connected to this polarisation, we are restricted to anecdotal evidence, some of which have become widely noted. Much more research and closer observation are need to gain clarity on this process. We can only raise some questions in these final paragraphs.
One of the anecdotal phenomena is the spread of the wearing of the hijab in state schools, something almost unheard of during the New Order period.[27] In late 2022 and early 2023, there was considerable TV and press coverage of this phenomenon, and even more on social media. The Ministry of Education had to issue a clarification that girls could not be forced to wear a hijab, but still, some school heads and teachers insist that children do so. Mothers of children, many of whom experienced greater clothing and other freedoms during the New Order period, use social media to demand the same freedom for their daughters.
This phenomenon does, of course, reflect socially conservative attitudes towards women, demanding stricter control of how they dress and assuming it is females who are responsible for unwanted male sexual interest rather than men. There may be another layer to this, noticeable in both schools and on university campuses. This is when students bow and kiss the hand of teachers or lecturers. This was also a very rare behaviour during the New Order. This change is also often discussed on social media.[28] Both these observations, the wearing of the hijab being the most widely discussed, reveal a new presence of conservatism. The wearing of the hijab is clearly associated with religion (Islam) but the reinforcement of hierarchy among youth at school is not necessarily so. Rather than reflecting a deepening religious consciousness, it is more likely that there is now a greater reliance on tradition, which in Indonesia can have aspects of religion, for the buttressing of hierarchical authority. During the New Order, the established hierarchy rested on the enormous power of the New Order state, backed by the military and resting on at least two years of terror, systematic reorganisation of power and the awe provoked by a decade of sudden economic growth. In the wake of the exposure of economic and political fragility in 1997-98 and the emergence of a rivalry-ridden new elite constantly being exposed for corruption by its own Corruption Eradication Commission, the state no longer has the necessary aura to sustain respect for the various hierarchies. Even on the question of the status of women, state-backed organisations such as Dharma Wanita enforced patriarchal values. This meant less pressure on parents and schools to inculcate conformity – the state would do that later on. Now with a much less authoritative (and less authoritarian) state, the existing hierarchies of authority have to rely on tradition for enforcement, sometimes also drawing on elements of religion, albeit not with religion as its source.
These and other similar phenomenon such as hostility to LGBTQ people, open campaigning for polygamy,[29] and movements against pre-marital sex,[30] emerge haphazardly in response to the spread of socially liberal behaviour and attitudes that threaten existing authority hierarchies. Even so, the existence of religious institutions that produce the equivalent of a priesthood means that there exists a thick layer of people, mainly men, trained in how to present conservative world views. These institutions have unruptured histories going back over a hundred years in the archipelago. While the spread and intensification of urban life facilitate secular modernisation and socially liberal behaviour, there are not yet the equivalent intellectual institutions that can advocate authoritatively for a secular worldview. The religious defence of traditional sources of authority can draw on the whole world of “kyaihood”, whereas new secular outlooks have not yet any such equally authoritative spokespeople. The traditional-religious worldview is more explicitly present than the secular worldview, which is still embodied in social behaviour rather than public advocacy. The partial exception to this is when democratic and human rights civil society elements advocate for the rights of people whose space is expanded by liberal social norms, even if they are not involved in an outright exposition of a liberal worldview. This particular polarisation is between a defence of hierarchical authority using religio-traditional cultural resources, and an urban-life-encouraged, secular modernisation still without an articulated worldview.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
“Consuming Digital Disinformation: How Filipinos Engage with Racist and Historically Distorted Online Political Content” by Jason Vincent A. Cabañes and Fernando A. Santiago, Jr.
2023/66 “Malaysia’s 2023 State Elections (Part 2): Campaign Strategies and Future Implications” by Ong Kian Ming
EXECUTIVE SUMMARY
- The allocation of seats between PH and BN and within PN was conducted successfully in terms of avoiding multi-cornered fights among the component parties of the 3 major coalitions. But the specific distribution of seats and candidates in each of the six states advantages BN-PH and PN in some areas and leaves their respective candidates more vulnerable in other areas.
- The contours of the campaign are shaping out to be relatively low key and attracting low voter interest, at least if judged from the attendance at the public ‘ceramahs’. Strategic campaigning in some of the “hot” or marginal seats in the last week of campaign will be more important than in previous elections. A low turnout rate will be disadvantageous for PH-BN, but not significantly enough to change the overall outcome.
- While PN still seems to have an advantage in social media space, especially on Tik Tok, PH has slowly but surely narrowed the gap.
- Three wins for PH-BN (Penang, Selangor, and Negeri Sembilan) and three wins for PN (Kedah, Kelantan, and Terengganu) are expected. This would result in the status quo from before the elections being kept, and signal that the federal government will last the full term, till 2027. This will attract investors and calm the business community, and give more space for the Unity Government to roll out more substantive economic, fiscal, institutional reform and social protection policies.
- In the unlikely occurrence of a “Black Swan” event where PN wins Selangor and perhaps even Negeri Sembilan, the pressure on the federal government will be immense. A series of resignations by BN MPs, leading to a series of parliamentary by-elections, may have a domino effect that may lead to a change in government. The possibility for such an event is however very low.
* Ong Kian Ming is Senior Visiting Fellow at ISEAS – Yusof Ishak Institute. He was a former Member of Parliament representing the DAP and former Deputy Minister of InternationalTrade & Industry (MITI). He is the current Program Director, Philosophy, Politics and Economics (PPE), at Taylor’s University, a private university in Malaysia.
ISEAS Perspective 2023/66, 8 August 2023
INTRODUCTION
This is the second part[1] of my analysis of the upcoming state elections in Malaysia. Herein, I examine the following salient issues:
- The strategies underlying the allocation of seats between Pakatan Harapan (PH) and Barisan Nasional (BN), and within Perikatan Nasional (PN) as well as the likely impact on the campaign as well as the results
- The contours of the campaign one week after nomination day and one week till polling day
- Looking ahead at the likely results of these state elections, and the political impact on the next general elections
SEAT ALLOCATION AND STRATEGIC IMPLICATIONS
The seat allocation process between PH and BN was always going to be more contentious in the PH-held states of Penang, Selangor, and Negeri Sembilan, compared to the PN-held states of Kedah, Kelantan, and Terengganu. In Penang and Selangor, BN, or more specifically UMNO, will have to accept the reality that it will hold at most a handful of state seats and be a marginal player in the state administration. In Negeri Sembilan, where UMNO has more influence and seats, it may still have to play second fiddle to PH in not likely being able to claim the Menteri Besar (MB) position.
In the three PH-held states, PH would also have to give up some seats with incumbent candidates to UMNO to show its commitment to the BN-PH unity government cooperative framework at the federal level. In the three PN-held states, PH has less of a problem ceding the majority of seats to UMNO, especially since they feel that these are not winnable seats at this point in time.
(The implications of MCA and MIC “sitting out” these state elections will be discussed in the concluding section).
Table 1 below compares the seat allocation for the 2023 state elections (“Pilihanraya Negeri” or PRN 2023) with the seat allocation for GE14 among PKR, DAP, AMANAH, and UMNO.
Table 1: Seat allocations for PKR, DAP, AMANAH, and UMNO for PRN 2023 vs GE14
Source: Various newspaper reports
A few points are worth noting. Firstly, UMNO has to “sacrifice” the most by decreasing the number of state seats it contested in, from 175 in GE14 to 108 in PRN 2023, a reduction of 67. This reflects the significant decrease in the bargaining power of UMNO post GE15. Secondly, AMANAH had to sacrifice the largest number of seats in PH, from 62 seats in GE14 to 32 seats in PRN 2023, mostly by giving up seats in Kelantan and Terengganu. This means that the ability of AMANAH to expand its influence in the PAS strongholds of Kelantan and Terengganu will be severely constrained moving forward. Thirdly, DAP only had to give up one state seat, from 48 in GE14 to 47 in PRN 2023. This was because of the fact that DAP won all of the 48 state seats contested in GE14 and one of the negotiating rules between PH and BN was that the incumbent parties would retain the seats it won in the previous state elections in GE14. The fact that PH and UMNO were able to come to an agreement to avoid any three-corner fights in the 2023 state elections means that the Unity Government platform remains coherent, at least on paper.
PKR gave up three state seats where it had incumbents to allow UMNO to contest. In Penang, it conceded the marginal seat of N21 Sungai Acheh to UMNO, one of the two seats it is likely to win in Penang (the other being N40 Telok Bahang). In Selangor, PKR gave up N17 Gombak Setia to allow the UMNO state chief to contest. (This decision was made easier because the incumbent in this seat, Muhammad Hilman, left PKR together with Azmin Ali, to join BERSATU, as part of the Sheraton Move in 2020). In Negeri Sembilan, PKR gave up the seat of N25 Paroi to AMANAH, which in turn gave up the seat of N9 Lenggeng for UMNO to contest. DAP gave up the N24 Dusun Tua seat in Selangor to UMNO, the only state seat which DAP had to sacrifice.
The seat allocation process was much less complicated and contentious for the Perikatan Nasional (PN) parties – BERSATU, PAS, and GERAKAN. PAS was willing to let go of many of the seats it contested in GE14 which it knew it stood little chance of winning, especially in Penang, Selangor, and Negeri Sembilan. Its main priority in the seat negotiation process was to ensure that it contested in the majority of seats in its stronghold states of Kedah, Kelantan, and Terengganu, which it is able to secure. For BERSATU, being out of Pakatan Harapan (PH) allowed it to contest in seats that were previously contested by PKR and AMANAH. It increased the number of contested seats in Selangor from 9 in GE14 to 32 in PRN 2023 and in Negeri Sembilan, from 2 in GE14 to 15 in PRN 2023. GERAKAN was also able to contest in seats that were previously contested by MCA in GE14 when GERAKAN was still part of Barisan Nasional (BN). GERAKAN went from 17 seats in GE14 to 37 seats in PRN 2023. (see Table 2 below)
Table 2: Allocation of state seats in PRN 2023 versus GE14 for BERSATU, PAS, and GERAKAN
Source: Various newspaper reports
MUDA and PSM entered into an electoral alliance for the 2023 state elections with their efforts focused mostly in the state of Selangor where 14 out of 18 MUDA candidates are contesting and where the PSM’s 4 candidates are contesting (See Table 3 below).
Table 3: Allocation of seats in PRN 2023 – MUDA and PSM
Source: Various newspaper reports
From a campaign perspective, there are some noteworthy points with regard to the allocation of seats within PH and also between PH and BN. For example, the N18 Hulu Kelang seat in the parliamentary constituency of Gombak was originally an AMANAH seat; PKR decided to swap its N41 Batu Tiga seat (in the parliamentary constituency of Shah Alam) with the N18 Hulu Kelang seat because it wants to field a strong PKR candidate to take on BERSATU’s Azmin Ali, the former Menteri Besar of Selangor and former PKR Deputy President who left the party during the Sheraton Move. PKR is fielding the popular caretaker Menteri Besar, Amiruddin Shahri, who is defending his N16 Sungai Tua seat (also in the Gombak parliamentary constituency), and his political secretary, Juwairiya binti Zulkifli (former N10 Bukit Melawati ADUN), in the N18 Hulu Kelang seat, while UMNO is fielding its state chief, Megat Zulkarnain bin Omardin in the N17 Gombak Setia state seat (also in the Gombak parliamentary constituency). This strategy of fielding 2 PKR and 1 BN “big guns” in the three state seats in the Gombak parliamentary constituency is intended to pool the PH and BN votes to defeat Azmin Ali and his allies. If this strategy is successful, it will deal a big blow to the political ambitions of Azmin Ali not just to become the Menteri Besar of Selangor but also his aspirations to take over from Muhyiddin Yassin one day as the president of BERSATU. This bold strategy on the part of PKR and BN may very well succeed.
On the other hand, the decision to give the DAP-held N24 Dusun Tua state seat to UMNO to contest means that both state seats in the Hulu Langat parliamentary constituency (the other being N25 Semenyih) will be contested by UMNO. This means that the incentive for the PH parties to come out and support the two UMNO candidates in both state seats will be negatively impacted, even if the official narrative of solidarity among the UG parties is repeated publicly. Indeed, PH supporters may end up not coming out to vote, and this will affect the chances of UMNO winning one or both of these seats in the Hulu Langat area.
On the PN side, the decision to force PAS to give up the 63% Malay-majority state seat of N38 Bayan Lepas (located in the Balik Pulau parliamentary constituency) so that the GERAKAN President, Dominic Lau, can contest in a more “winnable” seat in Penang led to a backlash among the PAS grassroots in the area; this may end up causing the PAS grassroots in the entire state of Penang to not cooperate with GERAKAN.[2]
These three examples illustrate the importance of aligning seat allocation strategies with candidate and party allocation strategies so that the combined strength of the alliance – be it BN-PH or PN – can be maximized.
CAMPAIGN CONTOURS THUS FAR
In closely watched and closely contested elections such as the current state elections in Malaysia, the strategies undertaken and the issues raised in the course of the campaign can make a difference. These feed into the overall narrative of the campaign, providing material for social media especially Tik Tok, arguably the most important political outreach tool today.
One of the most important strategy outcomes was already observed on the first day of the campaign. The political frontline for this election is the state of Selangor and if PN was to stand any chance of flipping this state, it had to field “big names” to generate public interest. There was speculation that Khairy Jamaluddin would be fielded as a PN candidate and perhaps named as PN’s Menteri Besar candidate. The current Member of Parliament (MP) of Putrajaya and the former Education Minister, Radzi Jidin, was also touted as a possible candidate. When the slate of PN candidates was announced on 26 July, three days before nomination day, the absence of any “big names”, especially in the state of Selangor, was palpable. Even though the list of candidates for PH did not include any “exciting” names of its own either,[3] the fact that many of the PH candidates are incumbents already gives them name recognition and an electoral advantage (provided they have a good service record during their term as ADUN). The inability of the PN to field “big guns” or other exciting candidates may prove to be one of its key shortcomings in the campaign.
In Penang, the DAP candidate list invited much public attention. Five former state executive councillor (EXCO) members were dropped as candidates including caretaker Deputy Chief Minister P. Ramasamy and DAP Wanita Chief, Chong Eng.[4] This announcement led to a number of DAP Penang leaders and members resigning from the party and contesting as independents, including Satees Muniandy, former ADUN for N9 Bagan Dalam,[5] and David Marshel, former DAP councillor, who is contesting in the N16 Perai state seat.[6] It is unlikely that these candidates will be able to affect the election results as they are contesting in seats which are DAP strongholds.
Manifestoes have become more important as campaign issues. All the three major coalitions – PH, BN, and PN – issued manifestos as part of the GE15 campaign, albeit that the content of the manifestos was not discussed or debated substantively during the campaign.
For these state elections, the state-level manifestos have also not played a prominent part in the campaign thus far. Only in an economically advanced and politically sophisticated state like Selangor, has both sides – PH and PN – issued state manifestoes for the voters to compare and contrast. Interestingly, the PH manifesto was launched by caretaker MB Amiruddin Shahri, on 31 July[7] while the PN manifesto was launched on 4 August by the president of PN and BERSATU, Muhyiddin Yassin,[8] and not the putative MB candidate for PN in Selangor, Azmin Ali. In politics, perception matters, and the unsaid implication here is that Muhyiddin is much more popular, especially with the Malay voters, than the much more divisive Azmin Ali, because of the key role the latter played in instigating the Sheraton Move that led to the fall of the Pakatan Harapan (PH) federal government in 2020. In terms of substance, the PH manifesto seems much more focused on creating high income jobs and opportunities and also defending its own record in government over the past 5 years, while the PN manifesto seems to be more focused on social welfare programmes totalling up to RM2 billion. Interestingly, both MB candidates – Amiruddin and Azmin – did not offer to debate each other on how they would lead Selangor going forward. Instead, one political debate which will go on is the one between the Minister of Economy, Rafizi Ramli, and the PAS MP for Bachok, Mohd Syahir Che Sulaiman, scheduled to take place on 9 August 2023.
One of the key indicators of the level of vote transferability between BN and PH and vice versa is the level of cooperation between UMNO and the individual PH parties at the seat level. In places where such cooperative ties have been established even before the state elections, the level of vote transferability will be higher. In areas where such ties are weak, vote transferability will obviously be lower. One cannot underestimate the influence of human agency in determining the “closeness” of BN-PH cooperation on the ground. With the presence of strategic leaders at the local level on both sides, the chances for value-added cooperation increase significantly.
One area of campaign strategy which I am not currently qualified to speak at length on is the influence and use of social media. Anecdotal evidence indicates that the advantage which PN enjoyed on social media in GE15, particularly through Tik Tok, has dropped, with PH stepping up their own Tik Tok game. For example, Anwar Ibrahim’s Tik Tok account has, at the time of writing, 686k followers and 3.3 million likes compared to Muhyiddin Yassin with 97.9k followers and 767k likes. PN’s advantage in Tik Tok is not primarily via the accounts of its top leaders but through influencers and supporters whose presence is particularly strong in a state like Kedah where PN supporters can use words and actions of the caretaker MB, Mohd Sanusi, as an important content generator. The role which social media is playing in these and other elections in Malaysia deserves many in-depth studies and academic papers because of the diversity in data analysis and hypotheses which can be analysed and tested.
Interestingly, there have been no major hot-button issues raised and activated during the campaign thus far with the possible exception of Sanusi’s possible arrest by the police garnering a lot of public attention, especially in the state of Kedah. Whether or not this leads to a landslide for PN in Kedah, which was already firmly in PN’s win column prior to Sanusi being charged in Selangor, remains to be seen.
The overall mood and interest in this election seems to be relatively low, and this has led to some PH leaders calling for their supporters to come out to vote on 12 August 2023. A low turnout, especially among the non-Malay voters, will be disadvantageous to PH and to BN, especially in marginal seats in Selangor. Reports of low voter interest in these elections have caused some PH leaders, especially from the DAP to caution against complacency and to warn of a possible drop in its Chinese support in Penang,[9] the low number of postal ballots in Subang Jaya as a warning for PH in Selangor[10] and the need to use social media to get the voters out, especially the younger ones.[11] Interestingly, a low level of interest, especially among the younger voters, may not necessarily be negative for PH since many young Malay voters predominantly voted for PN in GE15. My assessment is that the turnout rate will be somewhere between 60% to 65% with the turnout among non-Malay voters being slightly but not significantly lower than the Malay voters.
POLITICAL IMPLICATIONS OF THE RESULTS
Other than a “black swan” event seeing PN capturing Selangor, the status quo of PN controlling Kedah, Kelantan and Terengganu and PH+BN controlling Penang, Selangor, and Negeri Sembilan will be the most likely outcome. A favourable outcome for PH+BN would be for it to capture a comfortable majority especially in Selangor and Negeri Sembilan and win at least 40% of the Malay support in Selangor and Negeri Sembilan and for UMNO to win at least one or two seats in each of the six states.
Such an outcome will provide the necessarily political stability for the Unity Government to push forward with a more aggressive policy agenda, especially on the economy, building on the momentum from the “Ekonomi Madani” policy speech given by Anwar Ibrahim on 27 July 2023. It will also provide some measure of stability within UMNO in the leadup to GE16 even if it does not rejuvenate the Grand Old Party of Malaysian politics.
For PKR, a good performance in Selangor will provide a boost for caretaker MB of Selangor, Amiruddin Shahri to make a bid for a higher leadership position within PKR and to challenge for the Deputy Presidency. A good performance for PH in Negeri Sembilan would also provide a pathway to greater national prominence for Aminuddin Harun, the PKR caretaker MB, assuming that PH keeps the MB position after the state elections. For the DAP, the tensions created as a result of the dropping of many incumbents in Penang, may set the stage for minor party tussles during the state party elections which are due to take place in 2023.
Amanah will continue to be “squeezed” into a role as a peripheral party as it has ceded many seats to UMNO in the states where it was supposed to take on PAS namely Kedah, Kelantan and Terengganu. The recent passing of AMANAH’s Deputy President, Salahyuddin Ayub, is also a big blow to the party leadership, especially from the perspective of who will succeed the current president, Mat Sabu.
For UMNO, it seems unlikely that Zahid Hamidi will be replaced as president, even if UMNO does not perform well in the state elections. Even though the party grassroots would be unhappy with a relatively poor showing by the party and may want to instigate against Zahid, his firm control over the UMNO Supreme Council and others in the council who fear that they would be suspended like Hishamuddin Hussein or sacked like Khairy Jamaluddin means that the grassroot agitation will lead nowhere. MCA and MIC face real political irrelevance especially if their presence is not missed or felt in the ongoing state elections. Given the fluidity and complexity of the political landscape in Malaysia, these moving parts will continue to evolve even if the federal government remains stable after the state elections. Of course, if PN wins big, including unexpectedly winning the states of Selangor and Negeri Sembilan, then the pressure on the Unity Government will be immense and the political manoeuvring will gain in intensity. These are interesting times indeed for observers of Malaysian politics, perhaps a little too interesting.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/65 “ASEAN’s New Dilemma: Managing the Artificial Intelligence Space” by Kristina Fong Siew Leng
EXECUTIVE SUMMARY
- The rapid rise of Artificial Intelligence (AI) and its potential risks of invasion of personal privacy, violations of acute copyright and intellectual property rights, and breaches of ethical boundaries have prompted governments to prioritize setting up regulatory boundaries to manage this dynamic technological disruption.
- The momentum in addressing these aforementioned risks has accelerated over the past six months, with the EU AI Act coming close to being passed. This is the first legislation aimed at regulating AI.
- ASEAN’s response has been to advance the formulation of an ASEAN AI Guide, focusing on ethics and governance in AI applications, which is anticipated to be released in early-2024 at the Fourth ASEAN Digital Ministers’ Meeting (ADGMIN), chaired by Singapore.
- ASEAN’s approach to regulating AI is expected to be different from the EU’s impending AI Act. Any formal ASEAN-wide formulation of an AI policy will be based on ‘best practices by design’ rather than anything legally binding.
- Existing AI policy strategies found in the ASEAN region suggest three main areas of importance: 1) Development of AI capabilities for economic growth; 2) Enhancing AI-related skills and competencies, and: 3) Ethical and governance frameworks in AI applications.
* Kristina Fong Siew Leng is Lead Researcher (Economic Affairs) of the ASEAN Studies Centre, ISEAS – Yusof Ishak Institute. The author wishes to thank colleagues Dr Siwage Dharma Negara, Senior Fellow of the Regional Economic Studies Program, and Ms Joanne Lin, Lead Researcher and Co-coordinator of the ASEAN Studies Centre, for their valuable comments and suggestions.
ISEAS Perspective 2023/65, 7 August 2023
THE RUSH FOR REGULATION AS AI PROFILERATES
As the catchphrase ‘Generative Artificial Intelligence’ or ‘GenAI’ spreads around the world, catalyzed by the rapid rise in popularity of ChatGPT since its launch in November 2022 last year, governments globally are taking heed and have stepped up efforts to formulate some form of regulation, be it industry standards or, at best, guidelines to counter the potentially-adverse impact of this technology on humans and everyday life. The skew in proposed regulations in this space has adopted the notion of ‘responsible AI’, geared towards creating an AI governance framework for the greater good, and reaping the benefits of greater productivity and technological advancement without unintended consequences such as an invasion of personal privacy, violations of acute copyright and intellectual property rights, and breaches of ethical boundaries. AI without regulations can potentially place mankind in a more precarious standing against a technology that can change life as we know it in countless ways.[1]
As we have seen over the past decade, social media algorithms have changed human thinking and behaviour to the extent of influencing political participation.[2] Thus, the inherent risks of AI are glaring. However, the speed at which regulations can be established is key to managing this. For an entire economic bloc such as ASEAN, this is all the more critical. It is important to note that the intention or appetite to regulate AI is not a new construct, but it is an area that has been fraught with differing opinions on how it should be regulated, or even if it should be regulated at all. Even as the EU’s AI Act is close to being passed,[3] there exists a polarity in views amongst the Members of European Parliament (MEPs), with one main sticking point being the use of facial recognition surveillance[4] and the associated ethical issues that accompany it. The final vote in Parliament for the ban on real-time facial recognition use was 499 in favour out of 620 members. Regardless, the rest of the world closely watches the rollout of this legislation, in the belief that the Act may set the benchmark for AI-related policies around the world.[5]
That said, various countries have also started formulating their own policies for AI, including six ASEAN member states, namely Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. These initiatives fall short of realizing a legally binding piece of legislation. EU- and ASEAN-wide regulations on AI will have differences due mainly to the lack of a region-wide legislative body in ASEAN, similar to the EU’s European Parliament. Thus, the result of any formal ASEAN-wide formulation of an AI policy will be based on ‘best practices by design’ rather than anything legally binding.
APPETITE FOR DIGITAL SERVICES MAY INCREASE RISKS IN AN UNREGULATED AI SPACE IN ASEAN
Should ASEAN countries be worried about AI applications and their far-reaching effects on industry and society? Is the region still far removed from the developments of other countries which are more developed in both industrial development and in the use of AI in sectors such as healthcare and manufacturing? As one indicator, based on May’s statistics of monthly visits to the ChatGPT chatbot application through both desktop and mobile means (Table 1), Indonesia was fourth in terms of global traffic share (4.7%) as compared to the US which was on top at 8.9%. It is notable that Indonesia was the only ASEAN country in the Top 5. Though ChatGPT’s reach is wide, it is not available in all countries; for example, Lao PDR and Myanmar have no access at all. Nevertheless, the application’s reach is wide, and its pattern of usage suggests that it is agnostic to levels of connectivity or the overall digital capabilities of the country. That said, in areas where overall digital connectivity may be low, this may be a case of wide geographic disparities with certain urban areas having denser digital usage.
Table 1. Traffic to the ChatGPT application in May 2023 and relative measures of digitalization
Source: similarweb database and World Bank World Development Indicators (data as at 2021)
According to UNCTAD’S digital services statistics, Indonesia’s share of digital service imports as a proportion of overall service imports is the largest in ASEAN, at 61.8% (Figure 1, left panel). The country remains a key consumer of foreign-originated digital services and this characteristic reinforces the trend seen above.[6] Singapore is a close second in this regard.
Figure 1. Digitally-deliverable services imports and exports in ASEAN (2017 vs 2021)
Source: UNCTAD (most recent data as at 2021); Note: Lao PDR data for 2021 takes the value of 2020’s data due to data unavailability.
On the other side of the coin, the Philippines’ digital services exports as a proportion of their overall services trade is the highest among ASEAN economies, with Vietnam coming in second (Figure 1, right panel). Despite a similar income-level classification by the World Bank as Lower-Middle Income economies, Vietnam is comparably more ‘connected’ than the Philippines, taking into consideration the fixed broadband and mobile subscription density in the respective countries (Table 2). All in all, this brings home two points: 1) The cross-border nature and porous borders in digital services trade have the ability to influence economies that are at differing levels of digitalization and 2) Economies that are not digitally developed (from an institutional or a regulatory perspective, especially with regards to safeguards), could face adverse risks grappling with the proliferation of disruptive technologies.
Table 2. The level of connectivity amongst ASEAN economies
Source: World Development Indicators, World Bank. Note: All data in Table 2 is at 2021 except for “Secure internet servers/1 million people” where only data up until 2020 is available.
IS ASEAN READY TO JUMP ON THE AI REGULATION BANDWAGON?
Are ASEAN economies ready for the rapid rise of AI and how important is it for these countries to have an ASEAN-wide AI policy? Given the rapid pace of AI development, it would be important at this juncture to assess where ASEAN countries are in terms of establishing or implementing their own AI-specific policies, how viable it is to have an overarching ASEAN-wide AI policy or set of guidelines, and which countries can realistically take the lead. Moreover, what will this region-wide AI policy likely look like, if it is realized?
In February 2023, ASEAN collectively agreed to establish an ASEAN ‘AI Guide’.[7] The formulation of the AI Governance and Ethics component is expected to take shape more expeditiously and may even be ready for dissemination by the end of the year or early 2024, at the Fourth ASEAN Digital Ministers’ Meeting (ADGMIN), chaired by Singapore.[8] Addressing the issue of governance and ethics at this initial stage is a promising indication of how seriously AI challenges are being taken. Individual ASEAN countries have initiated AI-related strategic policies or roadmaps. Table 3 highlights AI-related policies amongst the ASEAN-10.
Table 3. Summary of AI-related policy initiatives around ASEAN
Source: OECD. AI Policy Observatory, World Bank, Digital Economy Development Committee (Myanmar), Ministry of Science, Technology & Innovation (Malaysia), Digital Economy Council (Brunei Darussalam), Ministry of Economy and Finance (Cambodia), Department of Trade and Industry (Philippines), Smart Nation (Singapore), National Strategy On R&D and Application of Artificial Intelligence (baochinhphu.vn).
Key observations of AI strategies around the region:
1) AI strategies are at different stages of development – Only six of the ten ASEAN member states have developed their own AI strategies. Brunei, Cambodia, Lao PDR and Myanmar have not. These four have introduced national digital economy strategies but only Cambodia acknowledges AI in the text, and mostly in the context of AI industry development, except for some mention of the need for a data-driven governance system.
2) AI strategies have three common threads – For the six member states that have an AI policy, three main threads emerge: a) Development of AI as a technology for economic growth and development, b) Building up capacities, such as human capital capabilities, to reap the benefits of AI applications and c) Establishing ethical and governance frameworks for AI applications.
3) Varying degrees of international cooperation leverage – All six existing AI strategies feature international cooperation in the form of human capital development, as well as R&D collaborations. However, only two countries, Singapore and Malaysia, feature a strategy of leverage through international bodies or frameworks. In Malaysia’s case, there is the intention to tap on the ASEAN Committee on Science, Technology and Innovation (COSTI), as well as the UN Commissions on Science and Technology for Development (CSTD) to engage with international partners. Singapore’s engagement is more advanced with places in the OECD Expert Group on AI, and the European Commission’s High Level Expert Group on AI, thus giving it the ability to influence global standards.
The approach to an ASEAN-wide policy will need to take into account all of these factors when formulating AI ‘guardrails’. This is especially important in the event of rapid adoption of the EU-based laws; spillover effects on other parts of the world through companies doing business with EU-based entities can be substantial, much in the same way that the extensive General Data Protection Regulation (GDPR) affects external partners. As such, an ASEAN-wide policy must be sensitive to the wide disparity between member-state AI strategies, the different levels of digital capabilities and capacities, and the differences in institutional readiness across the region.
KEY REGULATORY ‘BUILDING BLOCKS’ FOR A BROAD-BASED AI POLICY STRATEGY
As the analysis of the respective AI strategies show, there are certain regulatory building blocks that should be integral to a robust AI policy, especially in ethics and governance. Given the key risks inherent in AI applications, such as risks of data privacy breaches, intellectual property infringement, and the creation of fake news, deepfakes and overall misinformation, it is important for regulations to be robust and holistic in coverage. Some key aspects to begin with can include data protection laws, cybersecurity regulations, intellectual property and copyright legislation, as well as consumer protection.
Table 4 below summarizes the status of these regulatory ‘building blocks’ around ASEAN.
Table 4. Summary of key pieces of legislation for a robust AI policy in ASEAN
Source: UNCTAD, World Intellectual Property Office, World Trade Organization, Intellectual Property Office (Brunei Darussalam), Department of Economic Planning and Statistics (Brunei Darussalam), MyIPO, Government of Philippines Official Gazette, Singapore Statutes Online. Note: * Brunei currently has a Data Protection Policy (2014) in place of Legislation, which is forthcoming.
At this juncture, all countries in ASEAN have (or will soon implement) some form of data privacy, cybersecurity, intellectual property and consumer protection legislation. In terms of consumer protection regulation relating to online incidents, only Brunei’s legislation does not provide for it. While copyright and intellectual property laws may protect against traditional copyright infringement cases; misinformation, misrepresentation or fake content (through means of AI technology) is an area which is still not quite developed within the legislation. In some AI policy documents, such as Singapore’s National Artificial Intelligence Strategy, there are explicit intentions to address these issues. ASEAN countries should expedite their forthcoming legislation in the areas of data privacy (Brunei and Myanmar), cyber security (Cambodia and Myanmar) and consumer protection laws (Brunei and Lao PDR) to get ASEAN countries onto a more level foundation to face a dynamic environment where AI will play a larger role in everyday life. Enacting legislation relating to distributing fake news does come with its challenges, especially when communications concerning these sorts of laws are not managed well and when enforcement is viewed as oppressive and an infringement on human rights. Malaysia’s Anti-Fake News Act (2018) had a short shelf life and was repealed only after a year.[9]
In order for ASEAN’s cooperation in AI to ward off adverse impacts of its applications, regional economies clearly need to reach a minimum threshold when it comes to key regulatory building blocks. An ASEAN Guide in AI can provide a timeline for this to materialize, and ensure safe use and application of AI, domestically and beyond. Moreover, existing ASEAN frameworks such as the ASEAN Framework on Personal Data Protection and the ASEAN Cybersecurity Cooperation Strategy, can be leveraged upon to streamline baseline targets so that they can be more expediently incorporated into the ASEAN-wide AI Guide.
BRIDGING DOMESTIC LEGISLATION TO INTERNATIONAL STANDARDS
Given the differing state of regulatory foundations and levels of digital development among ASEAN economies, the ASEAN approach to regulating AI will most likely take the form of a ‘best practices’ guide. The EU’s preference for bloc-wide AI legislation is not the only model that has been adopted. The US is also attempting a ‘best practices’ approach with their Blueprint for an AI Bill of Rights,[10] which aims to establish a framework for ‘accountable’ AI. In contrast, China has been seen to adopt a more progressive approach[11] which includes the introduction of various rules on different aspects of AI such as algorithms (2021), synthetically generated content (2022) and generative AI (2023). This dynamism mirrors the sophistication of the industry and the dynamic nature of AI.
In the ASEAN context, it will be important for a start to bridge the differences between the six ASEAN member states with AI policies with the four who do not, within the intended ASEAN AI Guide. The absence of a policy in these four countries reminds us that AI considerations may only take place after more fundamental digital capabilities are strengthened. The ASEAN-wide policy guidelines on AI may come to focus on the three common threads of AI policies found in the six member states: 1) AI capabilities development 2) development of national capacities to apply AI, and 3) creation of ethical and governance frameworks for AI use. These fundamentals address both the developmental aspect of the technology, and the risks inherent in a powerful technology if left unchecked.
Apart from broad-based strategies amongst ASEAN countries, regulatory building blocks of data protection, cybersecurity and copyrights, are almost in place, with some upcoming. That said, a more explicit AI element may need to be included in these laws, especially to account for copyright and intellectual property infringement incidents. Moreover, leveraging existing ASEAN frameworks such as the ASEAN Framework on Personal Data Protection and the ASEAN Cybersecurity Cooperation Strategy may help establish baseline targets and hence a framework for ‘best practices’ for the ASEAN AI Guide, and, more importantly, formulate actionable strategies for countries lagging behind. Getting foundational regulations up to speed is one of the more pressing goals.
Singapore will be the Chair of the ASEAN Digital Ministers’ Meeting (ADGMIN) and Related Meetings in 2024. It will be in a good position to lead ASEAN in the development of the ASEAN AI Guide on Governance and Ethics. With Singapore’s position at the European Commission’s High Level Expert Group on AI, it can guide the bloc’s AI strategy to better align it with international standards including good regulatory principles found in the EU’s AI Act. Singapore has an important role to play in bridging gaps within ASEAN on AI and at the same time, steering ASEAN’s AI guidelines toward international standards. It will be important for ASEAN to have a strategy that is not just symbolic in form but also able to safeguard the ASEAN economies in this dynamic arena.
ENDNOTES
For endnotes, please refer to the original pdf document.
“Unbundling Regimes and Structural Transformation in Malaysia” by Cassey Lee
2023/64 “What Can Malaysia Expect from IPEF?” by Jayant Menon
EXECUTIVE SUMMARY
- To re-engage economically with the Indo-Pacific region, US President Biden launched the Indo-Pacific Economic Framework for Prosperity (IPEF) in May 2022, with 14 countries signing on, half of them from ASEAN.
- More of a framework for setting rules and standards than a free trade agreement, it comprises four policy pillars: trade; supply chains; clean economy; and fair economy.
- For Malaysia, IPEF could help restore market access to the US by relaxing Withhold Release Orders (WROs) that ban exports of companies facing forced labour allegations.
- Malaysia also expects that the ease and frequency with which trade sanctions are applied in the future will be better managed as a result of IPEF.
- One problem with IPEF is that, without the inclusion of China, it is of limited usefulness to countries with China-centred supply chains, like Malaysia. Worse than that, any potential benefits could be more than offset if it fuels US-China tensions and leads to actions that further disrupt supply chains and trade.
* Jayant Menon is Senior Fellow at the ISEAS – Yusof Ishak Institute. He thanks Cassey Lee, Siwage Negara and Tham Siew Yean for useful comments, without implicating them in any way.
ISEAS Perspective 2023/64, 1 August 2023
INTRODUCTION
In a bid to re-engage economically with the region, United States (US) President Biden launched the Indo-Pacific Economic Framework for Prosperity (IPEF) in Tokyo on 23 May 2022. Malaysia joined six other Association of Southeast Asian Nations (ASEAN) fellow members – Brunei Darussalam, Indonesia, the Philippines, Singapore, Thailand and Vietnam – to sign on as participating countries, together with Australia, Fiji, Japan, India, Republic of Korea, and New Zealand. These countries account for about 40 per cent of world GDP.
The much-awaited return of the US to the region as an economic partner was met with great expectations, and standards by which IPEF is to be judged have been set accordingly high, also leaving a lot of room for disappointment. Expectations may be unreasonably high because they are probably still based on the view that the US is the original guarantor of a rules-based trading order, rather than its more recent performance that has seen it undermine the World Trade Organisation’s (WTO’s) Dispute Settlement Mechanism and disregard some of its rulings, such as against the Trump tariffs on iron and steel, among other things.
This Perspective is in four parts. The next two sections provide context by first introducing IPEF and its structure before reviewing Malaysian trade policy, focussing on its free trade agreements (FTAs) and trade governance. The section after that deals with the two most important pillars for Malaysia, i.e. trade and supply chains. The discussion on these two pillars is combined because it does not make sense to separate the two from an economic point of view for a country like Malaysia, albeit that it might be from a national security or geopolitical standpoint for a country like the US. (For completeness, the pillars on clean and fair economy are discussed in the Appendix because there is little here that is likely to have material impact on Malaysian policy making.) A final section concludes.
WHAT IS IPEF?
IPEF is not an FTA or a traditional trade agreement but more of a framework for setting rules and standards. It is also a White House Initiative, and the Biden administration has indicated that it will not be submitted to Congress for approval but will be implemented in whole or in part through Executive Order (see Freeman 2022). The framework comprises four policy pillars: trade; supply chains; clean economy (energy, decarbonisation and infrastructure); and fair economy (tax and corruption). Employing a modular approach, member countries can choose which policy pillar to sign up for but have to abide by all the commitments within the selected pillar(s).
The lack of market access provisions through the exchange of concessions is greatly lamented, and calls for reconsideration to bring them back onto the negotiating agenda are frequent. IPEF is very much about market access, however, but just not in the way that it is traditionally understood. While it may not improve market access of IPEF members to the US, it will certainly affect market access of US firms to other members’ markets, because almost every other item on the agenda, from digital trade rules to environmental or labour standards, will affect competitiveness. In the same vein, Malaysia’s interpretation of market access, as will be shown, is also slightly different and IPEF could be used to serve its interests in this area.
THE MALAYSIAN TRADE POLICY CONTEXT
Malaysia is a small, open economy that has a long history of embracing free and open trade and investment policies. In fact, prior to the 1997-98 Asian Financial Crisis, Malaysia was often hailed as a model worthy of emulation by the developing world of how such liberal trade and investment policies could transform economies and avoid the middle-income trap.
Malaysia has pursued liberalisation through its participation in the WTO and through unilateral actions and FTAs. As of June 2023, Malaysia is implementing 18 FTAs (Table 1) and is negotiating five more.[1] It has bilateral FTAs with 4 IPEF member countries – Australia, India, Japan and New Zealand – and is in the process of negotiating one with two others – Republic of Korea and the US.
Table 1
Malaysia’s Trade Agreements ‘In Effect’, June 2023
Source: Asia Regional Integration Center, ADB. https://aric.adb.org/fta
Notes: The number in parentheses refers to the number of countries participating in IPEF
Despite negotiations having commenced in 2006, Malaysia does not look like ever concluding an FTA with the US, and this raises the question as to the extent IPEF can effectively substitute for the absence of such an FTA. The short answer appears to be ‘very little, if at all’. So far, the US is not providing the same treatment to IPEF members as it is to countries that it has an FTA with. A stark contrast that highlights this discrepancy arises in relation to the clean economy pillar and ‘green’ investments (more later).
The question of overall value-addition combined with the recent political and policy climate in Malaysia may also affect the appetite to aggressively pursue a new and challenging agreement like IPEF. Since 2020, Malaysia has had four Prime Ministers and three Ministers of the Ministry of International Trade and Industry (MITI). To provide context, it has had the same number of Prime Ministers and Minsters of MITI in the last 3 years as it has had in the preceding 3 decades. In short, the political and trade policy environment has been in a state of flux over recent years. This is one reason for the delay in ratifying the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which finally happened on 30 September 2022, making it only the 9th (out of 11) member to do so.
Some stability has returned with the current Anwar Ibrahim administration, with Tengku Zafrul Aziz, the former Finance Minister, in charge of MITI. The CPTPP came into effect on 29 November 2022, soon after the Anwar administration took office. The current administration has reiterated support for the CPTPP, despite some concerns from domestic lobbies, and the Minister of MITI had the following to say in January 2023: “There were obviously some issues that were raised by various groups, and we have addressed that by taking action to mitigate some of the concerns, so we are very much committed to participating in it (CPTPP).”[2]This bodes well for the current administration’s free trade credentials, and therefore for the IPEF.
TRADE AND SUPPLY CHAINS (PILLARS 1 AND 2)
As noted, pillars 1 and 2 on trade and supply chains, respectively, are the most important to Malaysia. In fact, most of Malaysia’s trade involves supply chains and separating the two does not make much economic sense for a country like Malaysia. Nevertheless, the issues covered in the trade pillar have already had a significant impact on trade relations with the US, particularly as they relate to labour and environmental standards.
Former MITI Minister Azmin Ali has indicated that Malaysia sees IPEF as providing a platform to open engagement with the US in resolving the withhold release orders (WROs) that have been imposed by US authorities on Malaysian exports (MIDA 2022). US authorities currently have six active WROs on Malaysian companies, four on rubber gloves and two on palm oil, due to allegations of forced labour. The WROs prohibit the import of products originating from companies facing forced labour allegations.
Will IPEF be able to deliver on helping address the WROs or other punitive trade measures? Two out of the six WROs have been modified in early 2023 and there is another precedent of sorts that provides room for optimism that IPEF can help. Just two weeks after IPEF was launched on 23 May 2022, the Biden administration lifted a transhipment ban that had been imposed following a complaint by a US-based solar company. Malaysia (along with Cambodia, Thailand and Vietnam) was suddenly provided with a 24-month tariff exemption in the US market for their exports of solar cells and modules. The timing suggests a possible link between the two events.
Therefore, even if IPEF does not include the exchange of market access concessions in the traditional sense, it may provide the opportunity to reverse binding restrictions and restore market access for countries like Malaysia. It may also allow Malaysia an avenue to better manage similar issues should they arise in the future.[3] The recent relaxation of WROs on two companies and the 24-month tariff exemption following the transhipment allegations on solar products suggest that this might be possible. Nevertheless, the increasing influence of the US Department of Commerce in setting the trade agenda (see Alden, 2022; 2023) has increased the weaponisation of trade policy. This needs to be checked and better managed for fear that its impacts on a growing number of non-trade related areas will cause significant disruption to countries on the receiving end.
Malaysia is keen to grow its digital economy and the rules relating to it coming from IPEF may be significant. If the IPEF negotiations on digital trade and data flows can further the agenda beyond that of other bilateral (eg. the Framework of Cooperation with Singapore), regional (CPTPP, but also ASEAN, APEC, etc.), or multilateral (WTO) initiatives, then the impact of IPEF could be transformative. Details are still sparse, but the potential is certainly there to make IPEF a significant part of Malaysia’s trade policy. The negotiations in this area are not without risk, however. With the European Union and China also pursuing their own approaches to digital governance, the possibility of a “splinternet” emerging that fractures the global system needs to be avoided.
Malaysia will also be impacted by the first tangible results of the year-long negotiations, relating to supply chain resilience. Following the meeting in Detroit on 27 May 2023, US Commerce Secretary Gina Raimondo announced “substantial progress” towards an IPEF Supply Chains Agreement, although the final text is yet to be agreed upon.
Three new structures are being created to operationalise the agreement:
- The first is the IPEF Supply Chain Council, which is supposed to better coordinate supply chain activities and help build resilience and competitiveness in certain critical sectors. The council will apparently oversee the development of “action plans” for these sectors that may help companies identify and address supply chain vulnerabilities.
- Second is an IPEF Supply Chain Response Network that is designed to give early warnings to IPEF countries of potential supply disruptions. With a new “emergency communications channel”, it is expected that IPEF members can streamline communication and coordinate a response when one or more IPEF parties faces a supply chain crisis.
- Finally, an IPEF Labor Rights Advisory Board made up of government, worker, and employee representatives is being proposed. This Board is apparently required to identify areas where certain labour rights are being violated.[4]
Although a tangible outcome such as the IPEF Supply Chain Agreement after just one year should be welcomed, the operational details are not yet available and need to be studied before any judgement on its practical use can be made. A careful study of the Press Statement on the Substantial Conclusion of IPEF Supply Chain Agreement Negotiations, posted on the US Department of Commerce official website,[5] reveals very little of substance, unfortunately. In fact, Beattie (2023) describes the announcement, which is all that is available as of July 2023, as “a mass of abstract verbiage with a tangle of subclauses festooned with adjectives and adverbs layered two or three deep.” In short, it is mostly aspirational and very thin on practical details, with what little details that are provided being so heavily qualified that they can be interpreted to suit a diverse range of interests.
What we do know, however, is that China is not a part of IPEF or this agreement, and this is a major concern to Malaysia and other ASEAN members involved in regional supply chains. This is because almost all manufacturing supply chains that involve Malaysia and other ASEAN countries are China-centred. It is with this pillar that the exclusion of China is most significant, and greatly undermines its value to a country like Malaysia. The high level of interdependence that characterises supply chains highlight the importance of including all players, especially critical ones like China. The exclusion of China is a major constraint and could undermine the usefulness of this pillar to ASEAN members of IPEF, including Malaysia.
More than being of limited use by excluding China, the supply chain agreement could actually harm Malaysia and other countries with China-centred supply chains. This is because the US expects to get IPEF members to buy into its ‘resilience and competitiveness’ framework and support its national security interests by limiting engagement and dependency on China. Arasasingham et al. (2023) argue that the US hopes the agreement will encourage other members to also start reshaping their supply chains in line with the broader US friend-shoring agenda that incentivises supply chain relocation to countries that do not pose a perceived national security threat. In exchange for this, members are being offered various capacity building and training programmes, and the possibility of greater FDI flows during an unspecified future. This is not a bargain that countries like Malaysia are likely to find beneficial.
When it comes to regional supply chains, an early warning system will only be useful if its predictions are reliable. This in turn will depend on how willing member states are to share information on a timely basis. Although supply chain networks are characterised by a high level of interdependence, countries involved can sometimes operate more as competitors than collaborators, and may not always be willing to share information on a timely basis, especially if it is considered to be sensitive or proprietary in nature.
The supply chain initiative needs to be able not only to identify emerging risks but also be able to respond to them in an effective and timely manner. All of this suggests that the details need to be examined before the initiative is hailed as a breakthrough, as some have already done.[6]
As noted earlier, embedded within the supply chains agreement is a new labour rights advisory board aimed at raising labour standards in supply chains. Labour issues were meant to be part of Pillar 1 on trade but has also found its way into Pillar 2 on supply chains and could arise in other pillars as well, further emphasising the so-called ‘worker-centric’ nature of IPEF. The extent to which this body will raise standards to protect workers as opposed to removing the cost competitiveness that developing countries have with labour supply, is yet to be seen. Suffice to say that developing countries tend to view the introduction of labour standards into trade negotiations with a high level of suspicion.
CONCLUSION
Using trade agreements to pursue non-economic ends, whether through formal FTAs or frameworks like IPEF, is neither new nor unique to the US. In fact, most trade agreements probably have more to do with international diplomacy and politics than with trade or investment. IPEF is not an exception. The outstanding trait with IPEF, however, is how much it asks of its members in return for how little it promises to provide – it is almost all stick and no carrot. This is particularly problematic since there is no mechanism to bind countries to make good on their commitments.
What Malaysia expects to derive from IPEF may differ from that of other members. For Malaysia, participation in IPEF could serve as insurance against punitive trade policy actions by the US and provide the opportunity to resolve existing trade frictions. IPEF could help restore market access by relaxing the remaining Withhold Release Orders (WROs) on four companies banning their exports to the US market. Malaysia also expects that the ease and frequency with which trade sanctions are applied in the future will be better managed as a result of IPEF.
A remaining unknown relates to digital trade. The potential exists for IPEF to be transformative for countries like Malaysia if it can deliver in this area in a way that moves the frontier while avoiding the risk of a “splinternet” emerging.
These potential benefits of IPEF need to be weighed against a worst case but highly plausible scenario where the creation of IPEF further fuels US-China tensions and leads to further retaliatory actions. This is likely if IPEF is viewed as an attempt by the US to export its national security agenda to the region. If retaliatory actions further disrupt the operations of regional supply chains, possibly causing bifurcation, then the cost to Malaysia and other ASEAN countries may be so high as to outweigh any benefits.
The problem is that the IPEF without China is, to a large extent, economically meaningless to countries like Malaysia, and potentially quite disruptive and costly. To expect that this might change would be unrealistic if a key underlying motivation of its main proponent(s) is to counter the rise of China’s influence in the region, which appears to be the case.
APPENDIX
CLEAN ECONOMY AND FAIR ECONOMY (PILLARS 3 AND 4)
For the issues covered in the pillars on clean and fair economy, Malaysia’s main policy response will be determined by either national actions and priorities or commitments to existing international agreements, rather than IPEF. For clean energy, Malaysia has updated its Nationally Determined Contribution target to reach net-zero greenhouse gas emissions by 2050. This is a major challenge[7] and IPEF could play a complementary role in helping Malaysia meet its commitments, but not with its current configuration. At the moment, IPEF will not have much of an impact unless it is upgraded to at least the standard applied in US FTAs.
The US has comprehensive FTAs in force with 20 countries, of which four are in IPEF, namely Australia, Republic of Korea, Japan and Singapore. Since Malaysia has not concluded an FTA with the US, it will not receive the same treatment as these four IPEF members or other non-IPEF countries that the US has an FTA with, and this discrepancy is at its greatest in relation to the green economy.
The Inflation Reduction Act (IRA) grants tax credits to companies if a certain percentage of the value of critical minerals in electric vehicle batteries, for instance, is extracted or processed in the US or in FTA partner countries but this does not automatically extend to IPEF members. The fact that a critical minerals agreement was signed with Japan in March 2023 as a bilateral deal that allows it to access IRA tax credits further erodes the relevance of IPEF to other members. It is this type of discrimination that is undermining the value of IPEF, in particular, and as a serious attempt to economically re-engage with the region, in general.
With respect to the pillar on fair economy, it should be noted that Malaysia is already a signatory to the Multilateral (Tax) Instrument to Prevent Base Erosion and Profit Shifting, or BEPS. There are also various governance issues relating to corruption and the performance of Government Linked Companies (GLCs) that need to be addressed, but this will mainly require national actions (Menon and Ng, 2019). Furthermore, now that Malaysia has ratified the CPTPP, there may be little that IPEF can add to the binding commitments already made to the reform agenda in this area.
REFERENCES
Edward Alden, “Why the U.S. Trade Office No Longer Runs Trade”, Foreign Policy, (7 March 2023). https://foreignpolicy.com/2023/03/07/ustr-tai-trade-biden-america-first-china-decoupling/
Edward Alden, “Biden’s ‘America First’ Policies Threaten Rift with Europe”, Foreign Policy, (5 December 2022). https://foreignpolicy.com/2022/12/05/biden-ira-chips-act-america-first-europe-eu-cars-ev-economic-policy/
Aidan Arasasingham , Emily Benson , Matthew P. Goodman , and William Alan Reinsch, “Assessing IPEF’s New Supply Chains Agreement”, CSIS, Washington, DC. (31 May 2023). https://www.csis.org/analysis/assessing-ipefs-new-supply-chains-agreement
Robert Atkinson, “Biden’s Indo-Pacific Economic Framework Is a Paradigm Shift”, Foreign Policy, (1 July 2022). https://foreignpolicy.com/2022/07/01/biden-ipef-indo-pacific-trade-economics-china/
Alan Beattie, “The US trade pledge to the Indo-Pacific is empty”, Financial Times, (8 June 2023). https://www.ft.com/content/42a87796-8228-445b-8ad5-63a5c35d5144
Mei Mei Chu, “Malaysia needs to invest $375 bln in renewables to reach 2050 climate goals – report”, Reuters, (9 March 2023). https://www.reuters.com/business/energy/malaysia-needs-invest-375-bln-renewables-reach-2050-climate-goals-report-2023-03-09
Kyle Freeman. The Indo-Pacific Economic Framework (IPEF) is Not a Free Trade Agreement, but Will Be Judged on the Same Principles, China Briefing, (1 June 2022). https://www.china-briefing.com/news/ipef-not-an-fta-will-still-be-judged-like-one-op-ed/
David Lawder, “U.S.-led Indo-Pacific talks produce deal on supply chain early warnings”, Reuters, (28 May. 2023). https://www.reuters.com/markets/asia/us-led-indo-pacific-talks-produce-deal-supply-chain-early-warnings-2023-05-27/
Malaysian Investment Development Authority (MIDA). Malaysia’s involvement in IPEF will help resolve Withhold Release Orders issues, says Azmin. (1 August 2022). https://www.mida.gov.my/mida-news/malaysias-involvement-in-ipef-will-help-resolve-withhold-release-orders-issues-says-azmin/
Jayant Menon. “Supply chains are more resilient than they appear”, East Asia Forum, (3 July 2022). https://www.eastasiaforum.org/2022/07/03/supply-chains-are-more-resilient-than-they-appear/
Jayant Menon and Thiam Hee Ng, “Do State-Owned Enterprises Crowd Out Private Investment?: Firm Level Evidence from Malaysia”, Journal of Southeast Asian Economies, Vol. 34, No. 3, (September 2017): 507-522.
ENDNOTES
For endnotes, please refer to the original pdf document.
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