2023/16 “Minilateral Cooperation in ASEAN May Help it Overcome Challenges in Multilateralism” by Joanne Lin and Laura Lee

Joanne Lin; Laura Lee

2023/16 “Minilateral Cooperation in ASEAN May Help it Overcome Challenges in Multilateralism” by Joanne Lin and Laura Lee

Indonesia’s Foreign Minister Rento Marsudi (R) welcomes her Cambodia’s counterpart Prak Sokhonn (L) during the 32nd ASEAN Coordinating Council meeting in Jakarta on February 3, 2023. BAY ISMOYO/AFP.

EXECUTIVE SUMMARY

ASEAN regionalism is increasingly seen as being slow and ineffective, casting doubts on its leadership role in the region.

Minilateral cooperation in ASEAN will allow a smaller group of like-minded ASEAN countries to work together in a targeted manner to deliver results where it matters.

Such cooperation is not meant to replace multilateralism but rather to supplement what is not possible in the broader setting, and to promote its eventual expansion into greater regionalism when the time is ripe.

Minilateral cooperation currently exists in ASEAN in many forms, such as: The Malacca Straits Patrol between Indonesia, Malaysia, Singapore and Thailand; the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area, and; the Laos-Thailand-Malaysia-Singapore Power Integration Project, among many others. This allows ASEAN countries to respond to opportunities and challenges in their geopolitical environment and to overcome weaknesses in existing ASEAN cooperation.

ASEAN should look beyond existing minilateral cooperation to address in like manner more challenging issues such as the South China Sea.

*Joanne Lin is Co-coordinator of the ASEAN Studies Centre at ISEAS – Yusof Ishak Institute, and Lead Researcher (Political-Security) at the Centre. Laura Lee is currently a Public Policy and Global Affairs undergraduate at Nanyang Technological University. She was an intern at the ASEAN Studies Centre from May to September 2022.

ISEAS Perspective 2023/16, 8 March 2023

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INTRODUCTION

Minilateral groupings such as the Quadrilateral Security Dialogue (QUAD) and the trilateral security pact between Australia, the UK and the US (AUKUS) in the Indo-Pacific region have called into question the effectiveness of ASEAN and the security benefits it offers. It has also cast doubts on ASEAN’s centrality, especially its ability to satisfy the strategic needs of major powers.[1]

Although multilateralism will ensure an equal voice across all member countries (regardless of size and power), multilateral organisations are increasingly finding themselves in a deadlock, unable to act or slow to act, resulting in sub-optimal results.[2] This is starkly exemplified in the UN’s failure to prevent the outbreak of the Russia-Ukraine war or to end it.

Similarly, ASEAN finds itself increasingly unable to overcome challenges, with differing national interests among member states leaving the grouping divided and increasingly unable to achieve consensus. Since the bloc’s expansion from six to ten members in the 1990s, the divide between maritime and the newer continental (Mekong) countries in Southeast Asia has also become obvious.

In the State of Southeast Asia 2023 Survey Report[3], the top concern about ASEAN among regional respondents (at 82.6%) is that “ASEAN is slow and ineffective, and thus cannot cope with fluid political and economic developments, becoming irrelevant in the new world order”.

This has prompted observers and scholars to call for a paradigm shift to overcome ASEAN’s bureaucratic processes and institutional hurdles, and to become a nimbler organisation that can quickly adapt to rapid geopolitical and economic developments.[4]

This article suggests that ASEAN’s ineffectiveness may be overcome by a constructive form of ‘ASEAN minilateral cooperation’ that allows like-minded ASEAN countries to work together through concrete activities towards shared priorities (especially strategic ones) in a targeted manner for maximal impact.[5] Such minilateral cooperation could focus on issues of common interest and should not be mistaken for minilateral decision-making, which goes against the principles of the ASEAN Charter.

This is aligned to the growing preference for minilateral cooperation among countries (including major powers and ASEAN members). Besides the QUAD and AUKUS, there has been an increasing number of trilateral collaborations and engagements such as the trilateral security dialogue between Australia, Japan and the US and the Australia, India and Indonesia (AII) trilateral. The Five-Power Defence Arrangement between Australia, Malaysia, New Zealand, Singapore and the UK is an example of minilateral consultative defence cooperation; this was signed in 1971 to safeguard the external defence of Singapore and Malaysia,[6] and its functions later evolved to include non-conventional threats such as piracy and disaster relief.[7]

MINILATERAL DECISION-MAKING VERSUS MINILATERAL COOPERATION

Minilateralism is not entirely new to ASEAN. The regional organisation has a history of working in smaller groups. According to the ASEAN Charter Article 21, in the implementation of economic commitments, a formula for flexible participation, including the ASEAN Minus X formula, may be applied where there is a consensus to do so.”[8] It allows for the gradual, delayed participation of X number of state(s) in economic agreements, given the consensus of all member states (including the X states). This is to enable ASEAN to advance its cooperation and integration without being held back by members who are not ready.

However, misconceptions arise when the ASEAN-X formula is extended to decision-making process within ASEAN, as advocated by some scholars and practitioners. Often, this fails to recognise the high-degree of apprehension among several member states towards any shift away from the ASEAN fundamental principle of consultation and consensus, toward a majority-vote decision-making process.

For example, Professor Thitinan Pongsudhirak has suggested an a la carte formula allowing willing members to take common positions without waiting for unanimity among all ten countries. His proposed “ASEAN 5+X” model will allow the five original members of ASEAN, namely Indonesia, Malaysia, the Philippines, Thailand and Singapore to serve as a renewed core.[9] However, such a formula may go against ASEAN’s principle of equality (irrespective of the length of membership) and may deprive the newer members of the opportunity to lead ASEAN.

Similarly, in the case of the ASEAN Intergovernmental Commission on Human Rights (AICHR), Professor Vitit Muntarbhorn, a UN independent expert, viewed the “X minus Y formula” as a healthy development, especially as the credibility of AICHR is likely to suffer if it sits still on issues that require a substantive response” such as the situation in Myanmar.[10]

While these are innovative suggestions to help ASEAN overcome its alleged tendency to be slow and ineffective, the fear that one’s national interest or position can be overridden by a majority-vote will not sit well with member states. The entrenched processes within ASEAN are unlikely to be open to overnight reform.

Minilateral cooperation as suggested here is not about decision-making in a small group but rather, about an interest group being formed to focus on issues that matter more to some countries than to others. Humanitarian mine actions for example would be more relevant to ASEAN countries impacted by landmines and explosive remnants of war such as Cambodia and Laos, than to others. As such, ASEAN should not view minilateral cooperation to be an activity carried out by an exclusive group of members, but as an initiative involving an initial group of members that are ahead in certain areas of cooperation, and that will expand over time to include other interested members.

Premised upon the non-exclusive nature of such minilateral cooperation, the ASEAN-X formula can be expanded beyond economic cooperation into the security domain (such as areas like terrorism and preventive diplomacy)[11] in order to make progress on key transnational challenges, as well as future areas of cooperation such as artificial intelligence and space technologies where some members may not yet be ready.

ASEAN minilateralism can also take the form of a group of ASEAN members playing a greater leadership role in areas of cooperation that are specifically of greater relevance to them, such as in the case of the South China Sea where only four members are direct claimant states.

EXISTING MINILATERAL COOPERATION IN ASEAN

Similar to minilateral cooperation among major and middle powers, ASEAN countries have tried to develop various security configurations of their own in order to advance their own interests and respond to the opportunities and challenges in their geopolitical environment.[12] This takes into consideration existing gaps in ASEAN cooperation.[13]

On the security front, the Cambodia-Laos-Vietnam Trilateral Security Cooperation is an example of minilateral cooperation within ASEAN. It boosts cooperation in defence and humanitarian assistance between these three countries which have lingering border management and war legacy-related issues that can occasionally flare up.[14]

Another is the Malacca Straits Patrol between Indonesia, Malaysia, Singapore and Thailand, which was launched in 2004 to enhance security in the Straits of Malacca and Singapore through coordinated sea patrols and facilitate the sharing of information between ships and their naval operational centres.[15] Likewise, the Sulu Sea Trilateral patrols—a minilateral security collaboration between Indonesia, Malaysia and the Philippines,[16] was set up in 2017 to address transnational challenges in the Sulu Sea between the three countries. There have been talks to expand and broaden the partnership to other countries in Southeast Asia.[17]

Beyond the trilaterals and quadrilaterals, Our Eyes initiative—a platform for strategic information exchange to combat terrorism and violent extremism among six ASEAN countries, namely Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand—was launched in 2018.[18] The was later adopted as ASEAN Our Eyes initiative under the ASEAN Defence Ministers’ Meeting (ADMM) and serves as an example of a sub-regional minilateral initiative expanding into a full regional mechanism.

More recently, the first ASEAN Coast Guard Forum—initiated by Indonesia—took place last November to boost maritime security. Eight of the ten ASEAN countries, excepting for Myanmar and Cambodia, attended it;[19] the event was followed by the signing of the ASEAN Coast Guard Declaration[20] to promote safe and secure sea lanes in regional seas. What started as a proposal by the Indonesia Maritime Security Agency (Bakamla) to “present a coordinated approach” in matters relating to the South China Sea [21], generated a smaller grouping, made up particularly of those most directly involved, such as the claimant states in the case of the South China Sea, that could take the lead. A similar, but more extreme view was also expressed by Philippines’ Senator Maria Imelda Marcos when she proposed a code of conduct among claimants, instead of the 10-member ASEAN and China.[22]

Apart from security initiatives, ASEAN minilateralism in the economic sector such as the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA, launched in 1994) allows the four ASEAN members to boost growth in trade, investment and tourism through intra-regional shipping routes and air links. While boosting sub-regional economic growth, the initiative also contributes to greater ASEAN economic integration.

A new initiative for a regional QR code payment to be constructed between the central banks of five ASEAN members—Indonesia, Malaysia, Philippines, Thailand, and Singapore, launched in November last year[23] is also a form of minilateral arrangement that can help advance ASEAN economic integration, starting with partners who are ready and willing to later expand to include others in the grouping.

Likewise, energy cooperation through the ASEAN Power Grid to promote regional power interconnection is currently in a “minilateral” phase.[24] At this point, the Laos-Thailand-Malaysia-Singapore Power Integration Project serves as ASEAN’s pilot in addressing technical, legal and financial issues of multilateral electricity trade.[25]

The ASEAN Power Grid was originally envisioned in the 1990s as a region-wide initiative to encourage collaboration on energy efficiency and renewable energy innovation. However, after 20 years, not much progress has been made due to differences in energy policies and commitment, as well as economic inequality among ASEAN member states.[26]

To go beyond this difficult situation, countries that are ready for broader cooperation in the energy sector could proceed first and let others to follow when ready. In this way, cross-border cooperation on bilateral terms may be expanded to a sub-regional level, and ultimately allow for the creation of an integrated multilateral ASEAN power grid system. Similarly, the Trans ASEAN Gas Pipeline could potentially be another model of how bilateral and minilateral cooperation within ASEAN that has the potential to be scaled up to regional level.

EXPLORING NEW MINILATERAL INITIATIVES IN ASEAN

Beyond existing minilateral cooperation in ASEAN, there is potential for ASEAN to expand such an approach in order to address more challenging issues. The South China Sea is an area of contention within ASEAN due to competing national interests and to deep differences between ASEAN countries and China. ASEAN and China have worked together for 20 years on a Code of Conduct in the South China Sea,[27] but with no clear end in sight.

Claimant and non-claimant states within ASEAN may not share the same level of interest and priority with regard to the negotiations. Four out of the ten ASEAN members are claimant states, namely Brunei, Malaysia, the Philippines and Vietnam, while Indonesia has an overlapping claim with China in the Natuna Islands. Scholars have observed that non-claimant members have little or no interest in standing up against China.[28] They have also noted the possibility of an intra-ASEAN caucus (or an ASEAN South China Sea Forum) to coordinate more closely with each other on their respective national positions on the South China Sea issue and the Code of Conduct negotiations.[29] Such a caucus or forum may also be used for intra-ASEAN settlement of disputes. By settling disputes among themselves first, ASEAN claimants of the South China Sea may have a stronger stance in negotiating a Code of Conduct with China.[30] A consensus between the claimant states could serve as ASEAN’s negotiating position against China, resulting in greater bargaining power for ASEAN.

Indonesia and Vietnam set the stage for closer coordination by coming up with an agreement to demarcate their exclusive economic zones (EEZ) in December last year after 12 years of negotiation. The successful EEZ delimitation between Indonesia and Vietnam may also encourage the Philippines and Malaysia to follow suit.[31]

However, for such a minilateral caucus to work, a consensus should first be reached among all ASEAN countries to agree to leave certain issues and decision-making to a group of ASEAN members. In the case of the South China Sea, once claimant states have agreed on a common position, consensus should also be sought from non-claimant states, since the COC is to an agreement between all ten ASEAN countries and China (rather than between the claimant states alone).

Another potential area for minilateral cooperation is the ASEAN peacekeeping force. The initiative was proposed in 1994, 2003, and 2015 by Indonesia and Malaysia but failed to attain consensus among all ASEAN members. [32],[33] This is considering that eight ASEAN members (except Laos and Myanmar)[34] have contributed to the United Nations peacekeeping missions. The ASEAN Defence Ministers’ Meeting has been cooperating closely on peacekeeping operations, including through the ASEAN Peacekeeping Centres Network (APCN).[35] However, a joint force under the banner of ASEAN seems to be a distant dream. For the strong proponents of this initiative, perhaps a good starting point could be an ASEAN-X peacekeeping force to which willing members may contribute under the banner of ASEAN, allowing other members to join when they are ready.

Other forms of minilateral cooperation to complement ASEAN’s work could be in enhanced cooperation on counter-terrorism and anti-radicalisation among high-risk countries such as Indonesia, the Philippines, Malaysia, and Singapore.

CONCLUSION

Evolving geopolitical developments necessitate an exploration of new approaches to cooperation in order for ASEAN to stay relevant and uphold its centrality. The opportunity cost is high if ASEAN fails to take concrete action in dealing with important regional issues such as the South China Sea. While the preservation of ASEAN unity is important, the regional bloc must balance the usefulness of moving together against the loss of credibility if it fails to act.

Minilateral cooperation within ASEAN will allow it to make greater progress and to better serve the diverse interests of member states. Such cooperation is not meant to replace multilateralism but to supplement what is not possible in the broader setting, while facilitating its eventual expansion into greater regionalism when the time is ripe.

ENDNOTES

For endnotes, please refer to the original pdf document.

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“Tides of Insecurity: Vietnam and the Growing Challenge from Non-traditional Maritime Threats” by Phan Xuan Dung and To Minh Son

2023/15 “Towards More Sustainable Agro-Food Systems in Indonesia” by Maria Monica Wihardja, Bustanul Arifin and Mukhammad Faisol Amir

*A farmer working at a paddy field in Samahani in Indonesia’s Aceh province on January 25, 2023. CHAIDEER MAHYUDDIN/AFP.*

EXECUTIVE SUMMARY

Indonesia needs to focus on developing sustainable agro-food systems if it is to achieve its three major goals: eradicating extreme poverty, maintaining food and nutrition security and attaining net-zero carbon emissions.

This paper lays out major hurdles Indonesia has to clear in order to achieve that ambition:

The agricultural sector’s heavy reliance on (ineffective and large) state support.
The practice of extensive land expansion.
The high level of food waste and loss.
The lack of agricultural extension services, climate information and advisory services.
The competing goals of food security and energy security.

We recommend the following to the government to overcome the above challenges:

Continue redirecting fertiliser price subsidies towards direct subsidies for farmers through the farmer card (Kartu Tani) system and better regulation of dangerous pesticides.
Allow the private sector to compete alongside state-owned enterprises in input markets; create an output market that enables farmers to obtain a higher price for their efforts in maintaining ecosystems, including sustainability certification and payments for environmental services; and support fee-based, private agricultural extension services.
Invest in post-harvest technologies, especially cold chain logistics, dryers and modern milling equipment.
Institutionalise Science Field Shops that promote farmers’ agrometeorological knowledge, helping them to adapt to increasing climate variability.
Diversify biofuel sources to non-food commodities such as the seeds of the rubber tree and Ricinus, and increase palm oil productivity.

* Maria Monica Wihardja is Visiting Fellow at ISEAS – Yusof Ishak Institute, Bustanul Arifin is Professor of Agricultural Economics at Lampung University and Mukhammad Faisol Amir is Junior Researcher at the Center for Indonesian Policy Studies.

ISEAS Perspective 2023/15, 3 March 2023

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INTRODUCTION

As in many other developing countries, agricultural growth has contributed significantly to poverty reduction and economic transformation in Indonesia. Although the sector’s contribution to the country’s gross domestic product has declined from 17% in 1995 to 13% in 2019, it still accounts for around one-third of Indonesian employment today, compared with around 44% in 1995.[1] Moreover, the agriculture sector is estimated to have been responsible for about half of the reduction in extreme poverty (USD1.9 per day) from 2000 to 2021. Indonesia’s ambition to eradicate extreme poverty by the end of 2024 – it was 2.2% in 2021 – will be next to impossible without further improvement in agricultural productivity and in farmers’ incomes.

Moving from production to consumption, Indonesia still faces huge nutritional issues. Today, 21.6% of Indonesian children under five suffer from chronic malnutrition (stunting), though this figure has been declining. Indonesia’s ambitious target to bring its stunting rate down to 14% by the end of 2024 means nutritious food must become more accessible and affordable, and diets must become healthier.

However, the business-as-usual strategies to improve the agro-food systems in Indonesia are no longer sustainable nor effective. The agro-food systems have been both a contributor to and a victim of climate change. Indonesia’s ambitious target of net-zero carbon emissions by 2060, which was recently brought forward by a decade, will be unachievable without more sustainable agricultural practices and efficiency along the food value chain. Agriculture, land-use change (mostly deforestation to create agricultural lands) and forestry are the largest contributors to greenhouse gas (GHG) emissions in Indonesia. At the same time, its farmers and fishers have been severely impacted by extreme and unpredictable weather.[2] This century, about 25–30% of global food production could be affected by extreme weather and other climate change shocks.[3]

Indonesia needs new strategies for more sustainable agro-food systems if it is to meet the three goals of: eradicating extreme poverty, maintaining food and nutrition security and attaining net-zero carbon emissions. Ideally, agro-food systems must produce agricultural products without deforestation and natural habitat conversion, and at the same time educate farmers and consumers to adapt to and mitigate the effects of climate change. Ignoring the emission of GHGs from our agro-food systems is not an option.[4] Indonesia is the world’s fifth-largest GHG emitter, contributing about 4% of global GHG emissions in 2019; thus, making its agro-food systems more sustainable would significantly contribute to global climate change mitigation efforts. However, Indonesia is stuck in a production-centric mindset and faces big challenges in transforming its agro-food systems and embracing sustainability.

This paper lays out key challenges to developing sustainable agro-food systems in Indonesia, namely: (A) heavy reliance on (ineffective and large) agricultural supports, (B) extensive land expansion for food, (C) high level of food waste and loss, (D) lack of agricultural extension services and climate information and advisory services, and (E) competing goals of food security and energy security. We also propose policy recommendations to address these challenges.

CHALLENGES AND POLICY RECOMMENDATIONS

Globally, agro-food systems account for one-third of GHG emissions.[5] In Indonesia, GHG emissions from the agro-food system largely come from land-use change and forestry, contributing 48.7% in 2019, and agriculture, contributing 9% (Table 1). In comparison, globally 18.4% of GHG emissions come from agriculture, land-use change and forestry.[6] Indonesia’s share of GHG emissions from land-use change and forestry is the highest among ASEAN nations, higher even than China’s and India’s (see Annex Figure 1). Around 73% of land-use change and forestry came from deforestation, largely driven by cultivation of palm oil from 2000 until 2016 when the government decided to impose a five-year moratorium on the issuance of new oil palm plantation permits.[7]

Table 1: Sectoral contributions to GHG emissions in Indonesia

	1990	2000	2010	2019
Land-use change and forestry	61%	44%	32%	49%
Agriculture	11%	12%	14%	9%
Waste	13%	16%	11%	7%
Industry	1%	2%	2%	2%
Manufacturing and construction	2%	5%	11%	8%
Transport	3%	5%	8%	8%
Electricity and heat	4%	8%	13%	13%
Buildings	3%	4%	3%	2%
Fugitive emissions	3%	3%	4%	3%
Other fuel combustion	0%	1%	1%	0%
Aviation and shipping	0%	0%	0%	0%

Source: Our World in Data

Rice cultivation is the largest source of GHG emissions in Indonesia’s agriculture sector (39%).[8] In fact, Indonesia’s agricultural emissions account for 38% of the ASEAN region’s total, while the country is home to 41% of the region’s population.[9] In many developing Southeast Asian countries, including Indonesia, rice significantly contributes to GHG emissions chiefly through paddy flooding which releases methane[10]. Globally, 10% of methane emissions comes from rice cultivation, but in Southeast Asia rice cultivation accounts for as much as 25–33% of methane emissions.[11]

In the 1960s, the green revolution introduced intensive agricultural practices, which then required industrial inputs – such as fertilisers, pesticides and high-yielding seeds – to increase yield. Although the green revolution technology saved Indonesia from rice shortages and famines during times of drought and political instability in the 1960s, the production-centric paradigm[12] of the green revolution has created a crisis for the ecosystem – for soil, groundwater, air and other natural resources – and human health. This paradigm is entrenched in farmers’ practices and government policies and shifting it towards an ecosystem-centric paradigm is not an easy task especially since the green revolution was a largely successful one.[13]

The challenges faced in creating sustainable agro-food systems in Indonesia are described in detail below. The measures are by no means exhaustive, and instead exemplify some of the most urgent issues to address. Some policy recommendations are provided thereafter.

Heavy reliance on agricultural supports

Among emerging and OECD economies, Indonesia provides the highest level of support to the agriculture sector measured in percentage of GDP.[14] However, agricultural support has been provided mainly in the form of market price support (e.g., fixed prices and trade barriers) and direct subsidies (e.g., fertilisers, seeds) towards rice production, instead of providing public goods such as rural and urban infrastructure and post-harvest technologies to reduce food losses. Such agricultural support not only disincentivises farmers from diversifying their production away from rice, but also carry large environmental costs in terms of GHG emissions, land degradation and environmental pollution, since rice is one of the most water-intensive and GHG-emitting crops.

One example of such agricultural support is fertiliser subsidies, 60% of which are targeted for smallholder rice farmers, but with a significant amount leaking out to large palm oil plantations.[15] Fertiliser subsidies have risen from Rp 2.5 trillion in 2005 to Rp 25.3 trillion in 2021. They account for 25–30% of the annual agricultural budget – or 1% of the total state budget – and are expensive but poorly targeted, regressive, subject to leakage, and cost-ineffective at increasing production.[16] Evidence also suggests that subsidies may have caused unbalanced use of fertilisers,[17] with farmers overapplying and causing water pollution, soil degradation and excess nitrous oxide emissions.[18] Indonesia has higher levels of nitrous oxide emissions – a product of nitrogen fertiliser use – from agriculture than all other ASEAN nations, plus China and India.[19]

Farmers have also had increasing access to pesticides over the past two decades due to looser regulations since decentralisation in 1999.[20] This has led to overuse and a resurgence of pests that had previously been successfully managed, such as the brown planthopper.[21] Additionally, pesticides are highly toxic and have had an adverse effect on the physical health of farmers using them and consumers eating the crops, as well as the ecosystems to which they are applied.[22]

Policy recommendations: The government could continue redirecting fertiliser price subsidies (subsidising goods) towards direct subsidies for farmers (subsidising people) through the farmer card (Kartu Tani) system.[23] Targeted social protection such as direct subsidies for farmers requires better social registry data from Indonesia’s unified database or Data Terpadu Kesejahteraan Sosial, which still has many weaknesses.[24] The government could also better monitor and regulate dangerous pesticides, fill a regulatory gap in the national integrated pest management system, which refers to a pest management system that applies sustainability principles including using more pest-resistant seed varieties, provision of habitat for natural enemies of pests (predators, parasites and pathogens), crop rotation, and restricting application of chemical pesticides unless deemed necessary. This must be accompanied by better enforcement and awareness among all stakeholders, including extension services workers, about the dangers of overusing and misusing pesticides.

High rate of land expansion for food

One-third of Indonesia’s 192 million hectares (ha) is taken up by agriculture. Between 2014 and 2018, the rate of agricultural land expansion was 1.7%, higher than the regional average of 1.2% and the second highest in Southeast Asia after Vietnam.[25] The largest contributor to land-use conversion are oil palm plantations.[26] In 2018, rice and palm oil dominated 80% of Indonesia’s planted area. This is very rice and palm oil-centric if compared to, for example, China which has much more diversified food crops in its planted area.[27]

Since 2020, the Government of Indonesia has been developing “food estates” in the provinces of Central Kalimantan, East Nusa Tenggara, South Sumatra, Central Sulawesi and Papua. Some estates (in Central Kalimantan and Papua), however, are derived from cleared forests and peatlands. This is permitted by the regulation on Food Estate Programmes,[28] conflicting with the government’s climate commitments, such as its Enhanced Nationally Determined Contribution target and Indonesia’s Forestry and Other Land-Use Net Sink 2030.[29],[30], [31]

Policy recommendations: Indonesia could focus on intensification instead of extensification. Increasing yields rather than expanding agricultural land will increase the income of farmers and help retain and attract new farmers into the industry. Intensification requires more investment in human capital and technology, as well as policy reforms to facilitate this investment. Policy reforms could include:

Allowing the private sector to compete alongside state-owned enterprises in inputs such as seeds and fertilisers as well as machines and other equipment. Indonesia’s current policy in agri-inputs (such as seeds and fertiliser), for example, limits the use of more sustainable inputs, such as hybrid seeds to increase yields and plant resiliency, by creating barriers to market entry.[32]
Creating an output market that enables farmers to obtain a higher price for their efforts in maintaining ecosystems. This would incentivise them to adopt more sustainable agricultural practices, including through sustainability certification and payments for environmental services (PES), a form of climate financing for smallholder farmers and jurisdictions, such as the PES Rejoso watershed project in Pasuruan District, East Java.[33] Sustainability certification is developing in Indonesia and is one way to boost competitiveness. It is already occurring in Indonesia’s coffee and palm oil sectors, for example (see Annex 2 for case studies), but could be developed in other export commodities as well, such as tea and cocoa.
Supporting fee-based, private agricultural extension services through partnerships with NGOs, development agencies, farmer associations and the private sector. Such initiatives are already underway, such as that supported by confectionery company Mars and NGO Rikolto for cocoa farmers in Sulawesi.[34]

Food wastage and low efficiency along the supply chain

Instead of clearing forest and opening peatland to create new agricultural land, the government could focus on improving efficiency along the food value chain, for example, by reducing food loss and food waste (FLW).[35] In per capita terms, Indonesia is estimated to be the second-largest FLW-producing country in the world, at 300 kg per capita per year.[36] Globally, FLW is linked to approximately 6% of GHG emissions,[37] three times the emissions of the aviation sector.[38]

Indonesia’s food supply chain is inefficient, starting from the production of food crops in the field to the chain of post-harvest supply through to consumption. Around one-third of all food produced in Indonesia is either lost or wasted.[39] Investment in post-harvest logistics and storage, as well as technologies, is urgently needed to reduce food loss along the supply chain, especially for horticulture and animal-based products, which are perishable. Over the next five years, the demand for cold storage is projected to increase by 10% and 20% annually.[40]

Policy Recommendations: Indonesia could prioritise investment in post-harvest logistics, storage and technologies – and especially cold chain logistics. Existing cold chain logistics in Indonesia are not standardised, for example, in terms of storage temperature, security and operating procedures.[41] The market for cold chain logistics is forecast to increase to USD12.6 billion in 2031 from USD4.97 billion in 2021[42], and it is therefore a promising industry for both the private sector and the government. Furthermore, a detailed public spending review could be carried out to evaluate the appropriateness and efficiency of spending on agricultural equipment. For example, more spending could be directed to support farmers to buy dryers and to support millers to purchase more modern milling machines in order to reduce post-harvest food losses, rather than providing farmers with four-wheel combine harvesters.

Lack of agricultural extension services and climate information and advisory services

Crop production is being affected by climate change, but Indonesia is investing little in educating farmers on mitigating it or adapting to it. Since decentralisation in 1999, Indonesia’s agricultural extension services – government services providing agricultural advice – have been greatly weakened. In 2018, only 18 out of 34 Indonesian provinces had agencies to manage and provide extension services.[43] The national government set a target of at least one agricultural extension worker per village since decentralisation, but it was recently estimated that only half of Indonesian villages have a dedicated worker.[44]

The central government has been attempting to digitalize some extension services to make up for insufficient human resources.[45] [46] It uses phone calls and video conferences with farmers and CCTV for crop monitoring, has increased the use of mobile phones and personal computers, and developed mobile applications for extension services. However, not all regions have sufficient digital infrastructure to allow them to use such services. And without a dedicated extension service worker on the ground, making use of digital services is an uphill battle, as many farmers have limited knowledge of digital technologies and only use them for communication and accessing social media.

Government efforts to support farmers in adapting to climate change are complicated by a lack of accessible and reliable climate information and advisory services to help farmers understand and manage the risks posed by climate change.[47] [48] As a result, most farmers still rely on inherited knowledge to make decisions.

Policy recommendations: The government could institutionalise Science Field Shops that help farmers gain agrometeorological knowledge and adapt their practices to increasing climate variability. The government could commit to long-lasting education and training and technology transfers, instead of relying on short-life programmes.[49] Moreover, the government could support its digital extension service efforts by improving digital connectivity in remote regions and cyber agricultural extension systems, and by engaging more younger farmers who may be more adept at using digital technology. Programmes to increase technological adoption, such as those currently developed and implemented by the Research Institute for Agricultural Technology (Balai Pengkajian Teknologi Pertanian), accessible in all provinces across Indonesia, could be integrated with farmers’ empowerment programmes under the Centre for Agricultural Extension in the Ministry of Agriculture.

Pressure on palm oil and food-energy competition

Since 2006, Indonesia has been developing biofuels sourced from crude palm oil (CPO), which has resulted in competition between food security and energy security.[50] [51] The country’s biodiesel policy stipulates that fossil fuels must be blended with palm oil, with the aim of securing energy, reducing carbon emissions and reducing the trade deficit. The regulation contains steady increases in mandatory levels of CPO-sourced biofuel, beginning with 5% in 2006 to reach 30% by 2021. This was achieved on time.

In Indonesia, CPO-sourced biodiesel accounts for close to 40% of total CPO use, while food accounts for close to 50%; this creates competition between food security and energy security.[52] For example, in early to mid-2022, the CPO-sourced biofuel policy may have exacerbated the sharp increases in the prices of domestic CPO and cooking oil. The policy may have placed additional pressure on domestic demand at a time when global energy and food prices were high due to the war in Ukraine, and CPO producers rushed to export.[53],[54]

The CPO-sourced biofuel programme has the potential to threaten food security and also to drive up land conversion for oil palm plantation use. A 2021 study found that cuts in export revenues from the CPO-sourced biofuel programme, if the programme is carried through to 2030, could outweigh the savings on imports of fossil fuels. It also found that the oil palm planted area would need to expand by 48% to 76% to meet demand.[55]

Policy recommendations: The government could consider diversifying biofuel sources to non-food commodities such as the seeds of the rubber tree and Ricinus.[56] The government could focus on increasing productivity in palm oil, which is currently still very low compared to other palm oil producers, to avoid opening new land. For example, Malaysia produces 3.96 tonnes of palm oil per hectare annually, compared to 2.70 tonne per hectare in Indonesia.[57]

CONCLUSION

Indonesia could build more sustainable agro-food systems by focusing on intensification instead of extensification, improving efficiencies in supply chains, building climate change adaptation and mitigation capacity through improved agricultural extension services and technologies, and removing incentives and policies that support unsustainable practices. These changes call for new knowledge, tools, policies and wisdom, and will require an interdisciplinary approach, as ecological risks and food security raise biophysical, socioeconomic and health issues. The changes needed for agro-food systems to become sustainable must rely on science to create evidence-based policy and implementation at the national, provincial and local levels. A shift away from production-centric towards ecosystem-centric agricultural practices, however, needs to be well calibrated, coordinated and staggered, as the real world experience from Sri Lanka has demonstrated.[58] Sweden is a model for sustainable agro-food systems and the country ranks first, alongside Japan, for sustainability in agro-food systems.[59] As this year’s ASEAN Chair, Indonesia’s plan to develop a Roadmap for the ASEAN Guideline on Sustainable Agriculture is highly commendable.[60]

Annex 1

Annex Figure 1: Contributors to GHG Emissions by Country

Source: Our World in Data

Annex 2: Case Studies on Sustainability Certification

Case studies on sustainability certification for coffee and palm oil in Indonesia provide examples of ways to move towards inclusive and sustainable agriculture:

Coffee: Sustainability certification in coffee has grown rapidly in the last decades. Sustainability certification started in Indonesia in 1992 with Gayo Mountain Organic Coffee from the Takengon region of Central Aceh, followed by organic coffee cooperatives in East Timor, Utz Certified coffee (part of the Rainforest Alliance since 2018) in Aceh, Lampung, East Java and in Sulawesi, and the Starbucks CAFÉ Practices scheme in North Sumatra, Aceh and Toraja South Sulawesi (as one of best practices at the company level).

Certification standards have encouraged more sustainable land management practices in Aceh, Toraja and Bali, where organic, low-input and shade-grown farming has been adopted by coffee farmers. After some years, the coffee eco-certification had affected the price structure of coffee: traders selling organic-certified coffee to exporters were receiving higher prices than were received for non-certified coffee (Arifin, 2021).

Palm oil: The Roundtable on Sustainable Palm Oil (RSPO) was formed in 2004 by CPO buyers, NGOs and environmental organisations. The RSPO initially targeted large companies to produce palm oil sustainably – refraining from clearing forests, protecting orangutan habitat, conserving wildlife and not converting peatland, among others. Several Indonesian palm oil companies have joined the RSPO and achieved certification.

The management of sustainable certification involving smallholder farmers is a complex and large task, given that 41% of Indonesia’s producers of fresh fruit bunches (FFB; the fruit from which palm oil is made) are smallholders, with most owning no more than 2 ha of land. Farmers need to form groups and partner with big companies. From a number of empirical studies, it is revealed that sustainable certification does not directly provide higher premium price for selling certified FFB for small-scale oil palm farmers yet[lxi] (Hidayat et al., 2016). Notwithstanding the weaknesses, sustainable palm oil is believed to be more inclusive and may become new strategies for competitiveness. Indonesia is serious about implementing sustainable certification at the global level (RSPO and International Sustainability and Carbon Certification), which is voluntary, and at the national level (Indonesia Sustainable Palm Oil), which is mandatory. The development of sustainable palm oil has improved the standards of Indonesia’s palm oil industry, especially RSPO certification, and hence access of the palm oil industry, especially to countries that have imposed high sustainability standards, including those of the European Union.

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ENDNOTES

For endnotes, please refer to the original pdf document.

2023/14 “An End to the Three Generals Era and a New Beginning for Thai Democracy” by Termsak Chalermpalanupap

Thai Prime Minister Prayut Chan-o-cha (C) addresses supporters of the Ruam Thai Sang Chart (United Thai Nation) Party, as the party members rallied for the first time before upcoming elections, at the Queen Sirikit National Convention Center in Bangkok on 9 January 2023. After breaking up with Prawit Wongsuwan, Prayut joined United Thai Nation. (Photo: Lillian SUWANRUMPHA/AFP).

EXECUTIVE SUMMARY

The “Three ‘Por’ Group” of three former army chiefs, which seized power in the 2014 coup, is falling apart.

Two of the three, Palang Pracharat party leader General Prawit Wongsuwan and Prime Minister General Prayut Chan-o-cha, are vying for the premiership in a cut-throat competition.

The rivalry between the two generals is intensifying, and this will make the upcoming general election in Thailand more tenacious, and its outcome less predictable.

General Prawit has the political edge because his party, the largest in the ruling coalition, has many experienced MPs who can win re-election with their strong political networks. He also has more powerful allies and fewer political enemies.

General Prawit’s new selling point is to move Thailand beyond the existing political polarisation. He has tried to distance himself from the 2014 coup and from General Prayut, whom his party successfully nominated to capture the premiership after the last general election.

After breaking up with General Prawit, General Prayut joined a new party, United Thai Nation. That party is trying to woo MPs from other parties, but lacks a clear potent selling point to attract support.

The end of the political domination of the “Three ‘Por’ Group” augurs well for Thai democracy. Now, two of the three strongmen from this group are appealing for support from Thai voters, instead of holding onto power through political machinations.

* Termsak Chalermpalanupap is Visiting Fellow and Coordinator of the Thailand Studies Programme, ISEAS – Yusof Ishak Institute.

ISEAS Perspective 2023/14, 27 February 2023

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INTRODUCTION

Political dominance by the group of three former army chiefs – the so-called “Three ‘Por’ Brothers”[1] – in Thailand is coming to an end. This augurs well for the political future of the country where parliamentary democracy has been faltering since the end of the Siamese absolute monarchy in 1932.

The main cause of the continuing failure of Thai democracy was and still is the delusion entertained by a handful number of army generals who think that they can run a government administration better than their civilian compatriots. The Thai military has little tolerance for the chaos of parliamentary politics, and no respect for most politicians, whom they see as mostly corrupt and self-serving.

Big Brother General Prawit Wongsuwan, a deputy prime minister and the leader of Palang Pracharat Party (PPRP), the largest government party, now wants the premiership for himself. He and his PPRP will no longer support Prime Minister General Prayut Chan-o-cha in the upcoming general election.

However, General Prayut feels he still has some significant unfinished business to finish, and thus he wishes to stay in power for at least another two years, until the end of his 8-year eligibility to hold the premiership, in mid-2025. Therefore, he has joined a new party, United Thai Nation (UTN), as its chief strategist, and will be its No.1 candidate for the premiership.

The rivalry between these two former army chiefs is a crucial change for the better in Thai politics. The two strongmen are now courting voters’ support to return to power, instead of seizing it with military force and holding onto power through political machinations.

Meanwhile, the middle brother in this triumvirate, Interior Minister General Anupong Paojinda has claimed that he has had enough of Thai politics, and intends to retire to a quiet peaceful life when his time in the current Prayut Administration is over. He has dismissed speculations of him joining the UTN, saying that he considers himself “unsuitable” to continue in Thai politics.[2]

Whether or not General Anupong will actually wash his hands of politics remains to be seen. He has accepted his recent appointment to the 5-member Committee on National Strategy, which is led by Deputy Prime Minister Dr Wissanu Krea-ngam.[3]

THE MAY 2014 COUP

General Prayut, when the army chief, led the coup on 22 May 2014 to seize power from the civilian government of the Pheu Thai-led coalition.[4] Fifteen days prior to the coup, Prime Minister Yingluck Sinawatra had to step down following a decision against her in the Constitutional Court for abuse of power.[5] Yingluck is a younger sister of exiled former prime minister Thaksin Shinawatra, who had also been toppled in another coup on 19 September 2006.[6]

The coup in 2014 saw the emergence of the Three “Por” Generals to control both the Thai polity and the Thai military. They established the National Council for Peace and Order (NCPO), with General Prayut as the head of the junta, and General Prawit as the deputy head.

Political parties were banned from undertaking any political activity. Critics and protest leaders were either arrested, or summoned to army barracks to listen to NCPO’s reasons for the coup and its promises of an early return of happiness to the Thai people.

Under the 2014 Interim Constitution, a new National Legislative Assembly (NLA) was set up with 250 members handpicked by the NCPO. It was chaired by Dr Pornpetch Wichitcholachai, a law professor, who in 2019 became president of the new Senate.

General Prayut also assumed the post of prime minister in September 2014. General Prawit became a deputy prime minister and defence minister; and General Anupong took over the post of interior (home affairs) minister, which supervises all of Thailand’s provincial governors.

Before long, the three generals realised they would need much more time to create real “happiness” for the Thai people. Thus, a new constitution had to be designed to enable them to continue holding onto power by constitutional means.

NEW CONSTITUTIONAL FOR POWER SUCCESSION

At first, a new comprehensive draft constitution was formulated by a group led by Dr Borwornsak Uwanno, a respected jurist and a deputy president of the NLA. Unfortunately, the NCPO disliked the draft and signalled the NLA leadership to scuttle it in September 2015. Dr Borwornsak later lamented that his draft constitution could not ensure a “long stay” of those in power, and thus it was rejected.[7]

A new smaller group was formed to draft a new constitution. Led by Dr Meechai Ruchupan, another senior jurist and a former acting-prime minister, its new draft was finally accepted by the NLA on 7 April 2016.

For a national referendum on the new draft constitution on 7 August 2016, the NLD laid down a set of guidelines, which included banning public rallying to oppose the draft constitution. The NLA also included for the national referendum a subsidiary question on whether or not 250 senators appointed to the Senate should be empowered to join elected MPs in the House to vote for a new prime minister after each general election during the Senate’s first five-year term.

The NPCO urged voters to accept the draft constitution as it was only a temporary measure, so that a general election could be held sooner. After that, the new elected civilian government could amend the constitution to make it more palatable to all parties concerned.

The national referendum approved the draft constitution with a vote of 61.35% (from about 16.8 million voters); and agreed with a vote of 58.07% (from about 15.1 million voters ) to let the 250 appointed senators join MPs in voting for a new prime minister.

However, after the draft constitution went into force on 6 April 2017, it quickly became clear that amending the new constitution would be more difficult than previously assumed. In order to approve a proposed constitutional amendment, the support of at least a majority of the combined membership of the House and the Senate is required; and the majority vote must include at least one-third of the existing senators, as well as 20% of MPs from parties whose members do not hold any cabinet posts or the posts of House Speaker and Deputy House Speaker.[8]

2019 GENERAL ELECTION

Pheu Thai (PT) Party came first in the general election on 24 March 2019, but it failed to win the subsequent premiership race in parliament. The PT was handicapped by the NCPO’s two political innovations: the single ballot election designed to hobble large popular parties, and the involvement of the 250 senators in the premiership selection.

In the 2019 general election, each voter cast only one ballot to elect a constituency candidate. All votes collected by all candidates of a party went to determining the party’s share of the 150 party-list seats in the House of Representatives. Crucially, the allocation also took into account how many House seats a party “deserved” to have, based on the total of its candidates’ collected votes as a percentage of the total votes cast in the general election.

The PT’s candidates won 136 constituency seats with a total of about 7.88 million votes – which constituted about 22.16% of the grand total of votes. Based on this number, the PT “deserved” to have only 110 MPs in the House (22% of 500 House seats). Since its candidates had already won altogether 136 Houses seats – 26 more than the party deserved to have – the PT did not get any share of the 150 party-list House seats.

One dire consequence of this unexpected outcome was the failure of the entire PT top leadership on the party-list to enter the House as MPs.

The PT-led coalition[9] of seven parties had only 246 MPs, five seats short of a simple majority in the House, while the PPRP-led coalition of 19 parties had 254 MPs.[10] When it came to the premiership race, the PT-led coalition could muster only 244 votes[11] for the opposition’s candidate Thanathorn Juangroongruangkit. General Prayut, who was nominated by the PPRP, easily won with 500 votes – including 249 of the 250 senators’.[12]

The Three “Por” Generals came up with a new division of power-sharing among them: General Prawit would manage the PPRP and control MPs in the ruling coalition; General Anupong would, from his post as the interior minister, supervise all provincial governors and local government administrations; and General Prayut would do the heavy-lifting of running the government administration, including choosing his own appointees to the defence, the home affairs, the finance, and the energy ministries.

However, two crucial flaws in this new arrangement soon soured ties between General Prawit and General Prayut. General Prawit lost to General Prayut both the defence minister post and the job of supervising the national police force.

Moreover, politicians in the PPRP have been griping about their party not getting a fair share of plum cabinet posts despite being the largest in the ruling coalition.[13] And they also resented the alleged indifference of General Prayut to their tedious and thankless job in parliament. Indeed, General Prayut has kept at arm’s length all government MPs, since he himself is neither a member of the PPRP nor an MP.

WIDENING RIFT LED TO MUTUAL DISTRUST

The widening rift between General Prayut and General Prawit’s PPRP came to a head in early September 2021. PPRP secretary-general Captain Thammanat Prompao and his followers were caught planning to join opposition parties in voting out General Prayut from the premiership in a no-confidence debate.

However, Captain Thammanat’s secret plan was leaked, and General Prayut managed to foil the conspiracy and prevail in the no-confidence vote. He quickly retaliated by removing Captain Thammanat from the post of deputy agriculture minister.

Subsequently, in January 2022, Captain Thammanat was “expelled” from the PPRP, together with 20 MPs who chose to join him in a new party, Thai Economic, and to serve as an “independent opposition”. The main charge for the expulsion was a serious breach of the party’s regulations in creating internal disunity.[14]

The expulsion was apparently done by mutual consent between Captain Thammanat and party leader General Prawit. It allowed Captain Thammanat and his followers to leave the PPRP to join a new party without losing their House membership. If they simply resigned from the PPRP, they would have automatically lost their House membership in the process.

Under mysterious circumstances, the PPRP joined the PT to change the election system to increase the number of election constituencies from 350 to 400, and to reduce the number of party-list House seats from 150 to 100. Another crucial change was the return to using two ballots: one for electing a constituency candidate, and another for choosing a party. Second ballot votes will go to determining the allocation of the party-list House seats, but this time the allocation will be by way of a simple direct proportion, i.e. if a party receives 10% of all second ballot votes in the next general election, then the party will get 10 party-list House seats, regardless of how many constituency seats it has won.

These changes will benefit large and well-funded parties like the PPRP and the PT which have resources to field competitive candidates in all the 400 constituencies in the next general election.

One explanation gaining attention in the Thai media is that General Prawit and Thaksin have struck a “secret deal”. After its “landslide victory” in the next general election, the PT will team up with the PPRP to support General Prawit for the next premiership. In return, General Prawit will, for the sake of national reconciliation, help Thaksin return to Thailand after 15 years in exile overseas.[15]

The talks about the “secret deal” sometimes also included Bhumjaithai, the second largest government party. But its leader, Deputy Prime Minister and Public Health Anutin Charnvirakul, has denied having any deal with any other parties. He intends to lead the next government coalition with himself as the prime minister if his party wins 120 House seats or more.[16]

Likewise, leaders of the PPRP and the PT all have publicly denied any such “secret deal”. Nevertheless, it is common knowledge that many senior politicians in the PPRP, the PT, and Bhumjaithai (including Anutin) all used to belong to Thaksin’s Thai Rak Thai Party,[17] until the coup in September 2006.

By early January 2023, the widening rift between General Prawit and General Prayut worsened beyond repair. General Prawit announced in an “open letter” posted on his Facebook on 13 January confirming that General Prayut would separate from the PPRP, and join a new party, the UTN.

General Prawit described his mixed feelings as follows: “I had stated [the slogan] “3 ‘Por’ Forever”. I still have the same old feeling without change. …But I just cannot describe my current feeling into words now, except to congratulate him for his decision and to wish him success in his new political path which he has chosen. …”[18]

Nevertheless, General Prawit dropped one bomb shell in his “open letter”. He stated that it was General Prayut who wished to continue doing political work in order to finish what he had started after staging the 2014 coup. Therefore General Prawit had to set up the PPRP to support General Prayut and to nominate him for the premiership.[19]

Earlier, General Prawit had also claimed during a no-confidence debate on 22 July 2022 that the 2014 coup was the brainchild of General Prayut. Neither he nor General Anupong were involved.[20]

TWO GENERALS, ONE PREMIERSHIP

The rivalry between General Prawit and General Prayut for the next premiership will intensify in the upcoming general election. For the time being, General Prawit has the clear advantage of having more MPs in his PPRP, while General Prayut’s UTN is new and untested.

The UTN is frantically trying to woo MPs from other parties, including those in the PPRP – much to the chagrin of the PPRP leadership. So far, Labour Minister Suchart Chom-klin and PM’s Office Minister Anucha Nakasai of the PPRP have shown clear intention to join the UTN.

At the same time, the PPRP has welcomed the return of Captain Thammanat and 10 MPs from his group. Also returning to the PPRP are Dr Uttama Saowanayon and Sonthirat Sonthijirawong. Dr Uttama was the first PPRP leader and a former finance minister while Sonthirat was the first PPRP secretary-general and a former energy minister.

These two political heavyweights had given up on their two-year-old Sarng Anakot Thai Party, partly because of their failure to work out a merger with Thai Sarng Thai (TST) Party led by Khunying Sudarat Keyurapan.

Khunying Sudarat was the PT’s No.1 candidate for the premiership in the 2019 general election. When it was clear that there was no chance of beating General Prayut, the PT turned to endorse the nomination of Future Forward party leader Thanatorn to enter the race for the premiership.

Subsequent power struggles inside the PT eventually forced Khunying Sudarat and her followers to quit the PT, and to join the TST. Khunying Sudarat has had some success in attracting support, especially in north-eastern provinces, at the expense of the PT. One of her potent selling points is to offer the TST as an open-minded new party to overcome the old political polarisation between the PT’s pro-Thaksin camp versus the pro-General Prayut conservative establishment.

Undoubtedly, the PPRP is also going with the same selling point. This was why General Prawit has tried to distance himself from the 2014 coup and coup leader General Prayut, as well as from the feud between General Prayut and Thaksin. Now, General Prawit is avoiding dismissing the possibility of his PPRP collaborating with the PT in forming the next government coalition.

On the other hand, the mutual distain between General Prayut and Thaksin is well-known. General Prayut finds it hard to tolerate the PT’s pro-Thaksin inclination, whereas Thaksin and the PT have ridiculed General Prayut as a usurper and as the enemy of Thai democracy. The possibility of General Prayut’s UTN working with the PT in a new government coalition is nil.

For many politicians who are looking for a sure winning bet, jumping on the political bandwagon of General Prawit and his PPRP is a no-brainer choice. General Prawit clearly has more friends than enemies, unlike General Prayut who has many enemies and few friends.

Worse still, at the UTN, it is still doubtful whether the new party will be able to win up to 25 House seats in order to qualify for putting forth General Prayut’s name in the race for the premiership in parliament after the general election. The party has no new selling point beyond maintaining the status quo of political polarisation and continuity.

It is also unclear how most of the 250 senators will vote, knowing that General Prayut’s eligibility to hold the premiership will end in mid-2025.

CONCLUSION

The end of the “Three ‘Por’ Group” is a welcome change for the better in Thai politics.

The rivalry between General Prawit and General Prayut for the premiership will make the next general election a crucial turning point in Thailand. The outcome of the election will be less predictable, and the formation of the new government coalition will be more complicated.

General Prawit may be enjoying a clear political edge, but it is still premature to jump to the conclusion that he will be the next Thai prime minister.

Uncertainties remain in Thai politics, because General Prayut is determined to soldier on, both in the general election and in the Senate, to hold onto the premiership.

ENDNOTES

For endnotes, please refer to the original pdf document.

2023/13 “Impact of GE 15 in Sarawak: Preliminary Observations and a Look Ahead” by Lee Poh Onn

Election banner at Bandar Kuching during the 15th General Election taken on 11 November 2022. (Photo: Lee Poh Onn, ISEAS – Yusof Institute)

EXECUTIVE SUMMARY

The 15^th General Election (GE 15) on 19 November 2022 followed eleven months after the Sarawak state election (SSE), which took place on 18 December 2021. Concerns over the costs of living, education, endemicity of Covid-19, and employment were among the uppermost thoughts of Sarawakians when GE 15 was announced.

What resulted from GE 15 was a hung parliament at the federal level. In a strange turn of events, BN, with its 30 seats became the kingmaker for Pakatan Harapan (PH). Sarawak also became crucial in providing 23 seats to the unity government.

The Gabungan Parti Sarawak (GPS) initially pledged its support to Perikatan Nasional (PN) but eventually joined Pakatan Harapan (PH), making Anwar Ibrahim the 10^th Malaysian Prime Minister under the decree and suggestion of the Malaysian Agong. Currently, many benefits under the unity government are flowing to Sarawak following its relative increase in importance in federal politics.

Sarawak is now allowed to use English along with Bahasa Malaysia as its official language. The unity government has also empowered both the Sabah and Sarawak state governments to directly manage federally-funded projects worth RM 50 million and below. The number of ministerial and deputy ministerial positions has also been raised.

Sarawak Premier, Abang Johari, is now standing on much firmer ground, especially after the victories in SSE 2021 and this election.

* Lee Poh Onn is Senior Fellow and a member of the Malaysia Studies Programme at ISEAS – Yusof Ishak Institute. He would like to thank Francis E. Hutchinson and Lee Hwok Aun for comments on an earlier version and Rebecca Neo for producing the map of Sarawak and its constituencies.

ISEAS Perspective 2023/13, 23 February 2023

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INTRODUCTION

The 15^th General Election (GE 15) on 19 November 2022, followed about one year after the Sarawak state election, which took place on 18 December 2021. Political fatigue was widely expected among voters in this election in Malaysia and in Sarawak. Politicking at the federal level in the past four years, including the Sheraton move that toppled the Pakatan government, had undermined political confidence in the country.[1] In Sarawak, when GE 15 was announced, concerns over the costs of living, education, endemicity of Covid-19, and employment were at the top of voters’ minds.[2] An additional deterrent were the seasonal monsoon rains.[3] These factors eventually dampened voter turnout in GE15 in Sarawak.

What resulted from GE15 was a hung parliament. PN won 73 seats, PH won 82, and BN won 30 out of the total of 221 seats.[4] For a simple majority, a minimum of 112 seats was a prerequisite. PH just needed BN to work with it in order to form this simple majority, but PN needed both BN and Gabungan Parti Sarawak (GPS) to fly past this simple majority.[5] No single coalition had secured enough seats and in a strange turn of events, BN, with its 30 seats became the kingmaker for PH, which had won 82 seats. Sarawak then became crucial in providing additional stability with its 23 seats, and a building block towards the 148 seats needed for a two-thirds supermajority in the Malaysian Parliament.

This perspective will analyse the election outcome in Sarawak and, at the same time, also quickly retrace what immediately happened in Peninsular Malaysia after GE 15. It also provides some observations of the election results in Sarawak. How did GPS and its opposition parties perform? What are the implications of this victory? It then examines developments that took place immediately after GE 15, when no coalition was left with a majority in government. After that, the new dynamics under the unity government are examined.

PRELIMINARY OBSERVATIONS: GE 15 IN SARAWAK

The 2022 general election (GE15) in Sarawak was a pivotal one for Abang Johari. First, this was watched to see if it would replicate the solid showing of the Sarawak State Election in 2021 (SSE 2021). In SSE 2021, GPS won 76 out of the 82 contested state seats, the opposition Parti Sarawak Bersatu (PSB) won 4, while DAP Sarawak won two seats.[6] There was an expectation that GPS would perform similarly well for GE15 by capturing around 25 of the 31 parliamentary seats. Second, Abang Johari has since 13 January 2017 held the office of Chief Minister of Sarawak – renamed Premier in March 2022.[7] A reduction in the number of seats won in GE15 compared to the number of seats in GE 14 would mean that GPS was losing ground.[8] GPS performed well, however, and secured 23 out of the 31 seats (Table 1 below). This was less than the expected 25 seats but a good indication that GPS had strengthened its electoral position compared to GE 14.

TABLE 1: GE 15 Outcome of GPS Component and Opposition Parties

Party	Political Party/Component	Seats Contested	Seats Won
Gabungan Parti Sarawak (GPS)	PBB (Parti Pesaka Bumiputera Bersatu)	14	14
	PDP (Progressive Democratic Party)	4	2
	PRS (Parti Rakyat Sarawak)	6	5
	SUPP (Sarawak United People’s Party)	7	2
	GPS Total	31	23
Pakatan Harapan (PH)	DAP Sarawak (Democratic Action Party – Sarawak)	8	5
	PKR (Parti Keadilan Rakyat)	16	1
	PBM (Parti Bangsa Malaysia)	1	1
	PH Total	25	7
Perikatan Nasional (PN)	Bersatu (Parti Pribumi Bersatu Malaysia)	3	1
	PN Total	3	1
Other Parties and Independents (PSB, PBK, PBDS, Independents)	PBS (Parti Sarawak Bersatu), PBK (Parti Bumi Kenyalang), Sedar, PBDS (Parti Bansa Dayak Sarawak Baru) PBM (Parti Bangsa Malaysia) Independents	33	0
	Other Parties and Independents Total	33	0

Source and Notes: Compiled from Borneo Post Online, Sabah and Sarawak Results, https://ge15.theborneopost.com/results/index.html. The Star, GE 15, https://election.thestar.com.my/sarawak.html. Both accessed on 28 December 2022. See Appendices 1 to 9 for a detailed breakdown of seats contested by the various candidates.

The average turnout for SSE 2021 was 60.67 percent[9] with 9 out of the 82 seats having a voter turnout of less than 50 percent. Historically, election turnouts in Sarawak have averaged 68 percent.[10] In the recent GE15, turnout in Sarawak was 61.7 percent;[11] lower than the turnout of 72 percent in GE 14 and the long-term average turnout of 68 percent. This was in spite of the 1.943 million registered voters in the state, understood to be around a 59 percent increase over GE 14.[12] In rural constituencies like Kapit, Baram and Limbang, the turnout was 49.9 percent, 50.8 percent and 47.9 percent respectively (Appendices 2 and 3).

The increase in the number of voters with automatic registration and the inclusion of youths 18 years and above did not manage to raise turnout rates in Sarawak. The survey done by Merdeka Study Centre before GE 15, which indicated that only about 40 percent of eligible youths would actually vote[xiii] had proven correct.[14] Generally it is understood that a low turnout would give an edge to GPS, with its established election machinery in getting/transporting voters to the voting centres even in rural areas.[15]

In Sarawak, 15 constituencies had three contesting candidates (three-cornered fights), five had four candidates, and one had five candidates (see Appendices 1 to 9). Out of the 31 seats, seven were marginal victories. From Appendices 1 to 9, it can be seen that multi-cornered fights did dilute the results in some constituencies, notably in Sri Aman (GPS), Kanowit (GPS), Sibu (DAP Sarawak), Miri (PKR), Lubok Antu (GPS) and Julau (PBM).

Out of the seven marginal seats[16] in this election, three belonged to the PRS component of GPS (Sri Aman, Kanowit, and Lubok), two to DAP Sarawak (Stampin and Sibu), one to Parti Keadilan Rakyat (Miri), and one to PBM (Julau). PRS therefore represents the weakest component in GPS. The entry and victory of the PN candidate, Ali Biju in Saratok, is a worrying concern on one level, but this should be placed in context, in that he was a PKR candidate in GE 14 who switched sides to Bersatu in GE 15. The worry however is that he will continue to remain in Bersatu and allow the party to make further inroads into Sarawak.

Abang Johari has maintained the Sarawak parties’ established stance that UMNO not be allowed to not enter the state. In that vein, Bersatu’s decision to contest GE 15 in Sarawak also subverted the norm in Sarawakian politics. Not only would Peninsular race and religion politics be entering into the state through Bersatu, which is a breakaway component of UMNO, but these parties would also be contesting directly against GPS. For example, in this election, Ali Biju of Bersatu contested against Giendam Jonathan Tait of GPS.PAS was however visibly absent in Sarawak this time; Hamdan Sani from PAS who contested in GE 14, now contested under the PN banner in Batang Lupar in GE 15 (see Appendix 1). How this can translate into a less visible entry by PAS into Sarawak (through the PN backdoor) is a matter that should be tracked in future state and general elections.

On the surface, the opposition appears not to have lost too much ground; retaining eight seats in GE15 compared to twelve in GE 14 (see Figure 1 below).[17] However, out of these eight seats, four are marginal. Chong Chien Jen (Stampin seat – DAP – indicated in red) only had a marginal victory against his SUPP opponent, Loh Khere Chiang. Oscar Ling (Sibu seat – DAP – indicated in red) also only had a marginal victory against Clarence Ting of SUPP. The Sarawak-based party PSB did not win any seats despite fielding Wong Soon Koh (in Sibu) and Baru Bian (in Lawas), strong candidates in PSB’s fold. PSB has lost its earlier footing gained during the Sarawak state election a year earlier. Larry Sng (Julau seat – PBM – indicated in green) also only won marginally, his victory diluted in a four-cornered fight.

FIGURE 1: General Election and Winning Party in Sarawak

POLITICAL JOSTLING IN FEDERAL POLITICS AND A RELUCTANT GPS BRIDE

Abang Johari on 23 October 2022 stated that GPS would support the party that can form a strong federal government to ensure political stability and prosperity for Malaysia.[18] Stability was important, Abang Johari pointed out, and a weak administration would only slow down progress and the implementation of projects. This was witnessed in developments which unfolded after the 2018 general election where there were three changes of governments within one parliamentary term. Abang Johari also stated that GPS would support any prime minister candidate who is fair to Sarawak, one who will understand and protect the state’s rights as enshrined in the Malaysia Agreement 1963. Sarawak was fortunate, he added, in that it does not follow the “culture of Malaya” (specifically Peninsular Malaysia’s culture of race and politics), and it will not allow Malayan culture to come into the state. Thus, Sarawak does not want UMNO and Bersatu to come into the state.[19] The drama unfolded in the five days after polling day.

– 20 November 2022

One day after GE 15, Abang Johari announced that GPS had agreed to form a coalitional Federal Government with PN, BN, and Gabungan Rakyat Sabah (GRS). GPS also agreed to support Muhyiddin Yassin as the 10^th Prime Minister.[20] The establishment of this coalition government was of course premised on the Federal Constitution, the Sarawak State Constitution, and the sovereignty of laws as enshrined in the Malaysia Agreement 1963 and Inter-Government Committee (IGC) Report.[21] PN, however, needed more than GPS to form a simple majority of 112, as opposed to PH which just needed 30 seats from any party. In retrospect, this announcement by GPS was made on the understanding that BN would also support the PN coalition.

On the same day (20 November), Zahid Hamidi came out to say that BN had not made a decision and had yet to hold any formal talks with GPS on forming a coalition. There had also been no negotiations with PN which could lead to “any understanding on forming a federal government with the coalition.”[22]

– 21 November 2022

BN subsequently held separate meetings with PN and PH. PN did not agree in writing to conditions laid down by BN, including not identifying the unity government to the name of a particular party, the formation of the cabinet, the issue of Islam, Malays and Bumiputera, the royal institution, and the Malay language.[23] PN stated that they were ready to consider the points brought forward by BN while PH agreed to these conditions by BN in writing. PN also rejected the Agong’s suggestion to form a unity government with PH. Muhyiddin also claimed that he had the support of 10 MPs from BN to support his PN government, which Zahid likened to treason as the decision of these 10 MPs was not in line with the party’s stance.

The decision for BN to join the unity government headed by PH, was also in line with the Agong’s decree to form a unity government, and was also not unilaterally made by Zahid Hamidi, as UMNO Supreme Council had agreed to back Anwar as the Prime Minister.[24] In this instance, BN with its 30 seats, effectively became kingmaker in the formation of the Unity Government. Under these fluid circumstances, GPS then came out again to say that it would wait before deciding on who to partner to form a coalition government.[25] It was prudent for GPS to keep out of the political impasse in Malaysia as BN was still undecided on PN or PH as its coalition partner. GPS was still inclined to support Muhyiddin as the new Prime Minister.

– 23 November 2022

On 23 November, GPS was advised by the Agong to consider forming a unity government to end this political crisis and break the deadlock, as PN had refused to join PH to form a unity government. Senior Vice-President of Parti Pesaka Bumiputera Bersatu (PBB) Fadillah Yusof who represented GPS for an audience with the King, then conveyed this message to GPS Chairman Abang Johari.[26]

– 24 November 2022

On 24 November 2022, one day after the meeting Fadillah Yusof had with the Agong, GPS Chairman, Abang Johari, announced that GPS had accepted the Agong’s advice on the formation of a unity government at the Federal Level, with Anwar as the 10^th Prime Minister.[27] The open apology made personally during a visit by DAP Secretary-General Anthony Loke to the residence of Abang Johari on 24 November 2022 may have worked towards GPS softening its stance towards PH. Following Loke, DAP Chairman, Lim Guan Eng also offered his apology via Facebook.[28] Both apologies were accepted by GPS but DAP Sarawak nevertheless remains an opposition party in the state assembly.[29] Indeed the DAP element in PH was a strong deterrent for GPS to support the unity government under Anwar. It is also understood unofficially that GPS would only support the unity government if no Cabinet positions were given to MPs in DAP Sarawak.[30] The years of being in parties that opposed one another in Sarawak has made it very “complicated” for both parties to now be in coalition in the unity government. This will remain an important issue that needs to be closely followed in the months ahead.

Naturally, mixed feelings were expressed in Sarawak on the proposed move by Abang Johari to join PN. This came from both local social activists and politicians.[31] Abang Johari’s decision to support PN which only had 73 seats as opposed to PH which had 82 seats ran contrary to the principles of majoritarian democracy, according to Denis Hang Bilang. Reservations were also expressed by state assemblyperson and PSB secretary-general Baru Bian on the proposal by GPS to form a coalition with PN (and PAS). Sarawak has a multiracial and multi-religious society which has existed harmoniously and which has to be preserved.[32] The ethnic composition of Sarawak is also distinct from West Malaysia as only 30 percent of the population are Muslim, while 44 percent are Christian.[33] Another social activist however felt that Abang Johari’s decision to support PN was not an individual but a unanimous decision by the four component parties in GPS. GPS as a party wanted to support a strong and stable coalition government, which it felt only PN could deliver. Elsewhere, concerns were also expressed by several retired SUPP politicians on the proposed coalition government with PN (and PAS), as sentiments against PAS in Sarawak are very negative.[34] Moving into digital space, there were three online petitions launched on Change.Org to persuade GPS to reject PN and particularly PAS.[35] These three petitions accounted for more than 50,000 signatures.

Currently, a unity government is in place comprising Pakatan Harapan (82 seats), Barisan Nasional (30 seats), Gabungan Parti Sarawak (23 seats), Gabungan Rakyat Sabah (6 seats), Warisan (3 seats), Parti Bangsa Malaysia (1 seat), Social Democratic Harmony Party (2 seats), and an independent backer from the Kudat Constituency in Sabah (1 seat).

NEW DYNAMICS UNDER ANWAR’S UNITY GOVERNMENT

At the federal level, GPS is in the unity government with DAP Sarawak. At the state level, however, DAP Sarawak remains in the opposition. There is also no formal cooperation inked between GPS and DAP Sarawak under this unity government structure. However, it is understood that at the state assembly level, DAP Sarawak and PH would still take on the task of monitoring affairs of the state.[36] How DAP Sarawak adopts a more conciliatory approach towards GPS at the parliamentary level but remain in the opposition at state assembly meetings will be an interested development to observe. Any untoward or unreasonable behaviour towards GPS at the state level may strain the support given by GPS to the unity government at the parliamentary level. From the stance of GPS, Fadillah Yusof[37] also took pains to remind Sarawakians that GPS is part of the unity government and is not part of the PH government.[38] He also said that GPS has the right to pull its support from the national unity government if state rights were challenged, though it recognises the current support given by Prime Minister Anwar in resolving outstanding issues in the Malaysia Agreement 1963. Anwar has also given the full mandate to Fadillah Yusof to sort out the outstanding claims under this agreement.[39] GPS also only supported this move because it was vital to have a strong and stable national administration, especially now with the appointment to many ministerial and deputy ministerial positions of Sarawakians and GPS in particular.

This time around, GPS managed to secure five ministerial and six deputy ministerial positions under the unity government, in addition to Fadillah Yusof being appointed a Deputy Prime Minister (see Table 2 below). GPS thus has two more positions than it had in Ismail Sabri’s cabinet. Then, GPS only had four ministerial and five deputy ministerial positions. Under the Muhyiddin Yasin cabinet, the party’s position was even weaker. GPS had only four ministerial and four deputy ministerial positions then.

TABLE 2: Ministerial and Deputy Ministerial Cabinet Positions for GPS and its Component Parties

	Component Party/Constituency	Position
Fadillah Yusof	GPS – PBB – Petra Jaya	Deputy Prime Minister and also Minister of Plantation and Commodities
Alexander Nanta Linggi	GPS – PBB – Kapit	Minister of Works
Nancy Shukri	GPS – PBB – Santubong	Minister of Women, Family and Community Development
Tiong King Sing	GPS – PDP – Bintulu	Minister of Tourism, Arts and Culture
Aaron Ago Dagang	GPS – PRS – Kanowit	Minister of National Unity
Wilson Ugak Kumbong	GPS – PRS – Hulu Rajang	Deputy Minister in the Prime Minister’s Department
Hanifah Hajar Taib	GPS – PBB – Mukah	Deputy Minister of Economy
Habibillah	GPS – PBB – Limbang	Deputy Minister of Transport
Lukanisman Awang Sauni	GPS – PBB – Sibuti	Deputy Minister of Health
Rubiah Wang	GPS – PBB – Kota Samarahan	Deputy Minister of Rural and Regional Development
Huang Tiong Sii	GPS – SUPP – Sarikei	Deputy Minister of Natural Resources, Environment and Climate Change

Currently, under the unity government, many benefits are flowing to the state. Sarawak is now allowed to use English along with Bahasa Malaysia as its official language.[40] The unity government has also empowered both the Sabah and Sarawak state governments to directly manage federally-funded projects worth RM 50 million and below. This would mean that around 70 percent of projects in Sarawak can be fully managed and decided over without referral to the federal government.[41] Projects within this range would include schools, clinics, fire stations and other rural projects. The return of autonomy in education and health has already also been agreed to in principle with the details currently being worked out by the federal government.[42] In 2023, Sarawak would also be receiving an increased annual special grant of RM 300 million (previously this only amounted to RM 16 million), and Sabah would be receiving RM 260 million as opposed to RM 26 million previously (Article 122D of the Federal Constitution). It was also reported that a clearer formula will be finalised to calculate the amount of these special grants.[43]

CONCLUSION: WHAT LIES AHEAD?

Post GE 15, Sarawak’s position in federal politics has been strengthened by the appointment of the unity government by Malaysia’s Agong. Abang Johari is now standing on much firmer ground, especially after the victories in SSE 2021 and in this election. A present worry for GPS is PN’s further entry into Sarawak. Sarawak has already been gaining visible benefits from the unity government, for example, larger funding and greater autonomy in managing projects below RM 50 million. It will be interesting to track what further benefits will come to the state and how federal-state dynamics will evolve to benefit the state and raise its investment potential for outside investors.

ENDNOTES

For endnotes, please refer to the original pdf document.

APPENDICIES

For appendicies (Appendix 1 to 9), please also refer to the original pdf document.

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).

2023/12 “The Vaccine R&D System and Production Network in Thailand: Possibilities for Strengthening Domestic and International Partnerships” by Antonio Postigo

*People wait to receive doses of Pfizer, AstraZeneca/Oxford and Sinovac Covid-19 coronavirus vaccine booster shots inside a stadium in Bangkok on 8 January 2022. (Photo: Lillian SUWANRUMPHA/AFP).*

EXECUTIVE SUMMARY

While Thailand enjoys self-sufficiency in many of the vaccines it needs, when COVID-19 hit, the country’s R&D preparedness and response were not strong enough to develop vaccines in a timely manner. And amid supply shortages after COVID-19 vaccines were developed, Thailand, like the rest of ASEAN, initially relied on vaccines produced elsewhere.

Thailand ranks high among ASEAN countries in many indicators of R&D inputs and outputs. However, its R&D and innovation systems are not yet sufficiently developed to translate vaccine R&D inputs into patents that can then lead to new vaccines.

Public and private pharmaceutical firms in Thailand conduct vaccine R&D in the national immunisation programme in collaboration with universities and research institutes in Thailand and abroad. Thailand is also home to many international and domestic contract research organisations.

ASEAN has launched several initiatives to strengthen its biomedical R&D infrastructure and human resources, build a network of research centres across the region, and promote cooperation in R&D among ASEAN members, ASEAN’s Dialogue Partners, the United States, and the European Union.

Thailand and ASEAN can strengthen their vaccine security by pooling and coordinating their financial and scientific resources to address diseases of regional concern.

* Antonio Postigo is Associate Fellow in the Thailand Studies Programme, ISEAS –Yusof Ishak Institute, Singapore, and a Visiting Fellow in the Department of International Development, London School of Economics and Political Science (LSE).

ISEAS Perspective 2023/12, 23 February 2023

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INTRODUCTION

Although non-communicable diseases are now the main drivers of mortality and morbidity rates in Thailand, some infectious diseases still have high levels of incidence and prevalence.[1] In most circumstances, particularly when no therapeutic drugs are available and in low-income settings, vaccines are a cost-effective public health intervention in controlling the spread of, and reducing mortality and morbidity from infectious diseases.[2]

Thailand not only self-procures many of the vaccines in its Expanded Programme on Immunisation, but it is also ASEAN’s second-largest vaccine exporter after Indonesia, mainly of influenza vaccines to other ASEAN countries.[3] Still, in 2020, Thailand reported more than 60,000 cases of vaccine-preventable diseases.[4]

KEY INDICATORS IN THE THAI BIOMEDICAL AND VACCINE R&D SYSTEM

Developing effective vaccines rapidly requires strong vaccine research and development (R&D) preparedness and response. As illustrated by the rapid development of vaccines for COVID-19, R&D preparedness and response necessitates not only adequate financial and scientific resources, but also a policy and regulatory R&D environment that fosters innovation, public-private partnerships, and international cooperation.

Vaccine R&D is also essential for achieving the UN’s Sustainable Development Goal 3 (SDG 3: Ensure healthy lives and promote well-being for all ages), and other SDGs that depend on healthy people and populations.[5] In fact, some SDG targets include indicators related to biomedical R&D.

The diversity in economic development within ASEAN is mirrored by variability in terms of R&D intensity. Thailand ranks among the ASEAN countries with higher inputs and outputs indicators in biomedical R&D. In 2017, gross expenditures on R&D relative to GDP (SDG indicator 3.b.2) in Thailand stood at 1.0%, only behind Singapore (1.9%) and Malaysia (1.4%).[6] In countries with total R&D spending above 1%, the private sector tends to be a major, often the largest, contributor to R&D expenditures (Table 1). The private sector accounts for 80.8% of total R&D expenditures in Thailand, the largest in ASEAN. In 2018, Thailand had 1,350 researchers per million inhabitants in full-time equivalents (SDG indicator 9.5.2), the third largest in ASEAN.

Regarding R&D output indicators, the picture is mixed (Table 2). On the one hand, Thai researchers are among the most productive in ASEAN in terms of the number of academic publications and clinical trials, but they lag in the number of patents. Thailand trails Indonesia, Malaysia, and Singapore in the number of articles published in peer-reviewed journals in the broad field of biomedicine, but when it comes to the specific topic of vaccines, Thai researchers published more articles than their peers elsewhere in ASEAN countries, and were only behind China, Japan, India, the Republic of Korea and Iran in all of Asia. [7]

A bibliometric analysis of the articles published in 2019 by ASEAN scientists indicates that Thai researchers collaborate more with scientists from the United States and Australia than with colleagues from other ASEAN countries.[8] The Southeast Asian office of the WHO established as one of the objectives of its 2016-2020 Vaccine Strategic Plan the participation of all countries in vaccine clinical trials.[9] As of March 2022, the Asia-Pacific region had conducted 24.1% of all vaccine clinical trials in the world, led by China with 571 trials. Thailand, with 200 vaccine clinical trials, ranked first in ASEAN (36.5% of all vaccine clinical trials in ASEAN) and fourth in Asia Pacific.[10]

However, research does not necessarily generate economic value if it does not create new products, services, and/or processes. Thailand has still to translate its investments, publications, and clinical trials into patents, which is a good proxy of a country’s ability to innovate. As of March 2022, Thailand had 41 patents in the field of biotechnology and 47 in pharmaceuticals, 7 times fewer than Malaysia and 20 times fewer than Singapore.[11]

MAIN PLAYERS IN THE THAI VACCINE R&D SYSTEM

As in other middle-income Asian economies, vaccine R&D and production in Thailand is centred on traditional technology vaccines included in its Expanded Programme on Immunisation. Thai vaccine manufacturers do not yet have the technological capacity to produce mRNA vaccines. As the R&D and production capabilities of Thai and ASEAN vaccine manufacturers improved, many of their vaccines had been exported to developing countries within Asia and beyond.

The policy process and government agencies involved in establishing vaccine security policy, deciding which vaccines should be included in the National List of Essential Vaccines as well as creating the regulatory framework for licensing and marketing of vaccines have been described in detail elsewhere.[12] The main government agencies that participate in setting the R&D agenda and allocating research funds are the Thai National Institute of Health (TNIH, Department of Medical Sciences, Ministry of Public Health, MoPH), the National Research Council of Thailand, the National Science and Technology Development (NSTDA), the National Science Technology and Innovation Policy Office, and the Thailand Centre of Excellence for Life Sciences. The TNIH is one of only five Asia Pacific R&D funding organisations included in the Global Research Collaboration for Infectious Disease Preparedness (GLOPID-R), an international coalition of funders of R&D to combat infectious diseases with pandemic potential. Regarding vaccine R&D, various organisations within the MoPH regulate and fund early preclinical research stages; namely, the Food and Drug Administration, the National Vaccine Institute (NVI), and the Department of Disease Control. Among its institutional goals, the NVI aims to strengthen R&D infrastructure, including training and capacity building, and technology transfer through its training vaccine centre.

The main pharmaceutical firms involved in vaccine R&D and manufacturing are the state-owned Government Pharmaceutical Organisation (GPO), the Queen Saovabha Memorial Institute-Thai Red Cross (QSMI), and the private firm BioNet Asia. The GPO conducts vaccine R&D and accounts for a significant share of Thai vaccine manufacturing, and it also exports vaccines to other ASEAN countries.[13] The QSMI packages and distributes serums and rabies vaccines. Both companies are members of the Developing Countries Vaccine Manufacturers Network (DCVMN), which encompasses 41 public and private pharmaceutical firms in developing countries.[14] BioNet Asia is one of the most active and innovative ASEAN firms, and the only Thai firm that produces vaccines prequalified by the WHO for procurement by UN agencies and governments.[15] Bionet has developed low-cost vaccines for Haemophilus influenzae type b (Hib) using traditional technologies and, in collaboration with the NSTDA and several Thai research institutes, has patented processes for the development of a dengue vaccine.

Several Thai public and private pharmaceutical firms and universities have engaged in collaboration with foreign organisations for R&D and production of vaccines. For instance, BioNet has developed a pentavalent vaccine covering diphtheria, tetanus, pertussis, hepatitis B, and meningitis in collaboration with the Thai NSTDA and with South African scientists.[16] Bionet also partnered with the NSTDA and Mahidol and Chiang Mai universities, to develop a dengue vaccine, which was later improved through a partnership with the Sanofi Pasteur Institute and the biotech firm In-Cell-Art in France. Sanofi Pasteur has also established a joint venture with the GPO (GPO-Merieux Biological Products, GPO-MBP) to conduct process development and finish-and-fill for new vaccines for ASEAN countries. Under the arrangement, Sanofi Pasteur supplies the vaccine in bulk and the GPO-MBP formulates and releases finished forms. The Thai Armed Forces Research Institute of Medical Sciences also conducts R&D on vaccines for enteric diseases, malaria, and HIV-AIDS. The MoPH has partnered with the USA’s NIH and the United States Military HIV Research Program to conduct clinical trials for an HIV vaccine. And Siam Bioscience was selected by Astra-Zeneca to produce its COVID-19 vaccine for ASEAN countries, and obtained the WHO’s approval.

Although the development of vaccines using the newest mRNA technologies still remains concentrated in a handful of American and European companies (Moderna, Pfizer/BioNTech, Curevac), some of them have plans to open manufacturing plants in developing countries.[17] In Thailand, the Chula Vaccine Research Centre at Chulalongkorn University and the King Chulalongkorn Memorial Hospital have joined forces with BioNet to develop and manufacture the first Thai-made mRNA vaccine for COVID-19, the ChulaCov19 BNA159 vaccine. Stages 1 and 2 of clinical trials for this vaccine have been conducted in Australia.[18]

The offshoring by global pharmaceutical firms of R&D activities to developing countries can potentially lead to technology transfer and enhance the R&D and manufacturing capabilities of domestic biotechnology firms. Many of the global pharmaceutical firms with a presence in Thailand conduct late manufacturing stages for vaccines and therapeutic drugs. However, they have chosen other Asian countries (mainly China, India, Japan, the Republic of Korea, and Singapore) in which to establish regional R&D centres. Many of these global pharmaceutical firms have outsourced some of their R&D, initial clinical trials but increasingly other tasks as well (preclinical research, applications for ethical committees, and regulatory authorities) to so-called contract research organisations (CROs). Thailand is home to several of the largest global CROs (Covance, ICON, IQVIA, Novotech, Parexel, PPD, Synchron, and Syneos Health) but also to local firms such as Aclires and Asia Global Research.[19]

VACCINE R&D COOPERATION IN ASEAN AND BEYOND

The COVID-19 pandemic has shown how international cooperation can accelerate vaccine development. It has also exposed how beggar-thy-neighbour policies, such as export restrictions on medical protective equipment and vaccine nationalism, can leave many developing countries at the expense of donor countries to secure vaccines for their most vulnerable populations.[20]

In the context of a pandemic, vaccine production may not be sufficiently elastic, opening the debate about whether or not countries should strengthen their vaccine security by developing their vaccine R&D and manufacturing capacity. Most developing countries lack the financial and technological resources to invest in vaccine R&D. In addition, it is not sensible to replicate R&D capabilities in each country. Instead, international agreements to facilitate unimpeded trade and global/regional cooperation should ensure vaccines for countries without R&D and vaccine production capabilities.

During the 2003-2004 SARS epidemic, the ASEAN Secretariat issued recommendations to contain the epidemic.[21] ASEAN has also been very active during the COVID-19 pandemic with multiple initiatives, including the establishment of the ASEAN Centre for Public Health Emergencies and Emerging Diseases, and the ASEAN Public Health Emergency Coordination System programme to coordinate national and regional preparedness and response to health emergencies. The ASEAN Committee on Science and Technology (COST), a committee to promote cooperation in science, technology, and innovation (ST&I) among ASEAN members, formulated the 2016-2025 ASEAN Plan of Action on ST&I (APASTI 2016-2025). TheAPASTI 2016-2025aims at intensifying R&D collaboration between the public and private sector, strengthening ST&I infrastructure and human resources, networking research institutes and centres across ASEAN, and promoting closer cooperation in R&D with ASEAN’s Dialogue Partners.[22]

The ASEAN Secretariat has also established international collaborations in R&D. Thus, in 2020, the United States launched the US-ASEAN Health Futures Initiative to strengthen public health in ASEAN through the development of R&D infrastructure, human capital, and health system capacity. As part of the Initiative, there are now more than 300 joint projects between ASEAN members and the US NIH. The Initiative includes US$ 30 million over the last 10 years in grants to research institutions in ASEAN, and technical support for clinical trials for treatment of infectious diseases.[23] Likewise, the United States Center for Disease Control and Prevention (CDC) established the US-ASEAN Infection Prevention and Control Task Force.[24]

Meetings among key stakeholders in vaccine R&D in ASEAN (health policymakers, biomedical researchers, and the pharmaceutical industry) sponsored by the Southeast Asian Ministers of Education Organisation (SEAMEO) Tropical Medicine Network identified dengue, HPV, HIV, malaria, Japanese encephalitis, leptospirosis, and influenza as the key regional R&D priorities.[25] Likewise, expert group meetings convened by the WHO have identified key areas for ASEAN collaboration and integration in vaccine R&D; namely, vaccine security and self-reliance, human resource capacity building, pooled vaccine procurement, and communication and coordination.[26]

Regional cooperation in vaccine R&D has also taken place outside the framework of supranational and intergovernmental organisations. Three of them deserve to be noted here. First, the Association of Academies and Societies of Sciences in Asia (AASSA), which comprises 32 ST&I societies from 30 Asian countries, including two from Thailand: the Thai Academy of Sciences, and the Science Society of Thailand.[27] In the context of the COVID-19 pandemic, AASSA organised webinars but, compared to similar organisations elsewhere, AASSA has played a relatively low-key role. Second, the Southeast Asia Infectious Disease Clinical Research Network (SEAICRN), a partnership between hospitals and research institutions in Thailand, Viet Nam, and Indonesia, which promotes clinical research collaborations on emerging infectious diseases of public relevance.[28] SEAICRN receives financial and technical support from the NIH in the USA, the Wellcome Trust in the UK, and the governments of Thailand, Viet Nam and Indonesia. Third, the ASEAN Network for Drugs, Diagnostics, Vaccines and Traditional Medicines Innovation (ASEAN-NDI), which has the support of the WHO, maps the overall research capacity of ASEAN countries in vaccines, drugs, traditional medicines, and diagnostic tools.[29] The ASEAN-NDI aims inter alia at strengthening cooperation between ASEAN countries in health R&D, sharing information on infectious diseases, transferring knowledge and/or technology, and facilitating collaboration in R&D initiatives.

CONCLUSION

As an upper-middle income country, Thailand has the financial and technological capabilities, in cooperation with other ASEAN countries, to ensure its national and regional vaccine security. Still, there are several actions at the national and regional levels that can enhance incentives for pharmaceutical firms to invest in vaccine R&D.[30] On the supply-side, Thailand and other ASEAN governments can incentivise vaccine R&D by mobilising financial and scientific resources for R&D on vaccines for diseases posing a domestic or regional public health threat. Thailand can also use other supply-side mechanisms, such as regulatory, policy, tax, and direct subsidies to reduce investment risks for pharmaceutical firms. On the demand-side, Thailand can strengthen policies and regulations to increase the uptake of vaccines through public information campaigns.

Partnerships between universities and the pharmaceutical industry are key sources of innovation. Thailand can promote new alliances and strengthen existing ones through a series of actions. Some of them require increasing financial resources for R&D; for example, such as the establishment of start-up incubators or the financing of joint projects between universities and public research institutes, and pharmaceutical firms. However, others involve regulatory and legislative reforms; for example, better defining the intellectual property rights of pharmaceutical companies and academic institutions for knowledge sharing and technology transfer, allowing academic researchers to carry out projects in pharmaceutical firms, or facilitating cross-participation of academic researchers and industry leaders on corporate and university boards.

Finally, at the regional level, ASEAN as a group, rather than Thailand alone, can pool financial resources to establish advanced purchase commitments with pharmaceutical firms for the R&D and manufacturing of vaccines against diseases of regional concern.

ENDNOTES

For endnotes, please refer to the original pdf document.

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).

“GVC Reconfiguration: Risks and Opportunities for ASEAN Members” by Sithanonxay Suvannaphakdy and Pham Thi Phuong Thao

2023/11 “Why Is China’s Global Security Initiative Cautiously Perceived in Southeast Asia?” by Hoang Thi Ha

Journalists watch a screen showing China’s President Xi Jinping delivering a speech during the opening of the Boao Forum for Asia (BFA) Annual Conference 2021 in Boao, south China’s Hainan province on 20 April 2021. STR/AFP.

EXECUTIVE SUMMARY

The Global Security Initiative (GSI) – launched by President Xi Jinping in April 2022 – contains broad general principles that reiterate China’s previous foreign policy and security statements.

The GSI is the latest expression of China’s international discourse that seeks to challenge the Western-led global governance system, and especially to de-legitimise the US role in Asia and advocate an exclusivist approach to Asian security governance.

According to the State of Southeast Asia survey 2023, the region’s overall reaction to the GSI is rather ambivalent and cautious as they fear that the GSI will increase US-China tensions and intensify pressure on regional states to take sides.

Judging by their official statements, mainland Southeast Asian states, except Vietnam, appear to be more accommodating towards the GSI while maritime Southeast Asian states are more cautious.

There is a gap between the GSI’s moralistic posturing and the manifested reality of China’s nationalistic foreign policy, especially in situations where China’s interests collide with those of its neighbouring states, such as the South China Sea disputes.

Southeast Asian countries’ caution towards the GSI, in contrast to their support for China’s Global Development Initiative, indicates the dichotomy between their reservations about China’s role as a security provider and their appreciation of China’s role as an economic partner.

The GSI can still gain traction in non-traditional and non-military areas, for example in law enforcement cooperation that cuts across the need to protect China’s overseas interests and to provide political/public security in some mainland Southeast Asian states.

* Hoang Thi Ha is Senior Fellow and Co-coordinator of the Regional Strategic and Political Studies Programme, ISEAS – Yusof Ishak Institute.

ISEAS Perspective 2023/11, 22 February 2023

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INTRODUCTION

Chinese President Xi Jinping proposed the Global Security Initiative (GSI) at the Boao Forum for Asia annual conference on 21 April 2022. The GSI is encapsulated in “six commitments”: (i) pursuing common, comprehensive, cooperative and sustainable security; (ii) respecting the sovereignty and territorial integrity of all countries; (iii) abiding by the purposes and principles of the UN Charter; (iv) taking the legitimate security concerns of all countries seriously; (v) peacefully resolving differences and disputes between countries through dialogue and consultation; and (vi) maintaining security in both traditional and non-traditional domains.[1]

On 21 February 2023, China released the GSI concept paper which elaborates on the “six commitments” and identifies priorities areas of cooperation. According to the concept paper, the mechanisms for the GSI implementation include various Chinese initiatives at the UN system and Chinese engagement with the Global South via multiple multilateral platforms over which China has strong ownership and influence, namely the Shanghai Cooperation Organization (SCO), BRICS cooperation, the Conference on Interaction and Confidence Building Measures in Asia (CICA), and the Lancang-Mekong Cooperation (LMC), among others.[2] As China’s near-abroad and being situated at the heart of the Indo-Pacific region, Southeast Asia is arguably one of the most critical constituencies of the GSI. It is listed as the first region in the GSI concept paper’s priorities of cooperation, followed by the Middle East, Africa, Latin America and the Caribbean, and Pacific island countries. This article examines the strategic rationale behind the GSI and how it has been received and perceived in Southeast Asia.

WHAT DOES THE GSI STAND FOR?

The GSI with its “six commitments” is contained within only one paragraph but its strategic rationale is organically linked to other parts of Xi’s entire speech, especially those promoting “Asian cooperation”, “Asian unity” and “Asian family”. This, coupled with the fact that Xi chose the Boao Forum to launch the GSI, suggests that China’s strategic gaze remains intensely focused on Asia where it is locked in a contest for primacy with the US. The GSI is in large part an extension of China’s New Asian Security Concept introduced by Xi himself at the 2014 Boao Forum which appeals to non-Western sentiments, de-legitimises the US role in Asia and advocates an exclusivist approach to Asian security governance.[3]

The “six commitments” of the GSI are long embedded in China’s national and international security discourse. It consolidates the basic norms of modern China’s foreign policy codified in the Five Principles of Peaceful Co-existence, including respect for sovereignty and territorial integrity and non-interference. The GSI also replays the terms “common, comprehensive, cooperative and sustainable security” from the New Asian Security Concept. The only new addition to the GSI is the commitment “to take the legitimate security concerns of all countries seriously” which derives from the ‘indivisible security’ concept. This concept was first coined in the Cold War-era 1975 Helsinki Final Act and then the 1990 Charter of Paris for New Europe which stated that “security is indivisible and the security of every participating State is inseparably linked to that of all the others.”[4] The Charter, however, also “fully recognize[s] the freedom of States to choose their own security arrangements”, a key principle that both China and Russia wilfully overlook.

While the logic of ‘indivisible security’ – i.e. the pursuit of one’s security should not be at the expense of others’ security – seems straightforward, its interpretation and application are highly subjective, especially in terms of defining the threshold of “at the expense of other’s security”. This concept has become particularly controversial after Russia invaded Ukraine in 2022 using the pretext that NATO’s eastward expansion jeopardised Russia’s security interests. Although China stops short of endorsing Russia’s action, Beijing is aligned with Moscow in attributing the cause of the war to NATO and the West, and has actively propagated this narrative. A couple of weeks before Russia’s invasion, Moscow and Beijing signed the 4 February 2022 joint statement, evoking ‘indivisible security’ to oppose NATO’s expansion and vowing that both countries would “stand against attempts by external forces to undermine security and stability in their common adjacent regions”, namely Europe for Russia and Asia for China.[5] As such, ‘indivisible security’ would potentially become a new sound bite and normative device for China to advance its longstanding geopolitical end goal, namely to dismantle the US’ alliance system and security partnerships which Beijing sees as detrimental to its own security and hegemonic ambitions in the region.

The GSI should also be perceived in the broader context of China’s push to reform the global governance system to better suit its interests and values, alongside the Belt and Road Initiative (BRI) and Global Development Initiative (GDI), among others.[6] The GSI now becomes the overarching framework for multiple Chinese security initiatives at the UN and in the Global South that seek to challenge the Western-led global system and project itself as a leader in the global governance and security architecture.[7] Xi’s speech at the 2022 Boao Forum and subsequent Chinese commentaries on the GSI are full of tropes framing China as a responsible actor – e.g. in enabling the world’s response to the Covid-19 pandemic, poverty reduction and economic recovery – versus the US and its allies that engage in “exclusive, bloc politics”, “decoupling”, “supply chain disruption” and “maximum pressure”. The most common refrain is that the GSI reflects “true multilateralism”, advocates “democracy in international relations”, and offers “a new type of security path of dialogue rather than conflict, forming partnerships rather than alliances, and win-win rather than zero-sum outcomes”.[8] Of note, the GSI has also been used to undermine US-led efforts to rally international punitive measures against Russia, including what China views as “the wanton use of unilateral sanctions and long-arm jurisdiction”.[9]

Another angle that needs further examination is the nexus between the GSI and China’s Comprehensive National Security (CNS) concept. Introduced in 2014, the CNS reflects Xi Jinping’s thinking about national security that aims to realise the “unity of political security, people’s security and national interests”.[10] Under this concept, national security covers multiple types of security, with “political security” at the top as well as other areas of consequence to international security such as “security of overseas interests”, “resource security”, “space security”, “polar security” and “deep-sea security”.[11] In April 2022, China and the Solomon Islands inked a security agreement that allows China, upon the Solomon Islands’ request, to send its “police, armed police, military personnel and other law enforcement and armed forces to Solomon Islands to assist in maintaining social order”; such Chinese forces can also be used “to protect the safety of Chinese personnel and major projects in the Solomon Islands”.[12] The agreement is a clear example of the convergence between the protection of Chinese overseas interests and the imperative to ensure regime security of the host country, which provides a perfect condition for China to expand its military footprint in this strategic location.

SOUTHEAST ASIA’s AMBIVALENT AND CAUTIOUS RESPONSE

Southeast Asians Are Cautious and Ambivalent about the GSI

While receptions of the GSI vary across Southeast Asian countries, the overall reaction has been rather muted and cautious. According to the State of Southeast Asia 2023 survey, 44.5% of respondents express little or no confidence that the GSI will benefit the region versus 27.4% who feel confident or very confident. The sense of ambivalence and uncertainty is also palpable as 28% choose the ‘no comment’ option.[13] Respondents from Brunei, Cambodia and Laos are most supportive of the GSI while those from Myanmar, Vietnam, Indonesia are most cautious, followed by the Philippines, Thailand, Malaysia and Singapore.

Table 1: How Confident Are You in China’s Global Security Initiative
to Benefit the Region?

(State of Southeast Asia survey 2023)

The above results largely mirror the official responses from most Southeast Asian governments to the GSI (except for Myanmar[14] and Thailand). The outcome documents of Xi’s recent meetings with the Vietnamese, Indonesian, Singaporean and Philippine leaders suggest the latter’s cautious position vis-à-vis the GSI, in contrast to their warm embrace of the GDI. The Chinese read-out of Xi’s meeting with Singapore Prime Minister Lee Hsien Loong in November 2022 said that both sides would pursue the GDI but made no reference to the GSI.[15] Speaking at an international conference in May 2022, Lee voiced Singapore’s support for the GDI but refrained from any mention of the GSI.[16] Like Singapore, Malaysia has stayed silent on the initiative – the read-outs from both Malaysia and China regarding the Wang Yi-Saifuddin meeting in July 2022 did not mention the GSI and focused mainly on economic cooperation.[17] As for Vietnam, according to the joint statement on the occasion of Vietnam Communist Party (VCP) general secretary Nguyen Phu Trong’s visit to Beijing in October 2022, Vietnam recognises China’s GSI only on the basis of the goals and principles of the UN Charter while expressing its support for and readiness to participate in the GDI.[18] Likewise, the joint press statement during Indonesia’s President Joko Widodo’s visit to China in July 2022 simply stated that Indonesia “takes note of the Global Security Initiative” but said much more about bilateral cooperation to implement the GDI, including development-oriented financing, cooperation in health, agriculture, poverty alleviation, food security, green development and digital economy.[19]

Typical of the Southeast Asian hedging position, the GSI is mentioned in their high-level joint statements with China but with certain qualifications. First, Southeast Asian countries are willing to consider the GSI so long as it conforms to the principles of the UN Charter and the Treaty of Amity and Cooperation in Southeast Asia (TAC) to which China is a party. Second, further details and communication on the GSI are needed to explore future cooperation, as reflected in the Indonesia-China joint statement in November 2022[20] and the Philippines-China joint statement[21] during President Marcos Jr.’s visit to China in January 2023. The ambivalent and non-committal attitude by these major ASEAN member states has been extrapolated to the ASEAN level, as reflected in the chairman’s statement of the 2022 ASEAN-China summit which “took note of the GSI proposed by China… and looked forward to further details of the GSI”.[22]

Except for Vietnam, other mainland Southeast Asian countries appear to be more supportive of the GSI. The joint statement during Prime Minister Hun Sen’s visit to China in early February 2023 says that “Cambodia supports China’s proposal of GSI, and stands ready to work with China on global security governance towards common, comprehensive , cooperative and sustainable security.”[23] According to Chinese sources, Thailand and Myanmar respectively expressed support for the GSI and GDI at the meeting between Xi and Thailand’s Prime Minister Prayut Chan-o-cha in November 2022; and at a working-level meeting with Myanmar’s ambassador to China in January 2023.[24] In an interview with Global Times in September 2022, the Lao ambassador to China also stated that her government attaches importance to and welcomes the GSI, alongside the BRI and GDI, because they “embrace the expectations of the countries to promote peace, development and win-win cooperation”.[25] It is argued that Southeast Asian countries that do not have territorial and maritime disputes with China and that lean towards China strategically tend to hold more favourable views about the GSI.

The GSI as a Public Good: Rhetoric and Reality

Southeast Asian countries generally subscribe to the GSI principles, especially the pursuit of comprehensive and cooperative security, respect of national sovereignty and territorial integrity, sanctity of the UN Charter, peaceful settlement of disputes, and security in both traditional and non-traditional domains. The GSI concept paper’s affirmation of support for ASEAN-centred regional security architecture and adherence to the ASEAN way of consensus-building also sounds assuring. What then explains Southeast Asians’ hesitance to embrace the GSI wholesale?

The devil is in the practice because there is a yawning gap between China’s high-sounding moralistic posturing and the manifested reality of its nationalistic foreign policy. It boils down to the question of how China would interpret and apply these principles in specific security situations where its interests collide with those of its neighbouring countries. Although the principle of sovereign equality is pre-requisite to friendly inter-state relations and in accordance with the UN Charter,[26] China’s policy and behaviour in the South China Sea disputes indicate the “winner takes all” approach. China’s preaching about these principles falls flat given its excessive claims that violate the 1982 UN Convention on the Law of the Sea and its constant encroachments, intimidations and harassments against other claimant states. For all the Chinese talk about making the South China Sea “a sea of peace, friendship and cooperation”, Southeast Asians’ top two concerns in these waters are (i) China’s militarisation and assertive actions and (ii) China’s encroachments in the maritime zones of other littoral states.[27] Likewise, China’s support for the purposes and principles of the UN Charter does not square with its decision not to criticise Russia’s invasion of Ukraine and instead lend propaganda support for Moscow’s justification for waging its war?[28]

Southeast Asian reservations about the GSI are also rooted in their growing anxiety about the US-China rivalry. The fear that the GSI will increase US-China tensions and intensify pressure on regional states to take sides is the biggest reason for their doubts about the GSI, according to the SSEA survey 2023.[29] Of particular concern is the ‘indivisible security’ concept which serves as China’s new normative device to discourage Southeast Asian countries from closer security ties or alliances with Washington. Beijing can be expected to fully exploit this concept in order to emphasise its sense of insecurity over the strategic autonomy of its neighbouring states to choose their own security arrangements.

In practice, the point that “security is indivisible” is so nebulous and subjective that it is of little help in addressing the deepening mistrust and security dilemma in the region. For example, although China criticises the US military presence and alliance/coalition building with its Asian partners as hurting Chinese national security, China’s own military build-up and power projection have been alarming to the South China Sea littoral states as well. The annual SSEA survey among foreign policy-security establishments in Southeast Asia consistently ranks China as the most distrusted major power (although the degrees of distrust may vary across regional countries). This distrust is rooted in their fear of losing sovereignty, territorial integrity and strategic autonomy in making their own foreign policy choices in the face of a strong and assertive China (Table 2). It is doubtful that the moral high ground that China claims in the GSI would help alleviate these concerns.

Table 2: Why Do You Distrust China and What Can China Do to Improve Ties?

(State of Southeast Asia survey 2020-2023)

Where Can the GSI Gain Traction?

Since the GSI adopts an encompassing definition of security, it stands a good chance to gain traction in non-military and non-traditional areas. Given the proximity and expanding connectivity between China and the region, law enforcement cooperation to address transnational crimes is a major area where China’s capacity and resources can be brought to bear. Apart from cooperation at the bilateral and ASEAN levels, one noteworthy minilateral arrangement in this respect is the Mekong river joint patrol by China, Thailand, Laos and Myanmar, with 125 joint patrols being carried out thus far since its start in 2011.[30] While such cooperation is mutually beneficial and necessary for practical reasons, it may have long-term strategic implications in enabling the extraterritorial reach of China’s law enforcement in some mainland Southeast Asian states.[31]

There is also a growing nexus between the need to ensure political/public security in those countries that have weak state capacity and their policing cooperation with China in the name of strengthening local law enforcement capabilities and protecting China’s overseas interests. The China-Solomon Islands security agreement stands as a clear example. Elements of this nexus are emerging in some mainland Southeast Asian states. At a meeting with his Cambodia counterpart in 2021, Chinese Minister of Public Security Zhao Kezhi called for “enhanced cooperation in preventing political security risks, implementing drug control and strengthening law enforcement capabilities to promote the building of a community with a shared future between the two countries.”[32] In Myanmar, following the coup in 2021, the junta regime has sought China’s assistance to step up its policing of internet use, including to obtain information on political dissidents and protestors.[33] In Laos, where China is the largest foreign investor with multiple special economic zones and the recently launched Vientiane-Kunming railway, both countries have agreed to strengthen security cooperation for major Belt and Road projects, safeguard national security and address transnational crimes, including through China’s equipment transfer and personnel training.[34] Seen from this angle, the GSI could effectively serve as a purveyor of China’s state-centred and all-encompassing approach to security and “market globally the instruments of China’s security state”.[35]

Another area where the GSI will draw international applause is its affirmation that “a nuclear war cannot be won and must never be fought”.[36] While this is a longstanding policy of China, this affirmation holds a significant meaning at this juncture as President Putin of Russia – China’s “no-limits” partner – has been using nuclear blackmail in his war against Ukraine. In this respect, China can also take the moral high ground as it is the only nuclear weapon state that agrees to sign on to the Southeast Asian Nuclear-Weapon-Free-Zone (SEANWFZ) Treaty without any reservation.

Last but not least, the GSI has been rolled out in conjunction with the GDI, reflecting the integration of security and development in China’s global outreach that sees “development as the basis for security, and security as the condition for development”.[37] China has already made its mark in terms of supporting Southeast Asian countries in pandemic response, vaccine support and economic development, and has leveraged its positive impact in these fields to further its geopolitical goals in the region. It is in these non-traditional, non-military areas that China is better positioned as a leader and provider of regional public goods.

CONCLUSION

There are some paradoxes that China – in its push to become a provider of regional security – should take notice of. First, China has become “more militarily capable than ever”, according to the latest Asia Power Index 2023 report.[38] Yet, few Southeast Asians in the foreign policy-security establishment think that China’s military is an asset for global peace and security, as found in the SSEA annual survey.[39] Military cooperation also ranks as the lowest option in foreign policy preferences towards China, according to a recent public opinion survey in Indo-Pacific states, including Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.[40] Second, while Southeast Asian countries would, in principle, agree with China that development guarantees security, their explicit support for the GDI and caution towards the GSI indicates the dichotomy between their appreciation of China’s importance as an economic partner and their reservation about China’s role as a security provider. As noted by Evelyn Goh, China’s hegemonic bargain towards the region may have gained significant headway in the economic domain, but in the security domain, China still needs “to demonstrate credible self-restraint for reassurance”.[41] To persuade regional states that it is a net contributor to regional security and stability, China should exert more efforts to match its words with its deeds.

ENDNOTES

For endnotes, please refer to the original pdf document.

2023/10 “Rising Hajj Fees and Investment Opportunities in Saudi Arabia: The Impact on ASEAN Countries” by Anggito Abimanyu

*Worshippers perform the farewell tawaf (circumambulation) in the holy Saudi city of Mecca on 11 July 2022, marking the end of this year’s hajj. (Photo: AFP).*

EXECUTIVE SUMMARY

The hajj ritual (pilgrimage to Mecca) is mandatory for Muslims who are physically and financially able. But the number of hajj pilgrims is capped at about 2.5 million yearly, and Muslims worldwide thus have to wait their turn to perform Islam’s fifth pillar.

The Saudi Arabia government is committed through Saudi Vision 2030 to transforming the organisation of the hajj and improving the quality of hajj services. However, this ongoing transformation has significantly increased the cost of the pilgrimage; this was obvious in 2022, and further increases are likely.

However, on a positive note, the transformation drive to expand and upgrade hajj facilities and services presents a promising investment opportunity as the Saudi Arabia government has opened the sector to global strategic investors. Muslims residing in ASEAN countries can therefore gain from investing in hajj-related infrastructure development in Saudi Arabia. The area of focus for investments includes the Masyair, which comprises the sacred sites of Arafah, Mudhzalifah and Mina in Mecca. Other investment opportunities involve accommodation building (such as hotels), fast food restaurants, transportation and logistics, provision of non-cash services and Muslim tours.

The relevant Islamic authorities and institutions in ASEAN countries have to grapple with the short-term challenges of helping their respective constituencies understand and cope with the rising costs and long waiting times for the hajj. At the same time, they will also need to organise themselves to take advantage of the investment opportunities arising from the Saudi transformation programme. They will have to convince their respective Muslim communities about the prudence and sound management of these investments, and the long-term dividends which can be passed on to future cohorts of pilgrims.

* Anggito Abimanyu is Head of the Economics and Business Department, Vocational School, Gadjah Mada University UGM Yogyakarta, Indonesia. He is also the Former Deputy at the Ministry of Finance, DG Hajj and Umrah, Ministry of Religious Affairs, and Head of the Hajj Financial Management Agency, Republic of Indonesia. Currently, he is Associate Fellow at ISEAS – Yusof Ishak Institute.

ISEAS Perspective 2023/10, 21 February 2023

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INTRODUCTION

Pilgrimage to Islam’s holiest city of Mecca in Saudi Arabia is the dream of all Muslims. This hajj ritual is the fifth pillar of Islam. However, the demand for places to perform the hajj every year exceeds the supply. With quotas imposed by the Saudi Arabia government on the number of pilgrims it can accommodate, Muslims have to wait their turn to perform the pilgrimage. Consequently, Muslims, including those from Southeast Asia, are increasingly making multiple umrah trips (minor hajj). On average, a hajj trip takes approximately 30 to 40 days, and can only be performed during the hajj season (the month of Dzulhijah, or the twelfth and final month of the Islamic calendar). Conversely, umrah trips are shorter—lasting approximately between one week and 15 days—but these can be carried out any time of the year.

At present, because there are long queues or restrictions due to the hajj quotas imposed on all Muslim states and nations worldwide, many Muslims cannot carry out the pilgrimage during their preferred timing even though they are physically and financially able to do so. For example, the average waiting time for pilgrims in Malaysia is 100 years, and in Indonesia, it is 20 years.[1] The long waiting time explains why the umrah market is booming since pilgrims are allowed to make that trip to Mecca at any time on tourist or umrah visas.

Moreover, for many who feel they may not be able to perform the hajj during their lifetime, umrah trips serve as the best opportunity to visit these sacred places. Hajj and umrah pilgrimages are principally private trips, but do not replace each other. Performing the umrah, however, does not mean that the Muslim’s obligation to perform the hajj is ceded.

The countries that currently send the largest number of hajj pilgrims are Indonesia, Pakistan, India, Turkey, Egypt, Bangladesh and Nigeria. Indonesia and Pakistan are also the largest sources of umrah pilgrims. Among ASEAN countries, many hajj and umrah pilgrims come from Malaysia, Brunei, Singapore, Thailand and the Philippines. Currently, the number of pilgrims in the world is 2.5 million,[2] and more than 5 million umrah pilgrims visit the two holy cities, Mecca and Medina annually.[3]

Ultimately, the costs of performing the hajj have increased multiple times, increasing the burden for ordinary pilgrims. The Saudi Arabian government is however calling for investments to upgrade facilities in the holy land, which will enable them to host more pilgrims at any one time in future. Southeast Asian countries can take advantage of these investment opportunities, though the challenge lies in how benefits reaped from these projects can trickle down to benefit ordinary pilgrims who are waiting their turn to perform the hajj, and are facing an exponential rise in expenses.

THE COSTS REMAIN HIGH

A large portion of pilgrims hajj expenses consists of round-trip airfare and accommodation in Saudi Arabia. Other expenses include inbound transportation costs, payments for guides to perform key rituals (tawaf, saii, and wuquf), and food. Costs are also incurred for pilgrims entering the Masyair worship areas (Arafah, Muzdhalifa and Mina), renting tents, buying ready-to-eat food, and patronising the shuttle buses at the height of the hajj season.

The Muslim world is entering an era of high hajj costs. In 2022, the average regular pilgrimage fee in Indonesia increased from Rp. 75 million or US$5,357 to almost Rp. 100 million or US$7,142 per pilgrim. This increase was not due to the Covid-19 pandemic, or even the modernisation efforts recently announced by the Saudi Arabian government. The increase in costs was announced long before the Saudi Arabian government introduced the Saudi Vision 2030.[4]

In 2020 and 2021, the hajj pilgrimage for those living outside Saudi Arabia was halted due to the Covid-19 pandemic. In 2022, the Saudi Arabia government announced that the hajj would resume, and at the pre-pandemic level; the news was greeted with joy by Muslims all over the world. A few days after the announcement, the Saudi Arabian government invited the Ministers of Hajj from a large number of countries to the country to discuss the new hajj policy. Two major decisions were presented: the 2022 hajj season would welcome pilgrims from outside Saudi Arabia, but the numbers were still limited to 50% of the normal 2.5 million quota; and the Saudi Muasassah hajj guidance group would be privatised, making it more professional and accountable when serving the hajj pilgrims.

However, the promise to improve hajj services came with the shocking news that hajj costs would triple.[5] Although in the end the costs were reduced, pilgrims still had to pay a 30% increase in fees on average. Pilgrims around the world protested, and the governments of Indonesia, Pakistan, Turkey, Nigeria and other countries submitted their objections to Saudi Arabia. The answer from Saudi Arabia was that the outcome was non-negotiable; all countries sending pilgrims including private haj travel agents finally relented.

ASEAN countries utilise various strategies to overcome the unprecedented sharp increase in hajj expenses for pilgrims. Indonesia and Malaysia sent pilgrims by providing subsidies covered by investment returns from hajj funding schemes. The two countries considered the opportunity costs of not sending pilgrims would mean the waiting time for other pilgrims to be even longer. Other ASEAN countries dispatched their pilgrims in accordance with the 50% quota. Last year, pilgrims also had to pay additional costs due to the implementation of the Covid-19 health protocol. To make matters worse, they also had to absorb the exchange rate depreciation against the US dollar.

INVESTMENT OPPORTUNITY

Despite this price increase, the Saudi Arabian government is providing lucrative investment opportunities for Indonesia, Malaysia, Brunei, Singapore and the other ASEAN countries. In January 2023, at the World Hajj and Umrah Forum held in Jeddah,[6] the Saudi Arabian government announced strategic investment opportunities related to hajj and umrah projects to global investors. All regulations, institutions, human resources, patterns of cooperation and investment objects in Saudi Arabia have been prepared, and the Saudi Arabia government has also carried out detailed approaches, showcases and campaigns by inviting its strategic investor partners.

Expectedly, Muslim-majority countries such as Indonesia, Malaysia, Brunei, Pakistan, Nigeria and Turkey have already begun assessing this invitation. Non-Muslim majority countries are also enthusiastic about this development, including the United States, Germany, Brazil and China. These have already submitted proposals based on their respective investment focus. The Saudi Arabian government does not seem to give any privileges to certain investors, and the criteria for selecting investors are solely based on competition, competence, and the ability to complete projects quickly.

With Vision 2030 in place, Saudi Arabia is expected to house waves of hajj and umrah pilgrims and tourists, with the government targeting 100 million visitors per year or 10 times the current numbers.[7] Tourism is a very lucrative business for Saudi Arabia, and tourism is not only related to holy sites in Mecca and Medina, but also to their neighbouring cities such as Jeddah, where an international airport is located. The city of Jeddah is also being transformed into a modern Muslim tourist destination on a par with Dubai in United Arab Emirates (UAE). The capital of Saudi Arabia, Riyadh, is designated as a world financial centre on par with Abu Dhabi, the capital of UAE. Airports are also scheduled to be built outside Jeddah, Medina and Riyadh. This means that a pilgrimage trip can be condensed into shorter periods, and pilgrims can explore Saudi Arabia beyond Mecca and Medina. Moreover, buildings in traditional holy sites in Mecca, such as Arafah and Mina, will be upgraded, and the Grand Mosque (Masjidil Haram” and the Prophet’s Mosque (Masjid Nabawi) will continue to be expanded.

The scale of development means that investment opportunities will multiply exponentially. Already, world-class giant travel agents, Agoda and Airbnb have collaborated with Saudi Arabia, and are expected to dominate online bookings for hajj and umrah. They also helped build and develop the GDS (Global Distribution Systems) online system, Saudi Arabia’s global travel network.

How can these strategic investment opportunities benefit Southeast Asian countries? What is urgent is expanding the Masyair area—specifically the space used during the peak hajj season—with multi-storey buildings. The upgrading projects include repairing permanent tents, developing accommodation in the vicinity, catering ready-to-eat food and providing Masyair buses. The upgrading of factories that provide catering services for pilgrims is no less important. Other possibilities include improving transportation and logistics services through inter-city buses, and developing hotels in Mecca and Medina, hospital services and others. The service sector is no less important, namely the financial services for hajj and umrah pilgrims, including provision of non-cash financial services, hajj insurance and other financial services. Likewise, with tourism services actually including the construction of historical Muslim tourist attractions, from those carried out by tourism services in the Taif mountains to the ancient heritage site of Al Ula and others, Southeast Asian investors are encouraged to play a role.

The Saudi Arabia government plans to form dozens of subsidiary companies through the institutional transformation of muasasasah, which will then be offered to strategic investors. At the exhibition, strategic investors signed an investment assessment in these fields. Investors from Indonesia, Malaysia, Brunei, Singapore, Thailand and the Philippines are also exploring this opening. To be sure, proposals will be accompanied by feasibility studies and legal due diligence, and these have to be carried out by credible and world-class consulting firms.

ASEAN STRATEGIC INVESTOR READINESS

The commercialisation of hajj and umrah services will increase the cost of hajj further. Since 2022, Masyair’s service fees have increased by three times, resulting in an increase in the cost of hajj for pilgrims to 30%. In 2023, this cost is expected to remain high. This increase is indeed burdensome especially given the conditions of global inflation and the domestic exchange rate depreciating against the US dollar and the Saudi Riyal.

If Indonesia, Malaysia and other Islamic countries who send pilgrims can take advantage of these investment opportunities, then the benefits can be returned to the pilgrims. This also means strengthening, developing and tapping into existing institutions and schemes that manage the hajj pilgrims. For example, Malaysia has a strong and established Sharia hajj investment institution, the Tabung Haji (TH), which it can draw on, while Indonesia has the Hajj Financial Management Agency (BPKH). Both are potential strategic hajj fund investors. In 2022, TH’s total assets amounted to around US$ 20 billion and BPKH’s to around US$11 billion. Brunei has Taib (Tabungan Amanah Islam Brunei), while Singapore has SWF (Sovereign Wealth Funds) such as GIC (Government Investment Corporation). Interestingly, Taib and GIC have an investment unit that addresses sharia needs.

Hajj funds managed by Malaysia and Indonesia can appropriately be invested in these haj-related projects because they are deposited for the long term to suit the long waiting time for hajj pilgrims. With a long-term tenor, Malaysia and Indonesia haj funds can be invested in hajj projects in Saudi Arabia which also have a long-term duration. Even though these projects carry risks, these can be mitigated by the hajj and umrah pilgrims who continue to increase and thus help maintain a low to medium risk profile.

The rate of return on hajj investment funds is relatively high, estimated at a minimum of 200 to 300 basis points above the yield on corporate sukuk. With such a high rate of return and low to moderate risk, the hajj funds will attract the interest of prospective pilgrims, umrah and even other people’s funds. ASEAN countries with institutional funds, such as Brunei from the provision of surplus oil products, and Singapore from insurance and pension funds, also have long-term financing funds that can be invested in Saudi Arabia. The Philippines is also interested to invest because of the high management of remittance funds from Filipino citizens in Saudi Arabia. Banks in the Philippines are also experienced in offshore financing, and some even have branches in Saudi Arabia. Likewise in Thailand, several banks have branches in Saudi Arabia and can immediately explore project financing in Saudi Arabia. It is conceivable that each investment institution in the ASEAN region can become a strategic partner for Saudi Arabia.[8]

So, even though the cost of hajj increases, this can be compensated for by increasing investment returns in various sectors offered by state-owned investment institutions. If investment opportunities can be implemented optimally and the benefits returned to the pilgrims, then you have a profitable long-term investment strategy. The investment proceeds will also circulate in the respective countries. The question now turns to how countries can manage the expectations of pilgrims in the short-term.

CONCLUSION

Undeniably, hajj’s strategies, policies and financing have undergone significant changes with the introduction of Saudi Vision 2030. The Saudi Arabia government, which has the mandate to manage hajj and umrah, has provided clear directions that in the future, hajj investment will play a key role in improving hajj and umrah services. The hajj capacity will be increased three times in the next ten years, to serve more than 10 million hajj pilgrims per year. This means the services and infrastructure need massive upgrading and improvements.

The service upgrade financing must thus come from investments from within Saudi Arabia and from global strategic investors. The strategic investment for hajj and umrah is expected to obtain returns that can later benefit pilgrims. Ultimately, investors and pilgrims expect transparency in investment management, a subsequent increase in the hajj quota and a reduction in waiting time for pilgrims.

In 2023, the quota for pilgrims has returned to pre-Covid-19 levels, and is to be gradually increased in the next few years. This year, umrah pilgrims from outside Saudi Arabia have exceeded the number before the Covid-19 period by around seven million. The number of hajj and umrah pilgrims will be increased since the area for performing hajj and umrah is now also significantly expanded. The increase in the quotas is encouraging news for Muslims worldwide, especially pilgrims who have waited for an average of more than 20 years in Indonesia,[9] and 100 years in Malaysia.[10]

If Indonesia and Malaysia succeed in becoming strategic partners for investment in Saudi Arabia, pilgrims can get optimal financial benefits from their hajj funds deposits. Besides benefiting from the value of the investment, the results of managing the investment funds can return to their respective countries. Meanwhile, ASEAN countries such as Singapore and Brunei, which also have significant institutional investment funds, can also become Saudi Arabia’s strategic partners. For example, Singapore investors can be an important part of the digital transformation for hajj and umrah pilgrims with cashless transactions for living costs, transactions for consumption needs and purchases of tourism needs. With 10 million umrah pilgrims coming from outside Saudi Arabia, and if each of them spends at least US$1,000 per person during their stay in Saudi Arabia, the number of transaction fees that can be obtained is lucrative. Umrah pilgrims also benefit from cashless facilities and digital transactions that make them practical and safe when spending money for their daily needs or shopping. ASEAN banks that have also been operating in Saudi Arabia, such as those based in Thailand and the Philippines, can also serve various financing needs for hajj and umrah projects—independently or jointly with Saudi Arabian banks.

Brunei can join Indonesia and Thailand in investing in supplying “ready-to-eat” food products; or building hotels with Malaysia and Saudi Arabia via joint venture companies. Investments can also be made in the form of financing or buying shares in companies owned by Saudi Arabian investors. Thailand has expertise and know-how in halal ready-to-eat food, while Malaysia has experience managing long-term rental hotels in Mecca and Medina.

The cost of traveling and carrying out the pilgrimage is no longer low, but with the investment of hajj funds in Saudi Arabia already having permanent buyers or off-takers and is quite secure, the development of Islamic finance in the world will increase significantly. Islamic finance has the characteristics of non-ribawi—lawful, fair, non-speculative and inclusive.[11]

Nevertheless, while these investment opportunities can benefit Southeast Asia in the long run, the challenge now is for the governments in Southeast Asia to communicate these opportunities to their domestic audience, and explain why the increasing hajj costs are happening. They still have to manage pilgrims’ expectations of long waiting times and address the concerns of sub-standard services. Moreover, ASEAN countries need to explain that by carrying out a joint investment strategy with Saudi Arabian investors, pilgrims can hope that the capacity of hajj and umrah quotas will increase, and the waiting time for hajj pilgrims, especially from ASEAN countries, reduced.

The 2023 hajj season will be from May and peak at the end of June or early July. Each country has now begun preparing prospective pilgrims physically, religiously and financially. Intensive communication with the pilgrims regarding the current conditions must be carried out concurrently.

ENDNOTES

For endnotes, please refer to the original pdf document.

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
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Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng
Comments are welcome and may be sent to the author(s).

2023/9 “Why Is China’s Global Development Initiative Well Received in Southeast Asia?” by Hoang Thi Ha

Chinese President Xi Jinping speaks via a video link during the annual gathering in New York City for the 76th session of the United Nations General Assembly (UNGA) on 21 September 2021 where the Global Development Initiative was launched. Photo: Spencer Platt/Getty Images/AFP SPENCER PLATT/GETTY IMAGES NORTH AMERICA/Getty Images via AFP.

EXECUTIVE SUMMARY

The Global Development Initiative (GDI) consolidates China’s international development cooperation agenda and seeks to bolster its role as a development partner for the Global South.

Following the Belt and Road Initiative pattern in furthering the domestic-global nexus in China’s economic statecraft, the GDI seeks to synergise with its domestic pivot towards sustainable and innovation-driven growth in order to secure markets for Chinese goods, services and technologies in these new sectors.

Southeast Asian countries unanimously support the GDI in the hope that it will contribute towards addressing their development deficits and that China will up its economic game more broadly in the region.

The state-centric approach to development embedded in the GDI finds strong resonance among Southeast Asia’s ruling elites who embrace the ‘right to development’ and focus on delivering economic progress in their governance ethos.

The GDI also serves as a diplomatic and discursive tool to discredit the US’ security-centric approach to the Indo-Pacific and tap into the discontent among developing countries who feel that the US and Europe devote too much attention and resources to the war in Ukraine at the expense of the Global South’s development needs.

* Hoang Thi Ha is Senior Fellow and Co-coordinator of the Regional Strategic and Political Studies Programme, ISEAS – Yusof Ishak Institute.

ISEAS Perspective 2023/9, 21 February 2023

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INTRODUCTION

As China rises to great power status, Beijing has been pushing to reform the global governance system to better suit its interests and values. Multiple Chinese initiatives of a global scale have been rolled out, including the Belt and Road Initiative (BRI), Community of Shared Destiny, Global Security Initiative (GSI) and Global Development Initiative (GDI). Together, they seek to project China as a provider of global public goods by offering Chinese wisdom, solutions and resources to address global development and security challenges.

Launched by President Xi Jinping at the United Nations General Assembly in September 2021, the GDI aims to put “development high on the global macro policy agenda”.[1] Its main constituency is the Global South that involves mostly developing and less developed countries. To show that China is committed to the GDI’s “results-oriented actions”, in 2021 Xi pledged US$3 billion of international assistance for developing countries in the following three years.[2] In 2022, he announced China would upgrade the South-South Cooperation Assistance Fund with a replenishment of US$1 billion, and increase China’s support for the China-UN Peace and Development Fund.[3] Thus far, the GDI remains largely a declaration of intent and principles[4] and its funding scale through Chinese foreign assistance is rather modest compared to the Organisation for Economic Cooperation and Development (OECD) members. However, the GDI has been well received among developing countries, including in Southeast Asia. This article seeks to understand what the GDI represents and why it has gained broad support in Southeast Asia. In doing so, it argues that the GDI is not simply a refurbishing of China’s international development cooperation agenda; its significance – and implications – should be perceived in the broader context of China’s economic statecraft and in how its developmentalist approach serves China’s domestic political, economic and foreign policy agenda.

UNDERSTANDING THE GDI BEYOND CHINA’S DEVELOPMENT COOPERATION

According to Xi’s vision, the GDI aims to address “unbalanced and inadequate development among and within countries”, thus shifting beyond the model of untrammelled growth associated with environmental degradation and socio-economic inequalities that characterised the Chinese economy and much of the developing world in the past decades, towards promoting development that is “people-centred”, “high-quality”, “green” and “innovation-driven”.[5] This vision is translated into eight GDI priority areas, namely (i) poverty alleviation, (ii) food security, (iii) Covid-19 and vaccines, (iv) financing for development, (v) climate change and green development, (vi) industrialisation, (vii) digital economy, and (viii) connectivity.

The GDI seeks to bolster China’s role as a global development actor and a “responsible major developing country”.[6] It “frames China’s existing and new development cooperation efforts, repackaging, harmonising and synergising them for both China’s own internal coordination and articulation to the world”.[7] Projects officially designated under the GDI are funded by China’s development assistance channelled through the China International Development Cooperation Agency (CIDCA) or Chinese contributions to international initiatives/programmes. CIDCA – the GDI’s main implementing body – was established in 2018 as a vice-ministerial level agency under the State Council with the mandate of supporting South-South cooperation and the 2030 Agenda for Sustainable Development. CIDCA has set up the Global Development Promotion Centre to facilitate GDI implementation.[8]

The GDI launch is in line with the upward trend in China’s international development cooperation in the last decade which saw China’s discretionary contributions to multilateral development institutions and funds more than quadruple.[9] The total of Chinese foreign assistance in grants, interest-free loans and concessional loans between 2013 and 2018 were around US$40 billion.[10] The Chinese leadership increasingly attach importance to development cooperation in their statecraft, as reflected in the 2021 White Paper on China’s International Development Cooperation in the New Era. The paper broadly defines ‘international development cooperation’ as “China’s bilateral and multilateral efforts, within the framework of South-South cooperation, to promote economic and social development through foreign aid, humanitarian assistance, and other means”. Since China considers itself a developing country, its development cooperation is viewed as “a form of mutual assistance between developing countries under the South-South cooperation” rather than as a North-South donor-recipient relationship.[11]

Although China’s official statements and bureaucratic arrangements mainly cast the GDI through the lens of development cooperation, the GDI should be assessed in the broader context of China’s economic statecraft towards developing countries. As noted by Anthea Mulakala, “China anchors its [development cooperation] approach in South-South cooperation, which has broader parameters than Official Development Assistance (ODA), and includes investments, diplomacy and other modalities, such as those implemented through the Belt and Road Initiative.”[12] As such, the GDI is seen as a parallel and complementary track to the BRI. Both initiatives seek to align China’s financial, technological and human resources (supply-driven) with the economic and development needs of recipient countries (demand-driven). The BRI exports China’s infrastructure-building capacity surplus to fill infrastructure deficits in other developing countries. In the same vein, the GDI is propelled by the need to synergise China’s global engagement with its domestic economic agenda which increasingly shifts towards sustainable, inclusive and innovation-driven growth under Xi’s ‘common prosperity’ brand.

While the growth-oriented BRI involves big-ticket, capital-intensive projects in hard infrastructure, the GDI is development-oriented and relies on smaller-sized projects in such areas as public health, poverty reduction, green and low-carbon economy, digital industry and innovation.[13] This signals China’s “slow shift from mega infrastructure” to “small and beautiful projects”,[14] a move necessitated by the BRI’s decelerating momentum. After years of excessive overseas lending, China has become more cautious in infrastructure financing due to its own economic woes, repayment problems and the low economic returns on its foreign loans, and accumulative complaints about the BRI adding to socio-environmental risks, unsustainable debts and governance and corruption issues in partner countries.[15] According to a study by the Boston University Global Development Policy Center, China’s overseas development finance through the China Development Bank and the Export-Import Bank of China peaked in 2016 and shrank to only US$10.5 billion in 2020 and 2021.[16]

Following on the BRI, the GDI is the latest expression of China’s developmentalist approach to international relations, which views “economic development as the foundation for stability, security and peace” – a key guiding principle for China’s domestic and foreign policy since its opening-up and reform since the 1970s.[17] According to Evelyn Goh, these developmentalist principles “are deeply shared among post-colonial, developing countries.”[18] China therefore sees the Global South as a critical constituency where its extensive economic engagement alongside its developmental discourse would help Beijing win more friends and partners than Washington in their global contest. That is why the South-South cooperation is increasingly important in China’s grand strategy, and the Global South is often framed as being in one family and sharing a common destiny with China.

To fully grasp the implications of the GDI for international politics, one should look beyond the lens of Chinese development assistance and examine how effectively and robustly Beijing will pitch the GDI as a diplomatic and discursive device to propagate Chinese norms of governance, rally other countries in broad and flexible coalitions that support China’s global vision and agenda, and undermine American (and Western) normative influence and leadership in the global governance system. As noted by Joseph Lemoine and Yomna Gaafar, “[W]ith the GDI, China wants to lead what it hopes is a new era in development – not only by investing money, but also by leading the conversation.”[19] It is in this broader context that this article looks at how the GDI has been received in Southeast Asia and what implications it may have for the Sino-US strategic competition in the region.

THE GDI IN SOUTHEAST ASIA: A MEETING OF MINDS AND INTERESTS

Addressing Development Deficits

Most Southeast Asian countries are developing countries with huge development deficits. This makes the GDI an attractive offer to their governments. Southeast Asian countries have unanimously expressed their support for the GDI. The leaders of Cambodia, Indonesia, Malaysia and Thailand attended the High-level Dialogue on Global Development hosted by Xi in June 2022. All ten ASEAN countries have joined the Group of Friends of the GDI at the UN. They also stand to become the largest regional group to benefit from this initiative, with 14 out of a total 50 projects (28%) in the GDI Project Pool’s first batch.[20] These projects focus on poverty reduction, pandemic response, food security, climate change and green development. Mainland Southeast Asian countries have a larger share of projects than the maritime ones. Singapore – the most advanced economy in ASEAN – has but one project on digital border information connectivity.

At the ASEAN level, the ASEAN-China foreign ministers meeting in August 2022 “welcomed the Global Development Initiative (GDI)… and encouraged participation in the GDI priority areas”.[21] This was followed by the adoption of the ASEAN-China Joint Statement on Strengthening Common and Sustainable Development at the 25^th ASEAN-China summit in November 2022, which affirmed both sides’ “commitment to development” and “priority to development undertakings”.[22] Xi pledged in 2021 that China will provide US$1.5 billion in development assistance for ASEAN countries in the next three years. In 2022, China offered to set up a special loan for ASEAN’s and China’s common development.

The GDI builds upon the existing ASEAN-China development cooperation agenda. During recent years, this agenda has increasingly focused on public health, green transition and digital development – three priority areas of the GDI. The Covid-19 pandemic has driven closer ASEAN-China cooperation in public health. As of August 2022, China had donated US$6 million to the ASEAN COVID-19 Response Fund and provided over 600 million doses of COVID-19 vaccines to Southeast Asian countries (in both donations and sales). In green transition, both sides adopted the 2021 Joint Statement on Enhancing Green and Sustainable Development Cooperation “to promote climate change mitigation and adaptation” through energy transition and energy resilience, forest management, climate smart agriculture, and knowledge sharing on climate change tackling. In digital transformation, the ASEAN-China Partnership on Digital Economy is being implemented through its 2021-2025 five-year action plan; policy exchanges are conducted through the annual ASEAN-China Digital Ministers Meeting starting from 2021; and an ASEAN-China Digital Trade Centre will be established in Guangxi, China.

Apart from these new priority areas, the GDI’s poverty alleviation component would be of great interest to Southeast Asian countries, given that their development goals have been seriously undermined by the Covid-19 pandemic. According to the Asian Development Bank, the pandemic pushed an additional 4.7 million people in Southeast Asia into extreme poverty in 2021 and caused 9.3 million job losses, compared with a baseline no-COVID scenario.[23] Meanwhile, China has lifted 800 million out of poverty over the past four decades and declared in 2021 that it had eliminated absolute poverty (at the threshold of below US$1.90 per day). Building upon its success story, the Chinese government has made poverty reduction a highlight of its development cooperation agenda, calling for the achievement of a “Global Community of Shared Future Free from Poverty”.[24] Mainland Southeast Asian countries are among the largest recipients of Chinese development aid targeted at poor communities. Together with Vietnam, these countries accounted for 74% of China’s aid to the region between 2000 and 2014.[25] More importantly, China’s role in enabling poverty reduction in Southeast Asia is channelled through economic opportunities from its enhanced trade and investment ties with the region.

Going forward, it is also important to follow ASEAN-China cooperation in the sharing of development knowledge, which is driven by China’s efforts to legitimise and promote the ‘China Model’ internationally. One manifestation of this is the rise of international development studies in China, focusing on China’s developmental path and promoting it as a model of development in Global South–South relations.[26] China has established the Center for International Knowledge on Development (CIKD) which actively promotes the GDI and concurrently serves as the Secretariat of the China-ASEAN Knowledge Network for Development launched in May 2022. Under the 2021-2025 plan of action to implement the ASEAN-China strategic partnership, both sides have agreed to enhance policy communication and promote sharing of experiences on governance, including e-governance, public sector reform, local administration capacity building, environmental governance, and digital governance.[27]

Confluence of Economic Interests

There are economic motives beyond development cooperation that make the GDI an attractive value proposition for both Southeast Asia and China. On the Chinese side, the GDI is arguably driven less by altruistic motives than by the need to synergise China’s global engagement with its new development stage characterised by Xi’s development philosophy of “innovative, coordinated, green, open and shared development”.[28] As such, China’s domestic economic agenda has increasingly pivoted towards sustainability and innovation-driven growth, which entails the need to secure export markets for Chinese goods, services and technologies in these new sectors. At the 2022 ASEAN-China Summit, Chinese premier Li Keqiang highlighted five areas of strengthened cooperation between China and ASEAN economies, namely (i) trade and investment liberalisation and facilitation, (ii) new-type industrialisation, (iii) digital transformation, (iv) low-carbon development, and (v) agricultural modernisation.[29] These areas overlap with the GDI priorities, and they signal China’s coming of age as an economic heavyweight, a technological powerhouse, and a global development actor.

On their part, Southeast Asian countries embrace the GDI not only because they anticipate larger Chinese development assistance but more importantly, they expect China to up its economic game in the region. Most Southeast Asian countries, except Cambodia, Laos and Myanmar, have moved from recipients of aid to providers of development cooperation.[30] Rather than counting on Chinese aid, they would look towards greater development opportunities through extensive economic ties with China.

There are ample development needs and new drivers of growth in Southeast Asia, making the region a prime destination for China’s investment, collaboration and assistance in new areas. For example, Chinese big techs have deep stakes in the region’s digital economy to tap into its growth potential which is estimated to reach US$363 billion in 2025.[31] Alibaba-owned Lazada is the largest e-commerce platform in the region, operating in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Alibaba and Tencent are major investors in most promising tech start-ups in the region such as SEA, Tokopedia, and Go-Jek. Chinese tech titans, notably Alibaba, Tencent and Huawei, are building multiple data centres in Southeast Asia since this region is assessed to be “indispensable for growth” of Chinese cloud companies.[32]

In terms of the sustainability agenda, China’s ongoing innovation drive towards green development has had positive spill-over effects to other countries. For example, its 80% market share for all manufacturing stages of solar panels has reduced the cost of solar PV by over 80% in the past decade, which helped to accelerate worldwide clean energy transition.[33] At the same time, China needs a global market to upscale and export its manufacturing capacity for greater cost efficiency, including in Southeast Asia where the green economy sectors will potentially generate US$1 trillion economic opportunities by 2030 if climate action is seriously pursued.[34]

Meeting of Minds

The GDI is not only an instrument of Chinese economic statecraft but also a normative vessel to promote China’s state-centric approach to development to serve its domestic political and geopolitical agenda. At the heart of this approach is the belief that ‘development’ – understood by China as economic progress in material terms – is “the master key to solving all problems”, from poverty to conflict and turmoil, in line with the Chinese traditional philosophy that “the essence of governance is livelihood; and the essence of livelihood is adequacy.”[35] The GDI’s normative significance therefore lies in its intent and effect to “reframe narratives around governance and human rights” to counter the Western discourse that places emphasis on civil-political and individual rights.[36] This Chinese approach finds strong resonance among Southeast Asian ruling elites who embrace the ‘right to development’[37] in the 2012 ASEAN Human Rights Declaration and prioritise the delivery of economic prosperity over the realisation of civil-political rights in their governance ethos.

The GDI also serves as a diplomatic and discursive tool to discredit what China views as the US and its allies/partners’ security-centric approach in their Indo-Pacific strategies. It pitches China-led win-win economic cooperation versus US-led zero-sum alliance-building. This simplistic framing glosses over China’s own military build-up as well as efforts by the US and its allies/partners to compete with China in delivering global public goods from Covid-19 vaccines to clean energy. However, this narrative resonates with many Southeast Asian leaders whose current top concerns are to have their economies recover from the pandemic, overcome economic fallouts from the war in Ukraine, and avoid entanglement in great power conflict. Chief among them is Indonesian president Joko Widodo who is well-known for his preoccupation with bread-and-butter issues rather than geopolitics. Under his watch, Indonesia’s 2022 G20 presidency prioritised three issues, namely inclusive health management, digital-based transformation and transition towards sustainable energy, all of which fall under the GDI’s ambit. Xi’s speech at the Bali G20 summit focusing on global development dovetailed well with Jokowi’s preference.[38]

Some pundits have criticised Jokowi for his parochial foreign policy, but his stand is not without public support. According to the State of Southeast Asia 2023 survey, the majority of Southeast Asian respondents view the increase in energy and food prices as the most serious impact of Russia’s invasion of Ukraine for the region (58.3%), well above the second-ranked concern over the erosion of the rules-based order and violation of national sovereignty (25.9%).[39] Against this backdrop, China could leverage the GDI to tap into the discontent among developing countries who feel that the US and Europe devote too much attention and resources to the war in Ukraine at the expense of the Global South’s development needs. Even India – a strategic opponent of China and a member of the Quad – has voiced similar grievances. In December 2022, Indian foreign minister S. Jaishankar highlighted two big divides in the world: “One is the East-West divide centering around Ukraine and the other is a north-south divide centering around development.”[40] In the same vein, Chinese media decried Washington’s US$150 million in development assistance pledged at the special ASEAN-US summit in May 2022, saying that it is “just a drop in the bucket if compared to US support for Ukraine” (US Congress approved a US$40 billion aid package for Ukraine in the same month) and also a meagre amount compared to Xi’s pledge of US$1.5 billion in 2021.[41]

CONCLUSION

The GDI signals China’s intent to be a global leader in development cooperation on its own terms. Its focus on poverty reduction, healthcare, green transition and digital transformation corresponds to the global trends of sustainability and innovation as well as the prevailing needs for pandemic response and the economic recovery of many countries. The GDI, however, is not simply a package of development projects supported by Chinese foreign aid. Its significance – and its implications – should be perceived in the broader context of Chinese statecraft that seeks to synergise China’s domestic economic shift towards sustainability and innovation-driven growth with its international engagement. It also serves as a discursive weapon to legitimise the Chinese developmentalist approach to domestic and global governance as well as to discredit the US’ security-centric approach in the Indo-Pacific and US’ role as the provider of security goods in the region.

Since ‘development’ is an encompassing and positive-sounding concept, the GDI has become China’s new rallying cry to deepen its comprehensive ties with Southeast Asian countries and ASEAN as a whole, from education to health, green transition to digital transformation, social security to economic integration. Southeast Asian countries support the GDI as they expect material benefits out of it as well as normative alignment around the ‘right to development’. However, it is premature to infer that they consent to China’s “hegemonic bargain”, i.e. enjoyment of China’s economic rewards in exchange for acceptance of China’s hegemony.[42] China’s expectation is that confluence of economic interests would trump disagreements on security issues. Judging by the enduring distrust towards China among Southeast Asian foreign policy elites, their doubts about China’s Global Security Initiative, and their abiding interest in deepening ties with other major powers,[43] China has a long way to go to convince Southeast Asians that looking towards Beijing is their best hope.

ENDNOTES

For endnotes, please refer to the original pdf document.