“Global Supply Chains and the Regional Comprehensive Economic Partnership: Who Benefits?” by Xiaojun Li
2021/79 “Ethnic Armed Organisations in Post-Coup Myanmar: New Conversations Needed” by Andrew Ong
EXECUTIVE SUMMARY
- The increasingly widespread attacks on Tatmadaw troops by resistance forces across Myanmar have given rise to suggestions of a descent into civil war, with Ethnic Armed Organisations (EAOs) touted as a “wild card” that might decide the country’s fate. However, talk of a Federal Army and comparisons to the Syrian civil war are premature and create a false impression of unity in intent.
- Broadly, EAOs are either fighting to regain lost territory, adopting a wait-and-see approach, protecting their ethnic kin from Tatmadaw attacks, or seeking opportunistic business deals in the peripheries. They have vastly different worldviews, military capabilities, and working languages, some leaning politically towards China and others towards Western countries.
- Recognising the EAOs for what they are—armed groups controlling territory—rather than looking to them for military solutions or political leadership, calls for more deliberate building of pan-ethnic solidarity at all levels and for the inclusion of diverse actors in new conversations about a federal union.
- The presence of the EAOs as a fighting force or potential “wild card” must not lead to wishful thinking or become a reason to absolve China, Japan, ASEAN and the West of the responsibility to search for solutions to protect people across Myanmar.
* Andrew Ong is Associate Fellow in the Myanmar Studies Programme at the ISEAS – Yusof Ishak Institute. Previously he was a Postdoctoral Fellow at the Asia Research Institute of the National University of Singapore. He earned a doctorate in Social Anthropology at Harvard University in 2018.
INTRODUCTION
In April of 2021, three months after Myanmar’s military (Tatmadaw) took over the country in a coup and replaced the elected government with its State Administration Council (SAC), attacks against Tatmadaw troops by Ethnic Armed Organisations (EAOs) and civilian resistance fighters began in earnest across the country. A series of speculative claims have been made about the possible involvement of the EAOs in the country’s post-coup politics.
In a first analysis, the EAOs and ethnic minorities, which comprise roughly a third of the country’s population, are seen as a potential “wild card” or kingmaker. Many observers inside and outside of Myanmar see them as a key deciding factor in the country’s future,[1] suggesting that they can “turn the tide” against the junta.[2] One Western observer writes:
“These ethnic minorities are the X Factor that will decide the fate of this coup…The junta and the NLD both need the support of ethnic minority political actors. The junta has enlisted the strongest political party in Rakhine State in the west of the country and the biggest ethnic party in Eastern Mon State. In the north, ethnic armed organizations mostly supported by China are staying above the fray…The NLD will turn to the east, home to the most outspoken ethnic minority opponents of the coup – Karen, Mon, Karenni and Shan groups.”[3]
A second assumption—that of EAO unity—has led to this “X Factor” being exaggerated.[4] The more vocal EAOs released statements condemning the coup, and even though few followed up with any action, observers extrapolated from this the existence of a common intent aimed against a common enemy.[5] This unity has been assumed to include the Burman people, leading to talk about a Federal Army gaining traction alongside the formation of the parallel National Unity Government (NUG).[6] With the ultimate aim of a Federal Union Army standing up to the Tatmadaw, a “People’s Defence Force” (PDF) was announced on 5 May to protect civilians,[7] alongside calls for unity and pan-ethnic solidarity made by the Civil Disobedience Movement (CDM) and NUG. The first cohort of PDF soldiers graduated on 28 May.[8]
For the EAOs, this is a strange shift. Previously viewed by many Myanmar people and foreigners alike as intransigent “spoilers”—half rejected signing President Thein Sein’s Nationwide Ceasefire Agreement (NCA) in 2015 while the other half did—they are now being called upon to counter the might of the Tatmadaw. Once seen as a threat to the indivisibility of the Union, the threat that allowed many Burmans to tolerate the Tatmadaw, the EAOs are now being given serious attention, and their longstanding calls for federal structures are now being explored.
A third related narrative is growing talk of Myanmar being on the “precipice of civil war”,[9] a descent into chaos and “looming catastrophe” that might result in a “failed state”.[10] While armed violence may have now increased significantly in the urban Burman centres, civil war has in fact festered for 70-odd years at Myanmar’s peripheries. Comparisons to Syria are far too premature., however, and the question does not seem to be one of whether civil war will break out (it already has), but whether forms of violence will reach a scale that might compel international political or military intervention, through China, India, Japan, ASEAN or the United Nations. The comparatively “low-intensity” fighting over the last three decades has thus far neither drawn external intervention nor produced any significant change in Myanmar’s political trajectory. Observers argue that PDF resistance in urban areas will need to rely on weapons and supplies from the EAOs,[11] and the passing and enforcement of arms embargos will play a big part in developments, as will any support from neighbouring countries. In late May, ASEAN came under criticism for proposing to remove mention of an arms embargo from a draft UN resolution.[12]
MYANMAR’S EAOS: A CRUCIBLE OF VARYING INTERESTS AND CAPABILITIES
Despite the claims of a unified threat to the Tatmadaw arising from the 20 or so EAOs across the country, the more fine-grained picture tells a different story. The EAOs represent a broad spectrum of political interests, perspectives and mutual relationships. They are not necessarily a significant military threat to the Tatmadaw, let alone a “wild card” or “kingmaker”. And it is too early to say whether Myanmar will go down the road towards a “Syrian” civil war, given that the country has already seen 70 years of sporadic conflict with limited political change.
Broadly, the complexities of the EAO landscape lie along four lines. First, the groups have extremely diverse interests and motives. The Kachin Independence Army (KIA) and the Karen National Liberation Army (KNLA) have arguably borne the brunt of Tatmadaw attacks over the last two decades, even as the latter signed the NCA. They were the quickest to condemn the military coup, and to launch attacks to reclaim areas they previously controlled. The KIA shot down a Tatmadaw helicopter and reportedly seized 10 Tatmadaw outposts by April, including the strategic hilltop Alaw Bum.[13] The KNLA attacked key Tatmadaw positions in late March and killed scores of soldiers.[14] Another group with an interest in recouping lost territory is the Myanmar National Democratic Alliance Army (MNDAA), or the Kokang group. Somewhat surprisingly, it has not entered into open hostilities to retake control of the Kokang area it lost in 2009. Perhaps biding its time, it has been involved in a number of skirmishes in Shan State alongside its Brotherhood Alliance ally, the Ta’ang National Liberation Army (TNLA). The Alliance reportedly killed dozens of Tatmadaw troops in early May.[15]
The Brotherhood Alliance condemned the coup in a joint statement on 30 March, but its position remains unclear in many ways. The TNLA has no clear territorial aims, and seems concerned to gain legitimacy with its support base through attacks on Tatmadaw forces. The Arakan Army (AA), the third member of the Alliance, has now gone silent after fierce fighting with the Tatmadaw throughout 2020. Negotiations were making progress between the two sides in December 2020 over the prospect of holding supplementary elections in Rakhine State.[16] Even after the coup, there has been no escalation in fighting. No longer branded a terrorist organisation by the SAC since mid-March, it has done little besides issue statements since its unilateral ceasefire declaration expired at the end of that same month.
Then there are the United Wa State Army (UWSA), the National Democratic Alliance Army (NDAA), and the Shan State Army-North (SSA-N), all of whom have adopted a wait-and-see approach, remaining quiet on the coup and not making hostile military manoeuvres. At the same time, they have refused to make any deals with the Tatmadaw.
Other EAOs have worked with newly formed ethnic-based militias to defend their people and areas against Tatmadaw incursions. The Karenni Army and PDFs in Kayah State killed dozens of soldiers in mid-May in Kayah State,[17] while the newly-formed Chinland Defense Force clashed with the Tatmadaw repeatedly in April and May in Mindat.[18]
Finally, there are smaller Tatmadaw-aligned Border Guard Forces (BGF) fighting the EAOs, such as Chit Thu’s Karen BGF fighting alongside the Tatmadaw against the KNLA, in return for business opportunities.[19]
Second, the EAOs are of different sizes and military capabilities, and have different military experience across a range of operations. Six or so groups can be said to have reasonable might—the AA, KIA, KNLA, SSA-N, RCSS, and the UWSA—but none is equipped to capture and hold territory against a Tatmadaw aerial and ground onslaught. Even the UWSA, whose forces are estimated to be around 30,000 troops and which possesses artillery and armed drones, is unlikely to be able to hold significant swathes of territory, should it succeed in capturing them. EAOs seem better placed to conduct concentrated attacks or guerrilla raids on Tatmadaw positions than missions to occupy territory.
It remains an open question as to what sustained effect EAO raids might have, even as they damage Tatmadaw morale, disrupt supply lines, and thin its resources. Groups on the Thai and Indian borders may have access to weapons through the black market but are susceptible to crackdowns by neighbouring governments. Most significant, however, is that some of these EAOs have, through the illicit economy, access to significant funding for long-running resistance if they decide to mount it. But thus far, the EAOs’ main contributions to any collective effort has been to provide shelter and training for Bamar resisters fleeing to the borderlands to avoid arrest and regroup. The KIA and KNLA, and increasingly others as well have also scored some symbolic “wins” against the Tatmadaw.
Third, the EAOs have differing degrees of connection to diasporas and foreign countries. Their ties shape their worldviews, sentiments, and external relations in divergent ways. The KIA and KNLA are Western-leaning through their language skills and far-flung diasporic communities, while the UWSA, NDAA, and MNDAA are largely Chinese-speaking and consume media and reportage from China. Many of the EAOs towards the south, along with the KIA, are well versed in human rights and democracy discourses, and are able to frame their positions to appeal to Western audiences. After the coup, the mainly southerly-based 10 signatories of the 2015 NCA were quick to withdraw from negotiations and declare support for the CDM, while most of the groups to the north had different calculations.[20] Groups on the Chinese border have had closer communication with Chinese representatives, but it remains unclear the degree to which these shape their actions. The shifts between Burmese, Chinese and English make negotiations and shared political definitions extremely difficult, whether for internal or external audiences.
Finally, the EAOs have complex relationships with their own Ethnic Political Parties (EPPs) and civil society groups. While most have a political party affiliated to their armed group, there are also various EPPs at odds with them. The Mon Unity Party and Arakan National Party (ANP) initially cooperated with the SAC—the former facing many resignations from party members as a result. The ANP saw the coup as an opportunity to achieve the representation that it was denied through the cancellation of the 2020 electoral vote in many areas of Rakhine State, and its position now remains uncertain. Relationships between many EAOs and their ethnic minority populace have become strained as the people demand that their armed groups take the fight to the Tatmadaw. Groups like the UWSA and NDAA are more impervious to this type of pressure since their revenue relies less on support from the populace.
WHAT POSSIBLE ROLES FOR THE EAOS?
While the notion of a “wild card” may overstate their influence, the EAOs are indeed in a unique position. They are not the direct targets of the coup, nor necessarily antagonists to the conflicting parties. They have long experience in carefully navigating national politics. Two future scenarios may yet emerge from the ambivalences and complexities of their positions.
First, their increased involvement in skirmishes could contribute to the potential crossing of a threshold level of insecurity in the country, which in turn could trigger more distinct Chinese engagement. EAOs might provide limited weapons, training, and tactics to the PDFs and CDM resisters, as has reportedly begun in Karen State.[21] Signs of instability are already spreading, with assassinations of government officials, detonation of bombs, and rocket attacks.[22] While the military threat posed by these groups together is unlikely to inflict sufficient damage to the Tatmadaw to coerce a rethink of position any time soon, widespread instability across the country may force Chinese involvement if any key infrastructure is threatened.[23] China may support a mediated compromise between the Tatmadaw and NUG representatives in order to preserve its interests, using ASEAN to front diplomacy. But on the other hand, it could double down on the side of the Tatmadaw and support it against the opposition.
The second scenario sees domestic actors taking a concerted interest in a federal union, and using the present crisis to begin a parallel development of meaningful pan-ethnic ties and conversations across different levels of society. On the NUG and CDM side, recognising the EAOs for what they are—armed groups controlling territories—rather than looking to them for military solutions or political leadership, may open different solutions. The EAOs may be military experts, but the labour of developing genuine pan-ethnic solidarity at the political, organisational, and community level requires the participation of many other domestic actors. New connections mean new conversations and perspectives about what a federal union might look like, involving the younger generations[24]. This must develop parallel to any armed action. CDM and civil society actors can meaningfully address ethnic minority concerns to find common ground with the EAOs. As CNN wrote of the KNU in April:
“The KNU’s Saw Taw Nee said it was important first to build a federal democratic union, in which all ethnic groups are represented, then a federal army could follow… ‘It’s very difficult to have an army like this now. Mainly because we have different opinions, different backgrounds, among ethnic groups,’ he said. ‘The main thing is to build trust between ethnic people.’”[25]
The last decade offered little evidence that the interests of ethnic minorities and EAOs could be accommodated without a significant change in Myanmar’s circumstances. This is the basis of their reluctance. Neither the military junta nor Aung San Suu Kyi’s National League for Democracy (NLD) government meaningfully engaged the EAOs to end the civil war and incorporate them into the state. The Joint Ceasefire Monitoring Committee remained unable to enforce or adjudicate breaches of the ceasefire. Western countries and surrounding neighbours took no decisive action on the country’s civil war, even after the horrors of the Rohingya crisis. On the long-drawn peace process, Mathieson observes that “Western donors [kept] pitchforking money into a process they know isn’t working to hoodwink their capitals that the process is working to mitigate the still unfolding catastrophe in Rakhine state.”[26] With the peace process now dead in the water, an opportunity for resetting the terms and imagining new approaches has arisen.
Finally, the presence of the EAOs as a fighting force or potential “wild card” must not lead to wishful thinking, or absolve China, ASEAN, Japan, and the West of the responsibility to search for solutions to protect human security in Myanmar. The increasing numbers of PDFs being formed, the calls for mediation led by EAO signatories to the NCA, and the vibrancy of CDM discussions hint at a variety of possible directions—political, military, or humanitarian, internal or external. Domestically, building pan-ethnic solidarity and holding meaningful political discussions are important time-consuming processes for Myanmar’s future, which must unfold in earnest alongside any call for armed resistance and alliances with other armed groups. This will take time, and whether there is sufficient patience for this amidst the urgency of the moment remains to be seen.
ISEAS Perspective 2021/79, 11 June 2021
ENDNOTES
[1] Philip Annawitt, “The wild card that will make or break Myanmar’s coup”, Nikkei Asian Review, 3 Mar 2021, https://asia.nikkei.com/Opinion/The-wild-card-that-will-make-or-break-Myanmar-s-coup.
[2] Maria Siow, “Could Myanmar’s ethnic armed groups turn the tide against the junta, with a little help from Beijing?” South China Morning Post, 27 Mar 2021, https://www.scmp.com/week-asia/politics/article/3127236/could-myanmars-ethnic-armed-groups-turn-tide-against-junta.
[3] Annawitt, “The wild card that will make or break Myanmar’s coup”.
[4] Poppy McPherson and Panu Wongcha-um, “As ethnic armies unite against coup, war returns to Myanmar’s borderlands”, Reuters, 31 Mar 2021,https://www.reuters.com/article/us-myanmar-politics-ethnic-idUSKBN2BM2KF.
[5] But see David Scott Mathieson, “The rebels who will and won’t fight Myanmar’s coup”, Asia Times, 31 Mar 2021, https://asiatimes.com/2021/03/the-rebels-who-will-and-wont-fight-myanmars-coup/.
[6] Guardian, “Myanmar’s besieged resistance dreams of ‘people’s army’ to counter junta”, 20 Mar 2021, https://www.theguardian.com/world/2021/mar/20/myanmars-besieged-resistance-dreams-of-peoples-army-to-counter-junta.
[7] Al-Jazeera, “Myanmar’s anti-coup bloc to form a ‘defence force’”, 6 May 2021, https://www.aljazeera.com/news/2021/5/6/myanmars-anti-coup-bloc-to-form-a-defence-force.
[8] Channel News Asia, “Myanmar’s shadow government parades new armed force”, 29 May 2021, https://www.channelnewsasia.com/news/asia/myanmar-shadow-national-unity-government-armed-force-14910032
[9] Lucas Myers, “Myanmar Is on the Precipice of Civil War”, Foreign Policy, 8 April 2021, https://foreignpolicy.com/2021/04/08/myanmar-military-coup-ethnic-armed-organizations-civil-war/.
[10] Derek J. Mitchell, “The Looming Catastrophe in Myanmar:Failure to Act Will Lead to a Failed State”, Foreign Affairs, 15 Apr 2021, https://www.foreignaffairs.com/articles/burma-myanmar/2021-04-15/looming-catastrophe-myanmar.
[11] Brian McCartan, “Why Myanmar’s civil war won’t be like Syria’s”, Asia Times, 23 May 2021, https://asiatimes.com/2021/05/why-myanmars-civil-war-wont-be-like-syrias/.
[12] Channel News Asia, “Southeast Asian states want to drop proposed UN call for Myanmar arms embargo”, 29 May 2021, https://www.channelnewsasia.com/news/asia/asean-myanmar-coup-arms-embargo-un-draft-resolution-14909110
[13] Myanmar Now, “KIA has seized 10 Myanmar military bases since coup, locals estimate”, 23 Apr 2021, https://www.myanmar-now.org/en/news/kia-has-seized-10-myanmar-military-bases-since-coup-locals-estimate; VOA News, “Myanmar Ethnic Rebel Group Says It Downed Helicopter”, 03 May 2021, https://www.voanews.com/east-asia-pacific/myanmar-ethnic-rebel-group-says-it-downed-helicopter.
[14] Mathieson, “The rebels who will and won’t fight Myanmar’s coup.
[15] Irrawaddy, “TNLA, MNDAA Claim to Have Killed Dozens of Myanmar Junta Troops in Shan State”, 6 May 2021, https://www.irrawaddy.com/news/burma/tnla-mndaa-claim-killed-dozens-myanmar-junta-troops-shan-state.html.
[16] Sebastian Strangio, “Will Supplementary Elections be Held in Myanmar’s Rakhine State?” Diplomat, 11 Jan 2021, https://thediplomat.com/2021/01/will-supplementary-elections-be-held-in-myanmars-rakhine-state/
[17] Irrawaddy, “Ethnic Army and Civilian Forces Battle Myanmar Regime in Kayah State”, 21 May 2021, https://www.irrawaddy.com/news/burma/ethnic-army-and-civilian-forces-battle-myanmar-regime-in-kayah-state.html; and “Around 40 Myanmar Junta Troops Killed in Kayah State”, 23 May 2021,https://www.irrawaddy.com/news/burma/around-40-myanmar-junta-troops-killed-in-kayah-state.html.
[18] Myanmar Now, “Military ‘uses rocket launchers’ in attack on resistance fighters in Chin State”, 27 Apr 2021, https://www.myanmar-now.org/en/news/military-uses-rocket-launchers-in-attack-on-resistance-fighters-in-chin-state.
[19] Frontier Myanmar, “With conflict escalating, Karen BGF gets back to business”, 13 May 2021, https://www.frontiermyanmar.net/en/with-conflict-escalating-karen-bgf-gets-back-to-business/.
[20] Myanmar Now, “Ten ethnic armed groups end talks with the military, declare support for Civil Disobedience Movement”, 20 Feb 2021, https://www.myanmar-now.org/en/news/ten-ethnic-armed-groups-end-talks-with-the-military-declare-support-for-civil-disobedience.
[21] Reuters, “Youths in black: Myanmar protesters train to fight junta”, 27 April 2021, https://www.reuters.com/world/asia-pacific/youths-black-myanmar-protesters-train-fight-junta-2021-04-27/.
[22] Bertil Lintner, “A wider war spreads fast and far in Myanmar”, Asia Times, 19 May 2021, https://asiatimes.com/2021/05/a-wider-war-spreads-fast-and-far-in-myanmar/.
[23] Irrawaddy, “Myanmar Protesters Say an Attack on China’s Pipelines Would Be ‘Internal Affair’”, 8 Mar 2021, https://www.irrawaddy.com/news/burma/myanmar-protesters-say-attack-chinas-pipelines-internal-affair.html.
[24] Emily Fishbein and Kyaw Hsan Hlaing, “Protests Unite Myanmar’s Ethnic Groups Against Common Foe”, Foreign Policy, 29 Mar 2021, https://foreignpolicy.com/2021/03/29/myanmar-protests-coup-ethnic-groups-military-federal-democracy/.
[25] CNN, “Myanmar’s military is waging war on its citizens. Some say it’s time to fight back”, 6 Apr 2021,https://edition.cnn.com/2021/04/06/asia/myanmar-civil-war-ethnic-rebels-intl-hnk/index.html.
[26] David Scott Mathieson, “Selling dog meat while showing a goat head in Myanmar”, 27 Aug 2020, Asia Times, https://asiatimes.com/2020/08/selling-dog-meat-while-showing-a-goat-head-in-myanmar/.
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“From Pakatan Harapan to Perikatan Nasional: A Missed Opportunity for Reforms for East Malaysia?” by Anantha Raman Govindasamy
2021/78 “Commanding Right and Forbidding Wrong: The Rising Influence of Muslim Mainstream Groups” by Syafiq Hasyim
The Jokowi government has been accommodating of pushback and pressure from Muslim mainstream groups over various policy decisions such as vaccines and the regulation of investments in alcoholic businesses. In this picture, Indonesian President Joko Widodo (L) and Vice President Ma’ruf Amin introduce members of their new cabinet on the steps of the Merdeka Palace in Jakarta on October 23, 2019. Photo: Adek Berry, AFP.
EXECUTIVE SUMMARY
- The banning of FPI (Front Pembela Islam) in December 2020 may have reduced the incidence of vigilante actions taken to enforce Islamic laws and norms in Indonesia. But this belies the fact that mainstream Muslim organisations such as Nahdlatul Ulama (NU) and Muhammadiyah, as well as the Indonesian Ulama Council (MUI), have increasingly stepped in to uphold more conservative Islamic strictures, albeit through less confrontational ways.
- NU and Muhammadiyah appear to be motivated by their desire to address perceptions that they have become too elitist and out of touch with the Muslim grassroots. Their efforts to challenge the government and advocate more conservative enforcement of Islamic laws and norms are attempts to recapture popularity with the ground.
- The Jokowi government has been accommodating of pushback and pressure from NU, Muhammadiyah and MUI over various policy decisions such as on vaccines and the regulation of investments in alcoholic businesses. This reflects their growing clout and effectiveness in navigating institutional processes to influence government policy. MUI, in particular, has become more influential ever since Ma’ruf Amin, former MUI chairman and an NU ulama, became Indonesia’s Vice-President.
* Syafiq Hasyim is Visiting Fellow at the Indonesia Studies Programme, ISEAS – Yusof Ishak Institute. He is also Lecturer and Director of Library and Culture at the Indonesian International Islamic University (UIII), a newly established international graduate university, and Adjunct Lecturer at the Faculty of Social and Political Sciences, UIN Syarif Hidayatullah Jakarta.
INTRODUCTION
Prior to its official banning on 30 December 2020, Front Pembela Islam (FPI or Islamic Defender’s Front), the vigilante group led by radical cleric Habib Rieziq Shihab, had played a major role in moral policing and enforcing Islamic strictures in Indonesia. It had been at the forefront of efforts to enforce the Islamic practice of amar ma’ruf nahi munkar (commanding right and forbidding wrong) by conducting raids on nightspots and cracking down on deviant Islamic sects. Over the years, the group had also been increasingly politically active – supporting the Prabowo Subianto-Hatta Rajasa pairing in the 2014 presidential election and taking the lead in agitating against former Jakarta governor Basuki Tjahaja Purnama (aka Ahok) over alleged blasphemy charges. President Jokowi eventually moved to ban the group when it became increasingly clear that FPI was also taking a lead role in mobilising Islamic opposition to Jokowi’s position as President.
Following the Jokowi administration’s banning of FPI, there was some hope that the more conservative and puritanical actors shaping Indonesian Islam would be neutralised. This Perspective argues that, in fact, the enforcement of conservative Islamic laws and norms has continued, championed by the mainstream Muslim organisations – NU, Muhammadiyah, and the MUI.
RECONNECTING WITH THE MUSLIM GRASSROOTS
Compared to the FPI, the mainstream Muslim organisations NU and Muhammadiyah had seemed relatively out of touch with the Islamic political agenda of the Muslim grassroots (umma). The FPI was popular at the grassroots level primarily because it had championed Islamist populist issues and was seen as defending the interests of marginalised Muslims. It was also able to connect with the grassroots at an emotional level as it had demonstrated its willingness to boldly confront the Jokowi government for alleged unjust acts committed against the Muslim community. For example, FPI had cast the arrest of Rizieq Shihab and other Muslim figures as examples of the Jokowi government’s criminalisation of and legal discrimination against ulama who expressed dissenting views about the government.[1] The FPI also tapped into longstanding Muslim grassroots unhappiness over the perceived injustices of Jokowi’s government in managing the economy. As Din Syamsuddin (former General Chairman of Muhammadiyah) had previously highlighted, many Muslims had felt unfairly treated and perceived the Jokowi government to be supporting the economic marginalisation of Muslims.[2] In this context, Thamrin Amal Tamagola, a sociologist from the University of Indonesia, observed that the FPI had been much more responsive in addressing the needs of poor urban communities, especially in Jakarta, compared to NU and Muhammadiyah which were perceived as elitist. The lack of grassroots presence by NU and Muhammadiyah amongst the urban poor had allowed FPI space to build up its following.[3] NU and Muhammadiyah are generally seen as championing their narrow causes. NU has prioritised issues such as education in pesantren, social welfare and upholding moderate Islam, while Muhammadiyah has appeared to be more focused on the economy, education and health issues of umma.
However, the banning of FPI in end December 2020 provided NU and Muhammadiyah with opportunities to reclaim their credibility and influence with the Muslim grassroots. Even prior to the banning of FPI, NU and Muhammadiyah were already aware of their weaknesses on this front and had begun making some changes to their dakwah in order to draw closer to the Muslim grassroots. Both NU and Muhammadiyah have given more attention to the phenomenon of the hijrah community among millennial groups through the use of social media platforms such as YouTube. Marsudi Syuhud of Nahdlatul Ulama has acknowledged that the conventional strategies of conducting face-to-face dakwah is no longer enough and stated that Nahdlatul Ulama’s preachers have started to use YouTube as the medium of their dakwah.[4] Some figures in Muhammadiyah have begun to make more appearances in social media.[5]
JOKOWI’S ACCOMMODATION OF THE MUSLIM ORGANISATIONS IN UPHOLDING CONSERVATIVE NORMS
Since the banning of FPI, NU and Muhammadiyah, together with MUI, have also taken positions that are very critical of some policies of the ruling regime. But unlike FPI which employed mass mobilisation to make their views heard, the mainstream Muslim organisations have instead opted to exercise pressure through less confrontational ways, often via the media and through institutional processes. And as the Jokowi government’s decisions on recent issues have shown, these mainstream Muslim organisations have been able to impose some conservative Islamic “supervision” over government policy. The following examples show that the Jokowi government’s accommodation of such pressure from MUI, Nahdlatul Ulama and Muhammadiyah has sometimes come at the expense of pluralism and minority interests.
The first case concerns Indonesia’s Covid-19 vaccine rollout. Notwithstanding the fact that the government had made very early efforts to order China’s Sinovac and Sinopharm vaccines, and the UK’s AstraZeneca, the vaccines could not be released for public use without a fatwa from MUI being obtained first. Vice-President Ma’ruf Amin (who was General Chairman of MUI from 2015 to 2020) had said that the MUI could authorise the use of vaccines either by ruling that a vaccine was halal, or ruling that a non-halal vaccine could be used on the basis of darura, which allows for exceptions under emergency situations.[6] This appears to be an example of the MUI asserting sole authority of Indonesian Islam. The MUI eventually ruled that the Sinovac vaccine was halal. In contrast, the MUI ruled that the AstraZeneca vaccine was haram (due to its use of trypsin, a non-halal ingredient) but could nonetheless be used under emergency situations by invoking the principle of darura. This haram ruling on AstraZeneca’s vaccine status appears to have impacted its roll-out to some extent, with the Ministry of Health deciding not to use it in Jakarta. Interestingly, the AstraZeneca vaccine was approved for use in East Java where the provincial branch of Nahdlatul Ulama had declared AstraZeneca’s vaccine halal.[7] (East Java NU did so in opposition to MUI’s haram ruling and had justified it by using references to the Hanafi school of Islamic law, instead of the Shafii school of law which MUI and most other Muslim leaders in Southeast Asia subscribe to.) The fact that the AstraZeneca vaccine could be used in East Java indicates the importance of support from local religious leaders in implementing government policy. At the national level, it is also significant that President Jokowi had to respect the influence of MUI when he assured the Indonesian Muslim public that Sinovac would not be used without the issuance of halal fatwa from MUI. The visual image of Jokowi receiving his Sinovac shot under a huge banner with the tagline “Vaksin Halal dan Aman” (Vaccine: Halal and Safe) reflects how religion is prioritised in government policy.
The second case concerns Jokowi’s decision to cancel his Presidential Regulation No. 10/2021 on Investment which allowed for investment in the business of alcoholic drinks in four provinces—Bali, Nusa Tenggara Timur (NTT), Sulawesi Utara, and Papua.[8] Despite this policy being intended to apply only to the four non-Muslim majority provinces, the mainstream Muslim organisations stepped in to pressure the Jokowi government to cancel this regulation. MUI was at the forefront in rejecting this regulation on the basis that the consumption of alcohol is banned by Islam. As a consequence, investing alcoholic businesses should also be prohibited. Nahdlatul Ulama, which usually adopts moderate positions, was also irritated with this Presidential Regulation. Said Aqiel Siradj (General Chairman of Nahdlatul Ulama) proposed that the regulation be delayed because it was against the spirit of Islam. Muhammadiyah also shared the same opinion with MUI and Nahdlatul Ulama. After sustained pressure from these Muslim groups and Vice-President Ma’ruf Amin, Jokowi cancelled this regulation. Jokowi explained that the cancellation was based on his acceptance of the advice from ulama.[9] This reversal of policy by Jokowi disappointed many who saw it as an example of the government’s submission to religious authority, at the expense of pluralism. It also suggested that Jokowi, despite his efforts to crack down on hardliners like the FPI, has chosen to draw more closely to conservative ulama than before.
The Jokowi government also had to give in to pressure from mainstream Muslim organisations on at least two other policies. The first was over the exclusion of the word “religion” in the vision statement of the Ministry of Education and Culture’s Roadmap of Indonesia’s Education 2020-2035). Various key leaders from NU and Muhammadiyah had protested over its omission in the original draft. The crux of their unhappiness centred around concerns that the exclusion of the word “religion” could undermine the centrality of religion in education and daily life. Vice-President Ma’ruf Amin[10] also intervened to ask the Minister of Education and Culture to include the word “religion” in the draft vision statement to address criticism that the Indonesian education system could be perceived as a secular system.[11] Eventually, the Education Minister Nadiem Makarim acceded and included the word in the vision statement.[12]
The other policy which saw the Jokowi government reverse its position was over the proposal by the Ministry of Religious Affairs (under its former minister Fachrul Razi) to implement Islamic preacher certification to strengthen the moderation of Islam. This was an effort to deal with the rise of Islamic conservatism and radicalism in Islamic dakwah in Indonesia.[13] The Ministry of Religious Affairs had targeted the certification programme to involve around 8,200 Muslim preachers. But this programme was criticised by Muhammadiyah which questioned the need for it. Muhammadiyah stated that dakwah was a religious calling, and therefore the certification of this activity had no relevance.[14] MUI also opposed the move. Anwar Abbas from MUI stated that the dakwah certification programme would be used by the government of Indonesia as a political tool to control religious life in Indonesia. The MUI published a Maklumat (Announcement) stating that MUI as an ulama organisation rejected the initiative by the Ministry of Religious Affairs to implement the programme.[15] Due to the strong opposition from these organisations, the Ministry discontinued the programme.
EROSION OF MINORITY RIGHTS UNDER JOKOWI
Taken together, the cases cited above show that the mainstream Muslim organisations have been increasingly active and assertive in pressuring the government to uphold conservative Islamic laws and norms. The response of the Jokowi government shows an increasing tendency to accede to such pressure, a trend that has also extended to the continued marginalisation of minority groups. Ahmadiyyah followers have long hoped that Jokowi would prove to be a pluralist national leader that could protect their religious freedom.[16] Such expectations were strengthened when the Jokowi government weakened the role of radical and hardline Muslim groups such as FPI and other Islamist organisations. However, the marginalisation of groups like Ahmadiyyah has continued. For instance, attempts by the Ahmadiyyah community in Garut, West Java, to rebuild their mosque were blocked by the local government of Garut because it was considered to be against Joint Decree of Three Ministers No. 3/2008 on the restriction of Ahmadiyyah.[17] The Ahmadiyyah have also faced similar obstacles in other regions like in Kuningan, West Java. Apart from Ahmadiyyah, other local indigenous groups have also faced continued curbs on their religious freedom from the mainstream Muslim organisations. For instance, the followers of Sunda Wiwitan (an indigenous religion in Kuningan, West Java) that has long struggled for their religious rights such as building their place of worship, are still facing discrimination. They also face difficulty accessing basic civil rights such as getting their identity card (KTP) to include mention of their belief or religion. The absence of mainstream Muslim organisations’ response to all these cases reflects their regressive position and their lack of willingness to empower the marginalised minority groups.
CONCLUDING REMARKS
The banning of radical groups such as FPI has not resulted in a reduction of conservative enforcement of Islamic laws and norms regulating Muslim life in Indonesia. The established mainstream organisations like NU, Muhammadiyah and MUI have stepped in to fill the void. What makes them different from FPI is their approach in enforcing the supervision of Islam in daily life. FPI had used a hard and confrontational approach, while the mainstream Muslim organisations have preferred using softer tactics. Based on the various cases discussed, it would seem that these organisations have been more effective in exerting their influence and advancing their agenda. This is probably because they have people in key positions in the Jokowi government and also a strong network among policy makers and state administrators. They have also been greatly helped by having Ma’ruf Amin as Vice-President. The response of the Jokowi government to pressure from them has been accommodative, indicating Jokowi’s political pragmatism in dealing with issues of Islam.
ISEAS Perspective 2021/78, 10 June 2021
ENDNOTES
[1] https://kumparan.com/kumparannews/fpi-soal-praperadilan-habib-rizieq-berantas-kriminalisasi-ulama-1umj5ispaVW, viewed on 24 May 2021.
[2] https://kbr.id/nasional/01-2017/sebut_umat_islam_dipojokkan__din_syamsuddin_kritik_negara__ahok_dan_pers/88226.html, viewed on 24 May 2021.
[3] Thamrin Amal Tamagola is a sociologist of University of Indonesia. He has highlighted the lack of attention from Muhammadiyah and Nahdlatul Ulama towards poor urban communities, see https://www.cnnindonesia.com/nasional/20210122190358-20-597363/tamrin-jelaskan-klaim-pandji-soal-nu-muhammadiyah-elitis, viewed on 24 May 2021.
[4] https://www.cnnindonesia.com/nasional/20190516190532-20-395594/anak-muda-hijrah-di-mata-nu-dan-muhammadiyah, viewed on 24 May 2021.
[5] https://www.wartaekonomi.co.id/read182663/jokowi-sebut-muhammadiyah-sukses-berdakwah-lewat-media-sosial.html, 24 May 2021.
[6] https://www.merdeka.com/peristiwa/wapres-maruf-amin-sebut-izin-bpom-dan-fatwa-mui-harus-ada-sebelum-vaksinasi-covid-19.html, viewed on 24 May 2021.
[7] https://www.thejakartapost.com/news/2021/03/25/after-mui-fatwa-astrazeneca-vaccine-sent-to-east-java.html, viewed on 8 June 2021
[8] https://www.cnbcindonesia.com/news/20210302182124-4-227338/siapa-yang-awalnya-desak-jokowi-restui-investasi-miras, viewed on 27 April 2021.
[9] https://nasional.kompas.com/read/2021/03/02/13105141/jokowi-putuskan-cabut-aturan-soal-investasi-miras-dalam-perpres-10-2021 , viewed on 30 April 2021.
[11] https://www.republika.id/posts/14856/wapres-minta-ada-agama-di-peta-jalan-pendidikan
[12] https://fulcrum.sg/pancasila-and-the-missing-word, viewed on 25 May 2021.
[13] https://www.liputan6.com/news/read/4351073/program-penceramah-bersertifikat-kementerian-agama-sasar-8200-dai, viewed on 24 May 2021.
[14] https://www.cnnindonesia.com/nasional/20200908074734-20-543830/pp-muhammadiyah-penceramah-dari-ormas-tak-usah-sertifikasi, viewed on 24 May 2021.
[15] https://news.detik.com/berita/d-5164473/mui-tolak-sertifikasi-dai-berpotensi-jadi-alat-kontrol-kehidupan-keagamaan, viewed on 24 2021.
[16] https://tirto.id/saat-pemerintahan-jokowi-membiarkan-pemberangusan-ahmadiyah-cq7p, viewed on 25 May 2021.
[17] https://www.cnnindonesia.com/nasional/20210506195757-20-639703/bupati-setop-pembangunan-masjid-ahmadiyah-di-garut, viewed on 25 May 2021.
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2021/77 “ASEAN’s Climate Cooperation with China and the US: Challenges and Prospects” by Sharon Seah
EXECUTIVE SUMMARY
- The US is back in the international climate cooperation game, but it has a lot to catch up on to make up for the last four years when it chose not to play.
- The biggest climate cooperation problem facing the Biden administration is the partisan divide in the US House of Representatives and Senate. The passing in December 2020 of the new omnibus package which includes major energy provisions to address climate change provides hope that this problem is not insurmountable.
- China’s current 14th Five-Year Plan demonstrates a level of intent not seen before where climate change issues are concerned. However, China’s rapid economic recovery post-pandemic may derail its net-zero carbon emissions plans.
- The 2003 Joint Declaration on ASEAN-China Strategic partnership framed by the ASEAN-China Strategy on Environmental Cooperation papers has enabled cooperation with China to progress well. Cooperation with the US can be more substantive if there is an institutional framework to bring climate cooperation to a higher level and protect it from domestic partisan politics.
* Sharon Seah is Senior Fellow and Coordinator of the Climate Change in Southeast Asia Programme and ASEAN Studies Centre at ISEAS – Yusof Ishak Institute.
INTRODUCTION
Tensions between the US and China which started with a trade war, complicated by a global pandemic, and compounded by a global economic recession, are revealing ever sharper and deeper rivalries. The tit-for-tat actions that the US and China have engaged in over the South China Sea, closure of consulates, banning of WeChat, and the order to sell TikTok have fuelled speculations of this being a “new Cold War”[1]. The Biden Administration has not minced its words when it comes to competition and cooperation with China. While President Joe Biden has said that working together with other nations to meet new global challenges is needed, he also said that the US is in competition with China to “win the 21st century”.[2] Southeast Asia, the theatre of great power rivalries, depends on a smooth functioning of this relationship for regional stability.
China’s announcement of a 2060 carbon neutrality target in September 2020 and the US re-joining the Paris Agreement in January 2021 have kindled hopes of cooperation between the two powers. While climate change has been identified as one key area of cooperation between the US and China, the US is seeking “standalone” cooperation on climate change issues[3], whereas China has made clear that it objects to “selective multilateralism”[4]. But the appointment of Xie Zhenhua, China’s former chief climate negotiator in 2015 and John Kerry, the US’ former Secretary of State, as special climate envoy by the respective governments is a positive sign that despite the rhetoric, cooperation will advance.[5] The two diplomats enjoy good rapport and are seen as capable of competing but also cooperating with each other. So far, the two countries have committed to co-chairing a G20 study group on climate-related financial risks.[6] It remains to be seen if more cooperation will be announced in the lead-up to COP26 in Glasgow.
The US accounts for 14.5% of the world’s total greenhouse gas (GHG) emissions while China accounts for 27.92%. Together, the world’s two largest economies account for over 40% of global GHG emissions (IEA, 2019). If the two powers are successful in implementing their national mitigation targets by mid-century and manage to cooperate in the development and deployment of advanced technologies, the world’s chances of slowing down global warming will improve drastically. Should the US embark and remain on a carbon neutral pathway and with cooperation chiefly from China and other developed countries, analysts expect that the target of holding temperature increases to well below 2 degrees Celsius, the stated goal of the Paris Agreement, would be achievable.[7]
This Perspective examines the likelihood of both major powers achieving their targets, and ASEAN’s climate change cooperation with China and the US.
CAN THE US AND CHINA MEET THEIR TARGETS?
President Joe Biden signed executive orders for sweeping climate action in January 2021.[8] He made climate policy central to national security decisions, putting in place plans for nationwide electric vehicle (EV) charging stations, and revitalising employment through wind, solar and energy infrastructure growth, among other matters. This was in contrast to the Trump Administration that rescinded some 100 environmental regulations.[9] If left untouched, these deregulatory actions are estimated to significantly increase GHG emissions over the next decade.[10] The Biden Administration has promised to reinstate more than 100 of these regulations over the next two to three years.[11] Beyond just reinstating regulations, the US also needs to embark on a deep decarbonization drive to put itself onto a zero-carbon pathway.
The US released its revised Nationally Determined Contribution (NDC) on 22 April 2021, the same day that President Biden hosted a Climate Leaders’ Summit. The US’ NDC commits to a reduction of 50-52% GHG emissions from 2005 levels by 2030, and is meant to propel greater global climate ambitions and actions among other major economies.[12] The new pledge represents a significant and deeper cut from the previous pledge of 26-28% by 2025, and has quickened the pace of reduction by 30%.[13] Biden has also pledged to double US spending towards international climate finance, raising it to $5.7 billion by 2024, pending Congress approval. The preliminary assessment of NDC targets is that they are achievable, provided that the Administration drives a “whole-of-government” approach involving all levels of the federal government, with massive investments in green technology and infrastructure, and building upon existing and new legislation that limit other GHG emissions such as hydrofluorocarbons (HFCs).[14]
However, the history of bipartisan support for climate legislation in the US Congress and Senate has not been easy.[15] It has been extremely difficult particularly in the last four years of the Trump Administration with efforts led by the Democrats blocked at different levels of government. There now appears to be some evidence of the possible bipartisan cooperation to address climate change with the passing of an omnibus package which included significant energy provisions, such as the limits of HFCs in December 2020.[16]
On the other side of the Pacific, President Xi Jinping announced in September 2020 that China will peak its emissions by 2030 and reach carbon neutrality by 2060, ten years later than the Paris Agreement’s stated year. To reach its 2060 target, China has to aggressively scale back on fossil-fuel usage for its electricity demand. According to latest IEA data released in November 2020, China’s energy mix is made up of coal (66%), renewables (26%), nuclear (5%) and gas (3%).[17] China’s energy mix proportions do not change drastically month-on-month. Data shows that China’s CO2 emission are still on a steep upward trajectory[18] with few year-on-year decreases since 1960. Xi promised at the Climate Leaders’ Summit to “strictly limit” increases in China’s coal consumption between 2026 and 2030 and control coal-fired power generation projects.[19] In its 14th Five-Year Plan, one of China’s stated goals is to “promote the proportion of non-fossil energy in total energy consumption to about 20%”.[20]
Is China’s 2060 target achievable? According to new research by Tsinghua University’s Institute of Climate Change and Sustainable Development, there are different possible pathways that China can embark on to reach its 2060 carbon neutrality target.[21] A combination of aggressive growth in renewable energy production, use of carbon offsets, increase in carbon sinks and use of carbon capture, utilisation and sequestration (CCUS) technologies and the application of hydrogen energy in the industrial, transport and power sectors are among the suggestions. China’s electricity production will have to transition to clean energy sources; this will require massive investments in renewable electricity over the next 40 years.[22] To ease reliance on coal, China will have to reach a 16-fold increase in solar, 9-fold increase in wind, 6-fold increase in nuclear and double hydropower electricity.[23] Even with all these combined efforts, fossil fuels would still account for 16% of China’s total energy consumption. Hence, a viable and large-scale deployment of CCUS and direct carbon capture technologies is needed. China has made some progress so far and is piloting the highest number of CCUS projects in the world.[24] However, large-scale deployment has not come about, and is assessed to be possible only with international collaboration.[25]
In March 2021, China released its 14th Five Year Plan (FYP), a national plan that charts its economic development; it confirms the elements of President Xi Jinping’s 2060 carbon neutrality pledge made in September 2020. Briefly, the FYP outlines climate-related targets such as:[26]
- Reduction of carbon emissions intensity by 18% from 2020 levels
- Reduction of energy intensity by 13.5% from 2020 levels
- Increase in clean energy by 20% in national energy mix
- Nuclear generation reaching 70GW by 2025
- Comprehensive energy production capacity reaching more than 4.6 billion TCE
- Increase in forest cover from 23.2% to 24.1%
Unlike the rest of the world’s economies that have faced massive economic contractions due to COVID-19 in 2020, China’s Gross Domestic Product (GDP) grew 2.3% with a year-on-year GDP expansion of 6.5% in the fourth quarter of last year. Economic predictions are that China will see an 8.4% GDP expansion in 2021.[27] This provides some perspective to the rate of China’s economic growth. The current estimates are that China’s annual GDP will hover around 5% per year up to 2026.[28]
Coal usage continues to be a problem for China. China plans to allow for emissions to increase by 1% per year or more if its economy sees an average economic growth of 5.5% annually. Hence, if China continues to rebound strongly in the next few years, the target for an 18% carbon emissions intensity reduction will have to be re-examined. A new analysis shows that China’s emissions reached a new record high of nearly 12 bn tonnes in the year ending March 2021, about 5% above its total emissions for 2019.[29] This strong CO2 surge is due to stimulus-spending related to strong demand for steel production. This acceleration in demand, spending and emissions poses a real challenge to China’s 14th FYP targets.[30]
National economic plans are not meant to be static and can evolve with new data and analysis. Chinese climate and economic policy-makers can still make adjustments to the 14th FYP and craft policies that will meet their stated goals. China is expected to release additional sectoral plans later in 2021 with targets for energy development. China’s revised NDC will also be published ahead of COP26, hopefully with more specifics on how China will meet its 2025 targets.
WHERE DOES ASEAN STAND?
The pace and development of environment and climate cooperation that ASEAN enjoys with the US and China are uneven. Both major powers have different forms of governance, styles of engagement and policy objectives, all of which impact cooperation with other countries, not least in the areas of environment and climate change.
The US, for instance, takes a more rules-based approach whereas China takes a more goals-based approach to environmental governance.[31] Rules-based governance starts with identification of a problem followed by the development of rules (e.g. use of prohibitions or requirements) to deal with the problem indefinitely.[32] Goals-based governance, on the other hand, deals with problems using time limits and short-term campaigns that quickly mobilises resources using top-down orders to deal with the problem.[33] Both approaches are reflective of the two societies’ governance cultures.
ASEAN’s cooperation with China is guided by the 2003 Joint Declaration on ASEAN-China Strategic Partnership for Peace and Prosperity and framed by the ASEAN-China Strategy on Environmental Cooperation papers.[34] The overall objective is to strengthen cooperation in 11 priority areas with a view to achieving environmental sustainability.[35] Cooperation is largely functional and technical, and focused on building capacity. The China-ASEAN Environmental Cooperation Center (CAECC) was established in 2011 to serve as the designated focal point for facilitating policy dialogues and promoting environmental technology, joint policy studies and partnership development.[36] China has bilateral agreements with Myanmar, Vietnam and the Philippines in the area of climate adaption. Additionally, China provides technical assistance to ASEAN officials and professionals through capacity-building workshops on climate-related topics.[37] China and ASEAN recently designated 2021 as the Year of Sustainable Development to mark the 30th anniversary of ASEAN-China Dialogue relations, underscoring collaboration on biodiversity, climate change and protection of marine environments. Here, it is reflective of the goals-based approach where China identifies a gap and proceeds to bridge it.[38]
On the other hand, US-ASEAN cooperation in the area of environment and climate change has not progressed at a pace and level that is needed to bear substantive fruit. In 2014, the US committed to work with ASEAN to address climate change in a joint statement adopted at the Leaders’ level.[39] The statement called upon both sides to tackle the issue under the UNFCCC and Paris Agreement and encouraged mutual actions to reduce emissions and adapt to climate change. However, very little concrete action was undertaken thereafter. The US-ASEAN Smart Cities Partnership is the most prominent cooperation project, and was launched in 2018 at the US-ASEAN Summit — a platform for the US government and US private sector to share best practices on sustainable cities with the ASEAN Smart Cities Network. [40] The US also works through development assistance partners such as USAID which runs the Clean Power Asia Programme, and other bilateral assistance programmes with Indonesia and Vietnam.[41] There is however no overarching ASEAN-US programme that engages the region collectively and holistically on climate change.
There is room for the Biden Administration to work closely and consistently with ASEAN on climate change, starting with some form of institutionalising of the climate relationship. Institutionalisation can provide a framework of governance to protect the relationship from the politics of bipartisanship and changes in administration. US-China competition in climate cooperation may be a good thing for Southeast Asia.
ISEAS Perspective 2021/77, 9 June 2021
ENDNOTES
[1] “The US-China Cold War Has Already Started”, The Diplomat, 8 July 2020. (https://thediplomat.com/2020/07/the-us-china-cold-war-has-already-started)
[2] “Biden: We are in a competition with China to win the 21st century”, Nikkei Asia, 29 April 2021. (https://asia.nikkei.com/Politics/International-relations/Biden-s-Asia-policy/Biden-We-are-in-a-competition-with-China-to-win-the-21st-century)
[3] “John Kerry: US-China climate cooperation is a “critical standalone issue”, Axios, 27 January 2021. (https://www.axios.com/john-kerry-china-climate-9c2f3a13-9c6f-46ef-a63e-26a8962059af.html)
[4] “Doubtful US will embrace real multilateralism”, Global Times, 26 January 2021. (https://www.globaltimes.cn/page/202101/1214045.shtml)
[5] “The Climate Crusaders”, The Wire China, 4 April 2021. (https://www.thewirechina.com/2021/04/04/the-climate-crusaders)
[6] Ibid.
[7] James H Williams, Ryan A. Jones, Ben Haley, Gabe Kwok, Jeremy Hargreaves, Jamil Farbes, Margaret S. Torn, “Carbon-Neutral Pathways for the United States”, AGU Advances, November 2021.
[8] “The Trump Administration Rolled Back More Than 100 Environmental Rules. Here’s the Full List”, New York Times, 20 Janaury 2021. (https://www.nytimes.com/interactive/2020/climate/trump-environment-rollbacks-list.html)
[9] These include the weakening of restrictions on power plans, removal of protection for nature wetlands and licensing for oil and gas projects by the Environmental Protection Agency.
[10] “The Trump Administration Rolled Back more than 100 Environmental Rules. Here’s the Full List”, New York Times, 20 January 2021. (https://www.nytimes.com/interactive/2020/climate/trump-environment-rollbacks-list.html)
[11] “Restoring environmental rules rolled back by Trump could take years”, New York Times, 22 January 2021. (https://www.nytimes.com/2021/01/22/climate/biden-environment.html)
[12] “Biden’s Climate Summit shows how far US leadership has to go”, Bloomberg Green, 23 April 2021. (https://www.bloomberg.com/news/articles/2021-04-22/biden-climate-summit-day-one-u-s-leadership-has-a-ways-to-go)
[13] Greg Carlock and Dan Lashof, “6 Words to describe the US Pledge to Reduce Emissions 50-52% by 2030”, World Resources Institute. https://www.wri.org/insights/6-words-biden-us-target-ghg-emissions-reduction
[14] “The Biden Administration must commit to swiftly cutting climate pollution at least 50% by 2030”, NRDC Issue Brief, March 2021. (https://www.nrdc.org/sites/default/files/2030-biden-climate-pollution-ib.pdf); “Strengthening US Climate Commitment to at least 50% by 2030 is Achievable with Whole-Of-Government Approach”, EDF Report, 3 March 2021. (https://www.edf.org/media/report-strengthening-us-climate-commitment-least-50-2030-achievable-whole-government-approach)
[15] See Congress Climate History, last accessed 30 May 2021 (https://www.c2es.org/content/congress-climate-history)
[16] “Climate action for Christmas? Omnibus bill includes biggest policy shift in years”, NPR, 22 December 2020 (https://www.npr.org/2020/12/22/949213763/climate-action-for-christmas-omnibus-bill-includes-biggest-policy-shift-in-years)
[17] Electricity Mix in China, January – November 2020, IEA, last updated 15 Jan 2021. See (https://www.iea.org/data-and-statistics/charts/electricity-mix-in-china-january-november-2020)
[18] Hannah Ritchie and Max Roser – “CO₂ and Greenhouse Gas Emissions”. 2020. OurWorldInData.org. See (https://ourworldindata.org/co2-and-other-greenhouse-gas-emissions)
“China CO2 Country Profile” https://ourworldindata.org/co2/country/china
[19] Full Text: Remarks by Chinese President Xi Jinping at Leaders Summit on Climate, (http://www.xinhuanet.com/english/2021-04/22/c_139899289.htm)
[20] See page 13, Select translations of the draft China’s 14th Five-Year Plan and the Long-range Objectives through the year 2035” (unofficial source), published in Pekingnology newsletter.
[21] “Tsinghua released research findings on China’s 2050 Strategy for Zero Emissions”, Energy Foundation, 12 October 2020. (https://www.efchina.org/News-en/Program-Updates-en/programupdate-lceg-20201020-en)
[22] Smriti Mallapaty, How China could be carbon neutral by mid-century, Nature, 19 October 2020 (https://www.nature.com/articles/d41586-020-02927-9)
[23] Ibid.
[24] Yu, Zewei, CCUS plays key role in transition to Carbon Neutrality future for China, International CCS Knowledge Centre, 29 October 2020. (https://ccsknowledge.com/news/ccus-plays-key-role-in-transition-to-carbon-neutrality-future-for-china)
[25] Ibid.
[26] Compiled from various media and unofficial translation sources: “Q&A: What does China’s 14th ‘five year plan’ mean for climate change?”, Carbon Brief, 12 March 2021 (https://www.carbonbrief.org/qa-what-does-chinas-14th-five-year-plan-mean-for-climate-change) and see Footnote 9.
[27] Straits Times, China becomes only major economy to avoid COVID-19 recession in 2020, 18 January 2021 (https://www.straitstimes.com/business/economy/china-becomes-only-major-economy-to-avoid-recession-in-2020-growth-accelerates-in)
[28] Statista, Growth rate of real GDP in China from 2010 to 2020 with forecasts until 2026, last accessed 23 April 2021 (https://www.statista.com/statistics/263616/gross-domestic-product-gdp-growth-rate-in-china)
[29] “Analysis: China’s carbon emissions grow at fastest rate for more than a decade”, Carbon Brief, 20 May 2021. (https://www.carbonbrief.org/analysis-chinas-carbon-emissions-grow-at-fastest-rate-for-more-than-a-decade)
[30] Ibid.
[31] Xiaofan Zao et al, “Back to the future: Can Chinese doubling down and American muddling through fulfil 21st century needs for environmental governance?”, Env Pol Gov, 2020.
[32] Ibid, p. 63.
[33] Ibid.
[34] The first ASEAN-China Strategy on Environmental Cooperation paper was adopted in 2009 and subsequently renewed in 2016 (2016-2020 and 2009-2015) and ASEAN-China Environmental Cooperation Action Plans (2011-2013 and 2014-2015). (see https://english.mee.gov.cn/Resources/Plans/Plans/201707/P020170714352675668098.pdf)
[35] Ibid.
[36] Pg. 5, ASEAN-China Strategy on Environmental Cooperation (2016-2020)
[37] “China, ASEAN team up on climate”, China Daily, 30 March 2019. (http://www.chinadaily.com.cn/a/201903/30/WS5c9eb121a3104842260b36a0.html)
[38] See “China, ASEAN reinforce collaboration on climate change, biodiversity”, 28 May 2021.
[39] “ASEAN-US Joint Statement on Climate Change”, 13 November 2014. (https://asean.org/wp-content/uploads/2012/05/25th-ASEAN-US-Joint-Statement-on-Climate-Change.pdf)
[40] Factsheet, “US-ASEAN Smart Cities Partnership (USASCP): Sharing Expertise Between Cities to Benefit the People of ASEAN”, State Department, 12 February 2021. (https://www.state.gov/u-s-asean-smart-cities-partnership-usascp-sharing-expertise-between-cities-to-benefit-the-people-of-asean)
[41] The Clean Power Asia Program is targeted at promoting low-emission power systems and integrating renewable targets into national power development plans, whereas the other bilateral programmes focus on forest management, biodiversity conservation, agricultural productivity and trade.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support | 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 Managing Editor: Ooi Kee Beng Editors: William Choong, Malcolm Cook, Lee Poh Onn, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
“The Growing Salience of Online Vietnamese Nationalism” by Dien Nguyen An Luong
2021/76 “Thailand’s Malfunctioning Political Party Funding System” by Punchada Sirivunnabood
In 1988, Thailand adopted measures to provide state funding for the development of political parties through the Political Party Development Fund. In this picture, candidates and officials from different political parties arrive for registration with the election commission in Bangkok on February 4, 2019. Photo: Romeo GACAD, AFP.
EXECUTIVE SUMMARY
- In 1988, Thailand adopted measures to provide state funding for the development of political parties through the Political Party Development Fund.
- The fund is a double-edged sword. While it provides subsidies for the development of political parties, it also enables small and new parties to maximize their funding by setting up inactive branches and enrolling fake members.
- Lawmakers have tried to curtail these corrupt practices among small and new parties by amending the formula for financial allocations to parties, most recently under the 2017 Constitution.
- Four years after the implementation of the new formula and regulations on state funding for political parties, these practices still persist.
- There are small parties with no parliamentary seats which have received more than a million baht each from the Political Party Development Fund but have not used the money to develop their organizations.
- Instead, they have allegedly used the allocated funds for party leaders’ personal expenses and submitted fraudulent financial reports to the Election Commission of Thailand.
* Punchada Sirivunnabood is Visiting Fellow in the Thailand Studies Programme, ISEAS – Yusof Ishak Institute, and Associate Professor, Faculty of Humanities and Social Sciences, Mahidol University.
INTRODUCTION
After adopting wide-ranging political reforms in 1997, Thailand introduced a Political Party Development Fund (PPDF) in 1998 under the Organic Law on Political Parties. Parties that met requirements specified in this law would receive subsidies from the Election Commission of Thailand (ECT).[1] The Constitutional Drafting Committee that drew up the country’s 1997 charter introduced the PPDF to help parties strengthen their organizations and in the process weaken the role of business interests in them. Stronger organizations, it was thought, would also enable small and new parties to survive successive election cycles.[2] After 20 years, evidence shows that PPDF funds have neither weakened the influence of business interests over parties nor strengthened party organizations. Moreover, official financial support for parties has exacerbated corruption, particularly where small and new parties are concerned. Small parties, particularly those that have never won parliamentary seats, now consider state funding their financial right. Some parties have used this budget for expenditure such as buying a house or a motorcycle and for travel,[3] rather than for party development.[4]
During the period of military rule from 2014 to 2017, political parties and their activities were banned. Parties were required to return unused subsidies to the ECT within 30 days after receiving letters of notification from the ECT. In addition, the military-appointed Constitution Drafting Committee responsible for preparing Thailand’s 2017 charter under the leadership of Meechai Ruchuphan introduced a new Organic Law on Political Parties that same year. That law revised many sections in previous legislation relating to the method for calculating PPDF subsidies and the process of allocating funds to parties. Although many new articles covering the criteria for subsidy allocation and financial reporting were introduced in the hope of enhancing the transparency of PPDF operations, corruption involving small parties has continued. More importantly, the complicated processes for applying for state funding and reporting party expenses outlined in the 2017 party law created challenges for many parties, in particular small and new ones. In some cases, it led to the dissolution of parties.
STATE SUBSIDIES AND THEIR CALCULATION FROM 1998 TO THE PRESENT
State subsidies for political parties were first introduced in the 1997 Constitution, a charter widely characterized as the “people’s constitution”.[5] In accordance with the terms of this charter, a new Political Party Act was adopted in 1998 with an aim to eliminate corruption, vote-buying and money politics, while promoting party institutionalization. Many provisions seeking to reform parties were included in the act, including some which were related to state subsidies to political parties though the PPDF.
During the early period of the PPDF’s operation, lawmakers created a formula for allocating funds to parties. It centred on determining percentages of the maximum budget that the PPDF would provide according to four measures: the number of constituency seats in parliament that a party held, the number of votes that it received for its party-list candidates, the number of local branches that it operated, and the number of party members. In the 1998 Party Act, the PPDF set the maximum budget that the state would provide by assigning a weight of 25 per cent to each of the four measures. The percentage for PPDF distribution and the calculation method were however revised over time; this was in order to limit funds allocated to inactive parties, particularly small and new ones which had no parliamentary representation. Table 1 shows the revisions in the PPDF allocation formula from 1999 to the present day.
Table 1. Revisions in the PPDF allocation formula, 1999- present.
In 2017, the formula for PPDF allocation was most revised to enhance the effectiveness of financial allocations to political parties and to eradicate corruption among small parties. PPDF subsidies are now allocated on the basis of the total number of votes that a party wins in elections, the total membership fees that a party receives each year and the total number of local branches that the party has. Between elections, the ECT will allocate financial support for parties based on the annual donations received instead of the votes that they won. This formula increases the chances for small and new parties with no parliamentarians to receive more state subsidies by setting up local branches and collecting membership fees.
These new criteria resulted in 77 political parties receiving state subsidies totalling 117 million baht in 2020. In 2021, 68 parties shared 32 million baht in subsidies. In the former year, major parties received the following amounts: the Democrat Party, 17 million baht; the Phuea Thai Party, 13 million baht; and the Phalang Pracharat Party, 13 million baht. In the latter year, the numbers were 7 million baht for the Democrats, 4 million for Phuea Thai, and 4 million for Phalang Pracharat.[7]
The drafters of the 2017 Constitution and the ECT expected the new regulations to eliminate corruption among small parties; this hope was based on prior experience and on the belief that providing all parties access to state funding would reduce incentives for corruption. In practice, however, the new regulations have proved unable to solve these problems. More importantly, the complex process created by the new laws has caused confusion for the ECT and for parties. This policy failure has resulted in legal prosecutions and party dissolutions.
CHALLENGES RAISED BY THE 2017 PPDF REGULATIONS
Four years after implementing of the new PPDF regulations, the ECT continues to confront various obstacles. First, small and new parties continue to establish large numbers of local branches for the purpose of securing state subsidies. At the time of party formation, many small and new parties first reported a large number of local branches to the ECT. This number was rapidly reduced in the year following the 2019 general elections because of inactivity. It was failure to meet the ECT’s evaluating criteria which resulted in the dissolution of inactive branches. Table 2 shows the numbers of branches established by some small and new parties in 2019, and their remaining branches in May 2021.
Table 2: Number of Local Branches in 2019 and 2021, Selected Minor Parties
The Thai Rak Tham Party is an interesting case. The party set up more than 100 branches in 2019 and received a total of 11 million baht from the ECT, with 7 million of the allocation based upon its number of party branches. After the 2019 election, the ECT’s provincial officers visited Thai Rak Tham branches in numerous constituencies and found that many of those registered with the ECT did not exist, while some were not formal offices and were instead located in abandoned houses or buildings with no permanent staff. Branch office-holders in some constituencies did not even know that they had been listed as branch executives.[10] Those branches were closed down, and the party was required to return PPDF subsidies to the ECT. Subsequently, the number of registered Thai Rak Tham branches plummeted to 5 in 2021 — down from 108 in 2019. The party is also facing threat of dissolution pending court prosecution over the next 12 months.[11]
Many small parties without parliamentary seats have also been recruiting members since their formation. With the exception of the Thai Rak Tham Party, small parties saw their memberships increase from 2019 to 2021. Table 3 shows the number of party members in select small and new parties.
Table 3: Number of Party Members in 2019 and 2021, Selected Minor Parties
Although the number of members in some small and new parties increased from 2019 to 2021, PPDF subsidies based on their membership fees decreased. Under the 2017 Party Law, the ECT calculates the total financial support that a party receives on the basis of membership fees instead of the number of members per se. It appears that most members of small and new parties had not been paying membership fees; a large number of members does not itself guarantee large PPDF subsidies.[14]
It is also the case that most members of small and new parties are not active, and some of them are claimed as party members without their knowledge. While it is not difficult to determine the level of activity of a party’s local branches by evaluating their quarterly reports or by visiting their offices, it is not easy to check the status of their members. This is due to flaws in the ECT’s data management system and its membership registration process.
Second, the new party law allows parties to receive funding from the ECT without submitting their activity plans. Under the laws from the 1999-2014 period, parties were required to submit their political activity projections together with their estimated expenses to the ECT in order to secure their subsidies. These submissions enabled the ECT to evaluate the parties’ projects and audit their financial reports before and after granting subsidies to them; this process was designed to prevent corruption among politicians and local party leaders.
The 2017 changes, however, allow parties to receive PPDF subsidies without submitting activity plans. Parties can now spend these subsidies without prior ECT approval. Financial reports from them to the ECT are required only on a quarterly basis.[15] This poses new challenges to the ECT’s financial monitoring procedures. For example, some political activities reported to the ECT may not be actually carried out. Parties that submit fraudulent reports to the ECT are required to return the total amount of their state subsidies within 15 days of notification. According to the author’s interview with the director of the PPDF, “the ECT has to request small parties to return subsidies almost every month”.[16]
Third, the quarterly financial reporting requirements under Section 89 of the 2017 Party Law are onerous for parties that received only minimal amounts of PPDF funding. More than 20 small political parties received PPDF funding of less than 100,000 baht (or US$3,200) per year. They are nevertheless required by law to submit financial reports to the ECT every three months, or four times a year, no matter what their situation; they face financial penalties if they fail to submit these reports on time, including both having to return PPDF money and heavy fines. Party leaders can also be prosecuted, which may result in party dissolution.
The ECT also complains that it lacks sufficient staff to check and evaluate the accuracy of the many regular financial reports that it receives. Under 1999-2014 regulations, the ECT conducted annual audits of party finances. But current rules have led to the ECT receiving approximately 70 reports every three months — a significant increase that overwhelms the ECT’s capacity to do its work properly.
Finally, leaders of small parties may use state subsidies for their own benefit rather than for advancing party organization. Many small parties receive more than a million baht each from the PPDF, but do not conduct activities for the development of their organization. They also submit fraudulent reports on their incomes and expenses. Where the ECT discovers misconduct and possibly corrupt practices, they often require the return of the subsidies. In many cases where PPDF funds are missing from the party’s bank accounts, the executive committee members of the party are obligated to repay the sums in question, regardless of whether they became committee members without their knowledge or had any idea about their responsibilities. Many party committee members in small and new parties are poor villagers. “We feel sorry for them about their needing to find money to return to us; but we cannot do anything about it”, says the director of the PPDF.[17]
Although the drafters of the 2017 Constitution attempted to revise the political party law in order to enhance the effectiveness of state subsidies to parties, it seems that the problems of the past persist. Many small and new parties without parliamentary seats have set up local branches and recruited members in order to maximize the state subsidies that they receive. Leaders of some of these small and new parties do not utilize state funding for the institutional development of their parties. Instead, they used this funding for personal expenses. If those small and new parties used state subvention to advance their organization in keeping with the original objectives of the PPDF, they might increase their chances of electoral success and become sufficiently institutionalized to survive in the long term.
CONCLUSION
The reforms of PPDF regulations ideally aim to enhance the transparency of state subsidy allocation and at the same time to eradicate corrupt practices among small and new parties. So far, however, the new regulations introduced under the 2017 Organic Law on Political Parties, have failed. Many small parties that were granted large amounts of state funding have not spent the money on organizational advancement. Rather, their leaders tend to have used the money for their leader’s or members’ own interests.
Consequently, it is difficult for small and new parties to develop their organizations, to become more institutionalized, and to compete more effectively in future. If the point of the PPDF is to advance the development of political parties and the party system, the ECT should in fact revise the regulations on funding allocation by endorsing budgets to parties based upon their projects instead of granting them lump-sum amounts at the beginning of the fiscal year and allowing them to use that funding without any prior financial plans.
The mandate to monitor the parties’ spending every three months without the submission of budget plans limits the ability of the ECT to effectively evaluate parties’ reports. In light of such challenges, the ECT is unable to prevent the abuse of state funds. It may be time to revise the PPDF’s regulations once again before the next fiscal year.
ISEAS Perspective 2021/76, 8 June 2021
ENDNOTES
[1] Napisa Waitoolkiat and Paul Chambers, “Political Party Finance in Thailand Today: Evolution, Reform, and Control”, Political Finance Regimes in Southeast Asia 47, 4 (2015): 611-640.
[2] Punchada Sirivunnabood, “Understanding Political Party Finance in Thailand: New Regulations but Old Practice”, Asia-Pacific Social Science Review 17, 3 (2018): 1-14.
[3] Author’s interview with the Election Commission Officers, 6 May 2021 at the Election Commission of Thailand, Bangkok.
[4] Punchada Sirivunnabood, “How the Thai State Subsidizes Political Parties”, ISEAS Perspective 50/2019, 20 June 2019 (/articles-commentaries/iseas-perspective/201950-how-the-thai-state-subsidizes-political-parties-by-punchada-sirivunnabood, downloaded 5 May 2021).
[5] Erik Martinez Kuhonta, “The Paradox of Thailand’s 1997 ‘People’s Constitution”: Be Careful What You Wish For’, Asian Survey 48, 3 (May/June 2008): 373-392.
[6] During intervals between elections, the Election Commission of Thailand would allocate subsidies to political parties on the basis of the donations that parties receive each year — rather than on the basis of votes gained in the general election — and of numbers of local branches and membership fees paid.
[7] “ข้อมูลการจัดสรรเงินอุดหนุนให้แก่พรรคการเมือง ที่ได้รับจากกองทุนเพื่อการพัฒนาพรรคการเมือง ประจำปี 2562” [Data on Financial Allocations to Political Parties from the Political Parties Development Fund, 2019] and “ข้อมูลการจัดสรรเงินอุดหนุนให้แก่พรรคการเมือง ที่ได้รับจากกองทุนเพื่อการพัฒนาพรรคการเมือง ประจำปี 2564” [Data on Financial Allocations to Political Parties from the Political Parties Development Fund, 2021], Office of the Election Commission of Thailand data.
[8] “ข้อมูลพรรคการเมืองที่ยังดำเนินการอยู่ ณ วันที่ 13 พฤษภาคม 2562” [Data on Political Parties Currently Operating, updated on 13 May 2019], Office of the Election Commission of Thailand (https://www.ect.go.th/ect_th/ewt_dl_link.php?nid=5456, downloaded 7 May 2021) and “ข้อมูลพรรคการเมืองที่ยังดำเนินการอยู่ ณ วันที่ 6 พฤษภาคม 2564” [Data on Political Parties Currently Operating as of 6 May 2021], Office of the Election Commission of Thailand (https://www.ect.go.th/ect_th/ewt_dl_link.php?nid=10858, downloaded 7 May 2021).
[9] “ข้อมูลการจัดสรรเงินอุดหนุนให้แก่พรรคการเมือง ที่ได้รับจากกองทุนเพื่อการพัฒนาพรรคการเมือง ประจำปี 2562” and “ข้อมูลการจัดสรรเงินอุดหนุนให้แก่พรรคการเมือง ที่ได้รับจากกองทุนเพื่อการพัฒนาพรรคการเมือง ประจำปี 2564”.
[10] Author’s interview with the Election Commission Officers, 6 May 2021 at the Election Commission of Thailand, Bangkok.
[11] Ibid.
[12] “ข้อมูลพรรคการเมืองที่ยังดำเนินการอยู่ ณ วันที่ 13 พฤษภาคม 2562” and “ข้อมูลพรรคการเมืองที่ยังดำเนินการอยู่ ณ วันที่ 6 พฤษภาคม 2564”.
[13] “ข้อมูลการจัดสรรเงินอุดหนุนให้แก่พรรคการเมือง ที่ได้รับจากกองทุนเพื่อการพัฒนาพรรคการเมือง ประจำปี 2562” and “ข้อมูลการจัดสรรเงินอุดหนุนให้แก่พรรคการเมือง ที่ได้รับจากกองทุนเพื่อการพัฒนาพรรคการเมือง ประจำปี 2564”.
[14] Punchada Sirivunnabood, “Building Local Party Organizations in Thailand: Strengthening Party Rootedness or Serving Elite Interests?”, pp. 163-185 in Dirk Tomsa and Andreas Ufen, eds., Party Politics in Southeast Asia: Clientelism and Electoral Competition in Indonesia, Thailand and the Philippines (London: Routledge, 2012).
[15] “พระราชบัญญัติประกอบรัฐธรรมนูญว่าด้วยพรรคการเมือง พ.ศ. ๒๕๖๐” [The Organic Act on Political Parties, 2017], Royal Gazette 137(105a), 7 October 2017 (http://web.krisdika.go.th/data/law/law2/%BB34/%BB34-20-2560-a0001.htm, downloaded 7 May 2021).
[16]Author’s interview with the Election Commission Officers, 6 May 2021.
[17] Ibid.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support | 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 Managing Editor: Ooi Kee Beng Editors: William Choong, Malcolm Cook, Lee Poh Onn, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
“Digital Mediatization and the Sharpening of Malaysian Political Contests” by Pauline Pooi Yin Leong
2021/75 “Vietnam’s Evolving Regulatory Framework for Fintech” by Dang Linh Chi and Pham Mai Nhu Thuy
EXECUTIVE SUMMARY
- The Vietnamese government is encouraging financial technology or fintech to promote a cashless society and extensive financial inclusion in the country.
- The fintech market is subject to multiple regulations issued by the State Bank of Vietnam for finance matters and the Ministry of Public Security (MPS) for data privacy and cybersecurity matters. The Steering Committee on Financial Technology is the centralized State authority for fintech management.
- Existing regulations neither provide a definition of fintech nor a single comprehensive instrument regulating fintech activities. The government is developing projects and drafting rules to regulate this largely unregulated industry.
- Government plans to promote modern technologies such as e-KYC, Open API, big data, artificial intelligence, blockchain and cloud computing, which supports local fintech development.
- To ensure that fintech promotes financial inclusion and a cashless society, the Vietnamese government needs to design a regulatory framework that is well-balanced to support innovation and ensure consumer protection and financial stability.
* Dang Linh Chi is a Special Counsel based in Baker McKenzie’s Hanoi office and Pham Mai Nhu Thuy is a Legal Assistant, also based in Baker McKenzie’s Hanoi office. [1]
INTRODUCTION
Financial technology, or fintech, has transformed financial services and introduced ample opportunities for economic development. Vietnam’s share of regional fintech investment rose from only 0.4% in 2018 to 36% in 2019, placing it second only to Singapore (51%) in the ASEAN region. Despite this achievement, the financial areas transformed by fintech in the country are quite limited, with 98% of the funding being concentrated in the payment sector and 1% in blockchain.[2] Also, Vietnam is still considered as having limited range of fintech activities, with fintech in the payment industry accounting for 31%, P2P lending for 17%, and blockchain/crypto for 13% of the market.[3] One of the main factors hindering fintech growth and development is the under-developed regulatory framework where most regulations revolve around fintech activities in the payment industry.
Generally speaking, the fintech regulatory landscape in Vietnam is still at an early stage of development. Traditionally, the government had been quite conservative in terms of currency control. However, to promote financial inclusion and a cashless society via fintech, the government has been willing to allow more relaxed regulations to create more space for innovation. At the same time, the legal framework has also been designed to ensure consumer data privacy and cybersecurity.
This paper discusses the current fintech regulatory development in the country, from fintech development policy, key fintech regulators, regulations on specific forms of fintech and fintech-enabling technologies. It also discusses personal data protection and data localisation requirement, which are important issues relevant to fintech companies and fintech-enabling technology developers. The key challenge for the local government is to design a regulatory framework that is well-balanced and that allows innovation while ensuring consumer protection as well as financial stability.
FINTECH DEVELOPMENT FOR FINANCIAL INCLUSION
Currently, Vietnam has a large proportion of individuals and small- and medium-sized enterprises which remain unbanked or underbanked. For example, only 30% of adults (15 years and above) have accounts with financial institutions in 2018.[4] Also, the rate of cash transactions is high, i.e., 80 % as at 31 December 2019.[5] Meanwhile, the population’s access to information technology and telecommunications (ITC) services is quite impressive, with mobile phone connection at 150%, internet penetration at 70%, and 3G&4G registration at 45% in 2019.[6]
In that context, to promote greater financial inclusion, the government has set the following targets by 2025:[7]
- non-cash payment transactions will increase at the annual rate of 20-25%,
- at least 80% of adults will have accounts opened at banks or other authorised organisations,
- at least 25-50% of adults will have deposit at credit institutions;
- at least 250,000 small- and medium-sized enterprises will have debt balance at credit institutions;
- at least 70% of adults will have credit history information in the credit information system of the SBV.
Fintech development is considered an important strategy to achieve the above targets. More specifically, fintech is included in the government’s plan for regulatory improvement, expansion of financial supply chain channels, diversification of basic financial services, enhancement of the financial infrastructure, and protection of financial consumers. For example, fintech companies are encouraged to actively participate in the financial service supply chain and partner with credit institutions, especially micro-finance organizations and programs.
That is to say that for fintech investors, Vietnam remains largely an untapped market offering an attractive customer base as well as policy incentives. However, such an untapped market poses great challenges for the government in its ambition to use fintech to achieve financial inclusion goals.
FINTECH REGULATORS
As fintech involves both elements of finance and technology, the industry is subject to multiple regulations issued by a number of key regulators. The country’s central bank, the State Bank of Vietnam (SBV), regulates finance-related matters, while the Ministry of Public Security (MPS) oversees data privacy and cybersecurity-related matters. Both the SBV and the MPS are specialised governmental agencies that can directly issue regulations (i.e., in the form of circulars). They can also propose draft regulations to be approved and issued either as decrees (which are of higher order of application than circulars) by the government or as laws (which are of higher order of application than decrees) by the National Assembly. For example, intermediary payment service (IPS), which is the dominant form of fintech activity in Vietnam, is subject to regulations on the establishment and operation of IPS providers, and regulations on anti-money laundering/KYC (Know-Your-Customer). Both are basically designed by the SBV. At the same time, IPS providers that participate in the collection, exploitation, analysis, and/or processing of personal information are also subject to the regulations on personal data protection and cybersecurity. These are basically designed by the MPS.
Among the regulators, the Steering Committee on Financial Technology, which was established by the SBV in March 2017, is the designated centralised state authority for implementing State management of fintech. The Department of Payment under the SBV is the standing unit responsible for implementing tasks assigned by the Committee.[8] The Committee is positioned to, among other functions, develop and complete the fintech ecosystem (including a regulatory framework), and create opportunities for fintech companies following the policy and strategy of the government. So far, the Committee has set targets to research fintech in five services: e-payment, e-KYC, P2P lending, Open API and blockchain application. Also, it has established direct dialogue channels with fintech firms to facilitate active problem solving.[9]
REGULATION ON CERTAIN FINTECHS
At present, Vietnamese laws provide neither a definition of fintech nor a single comprehensive instrument for regulating fintech activities. Current regulations mostly evolve around fintech in the payment industry. That said, the government has been developing projects and draft regulations to regulate thus far unregulated fintech forms.
Intermediary payment service providers
Fintech in the form of IPS is governed by the Decree 101 on non-cash payment[10] and Circular 39 on IPS.[11] IPS includes financial switching service, electronic clearing service, payment gateway service, support service for money collection and payment, support service for electronic money transfer, and e-wallet service.
IPS providers must be locally established enterprises that have obtained a license to provide IPS (“IPS License”) from the SBV. Basically, in order to obtain an IPS License, the applicant must satisfy conditions such as those on the charter capital (i.e., VND 50 billion, approx. USD 2,145,000), service provision plan (which includes processes such as those on technical processes, payment guarantee mechanism and internal control), personnel (e.g., the qualifications of the legal representative and key managerial positions) and technical infrastructure (e.g., those for security of information technology system). After being issued an IPS License, an IPS provider must provide services in accordance with its IPS License and relevant laws. One key operational requirement is that the IPS service provider must implement anti-money laundering measures (e.g., KYC/e-KYC and transaction reporting) in accordance with the laws on anti-money laundering.
Currently, the government is drafting a decree that will replace the Decree 101 on non-cash payment. This is expected to provide more details on IPS, allow outsourcing of certain functions to agents, and release or remove certain licensing requirements to facilitate market access to fintech investors.
Mobile money service providers
In March 2021, the Prime Minister issued Decision 316 on a pilot programme for mobile money service, allowing the use of telecommunications accounts to make payment for goods and services of small value (i.e., the total transaction value limit of VND 10 million (approx., USD 434) per month per mobile money account).[12] The pilot programme will operate for two years from the time the first enterprise is approved to pilot the mobile money service. The result of the pilot programme will be used by regulators to design specific regulations.
Enterprises eligible to apply for the pilot programme must either be (i) a qualified enterprise that has a license to provide e-wallet IPS and a license to establish a ground public telecommunication network using radio frequency bands, or (ii) a subsidiary that is allowed to use telecommunications infrastructure, network and data by its parent company which has a license to establish a ground public telecommunication network using radio frequency bands.
P2P lending service providers
For the lending industry, the SBV is currently working on a pilot programme for P2P lending as part of the Plan on Promoting Sharing Economy.[13] So far, the SBV has confirmed that P2P lending is currently unregulated by Vietnamese laws. There are some P2P lending platforms operated by companies who have registered for the business lines of financial consultancy and financial brokerage.[14] Also, the policy considers P2P lending as a civil transaction rather than a business activity.[15]
REGULATORY SANDBOX FOR UNREGULATED AND UNDER-REGULATED FINTECH
Apart from specific regulations, the government is making efforts to develop a regulatory sandbox as a catch-all instrument for all forms of fintech. This sandbox is currently included in many master plans such as the Strategy for developing information technologies in the banking sector,[16] the Scheme for promoting a sharing economy[17] and the Strategy for national financial inclusion.[18]
In early June 2020, the government issued a draft decree providing for a fintech regulatory sandbox (the “Draft Sandbox Decree”) in the banking sector. Generally, the Decree provides for the sandbox’s purpose, conditions and application procedures, test run requirements and extension/exit scheme, and the obligations of related parties.
More specifically, under the Draft Sandbox Decree, a fintech regulatory sandbox in the banking sector is defined as a legal mechanism established by the government that allows credit institutions, fintech solutions providers, and other innovative organizations to directly test fintech products and services in a closely-controlled environment supervised by relevant State bodies. Fintech areas that can be test run include payment, credit, P2P lending, KYC supports, Open API, solutions applying innovative technologies (e.g., blockchain), and other services supporting banking activities (e.g., credit scoring, savings, fundraising).
In the Draft Sandbox Decree, fintech organisations are organizations that are (i) not banks, (ii) established in Vietnam in accordance with the Law on Enterprises, and (iii) directly providing some banking-related services based on fintech solutions and/or fintech solutions supporting the activities of credit institutions. Fintech organisations must obtain a certificate of registration to participate in the sandbox by submitting a dossier to the Department of Payment of the SBV, which is the standing unit of the Fintech Steering Committee. The SBV will issue the certificate upon approval by the government.
The Draft Sandbox Decree also assigns the SBV with the responsibility to provide further detailed guidance for the implementation of the draft decree. However, it appears that the government’s current focus is on developing a regulatory sandbox for fintech in the banking sector, which will be managed by the SBV. Seeing that fintech could disrupt financial services other than banking activities (e.g., insurance with insur-tech), it is expected that there will be more regulatory development for Vietnam to welcome fintech investors from more diverse financial subsectors.
REGULATIONS ON AND SUPPORT FOR FINTECH ENABLING TECHNOLOGY
Fintech development is enabled by technologies such as e-KYC (electronic Know-Your-Customer), cloud computing, API, IoT (Internet-of-Things), big data, artificial intelligence, and blockchain. Development of such technologies is central to the SBV’s plan on banking digitalisation. SBV has set the goal of issuing a regulatory framework by 2025 for the application of key 4.0 technologies. These technologies include, among others, e-KYC, Open API, big data, artificial intelligence, blockchain, and cloud computing.[19]
The e-KYC is now further enabled by the National Database of Citizen, which was put into operation in late February 2021. It allows the collection and use of basic information on all Vietnamese citizens, which is standardised, digitalised, stored, and managed by an information technology infrastructure that supports State management and transactions of agencies, organisations and individuals.[20]
For cloud computing, banks are allowed to outsource information technology/cloud computing services to third-party service providers upon satisfaction of certain requirements. These cover obligations of the service user, criteria for selecting the service provider and the compulsory contents of the service contract.[21] The SBV expects the number of local banks using cloud computing to reach 60% by 2025 and 100% by 2030. However, currently, local cloud service providers account for only 20% of the market, and the majority are offshore entities.[22] With possible data localisation requirements being imposed on data-based service providers, partnerships with offshore cloud service providers to facilitate widespread use of cloud computing will be challenging.
Aside from the above regulatory initiatives, the Ministry of Science and Technology is also implementing Plan 844 to promote innovative start-ups that have the ability to grow rapidly via exploitation of intellectual property assets, technology, and new business models. The incentives include, among others, support for expenses regarding infrastructure, capital, training and marketing.[23]
PERSONAL DATA PROTECTION AND DATA LOCALIZATION
Fintech companies and fintech-enabling technology developers involved in data-related activities may be subject to regulations on data privacy, data protection, and data security/cybersecurity.
On the issue of data privacy, Vietnam does not have a single comprehensive law that addresses individual and organisational privacy rights. Instead, relevant provisions are contained in various legal instruments such as the Civil Code, the Law on Information Technology, the Law on Protection of Consumers’ Rights, the Penal Code, and the Law on Cyber Information Security. That said, a recent development is the Draft Decree on Personal Data Protection (the “Draft PDPD”), issued by the government in February 2021. Notable proposals under the Draft PDPD include a broad definition of personal data, restrictions on processing of sensitive personal data and cross-border transfer of personal data (which includes data localisation in certain cases). Under the Draft PDPD, the PDPD will take effect on 1 December 2021 with no grace period available.
Regarding data localisation, under the Law on Cybersecurity,[24] both local and offshore enterprises providing services on the telecom network, the Internet, and value-added services on cyberspace (herein referred to as “Cyberspace Service Providers”) which are involved in the collection, exploitation, analysis, and/or processing of personal information, data about users’ relationship and/or data generated by users in Vietnam, are required to store those data in Vietnam for a period specified by the government. Offshore entities will be required to open a branch or a representative office in Vietnam. That said, the data localisation requirement has not been implemented due to lack of details and guidance. Cyberspace Service Provider is yet to be more specifically defined, and it is uncertain whether data must be stored exclusively in Vietnam (i.e., no cross-border transfer) or whether only a copy of the data must be stored in Vietnam.
The data localisation requirement as proposed in the Law on Cybersecurity [24] and the Draft PDPD has generated heated debates in the private sector. A key concern raised is that the requirement of storing data in Vietnam will increase costs and reduce efficiency for businesses, especially for multinational companies. Another key concern is that companies located in Vietnam may become easy targets of cyberattacks, which may increase exposure to significant data loss, and with the risk of the attackers gaining access to a huge amount of information stored in Vietnam. In addition, the data localisation requirement is regarded by certain market participants to be potentially violating Vietnam’s international commitments under Article 14.11 and Article 14.13 of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (or the CPTPP).[25]
CONCLUSION
Digital payment and e-commerce activities are booming in Vietnam amidst the COVID-19 pandemic. These are driven by an increased demand for low-value transactions at low costs as well as the government’s policy to promote financial inclusion and a cashless society. The fintech industry is expected to grow further in the country. Investors, especially foreign ones, should stay updated with regulatory developments in the industry, especially possible restrictions regarding data privacy and cybersecurity. For fintech to enhance financial inclusion and promote a cashless society, the Vietnamese government will need to design a regulatory framework that is well-balanced and that allows innovation while ensuring consumer protection as well as financial stability.
ISEAS Perspective 2021/75, 7 June 2021
ENDNOTES
[1] Dang Linh Chi is a special counsel based in Baker McKenzie’s Hanoi office. Linh Chi focuses her expertise heavily towards the corporate, and banking and financial services sectors. She has substantial experience in and regularly advises on a broad range of banking and finance regulatory matters, capital market transactions, insurance, securities and funds. With fintech as part of her specialised expertise, Linh Chi frequently advises fintech companies, bank card organisations, and providers of payment services and intermediary payment services on their products and operation in Vietnam. Her capabilities also extend to advising domestic and international banks and financial institutions on their investment products. Over the past years, she has been actively participating as a contributor to legal reform efforts and as legal advisor on banking and financial services issues to business and professional associations. Pham Mai Nhu Thuy is a legal assistant based in Baker McKenzie’s Hanoi office. Thuy primarily focuses on banking and financial services, finance and projects, and corporate sectors. She helps the team in preparing regulatory advice, transactional documents and due diligence works for clients in several industries, including fintech.
[2] UOB, PwC and SFA, FinTech in ASEAN – From Start-up to Scale-up, 2019, p. 7 and 9.
[3] Fintechnews Singapore, Vietnam Fintech Report 2020, 2020, https://fintechnews.sg/wp-content/uploads/2020/11/Vietnam-Fintech-Report-2020.pdf
[4] World Bank (2018). The Little Data Book on Financial Inclusion 2018. Washington DC.
[5] Tapchitaichinh.vn, ““Thanh toán không dùng tiền mặt tại Việt Nam: Thực trạng và giải pháp”“, [Noncash-payment in Vietnam: Current situation and solutions] November 2020, https://tapchitaichinh.vn/ngan-hang/thanh-toan-khong-dung-tien-mat-tai-viet-nam-thuc-trang-va-giai-phap-329639.html#:~:text=Theo%20T%E1%BA%ADp%20%C4%91o%C3%A0n%20D%E1%BB%AF%20li%E1%BB%87u,l%C3%A0%20giao%20d%E1%BB%8Bch%20r%C3%BAt%20ti%E1%BB%81n.
[6] Vnetwork, ““Các số liệu thống kê Internet Việt Nam 2019”“, [Statistics on Internet in Vietnam] November 2019, https://vnetwork.vn/news/cac-so-lieu-thong-ke-internet-viet-nam-2019.
[7] Decision No. 149/QD-TTg dated 22 January 2020 of the Prime Minister on approving the Strategy for a national financial inclusion towards 2025, with a vision towards 2030 (the “Decision 149”).
[8] Decision No. 328/QD-NHNN dated 16 March 2017 of the State Bank of Vietnam on the establishment of Fintech Steering Committee and the supporting units from the Fintech Steering Committee of the State Bank of Vietnam (the “Decision 328”).
[9] The State Bank of Vietnam, “Hợp tác Ngân hàng – Fintech – Góp phần thúc đẩy phổ cập tài chính” [Bank and fintech partnership – contributing to the promotion of financial inclusion] August 2019, https://www.sbv.gov.vn/webcenter/portal/m/links/cm255?dDocName=SBV400234.
[10] Decree No. 101/2012/ND-CP dated 22 November 2012 of the Government on non-cash payment, as amended by Decree No. 80/2016/ND-CP and Decree No. 16/2019/ND-CP (the “Decree 101”).
[11] Circular No. 39/2014/TT-NHNN dated 11 December 2014 of the State Bank of Vietnam on guiding the intermediary payment service, as amended by Circular No. 20/2016/TT-NHNN, Circular No. 30/2016/TT-NHNN, and Circular No. 23/2019/TT-NHNN (the “Circular 39”).
[12] Decision No. 316/QD-TTg dated 9 March 2021 of the Prime Minister on Approving the implementation of piloting the use of telecommunications account for payment of small value goods and services (the “Decision 316”).
[13] Decision No. 999/QD-TTg dated 12 August 2019 of the Prime Minister on approving the Plan on Sharing Economy (the “Decision 999”).
[14] Official Letter No. 5228/NHNN-CSTT dated 8 July 2019 of the State Bank of Vietnam to credit institutions and branches of foreign banks regarding peer to peer lending (the “Official Letter 5228”).
[15] The State Bank of Vietnam, “Ý kiến của NHNN về lĩnh vực cho vay ngang hàng tại thời gian gần đây”, [Opinions of the State Bank of Vietnam on peer-to-peer lending in recent period], December 2018, https://www.sbv.gov.vn/webcenter/portal/vi/menu/trangchu/ttsk/ttsk_chitiet?centerWidth=80%25&dDocName=SBV355385&leftWidth=20%25&rightWidth=0%25&showFooter=false&showHeader=false&_adf.ctrl-state=3u8h33nbo_14&_afrLoop=6460897095115211#%40%3F_afrLoop%3D6460897095115211%26centerWidth%3D80%2525%26dDocName%3DSBV355385%26leftWidth%3D20%2525%26rightWidth%3D0%2525%26showFooter%3Dfalse%26showHeader%3Dfalse%26_adf.ctrl-state%3Da9bxu47t5_4.
[16] Decision No. 2655/QD-NHNN dated 26 December 2019 on approving the Strategy for developing information technologies in the banking sector by 2025, with a vision towards 2030 (the “Decision 2655”).
[17] Decision No. 999/QD-TTg dated 12 August 2019 of the Prime Minister on approving the Scheme for promoting a sharing economy (the “Decision 999”).
[18] Decision No. 149/QD-TTg dated 22 January 2020 of the Prime Minister on approving the Strategy for a national financial inclusion towards 2025, with a vision towards 2030 (the “Decision 149”).
[19] Decision No. 2655/QD-NHNN dated 26 December 2019 on the Strategy for developing information technologies in the banking sector by 2015, with a vision toward 2030 (the “Decision 2655”).
[20] VNExpress, “Khai trương hệ thống cơ sở dữ liệu quốc gia về dân cư” [Commencement of the national database on citizen], 25 February 2021, https://vnexpress.net/khai-truong-he-thong-co-so-du-lieu-quoc-gia-ve-dan-cu-4239980.html
[21] Circular No. 18/2018/TT-NHNN dated 21 August 2018 of the State Bank of Vietnam on the security of the information system in banking activities (the “Circular 18”).
[22] Opengovasia, “Vietnam launches digital transformation campaign”, June 2020, link https://www.opengovasia.com/vietnam-launches-digital-transformation-campaign/.
[23] Decision No. 844/QD-TTg dated 18 May 2016 of the Government on approving the plan of “Supportive policy for national innovative start-up ecosystem to 2025”, as amended by Decision No. 188/QD-TTg (the “Decision 844”).
[24] Law on Cybersecurity No. 24/2018/QH14 adopted on 12 June 2018 by the National Assembly (the “Law on Cybersecurity”).
[25] Under the CPTPP: Article 14.11: “each Party shall allow the cross-border transfer of information by electronic means, including personal information, when this activity is for the conduct of the business of a covered person”; Article 14.13: “no Party shall require a covered person to use or locate computing facilities in that Party’s territory as a condition for conducting business in that territory”.
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2021/74 “A Rising China Affects Ethnic Identities in Southeast Asia” by Leo Suryadinata
EXECUTIVE SUMMARY
- From Zhou Enlai to Deng Xiaoping, Beijing’s policy towards Chinese overseas was luodi shenggen (to take local roots), which encouraged them to take local citizenship and integrate themselves into local society.
- In the 21st century, following the rise of China, this policy changed with a new wave of xinyimin (new migrants). Beijing advocated a policy of luoye guigen (return to original roots), thus blurring the distinction between huaqiao (Chinese nationals overseas) and huaren (foreign nationals of Chinese descent), and urging Chinese overseas regardless of citizenship to be oriented towards China and to serve Beijing’s interest.
- China began calling huaqiao and huaren, especially people in business, to help China support the Beijing Olympics and BRI, and to return and develop closer links with China.
- Responses from ethnic Chinese in Indonesia, Malaysia, the Philippines, Singapore, and Thailand have been muted, as they are localised and are participating in local politics. Beijing’s new policy did not attract the attention of some Southeast Asian governments which were too occupied with domestic issues.
- This new policy can impact on ethnic Chinese identities in Southeast Asia and cause ethnic tensions which would undermine domestic political and economic stability. It can also make it more challenging for new Chinese immigrants to Southeast Asia to integrate locally. In countries such as Singapore, this policy if it continues, will cause ethnic tensions and affect the nation-building process.
* Leo Suryadinata is Visiting Senior Fellow at ISEAS – Yusof Ishak Institute, and Professor (Adj.) at S. Rajaratnam School of International Studies at NTU. He was formerly Director of the Chinese Heritage Centre, NTU.
INTRODUCTION
Since Deng Xiaoping introduced his four modernisation programmes in 1978, China has risen, and its impact on Southeast Asia has also been strongly felt. This paper briefly examines the impact of the programmes on the nation-building process in Southeast Asia. It will begin with a general observation of the ethnic Chinese position in Southeast Asian multi-ethnic nations, followed by a discussion about xinyimin or new Chinese migrants in the region and beyond, and finally an explication of Beijing’s new approach towards Chinese living in five Southeast Asian countries and its impact. These countries were chosen based on the availability of information on xinyimin to the author.
Southeast Asian countries with majority indigenous populations regard their ethnic Chinese as ‘migrants’ or ‘descendants of migrants’. Therefore, they are expected to be integrated, even assimilated, into the indigenous population. However, some are more integrated into their host society than others. In other words, all have adopted different degrees of local elements—which have made them different from mainland Chinese. The factors that have contributed to the intensive localisation of ethnic Chinese in Southeast Asia are complex. Apart from Southeast Asian government policies, Beijing’s initial policy of encouraging localisation was undoubtedly relevant.
SHIFT IN BEIJING’S POLICY ON CHINESE OVERSEAS
The policy of the People’s Republic of China initially followed the Kuomintang (KMT) position, treating all overseas Chinese as Chinese nationals. But at the 1955 Afro-Asian Conference in Bandung (also known as the Bandung Conference), Chinese Premier Zhou Enlai introduced a new policy later known as luodi shenggen (settle down and take local roots) to ease cooperation with the newly independent states in Southeast Asia and beyond. He encouraged overseas Chinese to take up local citizenship and integrate into local society.[1] The majority of these ethnic Chinese have since become localised. In 1980, Deng Xiaoping issued the first nationality law based on single citizenship, which further encouraged Chinese overseas to localise and adopt local citizenship.[2]
The rise of the Chinese following the success of Deng Xiaoping’s reform programme saw a new wave of migrants leaving China. Consequently, Beijing began adjusting its overseas Chinese policy. While the 1980 nationality law remains unchanged, Beijing started to blur the distinction between huaqiao (Chinese citizens overseas) and huaren (foreigners of Chinese descent) in 2000.[3]
Beijing began to advocate the concept of ‘Chinese Nation’ (Zhonghua Minzu), and exhibited this at events such as the World Federation of Huaqiao and Huaren Associations, and the Beijing Olympics. The ‘China Dream’ notion was also promoted to mobilise Chinese overseas regardless of citizenship to serve the interest of China.[4] This policy can be characterised as ‘luoye guigen’ (return to original roots). It appears that the policy aims to halt both the localisation of Chinese new migrants and further localisation of ethnic Chinese as a whole.
NEW CHINESE MIGRANTS IN SOUTHEAST ASIA AND THE WEST
It should be noted that these new migrants differ from the earlier migrants in a number of ways. The new migrants are better educated than the earlier ones; some of these migrants have large amounts of capital and special skills and hence are more mobile.[5] They are often considered as “transnational Chinese” and may not settle in the country.[6] It is particularly the case with those who come to Southeast Asia. Those with capital and the required skills often use it as a stepping stone to go to the more developed countries when opportunities arise.
The Chinese new migrants include businessmen, professionals, students, family reunion members, refugees, workers and illegal migrants.[7] In Southeast Asia, migrant workers, who are often called foreign workers or guest workers, are legally not allowed to settle permanently in the country where they work. They are required to return to their country of origin, in this case China, once the projects are completed.
In reality, some of these workers can become settlers due to weak legal systems and rampant corruption in some Southeast Asian countries.
The number of Chinese migrants leaving China since its rise is estimated to be 5-6 million, with about 80% of these now living in developed countries (especially the West). The rest—about 20%—went to Southeast Asia.[8] The former group has resulted in the emergence of new migrant Chinese societies in the West. In Southeast Asia, the number of new migrants in proportion to local ethnic Chinese is small and has not transformed local Chinese communities. The number of ethnic Chinese in Southeast Asian countries are as follows, based on 2010 estimates.
Table 1: Number of “Chinese overseas” in Southeast Asia (2010) & Xinyimin
| Country | Ethnic Chinese (excluding new migrants) | New Chinese Migrants |
| Thailand | 7,513,000 | 200-300,000 |
| Malaysia | 6,541,000 | 100-150,000 |
| Indonesia | 5,000,000 | 100-120,000 |
| Singapore | 2,808,000 | 500-600,000 |
| Philippines | 1,243,000 | 150-200,000 |
| Myanmar | 1,054,000 | 100,000 |
| Vietnam | 990,000 | 50-100,000 |
| Laos | 176,000 | 10,000 or more |
| Cambodia | 147,000 | 10,000 or more |
| Brunei Darussalam | 50,000 | unknown |
| Total | 25,522,000 | 1,350,000 |
Source: Taiwan Qiaowu weiyuan hui (The Overseas Chinese Affairs Committee of Taiwan) accessed 4 January 2016; excepting the figure for Indonesian Chinese.[9] The new migrant figures are based on Zhuang Guotu (May 2007).
As shown in Table 1, the number of ethnic Chinese in Southeast Asia is huge compared to new migrants. The highest number of new migrants is probably in Singapore (17% when compared to local ethnic Chinese), while the lowest number is found in Indonesia and Malaysia (lower than 2%.) In all these cases, the local Chinese are clearly dominant. This is not the case in countries such as the US, Canada, Australia and New Zealand, where new Chinese migrants outnumber the local Chinese population (as indicated in Table 2).
Table 2: The total number of ethnic Chinese in the West, including new migrants:[10]
| Country | 1970/71 | 2006 |
| Canada | 124,600 | 1,487,585 |
| USA | 435,062 | 2,565,458 |
| New Zealand | 14,860 | 140,570 |
| Australia | 36,638 | 669,890 |
Based on the above information, the problem of Chinese new migrants in Southeast Asia should not be serious as they are only a small fraction within the local ethnic Chinese community, whereas Beijing’s new overseas Chinese policy would have a greater impact on the identities of ethnic Chinese, potentially undermining socio-political stability in Southeast Asia. Nevertheless, due to racial/ethnic prejudices and negative local perception of Beijing, Chinese new migrants have often become a political issue and hence have had a significant impact.
IMPACT OF SOUTHEAST ASIAN CHINESE IN FIVE COUNTRIES
Indonesia
The Chinese in Indonesia are divided into the peranakanChinese (Indonesian-speaking Chinese) and totok Chinese (Chinese-speaking Chinese). The 32 years of Suharto rule, which experienced his assimilation policy and the elimination of the three Chinese cultural pillars[11] have turned the majority of Chinese Indonesians into Peranakan by definition. In other words, most Chinese in Indonesia have lost active command of the Chinese language and often use Indonesian or some local language for communication. About 24% still use Chinese as their home language, but these are mostly of the older generation.[12] Many successful businessmen are still able to speak Chinese.
Chinese Embassy officials are able to maintain close ties with some Chinese-speaking groups,[13] but not Chinese Indonesians in general. When prominent Indonesian Chinese businessmen were invited to China to attend Huaqiao Huaren businessmen gatherings, few participated. Some chose to avoid such gatherings.[14] During the 2008 Beijing Olympics torch relay in Jakarta, very few old Chinese Indonesian businessmen participated. The majority stayed away. It is also worth noting that only a small number of Chinese Indonesians served in the Beijing Olympics as volunteers.[15]
In 2012, the chairman of the Overseas Chinese Affairs Office (OCAO), Li Yinze, visited Jakarta and spoke at the Chinese Chamber of Commerce. He was quoted to have urged young Chinese Indonesians to learn the Han language (Hanyu) so that they could identify themselves with the Chinese nation. He even said that Chinese Indonesians should not be afraid as they had an assertive China as the backer. Some local Chinese criticised his speech, and he was told that as a guest he should know how to behave.[16] In 2015, a Quanzhou local government contacted the most affluent Chinese Indonesian family, the Oey family, congratulating them on the success of their business, and informing them that their ancestral house had been identified. The family was welcomed to Quanzhou to develop it into an ancestral memorial home. In response, however, the Oey family called for a press conference at which they announced that they did not have any ancestral house in Quanzhou.[17]
It is also important to note that the so-called Mandarin fever did not establish full-fledged Chinese-medium schools in Indonesia. Mandarin is only studied in Indonesia as a foreign language, and many non-Chinese have also studied the language.[18] Unlike in the past, anti-Chinese groups in Indonesia focused their recent opposition and attacks on local Chinese tycoons and mainland Chinese workers whom they claim to have stolen Indonesian jobs. [19]
According to the Indonesian Manpower Ministry, in 2020, there were only 35,781 Chinese workers in Indonesia, constituting 36.18% of the total foreign workers.[20] They worked in Mainland Chinese companies that engaged in various projects, from mining to industrial parks. They were supposed to cover gaps in expertise unavailable in Indonesia, but opposition politicians and Indonesian workers federations have insisted that the majority of mainland Chinese workers were ordinary workers whose work could have been undertaken by Indonesians.[21]
There are also hundreds of Mainland Chinese students and teachers in Indonesia as well as many Mainland Chinese businessmen present in various parts of Indonesia. China’s chambers of commerce have also been established in Indonesia. [22] Their presence has been felt by the local population.
Malaysia
Malaysians of Chinese origin tend to possess a much stronger Chinese cultural identity. Most of them, with the exception of the peranakan, are still able to speak Chinese dialects.[23] Where identity is concerned, they tend to be locally oriented, and those who feel an orientation towards China are very few, and of advanced age.
In 2015, Chinese Ambassador Huang Huikang visited Chinatown in Kuala Lumpur and encouraged Chinese Malaysians to stand up against racism; in another speech, he mixed the terms huaqiao and huaren and said China was their “maternal home”.[24] Many intellectuals criticised Huang for being insensitive and Malay youths expressed anger over his statement.
Malaysia has in place a successful retirement and residence scheme for foreigners which attract, among others, Mainland Chinese.[25] It is worth noting that a Mainland China university branch has been established in West Malaysia in 2015. This was arranged when Najib Razak was prime minister. [26] It is interesting to note that the presence of this university and mainland Chinese students in the country were not made into an issue by the UMNO youth and other radicals.
Nevertheless, the BRI projects became a political issue during the 2018 General Election. During the election campaign, for instance, Mahathir criticised the Forest City project which “will leech money and jobs to foreign companies while bringing in hundreds of thousands of immigrants.”[27] After Mahathir re-emerged as the new prime minister, some of the BRI projects were renegotiated.[28] The topic of China and new immigrants can easily be made into an issue in Malaysia.
Singapore
Singapore is unique for being a migrant state, and ethnic Chinese making up the majority. Like the two country examples above, the ethnic Chinese in Singapore are also divided. The peranakan Chinese community is small in number, and the Chinese-speaking group is large. Nevertheless, because of the national education system, the working language in Singapore is English.
Singapore was officially established in 1965, and initially, the concept of the nation was based on the melting pot, but since 1995, Lee Hsien Loong, then deputy prime minister, adopted the “salad bowl” idea and stressed the importance of shared values for Singaporeans.[29]
China’s soft power is thought to be influential in Singapore. However, the Singapore government is eager in promoting its own culture. Even in the promotion of Chinese language and culture, the emphasis has been its local characteristics. The Singapore Chinese Cultural Centre was established to develop a local form of Chinese culture.[30] Singapore’s political identity has also grown strong, and young Singaporeans have a much stronger sense of national identity than their forefathers.
The number of new migrants in Singapore was estimated by Beijing to be between 500,000 and 600,000.[31] Some of them have become Singapore’s permanent residents and new citizens. During the past few General Elections, migration was a hot election issue.[32] This resulted in the government tightening up its migration policy whilst continuing to recognise that new migrants are needed for Singapore’s continuous prosperity and development.
As the relations between xinyimin and Chinese Singaporeans are sometimes less cordial, the government has emphasised multi-cultural education for Singaporeans and created mechanisms to facilitate the integration of new migrants into the main streams of Singapore society.
The Philippines
The Chinese in the Philippines are diverse, with some being well-integrated and even assimilated. This community is known as Chinese mestizos. These are offsprings of a Chinese male and a Filipino female, quite like the peranakan Chinese. But while peranakan Chinese in Malaysia and Indonesia are still considered as a separate group from the indigenous population, Chinese mestizos are regarded as Filipinos.[33] Former President Cory Cojuanco Aquino and the late Manila Archbishop Cardinal Sin Jaime are Chinese mestizos.
Most Philippine Chinese are colloquially referred to as Tsinoy,[34] and many have embraced Catholicism, just like most Filipinos.
In the 21st century, however, the Chinese Embassy established close ties with the Philippine Chinese community, especially those who still speak Chinese.[35] Although rising China attracts those who have business links with China, most Tsinoys still identify with the local population.
The number of new Chinese migrants in the Philippines is estimated at around 250,000 to 300,000. A considerable number of the new Chinese migrants, the xinyimin, are mainly businessmen and workers in certain commercial sectors, especially in the gaming industry.[36] This gaming industry contributed significantly to Philippine economy. Nevertheless, it also gave ample opportunities for crime syndicates to operate. While many xinyimin have high economic status and often display their wealth, there is also an increase of illegal new migrants, their presence often give rise to ethnic tension in society. This tension could be found not only between the xinyimin with indigenous Filipinos, but also between xinyimin and Tsinoys who complained that these Chinese new migrants have spoiled the good relationship between Tsinoys and Filipinos.[37] The xinyimin issue is further complicated with the South China Sea dispute, which often impacted Chinese-Filipino relations.
Thailand
Ethnic Chinese in Thailand are the most assimilated in the region, and it has been argued that Buddhism is a key factor in this process. The number of new Chinese migrants in Thailand are estimated at between 350,000 and 400,000.[38] They live separately, mainly in so-called new Chinatowns. They are better educated than the older Chinese migrants with many holding a university degree. Many others are students as it is generally easier to get into Thai universities than those in China.[39] Overseas Chinese Affairs Office officials have also visited Bangkok to promote overseas Chinese collaboration with China.[40] They encourage Thai Chinese to learn Chinese. In fact, there are numerous Confucius Institutes in Thailand.
But since ethnic assimilation of people of Chinese origin is very high in Thailand, the government is convinced that these Thais would not become China-oriented. The Thai authorities also believe that these new migrants would eventually be assimilated into Thai society.
However, some scholars do not think that it would be the case. One scholar noted that there was no need to assimilate the new Chinese migrants but to make them have a sense of belonging to Thailand.[41] How to make these new migrants have a sense of belonging to their adopted land in a globalising world remains a big challenge.
CONCLUSION
Beijing’s policy towards Chinese living overseas, and ethnic Chinese populations in other countries, has recently changed. After China’s rise, although maintaining a single nationality is still upheld, China is attempting to blur the distinction between huaqiao and huaren, urging Chinese overseas to be oriented towards China, and increasingly disregarding their difficult position in Southeast Asia. Beijing might not be fully aware that Southeast Asian ethno-nationalism remains strong and ethnic Chinese are facing these pressures.
Inter-ethnic tensions in Southeast Asia between ethnic Chinese communities and indigenous majorities are a reality. China’s new policy may inadvertently affect ethnic Chinese identities in the region and create tensions, undermining political and economic stability. Moreover, the presence of xinyimin has also complicated the local socio-political landscape. China’s new policy may slow down the integration of xinyimin into local communities. If this was the intention of the new policy towards the xinyimin, then Beijing may have achieved its objectives.
ISEAS Perspective 2021/74, 3 June 2021
ENDNOTES
[1] Stephen Fitzgerald, China and the Overseas Chinese: A Study of Peking’s Changing Policy 1949-1970 (Cambridge: The Cambridge University Press, 1972) p. 134.
[2] Leo Suryadinata, “China’s Citizenship Law and the Chinese in Southeast Asia”, in M. Barry Hooker, ed. Law and the Chinese in Southeast Asia (Singapore: ISEAS, 2002). pp. 169–202 (particularly p. 182)
[3] Leo Suryadinata, “Blurring the Distinction between Huaqiao and Huaren: China’s Changing Policy towards the Chinese Overseas,” Southeast Asian Affairs 2017, Singapore: ISEAS Publishing, 2017, pp. 101-113.
[4] For a detailed discussion on these points, see Leo Suryadinata, The Rise of China and the Chinese Overseas: A Study of Beijing’s changing Policy in Southeast Asia and Beyond (Singapore: ISEAS, 2017) pp. 3–20, 143–51, 154–79.
[5] For a discussion on these new migrants see Liao Jianyu （廖建裕）, Quanqiuhua Zhong de zhonghua yimin yu huaqiaohuaren yanjiu（全球化中的中华移民与华侨华人研究）, Huaqiao huaren lishi yanjiu 华侨华人历史研究 No.1 (2012), pp. 1-17; Leo Suryadinata, Chinese Migration in Southeast Asia: Past and Present, in CHC Bulletin Issue 9 (May 2007), pp. 1-7.
[6] Liao Jianyu （廖建裕）, Xian dangdai de zhonghua yimin ji qihouyi: guigen, shenggen, shigen yu wugen, （现、当代的中华移民及其后裔：归根、生根、失根与无根）， Asian Culture 亚洲文化, no. 39 (August 2015), pp.45-60.
[7] Liao Jianyu （廖建裕）， Quanqiuhua zhong de zhonghua yimin……p. 15.
[8] Zhuang Guotu, 庄国土， Zhongguo xinyimin yu dongnanya wenhua （中国新移民与东南亚)，CHC Bulletin, Issue no.9 (May 2007), p. 10.
[9] Regarding the number of Chinese in Indonesia, the figure given by Taiwan’s sources was 8,011,000. Zhuang Guotu, writing in the Overseas Chinese Affairs Office (OCAO) publication, gave a higher figure of over 10 million. (Zhuang Guotu 庄国土， Huaqiao huaren fenbu zhuangkuang he fazhan quxiang (华侨华人分布状况和发展趋向)， 《研究与探讨》， 中华侨务第一刊， 2010年No. 4. (Accessed 4 January 2016) In fact, the Indonesian Census of 2010 reported that the Chinese constitute about 1.2% of the population, which puts their total at less than 3 million. My study shows that a more likely figure is around 2% of the population, i.e. just under 5 million. See “How many ethnic Chinese are in Indonesia?”, in Asian Culture (June 2004), pp.63-74.
[10] Based on tables published in Leo Suryadinata, “New Chinese Migrants in Developed ‘Migrant States’: Five Case Studies. CHC Bulletin, Issues 16 & 17 (November 2010 & May 2011), pp.2-5.
[11] This usually refers to Chinese-medium schools, Chinese mass media and Chinese organizations.
[12] Aris Ananta et.al. Demography of Indonesia’s Ethnicity. Singapore: ISEAS Publishing, 2015.
[13] Benny G. Setiono. “Beberapa catatan mengenai perkembangan organisasi-organisasi Tionghoa di Indonesia”, Yinni Jiaodian 印尼焦点 （Indonesia Focus）HKSIS, July 2008, pp.74-77.
[14] For instance, The Djarum Group and the Lippo Group were not present at the World Huaqiao Huaren Entrepreneurs Conference held on 6-7 July 2015 in Beijing.
[15] To my knowledge, from Jakarta only the president of Yinhua Writers Association served as a volunteer.
[16] Beijing shi qiaoban zhuren Li Yinze fang yinni jianghua yinqi qiaojie buman 北京市侨办主任李印泽访印尼讲话引起侨界不满。Guoji Ribao 国际日报，21 April 2012.
[17] Fei Teli (费特利) ，ZhenJi shouxi yunying zhang Huang Zhi Sheng chengqing, Huang Jia Quanzhou wu zuwu 針記首席運營長黃志勝澄清‧黃家泉州無祖屋, Qiandao Ribao 签到日报，9 May 2016.
[18] Aimee Dawis, “Chinese education in Indonesia: Developments in the Post-1998 Era,” in Ethnic Chinese in contemporary Indonesia edited by Leo Suryadinata (Singapore: ISEAS Publishing, 2008) pp.75–96; Personal observation.
[19] Leo Suryadinata, “Anti-Ethnic Chinese Groups in Indonesia Likely to Strike Again”, ISEAS – Yusof Ishak Perspective, Issue no.8 (3 February 2020); Leo Suryadinata, “Tensions in Indonesia over Chinese Foreign Workers during Covid-19 Pandemic”, ISEAS Yusof Ishak Institute Perspective, issue no.73 (6 July 2020).
[20] Jumlah tenaga kerja asing di Indonesia 98.902, TKA China terbesar – Page 2 (kontan.co.id) (13/5/2021)
[21] This may not be true. Nevertheless, until recently, many trade union leaders still hold this view. See https://nasional.kompas.com/read/2021/05/11/12292611/tka-china-masuk-indonesia-saat-pandemi-covid-19-kspi-ironi-pemerintah. (Accessed 20 May 2021)
[22] Leo Suryadinata, New Chinese Migrants in Indonesia: An Emerging Community that Faces New Challenge. ISEAS Yusof Ishak Institute Perspective No. 61 (11 June 2020).
[23] In Malaysia, Chinese-medium schools have never been banned and a large number of Chinese Malaysians still go to these schools, and hence are able to speak and write Chinese.
[24] For a discussion on this event, see Leo Suryadinata, The Rise of China and the Chinese Overseas: A Study of Beijing’s Changing Policy in Southeast Asia and Beyond. (Singapore: ISEAS Publishing, 2017) pp. 111–120.
[25] Danny Wong Tze Ken, “The Xinyimin Presence in Malaysia: A New Transnational Experience”, Webinar in ISEAS – Yusof Ishak Institute, 8 December 2020. Why there was no strong opposition from the Malays is a question that requires further investigation.
[26] Peter T.C. Chang, “China’s Soft Power and the Overseas Chinese, Case Study: Xiamen University in Malaysia”. ISEAS Yusof Ishak Institute webinar, 8 December 2020.
[27] Read more at https://www.todayonline.com/world/asia/look-east-policy-not-about-selling-land-foreigners-dr-mahathir-tells-sultanonly brought the benefit was considered as creating the Chinese enclave.
[28] China, Malaysia restart massive ‘Belt and Road’ project after hiccups | Reuters (Accessed 15 May 2021)
[29] “No Melting Pot, Singapore”, 29 January 1995. Reported by the Associated Press. Both melting pot and salad bowl are metaphors used in the United States. The former refers to “cultural assimilation”, i.e. an American Culture without cultural diversity, while the latter refers to an American culture with cultural diversity, i.e. cultural pluralism. However, Lee Hsien Loong used the term “pluralism” to describe the “new” policy.
[30] Ho Yikai, “China Cultural Centre and Singapore Chinese Cultural Centre: A Comparison”, Webinar at ISEAS – Yusof Ishak Institute, 8 December 2020.
[31] This figure cannot be verified. See Wang Wangbo （王望波）and Zhuang Guotu (庄国土), 2009 nian haiwai huaqiao huaren gaishu （2009年 海外华侨华人概述, Beijing: shijie zhishi chubanshe 世界知识出版社, 2011, p. 23.
[32] In most of the general elections from 2011 to 2020, migration has always been an issue. It should be noted that it was not confined to Chinese new migrants, but as the Chinese were the largest in number, the impact was most significant. In the last general election, the issue still prevailed. See Singapore GE2020: Jobs, immigration, cost of living are key issues in party political broadcast, Politics News & Top Stories – The Straits Times (Accessed 20 May 2021).
[33] Edgar Wickberg, The Chinese in the Philippine History, Asia no.18 (Spring 1970) pp. 1–15.
[34] Teresita Ang See and Carmelea Ang See, “The Rise of China, New Immigrants and Changing Policies on Chinese Overseas: Impact on the Philippines”, in Southeast Asian Affairs 2019, Singapore: ISEAS Publishing, 2019, p. 275-276.
[35] Interview with a Philippine researcher on the ethnic Chinese, Guangzhou, 12 November 2019.
[36] Teresita Ang See, “Xinyimin in the Philippines: Issues and Challenges”, Webinar at ISEAS Yusof Ishak Institute, 7 December 2020.
[37] Teresita Ang See, Webinar at ISEAS Yusof Ishak Institute, 7 December 2020.
[38] “New Wave of Chinese Coming to Live in Thailand”, Bangkok”, New wave of Chinese coming to live in Thailand (bangkokpost.com) (Accessed 20 January 2021).
[39] Ibid.
[40] “Guowuyuan Qiaoban fuzhuren Tan Tianxing zoufang taiguo qiaotuan zuotan tu 国务院侨办副主任谭天星走访泰国侨团座谈。www.gqb.gov.cn/news/2016/1123/41229.shtml (Accessed 20 January 2021).
[41] Yos Santasombat holds this view, see New wave of Chinese coming to live in Thailand (bangkokpost.com) (Accessed 20 January 2021).
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