According to a quick count released by several pollsters, the current Governor Basuki Tjahaja Purnama – popularly known by nickname Ahok – and his running mate Djarot Saiful Hidayat gained only about 43 percent of the votes, while their challengers Anies Baswedan and Sandiaga Uno are likely to win with roughly 57 percent.
Though a final result will only be announced in this month May – the quick count has more or less sealed Ahok chances in continuing to govern Jakarta as its Governor.
Analysts are divided on the cause of his defeat – with Western observers largely zeroing on the rise of Islamist. It is undeniable that, Islamist has been extremely successful in injecting the Islamic element in the whole issue, thus invoking a strong sense of guilt and responsibility for Islamic voters to oust Ahok.
However, realistically speaking – Islamist contributed only a part of the bigger socio-political backlash, which we have witnessed on 19 April 2017. It is worth noting that – in late 2014, Islamist did organised a rally against Ahok. The rally garnered a lukewarm response from Jakarta citizens.
Instead, what we see in the recent Jakarta election is a culmination of various genuine socio-cultural and economic dissatisfaction – which over time has been framed as a socio-religio issue by religious and seculars politicians alike.
To begin with, Ahok’s approach and ethics towards the Governorship post sets him apart. As someone who is willing to get down to the streets and listen to people’s grouses, Ahok approach is relatively personal and non-elitist.
In a book titled ‘A Man Called #Ahok Sepenggal Kisah Perjuangan & Ketulusan‘ by Kurawa, the Jakarta Governor is even described by members of his own constituents (Belitung Island) as a charitable personality who would donate money for building Mosques.
Though, in retrospect to the high-spirited and visionary work ethics, he has a distinct form of leadership. Temperamental, brash, outspoken and decisive – these traits characterises Ahok’s approach towards managing people and Jakarta public projects. For the polite and shy society of Javanese and Betawi, his logic of communication, however, may not be in-line with the generally accepted socio-cultural norms. Some have even suggested that his tough talk and Sumatran style has either captivated or appalled people in equal measure.
Secondly, are his policies. Arguably, the slum clearances at the controversial seafront Luar Batang in 2016 – though were popular with the middle class, did not go down positively with the poorer segment of Jakarta inhabitants. The relocation of Luar Batang dwellers which majority comprises of poor fisherman to new locations far away from the seafront has affected the source of livelihood of this group.
It was at this juncture that Islamist group such as FPI (Islamic Defender Front) begun showing solidarity with Luar Batang residents by making the Luar Batang mosque as the rallying point. In April 2016, it was turned into a humanitarian shelter for residents affected by the relocation exercise. Similarly, a controversial FP leader Habib Rizieq visited and handed out Rp 100 million, (USD 7500.00) or (RM 32,579) to residents affected.
This move has broad consequences.
First and foremost, this solidarity raises the plight of Luar Batang’s residents beyond the affected location. The plight equally resonates with the lower-middle income to poor Muslims segments – which already make the majority citizens in Jakarta. More importantly, it raises Islamist group as a credible movement to be fighting what now seems to be Ahok’s perceived discriminative and oppressive policy against Jakarta poor Muslim neighbourhood.
The big break for the Islamist movement came when Ahok is accused of uttering blasphemous insult against a paragraph in Al- Quran. Despite the recording of the incident itself is questionable, it has been widely circulated on Youtube prompting a broad backlash from Muslim community and religious conservatives.
Compounding all the above issues and framing it as a form of Islamic struggle – Islamist group such as FPI and FUI (Indonesia Ulama Council) in November 2016 organised a public demonstration attended by nearly 50,000–200,000 people demanding for Ahok’s resignation and trial. In December, another rally was held in Central Jakarta, which attended by an estimated 200,000 people.
Demonstrations in late 2016 provided a strong ripple effect towards Jakarta April 2017 Governor’s election.
These culminations of events opened window of opportunity for Muslim moderate politicians, which in this case – Anies Baswedan and Sandiaga Uno to jump into the Islamist bandwagon and packaged their campaign in line with the broader grouses. Clear contrast can be seen in campaigning style. Ahok focused on policy, while Anies and his allies focused on religion. Another Indonesian political heavyweight – Prabowo who himself is a military and nationalist-oriented leader is reported to have sided with the Islamist through endorsing Anies and Sandiaga candidacy.
These strategies paid well when Anies Baswedan and Sandiaga Uno as we know it won the Jakarta Gubernatorial election in April 2017.
In a nutshell, there are two key take away facts worth noting from all these development.
First, notwithstanding how successful the Islamist movement was in framing the anomaly that is Ahok – the major successors that took the Governor’s office – has ironically not been anyone from the Islamist movement. As a matter of fact, it is the two moderate and secular politicians, who happened to be Anies Baswedan and Sandiaga Uno.
This leads us to a second conclusion, that is, the preoccupation with the rise of Islamist Indonesia and the downfall of religious tolerance narrative – has only provided a partial understanding of the political dynamics. I would argue that the recent development has not shown any clear indication that the “rising Islamist element” could compromise Indonesia’s established religious, social and political tolerance, in the long-term.
Instead, the clear fact is – the issue of religion and race can be utilised as a convenient but impactful force to discredit leaders in Indonesia. Moreover, given the success in April 2017, such strategy may be employed again in the future. I suspect Jokowi given his liberal political outlook may face a similar challenge with his 2019 Presidential re-election.
On Ahok’s side – his downfall could possibly be traced to his failure to understand the finer nuances of Indonesia socio-cultural politics. In this context, he should have understood that his actions rightly or wrong have the possibility to be taken out of context, if he in the first place, does not tread his style of communication tactfully.
His future with Indonesian politics will largely depend on how he makes amends with the grass-root segment in Indonesian politics. He still has a sizeable support and sympathisers in both Jakarta and Belitung. Now, all that he needs is to reassure the broader voters that he would not positively approach his public and political work as he did previously.
The above article has appeared earlier in The Malay Mail Online 2 May 2017 with a different title. The content, however, remains the same.
Jakarta’s incumbent Governor Basuki Tjahaja Purnama (Ahok) has conceded defeat in the race to become the city’s new governor. This is after unofficial quick count results showed a former Indonesian education minister, Baswedan taking the polls.
Analysts are divided on the cause of his defeat – with Western observers largely zeroing on the rise of Islamist sentiment in Indonesia. However, the rise of Islamist is part of the broader socio-political issue, which has impacted Ahok’s Governor post.
Despite his popularity with middle-class Jakartans for his efforts to stamp out corruption and make the overflowing polluted city more livable, his upfront manner and evictions of slum communities could have alienated many in the city of 10 million.
The final straw, which may have broken the camel’s back, came when he was perceived to have ridiculed a passage in the Holy Al-Quran. Though the recording itself is questionable, it has been widely circulated on Youtube prompting a broad backlash from Muslim community and religious conservatives.
Baswedan, a highly educated Muslim moderate, is seen to have capitalised on the backlash against Ahok by courting the support of conservative religious leaders and figures on the radical fringe who opposed electing a non-Muslim.
The arms race amongst the South China Sea (SCS) claimants will be seeing an increase. Report by IHS Analytics estimated that SCS coastal nations’ collective defense spending could likely jump between $435 billion in 2015 to around $533 billion by 2020. China’s increased assertiveness in the waters of South China Sea has largely sparked this security dilemma. Other claimants may need to develop the capabilities that will allow them to at least, defend their territorial claims in the region.
The source of arms imports varies. Though the US may be the leading provider in the region, there are other emerging arm suppliers.
Stockholm International Peace Research Institute (SIPRI) report showed that Russia may account for 93 percent of the deliveries to the Southeast Asian nation, which included eight combat aircraft, four fast attack craft and four submarines armed with land-attack missiles.
Interestingly, however, archived web-based reports from 2008 to 2016 suggested – Israel may have already joined the list of arms suppliers to the region. This is worth further deliberation.
In 2014 – Philippines news outlet PhilStar Global reported the agreement by Philippines Government to purchase three ELTA air radar from Israel Aerospace Industries worth PH2.6 billion. The air radar will be utilized to monitor naval activities in the South China Sea waters.The following year in November 2015, Israel Defense, a credible Defense portal reported that – EXTRA (Extended Range Artillery Rocket) missile system has been purchased by the Philippines naval force since early 2015. Manufactured by Israel Military Industries (IMI systems), the rocket is reported to be highly accurate within a 150 km range. The system is placed within the contested waters of South China Sea.
In February 2016, SIPRI reports also showed the purchase of 20 Israel’s EXTRA by Vietnam. The whole system as reported by Reuters in August 2016 has been moved to 5 bases within Vietnam’s Spratley Islands.
Narrowing this into China-Israel defense cooperation – it is worth knowing Israel’s sales to China from the late 80’s up to the early millennium reached close to USD4billion.(atimes.com/atimes/Middle_East/FL21Ak01.html). Israel is China’s second-largest foreign supplier of arms (after Russia). China has purchased a broad array of military equipment and technology, including communications satellites.
One of the prime outcomes from Israel-China defense relations is China’s PLA fighter jet Chengdu J10 (Vigorous Dragon). J-10 is reverse engineered after Lavi jet fighter with the help of Israel’s Aerospace Industries (IAI) engineers. Both fighter jets share many similar avionic elements. With nearly 240 J-10 aircraft in active service, the aircraft has been utilised extensively in the South China Sea.
For the record, Israel’s Aerospace Industries (IAI) is owned by the Israel government through its Ministry of Defense. Shimon Peres, which is the former President of Israel, is the founder of IAI in 1953 (http://www.iai.co.il/).
The same is for Israel Military Industries Systems (IMI systems), which is fully owned by the Israeli Government through its Ministry of Defense. Production of military equipment is channelled largely to Israel Defense Force (www.imi-israel.com).
This proxy involvement of Israel Government in the South China Sea through its military sales raises four areas of concern and perhaps potential discourse in the future.
First and foremost is the provision of weapons by Israel, which has been questioned morally for its military activities. Israel has for decades flout international condemnation and demand to cease its land grabbing policies in Palestine.
Second is – Israel provision of weapons to the biggest recipients in the region, which has the audacity to ignore international norms and escalate the SCS conflict. China, which is the obvious recipient, has benefited much from IAI’s Lavi to J-10 technology transfer efforts and – ever since, has also been operating the aircraft actively in the controversial waters of SCS.
June this year, two J-10 as reported by Reuters has been involved in an unsafe air maneuver with a U.S. Air Force RC-135 reconnaissance plane over the East China Sea.
The third factor that needed to be considered is the moralistic and humanitarian issue. What is the moral stand of other ASEAN countries to Israel indiscriminate use of military technology in the Middle East? As food for thought, the Israel military technology utilised by certain ASEAN members might possibly be used against innocent women and children in Gaza.
In this context, ASEAN Secretariat through its ASEAN Intergovernmental Commission on Human Rights needs to raise this issue with the respective members that have and might plan to purchase military technology from Israel.
The fourth and perhaps a potent factor to contemplate is the reaction of Muslim countries in the South East Asia region. Malaysia and Indonesia are traditionally the two strongest Israel critics on the latter’s military policies in the Middle East.
In this circumstance, what would the hypothetical reaction be, once these facts become common knowledge in these respective countries? Specifically – the use of Israel’s military enhanced equipment both air and sea by China to assert its already perceived unfair demands in SCS?
Admittedly, these areas of discourse are still preliminary, and will take years for it to be widely discussed. Singapore possesses Israel’s technology for decades and the political reactionary to such knowledge has been quiet.
Hence it largely depends on how grass root leaders frame or think tanks urgently broach the abovementioned information into political sentiment or a form of discussion-worthy issue. However what is worth to be reminded, when it comes to this stage of complex entwinement of Israel, South China Sea, and Human Rights issue – diplomatic sensitivities should be practice sparingly by ASEAN.
Not too long ago in 2012, ASEAN former Secretary-General, Dr. Surin Pitsuwan warned the South China Sea disputes might risk into becoming the next ‘Palestine of Asia’. This statement may hold some water at this contemporary time– and hence deserves a little more attention now.
This article also appeared at The Palestine Chronicle (a Washington based Palestine Advocacy News) http://www.palestinechronicle.com/israels-proxy-south-china-sea/
In the second quarter of 2015, the Rohingyas’ irregular sea migration made the headlines in international media. The months of May and June 2015 witnessed thousands of malnourished Rohingyas refugees arriving into the seas of Thailand, Indonesia and Malaysia in cramped boats abandoned by their skippers. During the period, it was reported that thousands more were stranded on rickety boats off the coasts of these three countries, with dwindling supplies of food and clean water.
In recent years, the Rohingyas Muslims have struggled to attract attention to their plight, not only at international level, but also within the contemporary Myanmar political scene. This occurred amid the seemingly celebrated “limited Myanmar reform,” which to date has trickled nothing for the Rohingyas.
The ethnic minority continue to be prosecuted and ignored and rejected by their own countrymen. There are reports of on questionable policies introduced such as denial of citizenship to Myanmar’s 1.3 million Rohingya Muslims, severe restrictions on their movement, employment and access to education and healthcare, as well as a discriminatory law imposing a “two child” limit on Rohingyas families in their Rakhine state. Last year, in 2014, the government even banned the use of the word “Rohingyas,” insisting the Muslim minority, who have lived in that country for generations, be registered in the census as “Bengali.” The main argument to this is – ethnic Rohingyas belong to a Bangladeshi tribe.
Within all these developing issues, it is relevant for us to ask: where does the issue of Rohingyas fit within Myanmar’s evolving governance reform and, pertinently, in its upcoming November 2015 election?
Central to this notion is the involvement of Aung San Suu Kyi as the most well-known Myanmar political reformist.
She has been evasive. In May 2015, when the issue made headlines in international media (arrival of boat people to Malaysia and Indonesia), Aung San Suu Kyi avoided critical remarks and suggested the sensitivity of the issue needed a tactful response. While in a BBC 2013 interview, Suu Kyi blamed the violence on “both sides,” suggesting that “Muslims have been targeted, but Buddhists have also been subjected to violence.”
It is obvious her move is political.
Nicholas Farrelly, director of the Australian National University’s Myanmar Research Centre, stated that “Aung San Suu Kyi and her strategists are looking at the electoral maths,” “They have long imagined that any perception the NLD is too cozy with the country’s Muslims could lose them millions of votes.” For the sake of elections, this seems to be logical. Though in hindsight, Aung San Suu Kyi’s current approach may also trap her and NLD into following more or less the same vicious policy cycle towards ethnic Rohingyas and Muslims in the future – if granted the power to rule post-November 2015 election. Below are explanations.
The Rohingya Muslim issue is not Myanmar’s political cup of coffee, for two reasons.
First, is the population ratio between Buddhist and Muslims. About 89% to 90% of the population consists of Bamar Buddhist, while the Rohingyas and other Muslim ethnic groups occupy a minor 4% of the total Myanmar population as estimated by the Myanmar government’s latest census.
Second, more worrying, is a large majority of Bamar Buddhists has little sympathy and tolerance for the Rohingya’s.
If one would look closely at Myanmar’s emerging socio-political development, there seems to be an emerging passion towards dogmatized Buddhism lead by Ashin Wirathu, a leading extreme Buddhist and anti-Muslim nationalist. He has the potential to mobilize his Buddhist growing masses to pressure any ruling Myanmar government to exhibit zero tolerance for the Rohingyas or Muslims. A little extra show of sympathy to the Rohingyas, or Muslims in general, may likely send a different message to this rightist group, which in-turn could pull away their well-needed votes or the possibility of creating another violent chaos as in 2012.
As a matter of fact, the current Myanmar political climate and election direction is so coagulated with anti-Muslim and -Rohingya sentiment to a point where any perceived link with these two will be disassociated immediately.
This is exactly what Aung San Suu Kyi’s NLD party did last month when the party leadership excluded over a dozen Muslims from its candidate list. The Irrawaddy News portal reported the number of Muslim candidates that were out listed were about 15 or 16.
Prevailing dogmas in a majority population plays an important role in Realpolitik and Aung San Suu Kyi and her NLD party seem to be adhering to this principle for the sake of the impending election.
Hence, taking the above into consideration, one can anticipate that if Aung San Suu Kyi or anyone in her NLD party is voted to be the highest executive power in Myanmar, a drastic policy change towards the Rohingyas or Muslims is not to be expected. Politically, any immediate U-turn support or show of tolerance to Rohingya Muslims is not a sustainable move in Myanmar given the current political climate. This move can be capitalized by opposition and nationalist alike, which in turn can result in a swift political suicide for NLD even after winning the election.
The writer is not discounting in entirety Aung San Suu Kyi’s audacity for change if NLD is voted in. However, even if policy shift may happen, political sentiments and treatment towards Rohingyas and Muslim in general will not alter satisfactorily.
Hence, it is imperative for the international community to begin reflecting on Aung San Suu Kyi or her NLD party practical commitment towards the Rohingya’s not only from a short-term perspective (pre-election), but also in a longer time frame. Whoever that will be Myanmar’s new government post-November 2015 election will need to play along with prevailing political sentiments for survival.
The broader lesson is to understand that the responsibility to voice and highlight the Rohingyas should not be expected of any reformist party in Myanmar alone. The predicament seems bleak.
This should also be shouldered by the international community in continuously applying pressure on the Myanmar Government to reverse its discriminative policies on the ethnic Rohingyas. It is worth noting that such an approach may have been proven workable.
On May 19, after receiving harsh criticisms from the international community, pertinently from ASEAN members, Myanmar information minister Ye Htut told foreign ambassadors that Burma would cooperate with regional and international counterparts “to tackle the ongoing boat people crisis, which is a consequence of human trafficking of people from Rakhine state and Bangladesh to Thailand, Malaysia and Indonesia.”
Asean has, in the past, successfully assisted Myanmar in opening its door to the world and push the country towards various slow but moving reforms. A similar approach can be applied, but with a need for a more robust diplomacy. The Rohingyas issue is not unlike any domestic problems affecting Asean members. This involves raw and critical humanitarian issues of the Rohingyas that will perpetually plague ASEAN if other members choose the usual slow and mitigated path in dealing with Yangon. – September 6, 2015.
This article written by Ferooze Ali has been republished by The Malaysian Insider 6 September 2015 and The New Straits Times on the 8 of September.
After China’s central bank devalued the yuan by nearly 3% against the US dollar for the third time in three days, it was finally eased on Friday (14 October 2015) after yuan was raised against the US dollar by 0.05%. This may signal that the rows of aggressively weaker fixings have ended for now.
The main argument of this recent ‘managed float approach’ has been to counter China’s strengthening of yuan and its corresponding weakening of trade globally. It is worth noting that Industrial production, investment and retail sales data for July 2015 were weaker than expected, while at the weekend figures showed Chinese exports tumbled 8.3% in July, their biggest drop in four months. After a string of weakening output growth figures going back to last year, the authorities have come under intense pressure internally to address the slowdown with a dramatic policy shift.
Though the Chinese Government has stated the recent move as a one-off, this created unease amongst China’s major trading partners or exporting countries and regions, which has been China’s main traditional competitors. Here the immediate logic is – China’s devaluation will lead to a lower yuan value which could boost China’s export but reduce the usage of the currency worldwide.
Countries in ASEAN is worth examining within this context as this region has been China’s major competitor for exports and destination for yuan’s expenditure.
Singapore will be one of the most vulnerable to a decline in the yuan as their exporters have the highest exposure to China in Asia, according to Barclays Plc, Standard Chartered Plc and Mizuho Bank Ltd. Mr Song Seng Wun, an economist at CIMB Private Banking suggest “We will definitely see downward pressure in, say, the Purchasing Managers’ Index readings on new orders and new export orders, which, in turn, will have an impact on Singapore production and export figures,”
The yuan’s devaluation would likely add further woes to Malaysia’s ringgit. Apart from creating intense competition for Malaysian exports, Chinese devaluation of yuan will further destabilize investor’s confidence on Malaysia’s economic performance specifically on its exports and trade balances. The ringgit has slumped 13 per cent in 2015 as the oil-exporting nation grappled with weak crude prices and a political turmoil involving the main leadership in the country. Equally Malaysia closest neighbor – Indonesia- has its rupiah declined to 10.5 percent.
As for other ASEAN countries such as Cambodia – the concern is on the country’s extreme reliance on US dollar usage. This would be bad for Cambodia as it means that it cannot devalue its own Riel. Secondly, Cambodia risks pricing itself out of the market as a result of the rapid rise in wages, especially in the countries key garment industry that has not been matched by increases in productivity.
Chinese tourist numbers could also be impacted with yuan devaluation as it would make foreign travel more expensive especially to ASEAN countries, which has been the natural destination for tourism such as Thailand, Indonesia, Philippines and emerging tourist market in CLMV countries.
The devaluation of yuan also couldn’t come at a worse period given the potential decision from the US Fed’s to increase its interest rate in the future. This, in turn, will likely further reduce FDI in ASEAN countries with foreign investors being slightly more picky in selecting markets.
Taking all the burgeoning external economic problems faced by ASEAN, it is no surprise that the analyst has also previously predicted on the likely of a currency war. Each country will soften up their currencies to push respective exports abroad. Nikkei Asian Review on August 12 reported the phrase “currency war” which started to gain traction among Southeast Asian market players after the devaluation. However, with the latest move by the Chinese Government to increase yuan’s value to a 0.05% against US dollar, this theory is quashed – at the moment.
However, the deeper lesson is – the devaluation of yuan has definitely raised the panic threshold among major currencies in Southeast Asia in looking for options to mitigate any impact.
This has not been the first time and neither it would be China’s lasts in terms of yuan devaluation. Apart from creating the immediate problems to ASEAN as witnessed recently, other far-reaching socioeconomic consequences including the dramatic decrease in the domestic economic performance are to be expected.
From a long-term perspective, perhaps there is a need for ASEAN to continue seriously with its single currency/ economic union project. This could be one of the possible measures to soften drastic fiscal actions by economic giants such as China and the US to the region. Here the reliance of Southeast Asia as a single economy and currency could help not only in mitigating immediate financial impact but also raise the confidence level of foreign investors on the robustness of the system and reduce any panic factor – which has the potential to plunge a single state economy overnight – The Asian Diplomat.
JAKARTA, Aug 12 — Indonesian President Jokowi replaced major economic ministers in a cabinet reshuffle today less than a year into his term – as he strive to consolidate his power amid a slowdown in Southeast Asia’s largest economy.
Former central bank governor Darmin Nasution was chosen for the chief economics minister post, while Harvard educated and prominent private equity executive Thomas Lembong was appointed as the new trade minister. Four other ministers were replaced in the reshuffle, which followed months of speculation that Widodo planned changes after a poor start to his presidency. Luhut Panjaitan, a former military general and Mr Jokowi’s confindante, was promoted to the powerful post of co-ordinating minister for political, legal and security affairs.
Political observers were generally divided on Jokowi’s recent cabinet shake up.
“The cabinet reshuffle is a good move as it shows that Jokowi is bold enough to make changes and replace underperforming ministers,” said Salim Said, from the Indonesian Defence University. Wellian Wiranto, an economist with Singapore-based OCBC, said there was hope that Nasution will “have a better chance at coordinating economic policies among the myriad of ministries and agencies which have been largely lacking thus far”.
However other analysts suggested that the ministerial changes will simply cause further upheaval, delaying decision-making, and describe Wednesday’s moves as disappointing. There were hopes for big-name appointments including Sri Mulyani Indrawati, chief operating officer at the World Bank.
Others say new ministers will have little impact, while the president —fails to to take the lead and push through hard-hitting policy reforms. Mr. Jokowi came to power in October after defeating former general Prabowo Subianto in a tightly-contested election, bringing with him high expectations of reform. But the appointment of his cabinet, a mix of technocrats and politically connected figures, brought disappointment, with critics saying he was working too hard to appease some of his political backers. Three ministers at least have long-standing ties to political parties that supported his run for the presidency.
Mr. Jokowi’s economic team also came under scrutiny following the release of first quarter GDP figures that showed economic growth slowing to 4.71% from 5.01% the previous quarter.
Speaking at the 48th anniversary of ASEAN’s founding ceremony on the 8th of August 2015 – Thailand Foreign Minister Tanasak Patimapragorn emphasized that the union should tighten up cooperation in all fields to make the community more inclusive, which is a key principle of the Asian Economic Community(AEC).
Rewinding 8 years prior to the ceremony, the leaders of the Association of Southeast Asian Nations (ASEAN) has adopted the ASEAN Economic Blueprint on 20 November 2007 to served as a plan to guide the establishment of the AEC, due for implementation by the end of 2015.
The main goal is for regional economic integration, defined by four characteristics: a single market and production base, a competitive economic region, a region of equitable economic development, and a region fully integrated into the global economy.The European Union economic community is the likely example taken for this endeavor.
It was initially forecast for 2020, however, the deadline was moved forward to the beginning of 2015 before being pushed back again to the end of this year. With the dateline looming, The Asian Diplomat compiled perspectives and discourses on the AEC prospects:
Financial Investor perspective
From an investor perspective, AEC in principle shall make capital market products to be available freely in any ASEAN market from a single access point. Capital market intermediaries should also be able to provide services throughout the region, based on home country approval.
Too good to be true? Possibly. Though the plans and priorities have been approved by the respective governments, the devil is always in the details where in this instance, the speed and extent of implementation.
There is a host of initiatives and actions outlined in the AEC Blueprint, divided into four broad areas, targeted to be phased in over eight years (2008 to 2015). However, the general consensus by observers and ASEAN watchers is that a full integration will not happen by the end of 2015.
Small Medium Enterprise
Apart from investors, the prospect may also paint differently for existing Small Medium Enterprises.
While larger companies seem ready for the AEC (Garuda Indonesia announced its readiness/Antara News 2014), small and medium-sized enterprises (SMEs) are less prepared. According to a survey by the Asian Development Bank, less than one-fifth of ASEAN businesses are ready for the transition. This is despite the fact that small to medium-sized businesses generate approximately 90 percent of ASEAN jobs and 30 to 50 percent of GDP.
Some commentators highlight a lack of awareness and understanding among SMEs regarding the AEC. According to a 2013 survey conducted by the ASEAN Secretariat in Jakarta, three out of every four ASEAN citizens questioned had no real understanding of what the AEC entails.
ASEAN has taken some steps to promote awareness of the AEC for SMEs. A seminar held in Bangkok from the 15th to 16th of June 2015 aimed to promote awareness of the AEC for businesses.
Secretary-General of the ASEAN-Business Advisory Council, Syed Nabil, raised some of the issues faced by SME’s. These include limited access to finance, markets, and improved technology, as well as challenges in facilitating the free movement of goods. To overcome these challenges, much more will need to be done in order for SMEs to be prepared for the AEC’s implementation.
Free labour Movement
A recent policy brief from a Philippine-based think-tank(Ibon International) indicates that AEC may increase corporate profits at the expense of workers’rights. Secondly, there are also continued fears that AEC will worsen inequalities between and within ASEAN countries – with poorer countries experiencing distorted development as they continue to be the primary source of raw materials and cheap labour. In other words, the perpetuation of skewed labour mobility from poorer countries to more developed ones.
In a nutshell
From a short-term perspective, ASEAN Economic Integration will indeed happen by this year end. However, the burgeoning question is to what extent it will take into effect? While not in its entirety, investors and business people should expect pockets of areas where capital, services, and goods begin to flow more freely. More crucially, ASEAN members that are better prepared will kick-start the initiatives, with the circle widening as and when other member economies are ready to join.
However from a long- term perspective, it will take some time for ASEAN to be turned into a comprehensive economic community. Investors and businesses should avoid the expectation of an immediate change Post 31 December 2015.
More importantly, wealthier and stable ASEAN members should also take corrective measures to address any political, economic and social inequalities that exists between its members. This is required for the sustainability of the co-operation.
Worth noting that – it took the European Economic Community, which was created in 1957 to establish a common market among its politically and economically less prominent members, a total of 36 years. It was then finally declared a “completed project” in 1993.
Hence with the current different political climate and diverse economic performance for each ASEAN members – similar scenario should likely be anticipated for ASEAN.