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Written by
Amy Searight,
Brian Harding
January 15, 2019
This year promises to be another dynamic one for Southeast Asia—and hopefully for high-level
U.S. engagement with the region. With elections and governance challenges in many countries,
the Chairmanship of the Association of Southeast Asian Nations (ASEAN) returning to Thailand
while it organizes an election and plans a coronation, the region’s trade architecture in flux, and
the backdrop of growing U.S.-China strategic rivalry and trade friction, these are the key issues
to watch in 2019.
Elections and Governance
Indonesia and Thailand, Southeast Asia’s two largest economies and traditional leaders within
ASEAN, are both set to hold elections in early 2019. In Thailand, the upcoming election will
nominally return the country to civilian rule nearly five years after a coup d’état overthrew the
previously-elected government. However, the timing of the much-delayed election is again
uncertain, as the government just announced that the previously set date of February 24 will no
longer work due to activities surrounding the coronation of King Maha Vajiralongkorn on May
4. Thai military leaders have sought to reassure the public that the election will be held no later
than March and has floated March 10 and March 24 as possible dates. Regardless of the timing,
the outcome of the first vote under a newly rewritten constitution does not presage a full return to
democracy and civilian rule, as the military retains sweeping powers and an outsized role in
shaping the next government. Indeed, a likely post-election scenario is that the elected lower
house is controlled by an anti-junta coalition, while the upper house and prime minister remain in
the hands of pro-junta parties. This scenario would likely lead to political gridlock and
potentially spark social unrest and would diminish the ability of Thailand to return to stronger
economic growth and regional leadership.
The Indonesian presidential election on April 17 will see President Jokowi in a rematch against
retired general Prabowo Subianto. Although Jokowi appears to be in a favorable position to win
reelection, several variables make the outcome uncertain. Another sharp fall in the rupiah—
following the currency depreciation that hit Indonesia and several other emerging markets in
2018—could lead to a rise in household goods prices and spark an economic downturn that
would undercut Jokowi’s relatively solid record of economic growth. Religious identity politics
could also come into play as a central campaign issue, although Jokowi’s controversial choice of
conservative Muslim cleric Ma’ruf Amin as his running mate has helped him fend off attacks on
his Islamic credentials, at least for now. In the meantime, both Jokowi and Prabowo appear
content to focus their campaigns on who is stronger on economic nationalism, an issue that plays
well for Jokowi after his government wrested majority control over the massive copper and gold
mine in Papua that has been owned and operated by U.S. mining firm Freeport since the 1960s.
Elsewhere in the region, midterm elections in the Philippines in May 2019 will serve as a bell-
weather for the Duterte government and a test for how far Duterte can take the country on
divisive issues such as his drug war and repression of the opposition and civil society. The
election will also test how the public weighs his foreign policy choices regarding China,
including effectively shelving their disputes in the South China Sea.
Malaysian politics will continue their wild ride after the astonishing victory of Dr. Mahathir and
the Pakatan Harapan alliance in polls last May. All eyes will be on Dr. Mahathir to see if he
appears to be moving forward to honor his pledge to hand off power to his former rival-turned-
ally Anwar Ibrahim in two years. Other issues to watch will be the United Malays National
Organisation (UMNO)’s evolution and potential dissolution as many members flee, UMNO’s
relationship with fellow Malay-based opposition party Parti Islam Se Malaysia (PAS), and
alliance management within among the diverse coalition partners in Pakatan Harapan.
Meanwhile, in Myanmar, patience with Aung San Suu Kyi is running out internationally and
among some domestic elites on both on the Rohingya issue and badly needed economic reforms.
Choices that Aung San Suu Kyi makes on these issues will affect Myanmar’s economic
prospects and its relations with the world and could threaten to return Myanmar to a state of
semi-isolation in the international community, particularly in relation to the United States and
Europe.
ASEAN’s Relevance
With Thailand taking on the ASEAN Chairmanship while also trying to manage an election and
the coronation of its new king, its primary objective is to simply make it through the year
unscathed. Thailand’s ambition for its ASEAN year is therefore rather low, and observers should
not expect significant progress on big initiatives such as the ASEAN-China Code of Conduct or
concluding the Regional Comprehensive Economic Partnership agreement, which remains a
huge lift due to India’s reluctance to significant market liberalization. Thailand will also not be
eager to tackle issues that divide ASEAN members such as standing up to China on the South
China Sea or confronting Myanmar on the Rohingya crisis. In the end, Thailand’s 2019 ASEAN
chairmanship is likely to amount to little more than a hyphen between Singapore’s 2018 and
Vietnam’s 2020 chairmanships.
Further evolution of the regional economic architecture is expected to take place this year now
that the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) came into force in
the final days of 2018. Singapore and Vietnam are now full members of the trade pact, and
Brunei and Malaysia are likely to ratify the agreement early this year. Several countries
including Thailand and Indonesia have expressed interest in joining the CPTPP, although
Colombia, South Korea, and a post-Brexit United Kingdom may lead the pack of new entrants.
The Philippines’ trade policy will also be in focus, as it hopes to overcome human rights
concerns in Congress that have delayed the launch of bilateral free trade agreement (FTA)
negotiations with the United States, and also weighs its options with regard to joining CPTPP.
Meanwhile, the impacts of escalating U.S.-China tariffs may begin to be felt in 2019 as
multinational corporations make decisions about their shifting their supply chains, with some
potentially relocating manufacturing from China to Southeast Asia. Dynamic economies in
Southeast Asia stand to potentially benefit from these production shifts, although it remains to be
seen whether the gains of any new investment are outweighed by the drag on the Chinese and
global economies. With Vietnam poised to attract a large portion of any relocated investment, it
is unclear whether Indonesia, the Philippines, and others will compete successfully in this highly
competitive space. Meanwhile, China’s economic slowdown could loom large for Southeast
Asian economies heavily dependent on exports of commodities and components to China.
U.S. Engagement
After intensive presidential engagement with Southeast Asia in 2017, 2018 saw a dramatic
downturn with President Trump skipping the East Asia Summit and U.S.-ASEAN summit in
Singapore and not hosting any Southeast Asian leaders in the United States. However, the
administration did make progress fleshing out its Free and Open Indo-Pacific strategy, including
announcing some substantive initiatives and rhetorically affirming that ASEAN centrality
remains a pillar of U.S. policy in the region.
For 2019, it remains to be seen whether the strategy can really take off in Southeast Asia. One
barometer will be whether the new tools created by the Better Utilization of Investments Leading
to Development (BUILD) Act recently passed in Congress, which will dramatically expand U.S.
government-backed financing for infrastructure projects, will be strategically targeted on
Southeast Asia or have a more global focus.
President Trump’s personal engagement in Southeast Asia will also be watched closely.
Opportunities for presidential engagement abound, ranging from inviting the victor in the
Indonesian presidential election for a visit, initiating a meeting with Malaysian prime minister
Mahathir, hosting all 10 ASEAN leaders for a special Sunnylands-style summit at Mar-a-Lago,
and attending the East Asia Summit and U.S.-ASEAN summit this fall in Bangkok.
Finally, personnel in the Trump administration will be an important variable for U.S.
engagement to watch. Two years into the administration, numerous positions essential for
carrying out an Indo-Pacific strategy and deepening ties with Southeast Asia continue to sit
empty. Retired Air Force general David Stilwell has been nominated for the long-vacant position
of assistant secretary of state for East Asia and Pacific Affairs, but he has not yet been
confirmed. Meanwhile, no one has yet been nominated to be the next U.S. ambassador to
ASEAN, Singapore, or Thailand, while W. Patrick Murphy, the career diplomat nominated as
U.S. ambassador to Cambodia, has been awaiting confirmation for months. The departure of
Defense Secretary Mattis also creates questions, as Mattis was one of the key Trump
administration players on Southeast Asia and frequently traveled to the region. Mattis’s well-
stocked Asia policy office may also see shakeups with the transition at the Pentagon, which
would also hold potentially significant implications for U.S. engagement with the region.
Addendum
We always welcome views from our readers, and from time to time we will share them with our
broader readership. In this vein, this commentary elicited a vibrant response from the Thai
government, which sought to counter the view that Thailand’s busy political and royal calendar
this year would in any way impact its chairmanship of ASEAN. In a letter to me, Royal Thai
Ambassador Virachai Plasai highlighted Thailand’s historically central role in “advancing
regionalism in Southeast Asia,” and noted that “Thailand has always been at the forefront of
efforts to push ASEAN to the next levels of integration and to strengthen the pivotal role of the
grouping . . . regardless of Thai domestic politics.” He gave specific reasons why he believed
that Thailand’s chairmanship is already shaping up to be a strong year for ASEAN:
“Far from avoiding challenges and problems, Thailand is tackling them—but through quiet
diplomacy and trust-building within ASEAN and with the international community. This
unassuming style of diplomacy, more suitable in the ASEAN context, should not be
misconstrued as inaction or problem avoidance. We thus saw at the ASEAN Foreign Minister’s
retreat in Chiang Mai between 17-18 January 2019, the first ASEAN Ministerial Meeting under
the Thai chairmanship this year, ASEAN’s resolve in addressing pending problems such as the
humanitarian situation in Rakhine State, where an enhanced ASEAN role centered on the
ASEAN secretary-general and the ASEAN Coordinating Centre for Humanitarian Assistance on
Disaster Management (AHA Centre), with a roadmap of cooperative actions, has been endorsed,
with the support of Myanmar. The goal is to build an atmosphere conducive to, and an
infrastructure to support, repatriation.”
It is indeed encouraging that Thailand has taken up the issue of the Rohingya in Rakhine State,
Myanmar as a central focus for ASEAN, although the ASEAN team set to conduct a needs
assessment on the ground in Rakhine state has been put on hold due to security concerns.
Nevertheless it will be important for Thailand to continue to push efforts for ASEAN to play a
central role in addressing this humanitarian and refugee crisis and convincing Myanmar to
“address the root causes of the conflict and to create a conducive environment” for Rohingya
repatriation, as called for in the Thai chairman statement issued at the conclusion of the January
ASEAN Foreign Ministers’ meeting. Ambassador Virachai also raised making progress on the
draft code of conduct between ASEAN and China on the South China Sea, and the Regional
Comprehensive Economic Partnership (RCEP) trade agreement, as central priorities for Thailand
in its chairmanship year. 2019 will certainly be a fascinating year for observers of Thailand, as
well as for ASEAN watchers.
You can read the full text of the letter from Ambassador Virachai here.
Amy Searight is a senior adviser and director with the Southeast Asia Program at the Center for
Strategic and International Studies (CSIS) in Washington, D.C. Brian Harding is a fellow and
deputy director with the CSIS Southeast Asia Program.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a
private, tax-exempt institution focusing on international public policy issues. Its research is
nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly,
all views, positions, and conclusions expressed in this publication should be understood to
be solely those of the author(s).
© 2019 by the Center for Strategic and International Studies. All rights reserved.
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OPINION
It is disappointing to see Aung San Suu Kyi reverse the trend for freedom of expression. © Reuters
These are challenging times for Southeast Asia. Despite buoyant economies,
healthy investment and growing trade ties, predictability and certainty in the
political sphere seem elusive for the ten member countries of the Association
of Southeast Asian Nations.
What looked like stable political outcomes or transitions in Cambodia,
Malaysia, Thailand and Indonesia have more recently generated fear and
uncertainty as squabbling entrenched elites are battered by divisive issues of
corruption, identity and inequality. In Myanmar and the Philippines
democratic transitions have morphed into state-sponsored repressive security
crackdowns on hard-won freedoms.
Six years after the military intervened in Thailand to end a violent and
disruptive period of political conflict, elections have finally been scheduled for
the end of March. There were hopes of a transition back to a democratically
elected government and an end to the polarized, often violent, political
confrontation, even as members of the military junta prepared to stand for
elected office. But when Princess Ubolratana, the elder sister of King
Vajiralongkorn, made the surprise announcement in early February that she
would stand as a candidate for prime minister under the banner of a party
supported by exiled Prime Minister Thaksin Shinawatra, deep divisions in the
Thai elite were exposed. This suggests that the long period under military rule
has had no impact on solving underlying conflicts.
The Thai elections may well go ahead on March 24. But no one believes the
outcome will produce stability. The most likely result will be a weak coalition
of military-backed figures and conservative smaller parties, which will leave
dissatisfied the majority of people who have historically supported Thaksin's
party.
What at first looked like a remarkably peaceful transition in Malaysia after the
defeat of the ruling United Malaysia National Organization at the polls last
year is now overshadowed by splits within the new governing coalition and the
failure to swiftly prosecute former Prime Minister Najib Tun Razak on graft
charges. Despite credible allegations that Najib presided over the theft of more
than $4 million from a state-backed investment vehicle, 1MDB, he has seen a
revival in popularity among the majority Malay population. This development,
along with legal tactics delaying the opening of his trial, has unnerved the new
multiracial government led by veteran Prime Minister Mahathir Mohamad
and underscored its vulnerability to fickle conservative Malay sentiment.
More troubling still are those countries where the hard struggle for freedom
has been reversed.
Set against increasing confrontation between China and the U.S., the collective
role of Southeast Asian countries as a stable platform for regional economic
growth is becoming increasingly important. It is vital in this context for
ASEAN member states to put aside domestic turmoil and demonstrate a unity
of purpose.
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Globalist BookshelfPreviousNext
To reach its full potential, Asia will need to overcome key challenges in the twenty-first
century.
Discrimination, prejudice and persecution are rife in Asia, thereby preventing economies
and societies to realize their full potential
Most Asian countries face intractable demographic dilemmas. In much of East Asia,
fertility has plummeted below replacement rates and populations are ageing.
Asia is crying out for democracy and better governance to improve the foundations for
stronger economies and decent middle class societies.
The relative stability of postwar Asia, led by the US, is being shaken by the rise of China.
1. Getting better value out of global value chains
Many of Asia’s factories and call centers are staffed by poor migrants who have moved
to towns and cities in the hope of a better life. But their dreams are all too often
shattered as they wind up living in urban slums.
In the case of China, most internal migrants are denied access to basic social services
and their children are “left-behind” in traditional villages. And Asia’s most advanced
cities like Singapore, Hong Kong, Tokyo and Seoul lag sadly behind the West in the
quest to become hubs of innovation and creativity.
Discrimination, prejudice and persecution are rife in Asia, thereby preventing economies
and societies to realize their full potential, as our review shows for the cases of: Asia’s
LGBT community; Japanese women; South Asian women who suffer gendercide,
forced child marriages and honour killing; Asia’s indigenous peoples like West Papuans,
Tibetans and China’s Uighurs; Sri Lanka’s Tamil community; and India’s lower castes.
Most Asian countries face intractable demographic dilemmas. In much of East Asia,
fertility has plummeted below replacement rates, populations are ageing, workforces
declining and in Japan the population has begun falling.
And yet governments are slow to react. At the same time, in South Asia, Indonesia and
the Philippines, a youth bulge is bursting into the workforce, but much of this youth is
not well educated and there are not enough jobs on offer.
Asia is crying out for democracy and better governance to improve the foundations for
stronger economies and decent middle class societies. And yet, according to some
measures, there would not be even one mature democracy in Asia.
Contrary to the hopes of political scientists, economic development has fostered too few
democracies in Asia.
Asia’s political landscape is deeply flawed with: Oligarchic democracies in Japan and
Korea; pro-business soft dictatorships in Hong Kong, Malaysia and Singapore; Chinese
client states in Cambodia and Laos; weak and fragile democracies in India, Indonesia,
Philippines, Mongolia, Sri Lanka, Bangladesh, and Nepal; military-dominated
governments in Thailand, Pakistan, and Myanmar; and staunchly authoritarian
states in China, North Korea and Vietnam.
6. Combating Asia’s economic crime
One of the many consequences of these flawed politics is that, as Asia has moved
towards the centre of the global economy, it has also moved to centre of the global
criminal economy.
Asia is a major player in many aspects of economic crime like counterfeiting and piracy,
Illegal drug production and trafficking, environmental crimes, human trafficking and
smuggling, corruption and money laundering,and cybercrime.
And while flawed politics is one of the causes, this criminality is eating away at the
integrity of the state, as state actors are very often criminals themselves or are colluding
with criminals.
While many factors have underpinned Asia’s renaissance over the past half century or
more, the relative peace that the region has enjoyed has been perhaps the most
important.
But today, the relative stability of postwar Asia, led by the United States, is being
shaken by the rise of China, as China is now engaged in a bitter power struggle
with the United Statesand its Asian allies for the political leadership of Asia.
There is much debate about whether this will lead to military conflict between China and
the United States. In any event, the United States seems to be losing its hold over Asia,
something which will likely accelerate under the Trump administration.
This means that it will become ever more necessary for Asian countries to cooperate
better together. But this will be a great challenge in light of the tensions involving
China, North Korea, Japan, Taiwan, Hong Kong, South Korea and India.
Editor’s note: This feature is adapted from Asian Century… on a Knife-edge:
A 360 Degree Analysis of Asia’s Recent Economic
Development (Palgrave Macmillan, 2018).
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