Asean

Pierfrancesco Mattiolo published in Asean, Global Lens

The evolution of relations between Australia, New Zealand and ASEAN

After the Australian elections last May, both Canberra and Wellington are led by Labour governments. Both countries maintain deep ties with the United States, but they have different approaches to growing Chinese assertiveness. Cooperation with ASEAN could play an important part in the stability of the region.

In the Australian elections last May, Australian Labor Party Leader Anthony Albanese defeated the incumbent Liberal Prime Minister Scott Morrison. After the administration change in Canberra, both Australia and New Zealand are led by Labour cabinets. Both governments play a complex game on the Indo-Pacific chessboard. On the one hand, the two countries represent the southern end of the 'Anglosphere' (and the related Five Eyes intelligence alliance) and are key partners of the United States - in short, a piece of the 'West' in the Far East. On the other hand, their relations with their Asian neighbours are marked by alternating phases of concern and trust, cooperation and tension. So what will be the Indo-Pacific strategy of Australia and New Zealand in the coming years?

Already during the election campaign, the Australian Labor Party had vigorously expressed its support for the Quadrilateral Security Dialogue (Quad, which comprises Australia, India, Japan and the United States) and the AUKUS (which links Canberra to the US and the UK). Previous liberal-national governments had committed themselves to these agreements in 2017 and 2021, respectively. Barely three days after his election victory, the new PM Albanese was already in Tokyo for the Quad leaders' summit, at which he confirmed that his government would continue to support the Dialogue. At the same time, the Albanese administration intends to change certain aspects of the foreign policy of previous centre-right governments, ushering in a new phase of engagement with Pacific nations and commitment to international climate cooperation. The Morrisons governments had always opposed climate change policies - even when much of the country was engulfed in flames between 2019 and 2020 and rising sea levels are an existential threat to many countries in the region. So it is not surprising that Australia has been suffering from a poor standing among insular countries of the Pacific, which are most vulnerable to global warming. New Foreign Minister Penny Wong has also promised to increase financial support for Southeast Asian countries, so as to contain the growing Chinese influence in the region - Wong has recently defined the security pact between China and the Solomon Islands as the 'worst failure of Australian foreign policy in the Pacific since the end of World War II'.

Indeed, the expanding military influence of large Asian countries has always been seen as a threat by Canberra: first Japan, later China and, to a lesser extent, Indonesia. The improvement in relations between Beijing and Washington in the 1970s had also reassured Australians who had begun to see Asia as an opportunity rather than a threat. In the 1990s, another Labor PM, Paul Keating, had effectively summed up the paradigm shift shortly before concluding a security agreement with Jakarta: Australia was to pursue its security 'in Asia, not from Asia'. Relations between Australia and China have remained excellent for decades and still were so when Xi Jinping visited the country in 2014 for an official visit culminating in a historic address to the Australian Parliament. Nevertheless, the deterioration of China-US relations in recent years has been accompanied by a foreign policy shift with regard to Beijing, even in Canberra. Decades pass, but Australians continue to follow their American allies.

New Zealand, on the other hand, seems to have taken a more nuanced stance recently with regard to the US strategy for the Indo-Pacific. In early July, Labour PM Jacinda Ardern called for a more cautious approach to the Chinese presence in the region. For Ardern, it is wrong to regard Beijing's recent actions as 'new' and to require governments to take sides: ‘the honest reality is that the world is bloody messy. And yet, amongst all the complexity, we still often see issues portrayed in a black and white way’. Ardern's caution contrasts with Joe Biden's tough stance, according to which there is an ongoing battle between democracies and autocracies in the world which requires every government to pick a side. Wellington hopes for a de-escalation in the region and greater cooperation between all actors, even if Beijing becomes even more assertive. New Zealanders, however, are not indifferent to Chinese manoeuvres: they too, like Australia and the US, have expressed concern over the China-Solomon Islands defence agreement. Australia and New Zealand are in a position not different to the ASEAN countries, which are reluctant to get involved in the strategic competition between the US and China. Wellington seems intent on following a strategy similar to the one employed by other governments in the region: fostering dialogue with Beijing without renouncing strategic cooperation with Washington. Canberra, on the other hand, seems more rigid in its security concerns and more in line with Biden's vision. Both governments, however, could benefit from greater cooperation, especially with the ASEAN countries: the regional organisation in fact constitutes a factor of stability in the region and a central partner, as recognised in the Quad as well, which could balance Chinese assertiveness. The new Australian Labor government should, however, agree to cooperate with ASEAN on other issues and not exclusively on security: a strengthening of economic and political ties is preparatory and necessary if Albanese wants to move to other more sensitive forms of cooperation. International climate cooperation could be the first test and, as we have seen, the two Labour governments in Canberra and Wellington have expressed their intention to build new partnerships with other Indo-Pacific governments on the issue.

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Lorenzo published in Asean, Economy and trade

Energy transition is being made in Asia

The effects of the war in Ukraine are not slowing, but if anything accelerating, a process of historic dimensions

478.7 billion dollars of sustainable bonds outstanding at the end of the first quarter of 2022 among ASEAN and East Asia, an expansion of 51.3 percent year-on-year. Record issuances of green, social and sustainable debt (so-called GSS bonds) in 2021 totaling $24 billion across the six largest ASEAN economies, up 76 percent from $13.6 billion in 2020. These are some of the numbers of Southeast Asia's "green" race, reflected in economics, politics and finance. ASEAN and East Asia account for 18.1 percent of sustainable bonds outstanding globally, behind only Europe. Two regions that believe strongly in energy transition. A process that in ASEAN has not been slowed down, but if anything sped up by the war in Ukraine and its side effects. The need to increase the weight of alternative energy sources has never been more evident. Singapore has announced that government agencies will issue up to $35 billion in green bonds by 2030. The purpose is to finance green infrastructure projects and to disincentivize the use of private transportation. Thailand began issuing sustainable bonds at a rapid pace in 2020, mainly to aid recovery from the pandemic. Since then, total issuance of sustainable bonds by the government and state-owned enterprises has reached $3.5 billion. The Philippines, Malaysia and Indonesia are also moving in the same direction. But the tension toward energy transition is also seen in the choices of governments and investors. Vietnam has just approved a program that includes restrictions on the production and import of fossil-fuel vehicles, with the goal of achieving a zero-emissions industry by 2050. By then, all vehicles on the road will have to use green energy or be electric. Even the rail network will have to be entirely converted. Atlas Capital, a venture capital firm in the climate technology sector, and many other regional or international companies are raising funds to invest in projects related to the environment or energy transition in Southeast Asia. A trend that looks set to accelerate more and more.

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Redazione published in Asean, Economy and trade

The effects of inflation on the ASEAN

Southeast Asian countries are studying ways to withstand the pressure caused by rising prices. Here's how

Articolo a cura di Chiara Suprani

Le iniziative di policy per la ripresa post-pandemica dei Paesi si sono dovute confrontare con l’aggravamento della crisi alimentare attuale, esacerbata dalla guerra. Secondo l’Istituto Internazionale di Ricerca sulle Politiche Alimentari (IFPRI), fino ad oggi il 17,22% del mercato internazionale dei prodotti alimentari è stato soggetto ad innalzamento delle barriere tariffarie, e non,  o ad embarghi. L’inflazione, colpendo in particolare i Paesi delle economie più avanzate, ha ridotto l’afflusso di investimenti diretti esteri (IDE) da queste economie verso quelle dell’ASEAN. Secondo la Federal Reserve degli Stati Uniti, il tasso medio di inflazione nei Paesi dell’ASEAN è aumentato dallo 0,9% di gennaio 2021, al 3,1% di dicembre 2021, per poi raggiungere il 4,7% ad aprile 2022. I tassi di inflazione fino ad Aprile di Indonesia, Singapore, Laos e Thailandia sono stati tra i più acuti: Indonesia 149%, Singapore 161%, Laos 206% e Thailandia 267%. Il tasso di inflazione è diminuito in Malesia, mentre è rimasto sostanzialmente invariato nelle Filippine e nel Vietnam.  Tuttavia, in molti Paesi, la fiducia dei consumatori oggi è inferiore a quella del periodo pre-pandemico, e per gli economisti non si è arrivati ancora al picco massimo di pressione inflazionistica, che è previsto nei prossimi mesi. Sebbene le conseguenze della crisi degli approvvigionamenti, della ripresa post pandemica e della guerra in Ucraina non abbiano colpito in maniera uniforme i Paesi membri dell’ASEAN, tuttavia la reazione condivisa dalle banche centrali da alcuni di questi è stata quella di non aumentare immediatamente i tassi di interesse. Nelle Philippines, la banca centrale Bangko Sentral ng Pilipinas (BSP) si prepara ad alzare di mezzo punto i tassi di interesse, portando il tasso chiave dall’attuale 2,5% a 3%. In Indonesia, a marzo, il governo aveva dichiarato di voler mantenere l’inflazione tra il 3 e il 5 per cento per i prodotti alimentari, come l’olio di palma. Eppure, a giugno, l’inflazione è aumentata del 4,35% su base annua. Tra i Paesi dell’ASEAN, come nel caso del Vietnam il divieto di esportazioni di prodotti alimentari si applicherebbe solamente se la situazione interna fosse davvero critica. Per altri, lasciare l’economia aperta e priva di barriere o vincoli è ancora più vitale, come per Singapore. Ma alcuni Paesi hanno fatto della logica dietro all’espressione “nazionalismo alimentare”, cioè l’interruzione dell’esportazione di certi prodotti particolarmente chiave per l’economia del Paese, una vera e propria iniziativa di policy, con conseguenze a catena sulle economie dei loro partner ASEAN. Per stabilizzare il prezzo delle carni di pollo, il governo della Malesia ha imposto un embargo all’esportazione di carne di pollame a partire da giugno, e una task force chiamata dal Primo Ministro Ismail Sabri Yaakob “Jihad against inflation”, per combattere l’inflazione. In Indonesia l’embargo di olio di palma durato tre settimane, è stato quello con l’effetto monetario più impattante dall’invasione russa dell’Ucraina, con 19 miliardi di dollari americani di prodotto soggetti a restrizioni. Giacarta, a causa dell’embargo di carne di pollo della Malesia, ha iniziato ad inviare tonnellate del prodotto a Singapore. La città-stato, il cui piatto nazionale è di fatto il riso al pollo (chicken rice), si è trovata nella condizione di dover differenziare il proprio approvvigionamento. Nell’attuale situazione inflazionistica e di nazionalismo alimentare, secondo Roehlano M. Briones, ricercatore presso l’Istituto per gli Studi sullo Sviluppo delle Filippine (PIDS), occorre “integrare la cooperazione regionale, (che) è qualcosa che è abbastanza cruciale per guidare e stimolare la crescita continua e l’emergere di una regione ricca di scambi regionali di mais e carne all’interno dell’ASEAN.” 

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Redazione published in Asean, Economy and trade

China-ASEAN and global growth

In 2022 and 2023, Southeastern countries are expected to grow more than China and above the Asia-Pacific average

Editorial by Lorenzo Riccardi

Managing Partner RsA Asia

China's Ministry of Transport has announced its decision to establish a special office to oversee the operation of the new land and sea corridor for logistics and trade, which connects western China with several ASEAN countries. The corridor, with operations center in Chongqing, connects 14 Chinese provinces with 310 ports in 107 countries and regions around the world, and in particular promotes trade between China and ASEAN countries under the Regional Comprehensive Economic Partnership (RCEP) agreement. In 2022, the Ministry of Transport has set a goal of expanding the corridor's transport capacity with new infrastructure such as railways, highways, ports and airports, as well as promoting the development of a Chengdu-Chongqing international hub. ASEAN is a heterogeneous community of nations united by common goals, with member countries including city-states with high GDP per capita (Singapore and Brunei), populous nations with dynamic and expanding economies (Indonesia, Malaysia, the Philippines, Thailand, and Vietnam), and less advanced countries with lower-middle income (Cambodia, Laos, and Myanmar). Despite social and economic differences, ASEAN is a major free trade area with a share of more than 7.5 percent of world trade. Southeast Asian countries, which with $3.3 trillion in aggregate GDP account for about 3.5 percent of world GDP, have been severely impacted by the pandemic: in 2020, regional GDP contracted by 3.2 percent (with the exception of Vietnam, which grew by more than 2.9 percent in the year), only to rebound in 2021 by more than 3 percent, despite the -18 percent recorded in Myanmar as a result of political tensions. The most recent estimates, released at the meeting of the association's Economic Ministers, predict growth of 4.9 percent for 2022 and 5.2 percent for 2023, higher than the growth rates the International Monetary Fund forecasts for China (4.4 percent and 5.1 percent), and for the Asia Pacific region as a whole (4.7 percent and 4.9 percent). It is useful to point out that Southeast Asia is China's largest trading partner ($878 billion in trade in 2021, and $371 billion in the first five months of 2022, up 10.2 percent from the same period in 2021), as well as the third largest destination market for Chinese goods and the main origin of Chinese imports. China and ASEAN are increasingly strategic partners in Asia's growing role on trade and investment in the global economy today.

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Alessio published in Asean, Politics and strategy

Oceania and ASEAN closer than people think

Australia and New Zealand do not yearn to participate in the Asia-Pacific power confrontation. And they have similar goals to the countries of the Southeast

"It is wrong to talk about the West versus Russia. We are a liberal democracy and we try to promote, of course, the values that are important to us but we also try to ensure that our foreign policy responses are based on facts, not assertions and assumptions." Speaking, during a speech from Sydney, is Jacinda Ardern. More: "We do not assume that China, as a member of the United Nations Security Council, does not have a role to play in pressuring Russia" on the invasion, the New Zealand premier added. A more subtle view of diplomacy than the "ideological clash" between democracies and authoritarian regimes that the United States often talks about, especially after the start of the war in Ukraine. Despite Washington's charm offensive in the Asia-Pacific and despite its unquestioned inclusion in the list of liberal democracies, the countries of Oceania demonstrate a pragmatic approach; even Australia, which has seen its relations with China hit an all-time low in recent years, does not seem intent on promoting confrontations. On the sidelines of the G20 Foreign Ministers' Summit, a very meaningful bilateral between China's Wang Yi and Australia's Peggy Wong was staged. "We spoke frankly and listened carefully to each other's priorities and concerns. We have our differences, but it is in both of our interests for relations to stabilize," said the minister of the new Australian government led by Labor's Anthony Albanese. As The Straits Times wrote, for decades Australia has been seen as an Anglo-Saxon outpost and America's "deputy sheriff" in the Pacific. Canberra, however, seems intent on increasing engagement with Southeast Asia in order to tighten ties with a region that wants to keep the competition between powers from becoming a full-blown confrontation. And it seems to want to do so without stopping at clashing with Beijing to exert influence over the Pacific islands, but by cooperating in concrete ways with ASEAN and governments in the area. Greater involvement in Asia by the Albanian government may highlight, once again, the unique position of Australia and Oceania in general between East and West.

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Redazione published in Asean, Culture and society

South-East, the biodiversity heart

If the regional seas and forests start to be protected in a planned and scientific way, which better reflects the local ecosystems, they could become the engine of regional economic growth.

By Chiara Suprani

Last year in December, natural disasters wrecked both the Philippines and Malaysia. The calamities resulted in a large number of fatalities and severe consequences on the landscape and on the biodiversity of the two countries. The Philippines and Malaysia are not the only areas hit by climate change, but the entire South-East Asia region is one of the places in the world most vulnerable to climate changes. Nevertheless the region has a crucial role in the progress toward achieving the goals of the global energy transition, yet its economic potential within the environmental protection sector has been valued only recently.

On June 15th, 2022 the Academy of Science Malaysia published a study commissioned by Campaign for Nature, titled “The Nexus Of Biodiversity Conservation And Sustainable Socioeconomic Development In Southeast Asia”. The study admits the environmental and economic value of investing in biodiversity protection and preservation of the southeast edge of the asian continent. Additionally, the Academy highlights that the competences on the conservation of the ecosystems developed in the ASEAN countries could become an important input in other countries, especially if the competences are not mere instruction, but they become a full socio-economic model. In fact, even if South-East Asia covers only 4 percent of global landmass, according to the Biodiversity Intactness Index (BII), the single region presents the 80 percent of the entire global biodiversity. The reason why the model of South-East Asia is perfect to get inspiration from is that it has been the region in the world better able to preserve its biodiversity. Thus, with the right investments, South-East Asia could turn into the nexus between sustainable growth and the protection of local fauna and flora.

If the regional seas and forests start to be protected in a planned and scientific way, which better reflects the local ecosystems, they could become the engine of regional economic growth. To this extent, the regional economic growth would not be based on the exploitation of the resources but on their improvement, hence creating a model of economic growth fixed on environmental protection. 

The Malaysian study understood the importance of the protection of the environment, as an active component of the growth of a country, thanks to a report published by the World Wide Fund for Nature (WWF) in 2018. The report has recognized that the preservation of the ecosystems worldwide is worth US$ 125 trillions. Considering that 57 percent of sea areas and forests belong to South-East Asia, then US$ 2.9 trillions could go into ASEAN countries’ pockets, whose gross domestic product (GDP) in 2018 was US$ 3 trillions. Therefore, the economic potential of preservation and conservation of biodiversity is very tempting at first, especially for developing countries. However, in order to grasp the benefit of this outcome, the governments in the region have to be willing to invest 10 billions of dollars every year, starting from today, up to 46 billions annually in 2030. Moreover, the funding has to be allocated for projects such as the requalification of mangroves, the greening of cities, the creation of carbon credits and the education and digitalization.

Professor Emil Salim, a member of the directive committee of Campaign for Natura, affirmed that thinking about biodiversity as a business able to generate profits is the right recipe for captivating the international and local agencies’ attention on conservation. For instance, the Rimba Raya Biodiversity Reserve Project in Indonesia is the biggest project for the reduction of carbon footprint caused by deforestation and forest degradation (REDD+). The project aims to preserve tropical moors with high carbon density and it was able to stop the deforestation of 65 thousand hectares for palm oil plantation. Financed by the Canadian Carbon Streaming, the REDD+ project was capable of feeding the carbon credits back to the local communities and the infrastructures. The Rimba Raya project was the first REDD+ project that contributed to all 17 Sustainable Development Goals (SDG) of the United Nations, and also that safeguarded 105 thousands orangutans, an endangered species.

Among the ecosystem, the forests are one of the richest in biodiversity, and their value is measurable not only in width, but also in their prosperity and health. Finding the right balance between agriculture, arboriculture and safeguarded forest is key, but protecting their ecosystemic wellbeing is imperative for their survival, especially when the consequences of climate change not only hit plantations but also preserved ecosystems. Oxford Economics, a forecasting company, has highlighted that when looking from a long term perspective, Thailand and the Philippines’ temperatures and torrential rainfall frequency and volume are above average. The company has observed that the heat waves in Thailand in december 2014 and in Vietnam in february 2019 concurred by 5-6 percent of price increase of food products in those months. In conclusion, focusing all the efforts and investments on improving the climatic resilience of the ecosystems, would eventually reduce their vulnerability towards extreme meteorological events. It will also allow the governments to have more control over the economical consequences of these catastrophes on their countries.

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Redazione published in Asean

High Level Dialogue ASEAN-Italy

 "The interests of Italy, ASEAN and the European Union coincide," stressed Italy-ASEAN Association President Romano Prodi

The sixth edition of the event organized by The European House Ambrosetti with the Italy-ASEAN Association and the patronage of Maeci and Confindustria was held on Wednesday, July 6, in Kuala Lumpur, Malaysia. The High-Level Dialogue on ASEAN-Italy Economic Relations is the benchmark event in the ASEAN region for strengthening economic and strategic ties between ASEAN countries and Italy. During the hybrid physical-digital event, cutting-edge topics were addressed: macroeconomic prospects of ASEAN in the post-pandemic scenario, green technologies for a sustainable future, e-economy, smart technologies and value chains 4.0, aerospace and security for resilience, investment opportunities and tools for cooperation between Italy and ASEAN countries. The event was virtually opened by Foreign Minister Luigi Di Maio: "Strengthening relations with ASEAN is a priority for Italy," he said. "Already more than 700 Italian companies are doing business in the ASEAN market, third in Asia and fifth in the world, but there is still huge untapped potential both in traditional sectors such as agribusiness and in the innovative sectors of renewables and digital transition," Undersecretary Manlio Di Stefano said instead. The event was attended by Malaysia's Minister of Economy Dato Sri Mustapa Mohamed, Minister in the Office of the Prime Minister of Cambodia Sok Chenda Sophea, ASEAN Deputy Secretary General Satvinder Sing, among others. Romano Prodi (President of the Italy-ASEAN Association), Ramesh Subramaniam (Director General for Southeast Asia at the Asian Development Bank), Carlo Ferro (President of the Italian Trade Agency), Valerio De Molli (Managing Partner & CEO, The European House - Ambrosetti), Lorenzo Tavazzi (Head of International Development at The European House - Ambrosetti), and the two Vice Presidents of Italy-ASEAN Association, Michelangelo Pipan and Romeo Orlandi, also spoke. "The interests of Italy, ASEAN and the European Union coincide: a world order characterized by cooperation and not confrontation," said President Prodi. "A world that promotes trade, facilitates procurement and promises global development, with the goal of keeping environmental risks at bay".

Press release

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Redazione published in Asean, Global Lens

ASEAN and the Indo Pacific Economic Framework for Prosperity

Looking at its initial stage and various forward looking engagements, it will be crucial to see how member nations adapt to the key objectives of this partnership

By Aishwarya Nautiyal

Indo Pacific strategy has not only shown a new synergy among QUAD partners but has given a footprint towards the new Indo Pacific Economic Framework recently launched by US President Joe Biden allowing 12 nations as the participating member also opening doors for any new nations willing to join in future. Among major economic powers like the US, Australia, India, South Korea and Japan, interestingly ASEAN member countries like Malaysia, Philippines, Singapore, Brunei, Indonesia, Thailand and Vietnam have been in the forefront of this newly documented framework. It is crucial to understand that the collective economy of member nations represents nearly 40% of the world’s GDP. This opens the door for an opportunity for countries in the Pacific and Indian Ocean region who are also involved in various economic and security partnerships towards a collective effort to “grow faster and fairer”. Although it is interesting to see that it isn’t an official trade pact, trade has become a “pillar” in this whole framework along with other key elements.

      Though at the initial stage many later negotiations and amendments can be discussed among member nations, the key scenarios have been focused upon certain themes such as Supply Chain, Infrastructure, Green energy, decarbonization, tax and anti corruption and flow of free and fair trade. Thus this can be seen as a counterbalance to RCEP which is a free trade agreement as it outweighs both population and GDP. ASEAN countries that have not been included are Myanmar, Laos and Cambodia. Whereas China has raised its criticism for further economic decoupling perhaps it has also been excluded in this partnership. Interestingly countries such as the United States and India who have not participated in RCEP have been in the forefront in this new framework. India’s vision towards “Look East Policy” has brought ASEAN members to its core of foreign policy thus this new initiative brings the cooperation between India and ASEAN with a vision for strengthening a multilateral framework with other major economies to Pacific Ocean region. 

        Looking at future geoeconomics and geopolitics, the key pillar lies towards a resilient and fair economy which was also a highlight of President Biden’s statement during the East Asia Summit. This can also be seen as a possible replacement of the Comprehensive and Progressive Trans Pacific Partnership (CPTPP). Interestingly launch of IPEF just a day before QUAD summit in Tokyo, Japan has brought two platforms where economic base along with QUAD partners has initiated a new American led engagement to redesign partnership in various level among regional and global partners extending from East China Sea to South China Sea and further to Bay of Bengal and Arabian Sea. Bay of Bengal is a very crucial juncture between India and ASEAN nations. The crucial Strait of Malacca is a key for various goods and energy trade. Apart from India-ASEAN partnership IPEF gives a chance to expand beyond regional to global cooperation.

     Economic integration by creating new technological innovations also creating an industrial supply chain in which India is actively looking to become a new focal point with the future participation of various ASEAN nations in several industrial and technological investments such as semiconductors. Whereas India has been keenly working on enhancing economic connectivity by boosting investments in various infrastructure projects connecting ASEAN nations with the North East part of India. On the other hand US’s willingness to extend cooperation to strengthen the digital based economy and trade inclusive of purchase, sales, data flow enabling global value chain and smart services through several platforms and applications. The key idea is to ensure downstream costs for businesses and enhance the ability for processing of data and analysis, securing a secure platform for business continuity whereas access to key raw materials such as semiconductors, minerals and energy technology boosting the key pillars of IPEF is supply chain resilience.

       On the other hand, decarbonization and building new infrastructure to overcome key issues of global warming and rising levels of pollution by providing finances and technology to share technical assistance and mobilize concessional finances by adopting durable infrastructure for renewable energy. Tax and anti corruption is aimed to promote free and fair competition overcoming issues of taxation, money laundering and bribery through multilateral standards and agreements adopted by the members of IPEF. Looking at its initial stage and various forward looking engagements, it will be crucial to see how member nations adapt to the key objectives of this partnership and the level of confidence building with various engagements in near future ensuring regional and global geographic and economic obligations by creating new opportunities and avenues for future nations willing to be a part of comprehensive economic cooperation of IPEF.

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Sabrina Moles published in Asean, Economy and trade

The global inflation challenge: how Grab and the ASEAN gig-economy are struggling to survive

Rising fuel prices are the first real shock that Asian unicorns are facing since they expanded in the region. A vicious circle that challenges the resilience of the gig-economy made in ASEAN

Inflation is unforgiving. Even in the ASEAN countries. Especially if your business model has always focused on investor hype and extremely competitive consumer prices. This is what is happening to the ride-hailing giant Grab, a former unicorn now located in Singapore, and nowadays listed at Nasdaq index. The cleaver on fuel prices is straining the company's revenue across the region. Since Grab's core business are food delivery and ride-hailing services, it is no surprise that the crisis is hardly hitting its drivers and couriers.

According to the CEO and co-founder of the company Anthony Tan "Grab's mobility offer will stabilize in the second half of the year". But how? The company has planned incentives for workers and betting on the market recovery. A message that takes time with risk-averse investors but does not reassure customers: "It has been so difficult to find a car lately, it takes up to half an hour of waiting ", complains a premium user at Rest of World. While in the West many employees are trying to make ends meet with some extra income from gig-economy jobs, in Asia - where this market is still immature, albeit growing - the profession becomes less attractive. Once a viable and very profitable alternative to other traditional uses, a job in the gig-economy for ASEAN citizens is now more a risk than a solid investment.

Inflation hits the ASEAN countries

Today a delivery man in the Philippines spends 67% more on fuel than in February, while revenue is threatened by the general price surge. In Malaysia, travel prices during peak hours are estimated to have risen by up to 400%. Even those who rely on delivery services today find everything more expensive. Not only have the prices for raw materials increased - to this must be added the cataclysms that are causing the price of Filipino coffee to rise, for instance - but also the commissions are starting to become too expensive for small businesses.

From the customers’ point of view, without the economic advantages of the first, even the taxi service loses its appeal. As a study on ride-hailing trends in Southeast Asia reveals, the use of vehicles with driver is often a valid alternative for commuters. A rather common trend in Manila, where ride-hailing apps allow you to avoid the chaos (and disruptions) of the metro. In Indonesia, the overcrowded and sparse public transport that pushes users to the apps to book a taxi. Finally, it is curious that research in the area has revealed how, in the absence of these services, many customers would simply return ... to move on foot. According to studies for sustainable mobility there is a limit, estimated between 2 and 5 km, which would not justify the use of the car as the main means of transport: a possible point against traffic in those Asian cities where it is increasingly urgent. impose limitations on climate-altering emissions. And, therefore, another challenge in the horizon of Uber model for individual mobility.

Not to mention that ASEAN governments have opposed Grab while entering their markets. Unequal competition against taxis and contracts with few (or no) guarantees for workers are just some of the factors that prevent a peaceful relationship between these companies and the regulatory authorities. The system has proved fragile at times of crisis, and it is not yet clear whether the strategies adopted will be able to plug the fiscal deficit.

The vicious circle of the gig economy

Less revenue, more costs. Fewer workers, more inefficiencies. Grab isn't the only company caught in the tech unicorn trap. Even the Indonesian Go-Jek has to deal with skyrocketing prices, while resisting thanks to the strong support of Jakarta and customers who see the company as a bulwark of progress made in Indonesia. FoodPanda is in turn a victim of the race to the bottom attempted to penetrate the Grab empire, so much so that today the expansion strategy in Asia has become more cautious while the company looks for new ports elsewhere (for example in Eastern Europe).

Grab's pattern of expansion into Southeast Asia has often been referred to as "aggressive". The startup managed to penetrate the markets of the region thanks to competitive prices, the flexibility of working conditions and some local regulatory gaps. In addition, there has never been a lack of investor support, which has enabled the company to go from unicorn to ride-hailing leader in less than ten years. Between 2013 and 2014, Grab entered the Philippines, Thailand, Vietnam, and Indonesia, beating multinational Uber within a few months. In 2021 the company went public for a value of over 40 billion dollars and the shares immediately increased by 21%. But all that glitters is not gold: the company says it does not expect to make profits by 2023 and the current consumer crisis could further distance this horizon.

Grab's ambitions, and its promises, remain high: it would like to extend to all countries where it operates even the most advanced services, such as insurance and digital payments (currently reserved only for some locations). And he hopes to overcome this inflationary winter with subsidies that keep workers and do not bring down the quality of service. Above all, tariffs must remain extremely competitive - as Asian consumer preference studies suggest. A series of challenges, those of 2022, which test a whole (new) way of doing business and whose survival could determine the rewriting of the rules of doing business.

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Agnese Ranaldi published in Asean, Culture and society

The new "Asian values" and LGBTQI+ rights

Among ASEAN countries, the issue of legal and political recognition of the LGBTQI+ community experienced several setbacks but also steps forward

In June, Pride Month celebrations bloom around the world. Some Southeast Asian countries have made progress on civil rights, but most of them are still reticent to embrace the political claims and demands for recognition of the LGBTQI+ community. Cultural and religious circumstances and restrictive laws intersect with the bitter experience of Western colonization, providing political arguments for detractors of social movements fighting for the free expression of gender identity and sexual orientations. But recovering "Asian values," according to some analysts, may lead to accelerated openings on civil rights.

Also through the work of major international organizations, such as the United Nations, LGBTQI+ rights have been recognized as human rights under international law. In 2007, the Yogyakarta Principles, a compendium of guidelines addressed to states in the international community on the prevention of discrimination based on sexual orientation and gender identity were adopted: for "a different future, in which all persons born free and equal in dignity and rights" can enjoy the Arendtian right to have rights. But as we venture into national and local contexts, it seems that the recommendations of high politics become increasingly opaque. Southeast Asia is one of the regions that expresses this contradiction most forcefully.

In ASEAN, there have been many steps forward on the issue of legal and political recognition of the LGBTQI+ community, but also several setbacks. In Brunei and Indonesia, same-sex relationships are banned and in the Sultanate can even involve the death penalty. Indonesia has one of the highest levels of intolerance of same-sex couples in Southeast Asia: according to a 2019 Pew Research Center survey, 80% of respondents were against the acceptance of homosexuality in society. Recently, a news program airing on Youtube was at the center of a scandal for inviting a gay couple on the show. Deddy Corbuzier's "Close The Door" talk show is often the subject of controversy for having public figures speak on sensitive issues, and this time it infuriated many members of Indonesia's large Muslim community. President of the Indonesian Ulema Council Cholil Nafis was very upset when he said that "Islam forbids LGBT people. It is like a sick part of the body that needs to be amputated, not celebrated."

Singapore also does not rank among the most progressive countries when it comes to LGBTQI+ rights. The Asian city-state has a law in place that criminalizes sex between men, although "it is not strictly enforced." Thailand, often referred to as an "LGBTQI+ paradise" because of the relative freedom with which people can express gender and sexual orientation, is working on legalizing same-sex marriages. Kittinun Daramadhaj, president of Thailand's Rainbow Sky Association, said that gender equality in Thailand is "a fake equality, because we are happy with LGBT people, but we have no legal mechanism to protect their rights." Recently, after a Constitutional Court ruling that Thai laws should be expanded to provide more rights for the LGBTQI+ community, does something seem to be changing in Thailand. According to some observers, the country is well on its way to becoming the first in Southeast Asia to legalize same-sex unions, with a bill now going through parliament. The proposal is not about actual marriage, but would allow gay couples to adopt children and manage their assets jointly.

Another virtuous example of social recognition of LGBTQI+ people comes from an unsuspected country: the Philippines. Despite a history of authoritarianism and the deep pervasiveness of Catholic doctrine, the Southeast Asian archipelago has a record of inclusiveness for gender-fluid and queer people. This record also owes much to the legacy of traditional religions, which survived the advent of Spanish imperialism and the arrival of Catholicism and continued to guide the relational dynamics of society. Filipino-born director, producer and writer Vonne Patiag focuses heavily in her work on personal stories of marginalized identities. In an article in the Guardian, he gives the example of bakla, often considered a third gender in the Philippines, described almost as "an intersectional celebration of Asian and queer cultures." This is a gender identity based on performative cultural practice rather than sexuality, transcending male-female duality in a rejection of ante-litteram binarism. According to Vonne Patiag, "bakla is a Tagalog word for the Filipino practice of male cross-dressing, indicating a man who has 'feminine' manners, dresses like a 'sexy' woman or identifies as a woman." Baklas, historically, also hold important leadership roles at the societal level. Despite this pattern of gender fluidity, and although homosexuality is legal in the Philippines, marriage for same-sex couples is still not recognized, and legislation for the conversion of transgender people is still quite ambiguous.

According to Brian Wong, a PhD candidate in Political Theory at Balliol College, Oxford, and a Rhodes Scholar from Hong Kong, "it was contact with the West that gradually reduced Asia's permissiveness toward same-sex relations." Episodes of homophobia, according to the scholar, would have a correlation with the colonial experience, which would undermine the uniqueness of the debate on gender identity and sexual orientation in East Asia. Therefore, Wong calls on the Southeast Asian community to reclaim those "Asian values," which some detractors would like to confuse with conservative paradigms of thought, which should instead be drawn upon to take the state of rights of LGBTQI+ communities in Southeast Asia further.

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Redazione published in Asean, Politics and strategy

Italy-ASEAN relationship at a turning point

Editorial by Benedetto Latteri

Ambassador of Italy to Indonesia, Timor-East and ASEAN
*Originally published in The Jakarta Post

The recent visit of the Italian Vice Minister of Foreign Affairs Manlio Di Stefano to Jakarta and his attendance at the second ASEAN-Italy Development Partnership Committee Meeting represents pivotal progress toward the consolidation of the relationship between Italy and ASEAN. The reasons that led my country to the decision to apply for the development partnership status are evident to anyone who is familiar with international dynamics: ASEAN is a key partner in a strategic region, the Indo-Pacific, a region that hosts the world’s largest and fastest growing economies and a vast share of global trade passing through its waters. ASEAN is one of the most successful examples of regional integration, as well as a trusted provider of stability and economic growth. Its contribution to upholding freedom of navigation, preventing conflicts and promoting pluralism and tolerance has been unprecedented. At the same time, worrying developments are emerging in the Indo-Pacific: increased tensions over trade and supply chains, as well as intense competition on the political and security fronts. Consequently, regional and global powers, including the European Union and its member states, look at the Indo-Pacific with increasing attention, trying to strengthen cooperation with ASEAN, which represents an excellent framework to defuse geopolitical tensions. Since the first Italy-ASEAN Joint Committee in April of last year, we have been intensely negotiating the areas of joint cooperation. It’s been a long and challenging process that culminated yesterday with the adoption of a 62-paragraph document, the Practical Cooperation Areas (PCAs). The PCAs reaffirm our commitment to work together in a wide range of fields. The document defines the future direction of the development partnership by delineating a strategy that will require a comprehensive engagement and therefore a very significant effort from both sides. Just to give an idea of the depth and magnitude of our future cooperation, the fields of cooperation include peace and security, maritime cooperation, good governance and human rights, trade, investment and private sector development, energy, food, agriculture and forestry, tourism, science, technology and innovation, information communications technology, digital integration and e-commerce, people-to-people exchanges, disaster management and humanitarian assistance, health, environment and climate change, culture, connectivity and sustainable development. Even before the approval of the PCAs, Italy and ASEAN had launched or discussed a variety of initiatives on cultural heritage, cybercrime, environmental protection, sustainable fishing and coastal development and space cooperation. Furthermore, on July 5 and 6, the sixth edition of the High Level Dialogue on Economic Relations between Italy and ASEAN will take place in Kuala Lumpur, the first one to be held in person since the COVID-19 pandemic began. The event gathers ministers, CEOs and senior officials from Italy, ASEAN member states and the ASEAN Secretariat with the aim of strengthening economic ties between our countries. We believe that this initiative will contribute to unveiling the opportunities that the ASEAN market offers to our investors and build up “win-win” economic partnerships with Southeast Asia. As everyone can see, the cooperation that Italy and ASEAN envisage for the next five years is not limited to a few topics or sectors. To succeed, Italy and ASEAN will need to be fully committed to their partnership. In this context, we wish to commend the Cambodian presidency of ASEAN for the fruitful collaboration that we have been able to establish in 2022. And we are looking forward to working with the presidency of Indonesia in 2023 with which, I’m sure, we will continue to successfully advance our common goals of peace and development through mutual cooperation and support. The presence of the Italian vice minister of foreign affairs in Jakarta, especially in a moment of extreme crisis in Europe, sends a very clear message: Italy is fully committed to the region and counts on her ASEAN friends for the success of our cooperation in the years to come.

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Michelle Cabula published in Asean, Economy and trade

The rush of Japanese companies to South-East Asia

The pandemic has ignited a new awareness of the importance of personal and environmental hygiene. A number of Japanese companies, relying on an ever-widening pool of middle-income consumers, are expanding their operations in the ASEAN region

While the pandemic curbed the growth of countless sectors, the emergency situation gave impetus to the sudden expansion of some specific market segments, among which personal hygiene and home-care products stand out. This is the case of a number of Japanese companies that have relaunched their activities after an initial halt, leveraging the new awareness brought about by the pandemic among the growing middle class. Takafumi Ohno, who heads Lion's international business headquarters, has pointed out that the company wants to focus on the great potential of the beauty market in South-East Asia.

In September, the company, already established in the household products sector, launched Azzura, its first cosmetics brand. The brand made its debut in Indonesia, but the intention is to reach other countries, such as Malaysia, in the coming years. Offering mid-range pricing and targeting a growing number of young working women, Lion is confident of conquering also this new market segment, where demand is growing rapidly in the face of little competition from local and foreign brands. At the end of last year, again thanks to Lion, SunoHada, a Japanese skincare brand, arrived in Singapore, while Rawquest skincare, produced by its South Korean subsidiary, arrived in Thailand.

For Earth Corporation, a leading household insecticide company, there are also good opportunities to accelerate business expansion in South-East Asia. Taking advantage of the increased focus on the risk of transmission of infectious diseases through insects due to the recent pandemic experience, the time seems right to enrich its product offering and finalise expansion operations in countries such as Malaysia, Cambodia and the Philippines. The goal is to increase revenues from the sale of repellents in the region by 15 per cent by the end of 2023, from the current figure of ¥16 billion ($130 million), as stated by Earth's president, Katsunori Kawabata.

Recent expansion projects of Japanese companies in the region hint not only at a broadening of the consumer base, but also at participation in virtuous initiatives that benefit local communities. One of the most significant projects sees chemical and cosmetics company Kao launching a collaboration with Wota, a start-up affiliated with the University of Tokyo that aims to provide solutions to combat the global water crisis. The two partners announced that "Kao and WOTA will join forces in a business partnership aimed at solving global issues related to water and sanitation" through a series of initiatives, including the installation of handwashing facilities in places without access to running water. "We will expand our business so people in such places can use water and soap for better hygiene”, said Atsushi Koizumi, Executive Officer and head of the company's global business promotion center.

Currently, the two companies are engaged in a pilot test in Indonesia involving the installation of WOSH stands, equipped with their own water tanks and a technology able to filter, disinfect and make the water previously used for washing hands potable again. The hope is that the effort in the direction of solving a widespread social problem in some parts of South-East Asia - such as the lack of water supply systems - will also have a positive impact on the demand for soaps and detergents and reward sales.

The pandemic has profoundly changed the sensibilities and needs of Asian consumers, simultaneously rekindling the ambitions of those operators wishing to offer high value-added products to meet the increasingly demanding requirements of the growing middle class. Although China has recently surpassed Japan as a "top partner" in the opinion of people in the Southeast Asian region, in an attempt to expand their business and mitigate the consequences of the demographic decline in the domestic market, more and more Japanese companies are choosing to bet on the emerging ASEAN economies.

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