Asean

Redazione published in Asean, Global Lens

Readdressing India-ASEAN Defense Cooperation

The cooperation is not only limited to military engagement but has moved forward with future looking prospects in space and intelligence

By Aishwarya Nautiyal

ASEAN Regional forum which is a major platform of ASEAN security dialogue for consultation and cooperation at a highest level of defense engagement has seen an active participation of India prioritizing relations between ASEAN-India highlighting the importance of the forum as a key towards regional engagement with a vision of mutual security and growth maintaining the equilibrium through port visits and military exercises. India’s Act East Policy has brought new platforms like SIMBEX and SITMEX with Singapore and Thailand through military drills ensuring readiness to maintain regional peace and security. Maritime engagement by taking advantage of the strategic geographic location of Andaman & Nicobar (India) islands and its neighbors such as Thailand, Malaysia, Indonesia, Myanmar, Singapore that provides a key focus to Malacca cooperation and promoting a secured line for international trading channels.

      India has also been looking forward to providing various defense platforms such as Brahmos missile systems to the Philippines which nearly cost around 375$ million for the navy. On the other hand India and Singapore have shown a significant growth in bilateral security cooperation engaging in various naval exercises including new naval cooperation where India gained access to Changi naval base for its ships with refueling rights and logistics support. The agreement also provides a provision for mutual restock and rearm on each other's military bases. One of the significant developments can be seen with India-Vietnam defense cooperation where India gained access to Cham Ranh Bay naval and air base also providing training and advanced weapon systems to Vietnamese defense forces. Till now 550 Vietnamese submariners have gained in-depth training and knowledge at INS Satavahana submarine training base along with 100$ million credit to buy Indian defense equipment. Vietnamese pilots regularly get trained for Sukhoi platforms whereas private enterprise engagement can also be seen with Larsen and Toubro to equip Vietnamese Border Guards with 12 offshore vessels.In 2016, a new credit line of 500$ million has been provided for procurement of new defense platforms.

     The cooperation is not only limited to military engagement but has moved forward with future looking prospects in space and intelligence. India’s decision to establish a satellite tracking and imaging system around Ho Chi Minh city with the funding from ISRO of 23$ million for tracking and exchanging data with Vietnam and sharing future surveillance and intelligence linked up with stations in Biak in Indonesia and Brunei. Looking at a new geo strategic convergence several warships from Eastern naval command of India have been dispatched with an aim to engage bilateral exercises with Philippines, Singapore and Indonesia. Recently, Malaysia tends to procure Lightweight fighters and has engaged Indian fighter jet TEJAS to participate in procurement tender along with other global competitors. This is the first time that an Indian origin jet has been involved in a global tender. Mekong- Ganga Cooperation in which India and Vietnam are both members along with other other ASEAN members such as Thailand, Myanmar, Cambodia, Laos. The key focus of this engagement lies towards cooperation in exchange of culture and tourism along with educational and transportation development.

      India Thailand shares their maritime boundary through a crucial trading route of Malacca Strait. This brings both the countries at a focal point of ensuring safety and security of the Bay of Bengal region. The relations between two countries have been centuries old with several historic commonalities within their cultural relations. India has been providing regular engineers and medical delegations in various exercises conducted between two nations including Ex- Cobra Gold one of the largest military exercises. The 31st edition of India-Thailand Coordinated Patrol (CORPAT) was one of such engagements where HTMS Krabi along with INS Saryu and Dornier Patrol Aircraft have been engaged for 3 days near strategically located Andaman Sea. Bridging the friendship between two militaries along with several issues such as unregulated fishing, drug trafficking, piracy, terrorism, smuggling and illegal immigration including relief operations at sea have been a key fundamental in understanding interoperability between two navies in CORPAT.

      With India looking forward to expansion of its geostrategic footprint in Southeast Asia, energy rich Brunei seems to feature in a prominent position in India’s Act East policy. Till now the relations haven’t been in focus and have not been able to realize it’s full potential but with new vision India is looking forward to increase the level of intensity and vitality of connecting with Brunei as a crucial maritime partner. The port led development where Maura port can be a new focal point of Indian policymakers along with India- Brunei agreement in 2018 to boost defense relations including exchange of information, exercises, training and defense industrial development. Being at a crucial juncture of changing global dynamics from Europe to the Middle East, South Asia is becoming more and more crucial in balancing and benefitting through various platforms in which defense and intelligence cooperation has its own pivotal role ensuring trust between regional partners.

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Redazione published in Asean, Politics and strategy

L’ASEAN è sempre più al centro

Editoriale di Lorenzo Lamperti

Dopo la pandemia e in seguito alla guerra in Ucraina, l’Asia e in particolare il Sud-Est asiatico stanno diventando sempre più cruciali per gli equilibri politici e commerciali globali

La tendenza era già chiara prima. Ma ora lo è probabilmente ancora di più. Il Sud-Est asiatico e l’ASEAN sono destinati a essere sempre più fondamentali per gli equilibri commerciali e politici globali. La regione è già un motore fondamentale della crescita globale ed è destinata a diventare la quarta economia mondiale entro il 2030, soprattutto grazie al suo crescente status di hub commerciale e dell’innovazione. Non solo. Da Sud-Est arriva una forte spinta a digitalizzazione e sviluppo sostenibile. Le due componenti non sono scollegate, visto che proprio il focus sulla tecnologia consente l’utilizzo di sistemi smart per rafforzare la transizione energetica. La necessità di tenere sotto controllo l’inflazione e di diversificare le catene di approvvigionamento sta focalizzando ancora di più l’attenzione sull’area ASEAN, che sta proponendo misure spesso efficaci per calmierare l’aumento dei prezzi ed è diventata un’alternativa fondamentale a livello produttivo. Paesi come Vietnam e Malesia sono ormai al centro delle mappe delle forniture globali. I flussi di investimenti esteri nella regione sono in costante aumento, con le società di venture capital che scommettono con sempre maggiore convinzione sulle startup locali. Secondo i dati della società di ricerca Preqin, i fondi di capitale di rischio incentrati sul Sud-Est asiatico e sull’India hanno raccolto finora 3,1 miliardi di dollari nel 2022, avvicinandosi già ai 3,5 miliardi di dollari raccolti in tutto lo scorso anno. In confronto, la raccolta di fondi da parte dei fondi di venture capital focalizzati sulla Cina è scesa bruscamente da 27,2 miliardi di dollari nel 2021 a soli 2,1 miliardi di dollari. Come ha notato in un editoriale il Jakarta Post, la popolazione della regione è giovane, esperta di tecnologia digitale e sempre più prospera. Per le aziende, ciò significa che l’ASEAN non solo rappresenta una base da cui diversificare l’offerta, ma offre anche una diversificazione della domanda e della forza lavoro. Entro il 2030, si prevede che i consumi saranno più che raddoppiati, raggiungendo i 4 mila miliardi di dollari, mentre 40 milioni di persone si aggiungeranno alla popolazione in età lavorativa. Inevitabile che il Sud-Est asiatico sia un’area in cui ora tutti vogliono essere presenti.

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Pierfrancesco Mattiolo published in Asean, Economy and trade

Asia seeks answers to the energy dilemma

The effects of the Russian-Ukrainian war on the global fossil fuel market are also affecting Asian countries and pushing governments to change their long-term strategies.

The Russian-Ukrainian war has led to a serious increase in energy prices, in Asia as well as in the rest of the world. In the short term, this increase will weigh most heavily upon the weaker sections of the population - also affected by the war-induced increase in the prices of many food products. In the long run, however, it could also represent an opportunity. Governments and companies may decide to reduce their dependence on fossil fuels, whose prices have soared, and rely more on renewable energy sources. Can we take comfort in thinking the glass is half full? Not really. The ability to turn the energy crisis into an opportunity varies greatly depending on where in the world you are and how far-sighted public decision-makers will be in dealing with the immediate effects of the crisis. Examining the impact that the war is having on Asia's energy market today can be useful in predicting what far-reaching consequences we will have tomorrow. Advanced and developing economies, well-equipped and less prepared governments, international security tensions and the tangible effects of the climate crisis. The continent has all the relevant elements to be an excellent case study of the immediate and upcoming effects of conflict.

The Russian-Ukrainian war will have three immediate effects on Asian economies. First, global energy prices will remain high and volatile throughout 2022, leading to a generalised increase in inflation; second, efforts to finally overcome the Covid crisis, whose economic effects are still intense in some countries of the region, will have to be reviewed and increased; finally, governments will change their energy strategies, probably increasing the share of energy produced through coal and liquefied natural gas (LNG), so as to reduce the use of oil and gas transported by pipeline - the two fossil fuels most affected by the reduction of Russian exports caused by the war and sanctions.

In ASEAN, each country is experiencing the effects of the crisis differently. Oil and gas producing countries such as Indonesia, Malaysia and Vietnam will be able to use their new revenues to finance measures to support the people most affected by inflation. There are also some pre-existing differences in the mix of fossil sources consumed: some countries were already consuming a relatively little amount of oil and energy (Indonesia, Malaysia, Philippines), while others are more exposed (Singapore, Thailand). Another element to consider is the weight of exports on the national economy: some countries also have to worry about inflation in their trading partners. EU consumers, who are particularly affected by the economic effects of the war, may buy fewer Asian products. In particular, the Philippines and Vietnam appear to be in difficulty. Manila is struggling with soaring inflation, a worsening trade deficit, the devaluation of the peso and a still high number of Covid cases. Hanoi, on the other hand, has always suffered from a certain vulnerability to external economic shocks and these last few years of global crisis represent a perfect storm for its export-oriented economy.

Yet, we should keep in mind that energy is not only a production factor but also a strategic asset. The concept of energy security frequently appears in the speeches of world leaders, and the Russian-Ukrainian war has made the issue even more urgent. The conflict is also complicating the relations between the United States and the Asian powers, China and India in particular, on the issue of reliance on Russia's natural resources. Moscow is trying to break its isolation by diverting its fossil fuels from Europe to New Delhi and Beijing. India imports 80% of the oil it consumes, 3% of which comes from Russia, and seems intent on increasing this percentage in the short term. Modi's government seems indifferent to Moscow's choices or US pressure and wants to continue to cooperate with Russia. China also keeps an ambiguous stance toward Russia and is not eager to question the agreement made before the outbreak of the war to increase gas supplies. However, China does not seem to have much choice: even before the war, Beijing wanted to reduce its dependence on coal and LNG, whose market is dominated by the United States and Australia. The energy crisis also raises the stakes in the dispute over the South China Sea: its seabed is rich in fossil resources and a large number of LNG and oil cargo ships pass through its waters.

The energy crisis is, however, particularly relevant in terms of climate change. If economies relied more on renewables rather than fossil fuels, they would be less exposed to rising prices for the latter - prices that have once again proved extremely volatile. The war has been a wake-up call for the world's politicians and should prompt them to reset their environmental policies in favour of sustainability: perhaps renewables are not less reliable or more expensive than fossil fuels, as it is sometimes argued. But they could also choose to go in the opposite direction. For instance, there are some worrying developments in India. The country is on track to meet its emission reduction targets under the Paris Agreement - the only major economy in the world to do so - but it is now devoting significant resources to buying oil directly from Russia and distributing it at a subsidised price to mitigate the effects of the energy crisis. Increasing the use of LNG may also prove unsustainable in the long term, both economically and environmentally. Its price has sharply risen and its eventual inclusion among green energy sources generates controversy.

Energy security or combating climate change? Short- or long-term remedies? The Russian-Ukrainian war has presented Asia with an energy dilemma that is not easy to solve. In any case, the crisis will hit economies hard all over the world, and political leaders will have to find ways of protecting the weak without losing the increasingly complex environmental challenge while navigating a turbulent international scenario.

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Valerio Bordonaro published in Asean, Economy and trade

The moves of the Southeast on inflation

Governments in the ASEAN area are adopting a series of targeted strategies to protect consumers from rising prices. Often effectively

The war in Ukraine is having an inevitable and strong impact on economies around the world. The side effects on the food chain, energy supplies and inflation are evident at different latitudes. Including Europe and Southeast Asia. In this case, perhaps European governments could draw some inspiration from the moves of Asian governments, which are taking a more focused approach than their Western counterparts to contain global inflationary pressure - a strategy that appears to be working, at least for now. While inflation remains a serious economic challenge in Asia, in many countries the measures taken have helped protect the public from some price hikes and have meant that most central banks in the region have not had to raise rates of interest as quickly as it has elsewhere. The various efforts have also shifted some of the cost burdens from consumers and small businesses to state budgets. Indonesia, a country with a history of financial volatility and price fluctuations, last week increased energy subsidies by $ 24 billion to contain energy costs, following the lifting of a controversial export ban on palm oil. Although the impact of rising prices continues to be felt particularly on small and medium-sized businesses, household demand remains strong and inflation is within the 2-4% range set by the central bank of Jakarta. Malaysia's heavy fuel and transportation subsidies likely reduced the country's inflation by about 1.5 percentage points, which was only 2.3% in April. In Thailand, headline inflation just exceeded the central bank's target of 1-3% and the head of the bank pledged to continue supporting the economic recovery. The burden of containing prices in Europe and the United States has been largely borne by monetary policy, with the central banks of the United States, United Kingdom and Canada now engaged in aggressive interest rate hike cycles. In Southeast Asia, however, most central banks have only recently begun a very cautious shift from extremely low interest rates, with an increase that should be more gradual than in the Occident.

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Annalisa Manzo published in Asean, Economy and trade

Asia's focus on infrastructure to recover

The scale of projects will require not only government support, but also private sector support, as well as bilateral and multilateral funding

Infrastructure upgrading is at the top of the 2022 agenda for Southeast Asia and South Asia. The urgency starts with a basic fact: from 2020 to 2040, one-third of the world's population growth will come from the young economies of South Asia and Southeast Asia, namely India, Pakistan, Bangladesh, Indonesia, Malaysia, the Philippines, and Vietnam. United Nations projections also estimate a net development of urbanization, with some 462 million people moving to cities by 2040, or a 52 percent increase in the urban population, on top of the current 895 million. These phenomena will undoubtedly put great pressure on existing infrastructure, requiring greater investment to maintain not only existing demand but especially future demand.

The largest infrastructure gap is in India, followed by Pakistan and Bangladesh. In Southeast Asia, it is the Philippines and Indonesia that have the largest infrastructure gaps to fill, especially road infrastructure. However, India maintains the lead in the quantity of roads built, but it is the quality of the expressways that is of concern. Vietnam has also invested heavily in the construction of expressways, markedly improving the infrastructure system. The Philippines is focusing investment on air transport, which is critical for domestic mobility, trade, and tourism. Pakistan is the country lagging furthest behind in investment in air infrastructure. In contrast, rail infrastructure receives little investment in both South Asia and Southeast Asia, with the exception of Malaysia and Indonesia. 

The infrastructure gap is thus at the center of the political agendas of these countries, many of which have already devised policy support and government investments to address the problem. The Indian government has announced PM Gati Shakti worth $1.3 trillion to upgrade national infrastructure over the next 25 years and attract Foreign Direct Investment. In support of this long-term national plan-in the fiscal year 2023 budget-India has called for a 35.4 percent increase in investment, placing infrastructure construction, particularly highways, railways, and logistics, at the center of its economic development agenda, with figures significantly higher than previous budgets. Spending plans include the construction of 25,000 km of new highways and 100 new freight terminals in three years. Sectors such as water and power are also receiving proper attention.

In Southeast Asia, Indonesia aims to invest $400 billion by 2020 and 2024 to improve airports, electricity, and mass transit. Vietnam is continuing its feverish infrastructure development to increase its competitiveness. Major projects include the construction of more than 5,000 km of expressways by 2030; 172 national highway routes with a total length of 29,795 km; three urban ring roads in Hanoi with a total length of 425 km; and two more in Ho Chi Minh City with a total length of 295 km.

Pakistan, with the second largest demand gap, has found support in its alliance with China-through the China-Pakistan Economic Corridor (CPEC)-to improve its infrastructure. Bangladesh has also introduced the Delta Plan 2100 to implement 65 infrastructure projects.

Funding is the crux of these countries' infrastructure plans. The scale of the projects will require not only government support but also private sector support, as well as bilateral and multilateral funding. This issue is particularly felt by India, the Philippines, and Indonesia.

India aims to issue green bonds to support the construction of climate-friendly infrastructure, including as a financing vehicle for sustainable development. In 2021, India issued $6.8 billion in green bonds, compared to China's $66.1 billion. Southeast Asian nations are also turning to green bond issuance to support infrastructure ambitions. The Philippines, for example, is considering issuing sovereign green bonds to help private funds assess sustainable infrastructure investment needs in the archipelagos. 

Reducing the infrastructure gap is an urgent goal for these countries. With increased awareness and priority secured, 2022 will mark the tipping point for improving connectivity, and thus the productivity and trade competitiveness of these economies that are strategic to international balances. 

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Lorenzo published in Asean, Politics and strategy

Cooperation yes, opposition no

Most ASEAN countries have joined the launch of Biden's Indo-Pacific Economic Framework. But they say no to the logic of a clash between blocks

There are all but three. Only Myanmar, Cambodia and Laos are not part of the Indo-Pacific Economic Framework for Prosperity (IPEF), the cooperation program launched by US President Joe Biden from Tokyo, during his trip to Asia. Malaysia, Singapore, Indonesia, the Philippines, Brunei, Vietnam and Thailand, on the other hand, joined India, Japan, South Korea, Australia and New Zealand in a group that comprises 40% of world GDP. The program intends to strengthen supply chains and collaboration between partners, particularly in the areas of digital commerce and the energy transition with a focus on the development of renewable energy. Countries in Southeast Asia have made it clear multiple times that they would like to see greater USA trade engagement and in the past have expressed their frustration at Washington's withdrawal from the Trans-Pacific Partnership (TPP) by the former. US President Donald Trump in 2017. At the same time, the White House tries to convince ASEAN, through the IPEF, that the USA is ready to do its part to support the region's commercial, infrastructural, environmental and digital development and contain the economic impact of the war in Ukraine. Still, the Biden administration made it clear in advance that it was not a free trade agreement and that therefore the framework will not lead to a lowering of tariffs on imports. The neutrality of the Association was however reiterated and exemplified by the words with which the Premier of Singapore, Lee Hsien Loong, announced joining the program launched by Biden. "Asia does not need a NATO equivalent," said Lee, also referring to the Quad summit. And he clarified the inclusive will of Southeast Asia by asking at the same time as the launch of the IPEF for the go-ahead for China to join the TPP. Cooperation yes, opposition no.

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Agnese Ranaldi published in Asean, Economy and trade

Why Asia is thinking about going nuclear

In Singapore, Minister of State for Trade and Industry Alvin Tan spoke to parliament about alternative energy options such as hydrogen, geothermal, and nuclear. Other countries are following.

East Asian countries are considering the nuclear option in response to the shortage in global energy supply brought about by the Russian-Ukrainian conflict. This is an attractive option for many regional governments that are struggling to deal with economic consequences of the health crisis to promote domestic growth.

The latest report of the Intergovernmental Panel on Climate Change (IPCC) is blunt about the environmental and social emergency that awaits the international community in the near future. There is an urgency for decisive measures to drastically reduce greenhouse gas emissions by 2025 if we are to attempt to meet the Paris Agreement target and limit global warming to 1.5 °C above pre-industrial levels. At COP26 in Glasgow last November 2021, participating countries were encouraged to rapidly move away from fossil fuels to avoid climate disaster, and to consider the use of nuclear power.

East Asia - due to its geographical characteristics and socio-economic structures - is among the regions most susceptible to environmental and climate deterioration. The consequences of global warming are dangerously impacting on the living conditions of regional communities, forcing many people to migrate and others to deal with rising sea levels and extreme weather phenomena.

For these reasons, national governments have made sustainability and de-carbonization imperatives of their policy agendas. The economic difficulties that followed the pandemic and geopolitical contingencies in Eastern Europe have challenged these good intentions, because beyond environmental concerns, economic growth remains the main objective of these emerging markets.

Who are the supporters of the nuclear turnaround

China recently approved the construction of six new nuclear reactors to advance its de-carbonization policy. The severe power shortage experienced last fall 2021 had forced China's local governments to ration power access. This would have confronted national authorities with the pressing need to find energy solutions that meet the massive national demand without sacrificing climate commitments.

Japan, although still traumatized by the Fukushima disaster of 2011, is considering going nuclear to withstand the impact on energy prices brought about by the war in Ukraine. New Prime Minister Fumio Kishida is quite supportive of this transition, according to Nikkei Asia. He told reporters on April 8 that he aims to "maximize the use of renewable energy and nuclear power following the ban on Russian coal imports."

South Korea's newly elected president, conservative Yoon Suk-yeol has promised a nuclear turnaround to emancipate the national economy from carbon. The plan to overhaul the energy mix has been called "inevitable" for Seoul to meet its climate goals.

In Singapore, Minister of State for Trade and Industry Alvin Tan spoke to parliament about alternative energy options such as hydrogen, geothermal and nuclear. Although a 2012 study had determined that conventional large nuclear reactor technologies were not appropriate for the small Asian city-state, today the infrastructure can be much smaller and more sophisticated, and Singapore could also benefit from this industry.

The Philippines is also entertaining the idea of veering toward nuclear power. Energy Secretary Alfonso Cusi is a strong supporter of this energy option, and told the ANC TV channel last year that it is a strategic alternative to reduce oil imports. In February, President Rodrigo Duterte signed an executive order to include nuclear power in the national energy mix.

Other countries in the region, including Indonesia, Malaysia, Thailand, and Vietnam, are exploring or implementing plans to produce nuclear power, although many projects remain on hold due to cost and safety issues.

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Redazione published in Asean, Politics and strategy

Neutrality and pacifism cornerstones of ASEAN WAY

Editorial by Michelangelo Pipan

Vicepresident - Italy-ASEAN Association

ASEAN countries intend to remain neutral, continuing to pursue balance based on equidistance and proactive economic diplomacy 

In the aftermath of the summit with the US, ASEAN remains reluctant to take sides, to let itself be drawn into geopolitical disputes, faithful to its founding principles as if to extend the Asean Way that accompanied its expansion beyond its borders. The ASEAN countries intend to remain neutral, continuing to pursue equilibrium based on equidistance and proactive economic diplomacy (see RCEP) - which for two years have led them to be China's main trading partner, overtaking the USA, in third place, and the EU, which has risen in second place.

Biden asked the summit to remedy the lack of attention of the Trump presidency. Objective achieved from the formal point of view, without however removing ASEAN from the comfort zone intended not to spoil the friendship with the great powers.The final Joint Vision Statement seems entirely written on the Asian side of the Pacific: repeated references to ASEAN's cornerstones of neutrality, pacifism and the Nuclear Free Zone, to the peaceful settlement of disputes, to the commitment to regional peace and stability. In the chapter on the South China Sea - significantly titled "Promotion of Maritime Cooperation" - China is not mentioned and quietly advocates the peaceful resolution of disputes based on international law. The short section on Ukraine merely reaffirms - specifying: as for all nations - respect for sovereignty, political independence and territorial integrity, calling for an immediate cessation of hostilities. 

In the capitals, ASEAN leaders receive applause: the Association must remain neutral; the RCEP remains the reference context; The Indo Pacific Economic Partnership, not yet better defined as a US initiative, "it is absolutely not comparable".

Europe and Italy have an interest in the consolidation of intermediate powers that contribute to the regular functioning of globalization, which will have to resume along better meditated and governed guidelines. In this context, the ASEAN countries are confirmed - also as a springboard for the other Asian markets - natural interlocutors for Italy. A great opportunity for our country, its industrial districts and its natural export vocation.

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Sabrina Moles published in Asean, Culture and society

Mekong dams: the impact on communities and ecosystems

The Italian Vietnamese Studies Center brings up the debate on the Delta’s development issue. Recently, the Mekong region’s growth has been driven by infrastructural projects that are as ambitious as they are controversial

On Thursday 12 May the Italian Vietnamese Studies Center (CSV) hosted a webinar to explore the environmental, social and legal aspects that revolve around the construction of dams along the Mekong. The area occupies 790,000 km2 and embraces very different countries in terms of government, economy and demographics: all factors that influence priorities (and therefore approaches) to the issue of development. The nine panelists, preceded by greetings from Ambassador Duong Hai Hung, sought to cover all these aspects: among the speakers, experts in Earth sciences, ichthyology, power plants and law.

Ecosystems in danger

As Professor Simone Bizzi explained, the Mekong is a complex, but organized, ecosystem. Each element of the river ecosystem is constantly changing and is self-regulating to maintain its "health". The introduction of alien elements, such as dams and hydroelectric power plants, can have a devastating impact .

The case of the upper Mekong basin’s dams is emblematic of these changes. China is investing huge resources to enhance the development of the area through hydroelectricity. Along the Lancang, a tributary located in Yunnan province alone, 65 plants are operational and Beijing is planning to build another 23 dams. Among the various problems, their presence is "jamming" the transport of sediments, which each year amount to about 160 megatons (thirty times the weight of the pyramid of Giza): the accumulation of sediments causes stagnation upstream, while the nutrients that support biodiversity downstream no longer arrive. A phenomenon that has consequences not only on fish, but also on rice fields and agricultural activities in general.

(Un)sustainable development

Climate change poses a further challenge to the normal functioning of the river ecosystem (and of all the activities that depend on it). The flow of water, already reduced by the presence of dams, is subject to increasingly intense dry seasons. In 2019 the Mekong reached its lowest level in the last 100 years, a record that is turning into normality. Faced with the lack of water, as also reported by the Observatory on dams in the Mekong of the Stimson center, some dams end up further limiting the flow and penalizing the areas of the southern sector. This happens especially in the Chinese section of the Mekong, experts accuse, even when the level of rainfall is sufficient.

However, the projects for the construction of new hydroelectric plants have not stopped. On the contrary: along the tributaries of the Mekong, funding for the construction of new plants continues to increase, thanks to the growing demand for electricity in Laos, Cambodia, Myanmar, Thailand and Vietnam. Some of these countries are highly dependent on hydroelectricity, as evidenced by the Phnom Penh data on the Cambodian energy mix: 55% of electricity production capacity comes from hydroelectric plants. Financial dependence is added to the risk of imbalances in energy supply: whether they are investments by foreign companies or development banks, or the debts accrued to contractors.

Finally, the construction of dams can have immediate or long-term social effects. In the first case, neighboring populations could have their land expropriated - when the project does not directly require the relocation of villages. Secondly, the environmental degradation that follows poor project management reduces the livelihood and development opportunities of those citizens who should benefit from them.

Solutions (or compromises?)

As Professor Massimo Zucchetti pointed out, it happens that after a careful review the plans for the construction of new hydroelectric plants have to be canceled and totally replanned: in the northeastern Indian state of Uttarakhand as many as 23 out of 24 projects did not pass the minimum criteria of sustainability. This sometimes happens due to the lack of involvement of local actors or experts capable of assessing the impact of dams in the context concerned. Solutions to reduce negative externalities exist, and some of these are related to the so-called "nature based solutions". The latter represent a set of measures that are based on respect for the specificities of the territory and require minimal human intervention.

The problem of managing hydroelectricity in the Mekong Delta is not only ecological, but poses various challenges for the construction of an environmental law capable of protecting local communities. The last part of the meeting therefore focused on legal disputes affecting such a vast area. The growing scarcity of water resources has long been recognized as a factor in accelerating conflicts, and the lack of adequate mechanisms increases the risks of instability (as well as poor adaptation of projects).

The role of transnational organizations

What can ASEAN do in such a complex context that affects more than half of its member countries? According to the panelists, there are many interventions that today remain in the hands of transnational organizations. Most of the hydroelectric projects along the Mekong see the participation of banks of state and private actors, development banks, and research groups. Furthermore, public participation is particularly important for the management of local resources. The different actors also have the capacity to provide the data necessary to understand the reference context - objectives that are still difficult to achieve today.

What can happen thanks to the intervention of non-partisan organizations is the sharing of experiences and virtuous design mechanisms. Furthermore, a group like ASEAN has at times been able to form a common front in front of important players such as China, which in this case is one of the main interlocutors. The other side of the coin, however, offers an overview that is still too attentive to facade sustainability and little to the actual overexploitation of existing resources. On paper, the word "sustainable development" has spread as rapidly as electricity consumption and the emission of greenhouse gasses have increased. Here is the challenge for all the actors involved in the transformations in the Mekong basin: knowing how to innovate while respecting the territory, the ecosystem and its populations.

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Redazione published in Asean, Global Lens

ASEAN and India, redefining South Asian future energy strategies

By Aishwarya Nautiyal

India and ASEAN showed a willingness in developing another ecosystem as strengthening infrastructure for renewable resources while sharing expertise along with knowledge to its full potential among member nations.

Transition into new synergy with rising demand and advancement in technology is providing a new necessity of alternative and clean energy sources. ASEAN with the high level of potential from technological driven to resourcefulness has been seen by India as one of the major partners whether it is exchange of trade or new potential in innovation towards future energy needs . As the world is dealing with the fluctuating scenarios due to which rising demand of efficient energies and risk oriented dependency has brought a new requirement in exploring future avenues for green and efficient sectors of energy resources. A high level conference between delegates of India and ASEAN in the month of February, 2022 showed a willingness in developing another ecosystem as strengthening infrastructure for renewable resources while sharing expertise along with knowledge to its full potential among member nations.


New energy hubs,capacity building with technical assistance to promote joint initiative in the South Asian region has been prioritized.Initiative by India to welcome experience from ASEAN towards integration of green market is one of the key aspects. ASEAN power grid is one of the key areas of interest and its efficient functioning has brought a phase for integration and adaptation through various infrastructure development projects including strategic cooperation to sharpen the knowledge and expand opportunities in the Indian subcontinent region. India’s willingness to cooperate with Indonesia to facilitate a new dimension of transition in the renewable energy sector. Academic exchanges and providing new ideas for mutual encouragement with effective coordination among researchers and students has also been an important perspective among policymakers from India and ASEAN member nations.


Integration of Grid among ASEAN countries and its project designing new capacity building has been a key area with the welcoming signs . The Ministry of Mines and Energy of Cambodia has highlighted an importance of a unified ambition targeting actions planned for low carbon emissions whereby green hydrogen is seen by India as a new key for decarbonisation driven through intensive training and mutual expertise coordinating with partners from ASEAN grouping. Some recent developments in ASEAN countries have shown a tremendous potential in organizing and implementing new strategies towards transition into Renewable Energy. Indonesia is looking forward to resolving the storage capacity whereas Lao PDR has shown progress in a rise of 89% in new green projects including hydroelectric power generation, solar energy, biomass leading renewable energy generation totaling more than 9100 MW.


Thailand on the other hand has floated a 2700 MW solar plant creating its multi utility inclusive of water pumping. India has recently committed progress in future energy share along with new technological innovation ensuring its cost effectiveness and competitive infrastructure along with ASEAN partners such as Brunei, Philippines and Myanmar. Looking forward towards future challenges with rising opportunities utilizing technological skills of smart intelligence through India’s one of the largest networks of IT industry focusing upon robotic integration for smart engineering can bring a sustainable production to balance the demand for future energy needs in such a huge populated region. Mutual coordination with neighboring ASEAN nations can provide a platform for strengthening bilateral cooperation and sharing bilateral human development.


A response required for new energy security has been kept as one of the high priority sectors by Indian policy makers along with ASEAN promoting biofuels alternatives such as palm oil, sugarcane and coconut has emerged as a major component of alternative for driving future energy production. India produces large amounts of sugarcane in its mainland in the Northern part of its territory whereas coconut production in Southern India complemented by being a largest importer of palm oil from Malaysia and Indonesia showcase an avenue of mutual resource driven by technical cooperation as well as knowledge sharing. According to the Indian Planning Commission a major concern lies for its vast population of 1.36 billion people whose demand is rising due rising standard of living and driving workforce that needs a new kind of security policies ensuring future energy needs.


According to the United Nations Environment Programme, India spent almost USD 10.2 billion alone in 2015 while mitigating the effects of climate change and focusing on new strategies for solar and wind transition which have become a dominating field in India’s new ecosystem of sustainability in energy. New rising challenges in cities struggling with massive level of pollution and urgency of finding new ways through research and mutual confidence in investmenting in infrastructure projects, collaborative vision driven by ASEAN India commitment to succeed beyond single state strategy into integrated unified regional policy by harmonizing through mutual commitments in various steps and aspects with a vision of overcoming a daunting task of difference in national level of targets and commitments which may vary quantitatively due to variation in objectives and its time frame to overcome mechanism of conventional energy sources.

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Michelle Cabula published in Asean, Culture and society

Crypto Gaming in South East Asia

In recent months, the popularity of play-to-earn games based on blockchain technology has continued to grow. The online video game Axie Infinity, developed by Vietnamese company Sky Mavis, has become a symbol of this trend. However, the race to create a digital universe supported by decentralised transactions may have suffered its first setback. 

"Axie is a digital nation where people globally come together with their Axies to play, earn, and live. Welcome to our revolution." This is how Sky Mavis presents its mission statement. The experiment launched by the Vietnamese startup has created a real player-owned economy, making the possibility of earning thousands of dollars a month by breeding, collecting and trading their unique avatars - digitised as NFTs - a reality for dedicated players. The currency of the exchanges, and the main source of income on the Axie platform, are ERC-20 tokens called Smooth Love Potion (SLP). Until a few months ago, this cryptocurrency could be accumulated indefinitely by completing quests or winning battles and redeemed for new game features, or alternatively converted into real money.

According to Aleksander Larsen, co-founder and COO of Axie Infinity, the secret to Axie's success lies in the substantial monetary incentive offered to users in exchange for the time they spend on the game every day. However, on February 4th, the game's developers decided to take drastic action to balance the system, removing the rewards for 'Adventure Mode' and 'Daily Quest', effectively capping the amount of SLPs issued each day in order to limit inflation. While at its peak, a player could earn up to 150 SLPs per day, worth up to US$54, in December last year the maximum loot was halved to 75 SLPs, worth no more than two dollars. Simultaneously, the base price of Axies dropped from around $300 in August to just $25 in February.

The collapse of the SLP price is said to be explained by the tendency of players to convert tokens into real currency instead of reinvesting them within the game, causing an oversupply: the ways in which SLPs were 'burned' through the breeding of new Axies could not keep up with the speed at which large amounts of tokens were being issued on the market.

Jeffrey Zirlin, another co-founder of the game, was not surprised by these imbalances and compared the volatility in terms of capital flow to that which typically characterises emerging market nations. On the contrary, he emphasised the innovative strength of Axie Infinity, a pioneer in the trend of transforming digital gaming platforms into economies owned by real players that, consequently, often finds itself having to deal with unprecedented challenges.

In fact, it only took the announcement of the updated version - with its associated adjustments in terms of SLP supply - to reverse a long-running downward trend. Within just 24 hours of the launch of 'Season 20', the value of the game's cryptocurrency rose by 40%. In addition, the significant changes made are believed to hint at a number of other benefits, including increased chances that the game's economy can develop in a healthy and sustainable manner over time. "We believe the fastest way to reduce this volatility is for us all of us to come to terms with our collective responsibilities within Axie, and quickly work to build consensus and enable each other’s community efforts," reads the official presentation of the update. "Prosperity amongst a community comes when it collectively creates more value than it consumes."

However, uncertainty in the world of cryptocurrencies does not only depend on market fluctuations. At the end of March, Ronin, the blockchain network that supports the video game, was targeted in a hacking attack during which the equivalent of more than $600 (real) million in Ethereum was stolen from the famous videogame. Larsen reaffirmed the financial strength of Sky Mavis, which has since set about fully compensating players for their losses. However, he told Bloomberg that the partial recovery of stolen funds could take up to two years. It remains to be seen whether the game's popularity will survive this record-breaking theft and whether the Ho Chi Minh-based company will be able to respond promptly and effectively to these unprecedented and unforeseen attacks on its security systems, confirming its position as a leader in the crypto gaming industry.

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Redazione published in Asean, Economy and trade

The post Ukraine of Asian economies

By Lorenzo Riccardi

The war will have a direct effect on the Asian economies that have more trade with the countries in conflict, but it will be extended indirectly to the entire Far East region in relation to the impact on Europe-Asia economic relations

In addition to the suffering of the humanitarian crisis caused by the conflict in Ukraine, the entire global economy will have to face the effects of a direct impact in each region and increasing inflation.

Russia and Ukraine are among the largest producers of commodities, natural gas and oil, as well as accounting for 30 percent of global grain exports.

Russia is the third largest producer of oil, the second largest exporter of natural gas, and among the top producers of steel and aluminum.

Ukraine is one of the top producers of corn, wheat, sugar beet, barley and soybeans; their strategic role is interconnected with many countries and regions of the world.

In recent weeks many reports have been published by major financial institutions on estimates for trade, investment and economic growth, from the International Monetary Fund, to the World Bank all estimates predict a slowdown caused by the conflict.

The war will have a direct effect on Asian economies that have more trade with the countries in conflict but will be extended indirectly to the entire Far East region in relation to the impact on Europe-Asia economic relations.

China, according to official customs data, reported trade volume with Russia to be $147 billion in 2021 with an increase of 36 percent year-over-year, while trade with Ukraine was $19 billion in 2021, an increase of 30 percent on aggregate trade. These figures represent smaller percentages than trade with Beijing's major trading partners, which are the Southeast Asian region, the ten ASEAN economies, the European Union, and the United States.

The immediate effects on the economy could be less due to the fiscal stimulus sought by Beijing to promote the 2022 growth targets and in relation to the fact that trade with Russia amounts to less than 1% of gross domestic product. However, commodity prices and weakening demand in major export markets pose a challenge.

In the face of intensifying sanctions by Western countries, the Russian leadership will increasingly look to Beijing to promote new trade flows and new financial instruments with the CIPS international payments system alternative to SWIFT and the Chinese yuan as a currency replacing the U.S. dollar.

La posizione della Cina non è né di condanna né di supporto verso la Russia, si è però espressa a gran voce contro le sanzioni, ritenendole inefficaci per la risoluzione del problema.  Questa posizione è diffusa in quasi la totalità dell’Asia Pacifico con l’unica eccezione per Giappone, Sud Corea, Singapore e Taiwan in Asia e Australia, Micronesia, e Nuova Zelanda nel Pacifico; che sono stati inseriti da Mosca in una lista di paesi e territori ostili per aver aderito alle sanzioni.

For the ASEAN bloc, trade with China accounts for 20 percent of international trade according to 2021 data compared to 11 percent with the United States and 8 percent with the European Union, so some analysts are estimating a possible increase in intra-regional economic interaction in the Far East. The volume of trade with countries at war will be strongly impacted but among Asian economies only Vietnam and Japan have a surplus in the trade balance with Russia and Ukraine and in general the weight of the volume of trade with these countries occupies smaller shares of the local gross domestic product. 

Asian countries have various levels and types of exposure to the Russian and Ukrainian economies, with greater criticality given by the increase in prices in the energy and food sectors as well as shocks to the manufacturing supply chain that will have a different impact on countries in the region.

Russia is a major energy exporter, but the direct exposure of ASEAN member countries in this regard is quite limited. ING Bank has issued a report estimating the impact of the war on Asian economies with indicators related to trade, exports, oil and gas supplies and food price increases and with a ranking of the most affected Asian countries in order of importance: Vietnam, Thailand, Japan and South Korea.

According to the Asian Development Bank, the main impact of the conflict on the economies of Southeast Asia will not be on growth, but rather will affect the inflation rate. According to the World Bank, the countries in the region that will see the most growth will be the ones that have the highest rate of inflation.

In its April outlook, the International Monetary Fund predicted a slowdown in the global economy due primarily to conflict. The IMF report forecasts a change in global growth from +6.1 per cent in 2021 to + 3.6 per cent in 2022, with effects also on the emerging Asia region, which will go from an increase of 7.3 per cent in 2021 to a performance of 5.4 per cent in 2022.

L’autore

Lorenzo Riccardi teaches at Shanghai Jiaotong University and is managing partner of RsA Asia (rsa-tax.com). He has been living in China for 15 years where he follows foreign investments in the Far East and has held roles in the governance of the largest Italian industrial groups. In January 2020 he completed a project to travel to every country in the world collecting economic trends and data from Shanghai, in every region, along the new silk routes (200-economies.com).

 

 

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