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Asia’s Prospects and Challenges in 2018

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02 Feb Asia’s Prospects and Challenges in 2018

What lies ahead for Singapore, ASEAN, and Asia in 2018? The SIIA holds an annual party between the Western New Year and Chinese New Year, examining events over the past few months and looking ahead to the future. This year, we heard from two distinguished experts: Prof. Tommy Koh, Ambassador-at-Large, Ministry of Foreign Affairs, Singapore, who was also one of the SIIA’s founders, and Mr. Jusuf Wanandi, Senior Fellow and Co-Founder, Centre for Strategic and International Studies (CSIS), our ASEAN-ISIS network partner think-tank in Indonesia. The discussion was moderated by SIIA Chairman Simon Tay.

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Prospects in 2018

The global economy has recovered, with the IMF revising its estimates on the back of strong performance in Europe, the US and Asia. Despite political controversies, the US economy under the Trump administration is doing well. To some extent the US is benefiting from measures taken during the Obama administration, but the Trump administration’s tax bill is responsible for slashing corporate tax and boosting investment.

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ASEAN economies are collectively on track for five percent economic growth in 2018. Unlike some other countries and regions, people in ASEAN remain committed to free trade and economic integration. ASEAN and its partners are currently working hard to conclude negotiations on the Regional Comprehensive Economic Partnership (RCEP), hopefully by this year.

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Risks in 2018

While there is reason to be optimistic about economic growth, there is still a very real possibility of military conflict between the United States and North Korea. Some goodwill has been fostered by the Winter Olympics in South Korea, but this will likely be temporary. North Korea and the US have irreconcilable positions over the North’s nuclear armament, and we cannot rule out the prospect of war breaking out.

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Similarly, there is a chance of a trade war between the US and China. In the wake of Mr Trump’s visit to China last year, it seemed relations had improved. But the National Security Strategy (NSS) issued by the Trump administration in December and the recent US tariffs on solar panels have raised red flags.

Asians also need to recognise the possibility of a reduced regional and global role for the United States, given the Trump administration’s focus on domestic issues and bilateral diplomacy. This also comes at a time when China’s influence is rising. China may not be seeking to leadership at the global level, but China certainly does expect a greater regional role, as illustrated by China’s Belt and Road Initiative.

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Going Forward

In addition, ASEAN countries need to consider one major development  which is both a challenge and an opportunity – the rise of e-commerce, e-payment systems, and other digital technology. ASEAN must embrace the digital economy, or risk being left behind. This is why one of the themes for Singapore’s chairmanship is ‘innovation’.

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It is crucial for the small and medium sized states of ASEAN to work more closely together, in order to defend their mutual interests. As ASEAN chair, Singapore is working to ensure ASEAN’s relations with the great powers remain good, such as continuing talks with China on a Code of Conduct in the South China Sea. On the economic front, though ASEAN declared the formation of an ASEAN Economic Community in 2015, more needs to be done so that ASEAN can truly be considered a single market, in order to boost ASEAN’s competitiveness.

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