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SEAPSNET 2006 Regional Round-up and watch points for 2007

Updated On: Jan 03, 2007

2007 will be a year for celebration and reflection for the region.  Come August, ASEAN will celebrate its 40th anniversary.  ASEAN has been on high gear in the past year in pursuit of deeper integration.  Talks are underway for an ASEAN Charter.  Supposedly, the Charter will help consolidate and rationalize ASEAN’s institutional mechanisms for it to function more effectively as a 21st Century organization able to meet the new challenges of the century.  Expectations are running high and the date for achieving an ASEAN Economic Community has been brought forward to 2015.

Yet, the events of 19 December 2006 and 19 September 2006 would perhaps dampen our expectations.  For all the talks in the past year about regional cooperation and economic integration, the imposition of capital controls by the Bank of Thailand taken without consultation and coordination with its ASEAN counterparts set off panic selling in the region. The Stock Exchange of Thailand (SET) suffered a 15% plunge and lost around US$23 billion in value and triggered other regional losses.  The market turmoil on 19 December evoked memories of the currency crisis in 1997. 

In 2007, the 10th anniversary of the 1997 Asian Financial Crisis, Asia supposedly should be able to mark the event by celebrating the fact that all those Asian countries that have suffered tremendous losses and damage, have fully recovered from the crisis and back on the growth track.  The 1997 Asian monetary and economic crisis made the East Asians realized the extent of their interdependence and galvanized them to come together and seek greater regional cooperation.  The ASEAN + 3 process which brings Southeast Asians and Northeast Asians together, was in part a response to the challenges brought about the crisis.  Since then, East Asian regionalism has further developed. The achievements in promoting regional cooperation for the past decade have been commendable.  From ASEAN, to ASEAN + 3 (APT) and the East Asia Summit (EAS), there has been no lack of initiatives to promote regional cooperation. Yet, the reality is that East Asian regionalism remains a distant dream. 

The postponement of the 12th ASEAN Summit and the other attendant meetings may be seen by another as an ominous sign that all is not well in the region. If indeed rumours that terrorist threat was the key reason for the postponement were true, it just goes to show that despite the fact that counter-terrorism efforts have been stepped up in the region, terrorism remains a true and present danger.  Philippines, where the 12th ASEAN Summit was scheduled, is seen as one of the weakest link in the fight against terrorism. If however, the other reasons for postponing the summit was related to President Arroyo’s fear that a coup may take place in Manila to “depose” of her while she is in Cebu, is true, it is also a reflection of the sad state of democratic consolidation in the country.

Another event that showed up the uncertainty in the region is the military coup in Thailand on 19 September.  Though bloodless and initially welcome by many Thais who see no way out of a political stalemate that has paralysed the country for months, the coup in Thailand together with the ongoing political crisis that Philippines is experiencing, is a somber reminder of the continued uncertainties and political risks in the region.  Politics remained volatile in many of the Southeast Asian countries despite the general calm in the region.  The latest New Year eve’s coordinated bombings in Bangkok showed up the undercurrents within the polity.  While investigations are ongoing as to who is behind the bombing, suspicions that it may be related to the situation in Thai south highlight the religious and ethnic fault lines that continued to plague many of the Southeast Asian societies.

The situation in South Thailand has taken a turn for the worse during Thaksin’s reign. The latter’s authoritarian and high-handed way and lack of religious sensitivity in dealing with the restive South had let to the escalation of violence.  The interim government installed by the coup leaders have promised to reverse some of Thaksin’s policies and made several concessionary gestures to the people fighting in the South.  But the long-drawn conflict has taken its toll and proved hard to undo.  Can the case of Aceh offer some lessons for Thailand in its handling of the separatist sentiments in the South?  The peace that came to Aceh after the tsunami and the negotiations between Indonesian government and the GAM separatists brokered by the ex-Finnish president, was a positive example of how the democratization process in Indonesia and various external factors come together to create the opportunity for peace to be restored.      

One could only hope that experiments in democracy in Indonesia would succeed, and that the process of democratic transition would continue to be largely peaceful.  So far, the picture is fairly optimistic though no one would venture to declare that democracy is certain to triumph in Indonesia.  Democratisation has also unleashed religious activism – and while support for terrorism and political violence is going down, hardliners and fundamentalists have also begun to assert their demands in the political arena. The demand for the introduction of syariah law is one aspect of this trend.

Indonesian international stature has been on the rise with its status as the largest Muslim democracy, and its deft diplomatic pursuits in the past year – courting countries from Iran to Syria and offering to mediate in the nuclear crisis on the Korean peninsula.  This culminated in its election to the UN Security Council as one of the non-permanent member for the years 2007-2008.  However, domestically, it is still plagued by a whole host of human security issues from natural disasters to environmental degradation and infectious diseases.  Indonesia has been under the glare of international attention for not effectively controlling the spread of the avian flu.  It’s human death toll of 49 to the bird flu virus at the end of 2006 is currently the world’s highest. 

The forest fires in Sumatra and Kalimantan that contributed to the regional haze hazard for a few months in part of Southeast Asia has also incurred the displeasure from the peoples in the worst hit countries such as Malaysia and Singapore.  However, while there were still certain defiance and denials from local politicians, the top Indonesian political leaders from President Susilo Bambang Yudhoyono (SBY) himself to the Environment Minister have been quick to acknowledge the seriousness of the issue. An ASEAN meeting was convened to look into possible regional assistance to Indonesia to help control the recurring problem. 

Indonesia in 2006 has also been on high gear to attract foreign investments so as to create enough jobs for the millions of young Indonesians that enter the market every year.  Unfortunately, though both President SBY and Vice-President Jusuf Kalla have embarked on an aggressive quest for investments, the results have not been particularly encouraging.  Bureaucratic red-tape, corruption and occasional display of economic nationalism act as dampeners to an otherwise potentially big, lucrative market.  President Susilo summed it up “The feeling is that of nelongso” (nelongso – sad in Javanese) – that was the overall perception he gathered from his investment tours. Investors are not rushing to Indonesia but adopting a wait and see attitude for “something more concrete before they want to come in”.  

Elsewhere in ASEAN, Vietnam has emerged as the next Asian tiger with its sturdy economic growth and its entry into WTO in November 2006.  Investment in Vietnam has almost doubled from US$1.2 billion in 2002 to US$2.02 billion in 2005.  And FDI projects worth over US$7 billion coming from all over the world have been committed in 2006.  Vietnam’s economic prowess was especially highlighted at the APEC summit held in Hanoi in the middle of November.  Besides governmental interest, business people are also taking close look at Vietnam now.  Thousands of international investors from the Asia-Pacific economies turned up at the Vietnam Investment Promotion Forum and several other exhibitions and fairs signing contracts with Vietnamese businesses worth over US$2 billion.

Politically, Vietnam witnessed important leadership changes in 2006.  Nguyen Minh Triet (63) was elected as Vietnam’s new president and former deputy premier, Nguyen Tan Dung (56) was voted Prime Minister.  What is interesting is that this is the first time since the country was unified that both the country’s head of state and government are from the South.  This perhaps reflect the importance of the south both as a source of economic growth, talent and ideas, and that the Communist Party is now prepared to appoint the most suitable candidate without trying to balance appointments from the different parts of the country.

The new Prime Minister Dung has promised sweeping administrative reforms to increase transparency and cut bureaucratic red-tapes in order to improve business and investment environment.  The Enterprise and Investment law will also be judiciously implemented.  He also promised to tackle corruption, an ill that plagued many Asian countries. 

Vietnam has also set its sights to bid for the non-permanent UN Security Council seat in 2008. To increase the chances, it is deciding to send peacekeeping troops overseas and is also quietly pursuing political liberalization.

While Vietnam has increased its profile in a positive way, Myanmar continued to be a source of concern for both ASEAN and the international community. Myanmar seemed to remain unfazed despite being “criticized” during ASEAN meetings for its lack of progress in political reforms and the drafting of the Constitution.  The military junta appeared determined to do as it pleased, culminating in a highly secret and sudden move of its capital from Yangon to remote Pyinmana some 300 kilometers away from Yangon. 

While increasingly condemned by the international community for increasing repression and excessive use of violence, Myanmar is not entirely without friends. It has been courted by neighbours such as China, India and Thailand because of its vast gas resources.  Further afield, Korea and Russia, have also shown interest in Myanmar’s energy supplies.  Myanmar is therefore not entirely isolated, and will continue to have the energy to resist the international pressure to improve its human rights records and to release Aung San Suu Kyi, leader of the National League of Democracy. Myanmar’s official newspaper, the New Light of Myanmar had openly derided the international call for Aung San Suu Kyi’s release as “meaningless”, and added that restrictions on her “will never be lifted until she abandons her practice of the liberal policy”.  

Throughout 2006, Malaysia has been struggling with the issue of race and religion.  Early in the year, debates about racial unity in Malaysia has already been sparked off by Professor Khoo Kay Kim, Professor Emeritus at University of Malaya who highlighted the delicate nature of communal ties in Malaysia.  Several opinion leaders concurred with his view, adding that politicians were partly to blame for segregating the people by playing racial politics. 

In another study by a researcher from the University of Malaya, results seemed to point to the fact that religious identity for the majority of Malays have taken on a much more important role.  Most Malaysian Muslims see themselves as Muslims first and Malaysians second. 72.7% of the 1000 respondents chose Islam as their primary identity.  Also with some 77% wanting stricter syariah laws and 57.3% in favour of hudud (Islamic penal code), the findings confirm the growing orthodoxy among Muslims in Malaysia.

Amidst concerns that Islamists are trying to impose their values on the country, an umbrella body of 13 civic groups, Article 11 Coalition named after the constitutional provision on freedom of religion have banded together to push for Malaysia to honour constitutional guarantees enabling all citizens to practice their faith. Malaysia’s tolerant multi-faith model appeared increasingly strained as religiosity and conservatism sets in.  Several incidents revolving over the freedom to convert to another faith have polarized society. 

Abdullah himself admitted that religious tensions in Malaysia have reached a worrying level, and that the state of ethnic relations is “fragile and brittle”.  Adding to his woes was the open attacks by his predecessor, Mahathir on not only some of his policies, but personal attacks against his integrity and capability.  Abdullah has tried not to let himself be distracted by these attacks and focused instead on implementing his 9th Malaysian Plan and unveiling the South Johor Development Plan to silence his critics.

For other ASEAN countries besides those already mentioned above, 2006 has been a relatively quiet year, and in general most of their domestic events did not have much impact on the region. Singaporeans had their few weeks of “excitement” because of the general elections in May.  Hun Sen in Cambodia further consolidated his power with the opposition in disarray.  

Not part of ASEAN, yet, an integral part  of Southeast Asia, is Timor Leste.  In May 2006, violence broke out in this new country between feuding army, police units and gangs.  After weeks of violence and bloodshed, the UN intervened and more than 2000 foreign troops from Australia, Malaysia and New Zealand were dispatched to help restore calm.  It took some time before a political solution was found which involved the resignation of Prime Minister Alkatiri, who was accused by insurgent leader, Alfredo Reinado, for being partisan and organizing death squads to eliminate his political opponents.   Foreign Minister Jose Ramos-Horta was appointed the new Prime Minister.

Despite the various political dramas in several Southeast Asian states, 2006 has been a relatively good year for most of the economies.  Most of the Southeast Asian markets have also been enjoying a bull run pushing stocks and currencies to record high.  The investment boom and vast inflow of foreign capital is a symptom of Asia’s brighter economic growth prospects but Southeast Asia will continue to face pressures to integrate their markets so as to remain attractive to investors in the face of increasing competition not only from China but also India. 

2007 will be a year for Southeast Asia to further restructure their economies and work towards greater regional integration to stay attractive and competitive.  The concerns however are how domestic politics will pan-out in the various key ASEAN countries and if these political developments will hamper regional cooperation.  

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