SPECIAL EDITION THE GOLDEN AGE

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1 Enhancing Stakeholder s Engagement in Financing Infrastructure Projects in ASEAN 50th ASEAN Ministerial Meeting: expectations and reality ASEAN as a Global Actor: Realistic Proposition or Misplaced Confidence? ASEAN s Potential Role in Conflict Resolution: Challenges and Opportunities SPECIAL EDITION THE GOLDEN AGE ISSN Issue 25 / July 2017

2 A Note From the Editor Articles ASEAN s Potential Role in Conflict Resolution: Challenges and Opportunities ASEAN as a Global Actor: Realistic Proposition or Misplaced Confidence? Regional military build-up: Managing conflict potentials through defence diplomacy Enhancing Stakeholder s Engagement in Financing Infrastructure Projects in ASEAN Social Insurance in ASEAN The Way Forward 50th ASEAN Ministerial Meeting: expectations and reality

3 A note from the editor Dear readers: Welcome to the July 2017 issue of the monthly Thinking ASEAN! We are less than one month to go to the big ASEAN 50th anniversary celebrations. The region has come a long way from where it first began back in 1967 and has over the years experienced so many ups and downs. While it is easy to criticize the regional organisation for its shortcomings, we must also acknowledge its achievements. The region is simply a much more peaceful, stable and prosperous place for the over 600 million people that call it home. To chart ASEAN s journey as well as to look at how the next 50 years of ASEAN may turn out, we present to you this very special edition. We have no less than seven articles for you to enjoy, covering a wide range of issues from ASEAN s role in conflict resolution, social security in the region, enhancing stakeholder engagement in financing infrastructure projects in the region, ASEAN as a global actor, the regional military build up, what to expact at the special ASEAN Ministerial Meeting next month, and freedom of expression on the internet. Written by our dedicated researchers from The Habibie Center, we provide our expert perspective on some of the most important issues facing ASEAN today. We are sure that there is something for everyone in this special edition. As usual, we present a summary of the goings-on in selected countries from around Southeast Asia for your perusal. Don t hesitate to drop me a line at thinkingasean@ habibiecenter.or.id if you have comments, input, or prospective submissions. Happy reading! Best regards from Jakarta Thinking ASEAN is a monthly publication that aims to provide insightful, cogent and engaging perspectives on issues central to contemporary Southeast Asia and the ASEAN member states. It is a product of The Habibie Center, with the generous support of the Republic of Korea s Mission to ASEAN. The content of Thinking ASEAN does not reflect the official opinion of The Habibie Center or institutions related to the publication. The Habibie Center was founded by Indonesian President Bacharuddin Jusuf Habibie in 1999 as an independent, nongovernmental and non-profit organization to promote the democratization and modernization of the country. Responsibility for the information and views expressed in Thinking ASEAN lies entirely with the author(s). For comments, suggestions and prospective contributions, the Managing Editor of Thinking ASEAN can be reached at thinkingasean@habibiecenter.or.id. Project Supervisors Rahimah Abdulrahim Executive Director, The Habibie Center Hadi Kuntjara Deputy Director for Operations, The Habibie Center Editor in Chief A. Ibrahim Almuttaqi habibiecenter.or.id Thinking ASEAN Team Agustha Lumban Tobing Askabea Fadhilla Fina Astriana Muhamad Arif Hana Hanifa Bastaman Rahma Simamora Tongki Ari Wibowo Wirya Adiwena The Habibie Center was founded by Bacharuddin Jusuf Habibie and family in 1999 as an independent, nongovernmental, non-profit organisation. The vision of The Habibie Center is to create a structurally democratic society founded on the morality and integrity of cultural and religious values. The missions of The Habibie Center are first, to establish a structurally and culturally democratic society that recognizes, respects, and promotes human rights by undertaking study and advocacy of issues related to democratization and human rights, and second, to increase the effectiveness of the management of human resources and the spread of technology.

4 Issue 25/ July ASEAN s Potential Role in Conflict Resolution: Challenges and Opportunities Philippine rebels celebrate peace deal Source: Ted Alijibeted/AFP Rudi Sukandar is Senior Associate Fellow of The Habibie Center

5 As a regional organisation, the Association of the Southeast Asian Nations (ASEAN) has survived many difficulties since its inception in The organisation continues to face challenges in reinventing and reinterpreting its roles in the changing world. One key issue that continues to emerge and needs further discussion is ASEAN s potential role in managing and resolving conflict between and within its member states. Despite vast discussions on the issue, this article attempts to revisit existing discussions and analyses on challenges and opportunities facing ASEAN in managing conflicts in Southeast Asia. Challenges and Opportunities By and large, non-interference policy remains the main obstacle for ASEAN to play more active role in resolving conflicts in the region. This principle, as stipulated in the Treaty of Amity and Cooperation, is applied to any disputes that are perceived as domestic affairs. Although the application of this principle is often used to handle other issues, such as those related to human rights, it mostly limits ASEAN s potential role in managing conflicts in the region. Fearing the potential interference from other member countries, this principle prevents ASEAN Member States (AMS) to discuss sensitive issues openly. As an alternative, the less assertive preventive and quiet diplomacy becomes the preferred diplomatic tool to address sensitive issues in the region. 1 As further stipulated in the Treaty of Amity and Cooperation, ASEAN should maintain its non-interference stance when dealing with domestic affairs of member countries. This, consequently, provides very limited space for ASEAN to maneuver when addressing conflict--and violence- -related issues that occur in its member states. It is not surprising, therefore, that the non-interference principle has been the target of criticism by scholars and human rights activists. The principle, in the view of these non-state actors, is not only outdated, but also far from being adaptable to the changing world dynamics. In reality, the application of the principle often escalates existing issues, and create new tension. The recent case involving the plight of refugees from Myanmar to other countries in the region is a case in point. It is of little doubt that the principle needs to be reinterpreted to meet with the requirements of emerging issues that affect regional stability. The principle of non-interference aside, there is also an emerging reluctance amongst AMS in utilising ASEAN to solve their conflict with other members of the Association. This is particularly evident on issues concerning border disputes. In this regard, there is a tendency for conflicting AMS to involve external actors, mainly International Court of Justice (ICJ), to resolve their disputes. This was the case when, for example, Indonesia and Malaysia resolved their dispute over Sipadan and Ligitan in The dispute between Singapore and Malaysia over Pedra Branca (Batu Puteh) had to be resolved through the ICJ after bilateral talks to resolve the dispute failed. The ICJ, however, ruled in favour of Singapore in Given the possibility for the Court to review its decision ten years after the ruling was made, the Malaysian government is actively searching for new evidence to back up its legal claim over the island. Another pronounced disputes took place between Thailand and Cambodia over the Preah Vihear Temple, which led to several military clashes between the two sides. Despite mediation from Indonesia, resolution was difficult to achieve. 2 Given Thailand s reservation over mediation from other AMS, both countries agreed to resolve their dispute through the ICJ. In its verdict, ICJ decided that the temple is under the sovereign territory of Cambodia. 3 Despite this, the ICJ also encourages both parties to cooperate with ASEAN and its appointed observers. The increased trend amongst AMS to bring their border disputes over to the ICJ shows the difficulty for member states to make effective use of ASEAN diplomatic channels to resolve their disputes. Furthermore, AMS also give the impression that they are unwilling to formally seek the assistance from ASEAN to resolve their internal conflicts. Amongst other things, this has been driven mainly by their reluctance to internationalise their domestic conflicts. Reflecting on previous experience of some AMS, however, the supports gained from internationalising their domestic conflicts often outweigh the risks. This can be seen, for examples, in the peace processes in Cambodia, Aceh, and Mindanao, all of which involved non-asean parties in ensuring peaceful resolution in each of the respective conflicts. Some intra-asean conflict resolution processes that involved an AMS as facilitator or mediator in peace negotiations are worth noting, and these were particularly so in the following occasions: (1) Indonesia s mediating role in peace negotiation amongst the conflicting parties in Cambodia through Jakarta Informal Meeting; (2) the peace negotiation between the Philippines government and the Moro National Liberation Front (MNLF) that was sponsored by the Organisation of Islamic Cooperation (OIC, formerly known as the Organization of the Islamic Conference), and facilitated by the Government of Indonesia; 4 and; (3) the peace negotiation between the Philippines government and the MNLF that was facilitated by the Malaysian government. When examined closely the peace negotiation between the Philippines government and the MILF provides many lessons learned. After failing to implement the Memorandum of Agreement on Ancestral Domain in 2008, the Malaysian government, as the facilitator, and the conflicting parties agreed to invite Turkey, Japan, the United Kingdom, and Saudi Arabia to join the International Contact Group (ICG) along with a number of international non-governmental organisations, such as the Centre for Humanitarian Dialogue (Geneva), Conciliation Resources (London), the Asia Foundation (San Francisco), and Muhammadiyah (Jakarta) in 2009 to assist in the peace negotiation process. 5 The involvement of diverse international actors in the ICG was considered as one of its kind at the time. Playing their strengths in diplomacy and flexibility, the roles of both states and non-state actors of the ICG were perceived positively by the conflicting parties during the peace negotiation process. On the ground, the peace process between the Philipines government and the MILF was also assisted by the International Monitoring Team that was headed by a Malaysian national, with personnel from Malaysia, Libya, and Brunei Darussalam. As illustrated above, the willingness of AMS to involve non-asean parties in their conflicts has created a perception of ASEAN s legitimacy, power, and capacity in resolving conflicts amongst its member states. The tradition of musyawarah (consultation) and mufakat (consensus) in ASEAN s decision making processes has often seen to be complicating peace negotiation that often requires swift and flexible measures to deal with issues that arise in the process. This has inevitably created an impression that the involvement of one or more AMS in facilitating or mediating disputes between

6 Issue 25/ July AIPR should implement its assigned tasks by also promoting gender mainstreaming in peace-building, peace processes, and conflict resolution. other member states to have produced more fruitful results, rather than when ASEAN as an organisation is used to resolve the conflicts. The circumstances above might underplay ASEAN s position as an entity. In addition, the reluctance of AMS to utilise ASEAN to resolve their conflicts might be the result of perceived less legitimacy on the between-state conflict and flexibility of individual member states to less complicate the peace resolution process. Generally speaking, it is relatively safe to argue that, as far as AMS are concerned, flexible diplomatic maneuvering by individual member states in brokering peace is perceived more preferable to that of ASEAN. In other words, the emphasis lies more on individual member state whilst putting ASEAN in the background for the support. Such circumstances, however, create opportunities for all member states to individually play roles in peace negotiation, which is likely to increase collective capacity of ASEAN to internally resolve conflict within the region, be it domestic or bilateral. Way Forward In 2011 ASEAN agreed to establish the ASEAN Institute for peace and Reconciliation (AIPR) at the 19 th ASEAN Summit in Bali, in Indonesia. Subsequently, ASEAN Foreign Ministers adopted the Terms of Reference for the establishment of the AIPR, and launched it at the 21 st ASEAN Summit in Phnom Penh, Cambodia, on November As recommended in the Plan of Action to Implement the Joint Declaration on Comprehensive Partnership between ASEAN and the United Nations ( ), AIPR should implement its assigned tasks by also promoting gender mainstreaming in peace-building, peace processes, and conflict resolution. Its task should also promote the collaboration and networking efforts with relevant institutes. Finally, in its capacity, AIPR should also conduct regional and international seminars, workshops and trainings on confidencebuilding measures. 7 Despite its outlined tasks, I, however, tend to agree with Amador and Teodoro that AIPR should also go beyond providing research and some capacity-building activities. 8 With its potential, AIPR, indeed, should also actively be involved in conflict resolution, especially when ASEAN s presence as a regional institution is needed. Whilst the establishment of AIPR was a step forward for ASEAN, the Institute lacks mandates to effectively assist ASEAN in resolving disputes in the region. This is also enhanced by the fact that the capacity to assist conflict resolution lies in the member states rather than in the institutions within the ASEAN entity. Moreover, aside from showing the importance of individual AMS, as opposed to ASEAN, in domestic peace process, the peace negotiation process between the Philippines government and the MILF also underscores the effective role that nonstate actors can play in assisting the peace processes. Incorporating international non-governmental organisations in conflict resolution and mediation can be very strategic as many have been operating in Southeast Asia and have vast knowledge about the region. Finally, the involvement of other parties on preventive diplomacy, including peace building, conflict prevention, conflict management, and conflict resolution is also recommended in the Plan of Action to Implement the Joint Declaration on Comprehensive Partnership between ASEAN and the United Nations ( ). Despite vast use of quiet diplomacy to resolve conflicts amongst its members, 9 now is high time for ASEAN to take one step further in conflict resolution efforts in the region. Existing ASEAN s strategy to use quiet diplomacy in resolving conflicts amongst its members has its limitation. Echoing Wandi s suggestion, I believe ASEAN should develop its own institution for conflict mediation and prevention. 10 The experience of AMS in brokering peace and the best practice learned from the implementation of peace negotiation panel architecture should become references in developing a dispute resolution model to develop such institution. Endnotes 1 R. Cristescu, A. Nicolescou, and A. Wandi (2012), ASEAN and Peace Mediation: Progress, Challenges, and Cooperation, Helsinki: The Crisis Management Initiative. 2 N. Afrida and N. I. Santosa (2012), RI Ready to Send Observers to Cambodia, Thailand, The Jakarta Post, 26 th April, retrieved from: < news/2012/01/17/ri-ready-send-observers-cambodiathailand.html>. 3 ICJ International Court of Justice (2017), Case Concerning the Temple of Preah Vihear (Merits): Judgement of 15 June 1962, retrieved from: < 4 S. Rood (2016), The Role of International Actors in the Search for Peace in Mindanao, in P. D. Hutchcroft, ed., Mindanao: The Long Journey to Peace and Prosperity, Mandaluyong: Anvil, pp Ibid. 6 ASEAN Secretariat (2012), Chairman s Statement of the 21 st ASEAN Summit Phnom Penh, 18 th November 2012, retrieved from: < 7 ASEAN UN (2016), Plan of Action to Implement the Joint Declaration on Comprehensive Partnership between ASEAN and the United Nations ( ), retrieved from: < FINAL-AS-OF-5-SEP-2016.pdf>. 8 J. S. Amador III and J. A. Teodoro (2016), The Role of the Association of the Southeast Asian Nations in Post-Conflict Reconstruction and Democracy Support, Stockholm: International Institute for Democracy and Electoral Assistance, p Cristescu, et al., Op. Cit. 10 A. WAndi (2010), Can ASEAN be a Peace Mediator?, The Jakarta Post, 20 th April, retrieved from: <

7 ASEAN as a Global Actor: Realistic Proposition or Misplaced Confidence? Flags of ASEAN member states Source: Brookings Edu A Ibrahim Almuttaqi, Head of ASEAN Studies Program,The Habibie Center

8 Issue 25/ July Introduction This year the Association of Southeast Asian Nations (ASEAN) celebrates 50 years since it was first established by the Bangkok Declaration of From its initial membership of five states, the regional organisation has come a long way from its rather uncertain and unassuming beginnings. It was not until 1976 that the first summit was held, and it was not until 1999 that all Southeast Asian countries were brought together under the ASEAN umbrella. 1 Since then, the regional organisation hasdeveloped a number of ambitious initiatives and notched some important achievements. This can be seen in the adoption of the ASEAN Charter in 2007, as well as the launching of the ASEAN Community at the end of Indeed, there are some that consider ASEAN to be the most successful regional organisation in the world, especially given the current problems facing the European Union (EU). 2 Lending credence to this view is the increasing attention that ASEAN attracts from the international community. The expansion of the ASEAN-led East Asian Summit (EAS) in 2011 to include the United States and Russia is one oftcited example. Another exampleisthe fact that the ASEAN Treaty of Amity and Cooperation now counts 34 signatories, whilst 86 countries have diplomatic representatives to ASEAN. With more than 600 million people, a combined GDP of over USD 2.5 trillion, and decades of inter-state peace, it is easy to see the reasons behind the international community s increased attention to ASEAN. 3 However, it should be underlined that the Association was not merely a reactive or passive actor to this increased spot in the international limelight. A reference to the annual ASEAN Chairman s Statement would reveal that the regional organisation regularly adopts a stance on regional and international issues ranging from the Middle East, the South China Sea, the Korean Peninsula and so forth. Buoyed by its achievements, ASEAN confidently sought to actively position itself as a global actor. This was made abundantly clear in 2011 when ASEAN adopted the Bali Declaration on ASEAN Community in a Global Community of Nations, otherwise known as the Bali Concord III. The Concord committed ASEAN to a number of pledges, namely: to increasingly speak in a common voice on international matters of mutual concern at related international forums; to enhance ASEAN s capacity to respond and contribute solutions to those global matters; and to empower the ASEAN Secretariat so that it is able to support the vision and development of the ASEAN Community in a global community of nations. 4 As ASEAN celebrates 50 years, now is a timely opportunity to reexamine those ambitions to be a global actor and to ask: how much has been achieved, were its aims realistic, and/or was its confidence misplaced? The Path towards ASEAN as a Global Actor To understand ASEAN s ambitions to be a global actor, it may be useful to revisit the context surrounding the adoption of the Bali Concord III. Proposed by the ASEAN chair for that year, the Concord was the key outcome of Indonesia s 2011 chairmanship. Prior to tabling the Bali Concord III to his fellow ASEAN Leaders, Indonesia s then-president Susilo Bambang Yudhoyono declared, I believe ASEAN is able to respond to global dynamics...asean wants to play a bigger role...to reach out to the world. 5 These global dynamics referred not only to the Arab Spring and the Eurozone economic crisis, which were major concerns at the time, but also to longterm wider worries over scarcities in food, energy and water resources, climate change, natural disasters, and so forth. 6 The Concord was driven by the belief that ASEAN had passed the tests of history... [and] become a mature association capable of creating regional stability and security, and able to increase its economic strength. 7 It should be remembered that ASEAN had passed relatively unscathed from the global economic crisis that badly affected the United States and Eurozone, whilst its largest Member State, Indonesia, was touted as a possible role-model for the infant democracies of Egypt, Tunisia, and other Arab Spring nations. It was in this framework that the Bali Concord III sought to drive ASEAN forward by raising ASEAN s international profile and by transforming it into a regional organisation that was able to respond and contribute solutions to key global issues, rather than be a passive actor/victim. One passage of the Concord reads, Building on current practice and achievements, we will identify key global issues of common interest and concern, enhance ASEAN coordination and cooperation on these key global issues in relevant multilateral fora and international organizations, such as the United Nations, and raise ASEAN s profile and constructive role in the global stage [sic]. 8 Despite ASEAN s self proclaimed achievements, there were underlying question marks at the time over whether the regional organisation s ambition to be a global actor was a realistic proposition or whether its confidence was misplaced. These question marks that arguably remain to this day focused on the mechanisms, capability and capacity of ASEAN to be a global actor. Question Marks: Mechanisms, Capability, and Capacity The pledge for ASEAN to increasingly speak in a common voice on global issueswas fraught with uncertainties. In particular, the mechanism in which ASEAN would reach a common position. A media release accompanying copies of the Bali Concord III vaguely explained ASEAN s intention to build on current practice to identify those key global issues of common interest and concern. Once identified, they would then enhance ASEAN coordination and cooperation on these issues at related international forums. 9 Presumably the current practice referred to ASEAN s consensus-based approach which some have criticised for having a debilitating effect by effectively granting any one member state a veto power. 10 This was famously demonstrated a year later in 2012 following the diplomatic fallout at the 45 th ASEAN Foreign Ministers Meeting in Phnom Penh, Cambodia. For the first time in ASEAN s history, the region s foreign ministers failed to issue their usual annual Joint Statement following Cambodian refusal to include a passage criticising Beijing s actions in the disputed waters. This unprecedented failure revealed the deep divisions amongst the ten ASEAN member-states, and suggests that the aforementioned current practice was not adequate enough to address the question of how ten different member states with their own national interests and concerns could adopt a common position. This is in stark contrast to the EU with its more institutionalised mechanisms as

9 can be seen in the position of the EU High Representative of the Union for Foreign Affairs and Security Policy (in other words an EU Foreign Ministry). A more critical uncertainty referred to whether ASEAN can even reach a single ASEAN position on global issues in the first place; the diplomatic fallout in 2012 certainly suggests otherwise. Arguably, the wording employed in the Bali Concord III is rather indicative. The use of the terms a more coordinated, cohesive and coherent ASEAN position is significantly different and less certain when compared to the EU s more definitive Common Foreign and Security Policy [emphasis added]. On the one hand this should not be surprising as the two regional organisations adopt different systems for decision-making: intergovernmental for ASEAN and supranational for EU. Thus, the pledge for a more coordinated, cohesive, and coherent ASEAN position may merely reflect the state-centric nature that runs deep in the ASEAN mindset. However, it also reflects an acknowledgement, on ASEAN s part, of the inherent difficulties of getting ten different countries with ten different national interests and foreign policies to agree. This was clearly in evidence when ASEAN was largely silent on the recent assassination of Kim Jong-Nam, the halfbrother of North Korean leader Kim Jong- Un, in Kuala Lumpur. The involvement of an Indonesian and a Vietnamese allegedly duped by North Korean agents did little to reverse ASEAN s indifference. Neither did the extraordinary diplomatic fallout between Pyongyang and Kuala Lumpur that saw North Korea bans Malaysian nationals from leaving the country and Malaysia responding in kind; a move that Malaysian Prime Minister NajibRazak described as: effectively holding our citizens hostage. 11 An editorial by The Jakarta Post criticised the lack of solidarity amongst ASEAN Leaders, noting, It is regrettable that ASEAN leaders have not shown any kind of solidarity for Malaysia in facing North Korea s acts It is disappointing to see ASEAN foreign ministers fail to issue a joint statement to at least express their concern about the killing. 12 If the above example demonstrates ASEAN s lack of capability to reach a common position in response to an issue that originated externally, the regional organisation s handling of the recent Rohingya migrant crisis suggests there are more underlying problems: that ASEAN cannot even reach a common position in response to an issue from within the region. Last year, Malaysia s Prime Minister Najib Razak made what many saw as a serious breach of diplomatic protocol when he spoke out against Myanmar s treatment of the Rohingya; treatment that, in his view, amounted to genocide. The perceived act of megaphone diplomacy was unheard of amongst ASEAN member states, especially coming from an ASEAN Leader. This certainly represented a major departure from the ASEAN norm of not openly speaking about each other s domestic affairs. In response, an official in Myanmar s President s Office warned, A member country (of ASEAN) does not interfere in other member countries internal affairs, whilst a commentary by The Irrawaddy s editor-in-chief was headlined, Malaysia, don t use Burma to distract from disquiet at home. The Myanmar government later announced it was stopping its migrant workers from going to Malaysia, whilst its State Counsellor Aung San Suu Kyi refused to meet Malaysia s foreign minister. The situation in which member states were openly criticizing each other openly, its officials refusing to meet one another, and imposing bans on their citizens from working in the other country is not what one would expect from a regional organisation with ambitions to be a global actor. Lastly, the pledge to enhance ASEAN s capacity so that it is able contribute and respond to key global matters brings up a number of further questions. The Bali Concord III states ASEAN s contribution The situation in which member states were openly criticizing each other openly, its officials refusing to meet one another, and imposing bans on their citizens from working in the other country is not what one would expect from a regional organisation with ambitions to be a global actor.

10 Issue 25/ July shall take the form of promoting mediation initiatives and to actively participate in post-conflict peacekeeping and building activities based on the readiness of respective ASEAN member-states. The caveat referring to readiness requires further attention as it opens the possibility for some countries not to participate at all, whilst leaving others to carry out the lion-share of peacekeeping and building efforts. Certainly in the years since, the region has yet to see a joint ASEAN initiative of post-conflict peacekeeping and building activities. For the most part, United Nations peacekeeping operations that do involve ASEAN member states are done in their individual capacity, and are not considered as operating on behalf of the regional organisation. ASEAN s silence on the democracy and human rights reverses taking place in some of its member states also puts the regional organisation s capacity to contribute and respond to key global matters into doubt. In other words, how can ASEAN contribute and respond to key global matters when it has shown itself unable to address its own problems. In the Philippines, which hold the ASEAN chairmanship for 2017, it is difficult to ignore the controversies that have overshadowed President Rodrigo Duterte s first year in office. His tough drugs policies have left thousands dead, whilst there are serious allegations that Duterte was personally involved in the extrajudicial killings of drug dealers during his tenure as mayor of Davao City. 13 Meanwhile, in Thailand, the military junta has continued to postpone elections despite its initial promise of holding one soon after taking power in ASEAN s capacity to promote mediation initiatives is also questionable. The Philippines decision to go to the Permanent Court of Arbitration to rule on its dispute with China over claims to the South China Sea is indicative of the lack of confidence ithas in ASEAN s capacity. It should be noted that efforts at reaching a Code of Conduct (COC) on the South China Sea have stalled for years. It had been expected to quickly follow the adoption of the Declaration on the Conduct of Parties in the South China Sea in 2002 which had reaffirmed that the adoption of a code of conduct in the South China Sea would further promote peace and stability in the region. 14 Yet, no significant progress has been made and the effort towards merely a framework for the COC by the end of this year is highly indicative of the shortcomings in ASEAN s capacity. Conclusion In 2011, ASEAN was riding high, its confidence brimming, and its ambitions far-reaching. It sought to be an ASEAN Community that could play its part in the global community of nations. Yet, as the regional organisation celebrates its 50 th anniversary, it is clear that ASEAN has fallen somewhat short. The years since 2011 have been difficult and trying ones, with ASEAN struggling to address a multitude of problems it was confronted with. This was true not only for issues it had with actors outside of the region, such was the case with the South China Sea or Korean Peninsula, but also with those involving and between its own member states. Numerous cases outlined above have shown ASEAN to lack the internal unity and cohesiveness that its Leaders had so boldly proclaimed back in As a result, ASEAN has been unable to address the question marks surrounding the mechanism, capabilities, and capacities to be a global actor. Arguably, ASEAN s proposition to be a global actor was unrealistic and its confidence in its own ability misplaced. That is not to say, however, that ASEAN was wrong to have such ambitions. As Yudhoyono mentioned in 2011, ASEAN must never again be a passive spectator who can easily become a victim of problems arising in other parts of the world. 15 Its ambitions, therefore, were driven by the aspiration in which the people of Southeast Asia should determine their own political, economic, and socio-cultural destiny. ASEAN and its member states must, therefore, refocus its efforts. This should begin with an acknowledgement of its shortcomings and be followed by rectifying its failures if it wants to be a global actor. In other words, for ASEAN to be recognised as a global actor by the international community it must first start acting like one. On the occassion of ASEAN s 50th anniversary, now is a good time than ever for it to get its act together. Endnotes 1 Arguably the separation of Timor-Leste from Indonesia a few years later means that there is still one Southeast Asian country that remains outside the ASEAN umbrella. 2 Toh Cheng Seong (2017), ASEAN s done better than EU in political-military security sphere, Strait Times, 23 rd March,retrieved from: < forum/letters-in-print/aseans-done-better-than-eu-inpolitical-military-security-sphere>. 3 Retno L.P. Marsudi (2016, August 15). Keynote speech by H.E. Retno L.P. Marsudi, Minister for Foreign Affairs, Republic of Indonesia at the ASEAN Day Reception, ASEAN Secretariat, 15 th August, retrieved from: < asean.org/storage/2016/08/fm-marsudi-keynote-speech- 49th-ASEAN-Day.pdf>. 4 Nhan Dan Online (2011), ASEAN leaders sign third Bali Concord,18 th November, retrieved from: < homepage/world/asean-leaders-sign-third-bali-concord #pQqdAEyvJxzA>. 5 Antara News (2011), ASEAN showing increasing problemsolving capability, 18 th November,retrieved from: < 6 Jakarta Post (2011). ASEAN pledges a common platform,18 th November, retrieved from:< thejakartapost.com/news/2011/11/18/asean-pledges-acommon-platform.html>. 7 Antara News (2011), ASEAN showing increasing problemsolving capability,18 th November, retrieved from:< 8 ASEAN Secretariat (2011).Bali Declaration on ASEAN Community in a Global Community of Nations Bali Concord III, retrieved from: < documents/19th%20summit/bali%20concord%20iii.pdf>. 9 The Brunei Times (2011), ASEAN leaders ink Bali Concord III,retrieved from:< 10 Tang SiewMun (2016), ASEAN must reassess its one voice decision-making, Today Online, 25 th July, retrieved from: < 11 Kanga Kong and AnisahShukry (2017), Najib accuses North Korea of holding Malaysian citizens hostage, Bloomberg, 7 th March, retrieved from: < bloomberg.com/politics/articles/ /north-koreabans-malaysians-from-leaving-as-murder-spat-grows>. 12 The Jakarta Post (2017). ASEAN solidarity.9 th March, retrieved from: < the-jakarta-post/ / >. 13 ABC News (2016), Philippines President Rodrigo Duterte should be investigated for murder over killing claim, UN says,21 st December, retrieved from:< au/news/ /duterte-should-be-investigated-formurder-un-human-rights-chief/ >. 14 ASEAN Secreatriat (2002), Declaration on the Conduct of Parties in the South China Sea,retrieved from: < org/?static_post=declaration-on-the-conduct-of-partiesin-the-south-china-sea-2>. 15 Antara News (2011), That is ASEAN s Contribution to the world : President,17 th November, retrieved from:<

11 "ASEAN is obviously a very important association for us. Over the past 30 years ASEAN has made great strides in regional cooperation covering a number of areas, although recently it has been under strain because of the financial crisis and other challenges." Hassanal Bolkiah Sultan of Brunei

12 Issue 25/ July Regional Military Buildup: Managing Conflict Potentials Through Defence Diplomacy Military servicewomen marching in parade ground in Nay Pyi Taw. Source: Muhamad Arif Researcher at The Habibie Center s ASEAN Studies Program

13 In its 50th year of existence, ASEAN, as a community of Southeast Asian countries, faces a new set of security challenges; some are more urgent than the others. As mature as ASEAN is now, the prospect of inter-state conflict amongst ASEAN Member States (AMS) cannot yet be discounted. In fact, as countries have become more sensitive about their territorial integrity, what is initially intrastate conflict might at some point invite intervention from concerned external actors. There has also been increasing awareness about non-traditional/transnational security issues such as piracy, smuggling of people, drugs and weapons, and environmental degradation. For a number of reasons that will be explained in the remaining of this article, however, the prospect of inter-state military conflict involving both Southeast Asian countries and extra-regional powers is now higher than ever before. This article surveys the recent developments of military build-up currently undertaken by most countries in the region. The main argument this article proposes is that the prospect of interstate military conflicts caused by intense military build-up is the most urgent threat to regional peace and stability upon which ASEAN needs to focus its attention and resources. Whilst military build-up per se is not a direct cause of conflict, the existence of a number of preconditions past and present territorial disputes, and the rise of nationalism increase the chance of the outbreak of military conflict between states in the region. In order to reduce the hostility and prospect of misperception amongst conflicting parties, and, hence, inadvertent military conflict, ASEAN needs to further deepen and give more substances to its defence diplomacy initiatives. Recent developments of regional military build-up China and extra-regional countries military build-up The military build-up of major countries has been one of the most notable developments in the region. In this regard, China obviously leads the way. The rapid economic growth of the past three decades has dramatically increased the resources that the Chinese government has available to devote to military spending. 1 According to figures provided by the Stockholm International Peace Research Institute (SIPRI), China has increased its defence spending nearly fivefold over the last decade. 2 Although the actual figure and composition of China s military expenditure have been widely acknowledged as obscure, the general trend still suggests that Beijing is determined to continue its effort to build a military capable to advance its ambition to establish regional pre-eminence and expand its international influence. 3 A recent release by the Chinese government suggests that, despite the brakre in its economic growth, it will increase military spending by about 7 percent in 2017, making it around USD billion, which is a showcase of such a determination. 4 China s determination is answered by the United States (US) who has maintained its strategic presence in the Asia-Pacific. Despite the blur in US strategic approach towards China under President Trump, it seems quite clear that Washington D.C. will abandon the previous administration s policy to tighten the defence budget. President Trump, in March, proposed a USD 54 billion increase in defence spending. 5 The increase in US defence spending, as White House stated, is partly driven by the ongoing campaign against the Islamic State in the Middle East. It is also likely that the policy is part of the contingency plan against Russia in Europe. The potential threats posed by the China s military build-up and expanding power projection, however, are likely to remain taken into account. In fact, despite the tendency of the current US administration to distance itself from its predecessor, the military element of the rebalancing' strategy remains untouched until today. There has yet any discussion, for instance, to halt Obama s plan to shift 60 percent of US naval assets in Asia. If anything, the US government appears to be even more committed to leverage its military might in the Pacific to secure its interests in the region. Indeed, following the threat of nuclear strike by North Korea, Trump instructed the deployment of US warships to deter North Korea s belligerence, leaving China, long-time patron of Pyongyang, uneasy. 6 Although US-China strategic interaction remains the major driver of regional geopolitics, military build-up is not a monopoly of the two great powers. Smaller extra-regional countries have been involved in different levels of military build-up as well, subject to their respective economic capacity and threats perceptions. India, whilst continues to consolidate its sphere of influence in its strategic backyard in the Indian Ocean, has increasingly shown its aspiration to get more involved in the Pacific matters. The notion about the inseparability of the Indian Ocean and the Pacific Ocean in a global trade network underlies this aspiration. New Delhi appears to be prepared to back up this aspiration with military might. SIPRI records that India was the largest importer of major arms during the period of 2012 and 2016, accounting for 13 percent of global arms trade. 7 The potential rebirth of Japan s militarism, meanwhile, continues to raise concerns across the region. Indeed, the geographical destiny of Japan rules it to always be mindful of the surrounding oceans, particularly the East and South China Sea. 8 Lacking natural resource endowments, Japan is highly dependent upon seaborne commerce for its wellbeing. 9 The protection of the sea lanes of communication (SLOCs) connecting Japan to vital foreign resources and markets, particularly in Southeast Asia, therefore, has been the primary strategic interest of Japan. 10 Recent developments show how Japan has managed to find its way to get around the post-world War constitutional constraints that renounces the country s right to wage war and maintain warmaking potentials. A law passed in 2015, for instance, reinterprets the Article 9 of the constitution to allow for the socalled 'collective self-defence, enabling the Japanese military to defend its allies in cases where Japan faces a threat to its survival. Japan has also managed to expand its much-needed naval capabilities without violating the Article 9 by covering it up with the humanitarian and disaster relief missions. 11 Indeed, as one scholar notes, Japan is in many cases engaged in something of a quiet arms race with China. 12 Finally, Australia appears to have realised even more the importance of Asia, particularly Southeast Asia, for its strategic interests. 13 It is in the Australian interests to maintain the peace and stability of the broader Indo-Pacific region on which Australia relies for open access to its trading partners. 14 For any significant military attack against Australia must come from or through the north, Australian government is committed to provide the country with the capability and resources it needs to be able to independently and decisively respond to military threats, including incursions into Australia s air, sea and northern approaches. 15 ASEAN military build-up As noted before, the strategic interactions between the U.S. and China, and to

14 Issue 25/ July lesser extent the response of smaller extra-regional powers, is probably the main driver of Southeast Asian strategic environment. Nevertheless, unlike in the past when they were basically at the passive recipient end of the great powers dynamics, Southeast Asian countries are now more active players in shaping the strategic environment. Countries like Vietnam, Indonesia, and Singapore are acquiring new sophisticated defence technologies thanks to the very same globalised economic that underpins the rise of countries like China and India. Indonesian military personnel lining up during a drill in Jakarta, Indonesia Source: European Pressphoto Agency Amongst AMS, Vietnam is perhaps the one with the most significant military buildup. with its firm stance in the territorial disputes with China driving the military modernisation. Vietnam has started to acquire a number of modern defence technologies from countries like Russia and India at least since the 1990s. Its navy now operates six Russia-made Kilo-class tactical submarines, two Gepard-class frigates, six corvettes, and at least 18 fastattack missile boats. Its air force operates eleven Su-27 and Su-30 fighter aircrafts. As far as the territorial disputes in the South China Sea are concerned, Vietnam remains the only disputant outside China that maintains significant military presence in the features it occupies. Under President Joko Widodo, the Indonesian armed forces enters a new phase of transformation. Built upon the Minimum Essential Forces (MEF) blueprint set up in 2005, Indonesian military build-up now revolves around a renewed realisation of the country s geopolitics encapsulated within the Global Maritime Fulcrum vision. One of the goals of MEF is to achieve by 2024 a force level that can guarantee the attainment of immediate strategic defence interests, with the procurement priority given to the improvement of minimum defence strength and/or the replacement of outdated main weapon systems/ equipment. 16 It is planned that by 2024 Indonesian navy will be operating 274 ships with striking, patrolling, and supporting capabilities. The Indonesian government is thus prioritising the procurement of, amongst others, frigates, corvettes, submarines, and anti-submarine warfare capabilities. Indonesian air force has also been enjoying greater attention with longer term shopping list include strategic airlift capability, maritime reconnaissance, and fighter aircrafts. In order to fund the plan, President Jokowi continues the trend of defence budget increase to eventually reach 1.5 per cent of GDP. Besides the procurement of new technologies and increase in budget, another notable feature of Indonesian military build-up is the new approach taken in terms of assets deployment. In a departure from the old inwardlooking, army-dominated approach, more Indonesian military capabilities are now deployed in the outer areas of the country close to the regional hotspots such as South China Sea and Sulu Sea. Singapore, meanwhile, remains the most technologically advance military amongst AMS. In 2013, Singapore announced a contract for two new Type-218SG submarines from Germany, which are due to come into service by 2020, alongside two Archer-class boats commissioned in 2011 and Singapore also maintains its efforts to enhance its air capabilities. 18 Additional batches of F-15SG long-range strike aircraft, delivered between 2012 and 2014, bring the Singapore Air Force s total inventory of the type to The Singapore Air Force is also widely expected to acquire the world s most sophisticated fighter aircraft, F-35 Joint Strike Fighters to replace its aging F-16C/D Fighting Falcons. 20 Why military build-up destabilises? It is important to note that there is nothing inherently wrong with military build-up. In fact, it is sometimes necessary for a state to strengthen its defence capabilities in order to check the other states increase of power share. A capable and credible military would discourage aggressive behaviour from other states. Stability of the international system, defined as the absence of major wars, can be obtained when states try to balance against each other militarily. 21 Indeed, states, in building up their defence capabilities, tend to argue that what they are doing is necessary for the maintenance of international stability. Australian recent Defence White Paper, for instance, mentions that ''The stability of the rule-based global order is essential for Australia s security and prosperity''. 22 In the document outlining its policies on security cooperation in the Asia- Pacific, China claims that it is committed to promoting peace and stability in this region. 23 In the case of Southeast Asia, however, the prospect of inter-state military conflict is higher for the existence of a number of preconditions. First, the problem of history still haunts countries in the region. Unlike in post-world War Europe, for instance, there still exists disagreement amongst Asian countries with regards to their past. As one scholar notes, far from converging on a single, shared interpretation of their recent past, the Asian powers show signs of divergence, each constructing a history that serves its own national purposes. 24 For China a large part of the history of Pacific War is the history of Japanese aggression and atrocities. Japanese, on the other hand, remember the period quite differently. Early post-war memories emphasised the Pacific war the maritime battles against the US and other Allies - and portrayed the Japanese imperialism as Asian liberation. 25 Recent moves by Japanese government to offer apologies to its former victims notwithstanding, the disagreement over the history has fostered hostile feelings amongst Asian countries. After all, how countries remember their pasts conveys information about their

15 future behaviour. 26 Meanwhile, in Southeast Asia, Singapore and Malaysia, the bitter experience of Indonesian Konfrontasi politics five decades ago still looms large in the minds of the people. This has complicated the diplomatic relations between the countries in a number of occasions. Indonesia and Singapore were involved in a spat when Indonesian Navy chose to name its new warships after the marines who carried out a covert operation in the island during Konfrontasi. Singaporeans still consider the marines "terrorists". Between Malaysia and the Philippines, the unresolved dispute over part of Sabah erupted into an armed standoff in In Vietnam, the resentment towards China and the stories of "thousand years of war" between the two countries is easily noticeable. Second, the existence of territorial disputes increases the prospect of unplanned encounters of militaries that could result in incidents and collisions. In a region where the states boundaries are unanimously deemed fix, military deployments tend to be easily predicted and calculated. Any attempt to move military assets beyond one s own territory, unless explicitly planned and declared as part of an exercise or joint operations, would be undeniably seen as aggressive behaviour. In Southeast Asia, by contrast, a number of states claim overlapping territories, particularly in the South China Sea. As a result, military deployment of a particular state in the disputed territories is seen as a breach of national boundaries by other claimants. Add to this the problem of different interpretation of international laws i.e. matters related to the military activities in the Economic Exclusive Zone and the result is the incidents like the famous 2001 EP-3 collision or 2009 USNS Impeccable harassment. Given the circumstances in the region, such incidents could easily escalate into catastrophic military conflicts. Third, related to the first and second points, is the rise of nationalism in Asia that could spark inadvertent conflict. In Southeast Asia, the end of the Cold War, the rise of China, and the wave of liberalisation and democratisation have initiated the re-emergence of nationalist sentiments in many states. 27 Like the old nationalism of the early 20 th century, this new nationalism is manifested in missions that include defence of national territory and assertion of national identity. 28 Southeast Asian, and Asian countries in general, tend now to be more sensitive about their national integrity. Indeed, the South China Sea, as a scholar notes, has a nationalist and identity value above and beyond material resources and questions of strategy, and this value should not be understated given the importance of this matter to the [Communist] Party s legitimacy and sense of itself. 29 The rise of this nationalist sentiment could at some point push governments to take unnecessary strong foreign and security policy. For states foreign policy aims not only to the external but also the domestic audience, governments tend to take a particular foreign policy that can satisfy domestic pressures they face. A particular foreign policy that might be strategically unsound in terms of inter-state relations might be seen as necessary for the ruling regimes to maintain their domestic political legitimacy. Taken together, these three factors increase the chance of inter-state military conflict in Asia. The military build-up individually seen as necessary for the maintenance of regional stability might result in the opposite outcome. They are, in other words, the recipe for a catastrophic war in Asia. At this point, it is wise to contemplate Bill Hayton s rhetorical question, what happens if someone shoots an archduke? 30 What can ASEAN do? Military build-up of Southeast Asia, and Asia in general, is very unlikely to be reversible. In fact, history shows that military reductions are often preceded by major events such as regime collapses e.g. Indonesia after the fall of Soekarno and Eastern Europe during the early post-cold War years, or, God forbid, the war itself. Arms control is also very difficult in Asia given the vast range of weapon systems currently developed and deployed and the different strategic value given by respective states to these weapons (although the idea of a some sort of arms control on highly destabilising weapon systems such as anti-ship missiles is very attractive). Furthermore, the above-mentioned conditions that increase the chance of inter-state military conflict history, territorial disputes, and nationalism are very difficult to change. Territorial disputes in the South China Sea, for instance, is a very complex and complicated issue that there is a very little chance that it would actually be solved anytime soon. ASEAN, therefore, should focus its attention and resources on what it has been exactly good at, which is the conflict management. In order to decrease the chance of the outbreak of conflict amidst the intense military build-up, ASEAN needs to facilitate the efforts to promote cooperative relationships between the conflicting parties based on trust and confidence. The idea is to reduce as much as possible the sources of hostility and misperception amongst conflicting parties alongside a mutual agreement that the cost of war exceeds the potential benefit. This can be done through sustained dialogue, exchanges, and other related concrete activities among militaries and defence establishments in the region, encapsulated in the concept of defence diplomacy. Defence diplomacy in the region can be a means of introducing transparency into defence relations, in particular with regard to states intentions and capabilities. 31

16 Issue 25/ July In this regard, high-level discussions of defence policy and military doctrine can be used to show that a state does not have offensive intentions and that its armed forces are primarily defensive in character, thereby offering reassurance to, and building confidence with, the partner state. 32 Furthermore, defence diplomacy can also: (1) perform a primarily political role, acting as a symbol of willingness to pursue broader cooperation, mutual trust and commitment to work to overcome or manage differences; (2) be a means of building or reinforcing perceptions of common interests, and; (3) alter the threat perception of partner states militaries. 33 Defence diplomacy is surely not an entirely new concept in Southeast Asia, and Asia in general. A number of initiatives such as multilateral dialogue and joint military exercises have been regularly conducted. At this point of time, however, it is important to emphasise the need to concentrate ASEAN s attention and resources on defence diplomacy as a means of conflict management which is more feasible. This can be done, for instance, by deepening and giving more substance to the existing initiatives such as ASEAN Defence Ministers Meeting (ADMM) and ADMM-Plus. By contrast, setting the bar unnecessarily high e.g. to expect ASEAN to actually solve the territorial disputes in the South China Sea, for which ASEAN was never institutionally equipped in the first place, would only result in disappointment and, worse, the loss of credibility of ASEAN itself. Bibliography Arif, Muhamad. Relief Missions or Arms Race? The Jakarta Post, news/2015/09/12/relief-missions-or-arms-race.html. Australia in the Asian Century: White Paper. Canberra: Department of the Prime Minister and Cabinet, Australian Government Department of Defence Defence White Paper. Canberra: Commonwealth of Australia, Bisley, Nick. What Does China Actually Want in the South China Sea? The National Interest, nationalinterest.org/feature/what-does-china-actuallywant-the-south-china-sea Capie, David. Structures, Shocks and Norm Change: Explaining the Late Rise of Asia s Defence Diplomacy. Contemporary Southeast Asia 35, no. 1 (2013): Chapter Six: Asia. The Military Balance 115, no. 1 (2015): China to Increase Military Spending by 7% in BBC, Cohen, Zachary. Trump Proposes $54 Billion Defense Spending Hike. CNN, com/2017/03/16/politics/donald-trump-defense-budgetblueprint/. Cottey, Andrew, and Anthony Forster. Chapter 1: Strategic Engagement: Defence Diplomacy as a Means of Conflict Prevention. The Adelphi Papers 44, no. 365 (2004): Introduction. The Adelphi Papers 44, no. 365 (2004): Crane, Keith, Roger Cliff, Evan Medeiros, James Mulvenon, and William Overholt. Modernizing China s Military: Opportunities and Constraints. Santa Monica, Friedberg, Aaron L. Ripe for Rivalry: Prospects for Peace in a Multipolar Asia. International Security 18, no. 3 (1993): Hayton, Bill. The South China Sea: The Struggle for Power in Asia. New Haven: Yale University Press, Hughes, Christopher W. Japan s Military Modernisation: A Quiet Japan-China Arms Race and Global Power Projection. Asia-Pacific Review 16, no. 1 (2009): Lind, Jennifer. The Perils of Apology: What Japan Shouldn t Learn from Germany. Foreign Affairs 88, no. 3 (2009): Office of the Secretary of Defense. Annual Report to Congress: Military and Security Developments Involving the People s Republic of China Washington, D.C., Osborne, Samuel. Donald Trump s Armada Steams on as North Korea Warns of Nuclear Strike on US. Independent, news/world/asia/donald-trump-north-korea-armadanuclear-strike-us-navy-strike-group-fleet-aircraft-carrierchina-a html. Presidential Directive No. 7/2008 on General Policy Guidelines on State Defence Policy, n.d. SIPRI. Increase in Arms Transfers Driven by Demand in the Middle East and Asia, Says SIPRI. Stockholm International Peace Research Institute, media/press-release/2017/increase-arms-transfers-drivendemand-middle-east-and-asia-says-sipri. The State Council of the People s Republic of China. Full Text: China s Policies on Asia-Pacific Security Cooperation, paper/2017/01/11/content_ htm. Vu, Tuong. The Resurgence of Nationalism in Southeast Asia: Causes and Significance. Ann Arbor, Waltz, Kenneth N. Theory of International Politics. New York: McGraw-Hill, What Does China Really Spend on Its Military? Center for Strategic & International Studies, csis.org/military-spending/. Yoshihara, Toshi, and James Holmes. Japanese Maritime Thought: If Not Mahan, Who? Naval War College Review 59, no. 3 (2006): Endnotes 1 Keith Crane et al., Modernizing China s Military: Opportunities and Constraints (Santa Monica, 2005), 1. 2 What Does China Really Spend on Its Military?, Center for Strategic & International Studies, 2017, csis.org/military-spending/. 3 Office of the Secretary of Defense, Annual Report to Congress: Military and Security Developments Involving the People s Republic of China 2016 (Washington, D.C., 2016), China to Increase Military Spending by 7% in 2017, BBC, 2017, 6 Samuel Osborne, Donald Trump s Armada Steams on as North Korea Warns of Nuclear Strike on US, Independent, 2017, 5 Zachary Cohen, Trump Proposes $54 Billion Defense Spending Hike, CNN, 2017, com/2017/03/16/politics/donald-trump-defense-budgetblueprint/. news/world/asia/donald-trump-north-korea-armadanuclear-strike-us-navy-strike-group-fleet-aircraft-carrierchina-a html. 7 SIPRI, Increase in Arms Transfers Driven by Demand in the Middle East and Asia, Says SIPRI, Stockholm International Peace Research Institute, 2017, sipri.org/media/press-release/2017/increase-armstransfers-driven-demand-middle-east-and-asia-says-sipri. 8 Toshi Yoshihara and James Holmes, Japanese Maritime Thought: If Not Mahan, Who?, Naval War College Review 59, no. 3 (2006): See Yoshihara and Holmes, Japanese Maritime Thought: If Not Mahan, Who? 10 See Ibid. 11 See Muhamad Arif, Relief Missions or Arms Race?, The Jakarta Post, 2015, news/2015/09/12/relief-missions-or-arms-race.html. 12 Christopher W. Hughes, Japan s Military Modernisation: A Quiet Japan-China Arms Race and Global Power Projection, Asia-Pacific Review 16, no. 1 (2009): See Australia in the Asian Century: White Paper (Canberra: Department of the Prime Minister and Cabinet, 2012). 14 Australian Government Department of Defence, 2016 Defence White Paper (Canberra: Commonwealth of Australia, 2016), Ibid., Presidential Directive No. 7/2008 on General Policy Guidelines on State Defence Policy, n.d. 17 Chapter Six: Asia, The Military Balance 115, no. 1 (2015): Ibid. 19 Ibid. 20 Ibid. 21 See Kenneth N. Waltz, Theory of International Politics (New York: McGraw-Hill, 1979). 22 Australian Government Department of Defence, 2016 Defence White Paper, The State Council of the People s Republic of China, Full Text: China s Policies on Asia-Pacific Security Cooperation, 2017, paper/2017/01/11/content_ htm. 24 Aaron L. Friedberg, Ripe for Rivalry: Prospects for Peace in a Multipolar Asia, International Security 18, no. 3 (1993): See Jennifer Lind, The Perils of Apology: What Japan Shouldn t Learn from Germany, Foreign Affairs 88, no. 3 (2009): See Ibid. 27 Tuong Vu, The Resurgence of Nationalism in Southeast Asia: Causes and Significance (Ann Arbor, 2010). 28 Ibid. 29 Nick Bisley, What Does China Actually Want in the South China Sea?, The National Interest, 2016, nationalinterest.org/feature/what-does-china-actuallywant-the-south-china-sea Bill Hayton, The South China Sea: The Struggle for Power in Asia (New Haven: Yale University Press, 2014), xvi. 31 Andrew Cottey and Anthony Forster, Chapter 1: Strategic Engagement: Defence Diplomacy as a Means of Conflict Prevention, The Adelphi Papers 44, no. 365 (2004): David Capie, Structures, Shocks and Norm Change: Explaining the Late Rise of Asia s Defence Diplomacy, Contemporary Southeast Asia 35, no. 1 (2013): Cottey and Forster, Chapter 1: Strategic Engagement: Defence Diplomacy as a Means of Conflict Prevention, See also Andrew Cottey and Anthony Forster, Introduction, The Adelphi Papers 44, no. 365 (2004): 5 14.

17 Enhancing Stakeholder s Engagement in Financing Infrastructure Projects in ASEAN Hanoi,Vietnam: A man, carrying a blue barrel on his motobike. Source:Wikimedia Commons Fina Astriana Economic Researcher of the ASEAN Studies Program ofthe Habibie Center

18 Issue 25/ July There is an increase realisation amongst countries in Southeast Asia that the deepening of economic integration amongst ASEAN Member States (AMS) must be supported by enhanced connectivity within the region. Key to enhancing the connectivity in the region is the removal of infrastructure bottleneck, which is crucial in facilitating ASEAN to attain higher economic growth, as well as increase trade and investment within and beyond the region. To that end, ASEAN adopted the Master Plan on Connectivity 2025 (MPAC) in 2016, as a replacement of the previous MPAC, with the aim of achieving physical connectivity, institutional connectivity, and people-to-people connectivity through five strategic objectives, including sustainable infastructure, digital innovation, seamless logistics, regulatory excellence, and people mobility (ASEAN Secretariat, 2016: 7). In the area of physical connectivity, ASEAN needs to connect areas inside a country, between countries in ASEAN, and between ASEAN countries and its neighbouring countries. Improving connectivity is not just a single country problem therefore cooperation is needed between related stakeholders. MPAC 2010 and MPAC 2025 ASEAN managed to achieve some notable progress in the area of physical infrastructure under the MPAC The Association, for example, succeeded in developing the ASEAN Highway Network to reduce missing links in the region. One of the section of The Singapore- Kunming Rail Link (SKRL), an ambitious transport infrastructure project linking China s Yunnan Province with Singapore via Laos, Thailand, and Malaysia, or the Singapore-Phnom Penh section is still on schedule to be completed, whilst the Cambodia-Vietnam section still requires additional funding. ASEAN also managed to complete nine power interconnection projects under the ASEAN Power Grid and thirteen bilateral gas pipelines under the Trans-ASEAN Gas Pipeline. Despite some notable achievements in physical connectivity, ASEAN failed to meet all the targets set in MPAC 2010 as a result of a number of challenges, including financial, decision-making, and implementation barriers. Moving already, ASEAN is likely to face similar problems in implementing the 2025 MPAC. Of significant importance is the necessity for all AMS to address the infrastructure financing requirements of the Master Plan s implementation. Unfortunately, the financing requirements to develop these infrastructure projects will only get higher as all economies in the region continue to grow. It has been estimated, for instance, that ASEAN will require investment of more than USD 110 billion annually until 2025 for the region to be able to develop proper infrastructure (ASEAN Secretariat, 2016: 43). These investment needs is dominated by transport infrastructure (USD 55 billion), followed by electricity (USD 38 billion), telecommunication (USD 9.2 billion), and water and sanitation (USD 7.8 billion) (ASEAN Secretariat, 2015: 67). Given its limited resources, ASEAN will need to tap into potential financing supports from its Dialogue Partners and the private sectors. However, it is also important to note that each source of funding carries its own challenges. Source of financing Private sectors Private sectors can play a huge role in developing infrastructure in ASEAN. The region has some notable infrastructure companies, such as Malaysia s Axiata Group, Indonesia s Sinar Mas Land, and the Philippines Metro Pacific Investment Corp. These companies have not only been active in developing infrastructure in their respective countries but also in other AMS. The role of non-asean private sector is also important in supporting the realisation of ASEAN Connectivity. Non-ASEAN infrastructure companies, such as Japan s Sumitomo Corporation, South Korea s Daewoo Engineering and Construction Company, and General Electric of the United States have long been present in the region as operators, investors, and contractors in developing infrastructure. Despite this, the participation of private sector in ASEAN-related infrastructure projects is still very low, and can certainly be enhanced. It has been estimated, for example, that AMS has total assets of at least USD 10 trillion. Most of these assets are owned by the private sector, and these can serve as a potential source for infrastructure funding in the region (ASEAN Secretariat, 2016: xx). Unfortunately, such a potential funding opportunity has not been fully exploited, particularly as many in the private sector remain reluctant to fund many of these projects. The reasons for such a reluctance are not too surprising, but worth emphasising. First and foremost is political stability. Although political situation in some AMS, such as Singapore and Brunei, is relatively stable, political stability has been in decline in several AMS. From the recent passing of Thai King Bhumibol Adulyadej to 1MDB corruption scandal that affects the top leadership in Malaysia, these are political instances that affect business investment decision in the region. Furthermore, the 2015 World Bank s Political Stability Index Improving connectivity is not just a single country problem therefore cooperation is needed between related stakeholders.

19 Corruption will increase the cost of doing business as it adds additional costs to business transactions. ranked Myanmar and Thailand as the least stable countries in ASEAN (The World Bank, 2016a). The second main issue is corruption. Although Singapore has been consistently voted as one of the least corrupt nations in the world, many other AMS stand in far lower position in the Corruption Perception Index 2016, namely Laos (123), Myanmar (136), and Cambodia (156). High degree of corruption in many AMS hinders private sector s investment in infrastructure projects. Corruption will increase the cost of doing business as it adds additional costs to business transactions. In addition, since infrastructure projects usually involves large amount of funding, there is always vast opportunities for corruption to take Table 1. ASEAN in various global governance rankings place. Private sector needs to be assured that the resources that they invest in the region is not corrupted, and can bring about significant returns for them to be convinced to invest in ASEAN s investment projects. The third issue is the ease of doing business. Private sectors will invest in a country that provides a business-friendly environment, such as conducive environment for private sector to do business in, simple procedure to set up and operate a business, and solid protection for investors. Singapore, Malaysia, and Thailand are amongst the top countries in the ease of doing business in the region. Likewise, Cambodia, Laos, and Myanmar are still struggling in creating a better business climate for investors. Notes:*Political Stability Index: 0 (least stable) to 100 (more stable); out of 211 countries; **Corruption Index: 0 is highly corrupt, 100 is very clean; out of 176 countries; ***Ease of doing business: out of 190 countries. Source: Transparency International (2016), and World Bank (2016 and 2017). This is not to mention other potential risks in running infrastructure projects. Issues such as credit risks, settlement and operational risks, as well as systemic market risks often make investment in large infrastructure projects not too attractive for private sector (UN Task Team Working Group on Sustainable Development Financing, 2013:4). Uncertainties over potential return on investment from such projects also increase private sector s reluctance to be involve in large infrastructure projects. Another challenge for private sector is different implementation of the publicprivate partnership (PPP) mechanism amongst AMS. Brunei, Cambodia, Lao PDR, Myanmar, Malaysia, Singapore, pursue public-private partnership in the implementation of their infrastructure projects despite the absence of specific laws and regulations on the issue. So far, there are four AMS that have specific public-private partnership regulations, including Indonesia, Vietnam, Thailand, and the Philippines (Zen and Regan, 2014: xxvii). Despite the risk and challenges involved in investing in ASEAN infrastructure projects, there is little doubt that the realisation of ASEAN connectivity will be beneficial for private sectors. Of particular importance is the lowering of logistics costs, which has often been considered as a major hurdle for business sector in the region.to date, AMS s logistics performance remains varied. Whilst Singapore outperformed all of its ASEAN counterparts, and was amongst the world s top five performers in 2016, some other AMS, such as Laos and Myanmar, were ranked very low in the index. The full realisation of ASEAN connectivity, especially through infrastructure projects, is paramount to improve the way businesses operate.

20 Issue 25/ July Table 2. ASEAN s Logistics Performance Index (2016) Source: World Bank (2016b ). ASEAN should, indeed, work harder to ensure investors interests to invest in the region. It is of significant importance for ASEAN to make the private sector aware of potential infrastructure projects that are in need of development under the MPAC 2025 framework. To that end, the Association will need to strengthen and enhance its consultation with diverse private sector groups in the region. Dialogue Partners There are vast potentials for ASEAN s Dialogue Partners to contribute to the development and expansion of ASEAN physical connectivity. For example, through the Partnership for Quality Infrastructure initiative, Japan has renewed its commitment to support better connectivity in ASEAN. The initiative allows Japan to provide financing sources to support infrastructure projects in ASEAN (The Laotian Times, 2016). Japan also supported the infrastructure development in East-West and Southern Economic Corridor, ASEAN Maritime Economic Corridor, and soft infrastructure projects such as ASEAN Smart Network, Trade Facilitiation, and Common rules for standards for Automotive in the region (Sunaga, 2016). Likewise, China provides support in the development of the Singapore-Kunming Rail Link by providing assistance to construct Thai section. Other dialogue partners have also showed their commitment to support the implementation of ASEAN Connectivity. In order to maintain their commitment to support the infrastructure projects under the MPAC 2025, ASEAN should better illustrate to its Dialogue Partners that a better connected ASEAN will not only be beneficial for ASEAN, but also for non- ASEAN countries doing business in the region. A better connectivity willl support the free movement of goods and people in the region. Therefore, it is also in the interest of ASEAN s Dialogue Partner to assist the implementation of ASEAN connectivity. Engaging dialogue partners on the region s infrastructure projects, however, has its own challenges. One of such challenges is the motivation of Dialogue Partners to lend support to ASEAN (Nguyen and Vo, 2015: 108). In order to increase its bargaining power vis-a-vis its Dialogue Partners, ASEAN should ensure that it has one voice when they promote and negotiate the infrastructure projects. However, ASEAN should be able to address the different infrastructure development interests among AMS themselves. Moreover, since many ASEAN s Dialogue Partners already make significant contribution in ASEAN s infrastructure projects, the Association needs to ensure that it has ownership on the infrastructure project, whilst, at the same time, maintaining ASEAN centrality. ASEAN also needs to ensure that cooperation should be built upon equal partnership, not a donor-client relations. Another challenge is to avoid any overlapping projects and duplication, which is very common in present development cooperation programmes and projects between ASEAN and its Dialogue Partners. Stronger coordination between ASEAN and its dialogue partners, as well as between relevant parties within ASEAN bureaucracy, is needed to avoid redundancy in the implementation of 2025 MPAC. In addition, ASEAN needs to ensure that any infrastructure projects should be very much aligned with ASEAN s interest and priority, and it can only be done if the Association plays a more active and effective role in maintaining coordination with all of its Dialogue Partners. Despite existing commitments from Dialogue Partners to continuously extend their support to ASEAN s connectivity projects, the Association needs to prepare itself of possible decline of development assistance from its strategic partners. Development assistance from developed to developing and least developed countries have been declining significantly amidst sluggish economy deveopment in past few years (Pushpanathan, n.d.). Hence, ASEAN should find another type of cooperation with dialogue partner, especially in implementing the MPAC It is not only financing capacities needed to develop infrastructure but also their technology and expertise. It is something that ASEAN can tap into their dialogue partners. Conclusion and recommendation Improving intra-regional connectivity is crucial for a more integrated ASEAN. However, ASEAN will need annual infrastructure investment of more than USD 100 billion until Although several funding resources are available, such as from private sector and dialogue partners, it is also challenging for ASEAN to secure funding from them as they may have different motivation and consideration. Therefore, there are several steps that will need to be taken. Firstly, private sector engagement needs to be enhanced in developing infrastructure projects under the MPAC 2025.The government of AMS should create bankable projects that may appeal to investors. In addition, each AMS should create a better business climate by reducing regulatory complexity to attract investors to invest in infrastructure projects. Secondly, concerted efforts from all stakeholders, such as private sector and Dialogue Partners, are needed in successful implementation of the 2025 MPAC. To this end, ASEAN should not only engage with private sector and its Dialogue Partners, but also with the members of the community where infrastructure projects are being developed so as to ensure the acceptance and ownership of proposed infrastructure projects within the communities. In dealing with its Dialogue Partners, ASEAN should also maintain its centrality, and make sure that it secures full ownership of the projects. ASEAN should be able to play an effective role in managing infrastructure projects funded by the Dialogue Partners to avoid duplication and to decide which infrastructure projects should be prioritized. Finally, despite different levels of infrastructure development and policy, AMS needs to ensure that national infrastructure projects meet 2025 MPAC goal and vice-versa. The synergies between

21 national and regional infrastructure projects will establish a clear projection regarding the future of connectivity in the region. This will give better picture to Dialogue Partners and other potential investors on the direction that infrastructure development in Southeast Asia will take and hopefully help them better map their future policies vis-à-vis the region. However we need to acknowledge that this is a challenging homework for all AMS. Nevertheless, at the same time we need to also acknowledge this is the crucial first steps to enhance stakeholder s engagement in financing infrastructure projects in ASEAN. Reference ASEAN Secretariat (2016), Master Plan on ASEAN Connectivity 2025, retrieved from: (2015), ASEAN Investment Report 2015 : Infrastructure Investment and Connectivity, retrieved from: storage/2016/09/asean-investment-report-2015.pdf. Economic Research Institue for ASEAN and East Asia ERIA (2014), Financing ASEAN Connectivity, retrieved from: asean.org/storage/2016/09/financing-infrastructure-forasean-connectivity.pdf. Nguyen, Duong Anh, and Vo, Tri Thanh (2015), Enhancing East Asian Connectivity: What Can ASEAN and Japan Do?, in Rizal Sukma and Yoshide Soeya, eds., Navigating Change: ASEANJapan Partnership in East Asia and in Global Governance, pp , retrieved from: Pushpanathan, S (n.d.). ASEAN s strategy Towards Its Dialogue Partners and ASEAN Plus Three Process org/?static_post=asean-s-strategy-towards-its-dialoguepartners-and-asean-plus-three-process-by-s-pushpanathan Sunaga, Kazuo (2016), Japan s assistance to ASEAN Connectivity in line with MPAC 2025, retrieved from: Financing (2013), Challenges in raising private sector resources for financing sustainable development, retrieved from: documents/2106chapter%203-challenges%20in%20raising%20 private%20sector%20resources.pdf The World Bank (2017), Doing Business 2017: Equal Opportunity for All, retrieved from: doingbusiness.org/reports/global-reports/~/media/wbg/ DoingBusiness/Documents/Annual-Reports/English/DB16Chapters/DB16-Mini-Book.pdf (2016a), The Worldwide Governance Indicators (2016), retrieved from: wgi/index.aspx#home. (2016b), Connecting to Compete 2016: Trade Logistics in the Global Economy, retrieved from: s3.amazonaws.com/lpi_report_2016.pdf. The global economy (2015), Political stability country rankings, retrieved from: rankings/wb_political_stability/ The Laotian Times (2016), ASEAN, Dialogue Partners Agree on Future Director, September 9, retrieved from : Transparency International (2016), Corruption Perceptions Index 2016, retrieved from: feature/corruption_perceptions_index_2016?gclid=cnbvr7o8 rdmcfccwaaodqa8c7w. UN Task Team Working Group on Sustainable Development Aerial view of Singapore Source:Wikimedia Commons

22 Issue 25/ July Social Insurance in ASEAN The Way Forward Queue of social security registrar in Indonesia. Source: Antara Agustha Lumban Tobing Researcher at The Habibie Center s ASEAN Studies Program

23 Introduction Improving social insurance systems is critical to the reduction of poverty and vulnerability in ASEAN. If one defines poverty as having less than US$ 3.1/person/ day, then at least 150 million people in Southeast Asia live in poverty. 1 This essay will not argue in length about the myriad causes of poverty nor on the many other policy recommendations that may also help to reduce poverty, rather this essay will focus on highlighting the importance of social insurance programs which may reduce the plight of so many people in ASEAN. Strengthening social protection systems is not merely in the national concern of each ASEAN member state and thus should be left as a problem for each country. During this 50 th anniversary of ASEAN, the author would like to persuade the reader that in ASEAN s ever more integrated economic landscape (particularly concerning labor mobility, in which intra-asean migration has soared from 1.5 million in 1990 to 6.5 million in 2013), it is in the regional interest for all governments to provide a comprehensive social safety net as well. 2 In this essay, the author will discuss only the three large lower-middle-income ASEAN countries: Indonesia, The Philippines, and Vietnam. Unlike the more developmentally mature Thailand, Malaysia, and Brunei, nor the much smaller and advanced Singapore, these three countries are in the middle of massive social change. Demographically, people in these countries are moving from rural to urban areas (or are witnessing their surroundings urbanize) while technologically they are changing from a predominantly agricultural society to one that focuses more on manufacturing and services, as figures 1 and 2 show. The change in where people live and what kind of work they do has profound implications to the structure of the economy. The economic growth of these countries is starting to move from being driven largely by changes in production factors to one that is driven by the increased efficiency of those factors; 3 this, in turn, rewards those that have had (or whose parents had) the wherewithal to prepare themselves to the new economy and punishes those who didn t, or at least leaves them behind. The Rise of Inequality and Why it Matters Figure 3 below shows the change in the Figure 1. Agriculture's Share in GDP Source: World Bank (2016) Figure 2. Share of Urban Population Source: World Bank (2016) income distribution of Indonesia and The Philippines after three decades. Both these countries show a significant increase in the share of income captured by the richest forty percent; in Indonesia, it seems most of the relative increase seems to have been taken by the top twenty percent. The share received by the poorest twenty percent has stagnated, whereas the share of the next forty percent has decreased, suggesting a relative hollowing-out of the middle class. Figure 4 presents a starker contrast by highlighting the difference between the highest and lowest twenty percent (in green) and between the highest and lowest ten percent (in blue). The fact that the blue bars can be twice as high as the green bars may imply that the right tail of an income distribution curve may be very thin indeed. To stress this point further, because the data shown below are sourced from surveys, the severity of actual inequality is likely to be even higher as (1) surveys usually censor the highest incomes that are recorded (known as top-coding), (2) the very rich have many reasons not to divulge the full extent of their income or wealth (corruption, tax avoidance, or sheer queasiness). Turning back to how the three countries have transformed, these three economies have also been slowly integrating into the global economy and not only in terms

24 Issue 25/ July Figure 3. Income Distribution by Quintile of Select ASEAN Countries, Selected Years Source: World Bank (2016) Figure 4. Income Ratio of Highest and Lowest Income Quantile (Decile and Quintile) in the form of market concentration, corruption, as well as general government incompetence in selecting and executing policies also deserve part of the blame. Regardless, when people are not protected from falling below a certain floor of welfare, it denies them of basic decency, including subjecting them and their children to what may very well be a vicious circle of poverty. If one objects that developing countries may not be able to afford adequate social protection for all, one must answer whether or not such countries will afford not to have it. Reasonable social protection through risk-pooling and redistribution will curtail poverty, reduce vulnerability, and narrow the severity of inequality. These will, in turn, lead to an increase in economic activity by increasing domestic demand as well as by raising human capital, ultimately contributing to a developing country s development. This is why social security is paramount. Even without the sporadic yet frequent shocks that come from a rapidly transforming economy, there have always been some periods in a person s life where they could not work to receive an income (and would thus benefit from): illness (healthcare insurance and sickness benefits), injured at work (accident insurance), child-caring (parental leave and child-care subsidies), unemployed (unemployment benefits and training subsidies), and old age (pensions). Without such state-sponsored social protection programs, a person would be dependent on the wealth of people who are closest to them, if any and if sufficient. Source: World Bank (2016) of trade but -crucially- in investment as well. Becoming integrated to the global economy does not just mean relaxing the flow of goods and capital, but also to people and ideas, thus modernizing or otherwise changing these societies, sometimes in ways not readily apparent. What has been increasingly apparent, though, is that urbanization, industrialization, and particularly globalization do not have equitable effects. 4 These interrelated structural developments have undoubtedly and profoundly increased living standards for millions, whether through the new market to which to sell, new and cheaper goods to buy, increased productivity-enhancing investments, and so on. However, many people also experience the opposite: technological advancements rendering their skills obsolete, cheap foreign goods making their products uncompetitive, or companies relocating (or outsourcing) to places with more competitive labor (i.e. more profitable in its mix of productivity and wage levels). Although it may be impossible to conclude whether or not globalization reduces employment at net, but some do lose their jobs. This author would also caution to say that globalization may not be the only culprit of increasing inequality; rent-seeking The point of social security is to pool the resources of the whole nation and transfer it to those in need, so that whenever an individual is in a financially unproductive period, it shall render the possibility of precarity hopefully obsolete. Whether or not the ASEAN Economic Community truly does augur a golden era of industrialization and integration, ASEAN member states will, perforce, have to commit themselves in creating a truly universal and high-quality social protection system. Each of the social protection programs stated above certainly deserve their own lengthy discussions and improvements to social security programs requires discussing technical minutiae that could not be covered here. Rather, this essay will attempt to at least point out the general areas in which such programs

25 Table 1. Existence of National Social Security Systems 5 Source: ILO (2015) Note: LP = Limited Provision (by employer liability) can be improved and where ASEAN-level coordination may be helpful. The State of Social Protection in ASEAN ASEAN member states have expressed their commitment in ensuring an adequate social security system for its citizens, with the 2013 ASEAN Declaration on Strengthening Social Protection as the most prominent promise. As Table 1 shows the three countries in discussion have laid the foundation of a universal social protection program, with all three providing free public schooling until at least the lower secondary level. Although the least developed of the three, Vietnam has the most complete statutory social programs, lacking only family allowances (or childcare subsidies). Yet, obviously having legislated a program is different from implementing them with adequate coverage, and this is a key issue facing these countries today. When we are speaking of coverage regarding social security, there are two separate dimensions of coverage that are important to distinguish: (1) population coverage (or who gets covered?) and (2) cost coverage (how much is paid out?). Take for example healthcare coverage in the six major ASEAN economies in Table 2. The figures above show the large variation of how the larger ASEAN countries finance their healthcare systems and how successful it is in terms of population coverage, although it does little to reveal the immense complexity of each system. Unlike the other forms of social insurance that merely give out cash without a specific intended use, healthcare insurance is one of the few social programs where the pooled resources are given either in the form of specified government-provided services or cash to reimburse the use of medical services. Because of this, the types of services that are covered and its quality are additional factors along with the two dimensions of coverage explained above. This is why national health insurance systems can be very complex matters indeed. For example, Singapore has a three-tiered health insurance system where each tier covers particular services at specific cost coverage for certain people; having high levels of specificity enables Singapore to provide high-quality care with virtually complete service coverage while containing the costs it imposes on the pooled funds (though consequently, their out-of-pocket spending is quite high). For our three lower-middle income countries in discussion, achieving full population and service coverage alone will be difficult even with larger resources with which to spend, as the number of medical professionals and facilities in these countries are still far from sufficient. For comparison, in 2012 there was around one physician for every 1000 people in Japan, while there was only one physician for every 6000 in Indonesia, likely to be unevenly distributed within the country. 6 Turning to pensions, Table 3. shows the extent of current pension security coverage and the share of active (mandatory and voluntary) contributors to the scheme (whether for the civil service provident fund or the larger population social insurance scheme). The three countries in discussion currently have a smaller number of elderly people who receive the funds relative to the current contributors, reflecting the current demographic dividends these countries are enjoying. Yet as figure 5 indicates, the share of elderly people in the country will grow very quickly, particularly for Vietnam. These projections imply that the burden of the working age population will increase significantly if we were to maintain, if not increase, the population and cost coverage of those who will enter retirement, both of which are still at quite meagre levels. One difficulty with achieving higher Table 2. Healthcare Financing and Coverage Source: ILO (2014)

26 Issue 25/ July Table 3. Current Coverage of Pensions Source: Various Figure 5. Percentage Share of People Above the Age of 65 in the Population, 2010 and 2035 Source: World Bank (2016) coverage among these countries as well as the problem of how to finance it is that the proportion of people who do not work as salaried employees of formal companies in these countries are still very high. Around 30 percent of the labor force in Indonesia and the Philippines work in agriculture, while in Vietnam the proportion is still above 50 percent. For the rest of the labor force those who are not employed in agriculture as high as 70 percent of them work in informal enterprises (usually small companies that are not formally registered and thus do not pay taxes). Furthermore, as the financing scheme of some social security systems in ASEAN rely on joint employer and employee payments rather than on general taxation revenues. All this means that the vast majority of the labor force will not contribute to their national social insurance funds and many of them will not get access to various types of insurance, even though those who do not work as salaried employees are likely to be those who need it most. Conclusion and Suggested Initiatives In the discussion above we have shown Indonesia, the Philippines, and Vietnam, and likely also the other lower-middle-income ASEAN economies, are experiencing rising inequality partly due to industrialization and globalization. Further, because of the increasing precariousness of large parts of the population that this will bring, a more complete coverage of social insurance is required to keep people from having to live a less than decent life. We have also shown that providing social insurance is difficult and that its coverage is still less than adequate because of the lack of financing (due to high informalization, among many other things), the capacity to deliver health services is not yet met (due to lack of skills as well as equipment and other capital necessities), and the developing country s persistent lament of administrative inability. Although there are many dimensions upon which social insurance schemes can be improved, in this essay the author shall only briefly outline broad measures that relate to how developing countries may enlarge social insurance revenues. With regards to revenue, there is certainly no easy way but to either reallocate part of the existing budget or to generate new revenues elsewhere. Assessing which of the many subsidies (explicit or otherwise) ASEAN governments currently pay is worth cutting for the sake of subsidizing social security programs should be subject to research. Reallocating state budgets should prioritize cutting out wasteful subsidies that have been proven to be mistargeted.

27 Concerning generating new revenue, the three countries in discussion still have many unexplored avenues to do so. They would do well to follow the lead of countries such as Thailand that adjusted their compulsory contribution to firms with as little as one employee. Population coverage could also be extended by including compulsory contributors to anyone working with as short as a onemonth contract. Governments may raise the rates of social security contributions or make it progressive while increasing the limits on contributions (or abolish contribution caps entirely). By no means are these easy things to do, and improving social insurance schemes require much more than merely raising revenue. However, developing a country cannot just depend on building infrastructure and improving the investment climate. Making sure that people who are vulnerable to shocks outside their control do not fall into poverty is just as important, if not more. Endnotes 1 World Bank (2016). Each country usually has its own poverty line, but for the three countries discussed US$ 3.1/person/day is apropos for capturing the extent of people living below an internationally agreed floor of welfare at their level of development. 2 ILO (2014) 3 Factor-driven economies are laying the groundwork of development such as their governance structure, basic infrastructure, and primary education (Myanmar and Cambodia are arguably closer to this spectrum of development); efficiency-driven are more focused on developing their (labor, goods, financial) markets further and are catching up to the technological frontier. Singapore is at a higher innovation-driven stage where they are the technological frontier, whereas Thailand and Malaysia are somewhere between efficiency-driven and innovation-driven. 4 See Helpman and Itskhoki (2016) for a particularly new and rigorous example of an empirical investigation with Brazil as a case study. Other studies for developing countries include Attanasio, Goldberg, and Pavcnik (2004), Ferreira, Leite, and Wai-Poi (2010), and Gonzaga, Menezes- Filho, and Terra (2006). 5 Although there are no family allowances per se, all these countries do give tax breaks for incomeearners with children below a certain age and below a certain number. 6 WHO (2013)

28 Issue 25/ July th ASEAN Ministerial Meeting: Expectations and Reality The second Prime Minister of Malaysia, Tun Abdul Razak, addresses the Meeting of ASEAN Foreign Ministers in Kuala Lumpur on 26 November Source: Ministry of Foreign Affairs of Malaysia Wirya Adiwena Head of International Relations at The Habibie Center

29 Observers of ASEAN and Southeast Asia always pay close attention to the outcome of ASEAN Ministerial Meeting. While what happens behind closed doors are not privy to public eyes, the outcome documents or lack thereof are considered as signs of the directions that ASEAN Member States are heading. This year, amidst the historical moment that is the 50th ministerial meeting and ASEAN anniversary, there are a number of important issues that we can expect will colour the meeting, as well as possibly the following the 7th East Asia Summit Foreign Ministers Meeting and the 24th ASEAN Regional Forum. This essay will provide short highlight on the issues by focusing on past trends and recent developments in Southeast Asia. ASEAN Unity and Centrality As an issue, ASEAN unity and centrality has been a running theme in Southeast Asia for the past few years. The main cause of concern surrounding the issue is China s increasing activities and assertiveness around Southeast Asia, mostly in regard to the South China Sea. Indeed, the political development surrounding the contested area have been a thorn at the side of ASEAN Member States for the past years. In the past it has driven China to wedge itself between Member States to ensure that ASEAN does not take strong stance against China. The result was that the 2012 ASEAN Summit under Cambodia chairmanship failed to deliver joint communique and prompted then Indonesia s Minister for Foreign Affairs Marty Natalegawa to conduct shuttle diplomacy across the region to ensure that Member States can go past this hurdle and continue the longstanding ASEAN tradition of consensus based decision making and agree on a statement. After passing this challenge, ASEAN unity is challenged again under the 2016 Lao chairmanship when Beijing influence was spotted when the issue of South China Sea was discussed among the region Foreign Ministers with the least prosperous Member States reluctant to openly cross China s policy. However, perhaps as an evidence of ASEAN increased maturity, this time Member States managed to avoid deadlock and issued a joint communique. It should be noted that China s assertiveness is not the only challenge against ASEAN unity and centrality. United States foreign policy priorities under both President Obama and, as it seems today, President Donald Trump is another one. The presence of great powers in the region creates a juxtaposition within the region. Member States like Singapore and the Philippines used to be able to rely on the US presence in the region to prevent military escalation if not as a force of deterrence to possible major powers rivalry. At the same time other member states are quite wary that US military presence and its high defence budget shows disconcerting signs of a possible new Cold War. 1 Meanwhile, Member States like Lao and Cambodia are overtly veering closely to China. Responding to this development, Indonesia as ASEAN s primus inter pares is trying to set the regional organization back on its previous track. It started 2017 by ensuring that ASEAN unity is on the table again amidst great powers rivalry during the ASEAN Ministerial Meeting (AMM) retreat, a scene setting event where foreign ministers from all Member States convened and kickstart each year s round of meetings. 2 Indonesia is not alone. This goodwill was also echoed by Philippines, as this year's ASEAN chairman, that believes, there is more determination to proceed to finalise the COC framework as soon as possible and proceed to actual negotiations of COC. 3 This shows that ASEAN understands that they need to have a position in regard to South China Sea and, concurrently, the current reality of great power politics. However, it is still not clear how soon this will happen. This is a continuation of last year s AMM where Member States and China agreed on the full and effective implementation of the Declaration of Conduct and working substantively towards the early adoption of a Code of Conduct in the South China Sea based on consensus, 4 as an effort to introduce rule-based interaction among disputing parties. While this step forward should be appreciated, hope for development of the COC should be taken with a grain of salt. Indonesia s own 'hedging' strategy against China has been criticized for not having clear vision of where ASEAN stands in their strategy and on what they actually think of China enemy, friend, frenemy? as well as their future strategy regarding ASEAN interaction with China. 5 The Philippines foreign policy is also not encouraging. Their track record in responding to China s rejection of the July 2016 ruling by Permanent Court of International Arbitration that they win has been muted. China seems to decide not to fully acknowledge the ruling. Although they did not do anything to Philippines fishermen who fished in and around Scarborough Shoal in line with the ruling s acknowledgement of their historical fishing rights they still maintain active military presence in South China Sea. 6 Meanwhile, President Duterte has repeatedly showed his reluctance to aggravate China by actively exerting their claim on South China Sea based on the ruling and instead opting for a more peaceful means. 7 ASEAN is in the midst of great power rivalry where Member States are either taking sides or hedging between the great powers. In this situation ASEAN does not always manage to reach much needed consensus on critical issues. But as they go from summits to summits, ASEAN seems to be making gradual progress in facing this contemporary geopolitical challenge. However, as long as ASEAN Member States are occupied with their own domestic agenda and try to make the most of this geopolitical reality to further their national interest, ASEAN unity and centrality will still take second priority. Observers should appreciate any statements coming out from the meeting in an attempt to advance ASEAN unity and centrality, but they should do so with a grain of salt. ISIS in the midst ASEAN is not only facing external pressure. Internally, it also faces many serious challenges, although few demands as urgent attention as terrorism in the region. The region has seen increased terrorist activities in the past year with a number of bomb attacks and a city takeover by ISIS affiliated group. The terrorist group that claims to have established an Islamic caliphate in the Middle East has extended their claim to Marawi, a city in the Philippines, in May 23rd. This act was possible as they worked with local insurgents group Abu Sayyaf and the Maute militant groups. Indeed, southern Philippines has seen local insurgents group pledging allegiance to ISIS in 2014 and 2015, although it was initially not clear whether these are actual pledge or a public relations stint to try and project the image of a global movement. ASEAN Member States have been expecting such development. ISIS is no stranger to the region as a number

30 Issue 25/ July of people from Southeast Asia have travelled to join their fight in Syria most notably from Indonesia and Malaysia. The impact of transnational terrorist links reverberates in the region. Indonesian police and intelligence have been facing constant terror threats and responded by arresting terrorists with alleged link to ISIS. Thailand has been in the crosshair of bomb attacks by terror groups. Singapore has acknowledged that terror threat for the region is real. 8 The Philippines is also familiar of the threats the groups like Abu Sayyaf and the Maute militias pose for their region, despite President Duterte s open dismissal of terrorist prior to their attacks in Marawi and their national security focus on fighting drug trafficking. 9 This preparedness is the reason why some Member States can act quickly enough in the wake of the Marawi attack. Leading up to the AMM, three Member States Indonesia, Malaysia, and the Philippines- -have met last June in Manila to discuss terrorism and extremism in Southeast Asia. These meetings declared the operationalization of trilateral patrols in the Sulu-Sulawesi Sea. They also promised to deliver an action plan with detailed counter-terrorism cooperation. Also present in the meeting were Singapore s Senior Minister of State for Defence and Foreign Affairs and Brunei s Deputy Defence Minister. Moreover, following this meeting Singapore has offered to join the trilateral patrol and to help with intelligence sharing. 10 With the Marawi attack as the catalyst, ASEAN is gearing up toward greater cooperation in the field of counterterrorism. The ASEAN Ministerial Meeting would be a perfect place to ensure that other Member States are well informed of the results of the trilateral cooperation and that the instruments of this subregional cooperation is truly embedded in the regional security architecture. Labour clamour Labour is not in the strict purview of AMM, as ASEAN has its own instrument to discuss labour issue through the ASEAN Labour Ministers Meeting which is held every two years. As this meeting had been held in Lao in May 2016, this year only saw ASEAN Labour Ministers convened in Davao for a retreat earlier this year. These meetings pushed forward the operationalization of the ASEAN instrument on the protection and the promotion of the rights of migrant worker with plan to finalise it for signing by the 31 st ASEAN Summit in November This important step forward for meaningful protection of migrant workers in ASEAN could have been completed this year, as what seems to be the plan for the Philippines. For them the successful signing of this instrument this year could have been a major accomplishment. Not only that the instrument is directly relevant for their citizens who work in other AMS, but this instrument could be the continuation of their success that the Philippines had as ASEAN Chair in 2007 when AMS adopted the ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers. A declaration that truly put labour issue in the heart of ASEAN. However, the discussion faced deadlock on the binding nature of the instrument--only Indonesia is pushing for the document to be binding while other Member States prefer to have a non-binding agreement. Indeed, even the Philippines who initially insisted on having the document to be binding ceded their stance, hoping to have early adoption. This disagreement stems from the traditional separation between labour sending and receiving countries. There is a sense of status quo among the receiving countries who prefer to resolve issues relating to migrant workers through domestic laws or bilateral talks. At the same time, sending countries often face domestic push for a better protection of their citizens abroad and they are hoping to be able to reach this by institutionalizing the protection of migrant workers rights including undocumented ones through regional instrument. A meaningful protection for migrant workers from any Member States are not solely the jurisdiction of Labour Ministers and solving this longstanding deadlock will require constant negotiation from all relevant ministerial lines. Therefore, with only one year left, Member States should realize that they are all duty bearer in the protection of migrant workers and that this duty should be legally and not just morally binding. To reach this end, Indonesia and the Philippines could still use the opportunities of AMM to talk with their counterparts and ensure that when the next ASEAN Summit arrives, Member States are able to come into an agreement ready to sign a legally binding instrument to protect migrant workers rights. Conclusion This essay by no means aim to comprehensively catalogue the issue that are going to be discussed in the AMM. However, taking into account recent trends across the region, this essay aims to emphasise critical issues that could be the main theme of the meeting (ASEAN unity amidst great powers rivalry), issues that are increasingly gaining traction due to recent events (terrorism), and issue that are currently on the backburner not because of it triviality but owing to difference of views among Member States (labour). What is clear from the list of possible talking points among ASEAN Foreign Ministers is that in their journey into golden jubilee, ASEAN is increasingly willing to face contemporary challenges hopefully, this will also translate into better ability to solve them. Endnotes 1 Susilo Bambang Yudhoyono The world cannot afford a new Cold War. com/2008/09/15/opinion/15iht-edyudoyono html 2 Asila Jalil Indonesia to focus on ASEAN unity at meeting. html 3 Nestor P. Burgos Jr. ASEAN determined to have South China Sea code: Philippines. com/seasia/2017/02/21/asean-determined-to-have-southchina-sea-code-philippines.html 4 ASEAN Joint statement of the 19 th ASEAN- China summit to commemorate the 25 th anniversary of ASEAN-China Dialogue Relations. 5 See, for example, Evan A. Laksamana How should Indonesia engage a hegemonic China. 6 Julian Ku Assessing the South China Sea arbitral award after one year: why China won and the US is losing. 7 Financial Times Duterte calls for calm as SE grapples with ruling. 8 Tham Yuen-C Singapore has to be prepared that terrorists may one day breach its safety net: PM Lee. 9 Business Mirror Philippine leader, focused on war on drug users, ignored rise of Isis Straits Times Joint Sulu Sea patrols launched; infosharing from S pore next. asia/joint-sulu-sea-patrols-launched-info-sharing-fromspore-next

31 "Development can only be sustained when people are secure. My dream is for ASEAN is to become an inclusive society where all people in the region can enjoy freedom with respect to their human rights" Wai Wai Nu Founder Women's Peace Network, Myanmar

32 Issue 25/ July ASEAN ROUND-UP Rebuilding Marawi Inquirer.net July 11 MARAWI CITY The City Hall here reopened for business on Monday even as government forces pressed an operation to dislodge Islamic State-linked terrorists holed up in the city s commercial district. The ground and some structures shook from the impact of airstrikes and artillery bombardment as Mayor Majul Usman Gandamra led his staff and employees in a flag-raising ceremony at the City Hall premises. Gandamra said City Hall would be open for business only on Mondays and Wednesdays. Why it Matters? Even when militant snipers in tall buildings and hidden in tunnels and basements throughout the city are slowing down the AFP s attempt to recapture the remaining areas still occupied by militants, the armed forces are confident that the end of their military operation is near. The reopening of Marawi City Hall, however gradual, attests to the government s optimism and commitment to bring back Marawi to civilian control. This news is welcome because the former inhabitants of Marawi, of whom a large portion is at a relocation center in Iligan City, have urgent needs that must be addressed and sooner or later must be resettled back to their now destroyed homes. the whole of the city is recaptured and the many human remains still scattered in the city streets have all been recovered. The police force and Crisis Management Center are now training civilian volunteers on how to properly handle cadavers. The relocated citizens of Marawi, now relocated to surrounding areas like barangay Maria Cristina or Balo-I town, must still wait a little longer before they can return home. Reports from relocation centers seem to indicate that supplies have not been provided equitably among relocation centers with some centers lacking food while some others are delivered more food than their living spaces can store, indicating slack in the coordination of aid delivery. These are the complaints that the Philippine government must work to address; the complaints that the Marano people were somehow at fault for having terrorists set up base in their region is incorrect and unhelpful to the welfare of those relocated. The immediate and long-term work that must be done to rehabilitate Marawi is a tremendous task. The Philippine government must now focus on recapturing then rebuilding a city that has been crushed by bombs and resettling citizens scarred by the horror of war. The offer of help by the US government, particularly in intelligence, reconnaissance, and surveillance is a valuable one, other countries should also help where they can. After a month of intermittent battle between the Armed Forces of the Philippines (AFP) against an Islamic Statelinked secessionist terrorist groups for the city of Marawi -the heart of Islamic Mindanao- at least thirty-nine civilians along with eighty-nine police officers and AFP troops lost their lives with a further civilians displaced from their bullet-strewn homes to surrounding towns and barangays. The siege has yet to finish. Although normal life is beginning to come back to the besieged city, yet deep in Marawi s commercial districts, skirmishes between government troops and Abu Sayyaf and Maute militants are still ongoing. The government is already organizing the city s rehabilitation, which will start with remaking the city s utility infrastructure such as water and electricity lines, as well as rebuilding basic public services such as schools and hospitals. The government has already prepared a task force of military engineering brigades to reconstruct important public facilities, particularly in conditions where private companies could not yet penetrate. But these engineering units are still put on hold until

33 Agustha Lumban Tobing is a researcher at The Habibie Center s ASEAN Studies Program Migrant Workers Need Protection, Not Persecution Human Rights Watch, July 7 NEW YORK The Thai government should halt enforcement of a new migrant workers law that imposes excessive criminal penalties and has caused thousands of migrant workers to flee Thailand, Human Rights Watch said today. Since the government enacted the Decree Concerning the Management of Foreign Workers Employment on June 23, 2017, tens of thousands of registered and unregistered migrant workers from Cambodia, Burma, Laos, and Vietnam have fled Thailand, fearing arrest and harsh punishment. Why it Matters? Thailand s military junta unveiled new labor regulations that caused more than one hundred thousand migrant workers from across Thailand to flee back to their homelands. The new law would fine undocumented migrant workers as high as the baht equivalent of $3,000 (which may not be that different with what migrant workers makes in a year) or a maximum five-year prison sentence. The law would also fine employers who hire undocumented migrants up to the equivalent of $23,000 for each undocumented worker they hire. If documented migrant workers were caught working a different job than what their employers registered to the department of employment, then each migrant would still be forced to pay the $3,000 fine while employers would have to pay $12,000 for each employee working jobs other than that for which they were registered. This policy was apparently enacted by the junta as a response to Thailand s inordinately low achievement regarding labor standards generally but particularly for human-trafficking; the United States State Department judged that Thailand did not meet US standards concerning the prevention of human trafficking. Many reports from human rights organizations have shown that Thailand does indeed have a regrettable record when it comes to protecting the welfare of migrant workers; there are numerous reports that migrants in Thailand have been victims of assault, torture, detention, sexual abuse, extortion, and even murder either by their employers or corrupt government officials. Migrants in Thailand have also had their passports and work permits taken by their employers to keep them from leaving the country or to change employers. If that weren t enough, it is not unknown for police officers and public officials to retaliate against migrants who had the bravery to report violations of workplace rules to them. Although the new law does criminalize the confiscation of identification papers and work permits by employers and also extortion by government officials, yet the overall policy unjustly burdens migrants who are in need of protection. These new punishments, if anything, will increase the incentive for corrupt officials and exploitative employers to extort undocumented migrant workers more, rather than less. It has been estimated that there are around three million undocumented workers in Thailand, mostly coming from the poorer neighboring countries of Laos and Cambodia. Even beyond the inhumane treatment they receive from their employers, the existing government regulations are also somewhat at fault for creating an institutional environment where many workers are undocumented and many have to suffer the exploitation of crooked bosses and officials. Workers have to register themselves through a bureaucracy with the complexity to which they are unused; many of those undocumented workers have been poorly educated and were either only trying to find work in Thailand to make a better life than the poverty they had to endure in their home countries or were actually coerced or mislead into working in Thailand. If they do enter Thailand officially, migrants aren t allowed to unionize and must seek authorization if they wanted to change employers. Even if they were given authorization, they must find one in fifteen days, a difficult challenge even for the most skilled workers. After the sudden exodus of workers from Thailand and loud complaints from private industry that the policy would burden them too much, Prime Minister Geg. Prayut Chan-ocha used a special decree to delay the enforcement of parts of the law (particularly parts concerning fines) and decided to consult the public on how to revise the law. This is not how policy is supposed to be enacted. Whatever the intentions of the Thai junta were to create this policy, public consultations should have been done during initial planning stages, rather than after a backlash had erupted. And even so, punishing often helpless migrant workers because of the unsavory, even detestable, practices of employers and corrupt government officials is as unwise as it gets.

34 Issue 25/ July "ASEAN leaders must have the courage to see the strengths and weaknesses of the regional body, so that ASEAN will become an organization that is relevant for its people and the world," Joko Widodo President of Indonesia

35 The ASEAN Studies Program was established on February 24, 2010, to become a center of excellence on ASEAN related issues, which can assist in the development of the ASEAN Community by The Habibie Center through its ASEAN Studies Program, alongside other institutions working towards the same goal, hopes to contribute to the realization of a more people-oriented ASEAN that puts a high value on democracy and human rights. The objective of the ASEAN Studies Program is not merely only to conduct research and discussion within academic and government circles, but also to strengthen public awareness by forming a strong network of civil society in the region that will be able to help spread the ASEAN message. With the establishment of ASEAN Studies Program, The Habibie Center aims to play its part within our capabilities to the ASEAN regional development. ASEAN STUDIES PROGRAM The Habibie Center Jl. Kemang Selatan No.98, Jakarta Selatan (P.) (F.) a b i b i e c e n t e r

36 Imagine ASEAN at your fingertips thcasean.org