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Asean

Getting behind Myanmar’s reforms

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Author: Trevor Wilson, ANU

Australia hosted a high-level government delegation from Myanmar this week, led by President Thein Sein.

AUSTRALIA-MYANMAR-DIPLOMACY

Thein Sein’s ambitious program of economic and political reform has surprised the international community since he assumed office in March 2011. The visit — the first to Australia since 1974 — allowed the Gillard government to make a number of new commitments specifically designed to support Myanmar’s reform process and the development of democratic institutions.

The visit followed a series of similar overseas trips that Thein Sein has made since assuming office. Its purpose was to reassure Australia — and the Burmese community in Australia — that his government is genuinely committed to reform. In return, Thein Sein was looking for (and received) an explicit reaffirmation of Australia’s support for these reforms. He also thanked Australia for its past support as Myanmar’s fourth-largest bilateral aid donor.

During the visit, Prime Minister Gillard announced additional Australian aid for Myanmar to create a ‘Myanmar-Australia Partnership for Reform’. This will not involve a substantial increase in aid (AU$20 million over two years, in addition to the AU$58 million that Australia has already committed for 2012–13), but it does represent a significantly new style of commitment. The partnership is targeted at helping Myanmar’s government to ‘strengthen democratic institutions, promot[e] human rights, improv[e] economic governance and advanc[e] the rule of law’. These governance-related goals signal a policy shift from Australia’s traditional emphasis on providing aid to fulfil humanitarian objectives in health, education and poverty alleviation. They also represent Australia’s first concrete commitment to President Thein Sein’s reform agenda.

Controversially, Gillard also announced that Australia will ‘support democratisation and reform’ in Myanmar by restarting its defence engagement with the state. Australia will post a defence attaché to Myanmar for the first time since 1988, and resume defence training for Myanmar soldiers in peacekeeping operations, and humanitarian and disaster relief activities. This change means that, as well as being the first country to lift economic sanctions on Myanmar, Australia is now the first to partially lift defence sanctions (the United States has always had defence attachés in Yangon). Australian restrictions on military operational cooperation and arms sales will remain in place.

Gillard also announced a series of measures to encourage the development of commercial ties between Australia and Myanmar. Australia will encourage ethical trade with, and investment in, Myanmar by Australian firms, including through the global Extractive Industries Transparency Initiative, which will hold its next global conference in Sydney in May 2013. Gillard also confirmed that Austrade will re-open an office in Myanmar in the near future. These announcements followed the launch of an Australia-Myanmar Chamber of Commerce by Australian business groups last week, just ahead of Thein Sein’s visit.

Some commentators have characterised Prime Minister Gillard’s announcements as a ‘reward’ for Thein Sein, perhaps implicitly questioning whether they were appropriate or well timed. During his visit, President Thein Sein was met by loud demonstrations protesting against ongoing human rights abuses in Myanmar and the treatment of ethnic minority groups in areas where the Myanmar army is still fighting insurgencies. These protests are a reminder that opinion on the progress of Myanmar’s reforms is not unanimous.

But few people in Myanmar would see it this way. They would likely interpret Gillard’s announcements as recognition that Myanmar needs serious help to achieve Thein Sein’s reforms, especially given the low levels of international assistance that Myanmar has received during the past 20 years of sanctions. Many of the approximately 20,000 Burmese residents in Australia are also looking for ways to contribute to Thein Sein’s reform program.

The president’s visit highlights a significant change in Australia’s policy approach to Myanmar. Australia is determined not to be a mere observer in the country that will assume the chair of ASEAN in 2014. The Gillard government is now directly supporting reform-related activities, rather than just pursuing traditional humanitarian objectives. This approach will help to embed reforms and prevent them from failing before Myanmar’s next elections in 2015.

It is vital now that Australia live up to these important new commitments to improve governance, strengthen democratic institutions, and promote human rights as Myanmar moves towards democracy. Some promises made in June 2012 by Foreign Minister Bob Carr have still not been fully honoured.

Trevor Wilson is a Visiting Fellow at the College of Asia and the Pacific, the Australian National University.

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Getting behind Myanmar’s reforms

Asean

ASEAN weathering the COVID-19 typhoon

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Vietnam's Prime Minister Nguyen Xuan Phuc addresses a special video conference with leaders of the Association of Southeast Asian Nations (ASEAN), on the coronavirus disease (COVID-19), in Hanoi 14 April, 2020 (Photo:Reuters/Manan Vatsyayana).

Author: Sandra Seno-Alday, Sydney University

The roughly 20 typhoons that hit Southeast Asia each year pale in comparison to the impact on the region of COVID-19 — a storm of a very different sort striking not just Southeast Asia but the world.

 

Just how badly is the COVID-19 typhoon thrashing the region? And what might the post-crisis recovery and reconstruction look like? To answer these questions, it is necessary to investigate the strengths and vulnerabilities of Southeast Asia’s pre-COVID-19 economic infrastructure.

Understanding the structure of the region’s economic house requires going back to 1967, when Southeast Asian countries decided to pledge friendship to one another under the ASEAN framework. While other integrated regions such as NAFTA and the European Union have aggressively broken down trade barriers and significantly boosted intra-regional trade, ASEAN regional economic integration has chugged along slower.

Southeast Asian countries have not viewed trade between each other as a top priority. The trade agreements in the region have been forged around suggestions for ASEAN countries to lower tariffs on intra-regional trade to within a certain range and across limited industries. This has lowered but not eliminated barriers to intra-regional trade. Consequently, a relatively significant share of Southeast Asian trade is with countries outside the region. This active extra-regional engagement has resulted in ASEAN countries’ successful integration into global value chain networks.

A historically outward-facing region, in 2010 around 75 per cent of Southeast Asian commodity imports and exports came from countries outside of ASEAN. This share of extra-regional trade nudged closer to 80 per cent in 2018. This indicates that ASEAN’s global value chain network embeddedness has deepened over time.

Around 40 per cent of ASEAN’s extra-regional trade is with the rest of Asia. From 2010 to 2018 Southeast Asian countries forged major trade relationships with four Asian countries: China, Japan, South Korea and India. Outside Asia, the United States is the region’s major trading partner. ASEAN’s trade focus on Asia’s largest markets is not surprising. Countries tend to establish trade relationships with large, geographically close, and culturally similar markets.

Fostering deep relationships with a few large markets, however, is a double-edged sword. While it has allowed ASEAN to benefit from integration in global value chains, it has also resulted in increased vulnerability to the shocks affecting its network connections.

ASEAN’s participation in global value chains has allowed it to transition from a net regional importer in 1990 to a net regional exporter in 2018. But the region’s deep embeddedness in a small and tightly-coupled network cluster of extra-regional global value chain partners has exposed it to disruption to any and all of its external partners. By contrast, ASEAN’s intra-regional trade network structure is much more loosely-coupled: a consequence of persistent intra-regional trade barriers and thus lower intra-regional trade intensity.

In the pre-COVID-19 period, ASEAN built for itself an economic house held up by just five extra-regional markets, while doing less to expand and diversify its intra-regional trade network. The data shows that ASEAN trade became increasingly concentrated in these few external markets between 2010 and 2018.

This dependence on a handful of markets does not bode well for risk and crisis management. All of the region’s major trading partners have been significantly affected by COVID-19 and this in turn is blowing the ASEAN economic house down.

What are the ways forward? The immediate task at hand is to get a better picture of the region’s position in global value chain networks and to get on top of managing its network risk exposure. Already there are red flags around the region’s food security arising from its position in food value chains. It is critical to look for ways to introduce flexibility into existing supply chains for greater agility in responding to crises.

It is also an opportune time for ASEAN to harness the technology transfer gains of global value chain participation and invest in innovation-driven diversification of products and markets. The region’s embeddedness in global value chain networks certainly places it in a strong position to readily access large export markets not just in Asia but also Europe and the Americas.

Over the longer term, ASEAN is faced with the question of whether it should seriously look…

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Asean

Can Asia maintain growth with an ever ageing population ?

To boost productivity in the future, Asian governments will have to implement well-targeted structural reforms today.

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