Prospects for South-east Asia in 2019

Subject Prospects for South-east Asia in 2019. Significance The early part of next year will feature important elections in some of South-east Asia's major economies. Meanwhile, financial volatility and a trade downturn pose risks to ASEAN economies. ASEAN under Thailand’s chairmanship will aim to advance the Regional Comprehensive Economic Partnership (RCEP) and a Code of Conduct (CoC) for the South China Sea.

Significance This year's summits, which conclude on November 22, will have particular resonance following soon after the November 13 coordinated massacres in Paris, claimed by Islamic State group (ISG). Impacts Despite rising pressure on China, a deal on a South China Sea Code of Conduct remains distant. A Paris-style 'mass marauder' attack could occur in South-east Asia. ASEAN states will probably use the Defence Ministers' Meeting to expand anti-ISG intelligence-sharing and defence collaboration.


Subject South-east Asia's push for trade agreements. Significance Late last month, an Indonesian delegation led by Trade Minister Enggartiasto Lukita began a week of negotiations in Washington to lobby against the withdrawal of trade preferences for Indonesian exports to the United States. Meanwhile, South-east Asian states are involved in two major trade agreements: the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the 16-state Regional Comprehensive Economic Partnership (RCEP). Impacts US trade reprisals against Indonesia could weaken Jakarta’s support for Washington’s diplomatic pressure on North Korea. The US-China tariff escalation could prompt partners to redirect some of their trade, boosting trade between Taiwan and South-east Asia. ASEAN Economic Community integration will be slow despite progress in RCEP and the CPTPP.


Significance The ASEAN Summits will attempt to maintain momentum for greater integration, particularly on the new 2025 ASEAN Economic Community (AEC) blueprint. The EAS will focus on regional tensions on the Korean peninsula and in the South China Sea, and see the first visit of a serving US president to Laos. Impacts Russia will strengthen ties with South-east Asia and ASEAN, but avoid entanglement in maritime disputes. ASEAN could lose international traction in 2017: Duterte is still developing foreign policy experience. Regional economic issues will be considered outside South-east Asia this year also in Peru at the November APEC summit.


Significance The two sides have resumed CoC talks after a pandemic-induced hiatus. Meanwhile, Chinese-US rivalry in South-east Asia is escalating, as demonstrated by recent high-profile naval exercises in the South China Sea. Impacts ASEAN’s South China Sea claimants will resist any pressure from Beijing to compromise their claims in return for Chinese COVID-19 vaccines. South China Sea tensions will not impede commercial maritime traffic in the region. Any US-Chinese military confrontation in the Taiwan Strait would have considerable political fallout in South-east Asia.


Subject South-east Asia's relations with Russia. Significance Russia’s ties with the West are deteriorating. South-east Asia offers Moscow important diplomatic and economic opportunities. Impacts As Russia-China strategic alignment strengthens, Moscow and Beijing will increase coordination and cooperation in South-east Asia. Advanced Russian defence technology will further strengthen Beijing against South-east Asian claimants in the South China Sea dispute. Washington will try to encourage South-east Asian countries to buy US rather than Russian weapons.


Significance The announcement came days after an international ruling under the UN Convention on the Law of the Seas (UNCLOS) dismissing China's maritime claims and island-building in the South China Sea -- a ruling that Beijing has rejected. This will affect an aspect of China-South-east Asia relations that has gone under-noticed amid the maritime controversies: security and defence cooperation. Impacts Despite growing Chinese interest, Thailand will still seek security ties with Washington. As a beneficiary of competing Chinese and US diplomacy, Myanmar will try to balance the two powers' advances. The further China pushes defence interests and ties in ASEAN, the harder ASEAN will find reaching common security positions. South-east Asian countries will stay ready for maritime skirmishes; they will need Western military and technological support.


Significance The CoC would codify principles and processes to guide states’ activities and control incidents in the contested sea. The framework’s adoption at the ministerial level is a small but concrete step towards realising a CoC first envisaged in 2002 and under discussion since 2013. Impacts China will stall Framework talks if it detects US influence on ASEAN’s position, for instance if they insist on a legally binding CoC. Negotiating a CoC could help Beijing make Washington's involvement in South China Sea issues seem unnecessary. This could be exacerbated if US President Donald Trump’s administration decides to focus on East Asia over South-east Asia. South China Sea energy resource exploration will be a likely source of friction that could threaten China-ASEAN talks.


Subject Update on US-Cambodia ties, including China. Significance China and Cambodia will start repurposing Cambodia’s Ream Naval Base as a Chinese facility in 2020, the US Indo-Pacific Command’s General Joel Vowell said on August 15. A naval base in the Gulf of Siam would give China speedier access to the South China Sea and hold down the eastern end of Beijing’s aspirational ‘string of pearls’ line of Chinese-held ports in South and South-east Asia, enabling the Chinese navy to protect trade and project Chinese power. Impacts Developing the Ream base will make it more difficult to agree a South China Sea Code of Conduct. Development of the Ream base, and the 2017 crackdown, will not hinder US-Cambodia trade. Cambodian leadership transition could give Washington more influence in the 2020s. There will likely be South-east Asian pushback against any new foreign military basing.


Significance Most of ASEAN’s dialogue partners will be present at the talks in Bangkok. High on the agenda will be attempts to conclude negotiations over the Regional Comprehensive Economic Partnership (RCEP), a projected free trade agreement (FTA) involving the ten ASEAN members and six dialogue partners with which the South-east Asian regional bloc has existing FTAs. Impacts ASEAN and China may announce progress on talks over a second draft of the South China Sea Code of Conduct, although this remains distant. Malaysia could renew calls for ASEAN to pressure Myanmar over the Rohingya crisis, testing the regional bloc’s unity. ASEAN members will likely adopt guidelines for cooperating on regulation of the digital economy and social media.


Significance All are aiming to revive economies badly hit by the pandemic’s fallout. The ten ASEAN states and five of the bloc’s dialogue partners recently signed a Regional Comprehensive Economic Partnership (RCEP), a free trade agreement (FTA) that will progressively lower tariffs.


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