2023/66 “Malaysia’s 2023 State Elections (Part 2): Campaign Strategies and Future Implications” by Ong Kian Ming
EXECUTIVE SUMMARY
- The allocation of seats between PH and BN and within PN was conducted successfully in terms of avoiding multi-cornered fights among the component parties of the 3 major coalitions. But the specific distribution of seats and candidates in each of the six states advantages BN-PH and PN in some areas and leaves their respective candidates more vulnerable in other areas.
- The contours of the campaign are shaping out to be relatively low key and attracting low voter interest, at least if judged from the attendance at the public ‘ceramahs’. Strategic campaigning in some of the “hot” or marginal seats in the last week of campaign will be more important than in previous elections. A low turnout rate will be disadvantageous for PH-BN, but not significantly enough to change the overall outcome.
- While PN still seems to have an advantage in social media space, especially on Tik Tok, PH has slowly but surely narrowed the gap.
- Three wins for PH-BN (Penang, Selangor, and Negeri Sembilan) and three wins for PN (Kedah, Kelantan, and Terengganu) are expected. This would result in the status quo from before the elections being kept, and signal that the federal government will last the full term, till 2027. This will attract investors and calm the business community, and give more space for the Unity Government to roll out more substantive economic, fiscal, institutional reform and social protection policies.
- In the unlikely occurrence of a “Black Swan” event where PN wins Selangor and perhaps even Negeri Sembilan, the pressure on the federal government will be immense. A series of resignations by BN MPs, leading to a series of parliamentary by-elections, may have a domino effect that may lead to a change in government. The possibility for such an event is however very low.
* Ong Kian Ming is Senior Visiting Fellow at ISEAS – Yusof Ishak Institute. He was a former Member of Parliament representing the DAP and former Deputy Minister of InternationalTrade & Industry (MITI). He is the current Program Director, Philosophy, Politics and Economics (PPE), at Taylor’s University, a private university in Malaysia.
ISEAS Perspective 2023/66, 8 August 2023
INTRODUCTION
This is the second part[1] of my analysis of the upcoming state elections in Malaysia. Herein, I examine the following salient issues:
- The strategies underlying the allocation of seats between Pakatan Harapan (PH) and Barisan Nasional (BN), and within Perikatan Nasional (PN) as well as the likely impact on the campaign as well as the results
- The contours of the campaign one week after nomination day and one week till polling day
- Looking ahead at the likely results of these state elections, and the political impact on the next general elections
SEAT ALLOCATION AND STRATEGIC IMPLICATIONS
The seat allocation process between PH and BN was always going to be more contentious in the PH-held states of Penang, Selangor, and Negeri Sembilan, compared to the PN-held states of Kedah, Kelantan, and Terengganu. In Penang and Selangor, BN, or more specifically UMNO, will have to accept the reality that it will hold at most a handful of state seats and be a marginal player in the state administration. In Negeri Sembilan, where UMNO has more influence and seats, it may still have to play second fiddle to PH in not likely being able to claim the Menteri Besar (MB) position.
In the three PH-held states, PH would also have to give up some seats with incumbent candidates to UMNO to show its commitment to the BN-PH unity government cooperative framework at the federal level. In the three PN-held states, PH has less of a problem ceding the majority of seats to UMNO, especially since they feel that these are not winnable seats at this point in time.
(The implications of MCA and MIC “sitting out” these state elections will be discussed in the concluding section).
Table 1 below compares the seat allocation for the 2023 state elections (“Pilihanraya Negeri” or PRN 2023) with the seat allocation for GE14 among PKR, DAP, AMANAH, and UMNO.
Table 1: Seat allocations for PKR, DAP, AMANAH, and UMNO for PRN 2023 vs GE14
Source: Various newspaper reports
A few points are worth noting. Firstly, UMNO has to “sacrifice” the most by decreasing the number of state seats it contested in, from 175 in GE14 to 108 in PRN 2023, a reduction of 67. This reflects the significant decrease in the bargaining power of UMNO post GE15. Secondly, AMANAH had to sacrifice the largest number of seats in PH, from 62 seats in GE14 to 32 seats in PRN 2023, mostly by giving up seats in Kelantan and Terengganu. This means that the ability of AMANAH to expand its influence in the PAS strongholds of Kelantan and Terengganu will be severely constrained moving forward. Thirdly, DAP only had to give up one state seat, from 48 in GE14 to 47 in PRN 2023. This was because of the fact that DAP won all of the 48 state seats contested in GE14 and one of the negotiating rules between PH and BN was that the incumbent parties would retain the seats it won in the previous state elections in GE14. The fact that PH and UMNO were able to come to an agreement to avoid any three-corner fights in the 2023 state elections means that the Unity Government platform remains coherent, at least on paper.
PKR gave up three state seats where it had incumbents to allow UMNO to contest. In Penang, it conceded the marginal seat of N21 Sungai Acheh to UMNO, one of the two seats it is likely to win in Penang (the other being N40 Telok Bahang). In Selangor, PKR gave up N17 Gombak Setia to allow the UMNO state chief to contest. (This decision was made easier because the incumbent in this seat, Muhammad Hilman, left PKR together with Azmin Ali, to join BERSATU, as part of the Sheraton Move in 2020). In Negeri Sembilan, PKR gave up the seat of N25 Paroi to AMANAH, which in turn gave up the seat of N9 Lenggeng for UMNO to contest. DAP gave up the N24 Dusun Tua seat in Selangor to UMNO, the only state seat which DAP had to sacrifice.
The seat allocation process was much less complicated and contentious for the Perikatan Nasional (PN) parties – BERSATU, PAS, and GERAKAN. PAS was willing to let go of many of the seats it contested in GE14 which it knew it stood little chance of winning, especially in Penang, Selangor, and Negeri Sembilan. Its main priority in the seat negotiation process was to ensure that it contested in the majority of seats in its stronghold states of Kedah, Kelantan, and Terengganu, which it is able to secure. For BERSATU, being out of Pakatan Harapan (PH) allowed it to contest in seats that were previously contested by PKR and AMANAH. It increased the number of contested seats in Selangor from 9 in GE14 to 32 in PRN 2023 and in Negeri Sembilan, from 2 in GE14 to 15 in PRN 2023. GERAKAN was also able to contest in seats that were previously contested by MCA in GE14 when GERAKAN was still part of Barisan Nasional (BN). GERAKAN went from 17 seats in GE14 to 37 seats in PRN 2023. (see Table 2 below)
Table 2: Allocation of state seats in PRN 2023 versus GE14 for BERSATU, PAS, and GERAKAN
Source: Various newspaper reports
MUDA and PSM entered into an electoral alliance for the 2023 state elections with their efforts focused mostly in the state of Selangor where 14 out of 18 MUDA candidates are contesting and where the PSM’s 4 candidates are contesting (See Table 3 below).
Table 3: Allocation of seats in PRN 2023 – MUDA and PSM
Source: Various newspaper reports
From a campaign perspective, there are some noteworthy points with regard to the allocation of seats within PH and also between PH and BN. For example, the N18 Hulu Kelang seat in the parliamentary constituency of Gombak was originally an AMANAH seat; PKR decided to swap its N41 Batu Tiga seat (in the parliamentary constituency of Shah Alam) with the N18 Hulu Kelang seat because it wants to field a strong PKR candidate to take on BERSATU’s Azmin Ali, the former Menteri Besar of Selangor and former PKR Deputy President who left the party during the Sheraton Move. PKR is fielding the popular caretaker Menteri Besar, Amiruddin Shahri, who is defending his N16 Sungai Tua seat (also in the Gombak parliamentary constituency), and his political secretary, Juwairiya binti Zulkifli (former N10 Bukit Melawati ADUN), in the N18 Hulu Kelang seat, while UMNO is fielding its state chief, Megat Zulkarnain bin Omardin in the N17 Gombak Setia state seat (also in the Gombak parliamentary constituency). This strategy of fielding 2 PKR and 1 BN “big guns” in the three state seats in the Gombak parliamentary constituency is intended to pool the PH and BN votes to defeat Azmin Ali and his allies. If this strategy is successful, it will deal a big blow to the political ambitions of Azmin Ali not just to become the Menteri Besar of Selangor but also his aspirations to take over from Muhyiddin Yassin one day as the president of BERSATU. This bold strategy on the part of PKR and BN may very well succeed.
On the other hand, the decision to give the DAP-held N24 Dusun Tua state seat to UMNO to contest means that both state seats in the Hulu Langat parliamentary constituency (the other being N25 Semenyih) will be contested by UMNO. This means that the incentive for the PH parties to come out and support the two UMNO candidates in both state seats will be negatively impacted, even if the official narrative of solidarity among the UG parties is repeated publicly. Indeed, PH supporters may end up not coming out to vote, and this will affect the chances of UMNO winning one or both of these seats in the Hulu Langat area.
On the PN side, the decision to force PAS to give up the 63% Malay-majority state seat of N38 Bayan Lepas (located in the Balik Pulau parliamentary constituency) so that the GERAKAN President, Dominic Lau, can contest in a more “winnable” seat in Penang led to a backlash among the PAS grassroots in the area; this may end up causing the PAS grassroots in the entire state of Penang to not cooperate with GERAKAN.[2]
These three examples illustrate the importance of aligning seat allocation strategies with candidate and party allocation strategies so that the combined strength of the alliance – be it BN-PH or PN – can be maximized.
CAMPAIGN CONTOURS THUS FAR
In closely watched and closely contested elections such as the current state elections in Malaysia, the strategies undertaken and the issues raised in the course of the campaign can make a difference. These feed into the overall narrative of the campaign, providing material for social media especially Tik Tok, arguably the most important political outreach tool today.
One of the most important strategy outcomes was already observed on the first day of the campaign. The political frontline for this election is the state of Selangor and if PN was to stand any chance of flipping this state, it had to field “big names” to generate public interest. There was speculation that Khairy Jamaluddin would be fielded as a PN candidate and perhaps named as PN’s Menteri Besar candidate. The current Member of Parliament (MP) of Putrajaya and the former Education Minister, Radzi Jidin, was also touted as a possible candidate. When the slate of PN candidates was announced on 26 July, three days before nomination day, the absence of any “big names”, especially in the state of Selangor, was palpable. Even though the list of candidates for PH did not include any “exciting” names of its own either,[3] the fact that many of the PH candidates are incumbents already gives them name recognition and an electoral advantage (provided they have a good service record during their term as ADUN). The inability of the PN to field “big guns” or other exciting candidates may prove to be one of its key shortcomings in the campaign.
In Penang, the DAP candidate list invited much public attention. Five former state executive councillor (EXCO) members were dropped as candidates including caretaker Deputy Chief Minister P. Ramasamy and DAP Wanita Chief, Chong Eng.[4] This announcement led to a number of DAP Penang leaders and members resigning from the party and contesting as independents, including Satees Muniandy, former ADUN for N9 Bagan Dalam,[5] and David Marshel, former DAP councillor, who is contesting in the N16 Perai state seat.[6] It is unlikely that these candidates will be able to affect the election results as they are contesting in seats which are DAP strongholds.
Manifestoes have become more important as campaign issues. All the three major coalitions – PH, BN, and PN – issued manifestos as part of the GE15 campaign, albeit that the content of the manifestos was not discussed or debated substantively during the campaign.
For these state elections, the state-level manifestos have also not played a prominent part in the campaign thus far. Only in an economically advanced and politically sophisticated state like Selangor, has both sides – PH and PN – issued state manifestoes for the voters to compare and contrast. Interestingly, the PH manifesto was launched by caretaker MB Amiruddin Shahri, on 31 July[7] while the PN manifesto was launched on 4 August by the president of PN and BERSATU, Muhyiddin Yassin,[8] and not the putative MB candidate for PN in Selangor, Azmin Ali. In politics, perception matters, and the unsaid implication here is that Muhyiddin is much more popular, especially with the Malay voters, than the much more divisive Azmin Ali, because of the key role the latter played in instigating the Sheraton Move that led to the fall of the Pakatan Harapan (PH) federal government in 2020. In terms of substance, the PH manifesto seems much more focused on creating high income jobs and opportunities and also defending its own record in government over the past 5 years, while the PN manifesto seems to be more focused on social welfare programmes totalling up to RM2 billion. Interestingly, both MB candidates – Amiruddin and Azmin – did not offer to debate each other on how they would lead Selangor going forward. Instead, one political debate which will go on is the one between the Minister of Economy, Rafizi Ramli, and the PAS MP for Bachok, Mohd Syahir Che Sulaiman, scheduled to take place on 9 August 2023.
One of the key indicators of the level of vote transferability between BN and PH and vice versa is the level of cooperation between UMNO and the individual PH parties at the seat level. In places where such cooperative ties have been established even before the state elections, the level of vote transferability will be higher. In areas where such ties are weak, vote transferability will obviously be lower. One cannot underestimate the influence of human agency in determining the “closeness” of BN-PH cooperation on the ground. With the presence of strategic leaders at the local level on both sides, the chances for value-added cooperation increase significantly.
One area of campaign strategy which I am not currently qualified to speak at length on is the influence and use of social media. Anecdotal evidence indicates that the advantage which PN enjoyed on social media in GE15, particularly through Tik Tok, has dropped, with PH stepping up their own Tik Tok game. For example, Anwar Ibrahim’s Tik Tok account has, at the time of writing, 686k followers and 3.3 million likes compared to Muhyiddin Yassin with 97.9k followers and 767k likes. PN’s advantage in Tik Tok is not primarily via the accounts of its top leaders but through influencers and supporters whose presence is particularly strong in a state like Kedah where PN supporters can use words and actions of the caretaker MB, Mohd Sanusi, as an important content generator. The role which social media is playing in these and other elections in Malaysia deserves many in-depth studies and academic papers because of the diversity in data analysis and hypotheses which can be analysed and tested.
Interestingly, there have been no major hot-button issues raised and activated during the campaign thus far with the possible exception of Sanusi’s possible arrest by the police garnering a lot of public attention, especially in the state of Kedah. Whether or not this leads to a landslide for PN in Kedah, which was already firmly in PN’s win column prior to Sanusi being charged in Selangor, remains to be seen.
The overall mood and interest in this election seems to be relatively low, and this has led to some PH leaders calling for their supporters to come out to vote on 12 August 2023. A low turnout, especially among the non-Malay voters, will be disadvantageous to PH and to BN, especially in marginal seats in Selangor. Reports of low voter interest in these elections have caused some PH leaders, especially from the DAP to caution against complacency and to warn of a possible drop in its Chinese support in Penang,[9] the low number of postal ballots in Subang Jaya as a warning for PH in Selangor[10] and the need to use social media to get the voters out, especially the younger ones.[11] Interestingly, a low level of interest, especially among the younger voters, may not necessarily be negative for PH since many young Malay voters predominantly voted for PN in GE15. My assessment is that the turnout rate will be somewhere between 60% to 65% with the turnout among non-Malay voters being slightly but not significantly lower than the Malay voters.
POLITICAL IMPLICATIONS OF THE RESULTS
Other than a “black swan” event seeing PN capturing Selangor, the status quo of PN controlling Kedah, Kelantan and Terengganu and PH+BN controlling Penang, Selangor, and Negeri Sembilan will be the most likely outcome. A favourable outcome for PH+BN would be for it to capture a comfortable majority especially in Selangor and Negeri Sembilan and win at least 40% of the Malay support in Selangor and Negeri Sembilan and for UMNO to win at least one or two seats in each of the six states.
Such an outcome will provide the necessarily political stability for the Unity Government to push forward with a more aggressive policy agenda, especially on the economy, building on the momentum from the “Ekonomi Madani” policy speech given by Anwar Ibrahim on 27 July 2023. It will also provide some measure of stability within UMNO in the leadup to GE16 even if it does not rejuvenate the Grand Old Party of Malaysian politics.
For PKR, a good performance in Selangor will provide a boost for caretaker MB of Selangor, Amiruddin Shahri to make a bid for a higher leadership position within PKR and to challenge for the Deputy Presidency. A good performance for PH in Negeri Sembilan would also provide a pathway to greater national prominence for Aminuddin Harun, the PKR caretaker MB, assuming that PH keeps the MB position after the state elections. For the DAP, the tensions created as a result of the dropping of many incumbents in Penang, may set the stage for minor party tussles during the state party elections which are due to take place in 2023.
Amanah will continue to be “squeezed” into a role as a peripheral party as it has ceded many seats to UMNO in the states where it was supposed to take on PAS namely Kedah, Kelantan and Terengganu. The recent passing of AMANAH’s Deputy President, Salahyuddin Ayub, is also a big blow to the party leadership, especially from the perspective of who will succeed the current president, Mat Sabu.
For UMNO, it seems unlikely that Zahid Hamidi will be replaced as president, even if UMNO does not perform well in the state elections. Even though the party grassroots would be unhappy with a relatively poor showing by the party and may want to instigate against Zahid, his firm control over the UMNO Supreme Council and others in the council who fear that they would be suspended like Hishamuddin Hussein or sacked like Khairy Jamaluddin means that the grassroot agitation will lead nowhere. MCA and MIC face real political irrelevance especially if their presence is not missed or felt in the ongoing state elections. Given the fluidity and complexity of the political landscape in Malaysia, these moving parts will continue to evolve even if the federal government remains stable after the state elections. Of course, if PN wins big, including unexpectedly winning the states of Selangor and Negeri Sembilan, then the pressure on the Unity Government will be immense and the political manoeuvring will gain in intensity. These are interesting times indeed for observers of Malaysian politics, perhaps a little too interesting.
ENDNOTES
For endnotes, please refer to the original pdf document.
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2023/65 “ASEAN’s New Dilemma: Managing the Artificial Intelligence Space” by Kristina Fong Siew Leng
EXECUTIVE SUMMARY
- The rapid rise of Artificial Intelligence (AI) and its potential risks of invasion of personal privacy, violations of acute copyright and intellectual property rights, and breaches of ethical boundaries have prompted governments to prioritize setting up regulatory boundaries to manage this dynamic technological disruption.
- The momentum in addressing these aforementioned risks has accelerated over the past six months, with the EU AI Act coming close to being passed. This is the first legislation aimed at regulating AI.
- ASEAN’s response has been to advance the formulation of an ASEAN AI Guide, focusing on ethics and governance in AI applications, which is anticipated to be released in early-2024 at the Fourth ASEAN Digital Ministers’ Meeting (ADGMIN), chaired by Singapore.
- ASEAN’s approach to regulating AI is expected to be different from the EU’s impending AI Act. Any formal ASEAN-wide formulation of an AI policy will be based on ‘best practices by design’ rather than anything legally binding.
- Existing AI policy strategies found in the ASEAN region suggest three main areas of importance: 1) Development of AI capabilities for economic growth; 2) Enhancing AI-related skills and competencies, and: 3) Ethical and governance frameworks in AI applications.
* Kristina Fong Siew Leng is Lead Researcher (Economic Affairs) of the ASEAN Studies Centre, ISEAS – Yusof Ishak Institute. The author wishes to thank colleagues Dr Siwage Dharma Negara, Senior Fellow of the Regional Economic Studies Program, and Ms Joanne Lin, Lead Researcher and Co-coordinator of the ASEAN Studies Centre, for their valuable comments and suggestions.
ISEAS Perspective 2023/65, 7 August 2023
THE RUSH FOR REGULATION AS AI PROFILERATES
As the catchphrase ‘Generative Artificial Intelligence’ or ‘GenAI’ spreads around the world, catalyzed by the rapid rise in popularity of ChatGPT since its launch in November 2022 last year, governments globally are taking heed and have stepped up efforts to formulate some form of regulation, be it industry standards or, at best, guidelines to counter the potentially-adverse impact of this technology on humans and everyday life. The skew in proposed regulations in this space has adopted the notion of ‘responsible AI’, geared towards creating an AI governance framework for the greater good, and reaping the benefits of greater productivity and technological advancement without unintended consequences such as an invasion of personal privacy, violations of acute copyright and intellectual property rights, and breaches of ethical boundaries. AI without regulations can potentially place mankind in a more precarious standing against a technology that can change life as we know it in countless ways.[1]
As we have seen over the past decade, social media algorithms have changed human thinking and behaviour to the extent of influencing political participation.[2] Thus, the inherent risks of AI are glaring. However, the speed at which regulations can be established is key to managing this. For an entire economic bloc such as ASEAN, this is all the more critical. It is important to note that the intention or appetite to regulate AI is not a new construct, but it is an area that has been fraught with differing opinions on how it should be regulated, or even if it should be regulated at all. Even as the EU’s AI Act is close to being passed,[3] there exists a polarity in views amongst the Members of European Parliament (MEPs), with one main sticking point being the use of facial recognition surveillance[4] and the associated ethical issues that accompany it. The final vote in Parliament for the ban on real-time facial recognition use was 499 in favour out of 620 members. Regardless, the rest of the world closely watches the rollout of this legislation, in the belief that the Act may set the benchmark for AI-related policies around the world.[5]
That said, various countries have also started formulating their own policies for AI, including six ASEAN member states, namely Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. These initiatives fall short of realizing a legally binding piece of legislation. EU- and ASEAN-wide regulations on AI will have differences due mainly to the lack of a region-wide legislative body in ASEAN, similar to the EU’s European Parliament. Thus, the result of any formal ASEAN-wide formulation of an AI policy will be based on ‘best practices by design’ rather than anything legally binding.
APPETITE FOR DIGITAL SERVICES MAY INCREASE RISKS IN AN UNREGULATED AI SPACE IN ASEAN
Should ASEAN countries be worried about AI applications and their far-reaching effects on industry and society? Is the region still far removed from the developments of other countries which are more developed in both industrial development and in the use of AI in sectors such as healthcare and manufacturing? As one indicator, based on May’s statistics of monthly visits to the ChatGPT chatbot application through both desktop and mobile means (Table 1), Indonesia was fourth in terms of global traffic share (4.7%) as compared to the US which was on top at 8.9%. It is notable that Indonesia was the only ASEAN country in the Top 5. Though ChatGPT’s reach is wide, it is not available in all countries; for example, Lao PDR and Myanmar have no access at all. Nevertheless, the application’s reach is wide, and its pattern of usage suggests that it is agnostic to levels of connectivity or the overall digital capabilities of the country. That said, in areas where overall digital connectivity may be low, this may be a case of wide geographic disparities with certain urban areas having denser digital usage.
Table 1. Traffic to the ChatGPT application in May 2023 and relative measures of digitalization
Source: similarweb database and World Bank World Development Indicators (data as at 2021)
According to UNCTAD’S digital services statistics, Indonesia’s share of digital service imports as a proportion of overall service imports is the largest in ASEAN, at 61.8% (Figure 1, left panel). The country remains a key consumer of foreign-originated digital services and this characteristic reinforces the trend seen above.[6] Singapore is a close second in this regard.
Figure 1. Digitally-deliverable services imports and exports in ASEAN (2017 vs 2021)
Source: UNCTAD (most recent data as at 2021); Note: Lao PDR data for 2021 takes the value of 2020’s data due to data unavailability.
On the other side of the coin, the Philippines’ digital services exports as a proportion of their overall services trade is the highest among ASEAN economies, with Vietnam coming in second (Figure 1, right panel). Despite a similar income-level classification by the World Bank as Lower-Middle Income economies, Vietnam is comparably more ‘connected’ than the Philippines, taking into consideration the fixed broadband and mobile subscription density in the respective countries (Table 2). All in all, this brings home two points: 1) The cross-border nature and porous borders in digital services trade have the ability to influence economies that are at differing levels of digitalization and 2) Economies that are not digitally developed (from an institutional or a regulatory perspective, especially with regards to safeguards), could face adverse risks grappling with the proliferation of disruptive technologies.
Table 2. The level of connectivity amongst ASEAN economies
Source: World Development Indicators, World Bank. Note: All data in Table 2 is at 2021 except for “Secure internet servers/1 million people” where only data up until 2020 is available.
IS ASEAN READY TO JUMP ON THE AI REGULATION BANDWAGON?
Are ASEAN economies ready for the rapid rise of AI and how important is it for these countries to have an ASEAN-wide AI policy? Given the rapid pace of AI development, it would be important at this juncture to assess where ASEAN countries are in terms of establishing or implementing their own AI-specific policies, how viable it is to have an overarching ASEAN-wide AI policy or set of guidelines, and which countries can realistically take the lead. Moreover, what will this region-wide AI policy likely look like, if it is realized?
In February 2023, ASEAN collectively agreed to establish an ASEAN ‘AI Guide’.[7] The formulation of the AI Governance and Ethics component is expected to take shape more expeditiously and may even be ready for dissemination by the end of the year or early 2024, at the Fourth ASEAN Digital Ministers’ Meeting (ADGMIN), chaired by Singapore.[8] Addressing the issue of governance and ethics at this initial stage is a promising indication of how seriously AI challenges are being taken. Individual ASEAN countries have initiated AI-related strategic policies or roadmaps. Table 3 highlights AI-related policies amongst the ASEAN-10.
Table 3. Summary of AI-related policy initiatives around ASEAN
Source: OECD. AI Policy Observatory, World Bank, Digital Economy Development Committee (Myanmar), Ministry of Science, Technology & Innovation (Malaysia), Digital Economy Council (Brunei Darussalam), Ministry of Economy and Finance (Cambodia), Department of Trade and Industry (Philippines), Smart Nation (Singapore), National Strategy On R&D and Application of Artificial Intelligence (baochinhphu.vn).
Key observations of AI strategies around the region:
1) AI strategies are at different stages of development – Only six of the ten ASEAN member states have developed their own AI strategies. Brunei, Cambodia, Lao PDR and Myanmar have not. These four have introduced national digital economy strategies but only Cambodia acknowledges AI in the text, and mostly in the context of AI industry development, except for some mention of the need for a data-driven governance system.
2) AI strategies have three common threads – For the six member states that have an AI policy, three main threads emerge: a) Development of AI as a technology for economic growth and development, b) Building up capacities, such as human capital capabilities, to reap the benefits of AI applications and c) Establishing ethical and governance frameworks for AI applications.
3) Varying degrees of international cooperation leverage – All six existing AI strategies feature international cooperation in the form of human capital development, as well as R&D collaborations. However, only two countries, Singapore and Malaysia, feature a strategy of leverage through international bodies or frameworks. In Malaysia’s case, there is the intention to tap on the ASEAN Committee on Science, Technology and Innovation (COSTI), as well as the UN Commissions on Science and Technology for Development (CSTD) to engage with international partners. Singapore’s engagement is more advanced with places in the OECD Expert Group on AI, and the European Commission’s High Level Expert Group on AI, thus giving it the ability to influence global standards.
The approach to an ASEAN-wide policy will need to take into account all of these factors when formulating AI ‘guardrails’. This is especially important in the event of rapid adoption of the EU-based laws; spillover effects on other parts of the world through companies doing business with EU-based entities can be substantial, much in the same way that the extensive General Data Protection Regulation (GDPR) affects external partners. As such, an ASEAN-wide policy must be sensitive to the wide disparity between member-state AI strategies, the different levels of digital capabilities and capacities, and the differences in institutional readiness across the region.
KEY REGULATORY ‘BUILDING BLOCKS’ FOR A BROAD-BASED AI POLICY STRATEGY
As the analysis of the respective AI strategies show, there are certain regulatory building blocks that should be integral to a robust AI policy, especially in ethics and governance. Given the key risks inherent in AI applications, such as risks of data privacy breaches, intellectual property infringement, and the creation of fake news, deepfakes and overall misinformation, it is important for regulations to be robust and holistic in coverage. Some key aspects to begin with can include data protection laws, cybersecurity regulations, intellectual property and copyright legislation, as well as consumer protection.
Table 4 below summarizes the status of these regulatory ‘building blocks’ around ASEAN.
Table 4. Summary of key pieces of legislation for a robust AI policy in ASEAN
Source: UNCTAD, World Intellectual Property Office, World Trade Organization, Intellectual Property Office (Brunei Darussalam), Department of Economic Planning and Statistics (Brunei Darussalam), MyIPO, Government of Philippines Official Gazette, Singapore Statutes Online. Note: * Brunei currently has a Data Protection Policy (2014) in place of Legislation, which is forthcoming.
At this juncture, all countries in ASEAN have (or will soon implement) some form of data privacy, cybersecurity, intellectual property and consumer protection legislation. In terms of consumer protection regulation relating to online incidents, only Brunei’s legislation does not provide for it. While copyright and intellectual property laws may protect against traditional copyright infringement cases; misinformation, misrepresentation or fake content (through means of AI technology) is an area which is still not quite developed within the legislation. In some AI policy documents, such as Singapore’s National Artificial Intelligence Strategy, there are explicit intentions to address these issues. ASEAN countries should expedite their forthcoming legislation in the areas of data privacy (Brunei and Myanmar), cyber security (Cambodia and Myanmar) and consumer protection laws (Brunei and Lao PDR) to get ASEAN countries onto a more level foundation to face a dynamic environment where AI will play a larger role in everyday life. Enacting legislation relating to distributing fake news does come with its challenges, especially when communications concerning these sorts of laws are not managed well and when enforcement is viewed as oppressive and an infringement on human rights. Malaysia’s Anti-Fake News Act (2018) had a short shelf life and was repealed only after a year.[9]
In order for ASEAN’s cooperation in AI to ward off adverse impacts of its applications, regional economies clearly need to reach a minimum threshold when it comes to key regulatory building blocks. An ASEAN Guide in AI can provide a timeline for this to materialize, and ensure safe use and application of AI, domestically and beyond. Moreover, existing ASEAN frameworks such as the ASEAN Framework on Personal Data Protection and the ASEAN Cybersecurity Cooperation Strategy, can be leveraged upon to streamline baseline targets so that they can be more expediently incorporated into the ASEAN-wide AI Guide.
BRIDGING DOMESTIC LEGISLATION TO INTERNATIONAL STANDARDS
Given the differing state of regulatory foundations and levels of digital development among ASEAN economies, the ASEAN approach to regulating AI will most likely take the form of a ‘best practices’ guide. The EU’s preference for bloc-wide AI legislation is not the only model that has been adopted. The US is also attempting a ‘best practices’ approach with their Blueprint for an AI Bill of Rights,[10] which aims to establish a framework for ‘accountable’ AI. In contrast, China has been seen to adopt a more progressive approach[11] which includes the introduction of various rules on different aspects of AI such as algorithms (2021), synthetically generated content (2022) and generative AI (2023). This dynamism mirrors the sophistication of the industry and the dynamic nature of AI.
In the ASEAN context, it will be important for a start to bridge the differences between the six ASEAN member states with AI policies with the four who do not, within the intended ASEAN AI Guide. The absence of a policy in these four countries reminds us that AI considerations may only take place after more fundamental digital capabilities are strengthened. The ASEAN-wide policy guidelines on AI may come to focus on the three common threads of AI policies found in the six member states: 1) AI capabilities development 2) development of national capacities to apply AI, and 3) creation of ethical and governance frameworks for AI use. These fundamentals address both the developmental aspect of the technology, and the risks inherent in a powerful technology if left unchecked.
Apart from broad-based strategies amongst ASEAN countries, regulatory building blocks of data protection, cybersecurity and copyrights, are almost in place, with some upcoming. That said, a more explicit AI element may need to be included in these laws, especially to account for copyright and intellectual property infringement incidents. Moreover, leveraging existing ASEAN frameworks such as the ASEAN Framework on Personal Data Protection and the ASEAN Cybersecurity Cooperation Strategy may help establish baseline targets and hence a framework for ‘best practices’ for the ASEAN AI Guide, and, more importantly, formulate actionable strategies for countries lagging behind. Getting foundational regulations up to speed is one of the more pressing goals.
Singapore will be the Chair of the ASEAN Digital Ministers’ Meeting (ADGMIN) and Related Meetings in 2024. It will be in a good position to lead ASEAN in the development of the ASEAN AI Guide on Governance and Ethics. With Singapore’s position at the European Commission’s High Level Expert Group on AI, it can guide the bloc’s AI strategy to better align it with international standards including good regulatory principles found in the EU’s AI Act. Singapore has an important role to play in bridging gaps within ASEAN on AI and at the same time, steering ASEAN’s AI guidelines toward international standards. It will be important for ASEAN to have a strategy that is not just symbolic in form but also able to safeguard the ASEAN economies in this dynamic arena.
ENDNOTES
For endnotes, please refer to the original pdf document.
2023/64 “What Can Malaysia Expect from IPEF?” by Jayant Menon
EXECUTIVE SUMMARY
- To re-engage economically with the Indo-Pacific region, US President Biden launched the Indo-Pacific Economic Framework for Prosperity (IPEF) in May 2022, with 14 countries signing on, half of them from ASEAN.
- More of a framework for setting rules and standards than a free trade agreement, it comprises four policy pillars: trade; supply chains; clean economy; and fair economy.
- For Malaysia, IPEF could help restore market access to the US by relaxing Withhold Release Orders (WROs) that ban exports of companies facing forced labour allegations.
- Malaysia also expects that the ease and frequency with which trade sanctions are applied in the future will be better managed as a result of IPEF.
- One problem with IPEF is that, without the inclusion of China, it is of limited usefulness to countries with China-centred supply chains, like Malaysia. Worse than that, any potential benefits could be more than offset if it fuels US-China tensions and leads to actions that further disrupt supply chains and trade.
* Jayant Menon is Senior Fellow at the ISEAS – Yusof Ishak Institute. He thanks Cassey Lee, Siwage Negara and Tham Siew Yean for useful comments, without implicating them in any way.
ISEAS Perspective 2023/64, 1 August 2023
INTRODUCTION
In a bid to re-engage economically with the region, United States (US) President Biden launched the Indo-Pacific Economic Framework for Prosperity (IPEF) in Tokyo on 23 May 2022. Malaysia joined six other Association of Southeast Asian Nations (ASEAN) fellow members – Brunei Darussalam, Indonesia, the Philippines, Singapore, Thailand and Vietnam – to sign on as participating countries, together with Australia, Fiji, Japan, India, Republic of Korea, and New Zealand. These countries account for about 40 per cent of world GDP.
The much-awaited return of the US to the region as an economic partner was met with great expectations, and standards by which IPEF is to be judged have been set accordingly high, also leaving a lot of room for disappointment. Expectations may be unreasonably high because they are probably still based on the view that the US is the original guarantor of a rules-based trading order, rather than its more recent performance that has seen it undermine the World Trade Organisation’s (WTO’s) Dispute Settlement Mechanism and disregard some of its rulings, such as against the Trump tariffs on iron and steel, among other things.
This Perspective is in four parts. The next two sections provide context by first introducing IPEF and its structure before reviewing Malaysian trade policy, focussing on its free trade agreements (FTAs) and trade governance. The section after that deals with the two most important pillars for Malaysia, i.e. trade and supply chains. The discussion on these two pillars is combined because it does not make sense to separate the two from an economic point of view for a country like Malaysia, albeit that it might be from a national security or geopolitical standpoint for a country like the US. (For completeness, the pillars on clean and fair economy are discussed in the Appendix because there is little here that is likely to have material impact on Malaysian policy making.) A final section concludes.
WHAT IS IPEF?
IPEF is not an FTA or a traditional trade agreement but more of a framework for setting rules and standards. It is also a White House Initiative, and the Biden administration has indicated that it will not be submitted to Congress for approval but will be implemented in whole or in part through Executive Order (see Freeman 2022). The framework comprises four policy pillars: trade; supply chains; clean economy (energy, decarbonisation and infrastructure); and fair economy (tax and corruption). Employing a modular approach, member countries can choose which policy pillar to sign up for but have to abide by all the commitments within the selected pillar(s).
The lack of market access provisions through the exchange of concessions is greatly lamented, and calls for reconsideration to bring them back onto the negotiating agenda are frequent. IPEF is very much about market access, however, but just not in the way that it is traditionally understood. While it may not improve market access of IPEF members to the US, it will certainly affect market access of US firms to other members’ markets, because almost every other item on the agenda, from digital trade rules to environmental or labour standards, will affect competitiveness. In the same vein, Malaysia’s interpretation of market access, as will be shown, is also slightly different and IPEF could be used to serve its interests in this area.
THE MALAYSIAN TRADE POLICY CONTEXT
Malaysia is a small, open economy that has a long history of embracing free and open trade and investment policies. In fact, prior to the 1997-98 Asian Financial Crisis, Malaysia was often hailed as a model worthy of emulation by the developing world of how such liberal trade and investment policies could transform economies and avoid the middle-income trap.
Malaysia has pursued liberalisation through its participation in the WTO and through unilateral actions and FTAs. As of June 2023, Malaysia is implementing 18 FTAs (Table 1) and is negotiating five more.[1] It has bilateral FTAs with 4 IPEF member countries – Australia, India, Japan and New Zealand – and is in the process of negotiating one with two others – Republic of Korea and the US.
Table 1
Malaysia’s Trade Agreements ‘In Effect’, June 2023
Source: Asia Regional Integration Center, ADB. https://aric.adb.org/fta
Notes: The number in parentheses refers to the number of countries participating in IPEF
Despite negotiations having commenced in 2006, Malaysia does not look like ever concluding an FTA with the US, and this raises the question as to the extent IPEF can effectively substitute for the absence of such an FTA. The short answer appears to be ‘very little, if at all’. So far, the US is not providing the same treatment to IPEF members as it is to countries that it has an FTA with. A stark contrast that highlights this discrepancy arises in relation to the clean economy pillar and ‘green’ investments (more later).
The question of overall value-addition combined with the recent political and policy climate in Malaysia may also affect the appetite to aggressively pursue a new and challenging agreement like IPEF. Since 2020, Malaysia has had four Prime Ministers and three Ministers of the Ministry of International Trade and Industry (MITI). To provide context, it has had the same number of Prime Ministers and Minsters of MITI in the last 3 years as it has had in the preceding 3 decades. In short, the political and trade policy environment has been in a state of flux over recent years. This is one reason for the delay in ratifying the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which finally happened on 30 September 2022, making it only the 9th (out of 11) member to do so.
Some stability has returned with the current Anwar Ibrahim administration, with Tengku Zafrul Aziz, the former Finance Minister, in charge of MITI. The CPTPP came into effect on 29 November 2022, soon after the Anwar administration took office. The current administration has reiterated support for the CPTPP, despite some concerns from domestic lobbies, and the Minister of MITI had the following to say in January 2023: “There were obviously some issues that were raised by various groups, and we have addressed that by taking action to mitigate some of the concerns, so we are very much committed to participating in it (CPTPP).”[2]This bodes well for the current administration’s free trade credentials, and therefore for the IPEF.
TRADE AND SUPPLY CHAINS (PILLARS 1 AND 2)
As noted, pillars 1 and 2 on trade and supply chains, respectively, are the most important to Malaysia. In fact, most of Malaysia’s trade involves supply chains and separating the two does not make much economic sense for a country like Malaysia. Nevertheless, the issues covered in the trade pillar have already had a significant impact on trade relations with the US, particularly as they relate to labour and environmental standards.
Former MITI Minister Azmin Ali has indicated that Malaysia sees IPEF as providing a platform to open engagement with the US in resolving the withhold release orders (WROs) that have been imposed by US authorities on Malaysian exports (MIDA 2022). US authorities currently have six active WROs on Malaysian companies, four on rubber gloves and two on palm oil, due to allegations of forced labour. The WROs prohibit the import of products originating from companies facing forced labour allegations.
Will IPEF be able to deliver on helping address the WROs or other punitive trade measures? Two out of the six WROs have been modified in early 2023 and there is another precedent of sorts that provides room for optimism that IPEF can help. Just two weeks after IPEF was launched on 23 May 2022, the Biden administration lifted a transhipment ban that had been imposed following a complaint by a US-based solar company. Malaysia (along with Cambodia, Thailand and Vietnam) was suddenly provided with a 24-month tariff exemption in the US market for their exports of solar cells and modules. The timing suggests a possible link between the two events.
Therefore, even if IPEF does not include the exchange of market access concessions in the traditional sense, it may provide the opportunity to reverse binding restrictions and restore market access for countries like Malaysia. It may also allow Malaysia an avenue to better manage similar issues should they arise in the future.[3] The recent relaxation of WROs on two companies and the 24-month tariff exemption following the transhipment allegations on solar products suggest that this might be possible. Nevertheless, the increasing influence of the US Department of Commerce in setting the trade agenda (see Alden, 2022; 2023) has increased the weaponisation of trade policy. This needs to be checked and better managed for fear that its impacts on a growing number of non-trade related areas will cause significant disruption to countries on the receiving end.
Malaysia is keen to grow its digital economy and the rules relating to it coming from IPEF may be significant. If the IPEF negotiations on digital trade and data flows can further the agenda beyond that of other bilateral (eg. the Framework of Cooperation with Singapore), regional (CPTPP, but also ASEAN, APEC, etc.), or multilateral (WTO) initiatives, then the impact of IPEF could be transformative. Details are still sparse, but the potential is certainly there to make IPEF a significant part of Malaysia’s trade policy. The negotiations in this area are not without risk, however. With the European Union and China also pursuing their own approaches to digital governance, the possibility of a “splinternet” emerging that fractures the global system needs to be avoided.
Malaysia will also be impacted by the first tangible results of the year-long negotiations, relating to supply chain resilience. Following the meeting in Detroit on 27 May 2023, US Commerce Secretary Gina Raimondo announced “substantial progress” towards an IPEF Supply Chains Agreement, although the final text is yet to be agreed upon.
Three new structures are being created to operationalise the agreement:
- The first is the IPEF Supply Chain Council, which is supposed to better coordinate supply chain activities and help build resilience and competitiveness in certain critical sectors. The council will apparently oversee the development of “action plans” for these sectors that may help companies identify and address supply chain vulnerabilities.
- Second is an IPEF Supply Chain Response Network that is designed to give early warnings to IPEF countries of potential supply disruptions. With a new “emergency communications channel”, it is expected that IPEF members can streamline communication and coordinate a response when one or more IPEF parties faces a supply chain crisis.
- Finally, an IPEF Labor Rights Advisory Board made up of government, worker, and employee representatives is being proposed. This Board is apparently required to identify areas where certain labour rights are being violated.[4]
Although a tangible outcome such as the IPEF Supply Chain Agreement after just one year should be welcomed, the operational details are not yet available and need to be studied before any judgement on its practical use can be made. A careful study of the Press Statement on the Substantial Conclusion of IPEF Supply Chain Agreement Negotiations, posted on the US Department of Commerce official website,[5] reveals very little of substance, unfortunately. In fact, Beattie (2023) describes the announcement, which is all that is available as of July 2023, as “a mass of abstract verbiage with a tangle of subclauses festooned with adjectives and adverbs layered two or three deep.” In short, it is mostly aspirational and very thin on practical details, with what little details that are provided being so heavily qualified that they can be interpreted to suit a diverse range of interests.
What we do know, however, is that China is not a part of IPEF or this agreement, and this is a major concern to Malaysia and other ASEAN members involved in regional supply chains. This is because almost all manufacturing supply chains that involve Malaysia and other ASEAN countries are China-centred. It is with this pillar that the exclusion of China is most significant, and greatly undermines its value to a country like Malaysia. The high level of interdependence that characterises supply chains highlight the importance of including all players, especially critical ones like China. The exclusion of China is a major constraint and could undermine the usefulness of this pillar to ASEAN members of IPEF, including Malaysia.
More than being of limited use by excluding China, the supply chain agreement could actually harm Malaysia and other countries with China-centred supply chains. This is because the US expects to get IPEF members to buy into its ‘resilience and competitiveness’ framework and support its national security interests by limiting engagement and dependency on China. Arasasingham et al. (2023) argue that the US hopes the agreement will encourage other members to also start reshaping their supply chains in line with the broader US friend-shoring agenda that incentivises supply chain relocation to countries that do not pose a perceived national security threat. In exchange for this, members are being offered various capacity building and training programmes, and the possibility of greater FDI flows during an unspecified future. This is not a bargain that countries like Malaysia are likely to find beneficial.
When it comes to regional supply chains, an early warning system will only be useful if its predictions are reliable. This in turn will depend on how willing member states are to share information on a timely basis. Although supply chain networks are characterised by a high level of interdependence, countries involved can sometimes operate more as competitors than collaborators, and may not always be willing to share information on a timely basis, especially if it is considered to be sensitive or proprietary in nature.
The supply chain initiative needs to be able not only to identify emerging risks but also be able to respond to them in an effective and timely manner. All of this suggests that the details need to be examined before the initiative is hailed as a breakthrough, as some have already done.[6]
As noted earlier, embedded within the supply chains agreement is a new labour rights advisory board aimed at raising labour standards in supply chains. Labour issues were meant to be part of Pillar 1 on trade but has also found its way into Pillar 2 on supply chains and could arise in other pillars as well, further emphasising the so-called ‘worker-centric’ nature of IPEF. The extent to which this body will raise standards to protect workers as opposed to removing the cost competitiveness that developing countries have with labour supply, is yet to be seen. Suffice to say that developing countries tend to view the introduction of labour standards into trade negotiations with a high level of suspicion.
CONCLUSION
Using trade agreements to pursue non-economic ends, whether through formal FTAs or frameworks like IPEF, is neither new nor unique to the US. In fact, most trade agreements probably have more to do with international diplomacy and politics than with trade or investment. IPEF is not an exception. The outstanding trait with IPEF, however, is how much it asks of its members in return for how little it promises to provide – it is almost all stick and no carrot. This is particularly problematic since there is no mechanism to bind countries to make good on their commitments.
What Malaysia expects to derive from IPEF may differ from that of other members. For Malaysia, participation in IPEF could serve as insurance against punitive trade policy actions by the US and provide the opportunity to resolve existing trade frictions. IPEF could help restore market access by relaxing the remaining Withhold Release Orders (WROs) on four companies banning their exports to the US market. Malaysia also expects that the ease and frequency with which trade sanctions are applied in the future will be better managed as a result of IPEF.
A remaining unknown relates to digital trade. The potential exists for IPEF to be transformative for countries like Malaysia if it can deliver in this area in a way that moves the frontier while avoiding the risk of a “splinternet” emerging.
These potential benefits of IPEF need to be weighed against a worst case but highly plausible scenario where the creation of IPEF further fuels US-China tensions and leads to further retaliatory actions. This is likely if IPEF is viewed as an attempt by the US to export its national security agenda to the region. If retaliatory actions further disrupt the operations of regional supply chains, possibly causing bifurcation, then the cost to Malaysia and other ASEAN countries may be so high as to outweigh any benefits.
The problem is that the IPEF without China is, to a large extent, economically meaningless to countries like Malaysia, and potentially quite disruptive and costly. To expect that this might change would be unrealistic if a key underlying motivation of its main proponent(s) is to counter the rise of China’s influence in the region, which appears to be the case.
APPENDIX
CLEAN ECONOMY AND FAIR ECONOMY (PILLARS 3 AND 4)
For the issues covered in the pillars on clean and fair economy, Malaysia’s main policy response will be determined by either national actions and priorities or commitments to existing international agreements, rather than IPEF. For clean energy, Malaysia has updated its Nationally Determined Contribution target to reach net-zero greenhouse gas emissions by 2050. This is a major challenge[7] and IPEF could play a complementary role in helping Malaysia meet its commitments, but not with its current configuration. At the moment, IPEF will not have much of an impact unless it is upgraded to at least the standard applied in US FTAs.
The US has comprehensive FTAs in force with 20 countries, of which four are in IPEF, namely Australia, Republic of Korea, Japan and Singapore. Since Malaysia has not concluded an FTA with the US, it will not receive the same treatment as these four IPEF members or other non-IPEF countries that the US has an FTA with, and this discrepancy is at its greatest in relation to the green economy.
The Inflation Reduction Act (IRA) grants tax credits to companies if a certain percentage of the value of critical minerals in electric vehicle batteries, for instance, is extracted or processed in the US or in FTA partner countries but this does not automatically extend to IPEF members. The fact that a critical minerals agreement was signed with Japan in March 2023 as a bilateral deal that allows it to access IRA tax credits further erodes the relevance of IPEF to other members. It is this type of discrimination that is undermining the value of IPEF, in particular, and as a serious attempt to economically re-engage with the region, in general.
With respect to the pillar on fair economy, it should be noted that Malaysia is already a signatory to the Multilateral (Tax) Instrument to Prevent Base Erosion and Profit Shifting, or BEPS. There are also various governance issues relating to corruption and the performance of Government Linked Companies (GLCs) that need to be addressed, but this will mainly require national actions (Menon and Ng, 2019). Furthermore, now that Malaysia has ratified the CPTPP, there may be little that IPEF can add to the binding commitments already made to the reform agenda in this area.
REFERENCES
Edward Alden, “Why the U.S. Trade Office No Longer Runs Trade”, Foreign Policy, (7 March 2023). https://foreignpolicy.com/2023/03/07/ustr-tai-trade-biden-america-first-china-decoupling/
Edward Alden, “Biden’s ‘America First’ Policies Threaten Rift with Europe”, Foreign Policy, (5 December 2022). https://foreignpolicy.com/2022/12/05/biden-ira-chips-act-america-first-europe-eu-cars-ev-economic-policy/
Aidan Arasasingham , Emily Benson , Matthew P. Goodman , and William Alan Reinsch, “Assessing IPEF’s New Supply Chains Agreement”, CSIS, Washington, DC. (31 May 2023). https://www.csis.org/analysis/assessing-ipefs-new-supply-chains-agreement
Robert Atkinson, “Biden’s Indo-Pacific Economic Framework Is a Paradigm Shift”, Foreign Policy, (1 July 2022). https://foreignpolicy.com/2022/07/01/biden-ipef-indo-pacific-trade-economics-china/
Alan Beattie, “The US trade pledge to the Indo-Pacific is empty”, Financial Times, (8 June 2023). https://www.ft.com/content/42a87796-8228-445b-8ad5-63a5c35d5144
Mei Mei Chu, “Malaysia needs to invest $375 bln in renewables to reach 2050 climate goals – report”, Reuters, (9 March 2023). https://www.reuters.com/business/energy/malaysia-needs-invest-375-bln-renewables-reach-2050-climate-goals-report-2023-03-09
Kyle Freeman. The Indo-Pacific Economic Framework (IPEF) is Not a Free Trade Agreement, but Will Be Judged on the Same Principles, China Briefing, (1 June 2022). https://www.china-briefing.com/news/ipef-not-an-fta-will-still-be-judged-like-one-op-ed/
David Lawder, “U.S.-led Indo-Pacific talks produce deal on supply chain early warnings”, Reuters, (28 May. 2023). https://www.reuters.com/markets/asia/us-led-indo-pacific-talks-produce-deal-supply-chain-early-warnings-2023-05-27/
Malaysian Investment Development Authority (MIDA). Malaysia’s involvement in IPEF will help resolve Withhold Release Orders issues, says Azmin. (1 August 2022). https://www.mida.gov.my/mida-news/malaysias-involvement-in-ipef-will-help-resolve-withhold-release-orders-issues-says-azmin/
Jayant Menon. “Supply chains are more resilient than they appear”, East Asia Forum, (3 July 2022). https://www.eastasiaforum.org/2022/07/03/supply-chains-are-more-resilient-than-they-appear/
Jayant Menon and Thiam Hee Ng, “Do State-Owned Enterprises Crowd Out Private Investment?: Firm Level Evidence from Malaysia”, Journal of Southeast Asian Economies, Vol. 34, No. 3, (September 2017): 507-522.
ENDNOTES
For endnotes, please refer to the original pdf document.
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2023/63 “The Quad: Less than the Sum of its Parts?” by Nick Bisley
EXECUTIVE SUMMARY
- The Quad has rapidly emerged as a key new form of ‘minilateralism’ in Asia. It is valued by its members as a venue to signal their cooperation on regional priorities, driven by their shared perception of China as a threat to the present regional strategic balance and to their individual security interests.
- Originally focused on security cooperation, the Quad has opted to work on collaborative endeavours purported to advance regional order through public goods provision.
- In recent years, the Quad has expanded its cooperative domains and initiatives, which gives the appearance of a dynamic and fast-developing grouping. This expanding range of initiatives has yet to produce meaningful results, and their implementation lacks coordination and coherence. At the same time, the grouping seems to neglect security matters, and its existence has done little to constrain China’s behaviour.
- The Quad has potential but needs to reform its approach by developing a narrower range of activities, focusing on delivery, and ensuring coherence between its order-building ambitions and the substance of its public goods provision.
- Although the Quad’s new minilateralism was created because of the perceived shortcomings of existing ASEAN-led multilateralism, the Quad runs the risk of becoming another talking shop if it fails to focus on substantive delivery.
- In an era of great power competition, building inter-state consensus, policy coordination and cooperation has become extraordinarily difficult for both established forms of multilateralism and new types of minilateralism.
* Guest writer Nick Bisley is Dean of Humanities and Social Sciences and Professor of International Relations at La Trobe University, Melbourne, Australia.
ISEAS Perspective 2023/63, 28 July 2023
INTRODUCTION
The third Quad leaders’ summit had been expected to be a visually stunning affair at the iconic Sydney Opera House. The leaders of Australia, India, Japan and the US had planned to signal the Quad’s coming of age with an expansive agenda of cooperation. Yet, Joe Biden’s budget wrangling with House Republicans led to the cancellation of the event in Sydney and critics immediately highlighted how US domestic politics was damaging its global ambitions.[1] A compressed Quad summit was held at the sidelines of the G7 meeting in Hiroshima, which felt shorter than it took to read the various documents that were issued in its name.[2] The vision of the Quad offered at the summit, the shopping list of activities, statements and principles, are an underwhelming product for six years of much ballyhooed cooperation between four of Asia’s most important democracies. Despite its high profile, the Quad has not yet found its place as a meaningful contributor either to regional stability or order building.
The Quad is one of the most prominent examples of Asia’s ‘new minilateralism’.[3] This form is notable because such groupings tend to be exclusive and competitive, whereas the region’s longstanding multilateral forms have been inclusive in their approach to participation, and cooperative in terms of their strategic dynamic.[4] Furthermore, their creation has been prompted by a lack of confidence in the existing security architecture and they present a nascent challenge to ASEAN centrality in that architecture, and to regional cooperation more generally. The Quad has mobilised the attention of four significant regional powers and has rapidly developed a wide-ranging agenda focused primarily on the provision of international public goods. It has lofty ambitions to support and defend a broadly liberal vision of the region’s international order and has relatively swiftly developed a considerable profile.
The grouping clearly has significant potential. Yet the Quad’s ability to realise this has been hamstrung by a lack of focus, illustrated by an ever-expanding list of activities which have achieved little to date. Among a wide array of activities announced, none has made a meaningful contribution at the regional level. The Quad lacks a coherent plan to link its high-level aims to policy action that advances those goals. More pressingly, without a significant focus on substantive delivery, there is a very real risk that the Quad will become just another talking shop. This Perspective provides a critical analysis of the Quad, its strengths and limitations, and assesses its implications for the broader strategic dynamics in an increasingly contested region.
TAKING STOCK
First established in 2007, the grouping was formally referred to as the ‘Quadrilateral Security Initiative’. It brought together Australia, India, Japan and the US to coordinate activity regarding shared regional security concerns.[5] Japan’s Abe Shinzo was the group’s most visible advocate, although the idea had a strong undercurrent of American leadership, with both New Delhi and Canberra being somewhat reluctant participants. The group dissolved within 12 months, reflecting the lack of consensus among the four about the need for such a body.[6] Ten years later, the Quad was brought out of the deep freeze to work on their increasingly shared concerns about the region’s deteriorating security environment. While rarely articulated in public, the motivation for its resuscitation was a shared perception of the threat that Xi Jinping’s China presented to the strategic balance in Asia and to their individual security interests.[7] Tellingly, the group has rebranded itself as the ‘Quad’, ditching the security initiative from its formal moniker.
The Quad held its first meeting at the sidelines of the 2017 East Asia Summit (EAS) at the senior officials level.[8] This was followed by a number of meetings between officials and military officers, including a gathering of an admiral from each country at the Raisina Dialogue in New Delhi in 2018.[9] In 2021, they established the annual Leaders’ summit intended to signal the Quad’s importance through the dedication of top political time as well as to ensure an ongoing focal point to sustain momentum. US President Biden hosted the first Quad summit; the most recent, originally planned in Sydney in May 2023, was hastily rearranged to be a 45-minute gathering in Hiroshima. The foreign ministers of the Quad countries took the opportunity of 2022’s UN General Assembly in New York to convene their first annual ministerial meeting and the most recent one was held in New Delhi in March 2023.[10]
The annual leaders’ summits have become the venue at which increasingly lengthy statements are made about the purpose of the Quad and where they lay out the ways in which the four are seeking to make good on their ambitions. The first of these reads as something of a foundational document. Their vision for the grouping is impressively ambitious: the Quad aims to promote “the free, open, rules-based order, rooted in international law and undaunted by coercion, to bolster security and prosperity in the Indo-Pacific and beyond”.[11]
The Quad began life as a security-focused grouping with an emphasis on concrete areas of security and defence cooperation. Initial discussions focused on coordinating security policy, and operational aspects of their shared maritime security concerns prompted by China’s rise. Scholars and analysts had expected that the Quad would have defence and security matters at its core.[12] Since 2021, however, the Quad has ventured into broader areas of collaboration mainly related to public goods provision. It has become a body that works on a much more expansive and wide-ranging set of policy areas, and indeed those military-focused security matters are conspicuous by their absence. At the Hiroshima summit in 2023, the leaders issued a fact sheet which set out an extensive list of the Quad’s key initiatives. These are in relation to infrastructure, maritime security, climate, health, critical and emerging technologies, space and even public-private partnerships.[13] This widening-out of policy domains for cooperation has real potential but also some significant problems.
Despite the breadth of areas in which the Quad is seeking to cooperate, it does not have a substantive agenda working on economic matters beyond a number of programmes relating to infrastructure such as enhancing cooperation among their export credit agencies. There seems little appetite for taking this on in the future. Given the importance that the Quad members now put on the broader non-security contributions to order building and their emphasis on a particularly liberal vision for the region, their lack of an economic dimension is remarkable. It is doubly so given how China has been effectively using geoeconomic policies to advance its international policy goals. It is illustrative of gaps that exist between the Quad members on economic policy. It is also a function of the significant domestic problems that each member would face, especially the United States and India, were they to try to advance meaningful cooperation in economic matters along liberal lines. It also puts real limits on what they can achieve in trying to shape and defend a liberal vision for the region.
The Quad has put its label on a series of perfectly laudable and reasonable programmes that while worthy, are not really going to make a difference to the larger ambitions to protect a stable, rules-based liberal regional order in the face of the challenge presented by ambitious authoritarian powers. Take for example the Quad STEM Fellowship which allows scholars in various science and engineering fields to spend time in the US. The aim is to develop “a network of science and technology experts committed to advancing innovation and collaboration in the private, public, and academic sectors, in their own nations and among Quad countries.”[14] It is run by Schmidt Futures, a philanthropic initiative of one of Google’s founders. It is clearly a worthy programme but when set against the aims of defending the international rules-based order in Asia, it seems an initiative on the wrong scale and time horizon.
Even in initiatives linked to maritime security such as the Indo-Pacific Partnership for Maritime Domain Awareness, the grouping has so far delivered very little. There are three small pilot programmes whose contributions are not well known and the slowness with which the programme has developed provides little confidence that it can achieve the ambitions of improving maritime domain awareness in a maritime region as vast as the Indo-Pacific. Certainly, if the grouping could enhance the ability of states across the region, and not just the Quad members, to deal with maritime security issues such as illegal unreported and unregulated fishing, then it would be a real contribution.[15] As yet, however, there’s not much to show for six years of problem-focused cooperation between four of the region’s most significant maritime powers.
The decision to move away from a security-first focus was in part prompted by the recognition that regional order is multi-dimensional and that a full-spectrum programme of collaboration was needed to deliver on the grouping’s aims; to defend a liberal order requires a good deal more than better coordination of naval capabilities and intelligence sharing. It was also an attempt to manage the regional consequences of creating a new and potentially influential grouping intended to limit China’s influence and contain its ambitions. The four did not want to be seen to be unnecessarily provoking confrontation. This desire to emphasise reassurance over deterrence seems to have two larger problems. Most obviously, the Quad’s attempts to advance the broader public goods elements have been unimpressive thus far. The issue areas are patchy and uneven, they lack coordination, and a coherent vision for its contribution is difficult to discern. The other problem is that the Quad seems to have taken its eyes off security matters. While it is entirely correct to recognise that regional security interests are wide-ranging and multi-dimensional, it is critical that the hard power elements are not neglected altogether. Some analysts have argued for this to be rectified in the lead up to the 2023 summit,[16] yet it seems to no avail. Equally, there are reports that there is some frustration amongst the group, emanating most strongly from Washington, about the lack of focus on these matters; but these have not flared into public view as yet.
Despite this, the Quad remains significant for its members and for the region. One obvious area in which it makes a difference is the way that it structures the bureaucracies of the four states and improves their capacity to work together. One of the reasons why the Quad has found it difficult so far to deliver on its ambitions is the lack of experience working with one another in these new areas. The regularity of the meetings and interactions is going to increase this capacity over time. For some members, most notably Australia and Japan, the Quad also acts as a useful focal point for their bureaucracies to sustain focus on India. Improving ties to the world’s most populous democracy has been a priority stated by Australian governments for over a decade, but one that Canberra has found difficult to sustain due to capacity constraints within the various ministries. The Quad provides a key focal point for the Australian bureaucracy not only to work on the programme of collaboration between the four but also to sustain cooperative engagement with interlocutors in New Delhi in their bilateral ties. It also offers a way in which Tokyo and Canberra can exert leadership in a large and complex region where their geopolitical clout is decidedly second-tier.
The Quad has proven to be adept at moving from stasis to being a high-profile example of the new minilateralism. Yet, judged against its ambition to work “for a region that is peaceful and prosperous, stable and secure and respectful of sovereignty”,[17] the Quad so far has done very little. It is a textbook example of attempting to do order building or strategic policy through press releases and leaders’ vision statements. Unless changes are made, the ability of the Quad to realise its ambitions in a highly contested geopolitical space will ultimately be limited.
IMPLICATIONS FOR SOUTHEAST ASIA
From a Southeast Asian perspective, the Quad represents a potential challenge to ASEAN and its interest in remaining at the centre of regional security cooperation. Given the strategic and economic weight of its four members and the Quad’s promise of concrete cooperation on security matters, one can see why supporters of ASEAN centrality might have been concerned. The speed with which the Quad moved from the sidelines of the EAS to high-profile leaders’ summits may have been a source of some trepidation. The contrast between the Quad as a nimble start-up and the slow and tired incumbent ASEAN was striking.
The Quad has taken pains in recent years to speak at great length about the importance of ASEAN centrality and the Southeast Asian grouping more broadly.[18] The members take almost every opportunity to emphasise that their grouping is fully compatible with ASEAN institutions, norms and practices. Yet, the stark reality remains that multilateralism, understood as a broader practice in which groups of states get together to coordinate policy settings, is in poor shape in the region. The Quad’s re-creation reflected its members’ lack of confidence in the ability of Asia’s security architecture that had been created in the 1990s and early 2000s.[19] ASEAN had been a critical player in creating many aspects of the network of multilateral structures and processes, such as the EAS and ASEAN Regional Forum (ARF). But these structures and processes did not provide the assurance that the Quad members felt was needed in the face of a deteriorating regional security environment. They thus opted to re-animate the entity that had been established a decade earlier.
The new minilateralism was created because of the perceived shortcomings of the existing regional forms of multilateralism. Yet, the contested geopolitical dynamics and the diverging interests at play in this large and complex region means that building consensus and achieving policy coordination and cooperation to address critical issues are extraordinarily difficult, even within a small grouping of self-styled ‘like-minded’ states such as the Quad. The visible gaps that exist between its members in relation to Russia’s invasion of Ukraine is a clear reminder of the challenges involved in aligning the interests of the four countries. While they have found it relatively straightforward to build a consensus about the challenge China poses, forging a shared view about broader ranging issues at the international level is much more difficult and will likely continue to bedevil efforts to drive a more substantive agenda.
The logic of the Quad opting to focus their efforts on public goods for collaborative endeavour was sound. It showed an understanding of the complex nature of security as well as a degree of diplomatic caution. It was also about finding areas that are politically more straightforward to cooperate. It is always easier to collaborate on relatively less controversial matters such as export credit agencies and education exchange than high matters of state and national security. Equally, public goods have clear spill-over effects. For example, delivering high-quality outcomes in relation to maritime domain awareness can benefit countries across the region and align their interests with those of the Quad members. But what we have seen play out is that geopolitics and rivalry are making the business of cooperation much harder than it was before. Indeed, beyond the shared security concerns about China, the four do not have especially well aligned complementarities in areas of functional cooperation or public goods provision.
Critically, the Quad is compounding the problem by diverting resources away from cooperation in the existing collaborative structures.[20] The logic of free trade that informed the multilateral trading system created after 1945 was that the widest possible base was needed to provide benefits at the scale that would provide incentives for states to participate. That same basic logic – that collaboration needs to be on the widest base possible – remains critical to advancing a collaborative agenda today. But the intrusion of geopolitics is fracturing that base. On top of this, exclusive forms of collaboration, which are in turn suffused with geopolitics, further limit the breadth of interaction and thus the benefits which it can create. Finally, if the purpose of the Quad is to constrain China’s behaviour, there seems to be little evidence that Beijing is responding with heightened moderation in its approach to regional order.
CONCLUSION
The Quad’s progress, beyond that of profile, has been unimpressive, having little of substance to show for more than half a decade of cooperation beyond an ever-growing shopping list of activities that are of marginal consequences to the regional ambitions of the four countries. But considerable potential remains in the structure in which four liberal democracies work together to provide much needed international public goods at a time of heightened competition, nationalism and a zero-sum logic at work.
Considerable work needs to be done before that potential can be realised. Most obviously, the Quad needs a much clearer and sharper sense of purpose. The rousing rhetoric of order building is appealing, especially at leaders’ gatherings, but there needs to be a clearer and more systematic link between the Quad’s higher-level ambitions and what exactly they will do together to advance those goals. At the moment, the activities are a grab-bag of things that might in some indirect way contribute to orderly relations in the region and benefit other states. But they have little overall coherence and no clear line between what they are trying to achieve and the larger ambitions of order protection and construction. Most obviously, the Quad needs to make a clear decision about whether or not it is a security grouping, or one focused on public goods. At the moment, it seems to have defaulted into a grouping that pursues public goods as an indirect and circuitous path to some vaguely conceived security goals. A much clearer sense as to just what kind of grouping they are trying to be would go a long way to developing a priority of work programmes that are coherent in advancing a collective agenda. Presently, the public goods are too diffuse and lack a larger strategic plan, and coordination among the Quad members in the delivery has been underwhelming.
Equally, the Quad needs to change how it is trying to advance public goods. The experience of institution building in the early 2000s can be instructive. Regional groupings like the ARF and EAS burnt through their political capital by taking on too expansive an agenda and delivering too little. The Quad, wittingly or not, risks repeating that mistake. It needs to begin by paring back the number of things it is working on and focusing more resources, time and energy on a smaller number of meaningful public goods programmes. These can then build momentum and confidence in the cooperative endeavour and have non-members see the benefits that the Quad can create for the region more generally. Unless or until substantive cooperative outcomes begin to be delivered and in which others take note and see a benefit, the Quad is unlikely to generate either public goods or indirect security benefits. If it continues on its current path, it is likely to end up being little more than a photo opportunity and glad-handing amongst dignitaries. This would be a tragedy given the deep levels of support that liberally oriented regional order needs now and in the coming years.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/62 “Vietnam’s JETP Agreement: Accelerating the Energy Transition in a Just Way?” by Julia Behrens
EXECUTIVE SUMMARY
- The Just Energy Transition Partnership (JETP) agreement between Vietnam and the International Partnership Group was announced in December 2022. As a general agreement on advancing a just energy transition for climate change mitigation, it outlines some concrete steps for implementing the energy transition but is legally non-binding.
- Vietnam’s power sector needs to transition away from its heavy reliance on coal if it is to meet its net-zero-emission goal by 2050.
- Vietnam’s energy transition is currently hampered by inadequate legal regulations, insufficient capacity of the relevant Vietnamese authorities, lengthy decision-making processes, a lack of cooperation between relevant authorities and a lack of financial investment.
- Although the JETP agreement has the potential to address the lack of investment and capacity, unless the Vietnamese government speeds up decision-making processes and enhances cooperation among its ministries, the implementation of the agreement and other energy-related policies will be delayed.
- The “just” aspect in the JETP might be achieved with regard to the reskilling of workers and the advancing of decent jobs. However, it will not be “just” in the sense of involving non-governmental organisations and the media in the making of energy policies, as Vietnam’s increasingly oppressive political context makes it difficult for civil society actors to participate in the process.
* Julia Behrens is a post-doc fellow at the University of Bielefeld, Germany. Before that, she led the project on Climate and Energy in Asia at the Friedrich-Ebert-Stiftung, based in Hanoi.
ISEAS Perspective 2023/62, 27 July 2023
INTRODUCTION
Vietnam has an electrification rate of nearly 100 per cent,[1] largely due to its rapid economic growth precipitating a ten-fold increase in energy demand over the past two decades.[2] The country is highly dependent on coal for energy, with the share of coal in the country’s electricity production increasing by about 11 per cent annually between 2011 and 2021,[3] making it the fastest growing coal consumer within ASEAN. By 2018, coal had become Vietnam’s largest source of electricity, followed by hydropower, with the installed coal power capacity increasing four-fold from 2010 to 2020. In 2022, the total installed power capacity of the country reached nearly 77,800 MW, of which 26.4 per cent were renewable energy sources (excluding hydropower).[4] Hydropower accounted for another 29 per cent of the energy mix, while fossil fuels (coal and gas) made up around 44 per cent.[5] About 72 per cent of Vietnam’s coal use is for electricity production. Under a business-as-usual scenario, emissions from the energy sector are projected to account for 74 per cent of Vietnam’s total emissions by 2030, making it the largest climate change mitigation sector in the country.
Since 2019, Vietnam has seen a surge in renewable energy usage, with its newly installed solar power and wind power capacity reaching 20,000 MW in just three years between 2019 and 2021.[6] Such a shift towards renewable energy could bring various benefits, such as improved public health, job creation, and forest protection.[7] Additionally, since Vietnam is one of the countries that are most vulnerable to climate change challenges,[8] the urgent transition to renewable energy as a mitigation measure must be taken. This is laid out in the Power Development Plan VIII (PDP8), which was adopted in May 2023 after a two-year delay.[9] It guides the development of the country’s power sector for the period 2021-2030, with a vision to 2050, formulating goals for energy development and tasking different government authorities with the practical steps and responsibilities needed.
So far, there have been a multitude of international partnerships and projects put in place to drive the global energy transition towards renewable energy,[10] and many of these have been awaiting the PDP8 for implementation and progress. In December 2022, the International Partnership Group (IPG) and Vietnam announced their Just Energy Transition Partnership (JETP).[11] Despite the country’s commitment made at the COP26 summit to peak emissions by 2030 and reach net-zero emissions by 2050, Vietnam’s renewable energy boom from 2019-2021 has seen a decline, while its implementation of energy transition policies has faced challenges, with the delayed release of PDP8 being a case in point. With the JETP and the now approved PDP8, will Vietnam finally be able to advance its implementation of energy transition initiatives? This article explores what the JETP means for Vietnam’s energy transition and how effectively the partnership lives up to its promises, especially regarding the “just” aspect of the agreement.
WHAT IS JETP?
The JETP model was introduced by the G7 countries and the European Union (EU) as a financing tool to implement their climate commitments to the Global South. Through this tool, G7 and EU members aim to promote energy transition in developing countries, emphasising inclusiveness and worker protection based on the International Labour Organization’s (ILO) framework on just transition.[12] These targeted countries are typically those that already emit high levels of CO2 and are projected to have an increased energy demand in the future as well as potential for renewable energy. They should also have demonstrated political commitment to an energy transition.[13] The JETPs are an important contribution to fulfilling the G7’s goal of supporting climate mitigation and adaptation in the Global South, although they focus on private investment and loans rather than grants. In addition, they can be seen as a way to create markets for technology exports and to exert strategic influence on other countries’ power sectors. The first deal with South Africa was announced in 2021, followed by the second with Indonesia and the third with Vietnam in 2022. Negotiations are currently underway for new agreements with India and Senegal.[14]
The JETP agreement with Vietnam aims to reduce emissions from coal-fired power plants by limiting peak capacity to 30.2 GW by 2030, down from the 37 GW previously planned by the Vietnamese government. This would mean that coal would account for 20 per cent of the power mix, compared to the current level of approximately a third.[15] Despite projected growth in GDP and power demand, coal power capacity would only be allowed to expand slightly from its current capacity of 24.6 GW.[16] Renewable energy sources, on the other hand, are expected to rise to 47 per cent of total electricity generation by 2030 and 72 per cent by 2050. To reach these goals, the agreement provides a structure of loans and grants worth USD7.5 billion, which is expected to be matched by an additional USD7.5 billion in private investment. PDP8 underlines that the Vietnamese government will only be able to reach the formulated goals if its JETP partners live up to their commitments. The agreement also allows for the use of carbon capture and storage technologies as a way to reach emissions reduction targets.[17]
Concrete steps to achieve the above goals are not stated in the agreement. The agreement is also not legally binding and uses rather soft language, often relying on words such as “should”.[18] By November 2023, Vietnam must adopt a Resource Mobilization Plan in order to decide on the implementation, funding and strategy for the JETP.
THE CHALLENGES OF A “JUST” ENERGY TRANSITION
The JETP concept emphasises the importance of justice and recognising the energy transition as not only a technical process but also a social one that requires the active inclusion of workers, affected communities, and other vulnerable groups. It also stresses the importance of creating a supportive structure for those affected by the coal phase-out, such as through reskilling programmes and educational opportunities. The reskilling programme is crucial in order to prevent unemployment and develop skilled jobs. Model projects for reskilling already exist and are funded by international development cooperation, but so far these are very small in scale and limited to a few selected colleges (cao đẳng). Workers’ consultations are likely to be conducted through trade unions, which are ultimately controlled by the Communist Party of Vietnam (CPV). This provides access to workers but will likely be limited and structured in a top-down manner.
Another emphasis in the agreement, also underlined by PDP8, is on the affordability and access to energy, which must not be negatively impacted by the energy transition. In addition to affordability, there must be a “just” approach to land use which does not harm agriculture and aquaculture production, particularly for communities in areas where renewable energy sources are to be developed. Economic inclusion through energy access and a sensible and equitable approach to land rights are both essential for the CPV and its legitimacy.
More problematic is the agreement’s provision that for the transition to be just and equitable, “regular consultation is required, including with media, NGOs and other stakeholders so as to ensure a broad social consensus.”[19] In recent years, energy transition has become an issue of interest to non-government organisations (NGO) in Vietnam, including local ones. However, since the January 2022 arrest of Nguy Thi Khanh, the most vocal and renowned advocate for renewables within the local NGO community, and her conviction for alleged tax evasion, NGOs have become increasingly wary of publicly expressing their opinions. This is despite Khanh’s release in May 2023. Administrative procedures for NGOs have become more stringent, too, particularly in terms of obtaining permits for implementation of projects. Against this backdrop, the only public statement on Vietnam’s JETP by a local organisation has been the press release of the Vietnam Initiative for Energy Transition (VIET), a local independent think tank.[20] Other organisations have not yet dared to comment publicly on the agreement, both out of caution and due to the lack of information on the matter from the government. Media reports have also been scarce. The hope of the IPG to press for an inclusive, participative process for the JETP in Vietnam, therefore, seems unrealistic and the justice aspect of the JETP hence limited. Community consultation might be the only way to ensure some basic inclusivity and transparency in the process.
OTHER CHALLENGES
Vietnam’s energy policy is overseen by the Ministry of Industry and Trade (MOIT), and the main instrument of energy development policy is power development plans (PDP). The seventh PDP (PDP7) expired in 2020, and PDP8 was approved in May 2023 after extended delays. PDP8 recognises the power sector’s importance for sustainable development, with a focus on economic, social and security policy, as well as meeting environmental concerns through commitments to renewable energy and “new energy” such as green hydrogen.[21] The specific goals for renewable energy are wide and conditional, and rely on the JETP to come through. If JETP is implemented successfully, a 47 per cent share of renewable energy by 2030 and around 70 per cent by 2050 could be reached. PDP8 emphasises newly-installed power capacity by 2030 with wind, rooftop solar for self-consumption, hydropower, and liquefied natural gas (LNG). PDP8 also explicitly refers to the JETP and calls it an “important solution” for the energy transition.[22] Consequently, PDP8 has strengthened the JETP on paper, signalling political will for the energy transition. Nevertheless, to promote the sustainable development of renewable energy, further steps, such as a renewable energy law and a reliable pricing mechanism, are still needed.
Central to the success of the energy transition is an extension of the grid capacity that has been unable to keep up with the rapid increase in renewable capacities. This has resulted in the decision by Vietnam Electricity (EVN), the only off-taker in Vietnam’s electricity market, to implement curtailment, causing many renewable energy projects, both big and small, to lose around 40 per cent of their output and suffer devastating financial losses.[23] To address this issue, the JETP agreement has included investment and research into grid transformation, which could result in improved technical standards and grid infrastructure to accommodate a larger renewable energy capacity. Despite the complexity of this task, it is nevertheless feasible if all actors involved cooperate effectively and the legal framework reduces bureaucratic restrictions for this large-scale infrastructure project.[24]
For the energy transition to move forward, a clear political signal from the CPV leadership is necessary to prioritise its implementation and accelerate the bureaucratic processes in approving investments for projects. Moreover, the government needs to ensure cooperation between all relevant authorities, such as the MOIT and the Ministry of Natural Resources and Environment (MONRE). While MOIT is tasked with energy development and PDP8, MONRE is in charge of JETP. So far, cooperation has been lacking. For example, no MONRE representatives have participated in meetings of the Vietnam Energy Partnership Group chaired by MOIT and the World Bank to discuss the implementation of the energy transition with international and local partners. A strong signal from the top leadership demonstrating support for PDP8 and JETP can also help address the lack of capacity within the executive system and officials’ hesitancy to make decisions.
These two latter issues arise primarily from the CPV’s current anti-corruption campaign, which is considered the most comprehensive anti-corruption effort in the history of the party.[25] The campaign has resulted in the removal of President Nguyen Xuan Phuc and two deputy prime ministers in early 2023. Before that, Dinh La Thang became the first Politburo member to receive a 30-year prison sentence. Additionally, 7,500 party members have faced criminal investigations since 2021.[26] The campaign has made public servants and decision-makers, including those in state-owned enterprises, highly risk-averse and reluctant to make decisions or approve projects for fear of being caught up in the campaign. At the same time, 40,000 public employees have resigned since 2020,[27] further weakening the capacity of the bureaucracy. To some extent, the campaign has therefore impeded the energy transition, which requires the prompt approval of infrastructure projects and the active participation of capable policy makers and bureaucrats.
The MOIT and MONRE are only two players in the complex game of energy transition. Behind them lie a myriad of vested interests, ranging from coal-producing provinces in the North to the provinces in the Central and the South with the highest potential for renewable energy. While around two-thirds of coal-fired power plants are owned by state-owned enterprises, these enterprises hold only a small share of renewable energy sources like solar (four per cent) and wind (one per cent) in 2021.[28] Private investments from G7 countries also often come with their own agenda, such as creating new opportunities for the export of their technology and expertise. In order to ensure a just transition, it is essential to recognise and understand the divergent interests involved in the energy transition and the obstacles that must be overcome.
Another issue that makes the reliance on coal entrenched is political decision-makers’ perception that coal is the more stable and dependable power source.[29] This is because CPV leaders fear potential social unrest should electricity prices rise during the energy transition.[30] Maintaining social stability is essential to the CPV’s political security, and ultimately its rule. This is also the reason why the MOIT has avoided introducing carbon taxes and other similar measures,[31] despite research indicating citizens would be willing to pay more for electricity, and the fact that off-grid solar power projects could reduce electricity prices since they could replace gasoline generators in remote areas.[32]
CONCLUSION
Vietnam’s JETP offers international expertise and financing options to facilitate the country’s energy transition. However, it cannot address some key barriers to making this transition successful, such as the lack of political will, bureaucratic inertia, and dilemmas on how to deal with vested interests both inside and outside the country. The “just” aspect of the JETP can act as an incentive for the MOIT to consult with workers and affected communities, but it is important to acknowledge the possibility that the JETP may never meet the IPG’s definition of justice, and the participative process may always be limited to what the CPV allows. NGOs and the media will unlikely be able to meaningfully engage in the process. Ultimately, a successful JETP depends on political conditions, and while PDP8 is a step in the right direction, more action is needed.
There is also a risk that the JETP signed with Vietnam, with its limited approach to justice, could set a lower standard for IPG’s negotiations with other countries. Moreover, the potential issue of JETP financing structures not meeting the standards of just climate finance, in light of the historic responsibilities of industrialised countries, must be duly recognised and addressed. Therefore, close observation of all JETP agreements in the future is necessary.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/61 “Malaysia’s 2023 Elections: A Coming Clash of Coalitions in Selangor” by Khairy Jamaluddin
EXECUTIVE SUMMARY
- The upcoming state elections in Malaysia represent a referendum on the first eight months of Prime Minister Anwar Ibrahim’s ‘Unity Government’.
- The industrial state of Selangor will be the first real test whether the pact between Anwar’s Pakatan Harapan (PH) coalition and his Unity Government partner coalition Barisan Nasional (BN), can get support from voters.
- Based on the track record of the incumbent state administration and early polling numbers, Selangor is Pakatan Harapan’s to lose. Nonetheless, political undercurrents in Malaysia show that Perikatan Nasional may have the momentum.
- This Perspective lays out three scenarios for how the Selangor state election could transpire. Although Pakatan Harapan is favoured to retain Selangor, there is a path to power for Perikatan Nasional that hinge on certain levels of voter turnout and vote transferability.
- Only a modest shift in Malay support can sweep Pakatan Harapan from power in Selangor. Much will depend on the campaign swinging undecided voters in a contest that will affect the configuration of Malaysian politics.
*Khairy Jamaluddin is Visiting Senior Fellow at ISEAS – Yusof Ishak Institute. Previously, he served as Minister at Malaysia’s ministries of Youth and Sports, Science and Technology, and Health. He was also the Coordinating Minister for the Covid-19 Immunisation Programme. He was a three-term Member of Parliament and former Leader of UMNO Youth.
ISEAS Perspective 2023/61, 27 July 2023
INTRODUCTION
The campaigning in Malaysia’s six state elections is set to begin with the political temperature at boiling point. Both main coalitions frame the polls as a contest of national significance. For the opposition Perikatan Nasional (PN) coalition, the polls will not just be an opportunity for them to strengthen their grip on the three states in which they are incumbent governments – Kedah, Terengganu and Kelantan – but it also sets the stage for them to potentially capture Selangor. This state, led by Anwar Ibrahim’s Pakatan Harapan (PH) coalition, is Malaysia’s most economically developed and politically significant state.
For Anwar and his large ‘Unity Government’ coalition, these state elections are also being viewed as a national bellwether. They know that while a disastrous outing will not immediately threaten the government, it can inflict a serious blow. What could ensue is a prime minister becoming more cautious, less reformist and constantly questioning the commitment of the 19 parties that ostensibly have given him their support.
They will also be concerned that a rout in the northern and eastern states presently administered by one of PN’s component parties, the Islamist Parti Islam Se-Malaysia (PAS), will signal Anwar’s inability to gain significant support among Malay voters, something PH had already failed to do in the general election. Anwar had then turned to BN’s biggest faction, the United Malays National Organisation (UMNO), which still maintains a strong political base in the rural and suburban Malay-majority seats despite suffering its worst-ever general election result last year.
This formula now faces its biggest test, especially in Selangor. With urban seats encircling the national capital Kuala Lumpur to rural agricultural wards in the north, Selangor presents an ethnically diverse polity, but one with 39 of 56 seats having a majority of Malay voters. What happens in Selangor during these polls could set a voting trend that may continue until the next general election.
NATIONAL REFERENDUM PLAYED OUT IN THE STATES
PN has cast these elections as an early referendum on Anwar and the makeshift government he assembled following a hung parliament after last year’s general election.
The Anwar-led government formed in the wake of the November 2023 general election cobbled together his PH coalition with a raft of coalitions and parties from Sabah and Sarawak, and, most contentiously, PH’s long-time foe Barisan Nasional (BN). Although Anwar has maintained a relatively high approval rating, there is mounting dissatisfaction with the federal government’s economic management for lacking direction and substance.[1] This has been exacerbated by the Malaysian Ringgit being one of the worst-performing currencies[2] in Southeast Asia, contributing to imported inflation and increased outflows from the stock exchange.
In addition to these economic woes, Anwar’s government also finds itself constantly on the defensive dealing with Malaysia’s own ‘culture war’. As written previously by the author, Anwar has resisted betraying his multiracial and progressive base by playing with identity politics, in particular the ‘3Rs’ of race, religion and royalty.[3] This has seen him constantly being outflanked by PN who regularly weave identity politics into their speeches and policy platforms. Anwar’s cause is not helped by his coalition partner, the Chinese-dominated Democratic Action Party (DAP), failing to change the widely held, but rather misplaced, perception in the Malay community that it is anti-Malay and anti-Islam.
With the need for the Unity Government to rally its base and shore up Malay votes, what began as an unlikely union has now developed into, for the state polls at least, a pre-electoral pact in which PH and BN will work together, avoid putting candidates against one another and even campaign on the same manifesto and platform. This could well be a precursor to a similar arrangement between PH and BN for the general election, something UMNO president Zahid Hamidi hinted at during a Unity Government convention in May.[4]
Zahid continues to be a divisive and unpopular figure who could bring Anwar down with him if he falls.[5] With 47 charges of criminal breach of trust, corruption and money laundering hanging over him, Zahid’s status as deputy prime minister makes it easy for opponents to pillory Anwar’s agenda for good governance. Despite this, the prime minister has recently doubled down on Zahid and UMNO as his preferred partner to battle PN for the Malay votes.[6]
What Anwar and Zahid are both basically hoping for is that electorally one plus one equals two. Their ideal scenario is for two things to happen. First, for voters who chose PH or BN in last year’s general election to maintain that choice. Second, for there to be perfect transferability of votes between PH and BN. What that means is that since PH and BN have agreed to a pact for the state polls, they will avoid putting candidates against each other in every seat. They will then hope that where PH fields a candidate, all BN votes will be transferred to PH and vice versa. If there is perfect transferability, one PH vote plus one BN vote will result in two votes for the pact.
If there is perfect transferability, the PH-BN arrangement will be a formidable force and will ensure the PH-administered states of Penang, Selangor and Negeri Sembilan will be retained by comfortable margins.[7]
Of greatest interest and consequence will be the transferability of Malay voters. This is because Malay votes were the most contested during the general election compared to non-Malay votes which overwhelmingly went to PH. If there is no perfect transferability and there is a significant shift of BN voters to PN, there could be scenarios in which Selangor is a highly contested state.
THE CASE OF SELANGOR
The Unity Government’s Assets
Malaysia’s economically most developed state, along with the Federal Territory of Kuala Lumpur contained within it, is Selangor. It has been administered by PH since 2008.[8] That coalition comfortably retained the state in the 2013 and 2018 state elections which were held concurrently with the general elections. Out of 56 seats in the state assembly, PH has 45 seats (Parti Keadilan Rakyat [PKR] – 19, DAP – 15 and AMANAH – 6), commanding a two-thirds majority on its own. Since the formation of the Unity Government, BN now aligns itself with PH in Selangor and has pledged the support of its five seats. PN has five seats made up of Bersatu’s four and PAS’ single seat. The remaining seats are held by Pejuang (3), Parti Bangsa Malaysia (2) and Warisan (1).
Selangor has been led by Amirudin Shari who became the menteri besar in 2018. Although Amirudin is seen as a protegé to his predecessor as Selangor menteri besar Azmin Ali, he has since forged his own political trajectory. He stayed in PKR and did not follow Azmin when the latter defected during the Sheraton Move that brought down the PH government in 2020.
At 43, Amirudin is young, dynamic and enjoys strong approval ratings in Selangor. A recent survey conducted on Malay voters in Selangor (a demographic segment crucial to the outcome of the polls) showed that 71 per cent of respondents approved his performance as head of the state administration and 75 per cent said they want him named as menteri besar should PH emerge with the most seats after the state election.[9] Anwar has also moved quickly to quash any speculation of another candidate for menteri besar by naming Amirudin as his coalition’s candidate for leading the state should they prevail in the election.[10]
The state administration has also released a comprehensive report card of its achievements over the last five years covering a wide range of public services from healthcare to housing, transport and entrepreneurship.[11] Some of these initiatives began before Amirudin’s tenure, but are now seen very much as PH successes regardless of the person heading the state party. This has led to a pervasive feeling among PH supporters in Selangor that the state is now a stronghold in which opposing parties have struggled to make a dent in the last three elections.
Indeed, if the results of the general election are used as a proxy for what could happen during the state election, it will once again mean a comfortable win for PH. Taking the votes cast at the parliamentary level during the general election and simply apportioning it according to the state wards will see PH winning 40, PN getting 14 and BN taking 2 seats.
Therefore, the state election is very much for PH to lose. Selangor is now seen in Malaysian political consciousness as a PH fortress where their leader enjoys strong support for his stewardship of the state. A simple extrapolation of the general election results shows PH in a pole position for the state election.
Countercurrents favouring PN
However, just as we cannot assume perfect transferability of votes between PH and BN, we must not also assume that voters will vote the same way they did during the general election. Much has transpired in Malaysian politics over the last eight months and while surveys may show a high level of support for certain parties and individuals, there are strong undercurrents that may surface over the next two weeks as the campaign heats up.[12]
First, there is the UMNO factor. The state elections will determine if UMNO, led by Zahid, is an asset or a liability for Anwar. As explained above, Anwar wants to use UMNO as a partner to win Malay votes he was unable to get during the general election. Yet, UMNO continues to be seen as a shadow of the grand old party that dominated the Malay political ground for decades. UMNO is likely to get far fewer seats to contest compared to PKR and DAP in Selangor, and presently suffers from weak leadership at the state level. Should there be significant frustration among Malay voters at UMNO’s lack of reform, and should this result in vote transfers, PH-BN’s margin of victory could be affected.
Second, as mentioned above, Selangor voters will not just choose their state government based on the track record of the present menteri besar, but also use the ballot to express their feelings on national issues and the federal government. Anwar has attempted to assuage these fears in recent days by touting high-profile investments through a virtual meeting with the entrepreneur Elon Musk of Tesla, Inc. and by announcing Chinese automaker Geely’s expansion plans in Malaysia.[13]
Although Anwar’s administration has continued and even enhanced pre-existing measures to cushion cost-of-living challenges such as cash transfers and price control, and even subsidised food menus, there is a sense that eight months in, economic management is adrift with Anwar struggling to juggle being both prime minister and finance minister. In order to counteract this, Anwar’s government is preparing both an ‘economic narrative document’ which has been launched today and the tabling the Midterm Review of the 12th Malaysia Plan in October to demonstrate concrete programmes that can correct course for the Malaysian economy.
Third, coming into government after many years in opposition (apart from 22 months during the first PH government), some ministers have had difficulties managing expectations. This is the case especially with regards to positions they took when in opposition and where they now have trouble performing as a result of their populist or political compromises. Videos of former opposition leaders and now ministers promising higher minimum wages and lower petrol prices or abolishing draconian laws are still used as campaign fodder by the opposition. While some voters understand that these promises are now unrealistic, others have chosen to hold these ministers to account.
The fourth issue is how identity politics and the culture war will play out in the state election. Last week saw the arrest and arraignment of PAS’s election director and incumbent Kedah menteri besar, Muhammad Sanusi Md Nor, under the Sedition act for allegedly insulting the Sultan of Selangor. In recent months, Sanusi has emerged as a consequential and controversial figure for PN and PAS. His plain-speaking bravado and, at times, reckless abandon in taking on Anwar politically has significantly enhanced his image and following. It is likely that the action taken against him will boost sympathy for him and support for PAS in their strongholds. What remains to be seen is how it will play out in Selangor whose monarch was the subject of the alleged insult, especially in the Malay community.
Some critics have also pointed out that action against other potentially inflammatory 3R speeches, in particular one made by DAP chairman Lim Guan Eng, raising the spectre of a green wave coming to destroy non-Muslim places of worship have yet to be taken.
Sensing the disquiet in the highly contested Malay ground, DAP has crafted a narrative to ensure a high turnout at the state polls, in particular in Selangor and Penang. Along with Guan Eng’s scaremongering tactics, his father and DAP veteran Lim Kit Siang has even resorted to saying that the country is “teetering on the edge of another May 13, 1969 riot,” a reference to Malaysia’s most deadly communal conflict.[14]
Anwar has also tried to stave off the challenge PN brings to identity politics by allowing authorities to move quickly against Sanusi, therefore demonstrating his commitment to defend the Malay Rulers. He has also declared recently that Malaysia is not a secular state – at least in the laïcité sense – in an attempt to dismiss attacks that he is too liberal on religion. While these moves help in correcting the perception that Anwar is weak on 3R issues, the question is whether it is enough for him to win Malay support, and whether that will be at the expense of his natural support base, which tends to be more liberal on social issues.
With these broader observations and their implications in the battle for Selangor, what emerges are conflicting views rather than a consensus. Two separate surveys conducted by entities aligned to opposing sides show how difficult it is to gauge voter sentiment in Selangor. Institut Darul Ehsan, an independent think tank with links to the incumbent state government, recently released results from their survey of Malay voters in Selangor showing PH-BN commanding 46.7 per cent support compared to 27.2 per cent for PN, a result that would secure victory for PH-BN.[15]
Conversely, a recent paper written by, among others, a former aide of PN chairman, Muhyiddin Yassin, refers to a separate survey that suggests “no significant vote transferability” between PH and BN, a situation that could pave the way for a PN victory in Selangor.[16] With such divergent analyses going into the campaign period, various different scenarios are presented below to forecast likely outcomes in Selangor.
SCENARIOS
These qualitative observations present us with a few scenarios that could unfold, including one that shows a path to power for PN in Selangor. The state assembly has 56 seats, and 29 are therefore needed for any coalition to secure a majority.
Scenario One: This is a best-case scenario for PH-BN where there is a high turnout for both Malay and non-Malay voters of 81 per cent. In this scenario, PH retains its 95 per cent vote share among non-Malays while most of their Malay supporters transfer their support to BN candidates and BN supporters do likewise and transfer most of their votes to PH candidates. PH-BN would secure 52 per cent of Malay votes, which is a realistic assumption based on what PH received during the general election. The result would be PH-BN: 55 and PN: 1 in the state assembly.
Scenario Two: This is an average outcome for PH-BN and one most likely to happen if the campaign momentum turns for PN. The assumption for this scenario is that non-Malay turnout will be 55 per cent, similar to their overall turnout for the state election in Johor over a year ago now. While these elections were held during the pandemic and may represent a low baseline, they nonetheless represent the most recent state polls independent of those conducted concurrently with the general election. PH-BN will nevertheless secure 85 per cent of these votes. Malay voter turnout is modeled at 81 per cent with PH-BN getting 37 per cent due to a significant transferability of Malay votes from BN to PN instead of PH. This scenario will still see PH-BN prevailing in 34 seats compared to PN’s 22 seats.
Scenario Three: This is PN’s path to capturing Selangor. Non-Malay turnout and vote share will be the same as the second scenario above, as will the Malay voter turnout. But in this scenario, the PH-BN vote share among the Malays further drops only slightly to 32 per cent. In this case, PH-BN will win 27 seats and PN will win Selangor with 29 seats. What this suggest is that only a modest shift in Malay support by five per cent compared to the previous scenario is needed to see PH-BN lose Selangor.
CONCLUSION
These scenarios have been chosen to demonstrate that while Selangor appears to be a state where PH-BN should emerge as winners, a PN victory is not entirely impossible. Much will, of course, depend on the campaign to see if non-Malays can be convinced to turn out in large numbers and if Malays continue to give Anwar and his coalition and their partners the overwhelming support he desires.
Should BN fail to win any seats in Selangor and only muster a handful of seats in the other states, UMNO will have to consider some serious changes to both their leadership and strategy. Having suffered their biggest electoral loss during the general election, a poor outcome during these state elections will reinforce the electorate’s message that UMNO, at present, is unelectable. Yet, Zahid’s consolidation of the party through a purge earlier this year and by rewarding loyalists with various appointments suggests that UMNO will likely shrug off a potentially dismal result and pretend that all is well.
Anwar, on the other hand, will be forced to think long and hard about his partnership with UMNO. If UMNO turns out to be a liability during these state elections, will he want to commit himself to future electoral pacts with UMNO and BN? Or will he treat UMNO and BN as a temporary partner to ensure the longevity of his ‘Unity Government’ until the end of this parliamentary term and then decide on alternative potential configurations that will not include UMNO and BN? Much rides on what happens in the next two weeks.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/60 “Flexing Censorship Muscles and Leveraging Public Sentiments: How The Vietnamese State Scrambles to Sanitise Its Image Online” by Dien Nguyen An Luong
EXECUTIVE SUMMARY
- Netflix recently found itself having to entertain requests to censor three shows after Vietnamese authorities deemed their content unacceptable and “hurting the feelings of the people.” This raises the question of how much this rhetoric genuinely reflects the views of the general population.
- Vietnam’s ongoing efforts aimed at safeguarding national prestige in the digital sphere have resulted in the introduction of new regulations that could expose the online streaming industry to heightened censorship. Against that backdrop, it appears that Netflix’s future may be at stake if the streaming platform refuses to go along with the Vietnamese government’s censorship demands.
- An examination of three instances of censorship of Netflix shows indicates that the popular public sentiments that Vietnamese authorities cited to justify their censorship decisions were predominantly confined to an echo chamber, consisting mainly of pro-regime Facebook pages and state-controlled news outlets that actively promote government-sanctioned narratives.
- The censorship overreach and the manipulation of public opinion employed to sanitise the regime’s image in the digital sphere risk being counter-productive. These moves could end up casting the Vietnamese government in a bad light, revealing its hypersensitivity, insecurity and double standards.
* Dien Nguyen An Luong is Visiting Fellow of the Media, Technology and Society Programme at the ISEAS – Yusof Ishak Institute. A journalist with significant experience as managing editor at Vietnam’s top newsrooms, his work has also appeared in the New York Times, the Washington Post, the Guardian, South China Morning Post, and other publications.
ISEAS Perspective 2023/60, 26 July 2023
INTRODUCTION
A British docuseries, a South Korean television drama, and an Australian spy drama. Netflix has recently been forced to remove these shows altogether from its programme lineup in Vietnam in response to the authorities flagging them for having content deemed unacceptable. This development highlights the heightened censorship the American streaming giant has faced in Vietnam.
In April 2023, Netflix removed the first episode of the docuseries MH370: The Plane That Disappeared from its service in Vietnam.[1] Vietnamese authorities pilloried the three-episode show, stating that it contained “inaccurate and unsubstantiated” information regarding Vietnam’s search-and-rescue efforts for flight MH370, the Malaysia Airlines plane that vanished in 2014 en route from Kuala Lumpur to Beijing with 239 people onboard.[2] In October 2022, Little Women, a K-drama about three sisters living in modern-day South Korea, was pulled from Netflix after the authorities claimed it distorted Vietnam War history.[3] In June 2021, Vietnam demanded the removal of the Australian spy drama Pine Gap for featuring a map depicting Beijing’s unilaterally declared “nine-dash line” that represents its expansive maritime claims in the South China Sea.[4]
Vietnamese authorities have consistently defended their censorship decisions by stating that the content in these programmes provoked public outrage.[5] Using discourse analysis, this paper examines how much that rationale genuinely reflects the sentiments of the public at large. It explores how the Vietnamese government leverages popular public sentiments to justify its censorship of these Netflix shows, with the ultimate aim of safeguarding the regime’s image in the digital space.
PROTECT NATIONAL PRESTIGE ON THE DIGITAL FRONT
Over the past 25 years, the curbing of anti-state content has shaped the way Vietnamese authorities deployed various online censorship strategies, while also dictating how a raft of laws and regulations on Internet controls were formulated and enforced.[6] In Hanoi’s perspective, anti-state content is what potentially can undermine national prestige, besmirch the reputation of the ruling Communist party, and slander and defame Vietnamese leaders.[7] Dangling access to a lucrative market of nearly 100 million people, Vietnamese authorities have become increasingly adept at exploiting their economic leverage to strong-arm big tech companies into erasing content flagged as anti-state.[8] (Facebook boasts nearly 70 million users in Vietnam while YouTube has 63 million users and TikTok around 50 million).[9] On the other side of the spectrum, enticed by the lure of the Vietnamese market, major digital content platforms have exhibited a growing inclination to accommodate the Vietnamese government’s censorship demands,[10] citing the need to adhere to local laws in the countries where they operate. Based on the latest data disclosed by Vietnam’s Ministry of Information and Communications, Facebook complied with government requests and deleted 2,549 posts during the first six months of this year; similarly, YouTube removed 6,101 videos, and TikTok took down 415 links.[11] The ministry has claimed that the compliance rates by Facebook and YouTube both exceed 90% while according to its transparency report, TikTok’s was lower, at 74.4%.[12] Since 2017, the transparency reports of Facebook and YouTube have also revealed that a majority of the restricted or removed items were related to “government criticism”[13] or “oppose the Communist Party and the Government of Vietnam.”[14]
Constant government efforts aimed at safeguarding national prestige in the digital sphere have led to the implementation of new regulations that may subject the online streaming industry to increased censorship. Since January 2023, a Vietnamese government decree has imposed penalties and bans on movies, including those available for online streaming.[15] The offenses – such as undermining national interests, eroding cultural values, or corrupting morality – are vaguely defined, leaving them subject to broad interpretation and arbitrary enforcement. This dynamic portends a bumpy road ahead for Netflix, which is geared up to become the first major American tech firm to set up shop in Vietnam.[16] It appears that Netflix’s future may be at stake if the streaming platform refuses the Vietnamese government’s demands to censor content. But finding a way to accommodate those requests has proven to be challenging in a country where an unpredictable censorship system makes it difficult to determine what content would be considered unacceptable.[17]
DRIVEN BY PUBLIC OPINION – OR DRIVING IT?
This section examines three recent cases of Vietnam’s censorship of Netflix shows by analysing public sentiments on them on Facebook, the country’s most popular social media platform. In all three instances, a strikingly similar pattern emerged: Vietnamese authorities justified their requests for censorship by invoking the notion of “hurting the feelings of the people.” This rationale was either directly mentioned in their statements or conveyed through reports in state-controlled news outlets.[18] The section explores two questions. Firstly, to what extent does this “hurt feelings” rhetoric actually reflect prevailing public opinion? And secondly, to what degree was there government manipulation involved in influencing this narrative?
The section examines the relevant content of 90 public Facebook pages and 10 state-affiliated news outlets and portals. These are divided into three categories:
- Category I – Pro-government pages: 30 self-proclaimed patriotic pages that explicitly adopt a pro-government stance. Amassing a strong base of followers between 21,000 and 236,000, these pro-government Facebook pages have been highly engaged in flagging content deemed detrimental to the reputation of the Vietnamese party-state. They actively shape nationalist storylines and peddle them across the cybersphere.
- Category II – Mainstream media: 10 state-controlled news outlets and portals. They are the mouthpiece of the party-state (the Government News Portal, Vietnam News Agency, Vietnam Television, and Voice of Vietnam), influential news outlets (Tuoi Tre, Thanh Nien, VietNamNet and Lao Dong) and most-read online news sites (VnExpress and Zing News).
- Category III – Neutral pages: 60 Facebook pages that engage in discussions about movies, entertainment, and garden-variety subjects, excluding politics. These groups have also built up a strong base of tens of thousands of followers.
MH370: The Plane That Disappeared
Judging by the official rhetoric, the Vietnamese government’s vehement objection to the MH370: The Plane That Disappeared docuseries was pinned down to a single line in the first episode. In this line, a family member of a missing Chinese passenger desperately pleaded for her country’s intervention: “We hope the Chinese government can quickly send a search-and-rescue team, as the Vietnamese [government] doesn’t seem to have much ability.” The Vietnamese government asserted that the show sparked “public outrage.” But it is hard to comprehend why the Vietnamese public would bristle at just a single line quoting a plea made by an ordinary citizen in a desperate situation.
In fact, an analysis of public sentiments suggests that the online backlash against the MH370 docuseries was largely confined to a bubble of state media outlets and pro-government Facebook groups. As shown in Figure 1, the topic elicited few mentions on Facebook (33) from 1 March to 30 April 2023. The most substantial spikes in discussion aligned with the official narrative and revolved around three key timeframes: First, on 10 March, Tifosi, a vocal pro-government Facebook page, flagged the perceived problematic content of the docuseries.[19] About a month later, on 6 April, Vietnam’s foreign ministry spokesperson officially requested that Netflix rectify and remove “inaccurate information” related to the country’s search efforts in the show. And on 13 April, Netflix gutted the first episode.
FIGURE 1. ONLINE DISCUSSION ON THE MH370 DOCUSERIES
(Source: ISEAS data)
The mainstream media stuck to the official line that panned the docuseries for doing a great disservice to Vietnam’s efforts during the rescue mission. Pro-government Facebook pages not only amplified such criticism but also delved into further discrediting the show by excoriating its promotion of “conspiracy theories” that stand on empirically thin ice. Intriguingly, these pages specifically pointed out that one of such conspiracy theories was floated by Florence de Changy, a French journalist who authored a book on the MH370 incident.[20] According to pro-government Facebook pages, de Changy has speculated that the MH370 plane was deliberately shot down over the South China Sea by the US military to prevent undisclosed cargo from reaching China. These pages accused de Changy of continuing to allude to that theory in episode 2 of the docuseries and of implying that Vietnam had played a role in it.
State media outlets and pro-government Facebook pages played a dominant role in flagging the issue, shaping the narrative and propagating it in cyberspace. In contrast, the neutral Facebook pages analysed for this section did not touch upon this subject at all. The topic also elicited low public engagement online. Out of the 90 Facebook pages and 10 state-controlled news outlets and portals examined for this section, another content analysis was conducted specifically on 10 actors identified as the most active in promoting the relevant narrative. The examination finds that nine of them were pro-regime Facebook pages, while the remaining one was the Facebook page of the Government News Portal. Of a total of 3,589 posts churned out on various topics by those 10 Facebook pages between 1 March and 30 April 2023, the Government News Portal and Tifosi were responsible for producing solely three unique posts related to the MH370 docuseries. The other pages merely picked up, aggregated, and amplified those narratives. No post made it into the list of the top 100 most engaged content, ranked 148th,[21] 224th [22] and 349th.[23] In response to those posts, Internet users were generally supportive. But notably, their opinions closely aligned with, and often mirrored, the main thrust of the propagated narratives.
Little Women
The censorship of Little Women appeared to hinge on several lines in episode eight of the 12-part series, which featured a war veteran bragging about how South Korean troops slaughtered their Vietnamese counterparts. “In our best battles, the kill-to-death ratio for Korean troops was 20:1. That’s 20 Viet Cong killed for one Korean soldier dead,” the veteran said, referring to the communist-led army and guerrilla force supported largely by North Vietnam during the war. He added that the ratio was even higher among his country’s most skilled soldiers. Vietnamese authorities stated that the K-drama “distorted” the events of the war; but it appears that it was axed because the lines, in Hanoi’s perspective, callously reopened the wounds of the conflict.[24]
As Figure 2 shows, the topic garnered a relatively similar level of attention as the MH370 docuseries case, with a dismal number of mentions (40). The most conspicuous peaks in online discussion on the topic also correlated with the government’s official narrative and revolved around two key developments: First, on 4 October, the Vietnamese government officially demanded that Netflix remove the entire show. Two days later, the platform honored the request.
FIGURE 2. ONLINE DISCUSSION ON THE LITTLE WOMEN DRAMA
(Source: ISEAS data)
The mainstream media simply quoted the Vietnamese government’s general statement that Little Women was removed due to its distortion of the history of the Vietnam War, without providing further details. But in picking up and amplifying the narrative initiated by Tifosi, other pro-government Facebook pages went the extra mile to recall the atrocities perpetrated by South Korean soldiers during the Vietnam War, a topic leaders from both countries have shunned in the face of burgeoning bilateral ties.[25] Of note, online discussions on this topic also took place on neutral Facebook pages, where Vietnamese netizens expressed criticism of the show for the lines related to the war in a more moderate manner. But intriguingly, a similar portion of other Internet users opined that the Vietnamese government was making a fuss just over several lines in a show featuring South Korea’s contemporary society.
It is important to note that such discussions only gained momentum after Thanh Nien, an influential state newspaper, flagged the perceived controversial line[26] and Tifosi then fanned the flames.[27] At the end of the day, it was still state-run news outlets and pro-government Facebook groups that were most active in flagging the topic, shaping the narrative and trending it in cyberspace. Another content analysis was carried out on the 10 actors most active in peddling the official narrative. Among them was the Facebook page of the Government News Portal; the other nine were pro-regime Facebook pages. Out of more than 2,020 posts covering various subjects by those 10 Facebook pages from September 1 to October 31, 2022, Tifosi, the Government News Portal, Hoc vien phong chong phan dong (Anti-reactionary Academy), and Don Vi Tac Chien Dien Tu (Comrade Commissar) generated a total of six original posts specifically focused on the topic; the other pages just compiled, adopted and magnified the narratives. Only one of these posts managed to secure a spot among the top 100 most engaged content, ranked 8th.[28] The other posts were ranked 149th [29], 194th [30], 316th [31], 449th [32] and 1059th.[33]
Pine Gap
The move to censor Pine Gap became even more puzzling when considering the circumstances. While Vietnamese authorities claimed that the show “angered and hurt the feelings of the entire people of Vietnam”, there was hardly any discussion about it on social media, even among pro-government Facebook pages, let alone enough to trigger an online backlash. State-run news outlets only started covering the case after Vietnam’s Authority of Broadcasting and Electronic Information requested the removal of the show, with which Netflix ultimately complied.
To be sure, few actions are as sensitive and likely to provoke public discontent in Vietnam as those that validate China’s maritime claims.[34] Case in point: in July 2023, Vietnam banned the release of the highly anticipated Barbie movie, allegedly because of a scene that featured the nine-dash line.[35] There has been no compelling evidence to substantiate this claim by Vietnamese censors, however.[36] On the other hand, the Philippines conducted a “meticulous review” and concluded that the movie does not portray the nine-dash line on the world map, leading them to decide against banning its screening in that country.[37] But still, the ban on Barbie in Vietnam has not triggered any significant public backlash. In fact, a significant portion of Vietnamese netizens threw strong support behind the decision.[38] Seen in such a light, the Vietnamese public would have likely objected to the display of the nine-dash line in Pine Gap had they been given the opportunity to see it. It is more probable, however, that only a limited number of ordinary Vietnamese individuals, much less the “entire population”, had actually watched the show before the authorities intervened and censored it preemptively. In fact, when it was taken down in June 2021, Pine Gap had not even cracked the list of the top 10 most popular shows in Vietnam.[39]
Key takeaways
As shown in those three case studies, what Vietnamese authorities claimed as popular public sentiments to justify their censorship decisions was in fact confined to an echo chamber, primarily comprising of pro-regime Facebook pages and state-controlled news outlets that were highly proactive in propagating government-sanctioned narratives. This means that such sentiments expressed online were unlikely to reflect the prevailing public opinion. As Truong (2022) has argued, there has been a growing reluctance in the Vietnamese public to openly express their political views online, particularly due to the presence of staunch defense-security figures within the Politburo, the country’s supreme decision-making body.[40] Meanwhile, Vietnam’s state-sponsored cyber troops have become more skilled in manipulating public sentiments online.[41] Previous research done by ISEAS also indicated that popular backing for the Vietnamese government’s positions on certain issues may have been artificially inflated through posts from pro-government Facebook pages.[42]
IMAGE SANITISED OR TAINTED?
It is indeed perplexing why Vietnamese censors reacted strongly to just a single line in the MH370 docuseries, as the country was internationally recognised for its efforts in the search and rescue mission for the missing flight.[43] Given that the docuseries has also been released to poor reviews[44], such censorship only revealed the underlying insecurity of Vietnamese authorities when confronted with narratives that were perceived to be tainting the regime’s reputation. The removal of Little Women appears to be a hypocritical action; the Vietnamese government has never formally requested for an official apology or reparations from South Korea for its wartime atrocities.[45] This display of toughness seems to be a mere facade in light of the actual historical context. It was also puzzling as to why Vietnamese authorities resorted to engineering a popular backlash to justify their censorship of Pine Gap. Vietnam has made it crystal clear that companies operating within its borders must adhere to the laws prohibiting content that undermines the nation’s maritime sovereignty in the South China Sea.[46] Foreign companies also know full well that this is a line they must never cross while in Vietnam.[47] In light of this, the manufacturing of public opinion to buttress the Vietnamese government’s censorship request was just unnecessary.
The fixation on sanitising the regime’s image on the digital front has increasingly dictated Vietnam’s Internet controls. But the censorship overreach and the engineering of public opinion employed to achieve this goal, as examined in the three case studies above, are likely to prove counter-productive and only serve to lay bare the regime’s hypersensitivity, insecurity and double standards.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/59 “From the Fringes of Defeat: How UMNO President Zahid Hamidi Transformed His Vulnerability into Invincibility” by James Chai
EXECUTIVE SUMMARY
- The UMNO presidency has always been considered a very powerful position. As the Grand Old Party that held power continuously for 61 years, UMNO was regarded as one of the most successful parties in the world, with mass membership, territorial coverage, and a grassroots machinery that was second to none. Its President was always the Prime Minister, and had unrivalled access to state resources, making the presidency the most watched and coveted position in Malaysia.
- Despite never occupying the Prime Minister position like his predecessors, and being forced to take unprecedented garden leave due to internal pressure, Zahid nevertheless successfully bolstered the power of the UMNO presidency further.
- Zahid Hamidi used his presidency to consolidate power within the party by: (1) Changing the constitution to postpone party elections, effectively lengthening the maximum term from 3 years to 5 years permanently; (2) Passing an unprecedented no-contest motion for the top two positions of President and Deputy President; (3) Unceremoniously sacking and suspending high-profile dissenters in the party.
- These three structural decisions undertaken by Zahid Hamidi virtually shut off opportunities for dissent and are likely to disincentivise reforms, rejuvenation and change within UMNO, which may exacerbate its decline in electoral popularity.
- These changes, however, are unlikely to be reversed as they give the UMNO president extensive powers, especially in selecting general and state election candidates, securing a longer tenure, and suppressing internal opposition.
*James Chai is Visiting Fellow at ISEAS – Yusof Ishak Institute and a columnist at MalaysiaKini and Sin Chew Daily.
ISEAS Perspective 2023/59, 25 July 2023
INTRODUCTION
Throughout its unbroken 61-year rule, the United Malays National Organisation (UMNO) was regarded as one of the most successful political parties in the world.[1] The party’s presidency was the most watched position and its sweeping power was the ‘most striking feature of UMNO’s organisational structure’.[2] Much of this was owed to the fact that the presidency and prime ministership were seen as one, where the former was held together ‘through a system of patronage and disguised coercion’.[3]
The first Prime Minister cum UMNO President, Tunku Abdul Rahman Putra, deployed a highly personalised style of leadership; he held meetings of the Supreme Council (“SC”, see Annex A for the full structure today) at his residence, selecting election candidates, state premiers and leaders without resistance. His successor, Tun Abdul Razak Hussein, reorganised the party structure to be even more intimately tied to the government[4] by creating full-time ministry-like bureaus in UMNO and implementing policies following ‘the wishes and desires of UMNO’.[5] The party’s longest-serving President, Mahathir Mohamad, turned the centralisation process up a notch by maximally using the party-state apparatus for packing (placing loyalists in top party and government posts), rigging (manipulating procedures to curb the opposition), and circumventing (channelling government resources to loyalists), thus ensuring UMNO’s dominance against all odds.[6]
On 30 June 2018, Zahid Hamidi became the first UMNO President to run the party without holding the highest executive office of Prime Minister, within what used to be the ‘matrix of autocracy’.[7] Two days earlier, the anti-corruption agency had frozen UMNO headquarters’ bank accounts, regarded as a critical lifeline for the oldest and largest party,[8] after it had just suffered its worst electoral defeat in the 14th general election that year.[9] The party would go on to experience by-election defeats, high-profile defections,[10] external pressures for dissolution, and criminal charges being filed against its top leaders.[11]
Half a decade later, despite his party holding only 26 seats in Parliament—its lowest in history—Zahid Hamidi was able to reverse its party’s fortunes by acquiring executive power through securing the second-highest position, that of Deputy Prime Minister, for himself, besides securing five other ministerial and six deputy ministerial positions for the party. Within UMNO, Zahid Hamidi’s control as President is now the strongest it has ever been; he has entrenched his loyalists widely and deeply, from the highest leadership council to the lowest party branches.
Regarded as a shrewd political operator,[12] Zahid Hamidi’s ability to ‘snatch victory from the fringes of defeat’ is remarkable.[13] He used his time as the first non-Prime Minister UMNO President to centralise power further in the hands of the presidency. This paper will analyse the three decisions he made as UMNO President that were most consequential to the party structure:
a) Constitutional change to postpone party elections, effectively lengthening the maximum term from 3 years to 5 years permanently;
b) Passing a motion of no-contest for the top 2 posts;
c) High-profile sacking and suspensions of rebel party members.
In each section, this paper will consider the background and implications of the given ‘reform’ before concluding with an overall outlook for UMNO.
Before Zahid Hamidi came to power, UMNO was already a highly centralised organisation. As the party’s supreme leader (“pemimpin utama”), the President carries the prerogatives of selection. An UMNO President can appoint dozens of leaders at the highest decision-making council besides holding the final say on disciplinary matters and choosing candidates for the party to contest in general and state elections.[14] Through the years, such incumbency advantages have also grown. In 1971, the Liaison Committee replaced the State Liaison Committee (and its earlier form, State Executive Committee)[15] to limit state-level power in favour of the President and his council.[16] Mahathir Mohamad (1981-2003) lengthened the presidency by an optional 18 months, and created barriers to challenges to the presidency by modifying rules and procedures.[17] This resulted in the presidency staying unchallenged for decades.
Notwithstanding, Zahid Hamidi’s presidency started at a point of weakness. He was forced to compete and debate against two candidates—the first time since 1988. Although he won by a reasonable margin,[18] substantial opposition within UMNO forced him to take an unprecedented garden leave, amidst an unceasing call for him to step down.[19] To add to his travails, Zahid Hamidi was charged with 87 criminal counts relating to corruption[20]—the highest in the country—adding urgency for him to exercise any leverage he could to avoid final defeat.
Studying Zahid’s comeback from vulnerability to invincibility, therefore, is also a study of the awesome tools at the UMNO President’s disposal. The structural changes that Zahid undertook were merely the final steps of consolidation started long ago by his predecessors.
A. Postponing party elections to 6 months after general elections
Ironically, the most consequential structural decision for UMNO was also the easiest to pass. At the extraordinary general meeting held on 15 May 2022, attended by 2,586 delegates,[21] the party passed a constitutional amendment that allowed party elections to be postponed to six months after general elections.
Before the amendment, party elections had to be held every 3 years, with an option of an 18-month delay. Any postponement beyond this would attract investigations from the Registrar of Societies (RoS),[22] that carry the prerogative of suspension and deregistration.[23]
The main reason for postponement was tactical: for the party to focus its strength on the next general election without a party election for fear that the latter would threaten party unity.[24] There was also a procedural reason, and this regarded UMNO’s future requests for postponement and the fear that these risked being rejected, now that the Home Ministry was no longer controlled by the party.
At that time, UMNO SC members were keen to retain their positions, especially as the window for the next general elections being held was closing. Zahid Hamidi’s faction’s success in painting his opponents as ‘traitors’, or a fifth column, also disincentivised many from objecting to the postponement or challenging for the highest leadership positions.[25]
While a constitutional amendment requires two-thirds approval by eligible attendees of the Special General Assembly,[26] achieving that was not really difficult in practice. In fact, constitutional amendments are occasionally passed in large batches, mixed with substantive and procedural changes, typically reflecting the desires of the President.[27]
The implications of this amendment were severely underestimated. Running out the clock under the amended provision now enables elected officers to stay for a maximum of 66 months—nearly doubling the default term limit of 36 months—as seen in Table 1. The maximum term period under the pre-amended provision was 54 months, which was still a whole year less than the maximum term period post-amendment.
Table 1: Before-and-after comparison of the maximum term period for UMNO office bearers after the passing of the 2021 constitutional amendment [28]
| Default term limit | Optional period of extension | Maximum term period | |
| Pre-2022 amendment | 36 months[29] | 18 months | 54 months |
| Post-2022 amendment | 60 months | 6 months | 66 months |
Significant term period amendments had only happened twice in UMNO’s history. In 1971, UMNO under the presidency of Tun Razak amended the constitution to extend the term period for Supreme Council positions from one year to three years.[30] Mahathir Mohamad, in December 1998, passed an amendment to allow an 18-month extension, a provision that was retained at an extraordinary general assembly in 2000. Be that as it may, Zahid Hamidi’s latest update to the term period stands as one of the most consequential in UMNO history.
The most important effect is that it entrenches incumbency advantage by guaranteeing general and state election candidate selection powers for the President. With the amendment, an UMNO President does not need to prove himself in a party election between general elections like before. In other words, if Zahid Hamidi is the President for the 2023-2028 term, he shall also be guaranteed the candidate selection rights, precluding any possibility for an alternative person to take his place in a party election and subsume that right. This situation now significantly curtails dissent against the President and his team, jeopardising any dissident’s candidacy in the upcoming election.
Chances for a large-scale dissent movement similar to that led by Khairy Jamaluddin in 2021 calling for early party elections to determine the leadership going into the next general election are miniscule now. Dropping local warlords not aligned with the President, like Annuar Musa, Shahidan Kassim, Tajuddin Rahman, and Zahidi Abidin, prior to the 2022 general elections proved that dissent within UMNO can be politically costly.[31] The amendment significantly increases the political cost for dissent.[32] The ‘feelers and soundings’ of grassroots that guided early UMNO Presidents will matter less now.[33]
Even if party dissent happens after the general elections, it is highly unlikely to succeed. The short six-month window between the general election (“GE”) and the party election is insufficient to mobilise dissenters to overthrow the leadership, save for a severe violation on the President’s part. A President who fills the candidacy list with his loyalists in a general election will likely return with more capital if they become part of government or the legislative body, making a post-GE overthrow harder. The pre-GE candidate selection process can be used as an anticipatory tool to stamp out potential future threats in the party long before the party election is held.
To a smaller degree, the amendment also disincentivises reform and performance by elected party officers who enjoy the security of tenure. In a virtually guaranteed 5-year term, elected members are likely to take it easy and only pick up on their work when party election approaches.[34] Rejuvenation, reforms and course correction are less likely now since the party has severed midterm party elections which would have continued to serve as a vital feedback loop.[35]
Although the 60-month term remains optional and the previous default 36-month term remains on paper, the option will likely be exercised. The provision can always be interpreted in line with the President’s desire for maximum time in power.[36] Moreover, ever since the first 18-month delay was allowed under Mahathir, all UMNO Presidents have used it, even reforming Presidents like Abdullah Badawi and Najib Abdul Razak.[37]
On a balance of probabilities, it can be argued that the effective term period for UMNO office bearers have now been extended to 66 months; it is this that will deter performance and reform efforts.
B. No-contest motion for top 2 posts in UMNO
Despite Zahid Hamidi’s apparent willingness to open up the top two posts—President and Deputy President—for contest before 2023,[38] a delegate motion of no-contest for these posts was passed on 14 January 2023. This was the first time a no-contest was passed through a delegate motion at the General Assembly (or “PAU”). Before that, no-contests were secured as an SC advice or resolution, and/or through structural engineering, such as using the innovative bonus and quota system.[39] While the top two posts were rarely contested in the past—the last two presidential contests were 31 years apart, in 1987 and 2018—they were still a technical possibility. This delegate motion shuts that out, creating a ‘disguised autocracy’ by limiting the voters’ freedom of choice.[40]
At that time, Zahid Hamidi did not follow the practice of bringing the no-contest motion to the SC and announcing an advice or resolution after; this was because there was no guarantee he would succeed in barring contests. If he failed, there was no guarantee that he would win the contests since opposition was building up following UMNO’s worst-ever electoral performance two months earlier. Resorting to an unprecedented method of deploying a delegate-led no-contest motion,[41] while ‘sneaky’,[42] was the surest way of closing off contests.
Generally, no-contest at the top gives a ‘false sense of security and popularity’ to the leaders.[43] Leaving open a technical possibility of contests is important in a Malay party because it could be used as a signal to the leaders to step down from their positions if they had overstayed their usefulness.[44]
Former prime minister and UMNO Vice President Ismail Sabri argued that the no-contest motion was invalid because it had violated Article 9.3 of the UMNO Constitution (UC) which states that the top leadership positions ‘shall’ be elected every three years.[45] In other words, even if the motion was tabled as an SC motion at PAU after discussions and debates, it would not be valid since the UC demands that contests must be a technical possibility. Past court cases relating to the interpretation of ‘shall’ and ‘may’ showed that the overall intention and consequences of the interpretation matters more than the exact wording.[46] Since UMNO is set up as a party with a democratic process of elections, it could only be interpreted that an election ‘shall’ be had for the highest posts.
In fact, a leaked official letter showed that the RoS found the no-contest motion in violation of Article 9.3 which necessitates corrective measures.[47] Subsequently, the Home Minister on 7 March 2023 exempted UMNO from the effects of Section 13 of the Societies Act 1966 which governs the cancellation and suspension of societies.[48] Curiously, this decision referenced Section 70 of the same Act, which stipulates the Minister’s discretion to exempt compliance with the same Act. These unusual interventions underscore the case that UMNO’s no-contest motion amounted to a legal infraction.[49]
It is likely that the Home Ministry’s exemption is a one-off matter, and is unlikely to be made a practice in future UMNO party elections. However, the upshot remains the same, that is UMNO as a party has reverted back to its norm of not opening up the top two positions for contests. A delegate motion was a last resort to limit brewing dissent. Now with a loyalist-dominated SC, future no-contest advice or resolutions will likely pass, and the backing of the candidate selection powers from the party election postponement should secure the no-contest by default.
As no-contests persist as a norm, the status quo will likely remain. While contesting lower positions is still possible, the top two no-contest practice creates a chilling effect for members to fall in line.[50]
C. High-profile sacking and suspensions of party members
Almost two weeks after the no-contest motion was passed, UMNO announced that a few high-profile party leaders, including Khairy Jamaluddin, Hishammuddin Hussein and Shahril Hamdan, were being sacked and suspended respectively from the party, shown in Table 2.[51]
Table 2: List of high-profile sackings and suspensions on 27 January 2023.
| No. | Member Name | Last held party leadership position | Disciplinary outcome |
| 1 | Khairy Jamaluddin | UMNO Youth Chief | Sacked |
| 2 | Noh Omar | Supreme Council member | Sacked[52] |
| 3 | Hishammuddin Hussein | Vice President | Suspended for 6 years |
| 4 | Shahril Sufian Hamdan | UMNO Information Chief and Deputy Youth Chief | Suspended for 6 years |
| 5 | Maulizan Bujang | Johor State Executive Committee member and Tebrau Division Chief | Suspended for 6 years |
| 6 | Mohd Salim Mohd Shariff | Jempol Division Chief | Suspended for 6 years |
NB: Other than Khairy and Noh Omar, 42 other members were also sacked.
According to Article 20.4 of the UC, the Disciplinary Board (or Lembaga Disiplin, “LD”) must listen to and be satisfied with the presence of a violation before deciding on the punishment(s) to be meted, if any. Article 20.5 of the UC also states that every layer of the party must report to their respective disciplinary units before submitting the case to the LD. The proper due process requires that the LD then make a recommendation to the management meeting, before the SC ultimately decides. On a balance of probabilities, there was no disciplinary report or investigations on these members before the final decision was made.
The case of Shahril Hamdan’s suspension is instructive of the overall sacking and suspension process during this period. Unlike Khairy Jamaluddin or Hishammuddin Hussein, whose public statements and manoeuvres could be classified as violations of the broad obligations of members (Article 6 of UC), however tenuous, it was much more difficult to penalise Shahril Hamdan for a disciplinary transgression. Shahril was part of Zahid Hamidi’s apparatus prior to his suspension, having served as the party’s Deputy Youth Chief and Information Chief. Indeed, in the letter that was passed indirectly to Shahril via WhatsApp a few days later, there was only a reference to the UC clause being violated,[53] without specifics on which actions were found to violate those clauses. This was a clear violation of due process, an essential component to natural justice, as ‘no man should be condemned unheard’.[54]
Without a clear delineation of the transgressions, it is impossible to assess if the punishments have been proportionate.[55] Proportionality is an emerging natural justice doctrine in Malaysia, whereby its violation would render the punishment ultra vires (beyond legal authority prescribed). Taken in total, it can be argued that the sackings and suspensions were private decisions made by the President without due process, based on an LD report that was not seen by the leaders or the victims involved, and that might not exist at all.
ZAHID HAMIDI’S LASTING LEGACY AND THE OUTLOOK FOR UMNO
Deprived of executive premiership, Zahid Hamidi started his UMNO presidency as the most disadvantaged President in the party’s history. He did not have the state largesse to keep his supporters loyal or the executive apparatus to eliminate enemies like his predecessors had had. However, he maximally deployed this disadvantage to elicit party sympathy, filling his speeches and public statements with commissive and self-victimisation claims.[56] He painted himself as a selfless party-first leader (“I do not want any positions in the Cabinet”),[57] drawing attention to his unique absence of power as UMNO President (“Sorry I am only an UMNO President who doesn’t hold power”),[58] and contrasting his loyalty by demonising opponents as self-centred, power-hungry traitors (calling opponents “Seeking Livelihood Cluster” or Kluster Cari Makan, and “Afraid of Losing Power Cluster” or “Kluster Takut Bos Hilang Kuasa”).[59]
This worked well with sympathetic party members, who remembered him for taking responsibility in leading the party when UMNO was at its lowest point, even though they acknowledged the contrary view outsiders share.[60]
As a non-Prime Minister UMNO President, Zahid Hamidi focused on consolidating power within the party and fully exploited every tool he had, creating far-reaching changes to the structure of the party.
Cumulatively, the three major decisions discussed in this paper virtually shut off any reasonable opportunity for dissent. Hypothetically, even if a popular leader with substantial grassroots backing were to stage a democratic overthrow of Zahid, like Khairy Jamaluddin tried to do in 2018, that option is closed now. This is not only because a no-contest for the top two posts is further entrenched in the norm, but also that dissent, however reasonable, is dramatically less likely now given the guaranteed candidate selection powers held by the UMNO President. Even if a hypothetical rebel succeeds in shaking up the party by mobilising widespread dissent, the arbitrary and personal exercise of sacking and suspension by the UMNO President could immediately uproot any challenge. Save for the President’s goodwill, it is highly unlikely for democratic contests to occur organically in UMNO’s new structure.
At the time of writing, two UMNO members, together with a coalition colleague, have filed for a judicial review against UMNO, the Home Minister, RoS, and the Malaysian government for exempting the no-contest motion from compliance. They seek an order to quash the Home Minister’s exemption, besides seeking a declaration that the posts should be open for contest, among others.[61] However, even if the case has merits, there may be procedural challenges that may defeat such suits.[62] First, Article 20.7 of the UC allows the party to terminate a member’s party membership upon bringing any party decision to court, which may result in the UMNO members losing the necessary locus standi to proceed. Second, the judge may not entertain the challenge, considering it non-justiciable for reasons of the UMNO decision being a private law, laches (period lapsed), or requiring the members to exhaust all domestic party-based remedies.
UMNO is expected to become an increasingly reactionary party, as reforms will be less likely to materialise without internal dissent. Each President and his appointee’s tenure will be longer, which makes reforms less urgent, as party office bearers now have reduced accountability to their members. These structural decisions by Zahid Hamidi are also unlikely to be reversed in the medium-term as every President holding the position will likely want to retain the chief benefit of selecting general election candidates and securing a longer tenure. If there are any reforms at all, these will depend on the personalities holding the presidency, and this necessarily makes UMNO a personality-driven party, where the highest successes and failures are an extension of the President.
Since many Malaysian voters, especially youths, have avoided voting for UMNO because of Zahid Hamidi, it is sensible to assume that the decline in electoral power will continue at an accelerated pace.
In the past, experts argued that the UMNO Presidency was strong because of its merger with the role of the Prime Minister. What Zahid Hamidi has shown, however, is that the UMNO presidency on its own is powerful even without the executive power; he has wielded every tool at his disposal and made his position unchallengeable, even by the best opponents. Zahid has been successful in converting his disadvantage into an advantage, but whether he can reverse UMNO’s decline remains to be seen.
ANNEX A
UMNO Supreme Council Structure[63]
NB: Appointments are the sole prerogative of the President.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/58 “Governing the Digital Economy in Thailand: Domestic Regulations and International Agreements” by Antonio Postigo
EXECUTIVE SUMMARY
- Thailand is among the ASEAN countries that have seen the most rapid growth in digital infrastructure and e-commerce since the COVID-19 pandemic.
- In a 2022 study conducted by the Asian Development Bank, Thailand was among just eight countries in the Asia-Pacific region that have implemented comprehensive legislation governing digital trade.
- In the absence of a multilateral agreement, Thailand, like many other countries, is leveraging its participation in FTAs to shape global rules for digital trade; but this approach requires significant administrative resources and can lead to regulatory fragmentation and increased business costs.
- Alternatively, the standalone Digital Economy Partnership Agreement (DEPA) is emerging as a key consensus-building platform towards a multilateral digital economy regime that Thailand may consider joining.
* Antonio Postigo is Associate Fellow at ISEAS – Yusof Ishak Institute, Singapore, Visiting Fellow at the Department of International Development, London School of Economics and Political Science (LSE), London, United Kingdom, and Senior Research Fellow at the Barcelona Institute of International Studies (IBEI), Barcelona, Spain.
ISEAS Perspective 2023/58, 24 July 2023
INTRODUCTION
The world economy is increasingly dependent on the cross-border flow of digital information. Data can serve as inputs to a final product, function as final products themselves, or facilitate the production and/or trade of other goods. Between 2007 and 2017, the flow of data increased by more than 20 times.[1] The COVID-19 pandemic has accelerated the digital transformation of many economies and boosted digital trade. At the same time, the rapid digitalisation of the global economy has prompted national governments to introduce new legislation, often leading to increased regulatory fragmentation and barriers to digital trade.[2]
While there is no single definition of digital trade, the comprehensive definition proposed by the OECD as “digitally enabled or digitally ordered cross-border transactions in goods and services that can be delivered digitally or physically”[3] has gained widespread acceptance. While electronic commerce (e-commerce) is the most commonly reported component of digital trade because it is the easiest to assess, it is just one element on the broader digital trade landscape.[4] Estimates suggest that a 20% increase in the size of the digital sector from the 2020 baseline would result in a 5.4% global output increase and a 6.1% increase in Asia’s gross domestic product by 2025.[5] Similarly, a 10% increase in digital connectivity can boost trade in goods and services by 4% and 3%, respectively.[6]
Since the onset of the COVID-19 pandemic in March 2020, there has been a surge in digitalisation accompanied by an increase in legislation related to digital trade. However, many developing countries either lack entirely or have insufficient digital trade legislation.[7] At the same time, certain domestic regulations can create barriers to digital trade, including:[8] a) Forced data localisation: While data localisation measures can enhance data privacy, consumer protection, and cybersecurity, they can also limit firms’ access to global networks[9]; b) Customs duties on electronic transmissions: In 1998, WTO members agreed to a moratorium on tariffs for electronic transmissions (see below), which requires periodic renewal;[10] and c) Inconsistency and lack of interoperability between national regulations.
To assess the restrictiveness of domestic regulations on digital trade, several indexes have been developed. The United Nations Economic and Social Commission for Asia and the Pacific (UN-ESCAP) has created the Regional Digital Trade Integration Index (RDTII), which measures regulatory measures affecting digital trade integration.[11] Additionally, the Organisation for Economic Co-operation and Development (OECD) has compiled the Computer Services Trade Restrictiveness (STRI) and Digital Services Trade Restrictiveness (DSTRI) indexes, which quantify regulatory barriers impacting trade in services, including digitally-enabled services.[12]
THE DIGITAL ECONOMY IN THAILAND
In 2021, e-commerce alone in ASEAN was valued at US$170 billion in gross merchandise value and is projected to reach US$360 billion by 2025 and US$1 trillion by 2030.[13] Thailand is one of the countries in ASEAN and Asia that witnessed the fastest growth in digital infrastructure and accessibility, a trend that has been further accelerated by the COVID-19 pandemic (Table 1).
Thailand boasts the second-largest penetration of e-consumers in ASEAN, at 48 million internet users and 9 million new digital consumers since the start of the pandemic until mid-2021. Notably, 67% of these users are located outside the Bangkok area. In 2021, the internet economy in Thailand reached US$30 billion in global merchandise value, marking a 51% increase compared to 2020, and is expected to reach US$57 billion by 2025. Thai e-commerce alone accounted for US$21 billion in 2021, ranking 19th globally in terms of value.[14]
Table 1: Selected digital indicators in Thailand
* Population between 16 and 64 years old.
Abbreviation: The PDPA = Personal Data Protection Act
Sources: Bangkok Post 2 July 2021; 3 September 2021; and 27 August 2022;
Thailand Digital Outlook 2022 (https://tdo.onde.go.th/)
The digitalisation wave has also transformed numerous service sectors in Thailand, with most notable advancements observed in financial services. Foreign investment in digital services has surged, particularly in e-commerce, fintech, e-health, and online education. This growth has been driven by increased Internet and mobile phone penetration, as well as the improvement of logistics and e-payment systems.[15] In terms of e-commerce transactions, 50% are business-to-consumer (B2C), followed by business-to-business (B2B) at 27%, and business-to-government (B2G) at 23%.[16] One-third of B2B e-commerce transactions are in the food and service sector, with manufacturing at 16% and retail and wholesale at 15%.
In 2016, Thailand introduced the Thailand 4.0 Strategy, aiming to transition the country to developed status through an industrial transformation in ten key sectors, including digital industries, and position Thailand as ASEAN’s innovation and knowledge-based digital hub.[17] Similar to traditional industries like automotive, electronics, petrochemicals, and heavy industries, Thailand has prioritised digital transformation in the Eastern Economic Corridor (EEC), which accounted for 60% of total FDI inflows in 2021.[18]
Furthermore, in recent years, Thailand has implemented several projects to promote and strengthen the digital economy and digital transformation across various dimensions.
First, in the e-commerce ecosystem, the Department of International Trade Promotion (DITP) at the Ministry of Commerce established Thaitrade.com in 2011. Thaitrade.com serves as a B2B electronic marketplace connecting over 25,000 Thai exporting firms, particularly small and medium enterprises (SMEs), with international importers.[19]
Second, to bolster digital infrastructure, Thailand initiated the construction within the EEC of the Digital Park Thailand in late 2021.[20]This public-private partnership aims to promote the development of digital infrastructure, enhance digital connectivity and aspires for the Park to become an ASEAN hub for digital innovation by attracting high technology and digital industries. [21]
Third, to facilitate trade, encompassing both digitally enabled and digitally delivered goods as well as traditional goods and services, Thailand launched the pilot stage of the National Digital Trade Platform (NDTP) in September 2022.[22] The NDTP will serve as the centralised point for communication and electronic document delivery between trading partners.[23] The NDTP is linked with Thai facilities such as the National Single Window and will be integrated with similar digital platforms in other countries.[24]
DOMESTIC REGULATIONS ON DIGITAL TRADE
In 2016, Thailand launched the Office of the National Digital Economy and Society Commission to draft national policies for the digital economy and society. A year later, a Digital Economy Promotion Agency was created to facilitate the growth of digital industries and promote the use of digital technologies. Both have been later integrated into the Ministry of Digital Economy and Society, which was established in October 2016 as a replacement for the Ministry of Information and Communication Technology.[25] The Digital Development for Economy and Society Act (2017) established the legal framework for the digital development of both the economy and society in Thailand.[26] It also created a Digital Economy and Society Development Fund to finance future digital economy and social development plans.
In the past five years, Thailand has introduced a substantial number of new regulations concerning the digital economy.[27] According to a recent ADB report,[28] Thailand is one of only eight countries among the 49 surveyed in the Asia-Pacific region which has implemented digital trade legislation. The current Thai regulatory framework on digital trade encompasses various dimensions, including electronic transactions, consumer protection, privacy, data protection, cybercrime, and the adoption of the United Nations Commission on International Trade Law (UNCITRAL) model law on e-commerce.[29].
The Electronic Transactions Act (2019) established the legal equivalence of electronic records and signatures with paper records and handwriting signatures.[30] All digital businesses in Thailand are required to register under the Commercial Registration Act.[31] The Personal Data Protection Act (PDPA) issued in June 2022, outlines the obligations for both overseas and domestic e-commerce businesses regarding the collection and use of personal data.[32] In December 2022, Thailand issued the Decree on Digital Platforms, which establishes the obligations of digital platform providers.[33]
Of note, the PDPA does not require data localisation, and Thailand has lower tariffs and non-tariff barriers on information and communication technology (ICT) goods compared to the Asia-Pacific average.[34] However, Thailand imposes stricter restrictions on foreign investments and the operations of telecommunication businesses, as well as on online sales and transactions. Consequently, Thailand’s score on the UN-ESCAP’s RDTII is higher (indicating more digital trade restricting policies) than the ASEAN and Asia-Pacific averages.[35] Thailand also receives higher scores (more restrictive) in both OECD’s indexes, with the fourth-highest DSTRI and second-highest STRI in ASEAN.
INTERNATIONAL GOVERNANCE OF THE DIGITAL ECONOMY
A plurilateral negotiating platform at the WTO, the Joint Initiative on Electronic Commerce (JIEC), was established in 2017 to build consensus on trade-related aspects of electronic commerce.[36] Progress among the current 86 JIEC members has been most notable in the following areas: online consumer protection, electronic signatures, spam, open government data, electronic contracts, transparency, paperless commerce, and open Internet access.[37]
The Asia-Pacific Economic Cooperation (APEC) has launched discussions among interested members on trade facilitation and data privacy and on making the WTO moratorium on electronic transmissions permanent.[38] Despite these efforts, variations in national regulatory frameworks and the absence of multilateral rules and standards governing digital trade and data-driven markets can create what some authors refer to as a “digital noodle bowl”, which entails additional costs for businesses.[39]
While a multilateral digital trade agreement materialises, countries are relying on regional and bilateral free trade agreements (FTAs) as well as ad hoc digital economy agreements as the main mechanisms to establish international rules on digital trade. As of May 2023, there were 356 free trade agreements (FTAs) in force, with over half of them implemented in the last decade incorporating provisions related to digital trade.[40]
However, analyses of digital trade provisions in FTAs reveal a fragmented landscape, with three primary templates for digital chapters emerging in FTAs: those led by China, the European Union (EU), and the United States (US).[41] Digital trade provisions in Chinese FTAs tend to be less comprehensive and focus on facilitation and e-commerce; provision in the EU’s and the US’ FTAs are broader and deeper, and while the EU’s FTAs emphasise personal data protection, the US’ FTAs stress non-discrimination of digital products provisions. [42]
Although digital trade chapters have been included in many recent FTAs, the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) distinguish themselves through their extensive geographic reach and comprehensive provisions on digital trade rules.[43] RCEP’s liberalisation in traditional goods trade and other trade-related issues is less comprehensive and deep than the CPTPP.[44] The digital trade in the RCEP overlaps with that of the CPTPP in areas such as paperless commerce, electronic signatures, and online consumer protection. However, the RCEP, which is shaped by the digital trade framework of its members, especially ASEAN and China, allows for greater flexibility in restricting data flows if it is deemed necessary to achieve legitimate public policy objectives or protect security interests. In contrast, the CPTPP, building upon the initial membership of the US in its predecessor (the Trans-Pacific Partnership, TPP), incorporates the US model of digital trade provisions in FTAs, including non-discrimination of digital products, prohibition of source code access, prohibition of localisation requirements, and prohibition of cross-border data transfer restrictions, thereby emphasising open data flows.[45]
In December 2021, ASEAN implemented the ASEAN Agreement on E-Commerce, which closely aligns with the digital chapter in the RCEP covering various digital trade rules on cross-border trade facilitation, electronic payments, internet neutrality, personal data, and consumer protection.[46] Also, like the RCEP, the agreement does not include provisions on non-discrimination of digital products or restrictions on source code requirements.
Among the FTAs that ASEAN has already implemented with Australia/New Zealand, China, Hong Kong, India, Japan and South Korea, only the first FTA (AANZFTA) has been upgraded to include a digital chapter.[47] The e-commerce chapter in the AANZFTA, which could serve as a model for other ASEAN’s FTAs, covers various digital trade issues such as transparency, consumer protection, online personal data protection, authentication, certification, electronic signatures, and paperless trade administration. However, it does not include applicability of WTO rules (e.g., digital service supply), non-discriminatory treatment of digital products, or the moratorium on tariffs on digital products.
Thailand participates in the WTO’s JSIEC but, like other countries, has leveraged its engagement in FTAs to shape global rules and standards for digital trade. It has implemented six bilateral FTAs and is a party to eight regional agreements, namely ASEAN, the six ASEAN-centred FTAs, and the RCEP (Table 2).[48]
Among the bilateral FTAs, only the Thailand-Australia (TAFTA) and Thailand-New Zealand (NZTCEP) FTAs contain digital provisions, albeit that they are fairly generic.[49] Both FTAs include provisions on consumer protection, online personal data, paperless trade administration, customs facilitation, applicability of WTO rules to e-commerce, and a pledge to follow UNCITRAL’s model law. Unlike the NZTCEP, TAFTA also includes provisions on authentication, certification, electronic signatures, the applicability of trade rules to digital services, and a moratorium on tariffs on digital products.[50]
All members of ASEAN are part of the RCEP, but only Brunei Darussalam, Malaysia, Singapore, and Vietnam are members of the CPTPP (Table 2). While the Thai government has expressed interest in the CPTPP, it has not yet joined due to strong opposition from civil society organisations.[51]
Table 2: Digital provisions in the FTAs and digital agreements participated by Thailand and other ASEAN countries
Abbreviations: AANZFTA: ASEAN-Australia-New Zealand FTA; EU: The European
Union; GCC: Gulf Cooperation Council; US: The United States of America
Sources: Honey (2021); ADB (2022); Corning (2023); WTO-JIEC (undated)
Beyond FTAs, some countries are negotiating standalone bilateral or plurilateral digital economy agreements. For example, the US and Japan have signed an agreement on digital trade.[52] Singapore has taken a leading role in establishing international rules and standards for the digital economy and has bilateral digital partnerships with Australia (2020), the United Kingdom (2022), the European Union (2023), and South Korea (2023). But it is the Digital Economy Partnership Agreement (DEPA) signed by Singapore with Chile and New Zealand in 2020 that has garnered the greatest attention.
Unlike other digital agreements, DEPA is an “open agreement” that allows for the inclusion of additional countries.[53] South Korea, Canada, and China have initiated negotiations to join DEPA, potentially giving the agreement the necessary critical mass to become a consensus-building platform in the harmonisation or convergence toward a multilateral digital economy regime. In May 2022, Singapore extended an invitation to Thailand to join DEPA, and both countries have signed a memorandum of understanding (MoU) covering several key issues of the digital economy.[54] However, Thailand is still to decide whether it will join DEPA or not.
Another distinctive feature of DEPA is its modular approach. DEPA is organised into 16 modules, each addressing specific aspects of the digital economy. This allows for future revisions as the digital economy evolves and new issues arise. It also offers flexibility, allowing countries to join DEPA in its entirety or incorporate specific modules into their domestic policies or other trade negotiations.[55]
While DEPA and other bilateral digital agreements do not address traditional issues like cross-border services, financial services, and intellectual property included in FTAs, they offer greater coverage in terms of the digital economy.[56] DEPA and Singapore’s bilateral digital partnerships align with the CPTPP digital trade template, encompassing provisions on data flows, data localisation, electronic transactions, and non-discrimination of digital products. However, its scope extends beyond digital trade, aiming to cover the entire value chain and various aspects of the digital economy, like open government data, internet access, competition, fintech and e-invoicing.
EXPLORING THAILAND’S FUTURE CHOICES IN DIGITAL ECONOMY GOVERNANCE
While FTAs and standalone digital agreements have made important strides in building an international digital trade regime, there is still a pressing need for substantial progress at the multilateral level through the JIEC. An agreement facilitated by the WTO offers distinct advantages.
Firstly, it can better accommodate the “special and differential treatment” for developing and least developed countries compared to FTAs. Secondly, it enables the integration of rules for digital trade with those governing traditional goods, services, and intellectual property rights. Most importantly, it ensures interoperability and prevents fragmentation within the digital trade system. However, the institutional gridlock within the WTO hampers negotiations and makes it unlikely for any digital trade agreement to be reached quickly.[57]
In this scenario, Thailand faces the decision of whether to upgrade its existing FTAs to include digital trade rules, join the CPTPP with its more comprehensive digital chapter compared with RCEP, or join DEPA.
Upgrading existing FTAs to include digital trade rules with specific partners allows for the customisation of digital trade provisions based on bilateral or regional needs. This approach will require significant administrative resources and contribute to increased regulatory fragmentation and higher costs of doing business.
Joining the CPTPP would grant Thailand access to a more comprehensive digital chapter, compared to the RCEP. However, it would also require Thailand to meet a broader and more extensive set of requirements in other trade-related areas and could limit the policy space to implement certain developmental strategies.
Finally, and due to the evolving nature of the digital economy, a standalone and adaptable digital agreement such as DEPA can more adequately and rapidly address the barriers encountered by businesses better than FTAs. Although DEPA’s membership is still small, several major economies have expressed interest in joining it.
The existing MoU and the range of cooperative efforts in the digital economy between Singapore and Thailand have the potential to generate momentum for Thailand’s membership in DEPA. Early membership will also provide Thailand with the opportunity to actively participate in shaping the agenda of the agreement.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/57 “Indonesia’s Appointed Leaders and the Future of Regional Elections” by Ian Wilson
EXECUTIVE SUMMARY
- By the end of 2023, there will be 271 interim regional heads who are appointed rather than elected, accounting for more than half of the regional leadership posts throughout Indonesia.
- The legal basis of the interim leader appointment process has been contentious and subject to challenge, especially when some of the appointees have a substantial term in office before the next election, or when they execute significant policy changes.
- Critics argue that handpicked interim leaders are beholden to those who have appointed them and would use the advantages of incumbency to promote central government interests, and unfairly favour some stakeholders over others in the 2024 elections.
- The phenomenon of appointed interim leaders has intertwined with renewed questioning by political parties and elites of the legitimacy and future of regional elections with senior government ministers, among others, proposing a return to the political appointment of regional leaders and the ending of democratic elections.
* Ian Wilson is Senior Lecturer, Politics and Security Studies, Co-Director (interim) of the Indo-Pacific Research Centre, at Murdoch University, Australia, and Visiting Fellow at ISEAS – Yusof Ishak Institute.
ISEAS Perspective 2023/57, 19 July 2023
INTRODUCTION
In July 2022, Ahmad Marzuki, recently retired commander of the Iskandar Muda military command, was appointed interim governor of Aceh. Aceh had just emerged in 2005 out of decades of armed conflict, and its post-peace-accord politics had been dominated by Partai Aceh, a local party established by former Free Aceh Movement rebels. The selection of a non-Acehnese military man to that position was therefore surprising. Marzuki was not popularly elected,[1] and was in fact appointed by the Minister of Home Affairs, Tito, from three names proposed by Aceh’s regional parliament. The significance of the Minister’s preferred choice was not lost on many, with one Aceh Party parliamentarian commenting that “Jakarta has chosen a Jakarta person to sort out Aceh; what kind of message do you think that sends?”.[2]
By the end of 2023, there will be as many as 271 interim regional leaders throughout Indonesia, representing over half the total number of provinces, regencies and cities in the country. These interim appointees will be in office until after regional elections in November 2024, and throughout presidential and legislative elections scheduled for February that year.
The legislative basis for the appointment of interim regional leaders is Article 201 of the 2016 Electoral Law (UU No. 10), which stipulates that all regional elections (Pilkada) be held simultaneously in November 2024. This means that elected terms ending prior to 2024 will result in vacant positions. Rather than holding by-elections to fill these vacancies, the law specifies that these be filled by interim appointments.
BORN OF A LEGISLATIVE COUP
To understand the broader implications of the appointment of interim leaders for the 2024 election, it is important to first situate it within the context of the recent history of legislative and political challenges to the status of regional elections.
The 2016 Pilkada law, upon which interim appointments are based, emerged out of a tumultuous period during which regional elections were momentarily ended via what amounted to a legislative coup. In September 2014, five months after presidential and legislative elections were won by Jokowi and the PDI-P, the Koalisi Merah Putih, the six-party coalition known to have backed the losing presidential candidate Prabowo Subianto, used the final moments of its parliamentary majority to pass the Regional Elections law (UU Pilkada).[3] Central to the legislation was the replacement of direct elections with the appointment of regional leaders by parliament. It coalesced the antipathy held by many parties to the unpredictability and the attendant costs and risks of popular elections, together with entrenched ideological opposition towards liberal and participatory democracy.[4]
The argument against popular elections was that they created ‘division’, sowed discord, encouraged corruption and conflicted with the Pancasila, echoing New Order era characterisations of the unsuitability of electoral democracy in the Indonesian context. Outside of the party coalition, support for the change also came from Nahdlatul Ulama, whose leadership stated that regional and legislative elections “wrecked the spirit of Indonesia”.[5]
The 2014 legislation was short-lived, however. Responding to public outcry, outgoing president Yudhoyono overturned it via two presidential decrees in his last weeks in office, and reinstated direct regional elections.[6] This reversal was passed in early 2015 by a DPR now dominated by the PDI-P after the 2015 regional elections; this was however recognised to be insufficient in the long term. The law underwent further revisions in 2016, and again in 2020. Through this process, a majority consensus developed among parliamentary factions that Pilkada should be held in 2024, cancelling all other elections scheduled for 2022 and 2023, and thus producing the need for interim regional leaders.[7]
NOT JUST ANOTHER CARETAKER
Caretaker administrations are a common and largely uncontentious part of many electoral systems. Generally, interim administrations operate with limited executive authority and mandate during short periods before elections or post-election, or in moments of political crisis. Indonesia’s interim leaders, however, differ in several ways.
One is the length of the appointment. The first interim leaders took office in early 2022, over 34 months prior to regional elections scheduled for November 2024. This constitutes over half of a full elected term. Regional Government Law 23, 2014, stipulates, however that interim leaders should not be in office longer than one year.[8] Subsequently, interim leaders are subject to performance reviews after 12-months with the possibility of a further extension. The review process for governors has been conducted by the Home Affairs Ministry with performance ostensibly assessed against three sets of criteria: evidence of improvements to public services; achieving progress on development indicators via the use of regional budgets; and maintaining public order.[9] Others include facilitating ease of investment, and tackling inflation and unemployment.[10] There is a clear expectation that interim leaders will use their time in office to actively govern and make significant changes in line with national government priorities ‘unburdened by political interest’, rather than operate in a caretaker mode or continue the policies of their predecessors.[11]
To do so, and in contrast to many caretaker administrations, Indonesia’s interim regional leaders enjoy wide-ranging executive power. Governmental regulations from 2008 suggest some significant limits, such as prohibiting the replacing of government officials, retracting of permits, and instigating of policies that conflict with those of the central government or the previous administration.[12] There was, however, an important caveat, i.e. “except with the permission of the Minister of Home Affairs”.[13] In late 2022 the Home Affairs Minister issued a ministerial circular effectively granting interim leaders the authority to remove and replace government officials. In practice, new policy directions have also not faced censure as long as these have been assessed by the Ministry to be in keeping with national government priorities.[14] This Ministry-mandated authority has to date been variably deployed, from replacement of officials appointed by previous administrations and significant policy shifts. Be that as it may, without a political mandate granted by a constituency, interim leaders are highly susceptible to pressure from regional parliaments, but even more so the Ministry of Home Affairs, which remains their appointer, performance assessor and, in effect, political master.[15]
This has been evident in Jakarta, where the interim governor is Heru Budi Hartono, a former mayor of North Jakarta and head of the Presidential Secretariat, who was handpicked for the role by President Jokowi.[16] Since coming to office in October 2022, Heru has disbanded the Accelerated Development Team (TGUPP) that advised the governor, overhauled the directorship of the Jakarta-government owned property, infrastructure and utilities company Jakarta Property (Jakpro), replaced the Regional Secretary, and appointed a long-term critic of the previous administration of Anies Baswedan as commissioner of the government-owned Light Rail Transit Corporation (PT LRT).[17] Several signature policies carried out by Baswedan, such as widening pedestrian sidewalks, have also been reversed.[18] Also, the close consultation with urban poor groups and their advocates which characterised the previous administration has come to an abrupt halt.[19]
With Baswedan now a 2024 presidential candidate seeking to campaign on his policy achievements as governor of Jakarta, Heru, and by extension the Minister of Home Affairs, have been accused of politically weaponising his time in office.[20] Praised by the PDI-P for continuing the policies of Jokowi and Ahok, he has now been touted as one of the party’s preferred candidates for governor in 2024.[21] There is currently no legal impediment to interim leaders running in the 2024 elections. Handpicked by the national government, interim leaders who run will enjoy the significant strategic and resource advantages stemming from incumbency.
APPOINTMENT PROBLEMS
Perhaps unsurprisingly, the process of interim leader appointment has been highly contentious. The 2016 election law upon which interim leadership is based is scant on substantive details. It was not until April 2023, after the appointment of over 150 interim leaders and significant sustained pressure, that the Ministry of Home Affairs issued a Ministerial Regulation that nominally outlined an appointment procedure.[22]
The earlier absence of a clear or transparent process and opportunities for public input has resulted in accusations of political manipulation, with the legislative basis of interim appointments being subjected to repeated legal challenges.[23] In February 2022, five citizens requested a judicial review of Article 201 of the 2016 Electoral Law (UU Pilkada). In May of the same year, the Urban Poor Network (Jaringan Rakyat Miskin Kota, or JRMK) launched a constitutional challenge arguing that the appointment of interim leaders amounted to a “coup d’etat” that denied members of the network their constitutional right to representation, while the Regent of Mandailing Natal, North Sumatera, contested the constitutionality of the 2016 legislation on the grounds that it reduced his elected term from five to four years.[24] In all three cases, the constitutional court concluded that interim appointments are constitutionally valid. In its judicial review ruling, however, the court did request that the government legislate a technical process of appointment broadly guided by principles that were “democratic’, transparent, and accountable”.[25]
Despite this, and despite a damning report by the National Ombudsman that labelled the appointment process as marred by maladministration, the Ministry of Home Affairs remained steadfastly recalcitrant.[26] Minister Karnavian has instead engaged in a counter-polemic insisting that an appointment process involving any kind of voting process or public participation was ‘impractical’, and that a more pragmatic “filtering of aspirations” which was, according to the Minister, fundamentally “democratic in nature” was used instead.[27]
This ‘filtering’ has required regional parliaments forwarding the names of three potential candidates to the Home Affairs Ministry for consideration.[28] These are then evaluated by the Home Affairs Minister in coordination with other Ministries, and with the approval of the President.[29] Even here, however, the role of the DPRD has been routinely sidelined, and numerous appointments have been made by the Ministry outside of DPRD recommendations.[30] In other instances, Ministry-appointed governors have forwarded names of candidates for Bupati without consulting the DPRD.[31] This has generated some disquiet. In the case of Jayapura, the DPRD responded to the imposition of interim-Bupati by questioning the central government’s commitment to Papua’s special autonomy.[32]
Indonesia Corruption Watch (ICW) has argued that the wider pattern of interim appointments indicates that a key criterion in the process is “closeness” to the central government.[33] As can been seen in Table 1, most governors appointed in 2022 came from state ministries. The structural relationship is one of deference to the priorities and interests of central government, rather than those of the local and regional constituencies, be it the economic importance of mining and sand exports in the case of Bangka Belitung, or political security in the case of West Papua and Aceh.[34]
Table 1: Interim governors appointed in 2022
| Province | Name | Position | Institution |
| Aceh | Achmad Marzuki | Special Staff | Ministry of Home Affairs |
| South Papua | Apolo Safanpo | Special Staff | Ministry of Home Affairs |
| Central Papua | Ribka Haluk | Special Staff | Ministry of Home Affairs |
| West Sulawesi | Akmal Malik | Director-General of Regional Autonomy | Ministry of Home Affairs |
| Banten | Al Muktabar | Banten Regional Secretary | Regional Secretariat |
| Jakarta | Heru Budi Hartono | Head of Presidential Secretariat | State Secretariat |
| Bangka Belitung | Ridwan Djamaluddin | Director-General of Minerals and Coal | Ministry of Energy and Mineral Resources |
| Gorontalo | Hamka Hendra Noer | Special Staff | Ministry of Youth and Sport |
| West Papua | Paulus Waterpauw | Lieutenant-General | Police |
| Highland Papua | Nikolaus Kondomo | Special Staff | Attorney General |
IMPLICATIONS FOR THE 2024 ELECTIONS
There are two broad sets of implications that the phenomenon of interim regional leaders has for the 2024 elections.
The first is that interim leaders will go into election campaign periods with a national government-backed incumbency that will likely influence policy decisions and resource allocations. With close structural, if not personal, relationships to state ministries and the president, interim leaders can ‘campaign by stealth’ for or against presidential, legislative, or regional candidates, such as in the case of Jakarta.
Sustained resistance to the establishing of clear and transparent appointment processes on the part of the Ministry of Home Affairs and reliance on the Ministry’s own executive authority have however undermined its rhetoric about these being bastions of political neutrality. This has been further evidenced by patterns of appointment and by the prevalence of close ties to central government, together with the likelihood that some interim leaders will run for elected office in 2024. The latter challenges the idea that these are in fact caretaker administrations. This bullish approach is not without risks; it strains the relationship between some regional parliaments and the central government, resulting in questions about the fragile future of regional autonomy, together with public backlash over the imposition of non-local unelected candidates and policy change enacted without a public mandate.[35]
The second regards the broader implications for the long-term future of regional elections.[36]Despite the failure of Prabowo’s Koalisi Merah Putih in 2014, more political parties have since come to the table to question one of the most significant democratic reforms of the post-1998 period.
In February 2023, for example, Muhaimin Iskandar, the Chair of PKB and Deputy Chair of the DPR and a touted vice-presidential candidate, proposed ending elections for governor.[37] The Chair of the People’s Consultative Assembly (MPR), Bambang Soesatyo, reiterated the view that governors were “representatives of central government in the regions”, and as such should not be popularly elected, reigniting older debates over the status of provinces either as administrative units or as representative entities.[38]
The Indonesian Solidarity Party (PSI), a self-defined ‘youth’ party and a vocal supporter of President Jokowi, went even further, calling for a return to the New Order practice of direct presidential appointment of governors, arguably already in partial effect, given the interim governors, and the governance of Indonesia’s new capital, Nusantara.[39] Heralded by President Jokowi as a model for ‘a new Indonesia’, Nusantara will not have an elected leader, the equivalent of the current capital’s governor will be replaced by a chairman appointed directly by the president.[40]
The PDI-P, who opposed the 2014 legislative coup, has since developed a preference for more party and parliamentary power to be exercised over the appointment processes. Party leaders have been labelling direct regional head elections as “transactional” and “mired in nepotism and money politics”.[41] This shift is undoubtedly intertwined with their own political consolidation as the largest parliamentary faction, and with them holding the presidency.[42] This view was recently reiterated in an unsuccessful party-led Constitutional Court challenge of the 2017 electoral law, during which it was requested that the court impose a return to a closed-list voting-system, away from the current open-list approach. A key argument presented for this is that it is the party, and not the voting public, that was best suited to choose capable and appropriate leaders.[43]
CONCLUSION
In the face of this, perhaps the main defence for the continuation of direct regional elections is its public popularity, which has remained consistently high since its introduction in 2005. A survey conducted by Political Weather Station (PWS) in January 2023, for example, found that 80.9% were opposed to ending elections for regional leaders, including those for governor. This mirrors results from a survey done by Lingkaran Survei Indonesia (LSI) eight years earlier of supporters of the Koalisi Merah Putih Coalition, which found that 81.5% of these were in favour of direct elections.[44] Despite its well-known weaknesses and limitations, many Indonesians still consider direct elections an important vehicle for popular agency.
With the 2024 presidential and legislative elections only months away, the spectre of political interference in the process together with a significantly weakened capacity for civil oversight is looming large in public discourse.[45] This was highlighted in June following comments by President Jokowi that he was actively cawe-cawe or ‘meddling’ in the 2024 elections, to “ensure a smooth transition of power”.[46] The politics involved in the appointment of interim leaders has arguably been a case of systemic cawe-cawe.
It establishes a non-democratic norm for executive leadership appointment that is rationalised via appeals to efficiency, anti-corruption, and the ‘depoliticising’ of political power, and provides opportunities for the use of unelected incumbency to thwart electoral rivals. Interim leaders, in this respect, look something akin to a trial run for possible post-2024 scenarios in which there may be renewed legislative efforts to end elections for regional leadership positions.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |