Regional Outlook Forum 2020 – Disruption, Competition, and Collaboration

Thursday, 9 January 2020 – The 23rd Regional Outlook Forum (ROF) organised by ISEAS – Yusof Ishak Institute was held on 9 January 2020 at the Raffles City Convention City, attended by more than 660 registered participants.

The one-day event focused on macro trends, developments and challenges facing Southeast Asia in the immediate, short and medium-term, with insights from distinguished practitioners, scholars and intellectuals with international and regional reputation.

Mr Choi Shing Kwok, Director of ISEAS – Yusof Ishak Institute delivering the Welcome Remarks of 23rd Regional Outlook Forum on 9 January 2020. (Credit: ISEAS – Yusof Ishak Institute)

ROF2020 is in its 23rd year running. This year, more than 660 registered participants attended the event at Raffles City Convention Centre. They came from diverse backgrounds including the government and diplomatic community, the business and financial sectors, academia as well as domestic and international media.

The five sessions, with 11 speakers and five moderators in total, revolved around two broad themes.

The first theme focused on the intensification of the geo-strategic competition between the United States and China that will affect the outlook of countries in Southeast Asia. The second theme was related to pre- and post-election developments in a number of Southeast Asian countries, namely Myanmar (pre-election); and Indonesia, Malaysia, and Thailand (post-election) that would shape their political and economic landscape in the coming years ahead. Vietnam is emerging as a key Southeast Asian country for its strategic importance and economic dynamism. It is gearing up for the 13th Vietnamese Communist Party Congress in early 2021 and its economy also closely observed by analysts.

Session 1: Great Power Relationships: Choices for the United States and China, Consequences for All

Session 1 panel on Great Power Relationship Choices for the United States and China, Consequences for All. From left – Prof David Shambaugh, Prof Joseph Liow, Prof Francois Godemont, Prof Jia Qingguo (Credit: ISEAS – Yusof Ishak Institute) 

This session centred on the Great Power Rivalry between the United States and China. The moderator, Professor Joseph Liow Chin Yong (Dean of College of Humanities, Arts, and Social Sciences, Nanyang Technological University, Singapore), opened the panel discussion by highlighting the pressing need for countries in the Southeast Asian region to constructively manage differences in order to avoid conflict or hamper the pursuit of mutual interest, stability and growth, especially in the wake of the ongoing Sino-U.S. tensions.

The three panellists were Professor David Shambaugh (Gaston Sigur Professor of Asian Studies, Political Science & International Affairs, George Washington University), Professor François Godement (Senior Advisor for Asia, Institut Montaigne, Paris), and Professor Jia Qingguo (Professor and former Dean, School of International Studies, Peking University).

Professor David Shambaugh observed that we are again living in an era of Great Power Rivalry, with the Sino-U.S. bilateral tensions looming large and casting long shadows over the Asian region and the entire world. This has led many to believe that a new Cold War between the U.S. and China is emerging. Professor Shambaugh, however, explained that Sino-U.S. competition is multifaceted and not limited to the military-strategic domain, as it also extended into issues of diplomacy, economics (including trade, investment, aid, and standards), technology, political influence activities, ideology, competing models of development and governance, as well as culture and soft power. Although he carefully noted that there remain elements of cooperation and interdependence between the two powers, Professor Shambaugh argued that the “predominantly competitive” Sino-U.S. relationship will be the “new normal” for the foreseeable future.

Professor François Godement contextualised the current U.S.-China trade war in terms of a more general retreat from the post-war international order. Highlighting the increasing economic fragmentation and greater emphasis on sovereignty and self-sufficiency in countries across the world, he warned that the global order could “sputter and stop” if such trends were to take hold. He also expressed his scepticism about early predictions about the impact of the trade war. The trade conflict was supposed to hurt U.S. consumers and companies due to the loss of low-priced imports while China’s export sector was expected to be adversely affected. However, this has not proven to be the case. President Trump will be able to claim that the U.S. has managed an economic victory in cutting the trade deficit by more than USD 60 billion in 2019. Meanwhile, China has increased its share of global exports over this period. In sum, while both countries have weathered the trade war differently, they were able to do so without sustaining as much damage as predicted. As such, Professor Godement argued that the challenge against globalisation and commitment to trade liberalisation is much wider than the U.S.-China trade conflict.

Professor Jia Qingguo highlighted that despite the recent conclusion of the Phase One trade agreement between China and the U.S., the bilateral relationship remains in deep trouble, and is likely to get worse before it can improve. He explained that because confrontation will serve neither Chinese nor American interests, both powers should thus avoid confrontation while seeking to engage in cooperation where they can. However, while China has invested significant effort to stabilize the relationship, this has not been reciprocated by the U.S. As such, Professor Jia argued that it is necessary for China to resist American pressure and defend its national interests.

Session 2: Edging Ahead: Vietnam’s Leadership Transition And Economic Potential

Session 2 Panel on Edging Ahead Vietnam’s Leadership Transition and Economic Potential. From left – Dr Thaveeporn Vasavakul, Dr Le Hong Hiep, Dr Nguyen Dinh Cung (Credit: ISEAS – Yusof Ishak Institute)

Moderated by Dr Le Hong Hiep (Fellow, ISEAS – Yusof Ishak Institute), the second session of the day focused on Vietnam’s upcoming leadership transition and the ongoing U.S.-China trade war’s economic impact on the country. With Vietnam’s economy expanding by more than seven per cent in the previous year, Dr Hiep noted that the country is commanding increasing attention from investors across the globe and becoming one of the most vibrant economies in the region. 2020 is also set to be an important year for the country politically, as preparations begin for the Vietnamese Communist Party’s (VCP) 13th National Congress, which would set the direction for the country for at least the next five years. The speakers for this session were Dr Thaveeporn Vasavakul (Lead Specialist, Governance Support Facility Initiatives) and Dr Nguyen Dinh Cung (Senior Advisor, Central Institute for Economic Management)

Dr Thaveeporn Vasavakul argued that corruption remains the key political challenge facing Vietnam today. Corruption in Vietnam has evolved into multiple, mutually-enforcing forms consisting of bribery, appropriation of state property, and privatisation of state power. Corruption also manifests in the use of state management powers for personal or group benefit, especially in the arenas of law enforcement, policymaking, and personnel management. These are present across multiple sectors and administrative levels. Corruption in Vietnam is systemic, Dr Thaveeporn noted, having emerged with the country’s transition from central planning and becoming an integral part of the doi moi process itself. It has resulted largely from the concentration of state management power within the party-state institutions, the slow development of the rule of law, decentralisation, and weak accountability. These factors have interacted to give rise to sustained patronage networks based on vested economic interests within the party-state apparatus.

Dr Nguyen Dinh Cung focused his presentation on the relationship between Vietnamese economy and the ongoing U.S.-China trade war. Dr Cung pointed out that there has so far been no evidence of any negative impact from the trade war on Vietnam’s economy, with Vietnam’s GDP growth remaining high and its macroeconomic stability strengthening. The Vietnamese economy also appears to be resilient overall. The impact of the ongoing trade war on Vietnam has largely been mixed, despite the general optimism of Vietnam observers. Economic growth in 2019 was fuelled largely by domestic reforms, particularly the promotion of the private sector, and not FDI or an increase of exports. FDI in general has declined, with only investment from China increasing significantly. Despite optimism from observers that Vietnam’s ICT sector is set to take off due to a reallocation of investment from China, investors will face a shortage of both high- and low-skilled labour in Vietnam, leading to an increase in labour costs.

Session 3: Revert Or Reform: Indonesia Under Jokowi’s Second Term

Session 3 Panel on Revert or Reform Indonesia under Jokowi’s Second Term. From left, Dr Zainal Abidin Bagir, Prof Mari Pangestu, Dr Siwage Dharma Negara (Credit: ISEAS – Yusof Ishak Institute)

The session captured the challenges and opportunities under President Joko Widodo’s second term of administration. Moderated by Dr Siwage Dharma Negara (Senior Fellow and Co-Coordinator, Indonesia Studies Programme, ISEAS – Yusof Ishak Institute), the panel discussed the government responses to the current economic challenges and the rising conservatism facing the country. Professor Mari Elka Pangestu (Professor of International Economics, University of Indonesia) and Dr Zainal Abidin Bagir (Executive Director, Center of Religious and Cross Cultural Studies, Universitas Gadjah Mada) were the speakers for this session.

Professor Mari Elka Pangestu began the panel by outlining the main economic challenges and priorities for Jokowi’s second term. Given external uncertainties and disruptions, Professor Mari argued that the administration faces the challenge of attracting investments as well as making structural reforms a priority. This is necessary to achieve the next level of development, which would not only take into account economic growth but also climate change. Some of the external uncertainties that Professor Mari highlighted include the global economic slowdown, weak trade demand due to Sino-U.S. trade tension (which is not likely to be resolved soon), technological transformation and climate change. These uncertainties create both threats and opportunities in trade and investments for Indonesia.

Dr Zainal Abidin Bagir discussed how the image of Islam in Indonesia has been generally moderate and democratic, even though it was internally diverse and has a contentious political history. The post-New Order democratization in 1998 marked the beginning of the rise of ethnic and religious identity politics, which is now becoming an increasing fixture in Indonesian politics following Jokowi’s 2019 election victory. During his presentation, Dr Zainal surveyed the historical background of religion and politics in Indonesia in order to assess the challenges that Jokowi had faced in his first administration as well as those that he will face in the coming five years. While Indonesia is likely to be stable politically, there is a possibility for public disappointment as evidenced in the student protests of September 2019. Since Jokowi’s recent electoral victory, there has been considerable public disappointment over the weakening of the Corruption Eradication Commission (KPK) and a few proposed legislation, including draft revisions to the Penal Code.

Session 4: Arrested Development: The Cases of Thailand and Myanmar

Session 4 Panel on Arrested Development The Cases of Thailand and Myanmar. From left, Dr Prajak Kongkirati, Dr Michael Montesano, and Dr Richard Horsey. (Credit: ISEAS – Yusof Ishak Institute)

The fourth session was moderated by Dr Michael J. Montesano (Visiting Senior Fellow, Coordinator of the Thailand Studies Programme and Co-Coordinator of the Myanmar Studies Programme). Dr Prajak Kongkirati (Assistant Professor and Associate Dean for Research and Academic Services in the Faculty of Political Science, Thammasat University) and Dr Richard Horsey (Myanmar Advisor for the International Crisis Group) sat on the panel as the experts of Myanmar and Thailand respectively.

Dr Prajak Kongkirati took the stage to discuss the political and economic performance legitimacy of the current government in Thailand. He began by analyzing the political consequences of the 2014 Thai general elections on the current political landscape. Compared to the 2014 elections, the 2019 election was believed to be flawed and unfree, resulting in online campaigns by the Thai people to disqualify the election commission. During the elections, the commission was also not able to provide an accurate number of voter turnout or the vote scores of candidates and parties in each location. Rather than restoring the legitimacy of the military junta and the coup leader Prayuth, the lack of transparency has instead delegitimized the military government’s claim to power. Dr Prajak also discussed the slowing economy and rising inequality in Thailand. As GDP growth is set to fall below 3 per cent, the ongoing political uncertainty, saturating domestic demand, and strong Thai baht have led to declining investor’s confidence. Thailand’s woes are further aggravated by the China-U.S. trade war and economic opportunities lost to Vietnam. Moreover, state regulations and oligopolistic control of well-connected large corporations have only served to stifle the growth of small and medium enterprises (SMEs).

Dr Richard Horsey then surveyed the socio-economic and political conditions in Myanmar, as the country gears toward elections later this year. Dr Horsey pointed out that Myanmar faces an uphill battle as it deals with deep structural baggage, armed conflicts in its peripheries, a more open but also more divided society, the Rohingya crisis, and the case against Myanmar in the International Court of Justice (ICJ). Dr Horsey also discussed Daw Aung San Suu Kyi’s presence at the Hague, suggesting that her performance was at the higher end of expectations: while she defended military actions, Daw Aung San Suu Kyi also took responsibility for their actions, appeasing some of her Western supporters. The upcoming elections are likely to place any future plans and the political will to resolve the Rohingya crisis on the backburner. Electoral politics will not only consume much of the National League for Democracy (NLD) government’s attention but also influence Myanmar’s priorities and decision-making across a range of key policy areas including the peace process and the economy.

Session 5: Beyond the Horizon: Pakatan Harapan’s Succession Plans and Economic Challenges

Session 5 Panel on Beyond the Horizon Pakatan Harapan’s Succession Plans and Economic Challenges. From left, Mr Rafizi Ramli, Dr Francis Hutchinson, Dr Nungsari Ahmad Radhi  (Credit: ISEAS – Yusof Ishak Institute)

The fifth and final session of the Forum focused on Malaysia and featured two eminent speakers: Mr Rafizi Ramli (Vice-President, Parti Keadilan Rakyat, Malaysia) and Dr Nungsari Ahmad Radhi (Chairman of Khazanah Research Institute, Malaysia). Dr Francis E. Hutchinson (Senior Fellow and Coordinator, Malaysia Studies Programme, ISEAS – Yusof Ishak Institute) moderated the session.

Mr Rafizi Ramli began the discussion by highlighting the significant decline in Pakatan Harapan’s approval ratings in the eighteen months since the party had been in power, from around 80 per cent in June 2018 to around 30 per cent in December 2019. This has, once again, brought the coalition’s leadership transition issue to the fore. While Prime Minister Mahathir Mohamad has consistently spoken about his willingness to pass the premiership to Anwar Ibrahim, there is no clear timeline nor indication that the handover will begin at any time soon. According to Mr Rafizi, the succession will be decided by a small group of individuals (comprising of Members of Parliament, and members of Pakatan Harapan’s Presidential Council) and will most likely take place after the conclusion of the Asia-Pacific Economic Cooperation (APEC) meetings in November 2020. There is also a possibility that the transition may not be very smooth, resulting in a major political fallout. The odds, however, are in Anwar Ibrahim’s favour, as he enjoys the backing of the largest bloc of parliamentarians.

Dr Nungsari Ahmad Radhi highlighted that the country has now entered its third year of having less-than-five per cent in GDP growth. He however maintained that this statistic should not matter much. Instead, policymakers should instead focus on the growing economic inequality in the country. The widening disparity between the rich and poor – as reflected by, among other indices, extremely high levels of household debts (around 80 per cent of GDP in 2019) and limited social security nets – suggests that much more needs to be done to help Malaysia attain high-income status in the near future.

Related links:
1. Welcome Remarks by Mr Choi Shing Kwok
2. Rapporteurs’ Report
3. Media Coverage
4. More Event Photos
5. More Event Videos