Why the ASEAN Economic Community Will Struggle

25 09 2014

By Ji Xianbai

Serious weaknesses within ASEAN threaten the realization of the bloc’s regional project.

The recently released U.S. Chamber of Commerce ASEAN Business Outlook Survey 2015 highlighted the widespread concern that the much-anticipated ASEAN Economic Community (AEC) would not be launched by the end-2015 deadline. Indeed, most respondents were pessimistic about the inauguration of the AEC by 2020 or later. This is not the first time that AEC faces a probable delay: In 2012, the commencement of the AEC was postponed to December 31, 2015 from the original plan of January 1, 2015. Despite ASEAN Secretary-General Surin Pitsuwan’s firm reassurance that “[t]here will be no more delays and that all ten ASEAN countries will participate,” even the most fervent proponents of AEC are beginning to worry about the increasingly diminishing chance of delivering AEC on time as 2015 closes in.

ASEAN Economic Community

AEC originates from the ASEAN Vision 2020, which was adopted in 1997 on the 30th anniversary of ASEAN. It aspires to create a single market and production base with a free flow of goods, services, investments, capital and skilled labor by 2020. In 2003, ASEAN leaders signed the Declaration of ASEAN Concord II and agreed to establish the AEC by 2020. The 2007 Cebu Declaration accelerated the establishment of the AEC to 2015, and ASEAN introduced the AEC Blueprint, which was substantiated into the Roadmap for the ASEAN Community (2009-2015) two years later, to guide the implementation of the AEC.

To track the progress of the AEC, the AEC Scorecard, a compliance tool developed based on the EU Internal Market Scorecard, was adopted by ASEAN. To date, two official scorecards have been published, one in 2010 and the other in 2012. According to the AEC Scorecard 2012, the implementation rates of AEC’s four primary objectives: (a) single market and production base; (b) competitive economic region; (c) equitable economic development; and (d) integration into the global economy were 65.9 percent, 67.9 percent, 66.7 percent, and 85.7 percent, respectively, with 187 out of 277 measures being fully implemented by 2011. The formation of AEC appeared to be on track, which makes it all the more intriguing that so few people expect it to come into force even by 2020.

A Frail Locomotive

On the surface, the skepticism seems understandable – after all, it took the Europeans almost half a century to construct their European Community in the remarkable European integration process. Indeed, some critics point out that many of the specified deadlines of AEC implementation have been missed and some major initiatives have not taken off the ground. For example, only 50 percent of the ASEAN Master Plan on Connectivity has been realized due to a combination of financing shortfalls, poor governance, corruption, and the inability of national governments to manage international and interdepartmental coordination. However, ad hoc failures in implementing certain specific AEC targets are not the biggest concern; rather, it is the structural incapacity of the ASEAN to pull the AEC along.

If the AEC were a train, then the ASEAN Secretariat would be the locomotive. Yet, the ASEAN Secretariat itself lacks the financial and intellectual resources to act in that capacity. Astonishingly, the resources at its disposal have remained unchanged for 15 years, even though the region’s GDP had more than quadrupled. In 2013, the ASEAN Secretariat’s total budget was $16 million, a trifling amount for an institution growing in prominence with an ever expanding mandate and activities. In contrast, the European Commission was operating with a budget for its own administration of approximately $4.3 billion in 2012, and European governments spent many times that figure to launch their own regional project.

Not surprisingly, the ASEAN Secretariat is significantly understaffed. As of 2012, the ASEAN Secretariat employed about 300 people, while the European Commission employed roughly 34,000. Given budget constraints, a typical entry-level ASEAN headquarters professional is paid approximately $3000 per month – and this after major improvements in the remuneration package in recent years. Thus, the ASEAN Secretariat struggles to recruit well-educated staff from countries like Singapore and Brunei, or to compete with other regional organizations, such as the Asian Development Bank, which offers the brightest brains in the region a minimum annual wage of $74,100.

The AEC could perhaps still be achieved if the ASEAN member states (AMSs) were genuinely united in striving for the common good, not least the benefits derived from the envisaged economies of scale as a result of a Southeast Asian single market. Unfortunately, delays in delivering AEC reflect one of the most daunting challenges facing ASEAN: the AMSs’ inability or unwillingness to see themselves as a true single market. For example, Indonesia has refrained from ratifying the ASEAN Multilateral Agreement for Full Liberalization of Air Freight Services (MAFLAFS), to protect its domestic aviation industry from regional competitors, primarily from Singapore, Malaysia and Thailand. Without the participation of Indonesia, the single aviation market exists in name only and there is certainly no “open sky” above ASEAN territory. Other examples abound. Apparently, more often than not, narrower national interests trump a broader regional vision, while short-term thinking outweighs long-term benefits. Worse, it seems that the entrenched “ASEAN Way” of non-interference in domestic affairs in politics risks being translated and relegated to non-recognition of mutual interest in economics. In the absence of strong regional institutions and sanction mechanisms for non-compliance and non-cooperation, only peer pressure incentivizes AMSs to respect community commitments.

Last but not least, the slow progress and the obstacles encountered in implementing the AEC is an inevitable result of the generalized awareness deficit of ASEAN and AEC across the region – citizens in Southeast Asia know very little about ASEAN. An ASEAN Secretariat survey in 2013 found that three out of four ASEAN citizens lack even a basic understanding of ASEAN. Again, ASEAN can learn from the European experience in promoting public awareness about the European Union (EU). To enable EU citizens who are directly affected by EU legislation to understand the decisions that have been made in Brussels, translations of EU legislation into all 24 official languages and dissemination by national authorities are required before the new laws come into force. Regardless of their language, citizens of the EU at least know what their leaders are doing.

For ASEAN, the only working language is English, a language that is not cognate with any of the other languages in the region. The adoption of English has been hailed by some as “ASEAN’s Best Policy”; however, the very low English proficiency in the region makes it very hard for ordinary ASEAN citizens to follow regional agendas, which are often available in English only. Admittedly, copying the EU approach will take time, cost money, and entail complex regional and historical differences, but raising ASEAN awareness with the more effective use of communication channels would be conducive to the establishment of the AEC. By informing ASEAN citizens about the enormous economic potential the AEC is capable of unleashing, domestic lobbying pressure and public scrutiny would surge to pressure AMS governments to keep their promises and honor their pledge to build the AEC by 2015. In addition, greater public understanding of the AEC would encourage more people to take advantage of what after all would be a vibrant single market encompassing a GDP of $2.3 trillion and 600 million people.

If the AEC is to launch on schedule, it will certainly need a more powerful ASEAN Secretariat. It will also require all ten member states to abandon parochial obsessions in favor of shared prosperity.

Ji Xianbai is PhD candidate at S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore on the prestigious Nanyang President’s Graduate Scholarship (NPGS). He is also Associate Fellow at European Union Centre in Singapore.

Source :

The Diplomat

 

 





Is Bigger Better for ASEAN in a Mega-Regional World?

13 09 2014

by Razeen Sally

Big-block trade agreements or ‘mega-regionals’, revolving around one or more major powers, are the latest trend in trade policy negotiations. ASEAN is involved in two: the American-led Trans-Pacific Partnership (TPP) and the Chinese-led Regional Comprehensive Economic Partnership (RCEP). But are mega-regionals good for trade and economic growth? Will they spur regional and global economic integration? And where does ASEAN stand?

As of 2013, there were 261 FTAs concluded in Asia, over 100 of which are already in force. Asia’s three major powers, China, Japan and India, are heavily involved as are ASEAN countries Singapore, Malaysia and Thailand. ASEAN also has its own ASEAN Free Trade Area (AFTA), which will be upgraded into the ASEAN Economic Community (AEC) in 2015. And ASEAN has collective FTAs with China, Japan, South Korea, India, and Australia–New Zealand.

The strength of FTAs varies enormously. US FTAs in Asia are by far the strongest. They have the widest sectoral coverage and go deepest with disciplines to ensure market access. But they contain exemptions for politically sensitive sectors and are riddled with complex and discriminatory rules-of-origin (ROO) requirements. EU FTAs in Asia are also relatively strong. But intra-Asian FTAs are generally ‘trade-light’. The better ones remove tariffs on most goods, but they are weak on disciplining protectionist regulatory barriers in goods, services, investment and public procurement. That is true across the board of Chinese, Japanese and Indian FTAs, as well as the FTAs of ASEAN countries.

Overall, the new wave of FTAs has not given a big boost to trade and foreign investment. But nor has it impeded trade growth. Effects have been broadly neutral, or at best marginally positive.

Now attention has shifted to mega-regionals. There are three being negotiated: the TPP, RCEP and the EU-US Transatlantic Trade and Investment Partnership (TTIP). The TPP’s membership is 12 to date (US, Mexico, Canada, Chile, Peru, Australia, New Zealand, Japan, Singapore, Brunei, Malaysia and Vietnam). It started earlier than the others and is the closest to completion. RCEP’s members are the ASEAN 10 countries plus China, Japan, South Korea, India, Australia and New Zealand. Taken together, these three mega-regionals account for the bulk of world trade and GDP.

Mega-regionals potentially amplify the gains from trade liberalisation. If done cleanly and comprehensively, they would iron out distortions caused by multiple and overlapping FTAs among members (such as differing ROOs). With a bigger integrated economic space, they can reap economies of scale and spur technological innovation. This is particularly important for global supply chains. Regional production networks to serve global markets are the biggest drivers of productivity, employment and growth in international trade. They have a big stake in integrated regional and cross-regional markets. Still, mega-regionals are not ’multilateral’: they discriminate against non-members. That is a big potential source of disruption to global supply chains.

The TTIP and the TPP are the most ambitious mega-regionals. They cover markets for all goods, services, investment and government procurement, and go deep into regulatory disciplines — including on intellectual property, food safety and technical standards — and customs procedures. In the TPP, ‘twenty-first century’ innovations include rules to facilitate supply chains and e-commerce.

But there are major barriers that stand in the way of success.

Protectionist lobbies are big obstacles in several countries, including parts of agriculture and autos in the USA, agriculture in Japan, government procurement in Malaysia, and state-owned enterprises in Vietnam. The US insists on intellectual-property, public-health, labour and environmental standards, and ROO requirements that may impede market access for developing countries. And the Obama administration lacks Trade Promotion Authority from Congress, without which the TPP is unlikely to be concluded and ratified. The TTIP has also been slowed down by obstacles on both sides of the Atlantic.

RCEP looks the least ambitious. If it follows the pattern of intra-Asian FTAs, it will remove tariffs on about 90 per cent of goods over a fairly long timeframe. But it will have weak disciplines on non-tariff regulatory barriers that are the biggest obstacles to trade in the region. It might end up agglomerating the ‘noodle-bowl’ of FTAs among members rather than ironing out distortions among them. In such a scenario, RCEP will create little new trade and investment, and cause extra complications for global supply chains. But negotiations still have some way to go.

Much depends on US and Chinese leadership. President Obama’s leadership is needed to conclude a ‘high-quality, twenty-first century’ TPP — and open the door to eventual Chinese membership. But Obama has conspicuously failed to lead on international trade. Similarly, the Chinese leadership has been defensive on trade policy for almost a decade. But there are signs that China is becoming interested again in regional and global trade liberalisation. It will take Chinese leadership to inject more ambition into RCEP.

All ASEAN countries are in RCEP and four are in the TPP. What should they do on mega-regionals? First, they should push for ambitious agreements that are wide (with maximum sectoral coverage) and deep (with strong disciplines on regulatory barriers), with relatively simple ROOs and open accession clauses for non-members. Only this type of mega-regional is likely to create significant trade and investment, and facilitate the expansion of global supply chains. Second, they should back this up with intra-ASEAN measures, such as accelerating progress on the AEC and strengthening provisions in existing FTAs.

But it must be recognised that mega-regionals, and indeed other FTAs, are not a universal remedy. Political realities will inevitably dilute their ambition and quality. Given their gaps and distortions, they are unlikely to deliver the huge gains that many pundits predict. This applies to the TPP, RCEP and the AEC. The key policy implication that follows is that ASEAN countries should go as fast, wide and deep as possible with unilateral liberalisation. They should also ‘multilateralise’ preferences in existing FTAs as far as possible, that is, to extend them to non-members on a non-discriminatory basis. This is how ASEAN countries have liberalised and integrated into global supply chains in the past. That is unlikely to change in the future.

Razeen Sally is Associate Professor at the Lee Kuan Yew School of Public Policy, National University of Singapore.

Source :

East Asia Forum





ASEAN Economic Community: What Could Go Wrong?

13 09 2014





Banking integration in ASEAN gathers pace

29 08 2014

by Thiam Hee Ng

The ASEAN Economic Community, planned to come into effect in 2015, is expected to liberalise goods, capital and skilled labour flows in the ASEAN region. While there has been considerable progress in the area of trade integration, financial integration still lags behind. The ASEAN Banking Integration Framework, which aims to liberalise the banking market by 2020, could help pave the way for further integration and the entry of ASEAN banks into regional banking markets.

Greater banking integration in ASEAN will benefit the region.

Allowing banks to operate across borders enables them to take advantage of economies of scale to increase efficiency and reduce costs. The entry of regional banks into domestic markets can increase competition, leading to lower prices and a greater variety of banking products and services. Heightened competition may also spur banks to expand into rural areas which are traditionally underserved by banks. Extending banking to the rural poor is an important means of promoting inclusive economic growth in ASEAN.

Currently, the level of integration in ASEAN’s banking sector is relatively limited. The share of ASEAN’s banking assets held by regional banks is generally smaller than global banks. Indonesia has the highest share of banking assets held by other ASEAN banks at almost 15 per cent, followed by Malaysia at around 9 per cent. Malaysian and Singaporean banks have been actively expanding their operations in recent years into other ASEAN markets. For example, CIMB Bank from Malaysia has large subsidiaries in Thailand and Indonesia while United Overseas Bank of Singapore has a strong presence in Malaysia and Thailand. Greater intra-ASEAN trade and investment could also help encourage more banks to expand their operations regionally to better serve their clients.

While the share of ASEAN banks in the region’s banking market is still relatively small, it is not that different from that of European banks in the five largest European Union countries which benefit from operating in an integrated common market. This suggests that dropping regulatory barriers alone may not be sufficient to bring about close cross-border integration.

Entrenched incumbents in a saturated market may be hard to dislodge. Hence Singaporean banks which are dominant in their highly developed banking market will be hard to challenge. The three largest Singaporean banks control 80 per cent of assets in the banking system in the country. However, banks in Indonesia and the Philippines which have large populations and relatively underdeveloped banking sectors are likely to come under greater competitive pressure from other regional banks. The banking systems in Indonesia and the Philippines are also more fragmented. The three largest banks in Indonesia and the Philippines only have 35 per cent and 41 per cent of total national banking assets respectively.

As barriers to entry fall, the prospects of stronger competition from other ASEAN banks could push banks to merge as they look to strengthen their domestic position and better compete against regional rivals. Three Malaysian financial institutions, CIMB Bank, RHB Bank and Malaysian Building Society Berhad (MBSB) announced plans in July 2014 to merge. The merged entity is expected to overtake Maybank to become the largest Malaysian bank. The merger will help consolidate the banking market in Malaysia and create a regional banking power that can hold its own in its home market and have the resources to expand to other countries.

While recognising there are potential gains, it is important to note that closer integration can give rise to new risks. As the region’s banking system becomes more tightly knit, there is potential for contagion and spillover effects. Hence, the authorities should work together to strengthen regulatory and supervisory cooperation frameworks to deal with potential spillovers.

As ASEAN is getting ready to reap the benefits from greater banking integration, it should also be ready to cope with the complex challenge of supervising banks whose operations span the region.

Thiam Hee Ng is Senior Economist at the Office of Regional Economic Integration, Asian Development Bank.

Source:

East Asia Forum





India and ASEAN: Beyond ‘Looking East’

29 08 2014

By Prashanth Parameswaran

As expected, the South China Sea issue once again grabbed the headlines in the latest round of Asian regional summitry held in Myanmar earlier this month.

Less in the limelight, but no less consequential, was India’s first engagement of the Association of Southeast Asian Nations (ASEAN) since its new Prime Minister Narendra Modi was elected last month. Despite India’s oft-cited cultural and civilizational links with Southeast Asia and some notable advances in its much-touted Look East Policy since 1991, both sides agree that ASEAN-India ties are far from reaching their full potential. Southeast Asia – with the exception of Myanmar – had also been conspicuously absent in Modi’s foreign policy statements, which have largely focused on neighboring South Asian states and major powers like China and the United States.

The new Indian government’s first foray into a formal ASEAN gathering produced some encouraging signs. At the India-ASEAN meeting, External Affairs Minister Sushma Swaraj focused her remarks on “connectivity,” the reigning mantra in Modi’s regional policies which refers to a host of infrastructure projects to speed up Asian integration. That suggests a strong economic bent in the relationship that would both help New Delhi to develop its Northeastern states and Southeast Asia to form a more united ASEAN Economic Community over the next few years. ASEAN, for its part, said both sides will likely sign a long-delayed free trade agreement in services and investments later this month and proposed strengthening cooperation in several areas, including agriculture, energy, and science and technology.

India’s relationships with pivotal Southeast Asian countries are also gaining steam. New Delhi’s ties with Singapore, its strongest in the region, are expected to grow even tighter as both sides agreed to step up their defense partnership on August 19. Relations with Vietnam are also on the uptick, with Hanoi renewing India’s lease of two oil blocks in the South China Sea for another year before Swaraj’s first visit there next week. And Myanmar, the only ASEAN country that shares a physical land border with India, is in a league of its own in Modi’s eyes since it is New Delhi’s gateway to Southeast Asia. Modi himself is expected to visit both Vietnam and Myanmar by the end of 2014.

But as is often the case with ASEAN-India relations, the problem is not the lack of ideas but the inability to follow through on them. Take India’s relations with Myanmar. Earlier this month, India’s former ambassador to Myanmar VS Seshadri warned in a report that two key infrastructure projects – the Trilateral Highway and the Kaladan Multi-modal Transit – need to be completed on time by 2016 in order to realize the full promise of bilateral ties. Judging from past experience, this is far from assured. For all the talk of India’s Look East Policy, formal India-Myanmar land border trade is still a measly $35 million. At the sub-regional level, countless reports – including one I authored back in 2010 – have encouraged India to revitalize groupings like the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) and the Mekong-Ganga Cooperation (MGC), but to no avail. Perhaps a Modi government, with its “neighborhood” focus, will finally take steps in this direction.

Look East” has been the paradigm used to frame India’s approach to ASEAN since the days of Narasimha Rao in the 1990s. But given the gap between rhetoric and reality in ASEAN-India relations in the past, I have preferred to say that New Delhi’s strategy in the coming years should be to “Act East” more concertedly, following the remarks former U.S. Secretary of State Hillary Clinton delivered on a visit there back in 2011. As India prepares to draft the next five-year plan of action for ASEAN-India relations beginning in 2016, it should keep in mind that it will be judged less on the platitudes in that document than on its ability to deliver on specific initiatives on the ground in Southeast Asia.

Source :

The Diplomat





Bracing for the ASEAN Community

29 08 2014

by C.P.F. Luhulima

The establishment of an ASEAN Economic Community (AEC) should be viewed as a transformation of ASEAN’s connectivity through the widespread use of  information and communication technologies as prescribed by the ASEAN ICT Master Plan of 2015 and its slogan: “We go higher when we are connected.”

However, to “go higher when we are connected” requires an effective and efficient kind of interconnectivity. It requires infrastructural interconnectivity that solidly supports institutional interconnectivity in order to improve the compatibility of norms and values; and as a consequence, the compatibility of mind-sets among the people of the member states.

This is the basis for a “rules-based community of shared norms and values” as proclaimed by the ASEAN Political and Security Community 2015. It should be the basis for the other two communities as well. A focus on people within ASEAN, then, is a natural consequence of this endeavor.

It is, therefore, self-evident that Indonesia should take the initiative. It was former president Megawati Soekarnoputri, who together with Hassan Wirajuda as foreign minister, took the initiative in 2003 to advocate for an ASEAN Community comprising three pillars: political and security cooperation, economic cooperation and sociocultural cooperation.

These three pillars should be closely intertwined and mutually reinforcing for the purpose of ensuring durable peace, stability and shared prosperity in the region. Together, they should nurture common values and help develop a set of sociopolitical principles that can foster a community of caring societies that in turn promotes a common regional identity and a “prosper thy neighbor” policy.

This will help ensure the long-term vibrancy and prosperity of the ASEAN region. Realizing and expanding the widespread use of information and communications technologies to achieve the maximum compatibility of norms, values and mind-sets is the only means of dependably achieving these objectives.

Indonesia’s weakest link in developing these three pillars is the economic one. The major problem here is an inefficient business environment hampered by inadequate infrastructure, connectivity and a low level of awareness regarding small- and medium-scale businesses (SME) within the general public.

This has resulted in Indonesia losing a competitive edge at the SME level.

President Susilo Bambang Yudhoyono’s administration issued Presidential Instruction No. 5/2008 and No. 11/2011, instructing relevant ministries and non-ministerial bodies to “execute the various commitments of the AEC” and “to take steps to effect the commitments of AEC’s blueprint”.

In 2012, another presidential decree was issued mandating the establishment of a national secretariat of ASEAN–Indonesia. The body reports to the President through the foreign minister and acts as the focal point of ASEAN affairs, coordinating the implementation of ASEAN decisions at the national level, expediting the establishment of the ASEAN Communities and accelerating Indonesia’s efforts in closing the gap, primarily between itself and the original ASEAN members.

It is now August 2014. The ASEAN Communities will be launched on Jan. 1, 2016. The incoming government of  Joko “Jokowi” Widodo will have just 14 months to step up Indonesia’s capability to fulfill the requirements of the AEC and compete on a healthy basis within ASEAN.

The major problem here is to reach out to the 55,000 Indonesian SME entrepreneurs — constituting 95 to 98 percent of Indonesia’s total business ventures —  of whom the majority are unfamiliar with doing commercial business across borders.

These business owners need to be educated about the various consequences of the freer flow of goods, services, investment, capital and skilled labor that will follow the AEC launch.

Development in the SME sector is crucial to achieving equitable economic development within ASEAN.

Reaching out to Indonesian business ventures and improving their communication linkages must be a priority for the new government. Furthermore, the government should upgrade Indonesia’s communications infrastructure in the following areas: broadband Internet connections (with larger bandwidth by using coaxial or fiber-optic cables), satellites, microwaves and infrared links access methods. It should also increase the number Internet service providers utilizing these technologies.

Additionally, the SMEs should be encouraged to computerize their firms and utilize Internet services to speed up their businesses, both domestically and on an ASEAN basis in order to close the competitiveness gap between Indonesian SMEs and their ASEAN counterparts. Once better connected, Indonesia can “go higher” together with the other ASEAN member states.

These goals demand the appointment of a capable and experienced person in ASEAN affairs to coordinate the implementation of ASEAN decisions at the national level and to accelerate Indonesia’s efforts at closing the gap, primarily with the original members of ASEAN.

That responsibility will fall to Indonesia’s foreign minister, so the immediate question is determining the most suitable person to fill this crucial post.

In my opinion, there is but one person who can fulfill these requirements to assist the president in mobilizing Indonesia’s business community and the people at large.

The one person with sufficient knowledge of ASEAN and extensive utilization of the Internet is Marty Natalegawa, our current foreign minister. His experience in conducting ASEAN affairs is well known and indisputable, both at home and abroad.

Jokowi as the seventh president of Indonesia and Marty as foreign minister would provide the leadership and competence needed to successfully join the ASEAN Community that Megawati and Hassan initiated in 2003.

C.P.F. Luhulima is a researcher at the Center for Political Studies, Indonesian Institute of Sciences (LIPI), Jakarta.

Source :

The Jakarta Post





Why North Korea Is Courting ASEAN

5 08 2014

By Zachary Keck

North Korea has surprisingly robust relationships with a number of Southeast Asian nations.

North Korea is launching a charm offensive towards Southeast Asia as part of its larger efforts to expand its diplomatic ties.

On Saturday, North Korean Foreign Minister Ri Su Yong left Pyongyang for a trip that will take him to five Southeast Asian nations.

“A DPRK government delegation headed by Foreign Minister Ri Su Yong left here Saturday to visit Laos, Vietnam, Myanmar, Indonesia and Singapore,” a brief report from the Korean Central News Agency (KCNA) said. The report did not provide any details about the length of the trip, itinerary or size of Ri’s delegation.

However, South Korean media outlets reported, citing unnamed South Korean officials, that Ri will first travel to Laos and Vietnam before arriving in Myanmar in time to participate in the ASEAN Regional Forum (ARF) over the weekend. After the ARF ends, Ri will travel to Indonesia and Singapore.

Ri’s trip once again highlights the rather robust ties (by North Korean standards, at least) North Korea maintains with some Southeast Asian nations. Between 2000 and 2006, for example, trade with Southeast Asia accounted for as much as 12 percent of North Korea’s trade. It has declined in the years since North Korea’s first nuclear test, and Ri’s trip this week may be aimed at trying to facilitate stronger economic ties.

North Korea’s strong ASEAN ties extend to the five nations that Ri will be visiting. Perhaps best known is North Korea’s longstanding ties to the Myanmar Junta. Although Myanmarese leaders have claimed to have significantly reduced ties to North Korea as part of their more general reform and opening up, there have been a number of signs that suggest that ties remain stronger than Burma cares to admit.

North Korea also has fairly robust ties to Indonesia. The two sides first established diplomatic ties in 1961, and DPRK founder Kim Il-sung visited Jakarta four years later. The two countries continue to maintain diplomatic relations and have embassies in each other’s capitals. Indonesia also lobbied strongly for Pyongyang’s inclusion in the ASEAN Regional Forum. Just last year, Indonesian Foreign Minister Marty Natalegawa spent three days in North Korea in an effort to position Jakarta to exploit some of the economic changes Kim Jong-Un is introducing in North Korea.

Similarly, Singapore is one of North Korea’s largest trading partners and has had political ties with Pyongyang since 1975. High-level exchanges are also a frequent occurrence, and North Korean leaders have at times appeared interested in the Singaporean model of introducing economic reforms without relinquishing political power. Like Indonesia, Singapore undoubtedly seeks to benefit from some of the Kim Jong-Un era reforms such as the special economic zones.

Vietnam and North Korea also have a long history of relations, dating back to the early Cold War. Although economic ties between the two nations have stalled in recent decades, political ties remain robust with frequent senior level visits.

Laos and North Korea also maintain a robust political relationship, having first established diplomatic ties in 1974. Moreover, there has been a recent uptick in Lao-North Korean diplomacy. For example, in 2011 Lao President and General Secretary of the People’s Revolutionary Party, Choummaly Sayasone, visited North Korea. During that visit, the Lao president met with North Korea’s then-heir apparent Kim Jong-Un. Former North Korean military chief Ri Yong-ho also visited Laos in 2012, as did Kim Yong-nam, chairman of the Presidium of the Supreme People’s Assembly of North Korea. North Korea values its relationship to Laos because of the nation’s communist rule and the fact that it serves as a frequent transit point for North Korean defectors seeking asylum in South Korea.

Although North Korea usually sends its top diplomat to the ARF, Ri’s trip throughout Southeast Asia is consistent with North Korea’s recent effort to expand its diplomatic ties. As the North’s relationship with its traditional Chinese ally has faltered, Pyongyang has sought to improve ties with a number of other countries in the region such as Japan and Russia.

This is South Korea’s interpretation of the purpose of Ri’s trip. An unnamed ROK Foreign Ministry official told Yonhap that “Ri’s trip appears to aim at strengthening relationships with the Southeast Asian countries in a move to come out of international isolation and gather ground in the global diplomatic arena.”

Ri’s trip might also signal that the North Korean regime is once again concentrated on introducing some economic reforms in the country. This has always appeared to be part of Kim Jong-Un’s governing plan, however, the effort has slowed since the execution of Kim’s uncle, Jang Song-Thaek, a well known economic reformer, last winter.

While at the ARF, Ri might seek to make headway in restarting the Six-Party Talks over Pyongyang’s nuclear program as all six nations will be represented at the body. Japanese Foreign Minister Fumio Kishida has already said he plans to hold informal talks with Ri on the sidelines of the regional meeting this weekend. The U.S. has all but ruled out the possibility that Secretary of State John Kerry will meet with Ri during the forum. When asked about a possible Ri-Kerry meeting, State Department spokeswoman Jen Psaki said, “There is no plan for that. Nor do I anticipate that’s something that would take place.”

There hasn’t been official confirmation on whether South Korea’s Foreign Minister, Yun Byung-se, will meet with Ri, although both men plan to attend the ARF. Last year, the two Koreas’ top diplomats shook hands at the ARF but did not talk. Ri, however, is well positioned to negotiate on behalf of the North Korean regime owing to his longstanding relationship with Kim Jong-Un, which dates back to the latter’s childhood in Switzerland.

Source :

The Diplomat