The United States has all the tools at hand to build an enduring and sustainable strategy for engagement in the Asia Pacific. But some careful work is needed to fit the key parts of this policy together. The most compelling requirement is to ensure that trade policy supports a comprehensive U.S. strategy. Washington must make sure that the Trans-Pacific Partnership (TPP)-led trade approach avoids weakening or dividing ASEAN. That is vital because the engagement strategy outlined and articulated by the Obama administration is focused on strengthening ASEAN as “the fulcrum” of new Asia-Pacific regional economic and security architecture.

From a U.S. geostrategic point of view, a stronger ASEAN represents a stronger foundation for regional institution building. An integrated ASEAN is also consistent with pursuing a regional rules-based approach to development and dispute resolution. This concept is at the core of Secretary of State Hillary Clinton’s historic intervention at the ASEAN Regional Forum in Hanoi in July 2010. The United States is investing in ASEAN-based institutions such as the East Asia Summit (EAS), the ASEAN Regional Forum (ARF), and the ASEAN Defense Ministers Meeting Plus (ADMM+). It has signed the Treaty of Amity and Cooperation and has assigned a full-time resident ambassador to the ASEAN Secretariat in Jakarta.

A bet on ASEAN-based architecture is a long-term commitment. ASEAN is evolving, but it is not currently structured for, nor is it culturally accustomed to, results-based dialogue and diplomacy. However, ASEAN has shown signs it wants to step up its efforts and has begun to deliver clear strategic value.

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The Week That Was

• Indonesian labor unions protest government plan to cut fuel subsidies
• Myanmar invites foreign election observers to witness polls
• China arrests 21 Vietnamese fishermen near Paracel Islands

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Looking Ahead

• Round table on political prisoners in Myanmar
• Global Security Forum 2012 at CSIS
• Talk on Malaysia and the Trans-Pacific Partnership

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U.S. STRATEGIC ALIGNMENT: SQUARING TRADE AND GRAND STRATEGY IN ASIA

By Ernest Bower, Senior Adviser & Director, Southeast Asia Program, CSIS

The United States has all the tools at hand to build an enduring and sustainable strategy for engagement in the Asia Pacific. But some careful work is needed to fit the key parts of this policy together. The most compelling requirement is to ensure that trade policy supports a comprehensive U.S. strategy. Washington must make sure that the Trans-Pacific Partnership (TPP)-led trade approach avoids weakening or dividing ASEAN. That is vital because the engagement strategy outlined and articulated by the Obama administration is focused on strengthening ASEAN as “the fulcrum” of new Asia-Pacific regional economic and security architecture.

Geostrategic Clarity—A Strong ASEAN

From a U.S. geostrategic point of view, a stronger ASEAN represents a stronger foundation for regional institution building. An integrated ASEAN is also consistent with pursuing a regional rules-based approach to development and dispute resolution. This concept is at the core of Secretary of State Hillary Clinton’s historic intervention at the ASEAN Regional Forum in Hanoi in July 2010. The United States is investing in ASEAN-based institutions such as the East Asia Summit (EAS), the ASEAN Regional Forum (ARF), and the ASEAN Defense Ministers Meeting Plus (ADMM+). It has signed the Treaty of Amity and Cooperation and has assigned a full-time resident ambassador to the ASEAN Secretariat in Jakarta.

A bet on ASEAN-based architecture is a long-term commitment. ASEAN is evolving, but it is not currently structured for, nor is it culturally accustomed to, results-based dialogue and diplomacy. However, ASEAN has shown signs it wants to step up its efforts and has begun to deliver clear strategic value.

Remaining committed to the EAS and regional architecture at the appropriate political level will challenge the United States in the near to midterm. In a region as important as the Asia Pacific, how can the United States commit annual participation of the president with institutions not yet structured to guarantee that the most pressing issues—even if they are highly sensitive—will be on the agenda with a clarity that allows senior officials to prepare leaders to resolve problems and make decisions? The answer lies in an increased U.S. investment in relationships with its five allies in the Asia Pacific (Australia, Japan, Korea, the Philippines, Thailand) to help strengthen ASEAN and drive a results-based agenda. That agenda includes developing new partnerships with countries that share the United States’ strategic alignment, such as Brunei, India, Indonesia, Malaysia, Singapore, and Vietnam, and building capacity and confidence in less-developed countries such as Cambodia, Laos, and Myanmar.

At the same time, the United States must continue to invest in building relations with China. It already has many of the right structures in place to communicate and exchange views, which will build trust and capability to collaborate in more and more areas over time. The notable weak link in U.S.-China relations remains military-to-military dialogue—an area in which the United States continues to press for progress.

Trade: Forward Deployed, but Misaligned

For those with reason to question or challenge the U.S. resurgence in strategic engagement in the Asia Pacific, the important inconsistency is trade. They argue that the United States is supporting a strong ASEAN on the security and political front, but that it is happy to divide ASEAN when it comes to trade.

The problem is that only four ASEAN members (Brunei Darussalam, Malaysia, Singapore, and Vietnam) are included in the nine-country TPP negotiation the United States says is the core of its trade policy in Asia. TPP members have declared that only members of the Asia-Pacific Economic Cooperation (APEC) forum will be considered for accession. But three ASEAN countries—Cambodia, Laos, and Myanmar—are not members of APEC and therefore are not eligible for accession.

In other words, there is an apparent contradiction between U.S. strategy in the Asia Pacific and U.S. trade policy. While the United States says it wants a strong and integrated ASEAN, its key trade platform for the region includes only 4 of ASEAN’s 10 member countries, and only 7 of those 10 are even eligible for inclusion.

Squaring the TPP with Broader Strategy

Some leading Americans concerned with the U.S. position in Asia have called for the United States to articulate a long-term goal of a U.S.-ASEAN free trade agreement (FTA) to help bridge this gap. U.S. senator and ranking member of the Senate Foreign Relations Committee Richard Lugar (Republican of Indiana) and the CSIS U.S.-ASEAN Strategy Commission have endorsed that idea.

Countries including China, Japan, South Korea, Australia, New Zealand, and India have FTAs with ASEAN. In addition, all members of the EAS, the United States and Russia excepted, have some economic agreement with ASEAN. Most of those countries’ definitions of FTAs, however, differ from the U.S. definition, and none takes as comprehensive, high-level, and legally binding an approach to free trade agreements as the United States does. The Office of the U.S. Trade Representative is granted authority to negotiate free trade agreements by Congress, but it has no legal authority to negotiate agreements with lower-level criteria not approved by the legislature.

Nonetheless, there is a path open to the United States. The good news is that Laos is on track to accede to the World Trade Organization (WTO), possibly by the end of 2012, and when that happens, all ASEAN members will be WTO members. In addition, if Myanmar continues to make progress on its political and economic reforms, U.S. sanctions could be eased and the United States would have a structurally unfettered capability to engage ASEAN on the economic front and to work to connect its TPP-based goals not only to ASEAN, but to all members of the EAS.

Linking the intent of the TPP effort to establish a comprehensive, high-level trade agreement throughout the Asia Pacific to U.S. engagement in the EAS and ASEAN is the breakthrough needed to square U.S. trade policy with the country’s broader strategy. It is also a necessary step toward convincing China to play by the rules and be guided by norms it establishes in consultation with other nations in the Asia Pacific.

Key actions for the United States to take to accomplish this goal include the following:

1. Announce a U.S.-ASEAN Economic Partnership at the U.S.-ASEAN Leaders’ Meeting in Phnom Penh in November 2012. To prepare for the announcement, the United States should consult the ASEAN countries collectively and bilaterally and seek their support (a) to announce an acceleration of the U.S.–ASEAN Trade and Investment Framework Agreement (TIFA) and (b) to create a vehicle called the U.S.-ASEAN Economic Partnership. This would be a framework in which the United States and ASEAN’s TPP countries would brief other ASEAN members on the status of the TPP negotiations; create a U.S.-ASEAN working group to support member countries wishing to accede to the TPP; and develop a focused and well-resourced capacity-building plan for members who would like to join but need support.

The U.S.-ASEAN Economic Partnership should build and expand on the model of the U.S.-Philippines Trade Facilitation Agreement signed last November. This would allow the United States and ASEAN member countries to negotiate and make binding commitments to the customs chapter of a world-class FTA. This should be gradually expanded to include other chapters, which would serve as the building blocks to prepare for TPP accession.

2. Revise TPP accession eligibility. The United States should quietly work with other TPP members to revise accession language to open membership to members of APEC and the EAS. This does not mean all APEC and EAS members are ready to seek TPP membership in the near term, but it avoids the trap of institutionally excluding them and of pitting a strong and proactive trade strategy against a sensible and enduring regional strategy.

3. Initiate an EAS Economic Partnership. Build support within EAS for an economic integration plan that would be consistent with a U.S.-ASEAN Economic Partnership and provide capacity building so all EAS members could eventually aspire to join the TPP.

The plan should include a focused effort to coordinate assistance programs within the EAS on building capacity for less-developed members, preparing them to join the TPP as full members. This is a long-term process, but one that could build trust, cooperation, and a sense of common mission among EAS member countries.

4. Refocus the U.S.-Indonesia trade and economic development discussion under the existing U.S.-Indonesia Comprehensive Partnership. Experts will recognize that alignment with Indonesia is a vital aspect of this strategy. Indonesia has clearly indicated that it is not ready to negotiate new free trade agreements. The ASEAN-China FTA was a factor in costing the country’s last trade minister her position. Indonesia has clear goals for foreign direct investment, and trade is becoming increasingly important to ASEAN’s largest economy. Changing the discussion from TPP membership or an FTA to how to better align and adapt U.S. and Indonesian trade promotion agencies to fit current needs, identify common goals (there are many), and focus on these issues in the near to midterm will empower reformers and prepare both countries to move forward after their national elections in 2012 and 2014.

5. Invite China. The United States should take the lead to ensure that China and its companies are welcome to join the TPP and the EAS Economic Partnership. The long-term U.S. objective of Asia-Pacific economic integration must by definition include the region’s largest economy. Sending this signal seriously and with mantra-like repetition will help reassure U.S. partners around Asia that the United States is not asking countries to choose between China and the United States, but instead to help find ways to get all participants engaged in a rules-based regional integration effort.

It is important for the United States to square the perceived contradiction between its Asia-Pacific strategy and its trade policy for the region. The levers to accomplish this goal are well within reach. Working them carefully will require focused diplomacy, coordination of message and approach among U.S. agencies and between the administration and Congress, and high-level political commitment to the region. The investment is worthwhile: aligning trade and economics with broader strategy is key to enhancing regional security and resolving disputes in sensitive areas such as the South China Sea.

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The Week That Was

Indonesia

Labor unions protest government plan to cut fuel subsidies. Jakarta police mobilized 14,000 officers March 21 to contain a march by thousands of labor union members protesting fuel subsidy cuts set to take effect April 1. Union leaders also threatened to bring hundreds of thousands to the streets in protests planned for March 27 but the crowds that materialized were modest. Subsidies currently account for about $4.5 billion of Indonesia’s national budget. Fuel prices will climb by a third when the subsidy is pared back.

Over half of Indonesians believe China poses military threat, according to Lowy Institute poll. Fifty-six percent of Indonesians think China will become a military threat to Indonesia in the next 20 years, according to an opinion poll released March 19 by Australia’s Lowy Institute. The poll also found that that the United States is the second-most-liked country among Indonesians, behind Japan but several spots ahead of China. Seventy-two percent trust the United States to act responsibly in the international community, up from just 32 percent in 2006.

Police kill five suspected terrorists in Bali. Indonesia’s counterterrorism unit shot and killed five terrorism suspects during two March 18 raids in Denpasar and Sanur. National Police spokesman Inspector General Saud Usman Nasution told a press conference that the counterterrorism unit was justified in using deadly force because the suspects resisted arrest. The suspects were linked to a robbery in Medan in 2010 and had plans for future robberies and attacks on tourist hot spots. Saud also warned that some suspects remain at large.

Umar Patek trial reveals bin Laden funded Jemaah Islamiyah. Accused Bali bomb maker Umar Patek’s March 22 trial proceedings revealed that Osama bin Laden gave $30,000 to the Indonesian terrorist group Jemaah Islamiyah in 2001. The funding was crucial in the execution of the 2002 Bali nightclub bombing and the 2003 JW Marriott Hotel bombing. Patek claimed that he did not have the technical expertise to build the 1,540-pound bomb that killed 202 people at the Bali nightclub.

Chevron accused of bilking the Indonesian government of $270 million. Five employees of U.S.-based Chevron and two from Indonesia’s state oil and gas agency, BPMigas, were accused March 16 of pocketing payments for environmental clean-up work by two subcontractors. The subcontracting firms do not hold the registration required to conduct clean-up and, according to the attorney general’s office, never performed any clean-up operations in the area in question. A spokesperson for Chevron denied the accusations.

Five Papuan activists sentenced to three years for treason. Five leading Papua independence activists were sentenced March 16 to three years in prison for treason. They were convicted of illegally raising the Morning Star flag, a symbol of Papuan independence, during the Third Papuan People’s Congress in October. Human Rights Watch denounced the sentencing, though some observers were surprised at the relative leniency of the sentence, which could have been life in prison.

Bekasi mayor nabbed in Bali after being convicted of corruption. Mochtar Muhammad, the suspended mayor of Bekasi, was arrested March 21 in Denpasar, Bali, after being given several days to turn himself in by Indonesia’s Corruption Eradication Commission. He fled to Bali after being sentenced to six years in prison by the nation’s Supreme Court. Mochtar, who belongs to former president Megawati Sukarnoputri’s Democratic Party of Action–Struggle, ran up $600,000 in frivolous personal expenses during his time as mayor.

Myanmar

Myanmar invites foreign election observers to witness polls. Myanmar will allow observers from ASEAN and its dialogue partners, including the United States, to witness the country’s April 1 by-elections. ASEAN said it was asked to send 23 delegates, including two members of parliament from each member state and media representatives. The United States said March 21 it will send two election observers and three journalists. The observers appear increasingly critical as the opposition National League for Democracy has complained of voter intimidation and ballot irregularities ahead of the elections.

U.S. envoy visits Myanmar, voices concern over refugees. U.S. special representative for Myanmar Derek Mitchell during a March 15 visit to the country spoke about the plight of thousands of refugees displaced by fighting and said ongoing violence in Kachin State is “inconsistent with the trends toward…reconciliation” elsewhere in the country. The U.S. Campaign for Burma on March 22 delivered a petition to Mitchell signed by 5,000 ethnic refugees resettled in the United States asking him to use his position to end human rights abuses against ethnic nationalities in Myanmar.

Suu Kyi makes critical speech on state television. Opposition leader Aung San Suu Kyi was allowed to appear on state television for the first time March 14 to promote her election campaign message. She called for further political and judicial reforms as well as changes to Myanmar’s constitution. The government gave all political parties contesting the April 1 by-elections 15-minute slots on television and radio to make political speeches. Despite the landmark appearance, Suu Kyi said a paragraph of her speech criticizing the former military junta was censored.

Myanmar drafts new foreign investment rules. Reuters reported March 20 that Myanmar’s parliament will pass a draft investment law in the coming months freeing foreigners from the need to find a local partner to set up businesses and offering a five-year tax holiday for new foreign investors. Reuters reported the same day that Myanmar's central bank plans to begin a managed float of the currency April 1 from 6 kyat per dollar to around 820 kyat per dollar, close to its black market level.

Myanmar agrees to end forced labor. Myanmar’s deputy labor minister Myint Thein March 16 signed an agreement with the International Labor Organization (ILO) to end forced labor in the country by 2015. The ILO's branch in Yangon said last June it had received 506 complaints related to forced labor since the start of 2010, more than double the number seen during the previous three years.

Six ministries accused of corruption. The Voice Weekly, a local news outlet in Myanmar, reported March 12 that a government audit released to members of Myanmar’s Lower House in early March reported evidence of corruption in six key ministries. The report cited misappropriation of funds and other violations by the ministries of Mining, Cooperatives, Agriculture, Information, and Industry One and Two. The Ministry of Mines March 14 denied the allegations and said it will file suit against the Voice Weekly.

Cambodia

Khmer Rouge tribunal judge quits. UN-appointed judge to the Extraordinary Chambers in the Courts of Cambodia (ECCC) Laurent Kasper-Anserment resigned March 19, saying he was repeatedly blocked in his duties by his Cambodian counterpart. He will leave the ECCC on May 4. Kasper-Anserment is the second UN judge to resign in six months. He began investigations in early March into a third and fourth case against former Khmer Rouge officials despite opposition by the Cambodian government, which has repeatedly said it would not allow those cases to go to trial.

Cambodia to host ASEAN Summit and related meetings. Cambodia will host the 20th ASEAN Summit in Phnom Penh April 3–4, preceded by the ninth Annual Chiefs of Defense Forces Informal Meeting March 28–30 and other related meetings. Economic meetings are expected to discuss and prepare for ASEAN’s 2015 economic integration, while defense-based meetings are expected to be dominated by concerns over disputes in the South China Sea. Chinese president Hu Jintao will visit Phnom Penh prior to the summit, from March 30 to April 2. Cambodia is the current chair of ASEAN.

Ford to open plant in Sihanoukville to meet Cambodia’s growing car market. RMA Cambodia, Ford’s local representative, announced March 21 that it will open an assembly plant in Sihanoukville, according to a report in the Phnom Penh Post. The plant is projected to produce up to 6,000 vehicles annually. Cambodia has a small but growing car market with high import tariffs. Domestic production will reduce prices by 25 percent. The plant will initially focus on the domestic market, but looks to become a regional exporter in the long run as part of ASEAN economic integration.

Cambodia’s first IPO since Khmer Rouge regime will launch April 18. The state-owned Phnom Penh Water Supply Authority (PPWSA) April 18 will become the first listing on the Cambodia Securities Exchange. The exchange opened last year but currently has no listings. PPWSA is expected to list 13 million shares, or 15 percent of the company, with 11 percent going to employee stock options. The remaining 85 percent will be retained by the state. The final price offering will be announced March 29 and demand is expected to be robust.

Thailand

Yingluck pledges to ease inflation. Prime Minister Yingluck Shinawatra March 18 tried to ease concerns over rising prices, particularly for food and fuel, in her weekly address. Costs have been rising in Thailand as the economy recovers from devastating floods in late 2011. The country’s three-month industrial confidence expectation index fell 1.4 points from January to February, largely due to rising oil prices. The Bank of Thailand said March 21 that it would not change the repurchase rate, currently at 3 percent, to prevent further inflation. Yingluck promised that the economic situation would turn around by June.

Cabinet approves 23 projects worth $20 million on Andaman coast. Prime Minister Yingluck Shinawatra said March 24 Thailand will invest $72 billion in infrastructure and $11.4 billion in water management in order to recover from the devastating floods during late 2011. Thailand’s cabinet March 20 gave approval for immediate development of 23 projects worth $20 million in five provinces along the Andaman Sea coast. An additional 117 proposals were approved for future development, including expansion of the Phuket Airport. Many of the projects involve improving infrastructure and security to support tourism.

Rangers found to be at fault in shooting of civilians in Thai south. A fact-finding committee found Thai army rangers to be at fault in the January 29 killing of four civilians in Thailand’s volatile south. Lieutenant General Udomchai Thammasarorat, who heads the Army in the region, announced the findings March 21. Udomchai added that all those affected by the incident will be compensated and that the rangers will face legal action. The rangers shot at a truck of civilians traveling to a funeral, killing four and wounding four others, sparking widespread criticism.

Canadian prime minister visited Thailand for trade talks. Canadian prime minister Stephen Harper traveled to Bangkok March 22 as part of a weeklong Asia trip that included a visit to Japan and a nuclear security summit in South Korea. The visit was the first to Thailand by a Canadian prime minister in 15 years. Harper and his counterpart, Yingluck Shinawatra, said March 23 they will launch a study to examine a bilateral free trade agreement. Harper’s administration has been criticized for its limited engagement with Asia, but seems to be strongly reengaging the region. Harper visited China this past February.

Philippines

Philippines seeks U.S. assistance in tracking North Korean rocket. The Philippines and the U.S. military will coordinate in tracking the trajectory of North Korea’s planned satellite rocket launch between April 12 and 16. The Philippine military March 22 requested U.S. assistance in monitoring the rocket due to its limited equipment capabilities. Part of the North Korean rocket is expected to land off the Philippine coast. The Philippines has joined the United States in urging North Korea to cancel the launch, though North Korea insists the rocket launch is for peaceful space research.

Philippine court issues warrant for former president and her husband. A Quezon City anti-graft court March 13 ordered the arrest of former Philippine president Gloria Macapagal-Arroyo and her husband, Jose Miguel “Mike” Arroyo. Both are charged with corruption related to a $329.5 million government contract with a Chinese telecommunications company. A 2007 Senate investigation found that the contract was vastly overpriced, and Mike Arroyo is accused of accepting millions of dollars in bribes to push for its approval. Gloria Arroyo has been under arrest in a hospital since November 2011. Her husband was arrested March 13 and posted bail the same day.

World Bank presses the Philippines to reform. The World Bank on March 19 urged the Philippines to accelerate economic reforms to maintain growth or face the possibility of an economic slowdown. The bank pressed the Philippines to boost revenue by reviewing taxes on liquor and cigarettes and to reduce barriers for investors by providing fiscal incentives to companies. It also recommended easing access to finance for small and medium-sized businesses and improving education to boost the skills of the Philippine labor force.

Aquino welcomes U.S. troop rotations, not permanent bases. Philippine president Benigno Aquino said March 20 he supports increasing the number of U.S. troops rotating through the Philippines, but opposes the reestablishment of permanent bases. Aquino said he hopes to strengthen the U.S.-Philippine alliance by increasing the number of joint military exercises, U.S. Navy ship visits, and the purchase of military equipment, patrol vessels, and F-16 fighter jets from the United States.

Terrorist leader not killed in Philippine strike after all. The head of a Malaysian counterterrorism task force, Ayob Khan Mydin Pitchay, said March 13 that a Philippine airstrike February 2 failed to kill senior Jemaah Islamiyah (JI) leader Zulkifli bin Hir, also known as Marwan, despite earlier reports. The Philippine military said it is awaiting DNA results but still believes the terrorist leader was killed, along with another JI leader, the head of the terrorist group Abu Sayyaf, and about 12 other militants.

South China Sea

China arrests 21 Vietnamese fishermen near Paracel Islands. Vietnam’s Foreign Ministry March 21 demanded the unconditional release of 21 Vietnamese fishermen arrested by Chinese authorities March 3 near the disputed Paracel Islands. China has said the fishermen were detained for “invasive fishing” and is demanding that each of their families pay $11,000 for their release. China controls the Paracels, but Vietnam maintains a claim to the island chain.

Vietnam sending monks to disputed Spratly Islands. A senior Vietnamese monk announced March 12 that Vietnam will send six Buddhist monks to the disputed Spratly Islands. The monks will take charge of several recently renovated temples that have been abandoned since 1975 on three of the islands. The announcement came a day before the 24th anniversary of the 1988 battle between Chinese and Vietnamese forces at Johnson South Reef. China’s state-owned Global Times March 22 decried the move as a "religious guise" to "permanently claim sovereignty" over the Spratlys.

Taiwan protests Philippine plan to explore for oil near Reed Bank. Taiwan joined China on March 12 in protesting a Philippine plan to open two petroleum blocks near the Reed Bank in the South China Sea to exploration by foreign companies. The Taiwanese government reaffirmed its sovereignty over the island groups in the South China Sea, including Reed Bank and its surrounding waters, and claimed the Philippine plan violates Taiwanese territorial jurisdiction.

Vietnam criticizes Chinese plan for oil exploration in South China Sea. Vietnam March 15 protested plans by state-owned China National Offshore Oil Corporation (CNOOC) to open 19 blocks in the South China Sea for oil and gas development. Vietnamese officials said the plan violates Vietnam’s maritime sovereignty because one of the blocks is just one mile from the Paracel Islands, which have been occupied by China since 1974 but are still claimed by Vietnam.

Vietnam

Vietnam and South Korea hold inaugural strategic talks. Vietnam and South Korea March 20 held their first deputy minister-level dialogue on defense strategies. Meeting in Hanoi, Vietnam’s deputy defense minister, Nguyen Chi Vinh, and his Korean counterpart, Lee Young Geol, agreed on various measures to strengthen defense cooperation between the two countries and to hold regular talks, including a follow-up dialogue in 2013 in South Korea. The two leaders also discussed commemorating the 20th anniversary of the Vietnam-South Korea diplomatic relationship later this year.

Government issues new decree on NGOs. Vietnamese prime minister Nguyen Tan Dung issued a new decree giving international nongovernmental organizations (NGOs) more benefits, simplifying licensing procedures, and extending the validity of licenses from one year to three in an effort to encourage long-term projects. The law, which takes effect June 1, prohibits political or religious activities and any activity considered a threat to national security. Approximately 900 international NGOs operate in Vietnam.

Standard Chartered Bank to help Vietnam improve sovereign credit rating. Standard Chartered Bank announced March 22 it had been appointed to advise Vietnam’s Ministry of Finance to help improve the country’s sovereign credit rating. Vietnam’s current credit ratings are three to four notches below investment grade because of soaring inflation, balance of payments pressures, and the 2010 collapse of state-owned shipbuilding company Vinashin. Foreign direct investment inflows in the first two months of 2012 were $1 billion, down 9 percent from a year earlier.

Vietnam censures two high-ranking officials, prepares for Vinashin trial. Vietnam’s Central Party Inspection Committee March 14 censured Deputy Minister of Health Cao Minh Quang and Deputy Secretary of Dak Lak Province Lu Ngoc Cu for violating working regulations and abusing their positions. The government also set the trial of eight top executives at state-owned ship builder Vinashin, which went bankrupt in 2010, for March 27–30. Official corruption and abuse of power have come under increasing scrutiny as Vietnam’s government attempts to stem waning investor confidence and public support of the ruling Communist Party.

Singapore

Singaporean government responds to “unhealthiest city’’ ranking. Singapore’s Ministry of the Environment and Water Resources March 13 hit back at the University of British Columbia’s Eco2 Index, which ranked Singapore last out of 150 countries on overall economic and ecological health. The ministry said the results were “biased against import-dependent, land-scarce, densely populated countries such as Singapore,” and that the index would have been more relevant if Singapore was benchmarked against other cities rather than countries.

Singapore ranked Asia’s most competitive city. Singapore is the top city in Asia in efficiency, attracting businesses, and promoting a clean environment, according to a March 13 Economist Intelligence Unit report commissioned by Citigroup. The report ranks Singapore the third-most competitive city in the world out of 120, behind only New York and London and ahead of rival Hong Kong, ranked fourth. Singapore also ranked highest in financial maturity and physical capital.

Singapore building new international cruise terminal. Singapore is spending $400 million on a new terminal that will boost its capacity to host visiting ships. The Singapore Tourism Board announced March 20 the new terminal, which will join an existing cruise port under renovation, is expected to open by the end of 2012. The new terminal will be located near the Marina Bay Sands resort and will allow larger ships like Royal Caribbean's Voyager of the Seas to visit.

Singapore spending big on security. The Stockholm International Peace Research Institute said in a March 19 report that Singapore was the fifth-largest importer of arms from 2007 to 2011, ranking just one spot behind much-larger China and accounting for 4 percent of global arms purchases. The United States benefitted most from Singapore’s military acquisitions, with U.S. defense contractors involved in 43 percent of the city-state’s arms purchases. The report said arms deliveries to Southeast Asia during 2007–2011 reached their highest level since the Vietnam War, with deliveries to Malaysia and Singapore up almost 300 percent, to Indonesia up 144 percent, and to Vietnam up 80 percent

New York City mayor visits Singapore. New York City mayor Michael Bloomberg visited Singapore March 21 to receive the Lee Kuan Yew World City Prize 2012, awarded by Singapore’s Urban Redevelopment Authority and the Center for Livable Cities. The prize recognizes Bloomberg’s efforts in transforming New York City over the last decade. Bloomberg also attended the 15th World Conference on Tobacco or Health in Singapore March 22, where he announced that he would commit an additional $220 million to fight tobacco use around the world, bringing his total commitment to more than $600 million.

Malaysia

Malaysia Airlines seeks to delay share-swap deal with Air Asia. The Wall Street Journal reported March 19 that state-owned Malaysia Airlines has asked the owners of Asia Air to delay a previously agreed upon share-swap deal long enough to stabilize Malaysia Airlines’ finances and operations. The deal would see Air Asia’s parent company, Tune Air, take a 20.5 percent stake in Malaysia Airlines and Malaysia Airlines take a 10 percent stake in Air Asia. Malaysia Airlines took heavy losses in 2011 and chairman Nor Yusof March 16 described the company as a “very sick patient.”

Najib says winning a clear majority in Parliament will be challenging. Prime Minister Najib Razak told reporters March 18 that winning a clear majority in upcoming elections would be challenging. Najib’s ruling coalition in 2008 lost its two-thirds majority in Parliament for the first time since Malaysia gained independence in 1957. Najib is widely expected to call elections this year, perhaps as early as June but more likely in September.

Malaysia’s central bank lowers economic growth forecast for 2012. Bank Negara, Malaysia’s central bank, on March 21 cut the country’s 2012 economic growth forecast to 3.2 percent from 8.7 percent in 2011. The bank had previously predicted growth for 2012 to be 5–6 percent. The central bank said financial and economic restructuring in developed nations will dampen global growth and cause a slowdown in export growth in Malaysia.

Government approves committee to examine controversial rare-earths plant. Malaysia’s Parliament March 20 approved the establishment of a parliamentary select committee to examine controversies surrounding the Australia-based Lynas Corporation’s proposed rare-earths plant in Gebeng. The proposed plant has met considerable local opposition, with residents concerned about potential environmental and health hazards. Malaysia’s minister for higher education, Khaled Nordin, will chair the parliamentary select committee.

Indonesia, Malaysia to cooperate on peacekeeper training. Malaysian defense minister Ahmad Zahid Hamid said March 21 that Malaysia and Indonesia are in talks to cooperate on training and exchange of expertise for peacekeeping operations. Zahid, speaking on the sidelines of the Jakarta International Defense Dialogue, said the initiative would be jointly run by Indonesia’s Security and Peacekeeping Center and Malaysia’s Peacekeeping Training Center.

Timor-Leste

Ruak, Lu-Olo to compete in runoff for president. Tuar Matan Ruak and Francisco “Lu-Olo” Guteres will compete April 16 in Timor-Leste’s presidential runoff election. Ruak and Lu-Olo received 26 percent and 29 percent, respectively, in the first round of voting, with current president José Ramos-Horta conceding defeat. The relatively peaceful elections thus far mark a turned corner for the 10-year-old country, which saw significant violence during the last elections in 2007. Ruak and Lu-Olo are now consolidating support from minor parties. Ramos-Horta has not yet offered his support to either candidate.

Japan to give Timor-Leste $63 million loan for road construction. The government of Japan will give Timor-Leste its first yen aid loan for the construction and improvement of a road from the capital, Dili, to Baucau. The road is expected to boost Timor-Leste’s economy, and the low interest loan will be repaid over 30 years. The loan was announced as part of Prime Minister Xanana Gusmão’s March 19 visit to Japan, during which he met with his Japanese counterpart, Yoshihiko Noda. Noda reiterated Japan’s support for Timor-Leste’s bid to join ASEAN.

ASEAN

UN secretary-general visits ASEAN Secretariat. UN secretary-general Ban Ki Moon visited the ASEAN Secretariat in Jakarta March 20 for talks with Secretary-General Surin Pitsuwan. The two leaders sought to build on the ASEAN-United Nations comprehensive partnership that was signed in November 2011. Surin briefed Ban on his February trip to Myanmar, that country’s upcoming April 1 by-elections, and the status of Timor-Leste’s application for ASEAN membership.

ASEAN Humanitarian Assistance Center opens in Jakarta. ASEAN commemorated on March 15 the opening of its Humanitarian Assistance Center in Jakarta, Indonesia. The center is part of the organization’s ASEAN Community 2015 plans and seeks to facilitate cooperation and coordination among ASEAN states. Each of the 10 ASEAN members will need to contribute $30,000 per year to finance the center. The center’s executive director, Said Faisal, said that some of ASEAN’s dialogue partners had agreed to contribute money or training staff to the center.

ASEAN, South Korea, Japan, and China expected to double Chiang Mai Initiative reserves. The 10 ASEAN states and their dialogue partners Japan, South Korea, and China are expected to increase the Chiang Mai Initiative’s foreign currency reserve pool from $120 billion to $240 billion. The initiative was established in the wake of the 1997 Asian financial meltdown to avoid future crises. The director and chief economist of the ASEAN integration monitoring office, Aladdin Rillo, said March 18 doubling of funds would be considered and most likely approved March 28 at a meeting of deputy finance ministers and central bank governors in Cambodia.

Brunei Darussalam

Deputy defense minister meets his Chinese counterpart. Deputy Defense Minister Paduka Haji Mustappa bin Haji Sirat Mustapa met with Chinese defense minister General Liang Guanglie March 19 during an official visit to Beijing. The meeting was part of a tour of the region to pave the way for Brunei’s hosting of the second ASEAN Defense Ministers Meeting Plus (ADMM+) in 2013. The ADMM+ brings together defense ministers from the 10 ASEAN states and their dialogue partners, including the United States. The two officials also discussed the bilateral relationship between Brunei and China.

Japan to continue purchase of LNG from Brunei but at decreased levels. A Japanese consortium that includes Tokyo Electric Power will purchase 3.7 million tons of liquefied natural gas (LNG) from Brunei each year for 10 years starting April 2013. The consortium last year agreed to purchase 6.6 million tons per year, but Japan is now working to diversify its energy mix and sourcing after struggling to meet electricity demand following the Fukushima Daiichi earthquake and tsunami disaster in March 2011.

Laos

Laos ends gambling in casino city on Chinese border. Lao state media reported March 21 the country is ending gambling at casinos in Boten near the Chinese border amid concerns over increased crime. The Lao government changed the gambling hub into a special economic zone where gambling is forbidden. The casinos in Boten catered to Chinese nationals working on development projects in Laos, but security concerns have sparked debate about allowing any more gambling activity in border cities.

Thailand and Laos agree to resume border talks after five-year hiatus. Laos’s deputy foreign minister Bounkeut Sangsomsak March 21 proposed a ministerial-level meeting to resume talks on Thai-Lao border demarcation through the Joint Boundary Commission. The commission has not met since 2007. Bounkeut made the announcement at the 17th Thai-Lao Joint Commission meeting with Thailand’s deputy permanent secretary for foreign affairs Chalermpol Thanjit. Disputed areas include villages in the Thai provinces of Uttaradit and Chiang Rai.

U.S. supports Laos’s bid for WTO membership. Lao and U.S. officials March 14 signed an agreement to conclude bilateral negotiations to offer official U.S. support for Laos joining the World Trade Organization. The agreement follows Laos’s amending laws relating to investment, business operation, and imports and exports. Laos struggles to attract foreign direct investment in the non-resource sector due to limited market access. Only the European Union and a few other countries currently offer low import duties on Lao products.

Japan provides flood aid and loan for power development in Laos. Japanese prime minister Yoshihiko Noda March 16 offered Laos a low-interest loan worth $50.9 million for a power system development project in the country's southern region and extended a $7.3 million grant to help restore areas affected by flooding in 2011. Noda made the announcement during a meeting in Tokyo with his Lao counterpart, Thongsing Thammavong, to discuss cultural exchanges that would mark the 60th anniversary of diplomatic relations between the two countries.

Mekong Delta

Advocacy groups highlight ecological damage of 12 planned dam projects on Mekong River. Vietnam Rivers Network and the World Wildlife Fund presented scientific studies at a March 19 conference in Ho Chi Minh City highlighting the risks to Mekong delta agriculture and fisheries of 12 planned hydropower dams in Laos. The studies showed that 1,000 species of fish may vanish and alluvial depletion and land erosion will severely affect agricultural production. The dams are expected to generate $3.3–$3.7 billion in annual revenue. Laos would receive 70 percent of the profits, Cambodia and Thailand 11–12 percent each, and Vietnam 5 percent.

China claims joint patrols on Mekong River effective at curbing piracy. The director of public security for Yunnan Province was quoted by Chinese media March 13 claiming piracy on the Mekong River had decreased notably since joint patrols between China, Thailand, Myanmar, and Laos began in late 2011. The Mekong River flows through China's Yunnan Province and is a major trade route into Southeast Asia. The murder of 13 Chinese crewmen in October 2011 halted Chinese shipping on the river for two months and prompted the joint patrols.

APEC

APEC holds women’s leadership forum. APEC held its first international conference March 8–9 on the impact of women’s leadership on economic growth and improving corporate competitiveness. The conference, titled “APEC Leadership Forum on Women: Powerhouse for Economic Growth,” brought government delegations from APEC member states, female business executives, and up-and-coming young leaders together in Japan to discuss successful policies to empower women to become drivers of economic growth.

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Looking Ahead

Presentation on foreign direct investment in Laos. The Elliott School of International Affairs’ Sigur Center of Asian Studies will host a talk April 5 titled “Modernization and its Discontents: A Field Study of Foreign Direct Investment in the Forest of Laos,’’ with MA candidate Karen Wenchao Mo. The presentation will cover the legal, political, social, and local economic implications of commercial tree plantation development in Laos. The event will be held from 4:00 p.m. to 5:00 p.m. at the Elliott School of International Affairs, Room 505, 1957 E St., NW. Please RSVP here.

Talk on Taiwan and APEC. The Elliott School of International Affairs’ Sigur Center of Asian Studies will host a talk April 6 on Taiwan and its relationship with Asia-Pacific Economic Cooperation (APEC) featuring visiting scholar Joseph C. Y. Chang. Chang is chief of the APEC Affairs Section at Taiwan’s Ministry of Foreign Affairs. The event will be held from 2:00 p.m. to 4:00 p.m. at the Chung-wen Shih Conference Room, Elliott School of International Affairs, Suite 503, 1957 E St., NW. Please RSVP at go.gwu.edu/ChangApril6.

Round table on political prisoners in Myanmar. Initiatives for Asia will host a round table April 9 on the state of political prisoners in Myanmar with Bo Kyi, co-founder of the Assistance Association for Political Prisoners in Burma. The event will be held at Burma Restaurant, 740 6th St., NW, at 6:00 p.m. Dinner will start at 6:30 p.m. and Bo Kyi will speak at 7:15 p.m., followed by a Q&A. For more information, please contact initiativesforasia@gmail.com or see www.aappb.org or www.facebook.com/burmaroundtable.

Global Security Forum 2012 at CSIS. CSIS will host the third annual Global Security Forum April 11 from 8:00 a.m. to 2:00 p.m. The half-day event will feature nine sessions on various topics. CSIS Southeast Asia Program senior adviser and director Ernest Bower will give a geospatial presentation during the session from 11:00 a.m. to 12:45 p.m. titled “Navigating the Geopolitics of the South China Sea,” to be followed by a panel discussion with Maurice R. Greenberg and Admiral Joseph W. Prueher (ret.). The forum will be held at the Four Seasons Hotel, 2800 Pennsylvania Avenue, NW. Registration has been closed due to the volume of interest, but all the panels will be webcast at http://gsf.csis.org.

Lecture on Obama’s foreign policy. The Johns Hopkins University’s School of Advanced International Studies (SAIS) will host a lecture April 11 titled “Obama’s Approach to Foreign Policy” by Alan Platt, professorial lecturer in American foreign policy. The event will be held from 8:00 a.m. to 9:30 a.m. at the SAIS Rome Building, Room 812, 1619 Massachusetts Ave., NW. Please RSVP to saisevents@jhu.edu or call (202) 663-5636.

Talk on West Papua and globalization. The Institute for Global and International Studies will sponsor a talk April 12 titled “Freedom in Entangled Worlds: West Papua and the Architecture of Global Power’’ with Eben Kirksey, Mellon Fellow and visiting assistant professor, City University of New York Graduate Center. Kirksey will share his work on Papuan resistance to Indonesian control and globalization. The event will be held from 5:30 p.m. to 6:30 p.m. at the Elliott School of International Affairs, 5th Floor Seminar Room, Suite 501, 1957 E St., NW. Please RSVP at http://bit.ly/GEmtqb.

Talk on Malaysia and the Trans-Pacific Partnership (TPP). The Malaysia-America Society and American University’s ASEAN Studies Center will host a talk April 13 on the challenges and opportunities of the Trans-Pacific Partnership for Malaysia. Daniel Watson, deputy assistant secretary for Southeast Asia with the Office of the U.S. Trade Representative, Hairil Yahri Yaacob, minister counselor with the Embassy of Malaysia, and Catherine Mellor, director of the U.S. Chamber of Commerce’s Asia department, will speak at the event. The talk will be held from 6:30 p.m. to 8:30 p.m. at American University’s School of International Service, Founders Room, 4400 Massachusetts Ave., NW. Please RSVP to Nadia Bulkin at aseanstudiescenter@american.edu.

Conference on power and identity in Asia. The George Washington University’s Rising Powers Initiative will host a conference April 16 from 9:00 a.m. to 5:45 p.m. titled “Power, Identity, and Security in Asia: Views on Regional Cooperation and the U.S. Role.” The event will feature panels on India, Japan, Korea, ASEAN, China, and implications for U.S. foreign policy. The ASEAN panel from 2:00 p.m. to 3:00 p.m. will feature the East West Center’s Satu Limaye, American University’s Amitav Acharya, the University of the Philippines’ Allan Layug, and the University of Delaware’s Alice Ba. The conference will be held at the Elliott School of International Affairs’ City View Room, 7th Floor, 1957 E St., NW. Please RSVP here by April 12.

Conference on U.S. strategy in Asia. The National Bureau of Asian Research will host a conference April 18 titled “Engaging Asia 2012: Strategies for a Shift toward the Asia-Pacific.” Congressman Charles Boustany Jr. and Assistant Secretary of State for East Asian and Pacific Affairs Kurt Campbell will speak on the United States’ strategic rebalancing toward the Asia Pacific. Assistant U.S. Trade Representative for Southeast Asia and the Pacific Barbara Weisel will speak on the Trans-Pacific Partnership and U.S. trade policy in the region. The event will be held at the 20 F St., NW, Conference Center from 8:30 a.m. to 12:30 p.m. Please RSVP to Sonia Luthra at NBRdc@nbr.org.

Lecture on strategic transformation on Asia’s rim. The Johns Hopkins University’s School of Advanced International Studies (SAIS) will host a lecture May 2 titled “Strategic Transformation on Asia’s Rim” by Marvin Ott, professorial lecturer for Southeast Asia studies. The event will be held at the SAIS Rome Building, Room 812, 1619 Massachusetts Ave., NW, from 8:00 a.m. to 9:30 a.m. Please RSVP to saisevents@jhu.edu or call (202) 663-5636.

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