THAILAND’S LESSON FOR INDONESIA—STRENGTHEN INSTITUTIONS BEFORE CRISIS

There is near unanimous agreement that Indonesian democracy is one of the most remarkable accomplishments in Southeast Asia in the last two decades. The transition from autocracy under Soeharto to one man or woman-one vote was breathtaking. It transformed the country.  Indonesians know democracy was not easily won, nor can the country rest on its laurels for its historical accomplishment. In fact, Indonesians can learn an important lesson from their colleagues in Thailand. Namely, strengthen institutions that underpin democracy when you have the opportunity. Do not wait until crisis comes knocking.

During the Cold War, Southeast Asia was led by a handful of autocratic strong leaders—Soeharto, Mahathir, Marcos, Lee Kuan Yew, and arguably the King of Thailand—who all benefited from the Cold War dynamic that supported leaders who could, even in the most Machiavellian ways, control their politics, societies, and economies. These men were very successful in that mission and transformed their countries from post-colonial commodity-based economies into Asia’s newly developed “tigers.” Foreign investment poured in, infrastructure was built, and countries were brought into the modern era.

Unfortunately, what didn’t happen during that period, in most cases anyway, was the development of institutions that would underpin the democratic evolution that was coming in some form or another for all these countries. Indeed, such institutions were undercut or subjugated to support autocratic rule and maintain the status quo.  As the region’s strongmen left the stage in different ways, more political space was created and democratic reforms put into place. Thailand made a transition by pulling the military out of direct involvement in politics in the early 1990s —not without some serious violence and strife—and instituted a new constitution.

However, as the horrifying events in Bangkok earlier this year proved, Thailand’s institutions—the courts and the electoral commission, to name only two—were not developed enough and had not earned the independence and trust of the Thai people sufficiently to resolve the conflicting views and actions of partisans so as to avoid violent conflict and crisis. In fact, had a hundred or more of the new automated voting machines used in the May 2010 elections in the Philippines failed to function, and had candidate Aquino, who had what appeared to be an insurmountable lead according to polls before the election not won with a definable margin, his supporters, dressed in yellow, were poised to take to the streets all around the country. There was a complex and well-coordinated plan to execute this action in fact, due to Filipinos’ mistrust and suspicions of their own electoral processes.

Fast forward to the next Indonesian elections in 2014. What if the candidates competing for president at that time run a very close and disputed race? Are Indonesia’s courts and electoral bodies prepared for that situation? Indonesia is very fortunate that President Yudhoyono won the 2009 elections with such a mandate (just as the Philippines was lucky that President Aquino won indisputably).  The question is, what if the race is close in 2014? What if certain candidates have access to sources of hard power—either from the military or from access to fortunes from private business?  This is a serious question for Indonesian leaders and civil society to consider.

Perhaps now is the right time to invest in strengthening key democratic institutions in Indonesia, and indeed around the region, so that if a test comes in the national elections in 2014 or in other ways that cannot be predicted, those institutions can protect the veracity of Indonesia’s nascent democracy and the rights of its deserving citizens and avoid the bloodshed that Thais have sadly endured. Indonesia will do well to learn the hard lesson Thailand has shared. In this Issue
 

THE WEEK THAT WAS

• Dr. Ng Eng Hen, Singapore’s Minister for Education and Second Minister for Defense Japan invests $12 billion to rebuild ASEAN cities
• Thailand and Cambodia resume diplomatic ties
• The Philippine economy grew 7.9 percent in Q2
• China plants a flag on South China Sea’s seabed

LOOKING AHEAD

• CSIS Banyan Tree Leadership Forum: Indonesian foreign minister Marty Natalegawa
• CSIS launches U.S.-New Zealand Pacific Partners Study
• CSIS SEAP interview with Dr. Ng Eng Hen, Singapore’s Minister for Education and Second Minister for Defense

THE WEEK THAT WAS
ASEAN

U.S. Senator: Obama needs to act quickly on ASEAN. In a letter to President Obama on August 25, Senator Richard Lugar, member of the Foreign Relations Committee, urged the president to quickly name an ambassador to ASEAN. A copy of the letter is available here: http://cogitasia.com/2010/08/26/lugar-asks-obama-to-appoint-us-ambassado.... Former president George W. Bush named Scot Marciel as the first U.S. ambassador to ASEAN in 2008. However, Obama recently named Marciel as U.S. ambassador to Indonesia. CSIS senior adviser and director of its Southeast Asia Program Ernie Bower wrote about the trade gap in U.S. strategy for intensifying its engagement in Southeast Asia in his piece on the CSIS Asia policy blog cogitASIA: http://cogitasia.com/2010/08/25/absent-in-danang-urgent-need-for-a-us-trade-policy-in-asia/

ASEAN economic ministers determined to form single market by 2015. ASEAN economic ministers convened on August 25 for their 42nd annual meeting and the 4th ASEAN Economic Community Council's meeting. Ministers reaffirmed their will to establish a single market by 2015 and discussed measures to enhance its implementation, such as removal of non-tariff barriers and a boost in trade financing for small and medium enterprises (SMEs). Officials also proudly announced that as of January 2010, 99.65 percent of all tariff lines under the Common Effective Preferential Tariff Scheme for the ASEAN Free Trade Area (AFTA) have been eliminated. Other initiatives include the acceleration of liberalization and facilitation of logistics subsectors until 2013.

ASEAN plus 6 nations approve $290 billion Asian development plan. The $290 billion plan could be an important step toward effective economic integration in Asia. It will cover about 700 railway, airport, seaport, energy, telecommunications, and other infrastructure development projects linking ASEAN, China, and India.

Japan invests $12 billion to rebuild ASEAN cities. Approximately 400 Japanese enterprises will join the $12 billion Smart East Asian Community Initiative by the Japanese government to rebuild the cities of ASEAN under a public-private partnership. The initiative will assist these cities in installing smart electric systems, energy-efficient public transport, and water treatment facilities utilizing green technology. Construction will roll out in Jakarta, Hanoi, and Ho Chi Minh City in the next five years.

India, ASEAN meet on services pact. Trade ministers from India and ASEAN have agreed to fast-track their bilateral services and investment agreement. India-ASEAN trade stood at $43.5 billion in 2009–2010 and is targeted to reach $70 billion by 2012. India is driving for a quick conclusion of the negotiations following the signing of the bilateral agreement on goods earlier this year.

China supports ASEAN Defense Minsters’ Meeting Plus (ADMM+). Chinese defense minister Liang Guanglie said on August 24 in a meeting with visiting Vice Defense Minister of Vietnam Nguyen Chi Vinh that China hopes ADMM+ serves as a framework for handling nontraditional security challenges while strengthening mutual cooperation.

First post-ECFA forum on ASEAN ties slated for August 26 in Taipei. The first large-scale academic event following the Economic Cooperation Framework Agreement (ECFA) signed by China and Taiwan in June will explore how Taiwan and ASEAN members can cooperate even more closely in promoting economic development and Asia-Pacific regional integration. ASEAN academics and experts scheduled to present papers at the seminar include Sabam Sigian, Indonesia’s former ambassador to Australia, and Somkiat Tangkitvanich, vice president of the Thailand Development Research Institute, as well as scholars from Singapore, Vietnam, and the Philippines. CSIS experts Ernie Bower and Charles Freeman explored the tightrope Singapore and other ASEAN countries will need to walk to establish FTAs with Taiwan in their note in cogitASIA: http://cogitasia.com/2010/08/17/singapore%E2%80%99s-tightrope-walk-on-ta...

BURMA

U.S. State Department issues travel alert for Burma. On August 25, the U.S. State Department issued a travel notice alerting U.S. nationals of the possibility of being deported or detained when visiting Burma between now and the national elections on November 7. Currently, nearly 100 foreign NGOs working on post-Cyclone Nargis humanitarian projects face deportation and fines for overstaying their visas. Burmese media announced this week that the “visa on arrival” service will be suspended as of September 1, a move many observers claim is related to the junta’s fears of journalists and activists entering the country and causing a commotion. There are no plans for Burma to allow international observers for the November elections.

Burmese opposition parties may not participate in upcoming elections. Due to the unexpected announcement of the elections date and the requirement for all parties to send in their candidates’ lists by August 30, almost all 41 political parties set to contest in the elections have been caught unprepared. Many parties have yet to finish selecting their candidates, and as a result only half of them may remain in the competition. Significantly, the National Democratic Front (NDF), a splinter group from Aung San Suu Kyi’s National League for Democracy (NLD), reversed its earlier decision to run in the elections last week and will not participate. Earlier, the NDF split from the NLD based on its members’ desire to contest the election.  

Burmese generals shed uniforms. On August 25, there were reports that top Burmese military leaders were retiring to be able to compete in elections and become civilian rulers. Burma’s top two junta leaders—Senior General Than Shwe and his second-in-command, General Maung Aye—were among those exchanging uniforms for suits, as did the regime's numbers three and four. It is believed that they will stand as candidates for the junta's largest proxy party, the Union Solidarity and Development Party (USDP). The reshuffle is the second since April, when 27 senior officials, including Prime Minister General Thein Sein, retired from the military to become candidates in the elections.

UN aid efforts in Burma are “unsatisfactory.” According to a report by the independent assessment mission under the United Nations Development Program (UNDP), UN aid efforts in Burma are “unsatisfactory” and “with modest or limited impact.” One reason cited for the failure is the wide range of development activities that are currently operating under the UNDP, leading to excessive diversion of limited funds. Another reason is the difficulty of dealing with the fluctuating political conditions over the past few years. The report could add to the phenomenon of “donor fatigue” currently affecting aid in Burma.

THAILAND

Thailand and Cambodia resume diplomatic ties. The resignation of former Thai prime minister Thaksin Shinawatra as the economic adviser to Cambodia eased tensions between Thailand and Cambodia. The countries reestablished diplomatic relations and reinstated their ambassadors. The dispute over the Preah Vihear temple remains unchanged.

Bombings continue. Another grenade went off at King Power in Soi Rangnam in central Bangkok. A security guard was injured but is not in an intensive care unit. Deputy Prime Minister Suthep Thaugsuban repeated his position that these bombings were geared toward creating violence, which justifies the emergency decree. The police are closely examining closed circuit television footage of the area.

Baht at two-year high. With the economy strong and amid speculation that the Bank of Thailand will increase prime rates again in the future, the Thai baht appreciated another half a percentage point to 31.36 to the U.S. dollar, its highest level since March 2008 and the largest one-day gain. However, it is estimated this will not hurt exports-driven growth.

Extradition of Victor Bout delayed. Extradition of alleged Russian arms-dealer and money-launderer Victor Bout from Thailand to the United States has been delayed. Bout is charged with supplying weapons to terrorists and money laundering. U.S. air marshals and jets were waiting at Don Muang airport last week to transport Bout when Thai authorities baulked. Thailand’s attorney general explained that the extradition could not be enforced because the United States had filed a second charge for money laundering, which delayed legal procedures. Thailand is under pressure from both Washington and Moscow, drawing significant international attention to the case.

VIETNAM

Vietnamese government implements price control measures. Starting October 1, the Vietnamese government will implement new measures to enact price controls on foreign and private companies to contain inflation. The new measures will allow the government to control prices on a variety of goods, ranging from cement and steel to sugar and rice. However, critics claim that such a move may also stifle business sentiment.

Industrial output in Vietnam rises 13.7 percent. Vietnam’s industrial output reached $26.1 billion by the end of August, 13.7 percent higher than for the same period last year, based on reports by the Planning and Investment Ministry’s Industrial Economy Department. Foreign-invested enterprises were the highest growth sector. Industries such as electricity, gas, building materials, and automobiles achieved high growth, while seafood, air conditioners, and cotton came in below their targeted outputs.

Vietnam seeking FDI to Mekong River Delta. On August 26, the Vietnamese Ministry of Planning and Investment held a conference to discuss ways to attract foreign direct investment (FDI) to the Mekong River Delta—the country's rice bowl. Some representatives suggested that the government should focus on rice growing, tourism development, and aquaculture work. Others urged the government to focus on transportation, arguing that building a network of roads linking all the provinces will attract more investment.

Storm Mindulle leaves central Vietnam devastated. Tropical storm Mindulle has left 10 people dead, 1 missing, and 64 others injured. According to the Vietnamese Central Steering Committee for Flood and Storm Prevention and Control, total property loss is estimated at $44 million. Nghe An province was the hardest hit. Vietnamese authorities are closely monitoring river levels as they work on recovery measures.

MALAYSIA

Prime Minister Najib’s merdeka speech. As Malaysia celebrates its 53rd year as a nation, Prime Minister Najib Razak delivered a speech commemorating the event. He lauded the nation’s progress over the five decades since independence and urged Malaysians to strive for greater achievements, which can happen onoly by capitalizing on the individual talents of the Malaysian peoples. Prime Minister Najib reiterated the need for Malaysians to move away from racial and religious divides, as those issues can easily hinder, if not regress, the nation’s advancement into a high-income country.

Foreign Minister: “Malaysia running out of patience with street demos in Indonesia.” Malaysian foreign minister Datuk Seri Anifah Aman, in a protest note on August 25 to his Indonesian counterpart, Foreign Minister Marty Natalegawa, said Indonesia should curb the street demonstrations immediately. Tensions remain high despite the agreement between Indonesia and Malaysia that the maritime dispute has been peacefully resolved.

India hopes to conclude FTAs with Malaysia by 2010. Deputy Malaysian trade minister Mukhriz Mahathir said on August 23, “We are confident that when Prime Minister Manmohan Singh comes to Malaysia we will have the documents to be signed. His visit is in late October.” Malaysia is India’s second-largest trading partner in ASEAN after Singapore. It is trying to position itself as India’s gateway to other ASEAN countries and China.

INDONESIA

Indonesia sets up government unit to boost renewable energy use. Energy Minister Darwin Saleh said on August 24 that the new directorate general is mandated to “formulate policies and the technical standardization on new energy, renewable energy, and energy conservation.” The new office will be headed by Luluk Sumiarso, the former director general for electricity, oil, and gas.

21 suspected militants go on trial in Indonesia. Twenty-one suspected Islamist militants went on trial on August 26 on charges of plotting attacks on foreign aid workers and others in Indonesia's Aceh province. All of the defendants are accused of violating the anti-terror law, with a maximum penalty of 20 years in jail. The International Crisis Group’s expert on Indonesia and counterterrorism, Sydney Jones, provided an in-depth briefing to experts at CSIS in June 2010 on terrorist groups in Indonesia, including those apprehended in Aceh. For a copy of Ms. Jones presentation click here: http://csis.org/event/regional-conflicts-southeast-asia-perspectives-int....

PHILIPPINES

8 Chinese tourists killed in hostage situation in Manila. A rainy 12-hour standoff on August 23 between a former police officer and the Manila police ended tragically in bloodshed when police were unable to diffuse the hostage-taking situation. The former policeman demanded back his old job on the police force, claiming he had been discharged for a crime he did not commit. In the event, eight hostages, all tourists from Hong Kong, were killed on the bus. The incident uncovered poor training, preparation, and planning on the part of the Manila police and has led to cancellation of tour groups and flights from Hong Kong to the Philippines.

The Philippine economy grew 7.9 percent in Q2. Strong growth was driven by exports and fiscal spending. Growth was concentrated in the mining, manufacturing, and construction sectors. Agriculture, however, suffered record losses and slowed net growth.

SINGAPORE

Prime Minister Lee Hsien Loong’s national day speech. Prime Minister Lee Hsien Loong delivered a speech in celebration of the nation’s 45th year and praised the country’s ability to stand united in the face of economic recession. He commented on immigration and how Singapore’s cultural diversity has been accommodating to the influx, while additions to the labor force have contributed to the economy. The prime minister also stressed the importance of affordable education to give citizens equal opportunity. He concluded by emphasizing the “Singapore Spirit”—shared values, meritocracy, responsibility, and loyalty to Singapore, stating this spirit will take the nation to the next level. The full speech is available here: http://www.pmo.gov.sg/News/Speeches/Prime+Minister/National+Day+Rally+2010+Speech+%28English%29+by+PM+Lee+at+University+Cultural+Centre+NUS.htm

Singapore tops in IPR. A survey by the Hong Kong–based Political and Economic Risk Consultancy  says Singapore has the best record in Asia when it comes to protecting intellectual property rights (IPR). Indonesia has the worst performance. The survey polled 1,285 expatriate managers between June and mid-August. The rankings largely reflect studies by the global software industry, which is alarmed by the easy availability of pirated movies and software in Asian cities despite legal reforms and promised crackdowns.

CAMBODIA

Duch appeals his conviction. Former Khmer Rouge prison chief Duch appealed his 35-year prison sentence August 25. The original sentence of 35 years in prison was reduced to 19 years due to time already served. While Duch appeals his conviction, prosecutors are appealing for a longer sentence, claiming that the judgment “gives insufficient weight to the gravity of Duch’s crimes.” The Khmer Rouge regime’s brutal rule led to the deaths of an estimated 1.7 million people.

LAOS

Vietnamese president praises Vietnam-Laos relations. The president of Vietnam, Nguyen Minh Triet, concluded his visit to Laos on August 26 to begin a tour of Cambodia at the invitation of King Norodom Sihamoni. During his visit, President Triet praised the cooperation between Lao and Vietnamese businesses, as well as the Vietnamese nationals living in Champasak for their contributions in tightening Vietnam-Laos relations. At a meeting with Khamtay Xiphandone, former chairman of the Lao People’s Revolutionary Party, President Triet also expressed wishes to strengthen relations between the two countries in the future. The visit is consistent with Vietnam’s efforts to strengthen ties with its immediate neighbors as China and Vietnam compete for influence in Laos.

AUSTRALIA

AUSMIN rescheduled. The heart of U.S.-Australian government-to-government coordination is the annual Australia–U.S. Ministerial (AUSMIN). The original meeting was planned for January, but U.S. Secretary of State Hillary Clinton had to turn around halfway to Australia to oversee the United States’ response to the tragic earthquakes that devastated Haiti. The AUSMIN has been rescheduled for October.

Election results in limbo. There has been no clear victory in the Australian elections. The Labor party, led by Tony Abbott, and the incumbent prime minister, Julia Gillard, has been holding meetings with several independents throughout the week. Australia is in political limbo as the two-party preferred vote is being counted; the Australian Electoral Commission (AEC) has stated that it has counted 82.11 percent of the two-party preferred votes, with the Labor party leading the two-party-preferred count by 3,681 votes — a 50.02-49.98 percent split. The final tally is not expected until September 3. Read more about what this election means for the future Australian foreign policy on cogitASIA http://cogitasia.com/2010/08/26/australian-we-have-a-recipe-for-do-nothi... and http://cogitasia.com/2010/08/24/green-foreign-policy-feeling-queasy/

PAPUA NEW GUINEA & TIMOR-LESTE

Microfinance initiatives from the World Bank’s IFC. The International Finance Corporation (IFC), the World Bank’s investing arm, has implemented a new microfinance initiative in the South Pacific. The plan will reach out to South Pacific island-nations, including Papua New Guinea and Timor-Leste, with $12.3 million. The microfinance project will target those in the lower income bracket and provide credit at lower cost to those in need. This project is in tune with the discussion at the recent Pacific Islands Forum, where leaders stated the need for microcredit availability during the Private Sector Dialogue.
 

NEW ZEALAND

Air New Zealand reporting higher profits, airline industry recovering. Despite reports of a 6 percent decrease in total revenue, profits for Air New Zealand have been increasing. Unfavorable foreign exchange conditions, fewer numbers of travelers, and high fuel prices caused a significant drop in revenues. However, as fuel prices stabilized, the airline has recovered and is doing better than it has in previous years. Cheaper ticket fares and economic recovery has also brought in more travelers. Airlines elsewhere in the world are also reporting positive trends. This signals a gradual upturn for the airline industry.

Ambassador Moore begins to make rounds in Washington. New Zealand’s new ambassador to the United States, Mike Moore — a former prime minister of his country and former director general of the World Trade Organization — began making his initial rounds in Washington, D.C., this week. Ambassador Moore is focusing on strengthening bilateral ties and garnering support for the Trans-Pacific Partnership (TPP) trade negotiations, which include New Zealand, the United States, and six other countries within APEC.

SOUTH CHINA SEA

China plants a flag on South China Sea’s seabed. China used a submarine to plant a national flag on the seabed of the South China Sea to assert its ownership of the seabed and potential natural resources it contains. In addition to the flag planting, which is a conventional way by which nations signal claim to a territory, China has also made numerous dives beneath the sea during the past summer utilizing a  submersible, a 22-tonne and eight-metre-long submarine-like craft supported by a bigger vessel, reaching approximately 12,000 feet below sea level.

Deputy Assistant Secretary of Defense for South and Southeast Asia Robert Scher briefed senior foreign policy group at CSIS. DASD Robert Scher briefed CSIS experts and invited experts on his recent visits to Hanoi, Jakarta, and Singapore over the last six weeks. Mr. Scher most recently returned from Hanoi, where he led the U.S. delegation for the inaugural U.S.-Vietnam Defense Dialogue with his counterpart, Vice Minister of Defense Nguyen Chi Vinh. Scher described the talks as very productive, open, and frank. He predicted the U.S.-Vietnam defense relationship would continue to improve at a steady pace. He also commented on his visit to Jakarta with U.S. Secretary of Defense Robert Gates and described the overwhelmingly positive response from President Susilio Bambang Yudhoyono and Indonesian minister of defense Juwono Sudarsono to developments allowing the United States to engage Kopassus, Indonesia’s elite Special Forces unit. President Yudhoyono stated that the Indonesian military would follow through on agreed reforms linked to the Kopassus agreement.

LOOKING AHEAD

CSIS Banyan Tree Leadership Forum to feature Indonesian foreign minister Marty Natalegawa. Invitations will be distributed next week to the CSIS Banyan Tree Leadership Forum speech by Indonesian foreign minister Marty Natalegawa on September 17. Minister Marty will discuss Indonesia’s outlook on bilateral relations with the United States and Indonesia’s vision as it takes over the chairmanship of ASEAN later this year. Indonesia is also a member of the G-20. Invitations for the Banyan Tree Forum will be distributed next week. The Banyan Tree Leadership Forum is dedicated to exploring the visions of leaders from Southeast Asia and the United States. Interested parties may contact SoutheastAsiaProgram@csis.org.

Malaysia will commemorate its 53rd anniversary of independence on August 31. On August 31, 1957, the British peacefully ceded colonial rule over what was then known as the Federation of Malaya.

CSIS launches U.S.-New Zealand Pacific Partners Study. On September 9, CSIS will launch a new research based study on the U.S.-New Zealand partnership. The study will result in recommendations for enhancing ties between the two friendly nations across areas such as trade and investment, security and political issues, sociocultural and people-to-people ties, and transnational issues. U.S. Assistant Secretary of State Kurt Campbell and New Zealand ambassador Mike Moore will share remarks at the event at CSIS. The event is on the record and press releases will be available after the program. Interested parties may contact SoutheastAsiaProgram@csis.org.

CSIS Southeast Asia interview with the Honorable Dr. Ng Eng Hen, Singapore’s Minister for Education and Second Minister for Defense. CSIS senior adviser and director for Southeast Asian studies Ernie Bower will conduct an online interview with Minister Ng on September 9 at CSIS. The interview will be available online at http://csis.org/program/southeast-asia-program.

CSIS Southeast Asia Program will host Indonesian policy expert Dr. Rizal Sukma of CSIS Jakarta for a discussion of the regional architectural framework of Southeast Asia and Indonesia’s roadmap for action during its forthcoming chairmanship of ASEAN. More details will be available; interested parties, please e-mail SoutheastAsiaProgram@csis.org

Deputy Assistant Secretary of Defense Robert Scher will visit the Philippines. DASD Robert Scher will visit the Philippines in mid-September for discussions with senior defense officials from the U.S. treaty ally. Issues include capacity building, coordination on maritime security and on various initiatives including humanitarian assistance and disaster relief (HADR), and discussions about U.S. support for the Armed Forces of the Philippines (AFP) generally and in Mindanao specifically. The officials will also discuss the Visiting Forces Agreement (VFA).

CSIS will cohost a discussion with His Excellency Vo Hong Phuc, Minister of Planning and Investment of Vietnam. CSIS Southeast Asia will cohost a discussion with the Prime Minister’s Advisory Council for Competitiveness (PMAC) in Washington, D.C., on September 27. The meeting is private and by invitation only. Interested parties may contact Mary Beth Jordan (mjordan@csis.org) for more information.

APEC Japan 2010 Senior Officials’ Meeting 3. The APEC Senior Officials’ Meeting 3 (SOM 3) will be held on September 25 and 26 in Sendai City.

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