Asia - In Asia, Worries Over Healthcare Costs Grow as Populations Rapidly Age

Wolfram Hedrick and Jonathan Tan, senior directors for Asia Pacific Risk Center in Singapore, in a recent commentary said rising healthcare costs could threaten future growth in the world's major economic engine.

'Elderly healthcare represents a significant fiscal health risk all across Asia," they said.

Becoming 'aged societies'

The Asian Development Bank (ADB) says a rise in public expenditure is "particularly dramatic in East Asia" where spending in China is set to rise over 50 percent by 2050 due to rapid aging combined with "relatively high rates of economic growth.

Korea is also showing similar spending increases "in large part due to population growth."

Keizo Takemi, a member of Japan's House of Councilors and chair of a committee on global health strategy, told a recent conference on aging in Hanoi of the anticipated expansion in demand for healthcare services for the elderly among Asia's middle- and low-income countries.

Takemi said in Korea, Taiwan, China, Thailand and Sri Lanka, the aging populations had "advanced rapidly from 2000 on. These countries are forecast to become aged societies with elderly populations of 14 percent or more by 2016-2026."

Similar trends, he noted, were also evident in Vietnam, Indonesia, Myanmar, Kazakhstan, and Iran, divided between rapidly aging and slowly aging populations.

But Malaysia, Cambodia, Laos, India and Mongolia are among the countries whose populations will continue to age slowly, he said.

Japan is already facing the challenges of adapting to an older population. Some 32 percent or 41 million of Japan's 127 million population is over 60 years old.

Economic impact

ADB senior economist Donghyun Park said for Asia, known for its 'Tiger' economies in the 1980s and 1990s, aging populations are impacting economies.

"The issue is that, and it is well known, that less favorable demographics is a negative for growth, it's harmful for growth, so immediately there will be a negative impact on Asia's growth," Park told VOA.

Asia's substantial "demographic dividend" - of a young working population as a driver of the region's economic success, buoyed by sound institutions and positive government policies, paid off.

But China is a key example of a country where a rapidly aging population threatens to undermine the economic gains of recent decades.

"Unfortunately, that [demographic] dividend is coming to an end. In other words, in some countries already - not just these very high income countries such as [South] Korea, Singapore and Taipei, China and Hong Kong - rich countries - in which are demographic crisis is a here and now problem, but even in middle income countries such as China," Park said.

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Cambodia - Budget for 2017 to Increase by $5 Bil

The government plans to increase the 2017 national budget by 15.7 percent, to more than $5 billion – representing an increase over this year’s government expenditure of more than $4.3 billion – a government source said yesterday.

According to the Khmer Times source, the 2017 budget will focus on three main sectors – education, health and social welfare and economic development.

While the spokesman for the Council of Ministers, Phay Siphan, was reluctant to reveal the rise in government expenditure for the 2017 national budget, he confirmed an increase in next year’s spending for those three areas.

However, he said the figures would be released after this week’s cabinet meeting.

“The 2017 budget plan will be discussed during the upcoming cabinet meeting [which will be chaired by Prime Minister Hun Sen] on Friday,” he said.

“The increase in government expenditure in next year’s budget is possible due to the rise in revenue from our tax and customs and excise duties collection,” he told Khmer Times.

“Our three priority sectors in 2017 are education, health and social welfare and economic development,” added Mr. Siphan.

He pointed out that funds for government expenditure in the 2017 national budget would come from local revenue arising from direct and indirect taxes, grants from development partners as well as loans from multilateral financial institutions.

The government collected about $1.2 billion in taxes during the first nine months of the year, 20 percent more than the same period last year. In the same time period, the General Department of Customs and Excise collected $1.3 billion, up 16 percent compared with the previous nine months.

For the 2016 national budget, the government approved a 16 percent increase to make it $4.36 billion, from $3.75 billion in 2015. There was a 15.68 percent rise in social spending to $1.21 billion, from slightly more than $1 billion in 2015.

The biggest expenditure was on economic development, which saw a funding increase by 20 percent to about $1.3 billion, from about $1.07 billion in 2015.

Meanwhile, government expenditure in 2016 on defense, security and maintaining public order rose by 16.51 percent to about $711 million, from about $610 million in 2015.

Preap Kol, executive director of Transparency International (Cambodia), agreed that the government prioritizes spending on education, health and social welfare and economic development in next year’s national budget.

“These three sectors are a must for the country and they benefit all Cambodians,” he said.

However, he also raised concerns about monitoring the use of funds allocated to the various ministries in the national budget.

“The national budget keeps increasing every year, while there is very little monitoring on how well the funds have been utilized in the various sectors,” said Mr. Kol.

“Some sectors, like health, for instance, have not made much progress. There are questions to be asked on where the funds have gone and the answers need to be forthcoming for the sake of transparency,” he added.

“Of course we do appreciate the increase in government spending in the priority sectors. But what’s most important, also, is a mechanism for monitoring the use of funds in a transparent manner – with the participation of all institutions, the public sector, and civil society.”

Cambodians for Resource Revenue Transparency (CRRT), a watchdog organization, said recently that information about Cambodia’s budget was difficult to access.

“In many countries, a citizen’s budget is published by governments to give a non-technical overview of what the budget contains. This process does not exist in Cambodia,” said the group in the website.

“The only other way that the public can check up on the Royal Government’s budgetary spending is to look at the National Audit Report. However, the reports currently take years to be published, meaning that the funding has long ago been spent. The most recent National Audit Report published was for the 2011 budget. Consequently, scrutiny is difficult,” said CRRT.

“At CRRT, we think there is a clear need for greater budget transparency in Cambodia.”

May Kunmakara

Khmer Times

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Cambodia - Chinese Money Instrumental to Progress, Hor Namhong Says

Former Foreign Affairs Minister Hor Namhong, right, meets with Sun Guoxiang, China’s special rapporteur in charge of Asian affairs, in Phnom Penh in 2015. (Siv Channa/The Cambodia Daily)

Cambodia’s development “could not be detached” from Chinese aid, Deputy Prime Minister Hor Namhong said on Monday, joining a chorus of officials from both parties praising a relationship that appears to be deepening over similar stances on the South China Sea.

The comments came after Cambodia angered Asean neighbors and Western allies for refusing to join them in rebuking China’s vast territorial claims in the sea.

Cambodia characterizes its South China Sea position as neutral and declined to join other Asean members in a joint statement praising a July 12 ruling by a U.N.-backed tribunal that invalidated China’s claims, which are contested by the Philippines, Vietnam and others.

However, Asean diplomats have grumbled that Cambodia is merely serving as Beijing’s lackey in return for more than half a billion dollars in aid it received from China days after the verdict. The government has repeatedly downplayed Chinese influence on its foreign policy.

“It’s two different issues,” Foreign Ministry spokesman Chum Sounry said last week.

In a Monday meeting with China’s outgoing ambassador to Cambodia, Bu Jianguo, Mr. Namhong—who served for years as foreign minister before stepping down in April—emphasized the importance of Chinese aid in Cambodia’s development.

“Cambodia’s progress today could not be detached from China’s aid,” Mr. Namhong told the ambassador, according to Chinese state news service Xinhua. Cooperation between the countries had been “further strengthened and expanded” during Ms. Bu’s three- year tenure, Mr. Namhong added.

Mr. Sounry referred questions about the meeting to Mr. Namhong, who could not be reached.

Council of Ministers spokesman Phay Siphan agreed with Mr. Namhong, saying that Chinese direct investment, as well as infrastructure projects such as bridges and roads, were crucial to maintaining regional links.

“Without Chinese aid, we go nowhere,” he said.

Political analyst Ou Virak disputed the notion that China deserved so much credit for developing the country.

“I think that it would be a bit unfair to credit China with development in Cambodia,” he said. “Most of the credit should go to the people. It has nothing to do with Cambodia or China.”

China has steadily increased its aid to Cambodia. In 2014, Chinese President Xi Jinping promised Cambodia between $500 and $700 million in annual grants and loans—up from roughly $92 million in 2007. Critics say there is little oversight of how the aid is spent, but Mr. Hun Sen has praised China’s hands-off approach.

Speaking during a ceremony inaugurating a Chinese-funded road project in Kompong Speu province on Tuesday, Ambassador Bu said the deepening ties between Cambodia and China actually benefited Asean as a whole.

“Cambodia’s neutral and fair stance over the South China Sea issue has importantly contributed to protecting China-Asean good cooperation and to maintaining peace and stability in the region,” she said, according to Xinhua.

Mr. Hun Sen used the ceremony to announce that he would accept what the Ministry of Foreign Affairs described as the “very special and significant” Asean Lifetime Achievement Award at the 13th Asean Leadership Forum in Vientiane this weekend. Past recipients include the former heads of state of Malaysia and Singapore, as well as a Malaysian monarch.

In a speech, the prime minister credited his fans in Cambodia for the award.

“It’s the result of the efforts of our compatriots who voted for and supported the Cambodian People’s Party and voted for me to be prime minister,” he said.

“I thank the citizens of Kompong Speu province, people who are here, as well as citizens across the Kingdom of Cambodia who voted again and again for the CPP and for me to lead the country.”

(Additional reporting by Kuch Naren)

Ben Paviour

cambodiadaily

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ASEAN - What Asean did right: Compromise

Delegates attending the Regional Security Forum on the sidelines of the Association of Southeast Asian Nations (Asean)'s annual ministerial meeting in Vientiane on July 26, 2016. Photo: AFP

The Association of Southeast Asian Nations (Asean) has again come under criticism, this time for failing to refer in a joint communique to the recent judgment by the Permanent Court of Arbitration on competing claims in the South China Sea.

Cambodia has been singled out as the Asean member which blocked consensus during the Asean foreign ministers’ meeting in Laos.

In contrast, the United States and its principal allies in the region — Japan and Australia — issued a joint statement openly chiding China for its reclamation and military activities in the contested seas, and called on Beijing and Manila to abide by the tribunal ruling which invalidated China’s expansive claims in the strategic waterway.

In view of these developments, some observers have voiced concerns about Asean unity and its capacity to act on key security issues, called for action against the Hun Sen government and suggested changes be made to the decision-making process in Asean so that statements can be issued even without the agreement of all 10 members.

But on many counts, the widespread criticisms of Asean are wrong-headed.

Asean, in fact, reached a good compromise in a difficult situation. What it has done has helped the situation more than if, as critics wish, the group had issued a statement that was harsh on China. Here’s why.

First, Asean’s statement was not silent on the South China Sea issue.

It contained references to key principles such as preserving freedom of navigation and overflight, and the peaceful resolution of disputes, and urged for a binding code of conduct to manage the South China Sea issue.

In another statement issued after the group’s dialogue with China, there was a call to “peacefully solve territorial disputes through negotiation in accordance with international laws, including the United Nations Convention on the Law of the Sea”.

While there was no explicit mention of the court decision, let no one doubt that a message was delivered to Beijing — clearly, even if not loudly. This is the essence of quiet diplomacy — a tool that Asean has traditionally used, and with better effect on this occasion than just weeks ago when the two sides met in Kunming.

What would a stronger statement achieve? The criticism voiced by the US and its allies has been met with outright rebuttal by China. Beijing has now announced joint patrols with Russia.

The US will continue with its freedom of navigation patrols. But this tactic depends not on the force of principle, but the force of the American naval presence. If Asean had voiced similar protests without military heft, its words might risk sounding hollow.

ROOM TO MANOEUVRE

Second, the primary responsibility to deal with the issue lies with China and the Philippines, which brought the case to the court. Consider how Manila responded.

In the past, when Asean was stymied from siding with the Philippines against China, the previous Aquino government openly expressed disappointment. On this occasion, Manila more readily accepted the group stance.

Being somewhat detached from the court proceedings undertaken by his predecessor, President Rodrigo Duterte has an opportunity for a new approach to reach a compromise. Trumpeting the court decision too stridently might not help but rather hinder flexibility.

Much also depends on the attitude of Beijing towards negotiations, coming after a court decision that it did not expect and now derides.

Given domestic expectations, no Chinese leader can be seen to be weak and capitulate to Asean, let alone the Philippines.

In this setting, Asean’s statement gave space for the two governments to manoeuvre towards potentially more conciliatory positions.

Asean processes are far from perfect and, even with the Asean Charter, there are gaps and inefficiencies. But on what basis are there calls after these meetings for Cambodia to be chastised or to change the consensus principle in Asean decision-making?

The consensus approach helps to manage the diversities and differences among the 10 members of the group. It gives assurance to small states that their views will be taken into account. Another system for decision-making could be easily dominated by larger countries.

Those who seek to understand and support Asean cannot call for unity when it suits them and discard it when it doesn’t.

There is a balance between wanting to preserve Asean unity and trying to make the group better able to act on key issues.

Centrality for Asean is often talked about but often not well understood. It is remarkable that this group could convene key meetings when there are so many major powers with interests in the region as well as other middle powers like India, Australia and South Korea.

This role demands that Asean does more than provide the venue and deal with logistics. Centrality means that Asean must also be expected to set an agenda that includes key and even sensitive issues, and steer substantive discussions.

The acceptance and indeed trust of major powers is essential for this, and Asean needs to maintain or even help build up trust among the different major powers.

To be central, Asean must be a fair interlocutor on key issues but not take on an adversarial tone. In this context, the approach Asean took in the last week is not a signal of failure.

It was rather a balance between many different considerations, including unity within the group and maintaining the trust of so many different major powers.

Even as some continue to urge stronger words and action, Asean must continue to seek to strike that balance in new ways that are both principled and practical.

Simon Tay

About the author: Simon Tay is chairman of the Singapore Institute of International Affairs and Associate Professor at the National University of Singapore Faculty of Law.

todayonline

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Cambodian PM Hun Sen paints a bull’s-eye on his own back

By supporting Beijing on South China Sea matters at the recent ASEAN meeting in Laos and allegedly assassinating a harsh critic of his regime Kem Ley, it looks like Cambodian Prime Minister Hun Sen painted a bull’s eye on his own back.  But it will take a year or two to find out if his opponents can hit the mark.

At the ASEAN Foreign Ministers’ Conference in Laos on July 24, Cambodia’s intransigence on behalf of the PRC (China) in matters South China Sea was not as big an issue as it usually is.

The Philippine delegation of the new Duterte administration was apparently not very interested in provoking the PRC ahead of the upcoming bilateral discussions on the South China Sea, so the group eventually came together around a toothless communique that failed to invoke the UNCLOS arbitration ruling, thereby pleasing the PRC and advocates of ASEAN consensus, while evoking the scorn of China hawks in the region and around the world.

John Kerry sidestepped the South China Sea controversy and concentrated on extracting a declaration concerning the rather remote North Korean menace instead, perhaps in hopes of extracting an Obama legacy achievement from that unpromising dispute.

I think the US is reasonably satisfied with the current state of play regarding the South China Sea and is in a holding pattern until Hillary Clinton and her team of China hawks enter the White House in February 2017.

Nevertheless, impatience with Cambodia is getting pretty pronounced, especially in pivot strongholds Australia and Japan.

Japanese Prime Minister Shinzō Abe went in strong on Cambodia to support The Hague ruling and the Japanese press chose to play Cambodian Prime Minister Hun Sen’s irritated refusal as an unexpected rebuff.  I suspect that nobody seriously expected Hun Sen to ditch the PRC for Japan, and Abe’s intention was to show Vietnam that Japan was firmly in its corner to the point that it would happily and openly provoke Cambodia.

In Australia, China hawks point to Cambodia as the epitome of ASEAN dysfunction, and evidence for the need to switch to a “coalition of the willing” led by the US, Japan, and Australia to shape the response to the PRC in the South China Sea.

To deal with the Cambodia issue, the idea of discarding the consensus formula or watering it down with an “ASEAN X” formula—by which various ASEAN states could, according to their individual enthusiasm, craft their own responses while remaining, at least nominally, under the ASEAN aegis — has been bruited.

There is another solution that would resolve the conundrum to the satisfaction of the anti-PRC forces: regime change in Cambodia that would place a democratic, West-friendly, more China averse administration committed to ASEAN unity and “centrality”— the buzzword of the moment — in power.

Regime change is in the back of everybody’s mind, especially Hun Sen’s.  Hun Sen is the world’s longest-reigning strongman, who has employed skullduggery and violence to keep himself on top of Cambodia’s political and economic pile for three decades, and has vowed to remain there at least for another decade.

Disenchantment with his regime is growing — Hun’s party was able to maintain its parliamentary majority in the legislature in 2013 thanks only to pervasive thuggery — and he has apparently thrown himself into the arms of the PRC in return for the uncritical financial and political backing that a strongman with fading support craves.

Think of Cambodia as another Myanmar: a corrupted Chinese satellite whose vulnerabilities make it a tempting target for Western rollback against the PRC.

Problem is, there is a distinct shortage of attractive opposition horses to back for foreign governments.

The main opposition party, the CNRP, is a throwback émigré-backed outfit that has planted its flag on overt anti-Vietnamese chauvinism.  Led by San Rainsy, the CNRP was midwifed by the International Republican Institute (funded by the NED) and supported by US Republicans when anti-Vietnam strategizing was the name of the game in Washington.

Today, the linchpin for US and Japanese agendas in Southeast Asia is Vietnam; and enabling a new Cambodian government founded on anti-Vietnamese zealotry is not, I expect, at the top of everybody’s priorities.

Therefore, consigning Hun Sen to the dustbin of history may not become a US priority until a more attractive opposition force comes along.

Preferably something indigenous, pro-democracy, pro-human rights and less big-money boss-man — like the movement that Kem Ley was fostering before his assassination in Phnom Penh on July 10.

For China watchers, Ley looks something like Ilham Tothi, the jailed Uyghur activist from Xinjiang.

Tothi tried to color revolution between the lines, working the limited space allowed by the PRC authorities to advance Uyghur cohesion, identity, and activism while not running afoul of PRC law.  His success alarmed the PRC to the point where he was imprisoned by the PRC on trumped-up charges and his network of followers harassed and suppressed.

Tens of thousands of people attend a funeral procession to carry the body of Kem Ley, an anti-government figure and the head of a grassroots advocacy group, “Khmer for Khmer” who was shot dead on July 10, to his hometown, in Phnom Penh, Cambodia July 24, 2016. REUTERS/Samrang Pring

Ley had considerably more space to work in, since Cambodia is a democracy of a certain kind.  He had midwifed the creation of a new grassroots political party and then stepped away from it, ostensibly to concentrate on his research and analytic work but also, possibly, to insulate himself from political exposure so he’d be able to stay out of jail and continue to work and write even if the government cracked down on the party.

Whatever his considerations, he was gunned down in what was asserted to be a dispute over an uncollected debt but is widely considered to be an assassination.  Associates reported he told them he was being tracked, and he pointed out men with walkie-talkies monitoring his meetings.

As to why Ley was killed, all the accounts contain a rather hanging reference to the release three days prior of a Global Witness report, Hostile Takeover: the corporate empire of Cambodia’s ruling family.

Journalistic omerta seems to inhibit the dot-connecting one would expect in this story.

The Global Witness report was clearly intended to embarrass Hun Sen before the Cambodian people, weaken him politically, and also provide a basis for limiting foreign aid and governmental investment to the Cambodian government.  It employed “data journalism,” combing corporate records for damning links, similar to the exercise exposing Xi Jinping’s finances that was spiked at PRC insistence, causing a major meltdown at Bloomberg.

Global Witness’s organizational mission is to protect victimized citizens of resource-rich countries from exploitation of their national wealth by corrupt governments either working directly or in cahoots with multinational corporations.

Specifically targeting a politically corrupt elite represents something of an expansion of its brief, though Global Witness did provide a similar indictment of the Burmese junta; and Cambodia has historically been one of the focuses of its work.

Global Witness was founded by George Soros, so the color revolution narrative works itself into the Kem Ley story, along with the inference that the authors of the report seriously underestimated the backlash a regime change hit piece might provoke from its targets.

Ley had been on VOA Khmer for an English-language interview and had carefully distanced himself from Global Witness while endorsing the report and its value as a tool for transparency and reform (as in, “I’m not sure what the objective or direction of the Global Witness report’s author…”).

If this was meant to place a safe distance between Ley and the London authors of the report — while permitting him to praise and use its data and conclusions — perhaps it didn’t work and Hun Sen lashed out at the nearest and most vulnerable target for his wrath.

It’s also possible, by the way, that some other furious branch of the Hun family had Ley killed without Hun Sen’s prior knowledge and approval.

Global Witness dipped its toe into allegations of criminality, stating in the report it had obtained information from “confidential sources” (footnote 247) concerning holdings by Hun Sen nephew Hun To, who has been linked to big-time drug dealing allegations in the Australian media.  In retrospect, advertising that Global Witness was collecting tittle-tattle from informants about a drug dealer connected to the ruling family may not have been some of its best work.

In any case, if Hun Sen ordered the assassination of Kem Ley, it wasn’t some of his best work, either. Hundreds of thousands if not millions of grieving and indignant Cambodians lined the roads to witness Ley’s 70-kilometer funeral procession, and the cause of an indigenous, localized anti-Hun Sen political movement was probably advanced far more by his death than by the Global Witness report.

Tom Malinowski, the U.S. State Department’s Assistant Secretary for Democracy, Human Rights, and Labor, went to Cambodia and delivered condolences to Ley’s wife (who is now seeking asylum in Australia).

At a press conference, he was asked about the PRC grant of $600 million to support the upcoming elections among other things, which is unsurprisingly viewed as a cash grant to assist Hun Sen in buying the elections.

Malinowski replied:

More and more Cambodians are getting their information from media that nobody can control – from media that they control…

… I hope that it is the government’s intention to have a free and fair election in 2017 and 2018. I think that if anyone has contrary intentions, there are certainly things that they can do that would be unfortunate but I think that they will find that, as we have seen in Burma and as we have seen in Sri Lanka and many countries over the last few years, it is very hard to deny people their voice and their choice.

By siding with the PRC and by allegedly assassinating Kem Ley, it looks like Hun Sen painted a bull’s eye on his own back.  But it will take a year or two to find out if his opponents can hit the mark.

Peter Lee 

Peter Lee runs the China Matters blog. He writes on the intersection of US policy with Asian and world affairs.

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ASEAN - Iran resolved to start new chapter of coop. with ASEAN

JAKARTA, Jul. 29 (MNA) – Deputy FM Rahimpour on Fri. stressed Iran’s resolve for starting a new chapter of cooperation with Association of Southeast Asian Nations (ASEAN) member states.

Ebrahim Rahimpour, Deputy Foreign Minister for Asia-Pacific Affairs, made the remark in a Friday meeting with Indonesian Foreign Minister Retno Marsudi in Jakarta on Friday. During the meeting which took place on the sidelines of the sixth consultative-political committee’s meeting in the Indonesian capital, the two sides conferred on various venues for expansion of cooperation.

Rahimour thanked Indonesia as an ASEAN member state for its support for Iran’s accession to the Treaty of Amity and Cooperation in Southeast Asia (TAC) and highlighted Tehran’s firm resolve for expanding cooperation with the ASEAN countries.

Iran’s request to accede to the Treaty of Amity and Cooperation in Southeast Asia (TAC) has been approved by the ASEAN in the 49th Foreign Ministers’ Meeting in Vientiane, Laos, 24 July.

Rahimpour noted that Iran deems Indonesia as one of its priorities in foreign policies, and described the future visit of Indonesian President Joko Widodo to Tehran as highly significant for expediting the implementation of agreements and cementing bilateral relations.

He went on to stress Iran’s mutual support for Indonesia in regional and international circles, highlighting the Islamic Republic’s keen interest on improving ties with ECO and ASEAN.

The Indonesian foreign minister, for her part, deemed Iran a close friend to Indonesia, and warmly welcomed Iran’s accession to TAC and closer cooperation with the ASEAN.

“Indonesia is ready to advance its relations with Iran on bilateral, regional and international levels,” she said.

The two sides further called for expansion of banking relations in a bid to facilitate trade transactions between Tehran and Jakarta.

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ASEAN - Japan Inc. distancing itself from China, looking to India, ASEAN for growth

TOKYO -- Japanese companies no longer see China as a top destination for investment, and are overwhelmingly turning to India and ASEAN for growth, according to a joint survey by Nikkei Inc. and the U.S. think tank Center for Strategic and International Studies.

A combination of China's slower growth and aggressive national security policies has dented the Japanese appetite to invest in the world's most populous nation. Some 80% of respondents believe that China's growth rate will be lower than 3% in 10 years' time, including 34% who said that growth could be in negative territory.

The online survey received responses from roughly 2,800 people over the age of 20, working in the private sector. This is the third time Nikkei/CSIS has surveyed Japan Inc.'s sentiment toward China.

Since its accession to the World Trade Organization in 2001, China has continuously been the No. 1 destination for Japanese foreign direct investment in Asia, except for 2013, when Thailand briefly overtook it. However, when asked which emerging economy their company would invest in today, 50% said India and 38% said ASEAN nations, while only 4% of respondents named China.

Japanese companies have clearly started to look for alternative destinations. While 26% said that China's importance will stay unchanged or increase in the future, another 54% said, "Its importance will decrease, since other emerging markets are growing."

When asked the best strategy for Japanese companies doing business in China, a combined 55% called for either withdrawing or cutting back their China operations.

The lack of faith in the future seems to stem from their opinion of China's leadership. When asked, "How do you evaluate the Xi Jinping administration's Japan policy?" 56% replied "tough and adversarial" while 39% said "hard to define." Only a miniscule 3% called the administration "friendly and moderate."

Japan's corporate players have little enthusiasm toward the new order China is trying to establish in the region. When asked about the China-led Asian Infrastructure Investment Bank, 59% said there is no need to become a member. "See how the bank will be operated by becoming an observing member," said 35% of the respondents. Just 5% said Japan should become a member state as soon as possible.

The chilly relations between the two countries is affecting Japan's stance toward Taiwan, which China considers a province. Some 57% of respondents said Taiwan's independence would be the most desirable scenario for Japan. A similar 59% said that Japan should start free trade negotiations with Taiwan and support its aspiration to become a member of the Trans-Pacific Partnership agreement.

In terms of national security policy, the ratio of people who said, "Japan should strengthen the alliance with the U.S. to better cope with China" dropped to 48% from 54% in the previous survey two years ago. Meanwhile, the ratio of respondents who said, "Japan should strengthen its own defense capability to reduce dependence on the U.S." increased to 26% from the previous 21%.

Shin Kawashima, a professor at the University of Tokyo, said, "It is interesting to see that not only Japan's impression of China but its impression of the U.S. and the Japan-U.S. alliance is also changing."

Ken Moriyasu

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ASEAN - Asean – blowin’ in the wind

THE most significant point about the “now you see it, now you don’t” joint statement by Asean foreign ministers on the South China Sea issue in Kunming last month is how China is able to unravel the regional group’s decision ex post facto.

In a meeting among themselves, the ministers had earlier decided to express their deep concern over China’s – not named of course – assertiveness, land reclamation activities and militarisation of the South China Sea, and its threat to peace and stability.

The formulaic phrases used in the statement were not far removed from what had been employed since the 26th Asean summit hosted by Malaysia in April 2015. Then, for the first time, terms such as “strong concern” over activities which have “eroded trust and confidence and may undermine peace and stability in the South China Sea”, were used.

This was against the background of audacious actions by China in the South China Sea where it has territorial disputes with four Asean member states: Brunei, Malaysia, the Philippines and Vietnam. China stepped up these actions in the past couple of years to back its claims based on the nine-dash line which would make nearly the entire sea a Chinese lake.

The artificial islands created through reclamation were being militarised and China’s statements in support of its activities pointed to a situation where these artificial islands would be proclaimed to have their own territorial sea. Under such circumstances, freedom of navigation and overflight over the South China Sea – not to mention the rights of the other claimant states – would be compromised and subject to Chinese caprice.

There is a fear China would declare an Air Defence Identification Zone over the entire South China Sea, which would put everyone else under Chinese overflight control. With freedom of navigation also at risk – and with environmental damage caused to the coral reefs by extensive reclamation – the situation is fraught with hazard, which certainly could “undermine peace and stability in the South China Sea.”

Already Chinese fishing vessels, well-protected by naval gunboats, were fishing in disputed waters, and those naval coastguards with their fishing flotilla had been appearing with some regularity in waters well within the exclusive economic zone (EEZ) of Asean countries.

Since the Scarborough Shoal standoff in 2012, the Philippines lost control of its claimed territory just 230km from Luzon. Brunei and Malaysia have latterly seen their EEZ encroached upon, with missives to stop offshore oil and gas drilling activities.

Vietnam has been battered by China the most. When everyone was busy in those last days of the Vietnam War, the Chinese navy bloodied the Vietnamese (then South Vietnam) in 1974, resulting in Beijing seizing control of the disputed Paracels.

There have been many clashes at sea between the two, often resulting in the sinking of Vietnamese fishing boats. In 2014 a Chinese drilling platform was placed in disputed waters close to the Vietnamese coast and carried out its activities for a period before being tugged out.

Even Indonesia, which does not consider itself a claimant state, has been drawn in by China’s assertive activities. The nine-dash line actually cuts into the EEZ of Indonesia’s Natuna Island. China considers it has traditional fishing rights there, despite provision in international law that only the littoral state has right to the resources within the EEZ.

There have been three high profile incidents off Natuna involving the Indonesian navy and Chinese fishing boats protected by China’s coastguard vessels. The last occurred in the middle of last month, just after the ill-fated Kunming summit. There have been exchanges of stiff notes between, and strong statements by, the two countries. Indonesia’s President Joko “Jokowi” Widodo held a Cabinet meeting last week aboard an Indonesian navy ship off Natuna, to underline Indonesia’s rights and resolve to protect them.

China’s assertive actions

China’s assertive actions have been stepped up to almost a frenzy to establish facts on the ground, a fait accompli, before the decision of the Permanent Court of Arbitration (PCA) on the legality under the United Nations Convention on the Law of the Sea (UNCLOS, 1982) of China’s actions and claims in the South China Sea, brought to the PCA by the Philippines in 2013.

The PCA is not being asked to adjudicate on the actual territorial dispute between the states, as China disingenuously proclaims, but on the legal veracity under UNCLOS of China’s conceptual bases in its South China Sea assertions, like the nine-dash line. In fact Indonesia, and others so affected, could very well go to the PCA to seek a ruling on whether or not UNCLOS recognises such a thing as “traditional Chinese fishing grounds.”

It is true that, if it were a matter to determine actual territorial extent in specific dispute between states, the consent of involved parties is required. But this is a completely different case. It is a question of whether certain concepts, precepts and proclamations – and actions based on them – are legally sustained under UNCLOS.

No less an authority than Professor Tommy Koh, who chaired the long 10-year negotiations leading to UNCLOS, has categorically stated the PCA has jurisdiction over most of the matters brought to it by the Philippines.

This is why China is livid with the Philippines. The decision of the PCA, expected on July 12, will have far-reaching implications on what China has been asserting and doing in the South China Sea. The more supine claimant states will also benefit.

This is why China has embarked on a most extensive diplomatic effort to secure support from outside states against the PCA and its expected ruling – thereby internationalising the South China Sea dispute, when it suits it, and violating its repeated intonations against doing so.

This is why China will not allow Asean to come out with the joint statement that merely draws attention to reality without even naming or criticising China.

This is why China is willing to break and enter into an Asean foreign ministers’ decision, and get its cohorts – Laos and Cambodia – to get it withdrawn.

This is why China is, without apology, using chequebook diplomacy – and not a little bit of the gunboat kind in the South China Sea – to secure its position through inducement, threat and bluster.

China – with the help of Asean member states that are willing to prostrate themselves – has caused Asean to be fractured and divided.

What happened in Kunming is very serious for the future of Asean. In the month of Brexit, Asean showed signs it could break apart over the nature of the relationship with a great rising power in a situation of regional geopolitical change.

This month the Asean foreign ministers will meet again in Vientiane. What will they do or say about what happened in Kunming?

They cannot pretend it never happened. They have been avoiding their disunity for too long.

Now they have to establish the point that decisions already made consensually cannot be reversed by one or two member states, and certainly not on the instruction of a third party.

They also have to give clear standard operating procedures (SOPs) to their separate national delegations. The Lao foreign minister had already left but his minister of state made the decision to accede to the Chinese demand that the joint statement be retracted. Is there division within the Lao delegation reflecting the ruling communist party’s own differences over how influential China should be allowed to be?

Urgent amendments

The Malaysian delegation, which had issued the joint statement properly made, then withdrew it, with a spokesperson stating there were “urgent amendments” to be introduced.

Why should Malaysia withdraw the statement and on whose instruction? Why not get whoever insisted on its withdrawal to do so himself, and to give the reasons for it? If there were “urgent amendments” to be made, when will the joint statement now be released?

As it is, it looks like Malaysia got egg on its face.

Given the serious division in Asean on the South China Sea dispute, discussion on the matter cannot continue to proceed in the gentle “Asean way” without clear and strong statements on what’s what and who’s where.

The lack of clarity which gives a false appearance of unity cannot be sustained when Asean is palpably divided. Better now to be frank and clear.

With the ruling by the PCA coming up, there will be another possibility, most likely probability, of an Asean in disarray. Cambodia’s Prime Minister Hun Sen has already contradicted himself by saying his country is neutral on the South China Sea and at the same time will not accept the PCA’s ruling because it is the biased outcome of a conspiracy. What is Asean going to do?

Asean foreign ministers are saying they will take a position when the decision is made. Should they not be preparing on the stand they would take should the ruling not be favourable to China?

Are they in informal discussion? Are their foreign ministries in deep preparation on the stand they would take and the arguments they would adduce?

Asean is sailing very close to the wind following that Kunming meeting with China in the middle of last month, which showed a lack of backbone and the most profound disunity over the South China Sea dispute. Surely Asean must address that disunity and stop muddling through.

The other value-at-risk is the so-called Asean centrality. The November 2015 Declaration on the Asean Political and Security Community referred to this centrality.

But Asean has to be united, or at least have a consensus on key issues, if it is to be an influencer of events in the region. It is not and does not.

Not able to cope

What will happen to the work plan Asean foreign ministers adopted in New York in September 2015 on “Maintaining and Enhancing Asean Centrality”? Increasingly it is being shown Asean is not quite able to cope, and stay together, as major powers become more assertive and active in the region.

Even “default centrality” where the major powers allow Asean to play the regional role, even if they are driven by their own strategic interests, is at risk. When Asean cannot even put together its policy on the South China Sea, how can it be trusted to mobilise the views of other parties, regional or extra-regional?

The 22-year-old Asean Regional Forum (ARF) now has 27 members with divergent interests. The East Asia Summit, set up in 2005, has 18.

How can Asean keep these very diverse members in the regional architecture together when it itself is not together? At most, Asean becomes just a grand event organiser. How long will these institutions, which Asean had so creatively developed, remain relevant when its unity and centrality are lost?

It is critical that Asean foreign ministers are candid with one another, discuss how Asean is to go forward, and advise their leaders on these existential issues – in the very first year of the Asean community. Let Asean not proceed limply in a fashion best captured in the old Malay adage: hidup tak mau, mati segan (not making a choice whether to live or to die).

A lot of this has come to pass because of the South China Sea dispute, and China’s uncompromising attitudes and actions.

This has nothing to do with being anti-China. The position in the aborted Kunming joint statement is a principled one, based on what is taking place in the South China Sea. These are facts on the ground, which do not disappear in the mist of China’s froth and anger every time it is told so.

China cannot in response warn small states to beware, as happened at the ARF in Hanoi in 2010 and again at Kunming last month. As plucky Singapore put it, states, big or small, have the same right to sovereignty. They have a right to express their fears and concerns without being steamrolled, or bought, into silence and acquiescence.

And the principled stand has nothing to do with the United States either. It should be remembered the first Asean declaration on the South China Sea was made in 1992 following a clash between China and Vietnam (before Vietnam became a member of the regional grouping).

And – most importantly – well before US President Barack Obama’s so-called pivot or rebalance to the Asia-Pacific about 2010.

The Declaration of Conduct (DOC) of parties in the South China Sea was signed between China and Asean – Asean as a whole and recognised by China as such – in 2002, again well before the pivot, when China and Asean undertook to safeguard peace and stability in the waters and to negotiate a legally binding code of conduct (COC) in their activities in the disputed sea.

What has happened to all that? China asserts it has all gone out of the window because the Philippines eschewed direct negotiations (as provided by the DOC) and went to the PCA. The Philippines counter that direct negotiations with China had failed when China had used force (in contravention of the DOC) to occupy Scarborough Shoal.

Let’s face it. Going to the PCA is not an act of war and is not like the use of physical force, especially by a far larger country against a smaller one. Which then seeks protection from another big power, something any sovereign state would do when it feels threatened, and complicates the situation.

The most important thing is to remove that threat. China is already looking to improve relations with the Philippines following the election of the new President. This week State Councillor Yang Jiechi visited Vietnam to again find common ground with their comrades who have been bashed about before.

Relations with Brunei and Malaysia are supposed to be brilliant. But Malaysia must be worried that China’s attitude and assertiveness could extend to interference in domestic affairs, such as treatment of the Chinese populace.

The most worrying thing which underlies what Beijing is claiming and doing, increasingly, is the assumption of suzerainty over and above sovereignty, which would make regional states essentially vassals of China.

China must go for a reset. There is still a lot of goodwill, especially in the economic sector, where there is mutual benefit.

Trade is two-way. Projects bring profit. Asean states gain. So does China.

China must show it is not blowing hot and cold on the exigencies of the moment. It must also show that a close economic relationship does not come at cost to sovereign right, or as a means of entrapment.

MUNIR MAJID

Tan Sri Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.

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