ASEAN at 50

Asia’s bold experiment

From backwater to economic powerhouse, 50-year-old ASEAN has risen on consensus building and been boosted by ties with China

August 14-20, 2017
in Sydney

When the Association of Southeast Asian Nations (ASEAN) was first established 50 years ago, many predicted it would fail miserably.

They argued it would be impossible to bring together a region so deeply divided by language, culture and religion.

Economically it was a poor region where four of the five founding member states were rebuilding after centuries of colonialism.

British historian Charles A Fisher, in his book Southeast Asia: the Balkans of the Orient?, described the region as “the Balkans of the Orient … more diverse than the Balkans of Europe”.

Despite its critics, ASEAN has survived and has grown into a formidable economic and trading bloc in its own right.

The establishment of the ASEAN Economic Community (AEC) in 2015 is seen as a major milestone in the regional economic integration agenda in ASEAN.

With a population of 628 million and a combined GDP of $2.4 trillion, it is the world’s seventh-largest market and third-largest labor force, and it is expected to become the fourth-largest economic bloc by 2030.

Founded on Aug 8, 1967 with five members, Indonesia, Malaysia, the Philippines, Singapore and Thailand, it has since grown to a 10-nation bloc with the inclusion of Brunei, Cambodia, Laos, Myanmar and Vietnam.

In its five-decade history, ASEAN has come from being an economic backwater to one of the world’s biggest trading blocs. And much of that is down to China’s emergence as an economic power over the last 20 years and the growing ties between the two sides.

“China’s economic growth and its integration into the global economic system profoundly impacted on ASEAN’s economic landscape and production networks,” said Venkatachalam Anbumozhi, a senior economist with the Economic Research Institute for ASEAN and East Asia (ERIA).

China and ASEAN established their dialogue relations in 1991 and next year marks the 15th anniversary of the establishment of the China-ASEAN strategic partnership.

The China-ASEAN Free Trade Agreement was signed in 2010.

On Aug 6, the ASEAN foreign ministers gathered in Manila to mark the bloc’s golden jubilee, issued a communique commending China’s growing role in the region and expressed expectations for more high-level dialogue and a higher level of economic integration.

The ministers expect to designate 2018 as the ASEAN-China Year of Innovation Cooperation, and formulate a 2030 Vision for China-ASEAN Strategic Partnership as a blueprint to guide future relations.

China’s Foreign Minister Wang Yi speaks to reporters on the sidelines of the 50th Association of Southeast Asian Nations (ASEAN) regional security forum in Manila on Aug 7. China’s close relationship with the bloc goes back over two decades. Credit: AFP

Chinese President Xi Jinping, in his congratulatory message to Philippine President Rodrigo Duterte, whose country has ASEAN’s rotating chairmanship this year, also said Beijing is ready to bring greater closeness to the China-ASEAN Community of Shared Destiny to make it an example within the Asian Community of Shared Destiny.

“China-ASEAN ties have become one of the most vigorous and enriched dialogue partnerships of ASEAN,” Xi said.

The optimism for better relations is backed up by robust trade figures.

Bilateral trade between China and ASEAN grew from $6.3 billion in 1991 to $452.2 billion in 2016. Currently about 2,700 flights connect China and the 10 countries every week.

The total trade volume of ASEAN with China is projected to increase to $1 trillion by 2020, according to AKP Mochtan, deputy secretary-general of ASEAN for community and corporate affairs.

At a seminar earlier this year in Beijing, he said: “The cooperation agreements and mechanisms formed between China and ASEAN in various areas in recent years have brought new opportunities for Sino-ASEAN relations.

“The visions of ASEAN correspond to the China-proposed Belt and Road Initiative, leading to common prosperity,” Mochtan said, referring to the drive to improve connectivity along the historical Silk Road trading routes.

After the 1997 financial crisis, which affected many of the Japanese and South Korean firms active not only in ASEAN but throughout Asia, China took over as the bloc’s most significant trading partner and fastest-growing investor.

ERIA’s Anbumozhi noted that China as a rising economic powerhouse “lent weight and momentum to translate the shared development imperative to economic regionalism since then”.

“China’s participation in the Greater Mekong Subregion initiative of the Asian Development Bank and Mekong River Commission provided a forum for conflict resolution in that part of ASEAN and attracted investments for cross-border infrastructure projects.

“China’s diplomatic success in establishing the Asian Infrastructure Investment Bank in 2015 and the Belt and Road Initiative will have a profound impact on the ASEAN infrastructure connectivity and ASEAN Power Grid projects envisioned under the Master Plan on ASEAN Connectivity.”

Peter Drysdale, who has watched the growth of ASEAN since its inception, described the grouping as a “bold experiment that actually worked”.

“No one is talking about the application of the European model for Southeast Asia anymore,” said the emeritus professor of economics at the Australian National University in Canberra.

Some would say ASEAN’s success has been through consensus building, better known as “the ASEAN way”.

“ASEAN consensus was seen as a weakness or a vulnerability that would not work,” Drysdale said. “Its step-by-step approach to institution building was seen as fragile at the best of times, but in reality it has worked.”

Talk among analysts in the past about ASEAN adopting the European model is over.

“It is an odd kind of association,” said Sandra Seno-Alday, a lecturer at the University of Sydney Business School. “When it was first established it was a loose grouping with a commitment to being friends.

“It didn’t start out as a free trade area, which left many people wondering what it was. It took the group nearly 30 years to move from being just friends to a free trade area.”

The ASEAN Free Trade Area was signed on Jan 28, 1992.

One of the pillars of ASEAN’s success, said Seno-Alday, is its “respect for individual sovereignty”.

“Nothing is forced on member states. Just look at tariff reductions.

“ASEAN says something like ‘please cut tariffs’ … and then it gives a band from zero percent to X percent. Basically, ASEAN leaves it up to individual member states.”

Of the 10 ASEAN members, nine have emerged from long periods of colonization by the Dutch, French and British. Thailand is the only member state that was never colonized.

It is the respect for national sovereignty that sets ASEAN apart from other models.

The European Union, for example, has the power to impose its will on member states. In other words, member states feel a loss of sovereignty.

Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore and co-author of The ASEAN Miracle: A Catalyst for Peace, said in a paper recently: “ASEAN is far from perfect. Over the short term, it seems to move like a crab — two steps forward, one step back, and one step sideways. Yet ASEAN’s long-term progress is undeniable.”

“It is the only reliable platform for geopolitical engagement in the Asia-Pacific region, unique in its ability to convene meetings attended by all of the world’s great powers, from the United States and the European Union to China and Russia,” Mahbubani said.

Drysdale from the Australian National University agreed, saying that one of ASEAN’s strengths has been its ability to use “diplomatic strategies and principles” to engage with the region and global powers.

“ASEAN is not a significant military power,” he said. “It has used diplomacy to resolve conflict and that cannot be counted as a failure but as a great success.”

So what does the future hold for ASEAN over the next 50 years?

Justin Wood, head of regional strategies for Asia Pacific with the World Economic Forum, said economic growth will be critical as the “engine that drives rising incomes and prosperity”.

“ASEAN as a whole has a good record in recent years, growing by around 5 percent a year, and powering the creation of a giant middle class,” he said in a recent paper.

“At the start of 2016, the 10 economies of ASEAN were collectively the seventh-largest economy in the world. By the start of 2017, that rank had improved to sixth, and by 2020 it will be fifth.”

He said the bloc would benefit significantly from pushing forward the implementation of the ASEAN Economic Community (AEC).

Much work remains before the AEC fulfills its promise of being a genuine single market and integrated production base, Wood said.

“Without full realization of the AEC, local businesses will struggle to reach scale and be globally competitive, and consumers will pay more for products and services.”

ASEAN a model of tolerance, civility Outside interests may feed on instability, but 50-year-old Southeast Asian bloc is a picture of peaceful coexistence

August 14-20, 2017

The whole of Asia seems to be in a festive mood as the Association of Southeast Asian Nations celebrates its golden jubilee, especially because 50 years on, ASEAN has matured on the world stage, not only as one of the largest economies but also as an increasingly integrated community.

From the promising Sports-Shirt Diplomacy in 1967 to the burgeoning ASEAN Economic Community in 2015 and to the group’s Vision 2025, ASEAN has grown with its characteristic peaceful coexistence of diversity, cohesive consensus-building among members, and people-oriented orchestration for sustained development.

Consider the rugged terrains, varied economic conditions and multiple religions — Muslims, Christians, Buddhists, Hindus and Confucians — among ASEAN’s member nations Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Yet the grouping has presented humanity with a model of benign tolerance and progressive civility — in sharp contrast with the loose Union of South American Nations, the adolescent European Union, and NATO, the belligerent military organization led by the United States.

As the ASEAN Secretariat said on its official website on Aug 8 upon the 50th anniversary of its founding: “ASEAN’s most important achievement is the maintenance of peace and stability in Southeast Asia by promoting peaceful coexistence, friendly relations and pacific settlement of disputes among regional countries.”

Such stability, riding smoothly on political, religious and social tolerance, has paved the way for economic development over the decades, making it the world’s sixth-largest economy with a combined current GDP of about $2.4 trillion, the world’s fourth-largest trade powerhouse and a preferred investment destination.

Growth in Southeast Asia this year and last has been reversing its short slowdown in 2015, when GDP slowed in seven of the 10 ASEAN economies, edging down the region’s average to 4.4 percent in 2015 compared to 4.6 percent the previous year, according to data from the Asian Development Bank.

Annual foreign direct investment inflows to ASEAN member countries have exceeded $110 billion since 2012, except for a slight estimated dip in 2016, according to statistics released by the ASEAN Secretariat. Total trade volume reached $2.67 trillion in 2015.

Accelerated economic recovery in the last two years, amid the doldrums in much of today’s world, is also worthy of celebration for the group of 10 mostly developing countries.

For millions of youths eager for jobs, and millions of others hoping for a decent life out of poverty, continued and sustained growth holds hope of good fortune.

According to ASEAN data, the number of people living in poverty below the UN-defined level of $1.25 per day fell from 47 for every 100 persons in 1990 to 14 for every 100 persons in 2015, joining China as success stories in observing the UN Development Agenda.

So, it is reasonable for the region to embrace a spirit of optimism. “We look to the next 50 years and beyond, confident in our ability to build on our past achievements and address future challenges effectively as one ASEAN Community,” said the ASEAN Leaders’ Declaration on the 50th Anniversary of ASEAN.

Philippine President Rodrigo Duterte (front, center) and Southeast Asian foreign ministers and their representatives gather on stage during the closing ceremony of the 50th Association of Southeast Asian Nations regional security forum in Manila on Aug 8. The Philippines is currently chair of the bloc. Credit: AFP

The region’s potential is encouraging. With more than 600 million people, the ASEAN market should be larger than the EU or North America sooner or later. Moreover, next to China and India, ASEAN has the world’s third-largest labor force, which remains relatively young and makes it capable of succeeding China as one of the world’s manufacturing hubs.

The group appears to be free of any Brexit-type worries. But even so, challenges abound. A top concern is regional stability itself, which has helped safeguard the decades of remarkable growth.

As was shown by sometimes coarse voices prior to the anniversary, not all factors are conducive to peace in this interconnected era. In fact, it is instability, not stability, which may suit the interests of many in the United States.

A stable Southeast Asia will generate no more excuses for the long-term existence of dozens of military bases across and around the region. Although ASEAN has been free of any major conflict for decades, US military bases in the region have not been at rest at all.

Instead, its military exercises over the years have targeted imaginary enemies, in effect challenging the sovereign power of ASEAN members. And although for decades, navigation by any nation has never been disrupted across the vast span of the South China Sea, about half the size of the Australian continent, US carrier fleets and bombers and fighter jets have frequented the area, not to mention routine military reconnaissance.

Instead of reining in its own warmongering, the US military, seeking an excuse for its increasing presence in the region, often picks China as the scapegoat. Yes, in recent years China has built up facilities in some of its isles in the South China Sea area which can be conducive for shipping.

But these moves have come in response to the US closing in militarily and Vietnam’s building of facilities across the region for decades, which have somehow evaded the radar for US accusations.

China has committed to consultations on the Code of Conduct under the framework of a full and effective implementation of the Declaration on the Conduct of Parties in the South China Sea, as was said by Robespierre Bolivar, spokesman for Manila’s Department of Foreign Affairs.

Fault lines and regional instability can ease the thirst of another US predator — the greed of Wall Street capital, which bestowed the 1997 financial crisis on ASEAN economies and led to the 2008 made-in-America financial crisis that almost paralyzed most of the global economy for years.

Such capricious capital from the US feeds upon the bleeding of other economies right at their injured points and weak moments, depriving millions of jobs and hope.

The US Federal Reserve has again pushed its interest rate weapon into firing trajectory, waiting patiently for the time to re-wrench international capital out of the developing world where it is needed most and empty developing economies of investments.

Often the moves of these mighty financiers seem well orchestrated to coincide with bombardments of US naval and air force generals against possible “threats”, which in fact could hardly reach any US soil. American politicians often forget that US intervention troops occasionally report casualties, as a result of US policies to keep invading the land of another or bombing ground facilities, with or without non-American civilians.

ASEAN has been upgrading its free trade agreements with China and others, which enhances globalization against the will of the current US and UK administrations. It is also emphasizing the implementation of the Paris Agreement on climate change from which the US is withdrawing, and persisting in multilateral diversity which is often regarded as lethal to US interests.

Most important, at the core, the ASEAN way of decision-making through consensus building among members of diverse conditions, of emphasizing order, cohesion and civility, of “10 + X” reaching out to outside partners instead of erecting man-made trade barriers against potential or selected “evil states”, and of rotating with equal say within the group, is likely threatening the long-standing US-led global mechanisms of voting power decided by capital.

As one after another US president has repeatedly vowed to sustain “US leadership” and put “America first” in this changing world of ours, ASEAN success in community building speaks of values different from US criteria and can be targeted one way or another by US strategists.

Even as ASEAN prospers, the world is far from perfect. With best regards for this valuable sharing community for the next 50 years, it is good to celebrate the ASEAN style of handshaking: Interwoven arms leave no place for any more armed intervention by outsiders.

The author is a senior journalist with China Daily Asia Pacific.

Forging a path through consensus Future of the unique 50-year-old ASEAN grouping is a contest between mighty economic fortress and creative crossroads

August 14-20, 2017

Aug 8 marked the golden jubilee of the Association of Southeast Asian Nations (ASEAN), which was founded in 1967. This regional grouping came into being with a membership of five countries: Indonesia, Malaysia, the Philippines, Singapore and Thailand. Between 1984 and 1999, five other nations joined — Brunei, Vietnam, Laos, Myanmar and Cambodia — to make it an association of 10 states.

ASEAN is unique in its essential character. Unlike the European Union, it is not a supranational organization.

It may be recalled that following the turn of the century, ASEAN set for itself the goal of graduating to an ASEAN Community by 2015, a program that was launched with three specific pillars — political security, economic and social-cultural — and promised a comprehensive umbrella of functions. The member governments are all agreed on the road map that will take them to a common destination.

In the past, the Southeast Asia region was divided, a sprawling culture — but for most of the past 50 years it has been held together by a unifying story. This is the story of accelerated economic growth, social progress and cultural development to provide regional peace and stability.

ASEAN’s success was the story of leaving behind mutual suspicion and creating a new, promising future for its citizens. That story rested upon an amazing level of consultation, compromise and consensus — “the ASEAN way”. There are four narratives in the ASEAN way.

First, there is the story of multicultural ASEAN. It sees ASEAN citizens as members of groups whose status is largely determined by their nationalities and sociocultural background. This multicultural narrative dominates ASEAN’s community-building process and education systems.

It creates social capital, producing students, the future citizens of ASEAN, more able to think in terms larger than their own identity group — which means they can find common ground or effective arguments that can reach people of different backgrounds.

Second is the narrative of the globalized ASEAN. This story is dominant in urban centers and industrial parks. It comes with an exhilarating ideology of economic integration supported by regional production networks that flattened economic hierarchies, strengthened the local supply chains, discarded old elites and empowered low-middle income families and individual workers.

But in real life, when you disrupt old structures, you end up concentrating power in fewer hands. This narrative worked out well for people and industries well prepared for competition, but not so well for most others.

Third, there is the people-centered narrative that defines ASEAN as a land of free nations and individuals responsible for their own fate, both economically and socially. This story celebrates the dynamism of the economic integration that fulfills people’s hopes and social aspirations.

Its prime value is in economic freedom and environmental sustainability, which by default brings human-centered progress by regarding ASEAN as a community of entrepreneurs, taxpayers, consumers and workers — indeed everything except citizens.

Fourth is the narrative of ASEAN centrality, which has ASEAN at the center of an array of regional institutions involving partners in East Asia and beyond, such as ASEAN+3, the ASEAN Regional Forum, the Asia-Europe Meeting and the East Asia Summit.

A man cycles in front of the ASEAN logo near the venue for the Association of Southeast Asia Nations Regional Forum meeting in Manila on Aug 7. ASEAN’s success is the story of leaving behind mutual suspicion and creating a new, promising future for its citizens. Credit: AFP

ASEAN centrality is the conviction of new identity brought by unity and strength — the unity in elite decision-making, without allegiance to a central authority but which evolves through consensus and self-confidence.

Maritime and territorial disputes in the past and present threatened ASEAN unity and centrality. But this story is always forward-looking, pragmatic and optimistic. This narrative may have contempt for democratic norms and liberal values, but stabilizes the very idea of objective ASEAN.

To take an objective view, ASEAN in the past 50 years has made significant contributions to peace, security and prosperity in the region. ASEAN has many socioeconomic and political achievements to its credit, but the challenges are plentiful too. With a population of 628 million and a combined GDP of $2.4 trillion, it is the world’s seventh-largest market and third-largest labor force, and it has been projected to become the fourth-largest economic bloc by 2030.

Mari Pangestu, a former Indonesian trade minister, said at an Economic Research Institute for ASEAN and East Asia forum that ASEAN is now threatened by the slow recovery in the global economy, increased anti-globalization, anti-immigration and anti-elite sentiments, disruptive technologies that threaten job growth, and expanding demographic shifts. She recommends that it “speed up and widen the scope of regional economic integration”. But does ASEAN have the requisite will to execute this?

All of the four narratives provide a viable basis for successfully tackling this challenge. But the future of ASEAN will be a competition between two other stories, which are sort of descended from the existing four.

The first is the mercantilist model, which sees ASEAN not as the culmination of history and socio-culture but as one more economic power in competition with neighboring economies like China and India.

In this story, to be part of ASEAN implies membership of an economic clan, and the ideal ASEAN member states and its partners are purely protectors of this clan. ASEAN governments and corporations work together with their citizens and partners by closely controlling trade, investment and immigration. ASEAN’s wealthy would have an incentive to share their resources with workers, because they need them to fight off competitive economies.

The second is the empowered community of ASEAN. This narrative sees ASEAN as a melting pot of all socioeconomic and political cultures and as human history’s greatest laboratory for cultivation of new talent, skills and abilities. It welcomes diversity in education, pluralistic views on innovation, open trade, meritocracy and immigration — for all of the dynamism that these things unleash.

This model is heavily invested in social capital, especially the young and those who suffer from the downsides of creative destruction and the ASEAN community-building process. It sees every young boy and girl of ASEAN as enmeshed in the state’s care to arouse his or her inherent energy and propel social mobility.

The mercantilist model sees ASEAN as a mighty economic fortress in a treacherous world. The empowered community model sees ASEAN as a creative crossroads leading an open and fundamentally harmonious world. The empowered model will be an exodus story for ASEAN member states as well as other countries that are struggling to nurture and strengthen the roots of deepened regional cooperation.

The author is senior economist, Economic Research Institute for ASEAN and East Asia.

Guangxi’s ports make the right connections New transport corridor strengthens region’s role as a gateway to boost trade ties with ASEAN

Editor’s note: This is the first in a monthly series on ASEAN’s relations with the Chinese provinces and regions that border the bloc. We begin with South China’s Guangxi Zhuang autonomous region, which borders Vietnam. The other provinces in the series are Fujian, Yunnan, Guangdong and Hainan.

August 14-20, 2017
in Nanning

On a scorching May morning, a 26-car freight train packed with motorcycles and paper products pulled into Qinzhou Port East Station, in the coastal city of Qinzhou in South China’s Guangxi Zhuang autonomous region.

Arriving 48 hours after its departure from Chongqing on May 12, a southwestern city 1,480 kilometers from the terminus, the train ran on a new line that reduced travel time by more than two days.

But this was not the end of the journey for the cargo. After passing clearance procedures at Qinzhou Port, the goods were then transported another 2,600 km by boat to Singapore, which took roughly six days.

The train’s arrival at Qinzhou, part of the Guangxi Beibu Gulf Economic Zone, marked the commencement of the trial operation of the Southern Transport Corridor. The route connects Chongqing through Guangxi to Singapore.

Beibu Gulf Economic Zone comprises six cities: Nanning, Beihai, Qinzhou, Fangchenggang, Yulin and Chongzuo.

“The corridor will boost our trade activities with Southeast Asia, and even farther with Africa,” said Zhou Xiaoxi, chairman of Guangxi Beibu Gulf International Port Group, the State-owned company that manages Qinzhou Port.

Before the launch of the route, goods from western China to Southeast Asia were either delivered via scattered rail links to the Beibu Gulf area, or shipped eastward along the Yangtze River to Shanghai, before heading for the South China Sea to reach their destinations.

Containers are stacked together for shipment at a port in Guangxi. A new Chongqing-Guangxi-Singapore link will provide quicker access to Southeast Asia and beyond for goods from central and western areas of China. Credit: Asia News Photo

For cargo from Chongqing to Singapore, the detour through the Yangtze River to Shanghai takes an extra 2,100 km compared to the new channel. Altogether, the Chongqing-Guangxi-Singapore link now cuts travel time by more than 20 days.

“(The new route) will significantly shorten the distance, lower the logistics costs and allow the entire western (region of) China to have a new way to bypass potential bottlenecks at the Three Gorges Dam (on the Yangtze River),” said Chan Chun Sing, Singapore’s minister in the prime minister’s office, at a China-Singapore trade forum earlier this year.

With a location that makes it a crucial logistical node for the China-led Belt and Road Initiative, Guangxi aims to enhance connectivity between inland China and its trade partners in the Association of Southeast Asian Nations (ASEAN).

Trade activities between Guangxi and the 10 ASEAN member countries have been expanding at a stable pace.

ASEAN has remained Guangxi’s biggest trade partner for 16 years, with 183.5 billion yuan ($27.4 billion) in 2016, contributing 58 percent of Guangxi’s total trade volume, according to official data from Nanning Customs.

Connecting ASEAN is part of the role designated for Guangxi by China’s central government, which also expects the region to serve as an important Belt and Road gateway.

Comprising the seagoing 21st Century Maritime Silk Road and the land-based Silk Road Economic Belt, the Belt and Road is a transnational network proposed by China in 2013 to boost connectivity and trade activities across the ancient Silk Road routes.

“Considering Guangxi’s strategic locality, the Belt and Road Initiative will bring golden opportunities to the development of Guangxi’s Beibu Gulf, as the grand plan is to boost regional cooperation,” said Zhou from Guangxi Beibu Gulf International Port Group.

To make the most of its location, in 2006 the autonomous region established the Beibu Gulf Economic Zone, which mainly consists of Guangxi’s capital Nanning, and the port cities of Beihai, Fangchenggang and Qinzhou.

Beibu Gulf ports are the nearest on the Chinese mainland to the Strait of Malacca — the most important trade route in the region — and also the closest entry to the sea for Southwest China’s inland region. This gives the area inherent advantages in linking the ASEAN countries along the Maritime Silk Road.

“The value of a port lies in its ability to connect to the world,” Zhou said.

There are 39 container routes currently operating from the Beibu Gulf and most of the 24 foreign trade routes run toward ASEAN countries, according to Guangxi Beibu Gulf International Port Group.

The group, established in 2007, operates Beihai Port, Fangchenggang Port and Qinzhou Port in the Beibu Gulf region. The decade-old port cluster recorded a total container throughput of 1.8 million twenty-foot equivalent units (TEUs) in 2016.

The figure is slight compared to the 18.9 million TEUs recorded by Guangzhou Port in the neighboring province of Guangdong and the 37.13 million TEUs at the Port of Shanghai last year.

Yet Zhou sees immense potential for the latecomer, as Beibu Gulf is likely to profit from traffic diverted from those established ports.

“We have the late-mover advantage. Ports in Shanghai and the Pearl River Delta are becoming overcrowded for their increasingly saturated capacity, which means an opportunity for us,” Zhou said.


The Chinese government is placing high hopes on the coastal cities to spur Guangxi’s economic growth. Its GDP grew by 7.3 percent to 1.8 trillion yuan in 2016, ranking it 18th among 31 provinces and regions in China and one place lower than in 2015.

During President Xi Jinping’s visit to Beihai city’s Tieshan Port in April, he encouraged the autonomous region to develop a “seaward economy” to capitalize on its advantage as a strategic node.

A seaward economy, which will rely on the connectivity of the port areas and the supporting facilities in port-based industrial parks, seeks to develop industries based on ocean resources, such as marine heavy industries and deep-sea fish farms.

“The seaward economy will be our next focus of development here in Tieshan to take full advantage of our port and industry park,” said Xiao Huhe, deputy director and senior economist at Tieshan Port’s district government.

Scholars believe that a stronger industrial base will be essential in optimizing Guangxi’s connectivity advantage in stronger economic ties with trade partners, especially ASEAN countries.

“Guangxi has a clear advantage in terms of its location, but we will need to seize the opportunity of Guangdong’s industrial transfer to drive our trade activities with ASEAN forward,” said Liang Shuhong, vice-dean and professor at the China-ASEAN Research Institute of Guangxi University.

ASEAN’s long-time trade partner Guangdong would be one of the vital sources of industrial production capacity needed for Guangxi.

As Guangdong is undertaking an industrial upgrade which requires a considerable number of factories to be relocated to nearby provinces and regions, Guangxi would be an ideal recipient, particularly for ASEAN-related businesses, said Xiao from Tieshan Port.

“We are actively attracting businesses in Guangzhou that are selecting new sites to transfer their productions to take root in our industrial park in Tieshan Port, which will give them an edge in shipping to their ASEAN business partners,” he said.

Industrial park holds promise Bilateral government project in South China’s Guangxi opens doors for more investments between China and Malaysia

August 14-20, 2017
 in Nanning

Rows of coconut palms stand before a striking building with a horn-like curved roof above a wooden and glass facade on a sizzling day.

It could be a scene from almost any Southeast Asian tourism hot spot, but a Chinese-language signboard reveals the building is the Investment Promotion Center for the China-Malaysia Qinzhou Industrial Park (CMQIP).

Qinzhou is a coastal port city in South China’s Guangxi Zhuang autonomous region, and this China-Malaysia project is a government-to-government collaboration initiated in 2012.

Given Guangxi’s proximity to Association of Southeast Asian Nations member countries (it borders Vietnam), it is seen as an important channel for China to link with the ASEAN bloc and an increasingly important conduit for foreign investment between the two regions.

A majority of the companies based in the park are Chinese, but Malaysian firms will soon be bringing in their competitive industries, such as the production of edible bird’s nest, to utilize the park’s favorable policies and Guangxi’s positional advantage, said Ong Chong Yi, president of China-Malaysia Qinzhou Industrial Park (Guangxi) Development Co.

Malaysia was China’s biggest trade partner among ASEAN countries until 2016 and China has been Malaysia’s since 2010.

Yet there is room for further development in the foreign investment field between the two countries, and the industrial park project will facilitate that, Ong said.

“The establishment of CMQIP is one of China’s concrete moves to capitalize on the connection between Guangxi and ASEAN,” Ong said.

Responsible for developing and operating the industrial park, Ong’s company is a joint venture established by Chinese and Malaysian investors.

CMQIP is also the sister park of Malaysia-China Kuantan Industrial Park (MCKIP) as part of Two Countries, Twin Parks, a new collaboration model to boost investment between Guangxi and ASEAN. Two Countries, Twin Parks comes under the Belt and Road Initiative, the China-led drive to improve connectivity along the historical Silk Road trading routes.

MCKIP is the Chinese government’s flagship investment project in Malaysia, including a 1.4 billion yuan ($208 million) steel project, a 1 billion yuan aluminum product processing facility and 500 million yuan invested by Guangxi companies.

Chinese State-owned Guangxi Beibu Gulf International Port Group is one of the major investors in both parks. In the development of MCKIP in Malaysia’s East Coast Economic Region, the group partnered with IJM Corporation, one of Malaysia’s biggest construction contractors.

Gaining local support for these foreign investment projects was an essential but challenging task for Chinese investors, according to Zhou Xiaoxi, chairman of Guangxi Beibu Gulf International Port Group.

Before its construction, MCKIP had the full support of Malaysia’s central government, but the state government of Kuantan had its own concerns, Zhou said.

“The Chinese government and companies showed their sincerity and integrity by continuous communication, and offered a donation to the state when it suffered from floods. We eventually won the trust of the state government and the local community,” he recalled.

Malaysia is a popular outbound investment destination for Chinese companies, but Kuantan had been underrated by investors compared to other parts of Malaysia. The development of MCKIP has been a boon to local economic activity, Zhou said.

He is optimistic about further growth in Chinese investment in Kuantan.

“The establishment of the industrial park has paved the way for Chinese companies who are interested in investing in Kuantan,” Zhou said.

Aside from the most popular destinations, Chinese investors continue to seek investment opportunities among promising members of the ASEAN bloc.

For instance, Guangxi Beibu Gulf International Port Group has made a move into Brunei this year after its first foreign project in Malaysia’s Kuantan Port in 2015.

Zhou said the group will continue to explore new investment possibilities in other fast-growing destinations in ASEAN, including the Philippines and Indonesia.

However, he emphasized that such moves should not be made hastily in an investment frenzy.

ASEAN investors, meanwhile, are becoming increasingly aware of the investment opportunities in some competitive industries in Guangxi.

Thailand, for instance, has more than 120 companies investing in Guangxi, mainly in agricultural industries such as sugar, tapping Guangxi’s strong capacity as the source of 60 percent of China’s sugar production, according to Thailand’s Consulate-General in Nanning, capital of the Guangxi Zhuang autonomous region.

However, there are challenges among foreign investors when investing in Guangxi, according to consul-general Chairat Porntipwarawet.

“This is a common challenge in many investment destinations, but we still hope for a good investment environment, and the rule of law to protect the interests of foreign investors in a just way,” he said.

Tourism takes off from Guangxi Holidaymakers explore new upscale travel opportunities including cruises as they venture into ASEAN destinations

August 14-20, 2017
 in Nanning

As new modes of travel gain popularity, a boost is expected for tourism activity between South China’s Guangxi Zhuang autonomous region and destinations in the Association of Southeast Asian Nations (ASEAN).

The autonomous region’s first luxury cruise line — departing from Guangxi’s Fangchenggang city for Vietnam’s Ha Long Bay, Da Nang and Nha Trang — will make its maiden voyage on Aug 29.

Guangxi, facing the South China Sea, is ideally positioned to offer cruises to Southeast Asian destinations.

According to Guangxi’s Tourism Development Committee, the cruise line from Fangchenggang will be expanded to Cambodia, Thailand, Malaysia, Singapore, Indonesia and other ASEAN countries when operation of the Vietnam route matures.

Cruise tourism is expected to gain momentum as a new, upscale way of travel for Guangxi holidaymakers exploring ASEAN destinations. Cruise lines from the coastal city of Beihai to Vietnam and Malaysia are also expected to resume operation as early as this October, according to Cen Boxiong of the Beihai Tourism Development Committee.

The more than 1,000 kilometers of border that Guangxi shares with Vietnam is itself a rich source of tourism on land. In 2015, in Guangxi’s Pingxiang city, more than a million tourists entered and exited Vietnam’s Dong Dang through the Friendship Pass — a major tourist and cargo route between China and Vietnam.

The procedure for tourists to obtain permission to cross the border has been simplified since 2009. Processing takes less than 24 hours and requires only the applicant’s identification card.

A tourist walks before the Detain-Ban Gioc Falls that straddle the border between China’s Guangxi region and Vietnam. Credit: Asia News Photo

Latest official data reveal that more than 589,000 holidaymakers from Guangxi visited Vietnam in tour groups organized by travel agencies last year, and the number in the first quarter of 2017 reached 254,000.

Driving by road from Guangxi to Vietnam, and further to other Southeast Asian destinations, is also gaining popularity among tourists.

Guangxi’s tourism authority has partnered with Vietnam and other authorities in offering driving routes that depart from Guangxi and go through Vietnam to Laos, Cambodia, Thailand and Myanmar.

Since the routes were introduced to the market in 2010, the Friendship Pass in Pingxiang has recorded more than 700 vehicles and 2,500 passengers participating in such road trips.

Thailand, the top foreign destination for Chinese tourists in recent years, is naturally a highly sought-after destination for Guangxi holidaymakers.

Thailand’s Consulate-General in Nanning, capital of the Guangxi Zhuang autonomous region, processes up to 1,000 tourism visa applications daily and around 30,000 each month, according to consul-general Chairat Porntipwarawet.

“The application number is already a threefold increase compared to previous years, but I believe there’s still huge potential for more visitors from Guangxi,” Porntipwarawet said.

He was optimistic of seeing new trends emerge, citing increased interest in low-price charter flights from Guangxi’s Qinzhou city.

One year into his posting in Guangxi, Porntipwarawet is most impressed by the splendid scenery in Guilin — one of Guangxi’s best-known tourist destinations, famous for its karst hills and emerald waters.

While dazzled by Guangxi’s rich tourism resources, he said that the region should do more to boost its reputation among international travelers.

Some local attractions have started efforts to earn more global recognition. For instance, the Lingqu Canal, an attraction near Guilin, is striving to be recognized as a UNESCO World Heritage Site. The spot made it onto the tentative list in 2012.

According to Guangxi’s tourism authority, the integrated value added by the region’s tourism industry was 252.3 billion yuan ($37.7 billion) in 2016, accounting for 13.8 percent of Guangxi’s GDP.

Partners for peace and prosperity Good neighbors China and ASEAN have built a solid foundation of mutual trust and continuing cooperation

August 14-20, 2017

This year marks the 50th anniversary of the Association of Southeast Asian Nations, and through joint efforts over the past 26 years, channels of cooperation between China and ASEAN are well established.

Indeed, their areas of cooperation have steadily expanded, leading to fruitful results. China established dialogue relations with ASEAN in 1991, progressing to full dialogue partner in 1996.

In 1997, the two sides commenced a partnership of good neighborliness and mutual trust, which then developed into a “strategic partnership for peace and prosperity” in 2003.

Later, three phases of the Plan of Action on the strategic partnership were signed — in 2004, 2010 and 2015. The rapid development of China-ASEAN relations not only laid a solid foundation for their cooperation, but also made a significant contribution to regional peace and prosperity.

Since the establishment of China-ASEAN dialogue relations, both sides, guided by the principle of mutual respect and mutual benefit, have deepened political communications and built closer ties in economy and trade, which have led to fruitful cooperation in all areas.

At the political level, China was the first to establish a strategic partnership with ASEAN.

Dialogue mechanisms at different levels have been formed, including leaders meetings, ministerial meetings, the China-ASEAN Expo, as well as the China-ASEAN Business and Investment Summit.

Through frequent visits by leaders from China and ASEAN countries, the level of political mutual trust has been improved greatly.

Tour guides leading a group of Chinese tourists at the Grand Palace in Bangkok on March 23 last year. China is now ASEAN’s biggest source of tourists. Credit: Post Today Photo / Krit Promsaka Na Sakolnakorn

In economic cooperation and trade, China was the first to start negotiations with ASEAN on a free trade area.

In 1991, two-way trade volume between China and ASEAN reached $6.3 billion, soaring 70-fold to $452.2 billion in 2016.

China has been ASEAN’s biggest trading partner for seven consecutive years and ASEAN has been China’s third-largest trading partner for five years in a row.

In line with China’s Belt and Road Initiative — the drive to boost trade and connectivity across the ancient Silk Road routes — Chinese companies have set up 26 economic and trade cooperation zones in eight ASEAN countries, which will serve as the basis to further deepen China-ASEAN economic and trade cooperation.

As for people-to-people exchange, China signed a Memorandum of Understanding on Cultural Cooperation with ASEAN in 2005 to establish the framework of culture cooperation and to promote the common aspiration of the people, making it a third pillar for China-ASEAN relations.

China has become ASEAN’s biggest source of tourists. The number of tourists from ASEAN countries to China has also seen a remarkable increase.

In defense and security, China and ASEAN, through enhanced military cooperation, work closely on anti-terrorism, transnational crime and piracy.

In 2002, China and ASEAN signed the Declaration on the Conduct of Parties in the South China Sea, aiming to jointly maintain peace and stability in those waters.

In 2015, the first China-ASEAN Defense Ministers’ Informal Meeting was held in Beijing, writing a new chapter in China-ASEAN cooperation.

Moreover, China and Malaysia launched their first joint military exercise, Peace and Friendship 2015, fully demonstrating the profound friendship and political trust between China and ASEAN.

Looking back on the past, China-ASEAN relations have deepened continuously and the results are fruitful.

Looking to the future, China-ASEAN cooperation will be further upgraded, boosted by the effective connections between China’s Belt and Road Initiative, China’s 13th Five-Year Plan (2016-20), the ASEAN Economic Community Blueprint 2025 and the Master Plan on ASEAN Connectivity 2025.

China is always willing to build a China-ASEAN Community of Shared Destiny through the joint efforts of both sides, maintain regional peace and stability and promote common prosperity.

The author is director of the Dept for Malaysia Studies with the China-ASEAN Research Institute, Guangxi University.

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