ASEAN Roundtable Series: How does ASEAN navigate the new trade [dis]order?
Published on 2 May 2019
H.E. Dag Juhlin-Dannfelt
Ambassador of Sweden in Malaysia
Dr. Cecilia Ruthstrom-Ruin
Deputy Director-General, Head of the Department for Asia and Ocenia, Ministry of Foreign Affairs
Prof. Kuik Cheng-Chwee
Associate Professor, Institute of Malaysian and International Studies (IKMAS), Universiti Kebangsaan Malaysia
Dr. Kuik’s research concentrates on weaker states’ foreign policy behavior, state alignment choices, regional multilateralism, East Asian security, China-ASEAN relations, and Malaysia’s external policy. His publications have appeared in peer-reviewed journals such as Journal of Contemporary China, Contemporary Southeast Asia, Chinese Journal of International Politics, Asian Security, China: An International Journal, Asian Politics and Policy, East Asian Policy, Shijie Jingji yu Zhengzhi, as well as edited books. Dr. Kuik’s essay, “The Essence of Hedging” was awarded the biennial 2009 Michael Leifer Memorial Prize by the Institute of Southeast Asian Studies for the best article published in any of the three ISEAS journals. He is a co-editor (with Alice Ba and Sueo Sudo) of Institutionalizing East Asia: Mapping and Reconfiguring Regional Cooperation (Routledge 2016).
Dr. Kuik is a regular invited speaker to international conferences and closed-door policy roundtables. His current projects include: hedging in international relations, ASEAN states’ responses to China’s Belt and Road Initiative (with Lee Jones), and politics of China-related railroad projects in Southeast Asia (with David Lampton and Selina Ho). Cheng-Chwee serves on the editorial boards of Contemporary Southeast Asia, Australian Journal of International Affairs, and Routledge’s “IR Theory and Practice in Asia” Book Series. He holds an M.Litt. from the University of St. Andrews, and a PhD from the Johns Hopkins University’s School of Advanced International Studies.
Dato’ Dr. Ooi Kee Beng
Executive Director, Penang Institute
He is also a Förvaltningsocionom, graduated from Socialhögskolan i Stockholm. He represented Sweden in the first World Wushu Championships in 1991 held in Beijing, and in the European Wushu Championships in 1992 (where he was runner-up in Taijiquan) and 1993. His published translations of Chinese war strategy such as Sunzi’s Art of War, Wuzi’s Art of War and Weiliaozi’s Art of War are the first from classical Chinese to Swedish.
His many books include The Eurasian Core and Its Edges: Dialogues with Wang Gungwu on the History of the World. His book, The Reluctant Politician: Tun Dr Ismail and His Time, won the “Award of Excellence for Best Writing Published in Book Form on Any Aspect of Asia (Non-Fiction)”. His latest book is Catharsis: A Second Chance for Democracy in Malaysia. His personal website is: wikibeng.com.
Senior Vice President and Head of Asia & Oceania, Business Sweden
Glitterstam has extensive experience of consulting multinationals and leading Asian enterprises in the area of internationalisation and business growth, formerly as a Partner of the renowned consulting firm Accenture. He has operated in Asia since 2003, with a particular focus on the Chinese market.
Glitterstam was appointed to VP Asia Pacific in 2016, after having first joined Business Sweden as the Trade Commissioner to China back in 2015. In his current capacity he is steering business promotion efforts across the region, in areas such as Smart Cities, Industry 4.0, future transportation, life science and environment, always under the theme of Sweden as a leader in Innovation and Sustainability.
Furthermore Glitterstam is a senior advisor to Swedish enterprises in the area of market entry and business growth in Asia Pacific, often in the direction of exploring frontier markets, strategic innovation, expansion into new segments, market partnerships and M&A. Glitterstam also oversees the Swedish Invest promotion organisation in Asia Pacific with the objective of attracting investments into Sweden.
Tobias Glitterstam holds a degree in Business from Lund School of Economics and Management. He lives in China with his wife Karin and their three children.
Ng Lip Yong
Honorary Advisor, Malaysia-China Chamber of Commerce
He held various positions/advisory roles in the government agencies and corporate companies. He joined Standard Telephone & Cables Ltd in England as an engineer in 1975 and subsequently worked as an engineer with Telecommunications Authority of Singapore before returning to Malaysia to take up the position of Resident Manager of GTE International Incorporated, USA (Malaysia Representative Office). Mr Ng also was involved in several family companies in housing development, construction and oil palm plantation. He also served for a short period as Managing Director of Hai-O Marketing Sdn Bhd and Hai-O Energy Sdn Bhd as well as Business Advisor of Hiap Teck Venture Berhad.
Mr Ng was elected as the Member of Parliament for Batu Constituency in 1999 to 2008. He served in the Malaysian Government as Deputy Minister of Ministry of International Trade and Industry (MITI) (2006- 2008) and Parliamentary Secretary of Ministry of Plantation Industries & Commodities (2004-2006). He also was the Chairman of Malaysian Logistics Council as well as Chairman of Federation of ASEAN Shippers Council. He served as Chairman/Director of Malaysian Futures Clearing Corporation and Deputy Chairman/Director of Kuala Lumpur Commodity Exchange.
Since 2009, Mr Ng has been an Honourary Advisory of Malaysia-China Chamber of Commerce.
Tan Sri Dr. Munir Majid
Chairman, CIMB ASEAN Research Institute President, ASEAN Business Club
He has an extensive experience and is well known in the Malaysian corporate world. He had been the Group Editor of the New Straits Times, first executive chairman of CIMB and founding chairman of the Malaysian Securities Commission. After stepping down from the Securities Commission, he became Independent Non-Executive Director of Telekom Malaysia Berhad, Chairman of Celcom (Malaysia) Berhad and Non-Executive Chairman of Malaysian Airline System Berhad. He was Founder President of the Kuala Lumpur Business Club, established in 2003 and is a member of the Court of Fellows of the Malaysian Institute of Management.
Tan Sri Dr. Munir obtained a B.Sc (Econ) and Ph.D in International Relations from the London School of Economic and Political Science (LSE) in 1971 and 1978. He is an Honorary Fellow of LSE and continues the long association with his alma mater as Visiting Senior Fellow at the Centre of International Affairs, Diplomacy and Strategy. Tan Sri Dr. Munir is an associate of Southeast Asia Centre (SEAC) at LSE.
ASEAN will continue hedging between great powers due to credibility lag with the US and trust deficit with China, and must build up ASEAN community in order to formulate more coherent external policy
The CIMB ASEAN Research Institute (CARI) and the ASEAN Business Club (ABC) in partnership with the Embassy of Sweden held an ASEAN Roundtable Series on 1 April 2019 in Kuala Lumpur, which sought to analyse how ASEAN can navigate current uncertainties in the global trade environment, especially in relation to the ongoing US-China Trade War, rising protectionist sentiments, and challenges to the rules-based liberal order. The event also sought to analyse ways in which Sweden and Europe could work alongside ASEAN to respond to these economically difficult times.
Titled ‘How does ASEAN navigate the new trade [dis]order?’, the roundtable looked into the external challenges which have raised concerns over the future of open, free trade and the health of global markets. To bring clarity to these complex issues, the roundtable featured a group of eminent speakers including His Excellency Dag Juhlin-Dannfelt, Sweden’s Ambassador to Malaysia since September 2016, Dr. Cecillia Ruthstrom-Ruin, PhD, Deputy Director-General and Head of the Department for Asia and Oceania at Sweden’s Ministry of Foreign Affairs, Professor Kuik Cheng-Chwee, associate professor at the Institute of Malaysian and International Studies (IKMAS) at the National University of Malaysia and Non-Resident Fellow at the Foreign Policy Institute at John Hopkins SAIS in Washington D.C., Dato’ Dr. Ooi Kee Beng, Executive Director at the Penang Institute, Mr. Tobias Glitterstam, Vice-President and Regional Manager of Asia-Pacific at Business Sweden, and Mr. Ng Lip Yong, Board Member of the Industrial and Commercial Bank of China (Malaysia) Berhad and former Deputy Minister of the Ministry of International Trade and Industry (MITI).
Moderating the roundtable was Tan Sri Dr. Munir Majid, Chairman of the CIMB ASEAN Research Institute, President of the ASEAN Business Club, and a member of Malaysia’s Economic Action Council chaired by the Prime Minister.
The speakers and attendees of the event concurred that in light of the ongoing trade tensions between the US and China, ASEAN will attempt to navigate the current global uncertainties by hedging against both. Furthermore, it was agreed that Europe can partner with ASEAN in upholding a rules-based international trade order.
Dr. Majid opened the discussion by noting that the roundtable was concerned about how ASEAN could navigate the current disorder in the international system, including the possibility of another global recession. He wondered how ASEAN could emerge from this global uncertainty while currently enjoying high growth rates, especially when efforts to integrate the bloc continue to stall (such as through the rise in Non-Tariff Barriers). He also noted that Sweden has always remained interested in ASEAN and its growth.
His Excellency Dag followed by noting that Asia is currently one of the fastest growing regions in the world now, with ASEAN’s forecasted growth looking appealing from a European perspective. Dr. Cecilia concurred with Ambassador Dag, stating that Sweden’s new government has sought to promote democracy around the world, and see Malaysia as a positive example to be studied. She also added Europeans are recognising that the world is entering a century where Asia will become increasingly influential both politically and economically, and the former are keen to expand relations with ASEAN and further deepen cooperation. She believes that Europe and ASEAN share basic values, including an emphasis on a rules-based system and multilateralism. She noted that Europe is also increasingly recognising the rise of China, and are seeking to strategise accordingly.
ASEAN’s hedging behaviour in a changing geopolitical environment
Professor Kuik Cheng-Chwee opened the discussion by elaborating how ASEAN seeks to navigate a changing global order with the rise of China. From the perspective of small powers, he noted, there are three main points to consider about the current trade tensions between the US and China:
- Not just about trade: the tensions are not simply about trade tensions, but larger great power competition and rivalry.
- Not necessarily disorder: Professor Kuik argues that the current regional system is not necessarily disorder, but rather that the power structures are simply evolving.
- Navigation is an art: ASEAN practices ambiguity in their relations with both China and the US, hence the region’s seemingly contradictory behaviour at times. When conditions are uncertain and stakes are high, smaller, vulnerable states will be prone to hedging.
He discusses why smaller states feel compelled to hedge. He states that the key point in all three reasons put forth is to do with the issue of global uncertainties and lack of credibility with regional powers:
Professor Kuik then moved on to discussing how states seek to hedge in times of uncertainty:
Professor Kuik concluded by presenting examples of the great power contestations between the US and China currently in action in Southeast Asia, such as the US’ freedom-of-navigation-operations (FONOPs) in the South China Sea, or China’s Belt and Road Initiatives. He stressed that while ASEAN countries will welcome some form of US involvement in the region to constrain China, they will not want this constrainment to shift to containment. He believes that any attempt to contain China would only add to regional instability.
On the other hand, while ASEAN countries will welcome the development that comes from China’s Belt and Road Initiative, they will also be concerned about economic dependence on China and the security implications.
Ultimately, he believes that ASEAN countries will pursue policies of ambiguity and contradiction to keep their distance between each superpower. ASEAN governments will want to be seen to not be taking sides in the ongoing rivalry between the US and China.
The historical relationship between China and Southeast Asia
Dato’ Dr. Ooi Kee Beng followed with a presentation on how history has shaped ASEAN and China’s dealings with the outside world. He started by discussing how an analysis of the relationship between ASEAN and China can be broken down at three levels:
- The national level: experiences of colonialism and Japanese occupation have made modern Southeast Asian countries introverted and defensive. Southeast Asian countries are inherently insecure countries, which guides how they approach foreign policy.
- The regional level: regionalism has always been an extension of national policy. ASEAN as a project has been successful as a forum for major powers to meet on neutral ground, thereby heightening the significance of its centrality to regional affairs. Indeed, projects such as the BRI and the Indo-Pacific consider ASEAN as instrumental to the wider ambitions of major powers today, which will challenge the bloc’s ability to assert themselves as a coherent and united organisation.
- Through analysing China’s rise in a historical context: China should be considered a ‘normal’ country whose relations with the outside world is strongly affected by its domestic politics and economy. China now seeks integrative national-economy building and to build global influence through free trade. Dato’ Ooi urges dialogue between ASEAN and China in order to gain mutual understanding, and that ASEAN must view China as a new nation and economy facing similar uncertainties of their own.
Swedish companies’ APAC market outlook
The next briefing was provided by Mr. Tobias Glitterstam concerning the market outlook for the APAC region provided by Swedish companies operating in the region. Mr. Glitterstam started by discussing the economic potential that the APAC provides to Swedish companies. As he notes, ASEAN presently consists of 33% of global GDP and 55% of global growth (among other factors), thereby providing the region with a strong foundation for further growth.
He also proceeded to discuss the specific factors which have made the Asia Pacific an attractive market for Swedish companies to operate in. He believes that Swedish industries possess the industrial foundations to thrive in the region.
He then proceeded to discuss the performance of Swedish companies operating in the Asia-Pacific by export growth. He noted that between 2014 and 2018, export growth remained consistent at 11%.
He analyses the economic performance of Swedish companies through total sales, which he notes is five times the export figures.
He concludes by looking at the current market outlook for Swedish companies operating in Asia, breaking it down by surveying both headquarters in Sweden and the front-line businesses based in Asia. While headquarters seemed pessimistic about their business prospects for the first quarter of 2019, the front-line businesses were more optimistic when looking at long-term prospects for the next three years. He also discusses the nature of Chinese investments in Asia and how it presents business opportunities, and finally how the trade war has accelerated the offshoring of manufacturing from China to Southeast Asia.
The Trade War and ASEAN
Finally, Mr. Ng Lip Yong discussed the China-ASEAN relationship where he made several observations:
- He observed that despite being considered an economic bloc, ASEAN will not respond to the trade tensions in a cohesive manner. Most negotiations will be conducted bilaterally.
- In the ongoing trade tensions, it is likely that individual ASEAN countries will put their own interests above that of the bloc. They will also seek to demonstrate they are not taking sides.
- He believes that ASEAN will put more initiative into regional economic blocs such as the TPP and the RCEP.
- He concurred with Professor Kuik that the ongoing trade tensions are less about trade and more about geopolitics.
- ASEAN is currently aligned to different powers. Ng believes that Vietnam and Singapore have aligned more closely with the US, while Cambodia, Laos, and Thailand are aligning with China. The remaining countries are neutral at this moment. He agrees with Professor Kuik that ASEAN countries will ultimately hedge against both powers and side with the strongest one.
- The intentions of the US is very unpredictable right now. Prominent members of the Trump administration may seek another Cold War with China.
- Looking at China’s history, it is evident that the Chinese think long term in terms of grand strategy.
- Ng believes the Chinese are not inherently aggressive or expansionary, despite actions in the South China Sea. He believes the Chinese instead will attempt to spread their influence through trade, investment, and culture.
Panel discussions and concluding thoughts
During the final Q&A session, a few themes emerged:
ASEAN requires cohesiveness
While it is natural for ASEAN to hedge due to their relative lack of resources, it will become increasingly incumbent on the member states to push for greater integration should they wish to become an international player, as this will inevitably come with responsibilities. There was a common consensus among both speakers and attendees that ASEAN’s regional influence is still hindered by the bloc’s lack of cohesiveness.
Where China is on the growth curve in terms of global power
The panel speakers were queried on where they thought China was on the growth curve in terms of their global power (economic, military, political, etc). Professor Kuik stated it is difficult to determine where China is heading nowadays, terming China as a ‘fragile superpower’ with a lot of domestic uncertainties. Tan Sri Munir believed that Chinese power is growing, but at what speed is undetermined. His Excellency Dag also believed that China is growing, albeit starting from the early growth stage. He pointed to China’s continuing dependence on foreign tech transfers as it tries to play catch up with regards to the latest technologies.
The bedrock for an EU/ASEAN partnership
The panellists were also queried on what they thought could be the bedrock of an ASEAN-EU partnership. Comparisons were drawn between both blocs, insofar as they are composed of multiple member states with their own interests (thereby giving both blocs flexible cohesiveness). Professor Kuik stated that, like ASEAN, the EU will practice hedging with regards to both China and the United States. Dr. Cecilia concurred, but stated that despite not seemingly taking sides on the surface, both ASEAN and the EU will stand for a rules-based liberal international order, since both blocs are heavily dependent on foreign trade for their survival. Tan Sri Munir believed that the EU can be the new standard bearer for global liberal values as US and British soft power declines concurrently.