Reality check: ASEAN Economic Community

ASEAN economic community

 

By December 31, 2015, ASEAN (or for those outside Southeast Asia, known as Association of South East Asian Nations) has officially entered a new phase of its region-based integration with the launching of ASEAN Economic Community, or AEC in short. With that new precedent established, the 10-country association will become a single-market base, integrating a combined population that is projected to surpass 640 million by the end of 2016, with total GDP output approaching 3 trillion US$. The launching of AEC will enable near-limitless intra-ASEAN capital, human, investment, talent, and social mobility. People from all ASEAN member-states will soon be faced with intense competition with the free inflows and outflows of goods, services, labor, capital, and almost everything within the region.

Heck, a lot of my close friends I personally asked had not even the slightest idea what ASEAN Economic Community is.

If you look at all these numbers and figures (640 million people, middle-class population of over 100 million, 3 trillion US$ of GDP output, over 1.5 trillion US$ in goods and services exports and another 1.3 trillion US$ in imports), they are sexy. Indeed, these figures make the notion of AEC so sexy and attracting, particularly for multinational corporations seeking to invest in this region as labor costs remain lower than those in China. But, hold a second, why the heck do a lot of people here seem not attracted to this idea of ‘economic integration’? Even more people out there, I bet, would think of a cow playing a piano when imagining the impacts of this agreement.

Beforehand, we need to unmask the uneasy reality being faced by ASEAN in facing this brand-new world of free trade agreements, economic unions, customs unions, and so much other stuff you may think they are a series of one-off talk shows.

We have been so integrated economically, but separated culturally and socially.

Even before the implementation of AEC, ASEAN has signed lots (and damn lots) of trade agreements, mostly with our own neighbors. China, Japan, South Korea, India, Australia, and New Zealand have attested to such cooperation, and European Union (to a lesser extent also including Gulf Cooperation Council) are hastening up negotiations for the completion of another round of FTA – albeit EU is pursuing the negotiation with individual states. The implementation of ASEAN Free Trade Area, or AFTA, has also eliminated most existing trade barriers, in this regard the imposition of tariffs. All ASEAN countries have reported the rate of tariff elimination at above 95%, with the exception that some non-tariff barriers remain. And what about Myanmar, our ‘friend’ that just (supposedly, maybe?) became a democracy after November 2015 election? Economic reforms beginning in 2011 have resulted in Singapore and Thailand becoming the largest foreign investors in the country, but to which extent the economy will further open up remains another question worthy of further scrutiny.

The table below provides the data regarding ASEAN member-states, as cited from MIT’s damn-pretty data-visualization website Atlas of Economic Complexity:

 

ASEAN export-import

By the way, never mind with the fact that most Southeast Asian countries look up to the world’s biggest panda for trade (at least for now, as China is Asia’s biggest economy currently), with the exception of Brunei, which exports bulk of its oil to Japan, and Laos, which has Thailand as its ‘friendlier’ partner. One obvious indication with such pattern is the increasing Asian-centric nature of these countries’ trading activities. If you dig more data from the Atlas, especially with regard to ASEAN member-states, one major thing you observe is the overwhelming domination of Asian (and fellow ASEAN) countries taking huge portions of their trading volume.

Nevertheless, the inconvenient truth is that we remain ‘separated’ culturally and socially. Never mind with the fact that intra-ASEAN migration is of a huge and tremendous scale, especially if you try to consider these figures below (data obtained by UN International Migration 2013 report):

  • More than 3.7 million foreign migrants residing in Thailand originate from Myanmar, Laos, and Cambodia, overwhelmingly employed in low-paying jobs, particularly in construction, farming, and fishing industries
  • Over 1 million Indonesians are currently staying in Malaysia (mostly to work as domestic helpers or factory workers), but many unofficial estimates put the figure between 2.5 and 3 million people instead, due to the possibility that a lot of them ‘overstay’
  • Almost 1 million Malaysians are currently in Singapore, coming in and out of Johor Bahru on a daily basis, mostly for work

Or consider these news samples, based on what I obtained and summarized from mainstream media:

  • People in Yangon (capital of Myanmar) protest against death-sentence verdicts against two Myanmar nationals charged of first-degree murder in Thailand they possibly didn’t commit
  • Discrimination, at a lower level, continues for ethnic Vietnamese living in Cambodia
  • More than 150,000 Cambodian migrants rushed home in the aftermath of 2014 May coup in Bangkok, for fear of military persecution
  • Thousands of Rohingya (a Muslim ethnic group from Myanmar) refugees were stranded in seas as Indonesia, Malaysia, and Thailand refused to grant them protection, only to be resettled after months of intense negotiation between the countries
  • Potential future standoff by Sulu insurgents (from the Philippines) in Sabah State, Malaysia (located in Borneo Island)

Without trying to provide further explanations, I suppose I have given enough examples to highlight the problems with regard to our concept of integration. No?

Another problem is our extremely huge economic discrepancies within ASEAN member-states. Seriously.

Consider another table below for your reference. Do notice, for the fourth column, that I input ‘4 US$ a day’ as a threshold, largely following the guidelines set by World Bank and also Japan’s Ministry of International Trade and Industry (for the latter, the reason is you know why) to differentiate those as ‘lower-middle-class and above’ and ‘low-income and poor’.

ASEAN middle class

With such extremities occurring if comparing these countries, it is worth questioning the viability of socio-economic integration of communities representing a huge array of income strata, particularly when everyone is entering the AEC era, as the leaders always like to envision. Then there comes the gap in the quality of manpower. A large proportion of population, especially in countries with GDP per capita below 10,000 US$ per year, are deprived of access to education due to poverty and many other reasons, and of course this is a legitimate reason to worry about. How will people compete on a level playing field if the resources provided to them are not even on their own level playing field? While unfortunately this is the underlying reality that shapes the contemporary world (and we can’t deny that fact), it takes a massive investment to equip individuals in these countries with sufficient capacity to compete against each other, and the amount itelf is of a no-joke hold-no-breath size; McKinsey Global Institute, the world’s most optimistic consulting firm (I guess), forecasts that ASEAN member-states have to spend upwards to 3.3 trillion US$, from 2015 up to 2030, to totally upgrade their infrastructure, especially in education. Where on earth are they going to get the money? While asking for international aid sounds more like an off-sounding joke, the only possible models that can be envisioned are either public-private partnership (PPP) or simply total liberalization that will enable inflows of foreign direct investment (FDI).

Even in terms of political orientation, each ASEAN country is completely ‘unique’ on its own.

If one has to look at it from a very truthful, and I could say somewhat inconvenient, language, the unique ‘selling point’ of ASEAN lies in its all-inclusive spectrum of political orientation. It has 1 absolute monarchy (Brunei), 2 military dictatorships (Thailand and Myanmar, so long as the junta doesn’t permit Aung San Suu Kyi to become the president), 2 Communist countries (Laos and Vietnam, but the latter has better political space than China), 3 semi-democracies (Cambodia, Malaysia, and Singapore, which have continuously been ruled by the same ruling party), and 2 ‘problematic’ democracies (Indonesia and Philippines, which are still struggling to control corruption and cronyism).

And in recent years, there have been concerns by academics whether many countries are actually deteriorating in terms of quality of democracy. While I’m not to subscribe to the belief that democracy is a panacea or a cure-all, the major advantage of democracy is it allows freedom to voice dissenting opinions on existing issues. But that’s it. Numerous research works in political science, mind you, have warned the public that rule of law has absolutely nothing to do with the fact if a country is a democracy or a dictatorship. And even in terms of rule of law, most Southeast Asian countries are lagging behind (except Singapore). Indeed, corruption and abuse of power have been deeply entrenched as a kind of ‘inalienable’ mindset among a large proportion of population in those countries.

Even then we still intensely debate and struggle to define what is corruption, which has only been constrained to these two actions: either you bribe or are bribed, or that you steal state assets. But what about these possibilities:

  • Because you are close to people with influential political power, you can monopolize an economic sector, depriving other more capable players of equal opportunity to compete. Is that not corruption?
  • Major corporations donate to political parties financial support so that they can win election. Is that not corruption? (okay, some consider this lobbying, but still, you know what I mean)
  • Political parties, especially ruling regimes, create ‘linked companies’ as their major source of revenue, controlling various economic sectors. Some consider this a legitimate way of earning money and lessening dependence on private donors, but again, is that not corruption?

This is the big Achilles’ heel that almost all ASEAN countries are being faced with. How will there be a level playing field if one side endorses one thing more than the other? One can talk about the concept of ‘single market base’, but with governments sometimes going to all available means to protect their cash cows, is that not killing competition? Is that not corruption?

But the most challenging aspect is their solidarity in international issues, especially those that carry significant stakes to ASEAN. Did anyone still remember the failure in 2012 ASEAN Summit in Phnom Penh, Cambodia? If not familiar, this is the brief explanation: all the 10 countries failed to deliver a major communique about their stance on South China Seas, which are currently being disputed between China, Taiwan, Brunei, Malaysia, Philippines, and Vietnam. Even to deliver only a unified response ended up as a major fiasco! While further communication has been done and some ‘unified messages’ have been crafted, there remains an aura of uneasiness among those countries in responding to this issue, which has been their biggest major international challenge. Still, given the huge socioeconomic gaps that become internal problems in those countries, to some extent we also have to understand why these countries fail to show unity when presented with some crucial issues.

And there is another table that I have obtained from The Economist, Transparency International, and Freedom House. While the ranks may be somewhat subjective and disputed, at least they offer a general overview of the current sociopolitical situation in these Southeast Asian countries. For more examples, I would encourage you to look them up by yourself (as too many examples will render this blog post more like a ranting essay):

ASEAN political quality

This is the reason why the real ASEAN Economic Community will only be felt in a longer future to come, given the existing obstacles. Despite such reality, still, the initiative has been launched, and even with that celebration merely in name one has to start preparing oneself to face future challenges. While red tape will still exist, companies will face less restriction in investing in these emerging markets. A large population still below middle-class status will experience upward social mobility with closer economic cooperation. Furthermore, with mega-regional free trade agreements such as TPP already reached and soon to be ratified, as well as negotiations in RCEP that will also be completed in the near future, by which most ASEAN member-states are participating, this is the huge opportunity (altogether with its underlying risks) that the countries must adapt with in order to succeed in the long run. Now, the challenge with AEC is how long it will take for the entire bloc to achieve the envisioned integration, and truth be told, the path towards that vision will not be as easy as we imagine.

And yes, my friends already knew about this initiative, anyway.

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Increasing competitiveness: a challenge in Hong Kong’s tertiary education

hong kong

 

 

Yesterday, someone in our Facebook group for international students posted an article, as titled ‘give the opportunity back to local students‘. Penned by a Legislative Council member, this piece uncomfortably raised the issue about ‘reducing quota for non-local students’ per 2016/2017 academic year.

Or, just in brief, I’ll sum up some important points mentioned:

1. Among 15,000 university seats reserved each year for all institutions in Hong Kong, 20% (or 3,000 among them) are solely reserved for non-local students (notably students from China and overseas).

2. This rate of 20%, implemented since 2008, was a drastic increase compared to 4% back in 1996. Among the 3,000 seats for non-locals, one-fifth will be enrolled in courses fully endorsed and funded by government under a stipulation known as ‘university grants committee (UGC)’.

3. There has been notable concern among local students in regard to the diminishing opportunities for them to reserve places in universities, aside of the fact they have to undergo rigorous high-school curriculum (something very common in Asia’s developed countries).

4. What’s the government’s response? Sounds like a ‘fairly simple’ solution: they are considering to eliminate all UGC-funded options for non-local students, which, if passed in legislation, will be implemented as rapidly as 2016/2017 academic year.

While there is no denying that increasing local competitiveness is essential for long-term economic viability of a country/region, doing such measure towards non-local students does sound like, my prior apologies, some kind of jingoist campaign done in any Third World country. Such reality is ironic when it comes to facing globalization, particularly in the beginning of 21st century. With international mobility accelerating everywhere, as well as economic challenges that are becoming increasingly multifaceted and intricate, there is no doubt we need outside talent for some sectors. No matter how unpopular it may sound for local populace, if we rethink about it from a pragmatic point of view, we still need international resources.

But this is Hong Kong, a metropolis its own government so proudly labels as ‘Asia’s world city’.

Talking from a perspective as an international student, there are some concerns in my mind I think I need to express here.

The real roots of the ongoing education problem in Hong Kong lie in the diminishing competitiveness of the city and the funding problem. Just take the education budget as one example. According to annual statistics by Hong Kong government, in 2013/2014 academic year, total education expenditure equals 76.9 billion HK$, approximately 17.6 percent of total expenditure. That is a pretty high percentage compared to South Korea (15.5%), Japan (10.5%), or even China (12.1%). Afterwards, consider the 2013/2014 UGC budget allocated by the government. In 2012/2013 academic year, the amount provided was 15.8 billion HK$, but in 2013/2014 year, instead, the figure slightly dropped to 15 billion HK$. Why the drop occurred? I’m no expert on education expenditure in Hong Kong, but as what I skim and assume from the paper, this possibly suggests there’s substantial reduction in funding towards public institutions. And we all must consider that ONLY 4% of the UGC goes to non-local students, or approximately, as of last year, 600 million HK$. Does eliminating that option completely can increase local intakes in years to come? The answer is yes, but in the long term, Hong Kong’s vision of being ‘an international education hub’ will face further erosion.

Or go for another particular illustration: Hong Kong’s research and development (R&D) budget. In order to positioning oneself as an education hub, it is inevitable that research activities must be intensified. While Hong Kong is always well known to have competed with its Southeast Asian ‘twin’, Singapore (by which the former succeeds in financial services sector), the latter seems to excel much better in education. Just compare how the two city-states spend their money in research: while Singapore has invested over 9 billion US$ to strengthen its quality research in 2014 (source: Battelle), a figure that approaches 2.7% of GDP, Hong Kong’s gross expenditure on R&D remains a mere 15.6 billion HK$ (app. 2 billion US$), a disproportionately low 0.7% of the metropolis’ total GDP. This figure is even three times lower if compared with Mainland China’s investment in R&D, which now goes at 2% of its GDP (refer again to Battelle). With now average research expenditure required to be at least 2% of GDP to boost economic productivity, and for an ideal education hub expected to exceed such percentage, this is an ironic understatement that this Chinese autonomous region still has a very long way to go in achieving so.

Last year’s QS World University Rankings report has also mentioned that Singapore and South Korea were the winners in Asia’s race towards becoming education giants. Both countries have very successfully invested much of the budget to drastically improve their research quality, something that Hong Kong, despite its short-term drop because of major overhaul into four-year curriculum system, has yet to achieve. Internationalization rate among both countries above is rapidly increasing, successfully utilizing all the opportunities globalization can offer, while in Hong Kong, the increase remains largely gradual. In addition, the number of university seats has, sadly, remained unchanged for the last two decades since 1994: at a rate of 15,000 places. While over 28,000 students were actually qualified for higher education opportunities, a dismal 13,000 of them were turned down. Even if the government were to end up eliminating UGC-funded degrees for non-local students starting from 2016 onward, there will remain tens of thousands of ‘lost chances’ for much of Hong Kong’s young generation to attend tertiary education in their own soil (whose university attendance rate is among the lowest in developed world, at a chronically low rate of 18% only).

I’m very afraid the government will take another misplaced decision in the battle for this city’s future.

Extreme Wealth Is Bad for Everyone—Especially the Wealthy

wealthy not happy

 

The addendum of conventional success we have mostly adhered to sounds like this: “the more you achieve, the more dissatisfied you must be to continually perpetuate your success.” As creatures induced by desires and wants, it is inevitable for us to crave for some things, and try to do something, or anything, to get what we look out for. This applies for all the history, and it is also a driving force that makes our society advance.

But does ‘the more, the merrier’ rule apply indefinitely? If everything were left unconstrained, you would definitely encounter a perfect inequality. A ‘winner-takes-all’ situation where, in a realm of limited resources, people are racing savagely to gain something, like a zero-sum competition. And here, inequality has become one issue. It is not that competition is bad; we are, instead, being faced with ‘free-for-all’ mindset. And too much of it is increasingly a bad thing, not a good thing after all.

Read the full article in New Republic about the growing inequality in United States, and what should, ideally, be done about it.

 

Excerpt:

 

Billionaires seems to have been sparked by West’s belief that rich people, newly empowered to use their money in politics, are now more likely than usual to determine political outcomes. This may be true, but so far the evidenceand evidence here is really just a handful of anecdotessuggests that rich people, when they seek to influence political outcomes, often are wasting their money. Michael Bloomberg was able to use his billions to make himself mayor of New York City (which seems to have worked out pretty well for New York City), but Meg Whitman piled $144 million of her own money in the streets of California and set it on fire in her failed attempt to become governor. Mitt Romney might actually have been a stronger candidate if he had less money, or at least had been less completely defined by his money. For all the angst caused by the Koch Brothers and Sheldon Adelson and their efforts to unseat Barack Obama, they only demonstrated how much money could be spent on a political campaign while exerting no meaningful effect upon it.

As West points out, many rich people are more interested in having their way with specific issues than with candidates, but even here their record is spotty. Perhaps they are having their way in arguments about raising federal estate tax; but the states with the most billionaires in them, California and New York, have among the highest tax rates on income and capital gains. If these billionaires are seeking, as a class, to minimize the sums they return to society, they are not doing a very good job of it. But of course they aren’t seeking anything, as a class: it’s not even clear they can agree on what their collective interests are. The second richest American billionaire, Warren Buffett, has been quite vocal about his desire for higher tax rates on the rich. The single biggest donor to political campaigns just now is Tom Steyer, a Democrat with a passion for climate change. And for every rich person who sets off on a jag to carve California into seven states, or to defeat Barack Obama, there are many more who have no interest in politics at all except perhaps, in a general way, to prevent them from touching their lives. Rich people, in my experience, don’t want to change the world. The world as it is suits them nicely.

Inside America’s dildo industry

american dildo

 

 

Published on Buzzfeed in May 2013, a journalist entered what is dubbed ‘America’s largest dildo factory’, to get in-depth insight about the current situation of the industry that has also sustained porn, and other related industries, as it is increasingly facing an intense competition from China. Read the full article here.

Excerpt:

It is here, in this cavernous warehouse vibrating with the hums and murmurs of a bustling 500-person workforce, that one of the last bastions of old-fashioned American manufacturing labors on, using 2.5 million pounds of rubber per year to churn out a staggering 15,000 sex toys per eight-hour day, which amounts to 5 million a year. Dongs, cock rings, dick pumps, pocket pussies, strokers, suckers, strap-ons, ticklers, teasers, vibrators, ropes, whips, ball gags, anal invaders, pussy trainers, and “love spit ” lubricant pour out of here at a rate that would wow Henry Ford.

But if you look at almost any rubber vagina or string of anal beads today, they will be embossed with the epitaph that decimated much of American manufacturing: “MADE IN CHINA.” According to a 2010 estimate, 70% of sex toys produced in the world are made there; 50% of those were imported to four U.S. companies — California Exotics Novelties, Pipedream, Doc Johnson, and to a lesser extent, Topco — that dominate American sex toy sales. While the others do the bulk of their manufacturing overseas, Doc Johnson is the only one manufacturing most of its products here in the U.S. of A.

India’s Martian dream

india mars program

 

 

Beforehand, lo and behold, one important fact you should note: while NASA shuffles with its limitary budget, a new space race is commencing within its relative absence. It is no longer a two-party competition, though, a disproportionate amount of time by which we testified the intense rivalries between United States and Soviet Union. No more.

It is becoming increasingly polarized, with new entrants penetrating into a whole-new chapter of space exploration in 21st century. This year, we saw China announce its plan to establish a permanent, manned mission to the Moon by 2020, as well as its plan to set up its own space station, throwing down the gauntlet at International Space Station’s (ISS) domination. Then Japan, despite its economic setbacks, continues to develop its lunar mission and is even preparing solar sails.

Still, none of these countries could catch up with the Indian space program’s strong ambition to launch its unmanned mission to Mars, and now, Mangalyaan, as the satellite is named, has been successfully launched today.

We all admit, comparing India to either China or Japan, still the latter do have more sophistication, given that both countries have repeatedly launched manned missions to outer space and preceded the former in lunar exploration, but such eminence doesn’t necessarily imply India’s space program is inferior, though. Its Chandrayaan mission, the lunar-trotting space probe, has discovered an abundance of water and minerals on the Moon, a pride neither of the two nations has embarked on.

If India’s latest mission could bring home pictures of Mars’ scenery (the nation will still have to wait for 10 months before the sojourner lands on the Red Planet), its space-exploration pride would be similar to that of United States, Russia, and Europe, and such measure would pose a new challenge on either China’s or Japan’s space program, or even endorse a more bold ambition among many of the new, emerging-market countries’ space-probe attempts to transpierce the dreams of their predecessors in the future.

 

Read the articles on BBC World News and CNN.

And watch the live video on Sky News.

 

An uneasy home named Hong Kong

crowded hk.gif

Were it not for its mountainous terrains, Hong Kong would not have been dubbed the world’s most vertical city.

Occupying an infinitesimal carve out of Chinese land, and a few hundred outlying islands, all of which are no larger than 1100 sq km, Hong Kong can only afford to provide to its 7.2 million inhabitants approximately one-fifth of its total areas, given the geographically steep contours, virtually on all its entire spaces. Even the skyline on Big Apple, the first major city on Earth to proudly attest its nature-defying abilities with supertall skyscrapers, is no match to the enormity – and the monstrosity and all its narrow-gauge compactness – of the skyline in Hong Kong. New York City, in a century, has built over 4000 high-rise buildings, mostly in Manhattan; Hong Kong has put up to 8000 in half a centenary, scattered all over Hong Kong Island, Kowloon, and New Territories.

Sum it up, in historical sweepstakes, with its integrated 99-year rule by British Empire. Firstly concentrated on manufacturing, the government, realizing the potential impacts China’s open market reforms could impede on its economic growth, created a brand-new experiment to jack up its popularity as a global city: laissez-faire market, mainly on financial and trading sectors, with government intervention almost null-and-void. Thus is the brand-new Hong Kong we recognize today: glitzy skyscrapers, burgeoning elites, vibrant streets and markets, beyond-excellent infrastructure, and highly flexible bureaucracy.

Nevertheless, the environment simulated by the laissez-faire system has also procreated ruthless competition among individuals to achieve paramount success, enforced the people’s appetites to far-reaching extents, and pushed them for more recognition upon their higher social echelons. Driven even further by China’s economic boom, by which numberless mainland Chinese, mostly parvenus, have begun to enter the competition, the contest has been itself increasingly arduous. This is evident, particularly, from one major detail: more and more mainland Chinese are buying up apartments and condominiums, the already-exorbitant prices of which having been marked up by major real-estate developers bulk of the locals, self-dubbed ‘Hongkongers’ can barely afford in their lifetime.

As a consequence, social gap has increasingly exacerbated in the last decade. Despite the fact there are up to 100,000 millionaires and multimillionaires living lavish lives in over-sized condominiums, or to a lesser extent, mansions on mountain peaks, it is also estimated that more than 170,000 people in Hong Kong are struggling to live in cubicle-sized, stacked boxes they call ‘homes’, most of whom are former construction and industrial workers having been displaced due to the city’s dwindling industrial sectors.

In short, the race itself is not going to stop anytime soon.

The New York Times has published an article and a slide show to document the plight of Hong Kong’s poorest, each of whom is struggling to find a better home for oneself.