ASEAN - Abe’s ASEAN tour stresses regional tension

Japanese Prime Minister Shinzo Abe's trip to key ASEAN states Indonesia, Vietnam and Thailand this week is a sign of the times in East Asia, one of tense Sino-Japanese relations, geopolitical competition, and strategic counterbalancing.

These realities are also underscored by the dispatch this week of senior US officials to South Korea and Japan for consultations by an Obama administration concerned by heightened tensions between Beijing and Tokyo over the territorial disputes in the East China Sea. 

Often, the first foreign stop for a new Japanese prime minister is Washington. However, for an Obama administration in transition with a new foreign policy team not yet in office, budget deficit squabbles with congress, and planning for his second inaugural ceremony, scheduling problems proved too difficult. 

Instead, Abe's first trip abroad is to Southeast Asia, part of a larger Japanese diplomatic offensive in the region.

During his previous term as prime minister, Abe's first trip in the region was to China. However, last week Abe expressed concern about anti-Japanese feelings and actions across China. "The problem is," said Abe, "that harm is being caused to Japanese companies and Japanese nationals in China who are contributing to the Chinese economy and society." 

Tensions have mounted after Tokyo's actions in regard to the disputed East China Sea islets and lingering historical memories.

This, in turn, has fueled Japanese nationalism, as I discovered during a recent trip to Tokyo.

Senior officials told me they are considering a reinterpretation of Japan's Peace Constitution to permit more military activities, increased military spending, and forging closer defense cooperation with the US, ASEAN states and Australia.

Abe's Southeast Asia tour follows a trip last week by Japanese Foreign Minister Fumio Kushida to the Philippines, Singapore, Brunei and Australia, where new maritime cooperation between Manila and Tokyo was announced.

Manila is in a heated dispute with Beijing over contested claims over several islets in the Spratly islands (known as the Nansha Islands in China). Manila has expressed apprehension over more assertive Chinese maritime and commercial activities in the South China Sea.

During Kushida's visit, the Philippines' Foreign Minister Alberto del Rosario expressed concern over "the possibility that the freedom of navigation would be adversely affected."

Japanese multinational companies are also relocating some production facilities in China to ASEAN states such as Myanmar or Cambodia.

Regardless, Abe's Southeast Asia tour reflects growing geopolitical divisions that put East Asia's $20-trillion economy at risk. China argues that it is responding to Obama's "rebalancing" toward Asia. Though Washington was preoccupied with two wars in the Middle East, the US never left Asia.

Washington continued to enhance its network of alliances with Japan, South Korea, Australia and partnerships with Singapore and other ASEAN states. The US "pivot" was mainly a greater geopolitical and diplomatic focus on Asia and a modestly enhanced maritime presence along with continuing to enhance its defense relationships.

China's more assertive approach began in 2008, when the US financial crisis led many to view the US as in decline.

China's "nine-dash line" territorial claims, encompassing 80 percent of the South China Sea, increased maritime emphasis, and political wrangling with ASEAN over disputed South China Sea claims have sparked concern across the region.

Abe's tour this week reflects a trend toward counter-balancing in the Indo-Pacific in response to a widespread perception of a more assertive China.

Abiding by former Chinese leader Deng Xiaoping's policy of "putting aside disputes and seeking joint exploration" appears the most sensible way to reduce tensions.

More broadly, the US and China need to move beyond action-reaction to an entente with agreed rules and norms to stabilize the sustained presence of both Washington and Beijing in East Asia.

Robert A. Manning

The author is a senior fellow of the Brent Scowcroft Center for International Security at the Atlantic Council of the US. He served as a senior counselor from 2001 to 2004 and a member of the US Department of State Policy Planning Staff from 2004 to 2008.

http://www.globaltimes.cn

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Cambodia - Regional Comprehensive Economic Partnership to create huge market

Cambodia’s ASEAN economic minister said the official launch of the negotiations for the Regional Comprehensive Economic Partnership (RCEP) will lead to potentially forming the biggest single market in the region and is much bigger than the traditional markets of the US and the EU.

An economist and the minister both said Cambodia will enjoy great benefits from the trade agreement by expanding its exporting markets to other countries in the region.

The RCEP was officially launched on Tuesday during the 21st ASEAN Summit in Phnom Penh – of which the leaders of the ASEAN member countries, along with the leaders of Japan, India, China, Korea, Australia and New Zealand, issued a joint declaration to begin RCEP negotiations in order to pave the way to boosting trade and investment under the Free Trade Agreements (FTA).

Minister of Commerce Cham Prasidh said in a discussion with reporters yesterday that the launch of RCEP negotiations demonstrated the efforts of leaders to speed up the realisation of the partnership.

“This is a great effort to build a base which is bigger than the United State plus Europe,” said Cham Prasidh. “We see just the total population of China, India and ASEAN is more than half the world’s population and the economic power is also strong,” he added. 

“That’s why in the ASEAN framework, we are all trying to start negotiations on opening one more new market which we can export to duty and quota free,” he said. “Even though we’ve already opened one door, we are trying to seek opening a new door to ensure our exports in the long-run,” he said.

Hiroshi Suzuki, CEO and chief economist at the Business Research Institute for Cambodia (BRIC), said the RCEP will substitute the current FTAs between ASEAN and each of the six countries.

Suzuki described the current situation as being a “spaghetti bowl” because the number of bilateral FTAs have resulted in congestion.

“The RCEP will become much more convenient and smooth out FTAs among the 16 countries,” he said. “I would like to express appreciation of the decision to start the negotiations,” he added.

In Suzuki’s opinion, the RCEP will not allow as much free flow of trade as the Trans-Pacific Partnership between the US and other Asian nations, but still has its advantages.

“The RCEP would not be so free compared with TPP. However the effect of RCEP would be very big and positive to strengthen the ASEAN Economic Community (AEC) and the single market among 16 countries. Now Cambodia is becoming one of the production bases in ASEAN with the advantage of low labour costs and a good location on the Southern Economic Corridor among the other ASEAN countries. This trend will be further strengthened by RCEP,” he added.

Negotiations for RCEP will begin in early 2013 and are expected to be completed by the end of 2015 alongside the materialisation of the AEC.

According to statistics on the ASEAN website, the RCEP could potentially transform the region into an integrated market comprising more than three billion people with a combined GDP of about US$19.78 trillion.

Cham Prasidh said he will set up the taskforce and contact all member states to prepare the work.

“We believe the RCEP will materialise and so we’re beginning to promote it, based on the guiding principles we’ve all agreed on in terms of how to negotiate and talk to each other about this partnership.”

May Kunmakara

http://www.phnompenhpost.com/

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ASEAN - Asean: Deepening regional integration

The 10 leaders of the Asean member states meet in Phnom Penh for the 21st Asean Summit from November 18-20, to mark yet another milestone in the region's journey towards greater economic integration.

We will witness the region taking a lead role in expanding regional economic integration through the launch of the negotiations of the Regional Comprehensive Economic Partnership Agreement or RCEP.

The RCEP is Asean's initiative to leverage on the strengths of the region, and drive regional economic growth, counter-balancing the lethargy in the EU (European Union) and the United States. RCEP is envisaged as an open economic integration agreement, initially involving Asean's FTA (free trade agreement) partners, namely, Australia, China, India, Japan, South Korea and New Zealand, and later, expanding to include other dialogue partners.

Obviously there are questions about the rationale for such an initiative, given that the Asean Economic Community (AEC) is still a work-in-progress. Why start on RCEP? What's in it for Asean?

In essence, it means there is no letting up on the work that Asean is doing. Yes, Asean's own internal economic integration is important and, should at all times, take priority. However, ours is an open economic region, dependent on trade and foreign direct investment. We have to be pragmatic. The AEC cannot be the end game. Asean has to continue playing a key role in regional economic assimilation, so that we commonly shape our individual economic destinies.

So what is RCEP? One, it is an initiative driven by Asean. Two, it builds on the existing Asean FTAs with our dialogue partners. Three, it has an open accession clause, which means that in the first phase dialogue partners with FTAs with Asean, willing and able to take on the commitments, can sign on; later, RCEP may be open to other dialogue partners. Four, economic and technical cooperation will be an integral part of the agreement to support Asean member states. And, five, it shall provide for special and differential treatment for Asean member states, especially Cambodia, Laos, Myanmar and Vietnam.

Asean and its six dialogue partners have decided on the guiding principles and objectives for negotiating the RCEP. The negotiations are expected to cover trade in goods; trade in services; investments; economic and technical cooperation; intellectual property rights; competition policy; dispute settlement; and, new and emerging issues.

In short, RCEP brings together the leading economies in Asia. It is one of the most ambitious regional economic integration initiatives. Upon realisation, it could see an alliance of a region populated by more than three billion people, with a combined GDP (gross domestic product) of more than US$17 trillion, and over 40%of world trade.

RCEP, aside, the Asean Summit will also record important economic deliverables of 2012, including:

● The entry into force of the Asean Comprehensive Investment Agreement, which provides for the progressive liberalisation of the investment regimes in Asean, protection of investments and joint promotion of the region as an integrated investment area;

● The completion of the 8th Package of Services liberalisation under Asean Framework Agreement on Services covering 80 services sub-sectors;

● The conclusion of the Asean Agreement on Movement of Natural Persons, which will enable the increased mobility of skilled persons, service providers and professionals within the region;

● A new framework on Asean banking sector integration to enhance the liberalisation of banking services in the region, including the establishment of Qualified Asean Banks in each member state by 2020; and

● The Asean Infrastructure Fund which has been operationalised and lending activities expected to commence later this year.

Clearly, the 21st Asean Summit is not just another photo opportunity for the 10 leaders and their counterparts. When the 10 Asean Leaders and their six counterparts meet, they will set the stage for yet another important phase in the growth of the region and the significance of Asean on the global economic stage.

Rebecca Fatima Sta. Maria 

The Star

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Indonesia - Indonesia’s Rise And Its Regional Implications – Analysis

Indonesia’s projected rise as a medium power may see at least two likely scenarios. The first is one of power diffusion while the second sees Indonesia asserting a greater leadership role in the Asia Pacific. What are the implications for the region?

INDONESIA RECOVERED from the detrimental impact of the 1997 Asian financial crisis and came through relatively unscathed from the 2008 global financial turmoil. In fact, the ‘Asian Tiger’ has emerged much stronger and is currently ranked the 16th largest economy in the world. The McKinsey Global Institute (MGI) forecasts that such promising trends would continue in the future. MGI predicted that by 2030, Indonesia would overtake Germany and the United Kingdom as the world’s seventh most powerful economy, trailing behind only China, the United States, India, Japan, Brazil, and Russia.

Sustainable Growth Pattern

The Global Competitiveness Report in 2010 and the recent MGI report served to confirm Indonesia’s potential as an economic power. According to McKinsey, this growth has been due to several changes. Firstly, in addition to Jakarta, growing middle-sized cities such as Medan, Surabaya, and other regional cities will contribute significantly to GDP. Secondly, Indonesia’s economic growth is not only driven by its rich natural resources, but also by domestic consumption and services. Thirdly, Indonesia’s productivity gains also came primarily from the improvement in various sectors. In this case, Indonesia’s economy is now built on a more stable and diversified foundation than many external observers have assumed.

Whether we adopt a favourable or sceptical view of the MGI report, the fact is that Indonesia does have potential capacity. One prominent factor is an expanding productive workforce. According to the Indonesian Central Statistics Agency (BPS), in 2012, those aged between 1-29 years old comprised approximately 55 per cent of total population. Following such trends, MGI argued that in 2030, 135 million people will become part of the consumer or middle class and 113 million skilled workers will join the labour force as a result of individual empowerment and urbanisation.

In the future, an expanding middle class should raise Indonesia’s potential by increasing savings and spending power, while enhancing productivity. The resulting economic growth will make Indonesia stronger than any Asian economy other than China and India.

The broader resurgence of Asia will also benefit Indonesia as the unprecedented economic transformation of China and India will increase the demand for energy. For example, in 2010, China became the largest export destination for Indonesian coal and was generating approximately USD 3.6 billion in revenue; followed by India’s purchase of USD 2.0 billion in coal exports. Therefore, the resurgence of Asia’s economies will accelerate demand for a range of resources and commodities supplied by Indonesia.

Competition Or Cooperation?

Indonesia, however, is confronted with a security dilemma given the current uncertainty in international politics in the Asia Pacific; the geopolitical turbulence especially in disputed waters; and the emergence of new sources of conflict involving resources.

Against this backdrop, Indonesia’s quest to improve its military capability, if realised, will influence the regional balance. In previous years, Indonesia was never able to meet its defence budget. For example, in 2008 only 28% of the overall budget was fulfilled by the government. Economic growth should help Indonesia to unleash its full potential to build up its military. Indonesia has recently passed a Defence Industry Law, demonstrating a political will to increase its military capability. But as the regional power balance shifts, it could potentially stimulate a reaction from neighbouring countries such as Australia, Malaysia and Singapore, especially over border issues, such as the unresolved dispute over Ambalat with Malaysia.

The alternative scenario is that Indonesia will increase its importance by fostering a peaceful regional order particularly within ASEAN, and promoting cooperation between conflicting stakeholders, such as China and the US. Engaging the big powers via a regional platform where they can communicate their interests is important to avoid misperceptions, particularly amidst the current volatile atmosphere in the Asian region.

Geopolitical tensions could draw Indonesia and other regional countries into a protracted conflict and set back peace and economic development. Against this backdrop, Indonesia chose to play a constructive role by forging a consensus to manage the maritime disputes in the wake of the failure of the recent ASEAN Ministerial Meeting on the South China Sea issue. Recently, Indonesia also circulated a draft code of conduct in the South China Sea to ASEAN foreign ministers as a confidence-building measure. This diplomatic initiative is a manifestation of Indonesia’s benign rise, which should be a positive force for regional peace.

Key Determinants

There are at least three key determinants in Indonesia’s future rise. The first is the vision of Indonesia’s future president after 2014, whoever the leader may be, which will determine the next phase of Indonesia’s foreign policy. Secondly, domestic sentiments on certain issues are also important in terms of their impact on Indonesia’s foreign policy posture. Islamic nuances in foreign policy are already evident as a consequence of domestic pressures, for example raising concerns about the plight of the Rohingya community in Myanmar; advocating an anti-blasphemy law in the United Nations; and Foreign Minister Marty Natalegawa’s recent call for nations in the UN to review diplomatic ties with Israel and to boycott its products in solidarity with Palestine.

The final determinant is whether Indonesia will be able to effectively play its part in institutionalising regional cooperation to face the growing competition and quest for influence between the US and China.

Indonesia still faces domestic problems such as corruption, inequality, issues of governance and government effectiveness, and communal tensions, which can stand in the way of its rise. Therefore, whether Indonesia can fulfill its potential as an emerging medium power really depends on how successfully it can capitalise on its current growth trajectory to leap into the future.

Emirza Adi Syailendra

http://www.eurasiareview.com/

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ASEAN - ADB pushes for regional capital market integration

The Philippines is being encouraged to be more active in the three-phased implementation plan of the Asean Capital Markets Forum (ACMF) to promote Asean as an asset class and convert the region’s relatively small and limited range of products into a liquid, broader market.

Asian Development Bank (ADB) senior financial sector specialist for Southeast Asia Stephen R. Schuster says regional capital market integration will not only increase the size of the local and regional markets but open these up to more diversity of investment instruments and access to advanced infrastructure.

“Given the large capital flows into Asia, this is indeed a timely opportunity to refresh our discussions on capital market development. Without a reason to stay, these capital flows introduce increasing volatility to the region,” he tells members of the Fund Managers Association of the Philippines in the 7th Philippine Forum forum co-hosted by The Asset in Manila on September 25.

The ADB has been consistent and active in its support of the Philippine capital market development since these funds will eventually finance infrastructure projects. Financial sector assistance has been constantly under review beginning 2008 and this focussed on domestic bond markets and in helping the local government to establish an effective regulatory environment.

It all boils down to poverty alleviation, which is ADB’s main mission. “ADB believes financial sector development can help achieve that goal,” remarks Schuster. Financial sector development reduces poverty through at least three channels, he says, and these are indirectly through economic growth, directly by providing access to finance for the poor, and through financial sector stability.

“We believe the development of domestic capital markets, and increasing the linkages between them represents a mitigant to volatility and a means to support the infrastructure needs of the region, and a means to raise incomes and reduce poverty,” he remarks.

Within Asean, ADB has farmed out assistance to grow capital markets and financial sectors at the country level, but at the core of its agenda is to promote regional capital market integration.

Schuster lists the benefits for the Philippine participation to the ACMF, which is currently on the second phase of a three-phased implementation plan (2011-2012) and the third phase is 2013-2015. By 2015, the Asean Economic Community will become a reality.

Regional capital market integration will harmonize disclosure standards, stock exchanges trading link, better legal framework for cross border disputes, strong regional corporate governance framework, as well as improve regional economic cooperation.

“Harmonized disclosure standards actually bring investors to smaller markets in Asean,” he explains. “Once an issuer has issued securities in Singapore/Malaysia, they can use the same prospectus to issue in other countries including Philippines. This makes it cost efficient for issuer who otherwise may not invest beyond Asean’d top 3.”

Schuster says the Philippine Stock Exchange as a participant of the Asean exchanges trading link will also allow smaller brokers access to foreign securities and give investors a wider choice of products. “Brokers in the Philippines can sell their customers equities from, for example Thailand and Singapore. Foreign investors will also have better access to Philippines securities which means attracting more foreign capital.”

Other benefits include the Philippines leveraging on developed legal framework to resolve cross border disputes. “[There’s access to] enforcement mechanism to provide protection to local investors,” says Schuster. “Investor protection should be an important mandate for any SEC (Securities and Exchange Commission).

He notes that listed companies in the Philippines are already known for their strong corporate governance standards. “However, participation in the Asean corporate governance initiative will allow Philippines PLCs (publicly listed companies) to measure themselves against PLCs in other Asean countries, improve corporate governance and strive for international standards beyond the requirements of local regulations.”

Another perk to regional integration is that member nations will have the resources to build capacity collectively, adds Schuster, while increasing regional cooperation through sharing of information.

ADB, as a multilateral funding agency, assists by helping governments and private sectors to develop capital market master plans. This is done through direct technical assistance to enhance legal and regulatory frameworks, taxation and the governing rules on the issuance of debt and equity.

For the Philippines, it has recently decided to support initiatives for the PERA or personal equity and retirement account. The PERA law was approved in 2008 and is one of the major capital market reforms in the last 10 years.

“ADB plans to support the introduction of PERA in the Philippines by funding the acquisition of hardware and software development,” Schuster reveals during the forum.

Lee Chipongian

http://www.theasset.com/

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Singapore - Regional bourses rise on Japan's fresh stimulus

Japan's announcement of a new round of monetary easing gave shares here and across the region a boost.

It was barely noticeable here, with the Straits Times Index (STI) rising just 7.65 points, or 0.25 per cent, to 3,075.63 points, but gains were more pronounced elsewhere. Hong Kong's Hang Seng Index added 1.16 per cent, while Tokyo's Nikkei 225 rose 1.19 per cent.

"Despite a relatively flat lead from offshore markets, Asia began dancing to its own tune as speculation mounted that Japan would take action to stimulate the economy and arrest the rising yen," said a note by CMC Markets.

"The Bank of Japan indeed came to the party, pushing risk assets higher as midway through the session, they eased monetary policy further and announced the addition of another 10 trillion yen (US$127 billion) to their stimulus programme."

The latest round of central bank easing came less than a week after the United States announced a third round of its money-printing programme.

Singapore's STI was lifted by Jardine Matheson Holdings, up 99 US cents, or 1.8 per cent, to US$55.71, while SingTel rose two cents, or 0.6 per cent, to S$3.34.

Decliners included CapitaLand, down two cents to S$3.19, and DBS Group Holdings, which fell three cents to S$14.42.

The market was focused on news that Thai tycoon Charoen Sirivadhanabhakdi had agreed to back the sale of Fraser & Neave's stake in Asia Pacific Breweries (APB) to Heineken.

Thai Beverage, a Charoen vehicle holding a stake in F&N, was the most active stock, with 263.1 million shares changing hands.

The shares jumped 4.5 cents, or 13 per cent, to 39 cents as traders bet that ThaiBev would get some of the proceeds from F&N's sale of the APB stake.

F&N fell nine cents to $8.88 - the amount Charoen has offered for all F&N shares he does not own. APB was down 10 cents to S$52.99, below the S$53 that Heineken will put on the table in a general offer after it acquires F&N's APB stake.

Soft commodities supplier Olam International was down one cent to S$2.07. It has won a bid for the Northern Coffee Corporation for US$6.15 million. The bidding process had been organised by the Zambia Development Authority.

Tat Hong Holdings fell two cents, or 1.5 per cent, to S$1.28. The crane company has placed out 70 million new shares at S$1.20 each to raise about S$82.1 million. The proceeds will be used to expand its crane fleet and buy land and buildings in Singapore and Malaysia to support the new machinery.

Jonathan Kwok
The Straits Times

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Russia - APEC Summit kicks off with concerns of regional stability in spotlight

VLADIVOSTOK, Russia: The 24th Asia Pacific Economic Cooperation (APEC) meeting has kicked off with concerns of regional stability overshadowing trade issues.

Territorial disputes have strained relations between China, South Korea and Japan in the weeks leading up to the APEC summit.

Claims over the Scarborough Shoal in the South China Sea have also dampened China's relations with the Philippines.

Despite these concerns, APEC leaders opened their meeting with the trade agenda firmly on their minds.

Singapore Prime Minister Lee Hsien Loong's day started with a series of bilateral meetings on the sidelines of APEC.

Among them was a meeting with US Secretary of State Hillary Clinton. US president Barack Obama is absent this year because of his presidential re-election campaign.

The meeting with Mrs Clinton lasted nearly an hour. They discussed regional developments and the situation in the South China Sea, where a tense territorial dispute has been brewing between China and the Philippines.

Mr Lee reiterated Singapore's position on the issue, saying that while Singapore does not have a claim in the South China Sea, Singapore does have an interest in preserving the peace and stability and the freedom of navigation in the area.

Mr Lee added that the dispute should be resolved through negotiations and in accordance with international law.

In this regard, PM Lee said ASEAN can play an effective and moderating role without taking any sides.

Mr Lee also stressed the need for all claimant parties to exercise moderation and restraint.

He made the same points in a separate meeting with Philippine President Benigno Aquino.

When Mr Lee met Japanese Prime Minister Yoshihiko Noda, their discussions centred on collaboration, investment and economic issues.

Both leaders welcomed the imminent start of negotiations on the Regional Comprehensive Economic Partnership at the upcoming ASEAN summit later this year.

Mr Noda also encouraged further collaboration between Japanese and Singapore companies in infrastructural development and investment in other regional countries.

Russian President Vladimir Putin opened the official APEC leaders' meeting by stating the agenda for this year's summit included the need to establish a reliable supply chain.

This took on added significance in light of recent natural disasters around the world like floods in Thailand and earthquakes in Japan.

Leading the discussion on this topic, Mr Lee said a country like Singapore is acutely aware of the importance of global supply chains, because trade is the true lifeblood of the Singapore economy.

He said it was important to address supply chains individually by improving the domestic handling of goods and services, for example in customs clearance.

Collectively though, he said there needs to be a balanced approach that will reduce risk and not compromise on trade.

Mr Lee said an important priority is to promote trade liberalisation and openness.

APEC leaders are also scheduled to meet with top CEOs from various industries.

So far, business leaders attending the APEC CEO summit have urged for a speedy conclusion of the Trans-Pacific Partnership (TPP).

The TPP will need the consensus of the 11 APEC members involved and it may not be an easy task, but if the TPP does go through, it will mean a significant boost for trade in the Asia Pacific region.

Dominique Loh

- CNA/wm

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Vietnam - Vietnamese FM calls for regional forums’ contributions

Both the East Asia Summit (EAS) and the ASEAN Regional Forum (ARF) need to make further contributions to the region’s common goals of peace, stability, security and cooperation in the region.

Vietnamese Foreign Minister Pham Binh Minh made the remarks at the 2nd EAS Foreign Ministers’ Meeting and the 19th ARF held in Phnom Penh on July 12.

He said EAS and ARF should coordinate and supplement other regional cooperation frameworks such as ASEAN plus 1, ASEAN plus 3, and ASEAN Defence Ministers’ Meeting plus (ADMM+).

FM Minh affirmed that EAS continues providing a platform for leaders to discuss important strategic issues, including politics, security and development in the common interest of regional countries and on the basis of goals, principles and capacity of EAS.

The summit should continue promoting the five existing joint priorities and other important cooperation areas, including the establishment of a free trade area in East Asia, and the fight against natural disasters, terrorism and transnational crimes, he said.

Minh also stressed the necessity that ARF further promotes its role as a leading regional forum on politics-security.

The forum needs to effectively implement the Hanoi Plan of Action and the ARF vision statement 2020, boost cooperation to address non-traditional security challenges, such as natural disasters, terrorism, climate change, maritime security and safety.

At both meetings, the Vietnamese diplomat expressed his concern over recent complications in the East Sea with violations to the sovereign and jurisdictional rights over the exclusive economic zone and continental shelf of coastal nations.

Minh said that countries must respect principles of international law, especially the 1982 UN Convention on the Law of the Sea, including regulations in respect for the exclusive economic zone and continental shelf of coastal nations, without the use of force and settlement of disputes through peaceful means.

He also stressed the full implementation of the Declaration on the Conduct of Parties in the East Sea (DOC) and building the Code of Conduct in the East Sea (COC) soon.

VNN/VNA/VOV

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Malaysia - AirAsia to sign more JV pacts with regional carriers

SEPANG, June 13 (Bernama) -- Low-cost airline, AirAsia Bhd, will sign five more joint-venture agreements with regional airlines within the next two years to expand its business in the region.

Chief executive officer, Tan Sri Tony Fernandes, said the move was in line with AirAsia's ambition to become the leader in the industry.

"The enormous potential in an underserved market of three billion people spread across Asean, Northeast Asia and South Asia offers huge opportunity and AirAsia is ideally positioned to reap huge dividends by serving this market," he said after announcing the set-up the airline's Asean office in Jakarta here today.

AirAsia had signed a joint venture agreement with Japan's All Nippon Airways to form AirAsia Japan, which is expected have its first flight in August.

In line with the company's expansion strategy, he said, the airline was also considering placing an additional order for 50 planes to its existing order of 75 planes, scheduled to be delivered by 2016.

He said the airline might ask Airbus to advance the aircraft to fill the requirements of its operations.

Fernandes said the Asean office, called AirAsia Asean, would focus on the development of its regional operations as well as to bring the airline to a higher level.

The office, which would serve as the 'nerve centre' of its regional operation, would help the airline to engage more closely with the Asean secretariat headquartered in Jakarta, he said.

He said the office would also help raise the profile of AirAsia Indonesia, which was scheduled for listing on the Jakarta Stock Exchange by year-end.

Fernandes said with the establishment of the Asean office, he would leave his post as CEO of Malaysian operation to focus on the regional operation and would announce his replacement on Monday.

http://www.mysinchew.com/

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Taiwan - MOEA stresses need for economic integration

Taiwan must be part of regional economic integration as this is key to boosting the island’s trade and sustainable development, according to ROC Economics Minister Shih Yen-shiang June 7.

“The country will be marginalized if it does not forge more trade partnerships with countries in the Asia-Pacific region and rest of the world,” Shih said. “The Ministry of Economic Affairs is leaving no stone unturned in its efforts to achieve this goal.”

Shih made the remarks at a news conference upon returning from the Asia-Pacific Economic Cooperation ministerial meeting on trade in Kazan, Russia.

With the focus of this year’s meeting on economic integration, Shih said APEC economies are stepping up efforts to promote regional trade and investment liberalization.

The Association of Southeast Asian Nations, for example, is planning to establish the Framework for Regional Comprehensive Economic Partnership, an arrangement integrating members with their ASEAN Plus One partners such as Australia, India, Japan, New Zealand, South Korea and mainland China, Shih said.

Another example, the minister said, is the U.S.-initiated Trans-Pacific Partnership.

The TPP is a proposed trade agreement comprising negotiating partners Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the U.S. Three other nations, Japan, Mexico and South Korea, are also seeking to join discussions on the nascent pact.

In addition, Russia is planning to open the Eurasian Economic Commission to more countries from the Commonwealth of Independent States. Only Belarus, Kazakhstan and Russia are members of the EEC at present.

Against this backdrop, Shih said one of the top priorities for the central government is strengthening economic relations with the U.S.—Taiwan’s third largest trading partner—by resuming talks under the bilateral Trade and Investment Framework Agreement.

“Restarting TIFA talks will give greater impetus to a number of important measures, including the APEC initiative slashing tariffs on environmental goods and services, and the World Trade Organization’s Information Technology Agreement,” he said.

Expanding economic exchanges with mainland China is another step taken by the government to fast-track Taiwan’s regional integration, Shih said, adding that Beijing and Taipei are likely to conclude an investment agreement during scheduled talks later this month under the Cross-Straits Economic Cooperation Framework Agreement (ECFA).

The minister said the government has also commenced negotiations on the Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership, and completed a feasibility study with New Zealand on an economic cooperation pact. (JSM)

Write to Rachel Chan at ccchan@mofa.gov.tw

http://www.taiwantoday.tw/

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China - China boosts role in regional security bloc

The Chinese have a saying, si hai zhi nei jie xiong di, which translates literally as "within the four seas, all men are brothers".

But when ties with maritime friends are less than chummy, one alternative is to move closer to continental friends.

Observers say China's leading role in the Shanghai Cooperation Organisation (SCO), a regional security bloc that also comprises Russia and four Central Asian states, has taken on added significance in the light of recent developments.

The South China Sea dispute, most recently over the Scarborough Shoal, has heightened tensions between China and Southeast Asian claimants, particularly the Philippines.

The United States' so-called 'pivot' to Asia will see more American warships deployed to the region by 2020, and closer defence cooperation between Washington and its Asian allies and partners, such as South Korea to the east of China and the Philippines to the south.

Given the strained relations, Beijing might find merit in bolstering ties with the other members of the SCO, according to analysts.

This could explain China's decision to extend massive loans and pledge its commitment to developing the four Central Asian members - Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.

On day two of the SCO annual summit in Beijing yesterday, President Hu Jintao said China would offer US$10 billion in loans to group members, although he did not elaborate on how the funds would be used.

The latest pledge mirrored an earlier US$10 billion loan offer, made at the June 2009 summit, to help the Central Asian states tackle the global financial crisis.

While it is not known how much money from the 2009 offer has been disbursed, China has said on previous occasions that it would "continue providing member states with concessional loans".

At a press conference yesterday, Vice-Foreign Minister Cheng Guoping did not respond directly when asked by The Straits Times whether the South China Sea row had led Beijing to place greater emphasis on the SCO this year.

However, in what appears to be a veiled swipe at the US role in Afghanistan, among others, he said all SCO members had noted and objected to the rise of "interventionism" by certain countries in the domestic affairs of others.

"You can't say that just because you dislike a country's system, you can then think of ways to overturn its government," he added.

Russia is the only other global heavyweight in the SCO, which was formed on June 15, 2001 in Shanghai to foster collaboration in areas such as military cooperation, intelligence-sharing and counter-terrorism.

Being the economic juggernaut of the region, China is well-poised to increase its influence over the group's poorer Central Asian members.

Notably, the SCO is the only international grouping with no US participation.

The group thus provides an ideal stage for China to boost its international stature and advocate its preferred world order, which could attract states weary of a West-centric power structure.

Beijing's growing focus on the SCO might also make its maritime neighbours think twice about standing up against China or throwing their support behind the US.

While the SCO appears to be an excellent vehicle for China to make more friends, there are obstacles that could trip it up, according to foreign policy expert Yang Cheng from the East China Normal University.

For one thing, China must avoid giving the impression that its involvement is motivated by self- interest, he said.

It must act as "a service provider", which he described as a role that rallies members to a common vision, institutionalises the group's procedures and reaches out to outsiders, including even the US.

"Western countries are already present in Central Asia. It is impossible to remove or ignore them," Dr Yang said.

"By reaching out to the West, it could quash criticism that the SCO is anti-West. It might even attract more countries to the group."

Kor Kian Beng

The Straits Times

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ASEAN - ASEAN Sees Role as Regional Security Forum

Asia’s rise on the global economic stage - and the growing competition for resources that entails - is leading the 10-member Association of South East Asian Nations (ASEAN) to position itself as a shaper of security architecture to avoid regional conflicts, especially after recent tensions over the South China Sea.

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At the World Economic Forum in Bangkok, ASEAN Secretary General Surin Pitsuwan said his organization needs to help resolve such issues.

Four ASEAN member states - the Philippines, Vietnam, Malaysia and Brunei - have competing claims with China over access to the South China Sea, which is said to be rich in oil and gas reserves.

Tensions between China and Vietnam, and more recently between China and the Philippines, have made the region a potential flashpoint for conflict.

Surin, a former Thai foreign minister, said China is already "conscious of its own responsibility and interests in the region."

"[Regarding] our problem with China on the South China Sea, we have agreed with the Chinese [that the best way forward] is to demonstrate to the world that we can manage the differences among us without having to resort to violence and open conflict," he said.

Establishing a "code of conduct" to guide competing states is a central point of discussion within ASEAN, said Surin, who added that China wants a key role in setting the guidelines.

"ASEAN would offer the forum," he said. "ASEAN would offer the stage, the process and encouragement and I think along the way we can contain, again, the differences, and we can show the world that we can manage [and] are not going into open conflict. That already is a great achievement."

According to Peking University Professor Zha Daojiong, ASEAN’s role in avoiding conflicts is vital.

“ASEAN is very central to security maintenance," he said, describing the organization as indispensable to regional stability and sustained growth. "If you look at today’s Asia, we are so lucky. That spirit of leaving no stones untouched; that spirit of consultations; that spirit of working with each other to get you own house in order. Championing a military solution to solve problems in another state: that should not happen here in Asia.”

Economist Rajiv Biswas says as Asian economies grow military expenditures are rising, outstripping the European Union and the United States. He says a long-term security dialogue is important for the region.

“The economic rise of Asia has to be accompanied by a strengthening of the security architecture of the Asia Pacific," he said. "And clearly the governments are moving in that direction.”

By including security and economic partners, such as the United States and Russia, ASEAN is making concrete achievements in building the regional security architecture, he said.

Ron Corben

http://www.voanews.com/

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