- 11 months ago
Nailah Huda sits with Julia Roknifard, Collins Chong, and Fithra Faisal Hastiadi to discuss the 57th Asean Economic Ministers’ Meeting and the shadow of trade wars and power rivalries.
Category
đź—ž
NewsTranscript
00:00This is Dialogue ASEAN 25 with me, Nailah Huda.
00:11And this week, ASEAN's 57th economic ministers' meeting comes at a very critical time.
00:17With new trade deals on the table, global power rivalries, and the shadow of US tariffs,
00:23ASEAN is under pressure to deliver.
00:26And next month, ASEAN's summit at Kuala Lumpur will bring leaders from US, China, Russia, India and beyond,
00:33raising questions about whether ASEAN can set the agenda or if it risks being overshadowed.
00:39And today, on Dialogue ASEAN 25, we want to ask the question, can ASEAN deliver?
00:44Or will issues of divisions, rivalries, global power issues hold it back?
00:51And to help us unpack and address some of these questions, we have joining us in the studio and online.
00:56We have in the studio Dr. Julia Rognifat, Senior Lecturer, School of Law and Governance from Therese University,
01:02and also Collins Chong, Foreign Affairs, Security and Strategy Analyst from University of Malaya.
01:07And joining us online, we have Dr. Fitrah Faisal Hastiadi, expert staff and spokesperson on economic issues at a government communication agency.
01:15Thank you so much, everyone, for joining us today on Dialogue ASEAN 25.
01:19A lot, of course, to discuss.
01:21But before we go into the ASEAN Summit, of course, a lot of eyes on that.
01:25We do want to look at the Economic Minister's meeting this week at the time of recording today on Wednesday.
01:31We're still right smack in the middle of these meetings.
01:33But I think before we came into this, Collins, I asked whether there would be anything substantial in the next few days, and you said not much.
01:42So expectations and what has come into fruition so far at the Minister's meeting this week? Just some general thoughts.
01:52Yeah, we have seen how, you know, the responses by ASEAN leaders have been fragmented in terms of the responses to the tariff measures.
01:59As much as we want to have this cohesive, you know, action being taken in terms of the, in projecting ASEAN unity as a response to the tariff measures by Trump.
02:09We have not seen that yet, and we have this kind of fragility in terms of the ASEAN mechanism in how best to respond to this.
02:17Because we have seen how each country has its own natural interests, has its own policies and affiliations to the U.S. and China to consider.
02:25And, you know, as much as we have wanted to project this unified image and perception, you know, we have seen that it has not come to fruition.
02:33In terms of, you know, Vietnam was among the first to respond to the tariff measures.
02:38And, you know, these fragmented approaches by different countries, you know, trying to appease to Washington,
02:43seeing that, look, we have, you know, what it takes now to have this kind of a more, you know, a federal system, a more just kind of a trade system with Washington.
02:53So, and of course, also in terms of the projection of ASEAN economic capacity, we have seen how all these rosy pictures of how ASEAN is going to be the next economic block in the world.
03:05We have yet to see that. And in spite of all these positive pictures, if you were to compare, of course, U.S. remains far ahead by far.
03:13Biggest GDP at, you know, 24%, China around, you know, 16%.
03:19ASEAN as a combined GDP, we have around 2.7 trillion U.S. dollars.
03:22There's almost like 3.6% of the GDP of total world GDP.
03:26So, and we are very low still in terms of GDP per capita.
03:30We have around 5,000 USD as compared to the U.S. 76,000 USD, China is around 17,000.
03:37So, so this is, you know, again, we have seen how geopolitical differences, the fragmented approach and the internal weaknesses.
03:46And we have also a lot of this internal competition in terms of getting the best technological capacity investments for, you know, FDI and all that, even among internal ASEAN members.
03:56So, as much as we have wanted to play this role of regional leadership, you know, regional and global power reveries and national interests and geopolitical realities on the ground will be the tenets, the factors that will be the main fundamental grounds for us to consider the region moving forward.
04:16A lot of interesting points there, but I want to hear from Dr. Fitra.
04:20I think that was, if I can say, a little bit pessimistic, realistic, I think, of course.
04:25But do you perhaps have a more optimistic view on how ASEAN has fared?
04:29I know with the Economic Minister's meeting, there's a lot of attention on all these acronyms, ATIGA, the FTA, the DIFA and whatnot.
04:36But do you think, Dr. Fitra, that we are on the right track or do you think that, you know, with the shadow of the US tariffs that sort of pushes ASEAN to act faster and is ASEAN acting fast enough?
04:50Yeah, I remember in 2011, when I was in Tokyo, so I heard that Surin Pitsuan, the ASEAN General Secretary at that time, mentioning about the target of reaching intra-regional trade share, ASEAN intra-regional trade share for 30% by 2015.
05:11But now we are in 2025, it's still 23 to 25%.
05:18So it's a bit stagnating in the middle.
05:21So we cannot achieve higher regional integration for the past years.
05:26So it's actually a very typical ASEAN.
05:29But I think this is also the time that we need to have some kind of convergency and consolidation.
05:37Because as President Prabowo mentioned earlier in the United Nations General Assembly, a famous quotation from two kiddies, the strong do what they want, the weak suffer what they must.
05:55So we, if we are not consolidating, we are in the weak condition compared to other regions.
06:03So, of course, the solution should be beyond ASEAN.
06:07This is not, ASEAN alone is going nowhere.
06:09So in order to push ASEAN further, we need ASEAN plus scheme, which is already there.
06:15If we can see the RCEP, Regional Comprehensive Economic Partnership, and also other kind of the regional agreements.
06:24So the solution of ASEAN plus should be actually the theme of the ASEAN Economic Minister's meeting for these several days.
06:35And then we have to strengthen our consolidation because this is actually the time.
06:41But the multilateral and also regional integration is actually under a constant threat.
06:49A single nation bullied other nations and we have a constraint in trade and also investment nowadays.
06:57So in that sense, we need to reiterate our collaboration within ASEAN member countries.
07:04But we have several opportunities coming from the tariff disruptions here for several months.
07:12For example, for Indonesia.
07:14Indonesia just concluded the Indonesia-EU agreement, Comprehensive Economic Partnership Agreement, just yesterday.
07:22So it has been a prolonged negotiation since 2016.
07:26So we have a 10 years negotiation without having a concrete result.
07:31But now we have this result.
07:33It's already signed.
07:34It's already concluded because of the tariff.
07:37So we have the expediting process of the EU-Indonesia because of the tariff dynamics.
07:45So as a reflection, in 2018, there was also the first tariff dynamics that eventually created the RCEP, Regional Comprehensive Economic Partnership.
07:58So this is actually the momentum to have a greater collaboration and greater integration within ASEAN member countries.
08:08And then not to mention that we need also to see that bilateral negotiations.
08:13For example, Indonesia is having bilateral negotiations with the EU.
08:16This is supposed to be a fundamental block for the rest of the ASEAN region.
08:21For example, nowadays, Indonesia, because of this agreement, although it should be for another two years in 2027 enforced, but nowadays the EU has already defined our CPO products as renewable products.
08:40So can you imagine for the last 10 or 15 years, we are actually struggling to export to the EU member countries because of the non-tariff measures and also non-tariff bearers.
08:50But now CPO is already defined as renewable products.
08:54So that also applies, for example, of course, for Malaysia, that altogether Indonesia and Malaysia is dominating the CPO export markets in the world.
09:05So in that sense, it can create, of course, it can create trade diversion.
09:09But to the mid and the long term, I only see trade creation effect dominating the trade diversion.
09:17With that respect, we can have the unilateral negotiations, be it Indonesia to other countries, ASEAN to other countries or to other extra ASEAN countries.
09:30But it can become the foundation, it can be a fundamental block instead of stumbling blocks.
09:38So we can have the regional integration in a natural way and smoother rather than actually, you know, trying to, you know, force ASEAN integration without enough foundation.
09:51So that's my take.
09:53I mean, there's calls, of course, for regional collaboration, for stronger and deeper integration.
09:58But at the same time, as Dr. Fitra said, you know, there's efforts that's being done by individual countries.
10:04I mean, Indonesia has just strike this agreement with the EU on its own, Malaysia is doing something of its own as well.
10:11So, Dr. Julia, how do you see sort of, again, we're always coming into this question, especially with the US tariffs, right?
10:17How do countries find this balancing act between, you know, their own national economic self-interest, but also acting in unity?
10:26I mean, it's been a few months now since we've dealt with the US tariffs.
10:29How do you see it and how do you see it, I guess, coming into its peak with the ASEAN summit next month?
10:36I would like to pick up on the optimistic note that Dr. Fitri just ended.
10:42That, in fact, the urbanization of tariffs and urbanization of trade on the part of Trump administration gave ASEAN members a push to coordinate better economy and trade-wise.
10:59I also grew more conservative in my expectations towards that because, for example, when we look even at frameworks like RCEP that was mentioned today or any other framework, even CPTPP, it takes a long time to actually see the effects of it.
11:17And it probably will take decades for us to be able to assess what comes out of it.
11:23So I agree with Collins that some of the outcomes that observers would like to see, they are not there yet.
11:31We are not at that stage of development of the economic cooperation within ASEAN itself and also on the basis of alternative mechanisms like, for example, BRICS or Shanghai Cooperation Organization.
11:46But we can also see and look at how they are developing the existing mechanisms like new development of BRICS, SAO got its own mechanisms, which could also fund some interesting areas of trade.
12:04And against the background of Trump weaponizing tariffs, I think it's a very good opportunity for ASEAN states to work on their own mechanisms and engage with external partners on that.
12:20And on the other hand, also, if we look at the regional trade, sometimes it's lamented that intra-ASEAN trade is pretty low.
12:28It stands at about 21 percent, but I wouldn't necessarily say it's a bad thing.
12:33It simply means that ASEAN economies, members of ASEAN economies, they managed to a degree, one, to be self-sufficient, self-sustainable.
12:44And also, two, the things that they are capable of trading with one another, they are limited by the virtue of them being located in one region.
12:55So, for example, rice production, to one degree or another, we all do that, right?
13:00So, it's natural that we will have limited amount of trade.
13:04That's why we are looking outwards.
13:06And one of the partners at whom we are looking, especially in the context of the recent trade developments, is China.
13:14And together with all the abbreviations that you named, ATIGA, DEFA, we also have ASEAN China FTA 3.0, that's going to be updated this time around.
13:30To include more areas, I think they are including nine new chapters into it.
13:35And if we look at that area of trade, ASEAN China, it wasn't very much affected by the Trump tariffs.
13:43Not to mention, of course, that Trump tariffs are going to be, are being challenged in the United States, in the court system of the United States itself.
13:51So, my outlook are also pretty optimistic and I think ASEAN members will find this as an opportunity to coordinate their policies better.
14:03This optimistic view that, you know, Trump's weaponization of tariffs has sort of become this push, this catalyst for ASEAN member states to work together,
14:12whether to have this united front, whether that has become a reality or not, it's, of course, very difficult.
14:19But I do want to go back to, this is months back.
14:24I remember our interview where you, if I'm not wrong, you did call Trump a peacemaker in some of the policies that he, or in some of the speeches that he has given.
14:35And given how he's, you know, dealt with these tariffs and, you know, let's not even go into the geopolitics and the world wars into it yet.
14:45But if this were to go on, these, this weaponizing of tariffs, to what extent do you think this is a necessary push, I guess, for ASEAN member states to get their act together, to act in unity?
14:58And do you think that it's healthy for the global economy to work in this sort of mechanism?
15:05I think this is a deep misconception about, you know, what Trump is trying to do in terms of his tariff measure.
15:12And we have seen a lot of, we have heard a lot of these notions that, you know, this is a weaponization of, you know, a coercive measure, economic measure.
15:19It is actually to reset the global trade order. It is actually to, you know, to balance things that have been, you know, imbalanced for decades now.
15:28You know, you know, it is right when, when, when he debated, when he argued that, you know, nations have been taking advantage of the U.S. in terms of how they have been taking Washington as a piggyback in terms of getting these needed defensive assurances, critical umbrella, but without paying their fair share in terms of, you know, providing their own increased defense spending.
15:48And also, of course, taking advantage of the trade system in terms of the trade deficits and all that. So we have to remember that U.S. is the biggest consumer market in the world.
15:56They have, you know, per annum alone, they have, they imported around 3.7 trillion U.S. in terms of goods. And that amount is the same amount of the combined GDP of all ASEAN nations.
16:08So that implies that, you know, and most of ASEAN nations still rely a lot on the U.S. market in terms of also getting the needed FDI, debt transfer, capital resources and all that.
16:18We have seen also, I would like to touch upon some of the points raised earlier that, of course, we have seen how the disparity in terms of the policies among ASEAN members.
16:26You know, in terms of the intra trade, we have around 20, 25 percent. As compared to EU, we have, you know, almost 60 percent.
16:33We have a lot of this internal trade and non-trade, non-tariff barriers, tariff barriers also among ASEAN members.
16:38And despite all that, we have also seen how ASEAN alone doesn't give this needed economic stimulus, needed economic factor as an economic assurance to these ASEAN members.
16:50They still rely a lot on the external powers, especially with China and the U.S.
16:55And knowing that U.S. still maintains the status as, you know, the biggest consumer market, the biggest market.
17:00And hence, you can see the responses by all these ASEAN leaders who have been trying to, you know, you know, to rearrange their policies as a response to these tariff measures.
17:11And this also implies that, you know, in spite of all that has been said about the rest of China and the importance of China, we have seen also in the next decade and beyond the decline of the Chinese economic, you know, hope and, you know, capacity in terms of its demographic decline, in terms of its, you know, debt level, in terms of its unemployment.
17:30And, of course, also in terms of its demand for goods from this region, we have to remember that less we forget, you know, we, ASEAN runs a very large deficit with China, up to 140 billion USD.
17:43So, meaning we imported Chinese goods more than we export our goods to China.
17:48So, and in terms of the security calculations for the region, almost all ASEAN members have been in deep reliance on the security umbrella of Washington for decades now to maintain the rules-based order, to maintain peace and stability in the region,
18:03to deter any revisionist powers' attempts to rewrite the rules-based order in the region to defend the interests of all ASEAN nations, especially with regards to South China Sea.
18:11But, on our end, how do Washington see us, right? And, of course, ASEAN is seen as a very much a lost cause to Washington because of our reluctance to increase our defence spending,
18:22and our reluctance and our, you know, being entrapped by this notion of ASEAN's centrality, neutrality, hedging, balancing, whatever you want to call it.
18:31And, it's a known fact that, of course, we rely a lot on the Chinese market, on the Chinese economy to a large extent, but without having this reciprocal intention to do the same for what the Americans have been trying to do for the region in terms of also the amount of investments,
18:46the amount of tax transfer, the amount of security assurances being given to the region, so we can see that the amount of the GDP defence spending of the region is still very much low,
18:55low, and we don't have yet the capacity, the resources, the political will need to ensure that we align very much with the overall regional in terms of maintaining peace and stability,
19:06which is, which can only be assured by historical legacy and perspective and track record of how Washington has been doing that to the region and to the global community as a whole.
19:17So, this is how I see how Trump sees us, right? So, if we were to make a very wrong move of, you know, trying to have this cohesive stance, very, you know, antagonistic stance towards Trump,
19:29in terms of, look, we are now, you know, in ASEAN, we have our own autonomy, we have our own independence in foreign policy making, we have our own power to dictate our own, you know, hope and future of the region.
19:39Also, sending a very wrong message to Trump saying that, look, we also want your presence here, we do want you to be, you know, given away by all these measures.
19:48At the same time, we are also free to do our business with China. So, this will only increase the risk of, you know, Trump's transactional approach of seeing,
19:56this region does not offer very much to us in terms of how we see the region, in terms of how we have given to this region.
20:02So, this is the risk that I think will be very dangerous for the region, in terms of all the polemics and the rhetoric about, you know, how we see the US, how we see Trump.
20:10So, a lot of these misconceptions about Trump and I will argue that, you know, the presence, the policy of Trump to reset the tariff order will be beneficial to the region because it's trying to save the US economy.
20:23So, by maintaining the primacy of the US market, we are at the positive end because we have been exporting our goods and all that to the US and therefore, you know, our, going forward in the next few decades,
20:36the US will still maintain its own economic, you know, power in terms of demand, in terms of, of course, also hard power, supremacy and that will spell positive effects for the region as compared to the decline of China.
20:46Dr. Julia, did you have something to add or some of your thoughts on that?
20:51Oh, yeah, definitely. I don't think that we could potentially send any wrong message to Donald Trump because, I mean, to invoke transactional approach towards ASEAN states
21:06because he's set on his transactional approach to the others and hence the tariff measures, the weaponization of trade, which I would probably insist on that.
21:16And also, the Trump is a MAGA guy, America first policy. So, I don't think he cares much about ASEAN as a region.
21:28And what defines American presence here in terms of also guaranteeing our security of ASEAN states, which we heavily rely on the United States, are strategic considerations.
21:39It's not even Trump's personality that we suddenly disappoint him by saying something unpleasant and he will turn away.
21:48If we were to think this way, I guess Prime Minister Anwar Ibrahim visiting Russia and Vladimir Putin rolling out the red carpet in front of him would already have disappointed Trump.
21:59But it actually didn't, right? So, there are strategic considerations for the United States in this region and Washington is not going to turn away that easily.
22:09And I guess it means being honest when we say that we do rely on the United States in terms of security.
22:19But when it comes to economic and trade issues, it's true that China is a major trading partner for all of us.
22:27And ASEAN, as a grouping, is also one of the major trading partners, trade partners for China.
22:33I think 16.5% for the first quarter of 2025, as per China customs data, was ASEAN trade in the total foreign trade of China.
22:47So, I don't think there can be wrong messaging.
22:51And in fact, Prime Minister Anwar Ibrahim is hoping to bring all those leaders together to also score, rightfully so, his own points in bringing these parties who have their own conflicts and disputes with one another.
23:10Russia and the United States, United States and China, United States and India.
23:15And at the same time, I think what needs to be added is that ASEAN navigated it pretty well so far in terms of tariffs and how we reacted to that.
23:27Because we are not ideal, we are standing at, in Malaysia, for example, 19%.
23:31I think Dr. Fitri would confirm Indonesia also about there.
23:36So, more or less, it's just Singapore who made it to 10%, understandably.
23:41But we are not at the level of India and Brazil with 50%.
23:46So, there is a very large margin of disappointment with Donald Trump who looks at totally different factors in his decision making.
23:57Dr. Fitri, your thoughts on this, do you think honesty is the best policy in this case when ASEAN negotiates its tariffs or how it has negotiated so far?
24:07Do you think that Trump's feelings should be considered in these negotiations? Your thoughts?
24:12Yeah, I think so. In terms of negotiation, of course, we need to include multiple and complex situations.
24:22But in a formal meeting, feelings is not a very quantitative measure. As an economist, we cannot quantify feelings, right?
24:32So, what we need to see is actually what are actually the economic indicators. So, we negotiate based on that.
24:40And then, for another further and careful review that coming back again to the ASEAN growth factor.
24:49So, 10 or 15 years ago, to grow 6%, 7%, or maybe 8% is just at our fingertips.
24:59But nowadays, to grow more than 5%, it's quite hard. So, ASEAN, which was actually in the earlier days, was actually very youthful, vibrant, but now we are fading away.
25:14The spirit is actually almost gone.
25:17So, in that case, we need to revitalize that kind of spirits, the youthful spirits, the engine of growth through the global production network.
25:26So, in a sense that we need to, you know, further participate into the global and then also regional production network in order to increase the growth factor.
25:41But nowadays, we are seeing that de-globalization, de-regionalization is actually on the way.
25:48So, this is actually the right time to reiterate and to actually bring the roadmap further ahead.
25:58Because if ASEAN, which is not maturing, most of the matured and developed countries, they're also having a very, you know, low growth factor for the last 10 years.
26:14But they're already maturing. ASEAN is not matured yet, but now we are fading away.
26:20So, we need to revitalize that, actually, that growth factor for Indonesia.
26:25Indonesia is trying to reach beyond 5% growth.
26:28Now, we are aiming to reach 8% target.
26:30Because from the Indonesian perspective, by 2038, the demographic dividend will be ending.
26:38So, we cannot have the growth factor anymore.
26:41In order to achieve the growth, in order to escape from the middle-income trap, yeah, we need to grow further.
26:49So, it also applies for the rest of ASEAN.
26:52So, we need to actually push growth, to push regional growth.
26:56And we need to collaborate all together.
26:58And then the solutions will be beyond ASEAN.
27:00Because, again, ASEAN alone is going nowhere where we can see it, yeah.
27:04From the early 1990s, we have the ASEAN vision.
27:08And then we have the ASEAN Economic Community.
27:10And then we have also the Digital Economic Framework Agreement post-COVID.
27:15But I think ASEAN, if we are actually among ASEAN member countries, we are quite lenient.
27:21We are not actually that very ambitious in reaching the target.
27:25But if we would collaborate with other actors, extra ASEAN, for example, with China, Japan, Korea, and also EU, and even with the US, so we can have the pull factor.
27:37I remember one time an economist from Malaysia when we met in Shanghai in 2016 or 2017.
27:45I remember that time Malaysia already in place for Trans-Pacific Partnership.
27:52And Indonesia is still actually, you know, discussing internally whether or not we join the TPP or not.
27:58But I remember the fellow Malaysian economists, he said that we need the pull factor because we see that domestic activities are stagnating.
28:07We need other league members, which is actually the higher league, to push ourselves, to push our governance condition in order to reach even higher targets.
28:19So we need to collaborate even further with extra ASEAN member countries in order to move along.
28:26I want to ask you to elaborate a little bit more on what that growth would look like, especially not just ASEAN as a whole if we are seeing GDP collectively.
28:37But what about between different ASEAN member states, we are seeing this disparity of growth as well among member states.
28:44Is that being considered? Is that a concern for ASEAN member states to grow?
28:49I think equally as impossible, but at a somewhat, you know, balanced rate and to address that sort of gap and disparity between countries just within the region.
29:01Yeah. So if we see the variation among ASEAN member countries is quite diverse.
29:07But if we actually, you know, given that diversity, yeah, extra all-in model suggests, actually there is an international economic theory.
29:19They're suggesting that if you are diverse enough, you can collaborate.
29:23But the thing is, even we have, you know, high variation within ASEAN member countries, but intra-regional trade share is still very limited.
29:34So what happened? So when it comes to the intra-regional trade share, we need to see the products, whether or not the products is actually complementing or competing.
29:46Nowadays, most of ASEAN products actually competing to each other.
29:51So that is why we cannot achieve intra-regional trade share.
29:55So, but if we go beyond ASEAN, for example, ASEAN plus three, yeah.
30:00So without ASEAN plus six, ASEAN plus three is already integrated in terms of intra-regional trade share.
30:07The intra-regional trade share for ASEAN plus three countries, China, Japan and Korea, is almost 60%.
30:14In EU, they have 70%, so almost reaching the intra-regional trade share in EU.
30:23So almost having a regional, so institutional regional integration, just like in the EU, if we see only for ASEAN plus three intra-regional trade share.
30:33So when it comes to that, I'm seeing that the future of ASEAN is no longer lies within the ASEAN member countries.
30:42So we need to collaborate to each other.
30:45So that is also our positive outlook for ASEAN because if you compare it with EU, EU is actually quite stagnating because they are in the closed loop of EU integration, of European Union.
31:02But ASEAN is soft and open regionalism.
31:06So, of course, within ASEAN, so we are not moving, yeah, we are stagnating.
31:11But beyond ASEAN, we have some kind of optimism because we are actually, you know, the hub for other countries, yeah, to collaborate.
31:22We are actually the regional hub, soft and open regionalism.
31:26So if I'm seeing the future of ASEAN economic integration, it should be soft and open.
31:32It can connect all of the dots and eventually it can create the so-called FTAAP, FTA of Asia Pacific, not only ASEAN.
31:41But ASEAN can be the center of tension in terms of creating a mega RTAs, regional trade agreement, regional trade, regional investment, and also a regional and multilateral collaboration.
32:11Now, I think we've discussed quite a length about regional trade, but I do, of course, want to touch on the ASEAN Summit next month.
32:21Of course, a lot of eyes on that.
32:23The world will be looking with the US, China, India, Russia, leaders from all over the world present at the summit.
32:29We want to talk about, you know, we've been talking about this sort of optimism versus pessimism about ASEAN, right?
32:35How we see it and how the world sees it.
32:38But in terms of its capability, its capacity, whether or not ASEAN can truly set its own agenda at the summit or whether it will become just another stage for global powers to sort of grandstand each other.
32:51Colin, your thoughts on this?
32:53Just, I guess, in general, your expectations and perhaps potential pitfalls of the ASEAN Summit?
32:59Yeah. Before that, I'd like to add on to what Dr Fitra has argued.
33:02Of course, we've seen how the dynamics of ASEAN-China economic linkages.
33:06You know, we export a lot of these intermediate goods to China.
33:10So, meaning they'll be processed in China and they'll be re-exported back to other countries, especially to the US.
33:14Hence, the importance of the US market in terms of the value chains, in terms of the importance of the values of the goods and products,
33:21and also the incentivisation of the manufacturing and house production back here in ASEAN.
33:27So, and we have seen how, you know, as I've mentioned, 140 billion USD in terms of household consumption for the US.
33:33And, but we prefer to compare, you know, in terms of household consumption percentage to GDP.
33:39Yeah.
33:40For, you know, for China it's around 38%, for US it's around 68%.
33:44So, Chinese economy is much more, you know, export driven, investment driven, as, you know, if to be compared to the US, it's more, you know, consumption-based and all of this, you know, self-innovation and all that.
33:55So, for ASEAN, we can see that we are still very much a middle-income region.
34:00The same for China.
34:01And in terms of demographic advantage, that's why Hans has always repeatedly emphasised on the point that, you know, look, how, you know, where will we go from here?
34:10Where will ASEAN go from here?
34:11Of course, we have been trying to have a lot of these different fallback options, you know, French sharing efforts, capacity, economic and defence,
34:18and defence venturing with, you know, the GCC, with BRICS, with Global South, trying to have this kind of, you know, fallback dependent option apart from this impact of the tariff measure.
34:27And, but in terms of the long-term economic projection, in terms of, you know, the youthful, you know, workforce, if you were to compare between, you know, among US, ASEAN and China,
34:40US is the only power that has a growing youthful workforce by 2050. For China, the median age now is around maybe 31, it's going to up to, you know, 46 by the end of 2050.
34:53For the US, it's around 38 now, it's going to be a moderate rise to around 41 years. And for ASEAN, it's around from 38 to 42, 43.
35:02So, we can see that in terms of demographic returns also, it's going to be higher if we were to compare these two powers.
35:09So, what is the message being sent here now and then? So, we can see that in terms of the total combined economic capacity,
35:18the total demand for goods, especially high-end goods and high-value chain products.
35:23And, of course, also in terms of, if you were to look at the current debt levels of China, 280% ratio to GDP, which is very high for a developing nation.
35:32And then, you know, all these indicators in place, of course, also in internal, you know, of course, we have seen that household crisis, you know, debt crisis, unemployment, youth demographic and all that.
35:43So, and does ASEAN still want to, you know, continue to be trapped in this whole notion of, you know, trying to hedge, trying to balance as a power balancer, as you mentioned?
35:54Because we have been doing that for the past five, six decades now. We do not yet have the capacity on our own to enforce things,
36:02whether in terms of economic regulation, whether in terms of ensuring the external powers comply by rules.
36:06Of course, we have, you know, we have TAC, we have all these, you know, confidence-building measures in place, but that is all being confined to that kind of mechanism.
36:15We do not have yet the hard power capacity to enforce things. We have tried to do that last year in terms of having these joint, you know, deterrence measures by joint patrols and all that.
36:23The reality on the ground is that we are still very much reliant on external power support.
36:28And for defence, it's the US. For economy, it's US and China.
36:32And all the debates that have been raging on whether we have the capacity to do that on our own.
36:37You know, all these intra, you know, weaknesses and fragility and all that.
36:40So we do not have yet that kind of integration as much as we have wanted since more than 10 years ago,
36:45the last time we were host in 2015, we have tried to come up with all this, you know, ASEAN economic community, political community.
36:52We have still yet to feel the direct impact of that.
36:56So coming to the question of where do we go from here?
36:59Just quickly, just on that note, I mean, when you mentioned that, you know, the tariffs, either necessary or not,
37:05what they did was, in US's perspective, is to reset the global trade order, right?
37:10In that sense, does that mean that this order should be in the sense that we do not have to depend on the US anymore?
37:17We shouldn't depend on the US anymore to set the rules of the trade or is that what you mean or what should this order look like?
37:23It's the total opposite of what I've been arguing that we are still very much reliant on the US and we should continue to stick to the proven status quo of what the US has provided to the region in terms of security assurances.
37:37That's the highest importance to the region. When push comes to shove, ultimately, we still need to defend our own national interests, as has been the case for the past many years now.
37:46You know, the ASEAN spirit of trying to have this united ASEAN stance, you know, that it doesn't work now.
37:50We have yet to see this kind of ASEAN responses to, you know, the bellicose action in South China Sea, for example.
37:57And it's very much left to the individual states who have been trying to, you know, to garner support from the regional level to show kind of a more combined, you know, synergy in that.
38:07So we have failed to do that. So in terms of defence umbrella, in terms of economic dependence,
38:12let's not kid ourselves by saying that, you know, we can only rely on the future is still very much with ASEAN, the future is still very much with this alternative system,
38:22now being championed by China in terms of BRICS, Global South, SCO, GCC, you name it.
38:27I would argue that they do not have the economic capacity, nor the hard power capacity to revel that of the US, at least for the next three, four decades.
38:38That is the reality that we need to comprehend. And by the trajectory that we are going now, it is of great risk to the region by sidelining the status quo while putting, you know,
38:50we have been saying that we have been trying to, you know, balance things out and all that, but we don't yet see the, we have not yet to see, we have yet to see the results of that.
38:57So I would argue, ultimately, that we should not sideline the US, we should send a very strong message that we are still very much in need of the US fluity umbrella, which is still very much in need now,
39:08especially moving forward, for the potentiality of the conflict in Taiwan, in South China Sea, we'll be sitting ducks if we are, you know, left on our own.
39:16So that's the reality that we need to confront. At the same time, our economic dependence will be very much with Washington.
39:22And what Trump is doing now is to help to correct the US economy, as has been damaged by his predecessors in the past.
39:30And what he has set forth during his first time, now he's going to rebalance, you know, correct that.
39:35And that will spell, that will bring good positive effect to the region, both economically and on the security level.
39:41A lot of strong points there. But I think just on that note about the capacity for hard power, I think whether that's a choice or not for the global south,
39:49I think it's probably goes back to the US and Western imperialism, but that's for another show.
39:54And whether that should come hand in hand with economic capacity is, again, for another discussion.
40:01But I think Dr. Julia, I think you wanted to say something.
40:03Yeah, if I want, if I could chip in a little bit on the points that Collins just made.
40:08I think we're dealing here with a kind of a false choice that we need to choose between China and the US,
40:14unless we get together and decide that we're not hedging anymore, none of us.
40:18And we choose some strict line, but I don't think that's happening.
40:22That's happening. If we are looking at it in terms of trade, why should we?
40:28Well, one, Trump is doing whatever he can to actually undermine the status quo with this tariffs and his overall position on global trade.
40:39And Collins just said that he's trying to kind of reinvent, redesign the international trade order, international economic order.
40:49And why should we be looking at the United States with this young consumers?
40:52You mentioned what 30% and why we're not looking to the Arab world, not to the Middle East,
40:57where over 60% of people are 30 years old and below.
41:02Yes, it's conflict freedom. We know that.
41:04But there are also areas where we can tap in the markets where we can tap in.
41:08And that's why we just had our ASEAN-China GCC summit to explore those areas.
41:14Of course, you could say that the high added value products, it's still the US market that will be consuming them.
41:22But with, again, this kind of war that Trump waged against this economic global order,
41:28will they be able to afford those high value goods that we are producing?
41:32And not like they will stop purchasing it, they will stop consuming it,
41:37because we already now here in ASEAN, we became a hub, a re-exporting hub for Chinese goods.
41:43What prevents us, let's say, from getting another hub where the goods will be re-exported?
41:50Just a situation how it happens with Russian oil, for example.
41:54And Trump has questioned himself the European leaders just now at the UNGA in his speech.
42:00So what prevents us from getting another hub and re-exporting those goods to the United States,
42:05that have a high added value to those who can afford them, which are going to be more pricey?
42:10So it's also a false choice between economy and trade on the one hand and security on the other.
42:18And I guess that's the essence of the hedging that we're doing here.
42:22Trade, it's a status quo that China is a major trading partner for us now.
42:27Security, indeed, I would agree with that.
42:30Why should we stray away from the US' natural strategic desire to guarantee security for ASEAN states?
42:38And we can maintain that. And I think we've demonstrated it very well.
42:42Our neutral status towards everybody, ability and possibility of working with everybody.
42:47And that's probably what we are going to see in the October summit, especially if Trump comes,
42:52if China, India and Russia leaders will come as well.
42:56On that note, Dr. Fitra, I'll leave you with this billion dollar question, I guess.
43:01Do you think it's time for us to rethink the global trade order?
43:04Should we stick to the status quo? Should we remain looking towards the west?
43:08Or is it time for us to consider allies in the global south?
43:11So, yes, yeah, one billion dollar question indeed.
43:15Yeah, because it's very tough.
43:17But from Indonesian perspective, we still keep our traditional partners intact.
43:24While also seeing that the, you know, future of ASEAN lies more to the east.
43:32Because, you know, we already see that this is the Asian century, right?
43:36And ASEAN is a part of this growth factor.
43:39But currently we are fading away.
43:42So, but the thing is, we cannot just actually leave behind our traditional partners,
43:50just like President Prabowo repeatedly saying that one enemy is just too much.
44:00One thousand friends is just too little.
44:03So we need actually to engage more with the world, not to leave anyone behind.
44:08But to collaborate.
44:10So, of course, we have several issues with the U.S.
44:14But we are there.
44:15We have these tariff deals anyway.
44:18And then, of course, for Indonesia, Indonesia also joining BRICS,
44:23which is actually a part of Global South.
44:26But at the same time, Indonesia also submitting the proposal to be included in the OECD.
44:34So both actually working.
44:36But we need the convergence.
44:39As Rachel Baldwin suggests in his book, the great convergence.
44:44The great convergence can be achieved between the East and the West if we collaborate.
44:49So that's actually my take.
44:51Nayla.
44:52We were going to discuss the ASEAN Summit.
44:55And I guess from the perspective of an economist, what would you want to see at the ASEAN Summit?
45:00Do you want to see these issues of tariffs, trade and economic, these trade barriers taking center stage at the summit?
45:07Yeah, of course.
45:08Of course.
45:09And then to be placing a central of the issue, it should be the one that is actually involved non-tariff measures and non-tariff barriers.
45:20Because in terms of tariffs, we are okay.
45:22We are quite okay.
45:24The tariff bound is actually zero bound.
45:28But when it comes to non-tariff measures, we are actually quite in constraint.
45:34So in order to integrate more, we need to actually dismantle this kind of non-tariff measures so we can actually negotiate further with ASEAN member countries.
45:44And then, yeah, for the future, we need also to be engaged with the rest of the world.
45:50Not only ASEAN, but ASEAN as the regional hub.
45:53Others as POC.
45:55Yeah.
45:56Dr. Julia, what do you think are some priorities that ASEAN should set on its agenda for the coming month?
46:01They probably already have done a good job on demonstrating their neutrality, as I already said.
46:08And also, as I brought this up, if, in fact, we here will manage to bring, or rather, the ASEAN under Malaysia's chairmanship will manage to bring all those international leaders on board,
46:26I would say that that's already a winning point, with Malaysia demonstrating its capacity to play this mediating role of sorts.
46:38Because there are many disputes, not conflicts maybe, but many disputes that this party, the parties, the great powers would like to discuss, maybe one on one, on the sidelines of the summit.
46:51As for ASEAN itself, if it follows the course that we started off this year, then it should be maintaining the same neutral position.
47:05Maybe we wouldn't see that much of the convergence of the coordination or emergence of a mechanism, both in terms of trade and economy and security.
47:17Something that you could hear more voices from here and there that ASEAN also needs a security mechanism.
47:24I think Colin's also brought up this point, that we don't have this. But there is definitely an incentive to that.
47:31So maybe major discussions will be taking place somewhere behind the closed doors, rather than in public, and we might not see it in the statements.
47:41In the statements, I guess we expect more on the economic frameworks, on digital trade, and all the goodwill that the delegates gathered have to present to each other.
47:56That's on trade, but of course we can't forget and neglect the geopolitics side of it all.
48:02And in the shadow of not just the tariffs, but of course, in Palestine, what's happening there, and this growing recognition, this movement or this wave of recognition for Palestine as a state among Western countries.
48:19Will we see this taking center stage at the ASEAN Summit as well? I mean, you seem to think that we should maintain the status quo and that we should prioritize US as a partner.
48:29But when it comes to this, of course, this is a serious consideration for Malaysia as well as it's on top of the agenda.
48:36But how do you think Malaysia then should balance this?
48:39It shouldn't be a zero-sum game. It should not be at the expense of the other.
48:42We have stated very strongly that we have taken a very strong position on this, and the whole world knows that.
48:47I foresee that we will continue to take that stance, especially for the summit next month.
48:51And with Trump's presence, I think our leadership will governise this opportunity to show that, look, we carry the voice of the world now, even the Western world,
49:01that serious actions need to be taken to resolve this as what he has resolved now for.
49:09You know, he has prevented at least seven conflicts since he came to power early this year.
49:13So this is the ultimate thing that he needs to do.
49:16You know, of course, he has faced some difficulties during the first term, not only for the, you know, Palestine issue,
49:21but also, of course, with regards to the conflict in North Korea and all that.
49:25So I foresee that at least during this term, his second term, he will have this kind of, you know, intent resources and capacity to ultimately, you know, resolve this.
49:36And of course, that will also bring a legacy, not only to him, but also to the world and which the world desperately needed.
49:43So I foresee that we'll continue that stance very strongly, regardless of our, you know, of course, we have got, you know, enjoyed very good relationship with the U.S.
49:51Still, in this regard, we have our own strong stance on that. So there's no problem in that whatsoever.
49:56I'd like to add on some of the points earlier that, you know, in terms of drawing in more fallback capacities for ASEAN,
50:02some of the points raised earlier with regards to in courting, GCC, BRICS and all that.
50:06So in terms of sheer geographical distances and the barriers in place, despite the, you know, all the notion about globalization and all that,
50:14we have seen that, of course, despite the advantage of the GCC nation in terms of maybe energy resources, maybe capital,
50:21it's still very much limited to in terms of population in terms of market size.
50:25The same goes for like BRICS countries.
50:28For Russia, yeah, largely confined now maybe to energy and arms deals for the region.
50:33Of course, we have seen some increase, you know, presence in other areas.
50:37And of course, but for China, we have seen how also still being very much trapped with ASEAN's, you know, capacity.
50:46Both are middle income powers. Both are very much export driven.
50:50You know, and of course, in terms of the values and ASEAN as a whole, regardless of what we have been stating that, you know,
50:57in a combination of all the nations, we are now maybe fourth or fifth economic power.
51:02But internal disparities have been, you know, divergent.
51:05And that we do not have yet the capacity to buy as much as the Americans do.
51:10To buy as, you know, in terms of, you know, to provide this strong, sustainable or sustained demand for Beijing.
51:18So, of course, this region is being looked at by Beijing as one of the fallback measures for the tariff measure by Trump.
51:25But in terms of, you know, for the years moving forward, our growth and our, you know, economies are still very much driven by exports and investments and FDI
51:34and the competition for all these, you know, tech, capital resources and all that.
51:38So, we are not yet at the level of the U.S. where we consume a lot of goods or services.
51:42And hence, we are not that much, you know, important to China in that aspect.
51:46But maybe in different aspects for BRI, for RCEP, you know, we have also seen how RCEP now has been gaining traction among ASEAN leaders
51:54as to how this will be the, you know, this utopian rosy pictures of how RCEP is going to be the savior of the region.
52:00So, the region know that there's sort of like, of course, some sustained liberalisation in some aspects.
52:05And this will be, there's a risk of this influx of Chinese goods, which are way cheaper than domestically produced goods.
52:13And we have also seen, you know, with that in place, then we have some protectionist measures as well among ASEAN leaders.
52:19So, it's going around in circle, despite Beijing has its own dual circulation system and all that, we have yet to see the impact.
52:25So, back again to my argument that the importance of CEDUSCO needs to be maintained.
52:30Of course, we have talked a lot about economic terms and all that.
52:33But subsequent to that, more importantly will be the concerns, the weariness of the region in terms of how their own sovereignty,
52:39territory integrity, their natural interests will be safeguarded.
52:42And there's no other power on earth that is both capable and trusted to do this job apart from Washington.
52:48We have just about a couple of minutes left, but I do want to close with Dr. Julia.
52:52Perhaps you have some thoughts to add to that economic and security concerns.
52:58How should ASEAN balance this?
53:01It's been balancing it pretty well, as we've concluded.
53:05Probably some observers would like to see more, as we just spoke about it, coordination, maybe less hedging,
53:14and more coordination in terms of economy.
53:17How Dr. Fitra pointed out that we need more diversification, so it would be complementary rather than competitive in terms of economy.
53:26More coordinated line on external shocks like tariffs or anything else that is to happen.
53:33In terms of security also, there have been more persistent calls for ASEAN to mobilize and form some sort of institutional structure
53:43for standing against external challenges.
53:46Also addressing within ASEAN, you can say, challenges, which South China Sea comes to the forefront.
53:52However, as of this point, as of this moment, it doesn't seem to be happening.
53:59Again, as I said, maybe behind the closed doors.
54:02And ASEAN will continue hedging, will continue looking for the alternative mechanisms.
54:10Maybe not as a sustainable change to the status quo, but for the cases when the disaster like Trump comes with the tariffs,
54:21they could rely on alternative mechanisms.
54:26And that's what we are observing with the other countries also looking also in terms of security.
54:33We could conclude it after the Qatar attack administered by Israel.
54:39What rules-based order we are talking about?
54:41You can't trust anybody in this kind of order whose rules, who dictates the rules.
54:46So it's natural that ASEAN state will continue along with the documents that they adopted and restated commitment to them.
54:57Like ASEAN economic community is planning to diversify trade towards de-dollarization.
55:03Maybe not complete one, but to have the security mechanism, the guarantee mechanism that they could fall on something else if this external shock comes into being.
55:14So I guess that's what to expect within the short term.
55:18Okay. Thank you, Julia. Thank you, Collins. And thank you, Dr. Fitra, for joining us.
55:22That is all on Dialogue ASEAN 25 this month with me, Nalouda. We'll catch you another time.
Comments