PHNOM PENH – Going by the sometimes breathless reports about how well Vietnam has done out of the US-China tariff joust, a reader would be forgiven for thinking that an authoritarian single-party state where farmers make up 40% of the workforce has been transformed into a kind of scaled-up Singapore, which despite its small size usually sucks in around half the annual foreign investment bound for Southeast Asia. The numbers in so far suggest that Vietnam’s trade war triumph is indeed nigh. Its economy grew by just over 7% in 2018 – though that has dipped a notch, according to government statistics, to around 6.7% so far this year. But even that slight fall-off will nonetheless make for high growth – due in part to record levels of foreign investment, including some business seemingly diverted to Vietnam as American tariffs add to the cost of exporting to the US from China. “Following the US-China trade tensions, there is evidence of companies making adjustments to avoid the high tariffs situation,” said Bansi Madhavani, economist at ANZ Research, part of Australia and New Zealand Banking Group. According to Madhavani’s counterparts at Maybank Kim Eng, part of Malaysia’s Maybank, Vietnam “is emerging as the biggest beneficiary” of those adjustments, “with FDI [foreign direct investment] registration up by +86% in the first quarter of 2019”.
PHNOM PENH – Tax And Spend has rarely been part of the Southeast Asian governance lexicon. And judging by the region’s dismal tax-to-gross domestic product (GDP) ratios, it doesn’t look like that will be changing anytime soon. Newly published revenue statistics compiled by the Paris-based Organisation for Economic Co-operation and Development (OECD) show that the five biggest Southeast Asian economies have ratios of half or less than the 2017 OECD average of 34.2%, though most countries in the region showed small increases in revenues compared with the previous year. The OECD defines the tax-to-GDP ratio as “total tax revenue, including social security contributions, as a percentage of GDP”. While more prosperous countries in Southeast Asia’s vicinity such as Australia, Japan and New Zealand all come in around the 30% mark, Southeast Asia’s own numbers were much lower, with Indonesia at 11.5%, Malaysia on 13.6 and Singapore only slightly above on 14.1. This last number in particular seems surprisingly low given that Singapore’s economy more resembles higher-tax Western counterparts than its neighbours in Southeast Asia.
KUALA LUMPUR — “We do not want to choose between the United States and China.” So said Malaysia’s Deputy Defense Minister Chin Tong Liew during a speech last week on his country’s relations with China. Earlier this month the U.S. Secretary of Defence and his Chinese counterpart told a conference of defence ministers in Singapore that they do not expect other countries to takes sides. But many in Southeast Asia fear this is a choice they will have to make, given the increasingly-acrimonious Chinese-American rivalry.
KUALA LUMPUR — U.S. Secretary of State Mike Pompeo has singled out China for its “extreme hostility” to religion and accused the ruling Communist Party of demanding “that it all alone be called God.” Pompeo was speaking at the release of the U.S. Government’s 2018 Report on International Religious Freedom on June 21. “In China, the government’s intense persecution of many faiths — Falun Gong practitioners Christians, and Tibetan Buddhists among them — is the norm,” Pompeo said. “The Chinese Communist Party has exhibited extreme hostility to all religious faiths since its founding. The party demands that it alone be called God.”
SINGAPORE — China’s top security official articulated today (June 2) an uncompromising defense of his country’s stance on the contested South China Sea and threats to invade Taiwan in an anticipated address at a top security conference in Singapore. “Building facilities on one’s own territories is not militarization,” Lieutenant General Wei Fenghe said, responding to accusations that China has militarized islands in the sea as a means of taking effective control of what the US and others regard as international watersWei also warned of a “fight to the end” with the US in their escalating trade spat, and a “fight at all costs” for “reunification” with Taiwan, the island country China considers a renegade province. The US has recently upped its strategic support for the democratically-run Taiwan, much to Beijing’s chagrin.“No attempts to split China will succeed. Any interference in the Taiwan question is doomed to failure,” said Wei, dressed in his People’s Liberation Army (PLA) uniform.
SINGAPORE — In a highly-anticipated policy address in Singapore, acting US Defense Secretary Patrick Shanahan warned today (June 1) China that “behavior that erodes other nations’ sovereignty and sows distrust of China’s intentions must end.”At the same time, America’s top defense official stopped short of demanding countries take sides in the US-China economic and military face-off and said that there is still a chance for the two superpowers to come to terms.“The United States does not want any country in this region to have to choose or forgo positive economic relations with any partner,” Shanahan said, adding in a veiled reference to China that “some in our region are choosing to act contrary to the principles and norms that have benefitted us all.”
KUALA LUMPUR — On April 7, Taiwan’s foreign ministry posted a short video clip on Twitter that it said showed the razing of a Catholic Church building in Shaanxi in central China. The tweet tagged Sam Brownback, the U.S. ambassador-at-large for religious freedom, who had said in a March 8 speech in Hong Kong that “the Chinese government’s abuse of members of Catholic communities has continued” — despite a September 2018 deal between the Catholic Church and Beijing ostensibly covering the appointing of bishops in China. Questions sent to the Taiwanese foreign ministry about the source and date of the video had gone unanswered at the time of this writing, but leveling of the building was reported on websites such as AsiaNews.it, which publishes articles from Catholic sources inside China and which dated the razing to March 31. Asia News reported April 9 that local Catholics in the diocese also had rallied to protect a Marian shrine from police and government officials who were seeking to destroy it. An estimated 12 million Chinese Catholics are split between the so-called “underground” Church, the faithful who follow the Pope, and the government’s Chinese Patriotic Catholic Association. The Vatican has expressed hope that the September deal could lead to better relations between its faithful and those Chinese subject to the state-run version. But the clip, if authentic, is but the latest indication that China’s Catholics continue to be oppressed.
DUBLIN — Business deals worth more than US$60 billion were arguably the least significant aspects of Chinese President Xi Jinping’s visit to Italy and France during the past five days. The key moment arrived in Paris on Tuesday when German Chancellor Angela Merkel admitted that the European Union wants “to play an active part” in Xi’s signature Belt and Road Initiative (BRI). “We, as Europeans, want to play an active part [in the project] and that must lead to a certain reciprocity and we are still wrangling over that a bit,” she said at a media briefing after talks with Xi, French President Emmanuel Macro and EU Commission President Jean-Claude Juncker. Her comments came despite pressure from the United States to block BRI deals and a recent statement by the EU branding China a “systemic rival.”
KUALA LUMPUR — U.S. President Donald Trump is seeking to rein in China’s technological ambitions. Last week Washington took the unprecedented step of threatening to suspend intelligence-sharing with an ally — in this case Germany — should Berlin allow Huawei to supply equipment for 5G networks. At a U.S. Senate Finance Committee hearing last Tuesday, Democrat Ron Wyden cited intellectual property theft, forced tech transfers and the firewall in blasting China for using “schemes and entities to strong-arm American businesses, steal American innovations and rip off American jobs.” But despite the hostility from Washington, Huawei has over half a million followers on Twitter and 1.3 million on Facebook. “5G gaming beats the 4G experience every time with even lower latency and ultrahigh bandwidth,” Huawei wrote on its Facebook page during the Mobile World Congress in Spain in late February. A tweet posted a day earlier said: “Huawei’s playing its part too to bringing [sic] safer, faster and smarter 5G experiences.”
SINGAPORE — U.S. President Donald Trump announced that he would hold a second summit with North Korean leader Kim Jong Un in Vietnam on Feb. 27-28. “Our hostages have come home, nuclear testing has stopped, and there has not been a missile launch in more than 15 months. If I had not been elected president of the United States, we would right now, in my opinion, be in a major war with North Korea,” Trump said in his State of the Union address in Washington late Tuesday. “Much work remains to be done, but my relationship with Kim Jong Un is a good one.” Vietnam, which opened up its economy under Doi Moi reforms in the 1980s, has also been touted by the U.S. as a possible model for Pyongyang to follow. The country emerged as a likely host after Secretary of State Mike Pompeo visited last July, shortly after the first Trump-Kim summit in Singapore. Pompeo lauded the “once-unimaginable prosperity and partnership” between Vietnam and the U.S., before turning to North Korea.