What Comes after ASEAN Economic Community (AEC) 2015: A Threat from China’s Economic Downfall

November 15, 2016/in ASEAN Notes/by aseansc

Niki Wahyu Sayekti, 2nd Winner of Call for Essay: “ASEAN Community Post 2015”

ASEAN governments have spent decades crafting their reliance on the Chinese economy, with a strategic relationship shaped by geography and exports[1], thus the recent economic breakdown from China would certainly affect the economy of the region as well. A stock market crash, a depreciating currency and a sharp economic slowdown have driven Chinese consumer sentiment to record lows in the past few months,[2] and which means bad news for ASEAN.

The slowdown in China’s economy will continue to affect growth prospects on the rest of the region as export demand drops and investment flow decline.[3] Merchandise exports to China as a share of GDP vary considerably among the ASEAN countries, ranging from about 12% for Malaysia and 6-8% for Singapore, Thailand and Viet Nam to as little as 3% for Indonesia and the Philippines.[4] Another sector being affected by China’s economic slowdown is investment because FDI inflows from China into some of ASEAN countries have become an important overall source of foreign investment, particularly in Malaysia and Thailand.[5] The financial repercussions of China’s slowdown may also impact domestic financial markets in ASEAN countries and could complicate their macroeconomic management.[6] A report from International Monetary Fund (IMF) stated that countries with closer trade linkages with China (Malaysia, Singapore, and Thailand) and net commodity exporters (Indonesia and Malaysia) would suffer the largest impact, with growth falling between 0.2 and 0.5 percentage points in response to a decline in China’s growth by 1 percentage point depending on the model used and the nature of the shock.[7]

This condition of economic insecurity experienced mostly by the ASEAN-5 (Singapore, Malaysia, Thailand, Indonesia and Philippines), who are basically the dominant economy in the region) more or less would impinge on the AEC as well. As dominant economic powers in the region, the ASEAN-5 are morally supposed to support the economy and take bigger responsibility to help other ASEAN nations who are still less-developed in the region. However, with an economic knockdown from China, it’d be hard for the ASEAN-5 even to keep up with their own domestic economic affairs.

China’s economic crash might cause disaster for ASEAN economy and threaten the AEC, yet there are still opportunities for ASEAN behind this catastrophe. Due to the sluggish performance of China’s economy, investors would most likely seek for relocation from China. The migration of China’s inbound foreign investment from labor-intensive sectors to services and high-end manufacturing has seen a seismic shift in 2015 which will potentially create a knock-on effect for investment into Southeast Asia.[8] This investment will be a welcome relief particularly to countries affected by falling commodity exports, even as the region positions itself as an attractive alternative to soak up such inflows.[9] By the emergence of ASEAN Economic Community itself, the opportunity to attract more FDI is larger since ASEAN would be integrated as an economic entity with a single market and production based orientation. All ASEAN countries are important for foreign investors if they are considered as one node in a larger regional market of nearly 600 million people – a single market.[10]

ASEAN can maximize full-potentials of AEC to cover its wounds from China. The establishment of AEC which provides an access for free flow of goods and capitals could be utilized to increase trade and cross-border investment intra-region so that it should boost-up the region’s economy and reduce the trade-dependence on China.

[1] Luke Hunt, “Beware ASEAN’s coming economic bloom.” The Diplomat, Feb 12, 2016, accessed October 31, 2016, http://thediplomat.com/2016/02/beware-aseans-coming-economic-gloom/.

^{^[2]} David Wilder, “Chinese crisis bites Asean and Latin America consumer sentiment.” Financial Times, March 16, 2016, accessed October 31, 2016, https://www.ft.com/content/8b474f76-e3ab-11e5-bc31-138df2ae9ee6.

[3] The Organization for Economic Co-operation and Development (OECD). Economic Outlook for Southeast Asia, China and India 2016 Economic Outlook for Southeast Asia: Enhancing Regional Tie (2015), 1. http://www.oecd.org/dev/asia-pacific/SAEO2016_Overview%20with%20cover%20light.pdf.

[4] The Organization for Economic Co-operation and Development (OECD), ibid, 4.

[5] The Organization for Economic Co-operation and Development (OECD), ibid, 5.

[6] Ibid.

[7] International Monetary Fund (IMF). Spillovers from China’s Growth Slowdown and Rebalancing to the ASEAN-5 Economies (2016), 6. https://www.imf.org/external/pubs/ft/wp/2016/wp16170.pdf.

[8] Steven Cranwell, “Southeast Asia Set to Benefit from China’s Economic Rebalancing.” HSBS, Oct 12, 2016, accessed Oct 31, 2016. http://www.about.hsbc.com.sg/news-and-media/southeast-asia-set-to-benefit-from-chinas-economic-rebalancing

[9] Steven Cranwell, ibid.

[10] “Asia Opportunities: Asean Economic Community (AEC) in 2015.” Business in Asia, accessed Nov 1, 2016, http://www.business-in-asia.com/asia/asean_economic_community.html

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In December 2022, the Indonesian government passed a law that penalizes sex outside marriage. This is only one of the many changes in the criminal code that observers warn of the increasing conservatism in the country.

Indonesia houses the largest Muslim population in the world and is also a republic whose democratic experiences and milestones have been widely studied by scholars within and beyond the region. This makes Indonesia a compelling case for reflection on the nexus and tensions between religion and democracy. Is religion compatible with democracy? What opportunities and challenges does the “Islamic Renaissance” entail in the country? Democracy on Religion

Liberal democracy espouses secularism, the separation of church and state, and freedom of religion. In an “ideal” democratic system, the state must not endorse nor support any specific religion while guaranteeing the free exercise of religion among citizens. This is essential in a democracy for many reasons. Religious freedom is a crucial civil right that enhances citizens’ individuality and relations with others. It stops one religion from dominating society, hence promoting diversity and co-existence. At the same time, it prevents policies from being framed according to religious beliefs, which may result in discrimination and repression of fundamental human rights.

Religion and its Tensions with Democracy: The Case of Indonesia

This is particularly important for Indonesia. While the country is predominantly Muslim, Indonesia also has many ethnolinguistic groups with different cultures and practices. It is a challenge in itself to build one nation with an immensely heterogeneous society. The diversity in the country resulted in years of ethnic conflict and violence. Even a religious minority, the Ahmadiyya, faces intimidation and oppression in the exercise of their faith. Indonesia’s dilemma points to the longstanding debate in human rights discourse and practice – are human rights universal, or are they relative to culture and local customs? While I am more inclined to support the former, it is important to be aware and carefully consider the context of a country when designing human rights advocacy and interventions.

However imperfect, the democratization process in Indonesia has assisted in facilitating efforts for reconciliation and balancing competing interests in the country. Recently, the President stunned the world when he acknowledged past grave human rights abuses in the country, including an anti-communist purge in the ’60s and the arrest of democracy activists during the Suharto presidency.

Indonesia sits in between secularism and theocracy. The country’s fundamental law espouses Pancasila, which is the foundational political theory of Indonesia. Through its five principles, Indonesian society believes in one God and aspires to create a just and civilized humanity, unity, democracy, and social justice for all. This tells us that, by principle, Indonesia gives importance to pluralism and citizenship. Scholars and practitioners of the law also adopt legal pluralism and believe that different legal systems are complementary rather than contradictory. For example, community practices and customs are considered along with national and local regulations in settling disputes and conflicts at the village level.

However, in recent years, Indonesia has seen the expanding role of Islam in the country’s social and political life. Aside from Islam being a “source of ethical and cultural guidance”, many Islamic organizations have secured formal power, which allows them to easily introduce measures within the state apparatus that cement their own interests. Hardliner Islamic groups have also proliferated, and fundamentalist thought and practices are becoming more and more widespread. Islamic identity politics have also been evident since Widodo coalesced with conservative Islamic factions and appointed Amin, an influential Islamic figure, as his vice president. The new penal code tends to be more religious than secular. This has implications for Indonesia’s supposed secularism and diversity. How can the Indonesian government best represent the interests and aspirations of all?

As Indonesia continues to modernize and extend its economic and political ascendancy in the region, rapid changes in its social relations and dynamics are also expected. This demands a more careful look at the kind of laws and “social controls” that the government enforces. Suppose conservative forces are forwarding laws in the name of protecting tradition and keeping Indonesian values in check. In that case, it should not be at the expense of fundamental civil and political liberties, nor should it be to repress vulnerable groups even further, such as women, LGBT+, and ethnic communities. Admittedly, this is easier said than done. Hence, political representation must reflect the diversity and vibrance of Indonesian society. If only one group dominates political and policy discourse, it ultimately jeopardizes the general will.

When religion becomes the yardstick for crafting rules and policies, it creates biases, whether intended or not. Propositions that are credible and necessary but “contradictory” to a certain religion may be rejected simply because they do not fit the personal convictions of decision-makers. Integrating religion into politics usually leads to oppressive and harmful policymaking. Religion is also a form of heuristics or cognitive shortcut that devalues deliberation and discussion. Instead of scrutinizing issues, people may resort to using their religion as the sole basis for their position on a particular matter. Democracies ought to be deliberative and pluralistic.

Human rights activists and organizations in Indonesia have sounded the alarm on many changes in the criminal code that could stifle individual freedoms and lead to setbacks in the country’s democratic progress. Aside from banning sex outside marriage, the government also reinstated laws that criminalize insulting the President and other state officials and institutions. They also increased the punishment for blasphemy. These laws can be disproportionately used against individuals and groups with legitimate criticisms and concerns about the government. It may also render already marginalized communities even more vulnerable. Religion, Populism, and Repression

This trend is not only unique to Indonesia. Much of the world has seen the rise of “nationalist” movements, often within the pretext of religion and safeguarding culture. India’s Modi has exhibited Hindu nationalist tendencies, which have meant greater intolerance against the Muslim minority in the country. Myanmar’s Tatmadaw has weaponized Buddhism to rally support from the public and account for its atrocities.

The use of religion to justify repressive and oppressive regimes is apparent. Religion is an effective tool to unify a group of people and subject them to a specific set of beliefs and values, which may be highly prejudiced and absurd. Religion acts as a moral compass that defines what is right and what is wrong. Because religion is subjective, it can easily be manipulated to serve political objectives. Populists and autocrats can bastardize religion to create a public enemy, instill an “us vs them” mentality, and sow further polarization.

Failed democracies thrive out of fear, whether it is real or manufactured. Religion can be a potent force to ingrain this fear. This hysteria against change and modernization is easy to whip up when people already have preexisting beliefs. It is not too difficult to segregate people and label them as the “other”. When this distinction is entrenched, it is convenient to normalize discrimination and violence.

It is said that Indonesia is a model for “Moderate Islam” when compared to the Middle East; the “Indonesian way” can complement Western values and democracy. It also has the potential to correct Islamophobia and promote Islam as a religion of peace. On the other hand, if Indonesia cannot find its balance and condone fundamentalist and hardliner Islamic groups to flourish, Indonesia will certainly regress in its hard-won democratic gains.

Religion has inherent contradictions with democracy. Subscribing to a religion and structuring a supposedly diverse society using its tenets is monopolistic and can bring about intolerance. It is paramount for democracies to ensure that civil, political, and socioeconomic rights are not deprived based on religion and other forms of cleavages. The access and exercise of power should be as widely distributed as possible. Public office should not be limited to certain political clans or religious organizations. For instance, at the village level, cultural and socioeconomic elites must share power and administration with vulnerable and historically marginalized groups. There are more reasons and illustrative cases, present and past, to posit that religion is more of a bane than a boon to democracy. At the moment in world history when (dis)information is fast and instant, we must maintain vigilance in dealing with autocratic agendas in the guise of “respecting” values and tradition. It is easier to believe and conform than to reflect and deliberate. But democracy dies when we rely on shortcuts to define what is good for us. Democracy dies, slowly and deliberately, when we allow a few to sabotage our freedoms and liberties to increase their own. Demagogues and despots are usually cunning and do things “in the name of God”.

REFERENCES

Evans, M. S. (2014). Religion and political decision making. Journal for the Scientific Study of Religion, 53(1), 145–163. http://doi:10.1111/jssr.12088

Evans, T. (2012). Separation of Mosque and State in Indonesia. Policy, 27(4), 35–39.

Głodek, A., & Grzywacz, A. (2020). Indonesia – between religion and democracy, Warsaw: Boym Institute. Retrieved from https://instytutboyma.org/en/indonesia-between-religion-and-democracy

Jaffrey, S. (2020). Is Indonesia Becoming a Two-Tier Democracy?, Washington D.C.: Carnegie Endowment for International Peace.

Jamaluddin, M., Chen, H. & Watson, A. (2022). Indonesia bans sex outside marriage as parliament passes sweeping new criminal code, Jakarta: CNN.

Klinken, G. v. (2019). Living in a Sacred Cosmos: Indonesia and the Future of Islam. Journal of the Humanities and Social Sciences of Southeast Asia, 175(1), 81–135. http://doi:10.1111/jssr.12088

McWilliams, E. (2018). Democracy in Indonesia: A Progress Report, Washington D.C.: The Foreign Service Journal.

Nagda, A. (2020). The Diplomat. [Online] Available at: https://thediplomat.com/2020/03/the-islamization-of-indonesias-foreign-policy/

Omelicheva, M. & Ahmed, R. (2018). Religion and politics: examining the impact of faith on political participation. Religion, State, and Society, 46(1), 4–25.

The World Factbook. (2023). Indonesia, s.l.: Central Intelligence Agency.

Wieringa, S. E. (2006). Islamization in Indonesia: Women Activists’ Discourses. Signs: Journal of Women in Culture and Society, 32 (1), 40–27.

Short Biography:

Kay Conales is a student of the Asia Pacific-Master of Arts in Human Rights and Democratization of the Institute of Human Rights and Peace Studies (IHRP) of Mahidol University (Thailand). She also studied in the Faculty of Social and Political Sciences (FISIPOL) of APMA’s partner-university Universitas Gadjah Mada (Indonesia). She can be reached through e-mail at ksconales@gmail.com.

What Comes after ASEAN Economic Community (AEC) 2015: A Threat from China’s Economic Downfall

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