RCEP trade pact which takes effect Jan 1, set to boost regional, global growth

 

The Asean secretary-general and leaders of the 15 RCEP member countries with their trade ministers after the pact was signed on 15 Nov 2020. PHOTO: MINISTRY OF COMMUNICATIONS AND INFORMATION (MCI)

 

` SAN FRANCISCO (CHINA DAILY/ASIA NEWS NETWORK, REUTERS) - The Regional Comprehensive Economic Partnership (RCEP) agreement, which will take effect on Saturday (Jan 1), is expected to significantly boost the regional and global economies and offer lessons for international cooperation.

` "The RCEP is a huge, potentially powerful agreement among rich and poor countries that complements each other's strengths," Professor Peter Petri, who specialises in international finance at Brandeis University in the United States, told China Daily.

` "For example, it has favourable rules for parts and components trade, and these could help developing members benefit from partnering with more advanced countries, making the region a haven for some of the world's most efficient supply chains," he said.

` "If its potential is realised, the RCEP would create larger markets and innovative, affordable products for the world economy," he added.

` Signed in November last year by 15 Asia-Pacific economies - all 10 member states of Asean, China, Japan, South Korea, Australia and New Zealand - the agreement has created the world's largest free trade bloc that accounts for about one-third of the global population and gross domestic product.

` It will take effect in 10 member states - Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam, China, Japan, Australia and New Zealand - on Jan 1, and for the other five members 60 days after official deposition of ratification, acceptance or approval. 

South Korea will see it take effect on Feb 1.

 Indonesia's chief economic minister Airlangga Hartarto said on Friday (Dec 31) that Indonesia, South-east Asia’s largest economy, will likely ratify its RCEP membership in early 2022.

` A parliamentary commission overseeing trade rules had approved the ratification and its endorsement will be brought to a wider parliamentary vote in the first quarter of 2022, he said.

` President Joko Widodo will sign off on the ratification after parliamentary approval, he added.

` According to a recent study by Prof Petri and Prof Michael Plummer, an international economics expert at Johns Hopkins University in the US, the RCEP is estimated to increase world trade by nearly US$500 billion (S$675 billion) annually by 2030 and raise world incomes by US$263 billion annually.

` "There are several aspects of the agreement that will lead to significant economic effects, even if the RCEP is not as ambitious in scope as, say, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership," Prof Plummer told China Daily.

` "For example, it will create harmonised, cumulative rules of origin for intra-RCEP trade, which should give a significant boost to regional supply chains, at a time when supply chains are facing headwinds," he said.

` The agreement will lower tariffs on about 90 per cent of traded commodities and reduce some non-tariff barriers to trade in goods and services, according to Prof Plummer.

` "Importantly, it will create a free trade area among the North-east Asian economies of China, Japan and South Korea, giving a particularly strong boost to trade and production in the area of advanced manufacturers," he added.

` The study by the two economists, published by the East Asian Economic Review, estimates that the RCEP should increase regional incomes by US$245 billion on a permanent basis and create 2.8 million jobs in the region, which Prof Plummer described as "a significant boost".

` "In addition to its salutary effects on global incomes and trade, the RCEP offers an important boost to opening international markets, with very little negative effects on outside economies in the form of trade diversion," said Dr Plummer.

` Moreover, the RCEP shows how developed and developing countries can work together to include the interests of countries at all levels of economic development, he said.
`

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` "This could hold some important lessons for the WTO (World Trade Organisation), which reached an impasse at the Doha Development Agenda to a large extent because it was unable to accommodate the interests of developed and developing economies sufficiently," said Prof Plummer.

` Prof Petri also noted that the RCEP's success will depend on how well countries with different systems will work together to make the agreement successful.

` "If benefits are widely shared and relations are positive, members will implement the agreement fully and may even expand its scope," he said. "The RCEP could become a model for cooperation in an unusually diverse economic region."

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  Economic solidarity: Asia-Pacific leaders attending the fourth RCEP meeting as part of the 37th Asean Summit in Hanoi, Vietnam, last week. — Reuters

Malaysia and other partner nations are looking forward to better days ahead after signing the world’s largest trade deal.

THE Regional Comprehensive Economic Partnership (RCEP), eagerly awaited by 15 member nations and their 2.2 billion people, was finally signed last Sunday after eight years of negotiations and delays.

This regional free trade agreement has injected hope into the economies of member nations as they struggle to contain the second wave of Covid-19 pandemic.

The biggest trade deal in the world signed on Nov 15 during a virtual summit in Vietnam will, among others, allow participating countries to enjoy major tariff cuts.

Covering 30% of the global economy and global population, the RCEP will broaden and deepen economic linkages across the Asia Pacific region, ease trade in goods and services and facilitate the flow of investments.

The Geneva-based United Nations Conference on Trade and Development (Unctad) believes that the RCEP could give “a significant boost” to foreign direct investment (FDI) in the region.

“The provisions related to market access and disciplines in trade, services and e-commerce are highly relevant for regional value chains and market-seeking investment,” said the UN body in its special issue on investment trends last Sunday.

With China being a participating nation, others within the bloc will be able to gain easier access to China’s vast market of 1.4 billion people, including its 400-million strong middle-class income group.

And China, being the largest economy in Asia, will find it easier to export its capital to Asean and other RCEP nations after having faced political barriers in its investments in the West in recent years.

The RCEP comprises 10 Asean members (Indonesia, Malaysia, Singapore, Brunei, Vietnam, Laos, Cambodia, Myanmar, the Philippines and Thailand) and five others in the region – Australia, China, Japan, South Korea and New Zealand.

Indeed, Singaporean Prime Minister Lee Hsien Loong’s remark after the signing could best summarise the importance and impact of the trade agreement.

He described the signing of the RCEP as a “major step forward for the world at a time when multilateralism is losing ground and global growth is slowing”, according to The Straits Times.

“It signals our collective commitment to maintaining open and connected supply chains, and to promoting freer trade and closer interdependence, especially in the face of Covid-19 when countries are turning inwards and are under protectionist pressures,” he added at the virtual conference hosted by Vietnam.

Premier Li Keqiang of China, which has been suffering from the US-led trade war, said the RCEP “is a victory of multilateralism and free trade” and “it let people choose unity and cooperation in the face of challenges, rather than conflict and confrontation.” In its analysis, Global Times said: “The conclusion of the RCEP indicates that most Asian countries endorse free trade framework and see it as a landmark step toward achieving closer economic integration in East Asia and South-East Asia.

“The RCEP sends out the message that Asian countries are not willing to blindly follow the US and exclude China from the region’s integration process. A sound and healthy economic community in Asia cannot be achieved without China’s participation.”

For China, the RCEP is the first multilateral free trade agreement it has ever participated in. China already has bilateral trade deals with many RCEP members, and it has been trying to seal an obstacle-filled trilateral pact with Japan and South Korea.

For Malaysia, the cheer is that the RCEP will provide greater access to regional markets and more opportunities for local small and medium-sized enterprises (SMEs) to expand into foreign markets, said Senior Minister Datuk Seri Azmin Ali.

The lowering of barriers and streamlining of rules in trade facilitation will boost Malaysia’s trade with RCEP countries and attract foreign firms keen on entering into a more integrated Asean, said the Associated Chinese Chamber of Commerce and Industry of Malaysia (ACCCIM).

“This will enhance transparency in trade and investment, as well as facilitate the greater inclusion of Asean’s SMEs in global and regional supply chains,” said ACCCIM president Tan Sri Ter Leong Yap in a statement.

Wanita MCA national chairperson Datuk Heng Seai Kie said the RCEP provides “new hope for Malaysian entrepreneurs and national economic recovery to counter the current pandemic”.

“The RCEP trade deal will help stimulate the economy by integrating the various participating nations in the Asia-Pacific while introducing lowered tariffs, standardised customs rules and procedures and widened market access, especially among countries that don’t have trade deals,” she said in a statement.

Describing the free trade agreement as “an incredibly important agreement in terms of the timing”, Australian Trade Minister Simon Birmingham said: “This agreement signifies that our region is still committed to openness and to trade and that we will use that as a platform and a springboard for recovery in the post-Covid era… Better access for our farmers and businesses means more jobs for Australians overall.”

Birmingham noted that Australian businesses in education, healthcare, accountancy, engineering and legal service industries would benefit most from the deal, which will allow them to open offices in RCEP countries.

Most importantly, the trade pact may facilitate Australia’s exports to China – its largest trading partner – if Australia tones down its two-year long hostility towards Beijing. Canberra’s ongoing spat with Beijing has hurt Australia’s economy deeply.

For Japanese exporters, the agreement means that China and South Korea will gradually eliminate tariffs on sake and shochu, according to Japan Times. The reduction from China’s current 40% tariff on both will fall to zero after 21 years, and South Korea’s 15% tariff on both goods now will be eliminated after 15 years.

The RCEP may help reduce the adverse impact of trade wars waged on any member country in the deal, according to prominent YouTuber Yang Fong.

“Once the RCEP comes into force in two years, the US cannot simply wage trade wars on China and other members. The deal will also bring major changes to supply-chains in China and the region,” said the economic analyst.

While all member nations are excited about RCEP, India left the negotiation table last year.

In November 2019, Prime Minister Narendra Modi said the pact would not benefit India’s core interest. Indian dairy farmers, as well as SMEs, are worried of losing out to China in the trade of manufactured goods, and to Australia and New Zealand on dairy products.

But despite this, the RCEP welcomes the return of India once it is ready to join.

To the Western world, the concern is that the world’s largest trade deal has left out the United States.

“Notably, the agreement excludes the US and can potentially allow China to cement its position as a key trade partner for South-East Asia and other countries,” CNBC said in its report.

The US Chamber of Commerce in Washington has expressed concern that the US is being left behind in the world’s largest free-trade bloc, reported Reuters.

However, the absence of US in the RECP could be easily explained. The world’s biggest economy was never a part of the trade pact from the very beginning.

The RCEP’s formation in 2012 is seen as an Asean response to the Trans-Pacific Partnership (TPP), a US-led free trade agreement that excluded China – the world’s second largest economy and largest trading partner for most Asian countries.

At the beginning, TPP membership included the United States, Malaysia and several Asean countries, Japan, South Korea, Canada, Mexico and Australia.

While setting up the RCEP, Asean invited China, India, Japan, South Korea, Australia and New Zealand to be partners in this free trade agreement.

For countries like Malaysia that believe in multi-lateralism, they can gain tremendously from having membership in both US-led TPP and Asean-led RCEP.

However, when Donald Trump became president, he rejected multilateralism and the Trump administration withdrew from the TPP in 2016.

Trump’s “America First” policy and the trade wars he has waged against China and others have also raised doubts about the US’ willingness to trade with Asian countries on mutually beneficial basis.

Without US participation, the West is worried that China will dominate RCEP and expand its influence in the region.

China’s state-linked Global Times is prompt to supply answers and address the concern.

Noting that major US allies (such as Australia, New Zealand and Japan) are part of the RCEP, Global Times said: “China cannot dominate the attitude of these countries or Asean as many major US allies are in the deal.”

In fact, Japan and Australia – which have enjoyed very close ties with the US – are likely to keep a close eye on China in the RCEP, while championing their own interests in the deal.

Global Times added: “If China is the so-called winner this time, then it is a win-win situation for all other RCEP members because these countries have strived for their own benefits during the past eight years of negotiations. All countries can only be winners since they have signed this agreement.”

Analysis by HO WAH FOON wahfoonho@thestar.com.my 

 

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China and 14 other economies signed the world's largest trade deal, the Regional Comprehensive Economic Partnership (RCEP), on Sunday to form a free trade zone in the Asia-Pacific region that will encompass a third of the global economy, in what Chinese officials and experts call a historic win for multilateralism that would help the regional and global economies cope with the COVID-19 pandemic and rising protectionism.

Chinese Premier Li Keqiang said that signing of the RCEP is not only an achievement of landmark significance in East Asian regional cooperation, but is also a victory of multilateralism and free trade.

"Signed after eight years of negotiation, the RCEP lets people see brightness and hope in shadows, proving that multilateralism and free trade remain the main and correct course as well as the right direction for the global economy and mankind," Li said.

Signed at a critical turning point in the global political climate – when the next US administration is set to come into office and the world is grasping for solutions to tackle challenges arising from the coronavirus pandemic, the new regional deal would also help the Asia Pacific region take the global lead in recovering from the COVID-19 pandemic and reduce US hegemony in the region, experts said.

The deal, which encompasses Japan, China, South Korea, Australia and the 10 members of the Association of Southeast Asian Nationals, will create what is believed to be the world's largest free trade zone, covering about one-third of the world's total population and GDP. It will be also Japan's first free trade framework with its vital trading partners China and South Korea.

Notably, two major economies – the US and India – were left out of the trade pact. The US, under President Donald Trump, has been pushing for bilateral deals rather than multilateral ones. India was part of the negotiations, but did not join the final agreement.

The RCEP, which contains 20 chapters covering a wide range of areas from merchandise trade to investment to e-commerce, is “modern, comprehensive and high-level win-win agreement,” China’s Finance Ministry said on Sunday, adding that under the deal, members will aim to reduce tariffs to zero in the coming decade.

Bao Jianyun, professor of the School of International Studies and director of the Center for International Political Economy Studies at Renmin University of China, said that signing of the RCEP showed China, which played a very active role in pushing for the deal, has led the way in liberalizing trade and promoting a global market order of free competition.

"At the same time, China provides the world with a Chinese model and a Chinese solution on the open platform, where it serves the world," Bao told the Global Times, explaining that China as an emerging power has been a major promoter of trade and investment integration of RCEP.

Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations, also stressed that the successful and long-awaited signing of the megapact has rekindled the world's 'hope and confidence" about a model of cooperation.

"Global cooperation has been defeated in recent years because of rising protectionism and China-US trade friction. But the RCEP's signing is a signal that cooperation does work today, which I think is even more important withthe lift it gives to specific countries' GDP growth," Chen told the Global Times.

Liu Kuikui, a Beijing-based consultant of international transport and trade, told the Global Times that the RCEP will establish a common framework of rules of origin for Asia-Pacific countries, reduce investment barriers, and expand trade and investment. The participation of Japan, South Korea, Australia and New Zealand, allies of the US, demonstrates that the four countries are opposed to the trade protectionism and the economic bullying launched by the US.

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CHRISTCHURCH: An Australian gunman (pic) involved in attacks on New Zealand mosques that left at least 49 people dead published a racist manifesto on Twitter beforehand then livestreamed his rampage, according to an online analysis. 

Police called for people not to share the video, which showed the gunman shooting repeatedly at worshippers from close range.

“Police are aware there is extremely distressing footage relating to the incident in Christchurch circulating online,” New Zealand police said in a Twitter post.

“We would strongly urge that the link not be shared. We are working to have any footage removed.”

The media analysed a copy of the Facebook Live video, which shows a clean-shaven, Caucasian man with short hair driving to the Al Noor Mosque in central Christchurch, then shooting as he enters the building.

It was determined the video was genuine through a digital investigation that included matching screenshots of the mosque taken from the gunman’s footage with multiple images available online showing the same areas.

The manifesto detailing motivations for the attack was posted yesterday morning onto a Twitter account with the same name and profile image as the Facebook page that streamed the attack.

Entitled The Great Replacement, the 73-page document said the gunman had wanted to attack Muslims.

The title of the document has the same name as a conspiracy theory originating in France that believes European populations are being displaced in their homelands by immigrant groups with higher birth rates.

The manifesto said the gunman identified himself an Australia-born, 28-year-old white male from a low-income, working-class family.

He said that key points in his radicalisation were the defeat of the French far-right leader Marine Le Pen in 2017 elections, and the death of 11-year-old Ebba Åkerlund in the 2017 Stockholm truck attack.

Australian Prime Minister Scott Morrison confirmed the attacker at the Masjid al Noor mosque was an Australian.

“We stand here and condemn, absolutely the attack that occurred today by an extremist, right-wing, violent terrorist,” said Morrison.

New Zealand authorities said that three people had been arrested, but their identities were not made public.

The media confirmed the authenticity of the live-streamed video partly by matching the distinctive features at the mosque seen in the footage with images available online.

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Bigger thriller in Manila: Asean point man to deal with China

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NOW that the quartet of Asean-related summits is over for the year, so should the niggling criticisms. At least they should – more important matters are at hand.

Over the week Singapore hosted the 2nd RCEP (Regional Comprehensive Economic Partnership) Summit, the 13th East Asia Summit, the 21st Asean Plus Three Summit, and – not least – the 33rd Asean Summit.

These summits were held because it was time they were, and Singapore hosted them because it was its turn. But criticisms were not far behind.

US President Donald Trump was a no-show, and so was Chinese President Xi Jinping. Vice-President Mike Pence and Prime Minister Li Keqiang attended instead.

Trump was criticised for his absence, which allegedly “left the region wide open” for Xi’s China to make further inroads here. That complaint was limited only by Xi’s own absence.

Philippine President Rodrigo Duterte was also criticised for not attending an “informal breakfast summit” between Asean and Australian leaders.

His said it was only an informal event, and it was over breakfast which he did not eat.

A casual observer may be forgiven for sensing that there must be more important developments than these scheduled rounds of handshakes and photo opportunities. There are.

One of these begins in two days: Xi’s state visit to the Philippines, following the scheduled 30th Apec Summit in Papua New Guinea.

Duterte had made three visits to China as President, inviting Xi to visit Manila each time. This will be Xi’s first state visit, coming upon the third invitation to him.

There will be handshakes and photo opportunities too, but the substance and symbolism now may be more than the recent multiple summits in Singapore and Papua New Guinea.

The Philippines has been vocal about rival claims to territory in the South China Sea. The previous The region is generally unsettled by China’s recent occupation and construction of islands, with Vietnam remaining most disturbed. Duterte’s critics have also blamed him for being soft on Beijing.

However, Xi’s visit is expected to be smooth with an emphasis on the positives. These include mutual interests deemed to be larger than interminable disputes over distant rocks and islets.

Last year Chinese Vice-Premier Wang Yang visited Manila for four days amid more audible protests over territory such as Benham Rise. Yet the visit proceeded unhindered.

This time it is President Xi himself, for a state visit of only two days, with no particular complaint against China outstanding. It will also be after one full year of China having become the Philippines’ main trading partner.

For both sides the focus will be quite intense on specific projects backed by Chinese assistance. Duterte left the merrymaking in Papua New Guinea early to return home to prepare for Xi’s arrival.

For China, it would demonstrate to the region how it can cooperate with even a country locked in dispute with it to mutual benefit. This gains added significance when it is the Philippines, historically a US ally.

For the Philippines, there is a host of projects and programmes on Duterte’s wish list requiring Chinese aid. They span his ambitious 9-trillion peso (RM717bil) “Build, Build, Build” infrastructure plan covering all three regions of the Philippines: Luzon, Visayas and Mindanao.

These come under the Six-Year Development Program (SYDP) signed last year with China as a framework for the Philippines’ “Golden Age of Infrastructure.” It is to be Duterte’s legacy for his country.

The 75 projects include a water pump and irrigation scheme, a dam, a north-south railway, a highway, bridges, a park and a rehabilitated power plant. Economic growth is projected to outpace debt.

Duterte is clear-minded enough to know that only China is able and willing to provide the assistance needed. No other country or combination of countries is in a position to do so.

There are also plans for more Chinese business investments, as well as a framework agreement for joint oil and gas explorations at sea. The latter are understood to cover some disputed areas, with China agreeing to only a 40% share of recoverable deposits.

Countries in dispute over territory and the reserves found therein tend to shy from joint exploration, as legally this may imply recognition of the other disputing party’s claim.

But since this condition applies equally to both parties, the Philippines may be confident that China would also be obliged to acknowledge the Philippine claim. Can there be a lesson here for other Asean countries with claims to the South China Sea?

To ensure the success of Xi’s visit, there had been a positive build-up of Philippines-China relations in recent months. Xi’s state visit in turn is envisaged to lead to even better bilateral relations.

Last August, joint simulated naval exercises were held in Singapore among Asean countries and China without US participation. Manila defended that decision by saying that the “tabletop” drill was meant only for neighbouring countries in the region.

Now as Xi prepares for his visit, the US Pacific Fleet is reportedly readying a series of naval operations as a “show of force” in the South China Sea and the Taiwan Straits. In response to China’s stated concern, the Philippines said it will have no part in those operations.Xi’s visit is important not just for the Philippines but also Asean, which had designated Manila the “point man” in dealings with China. Can Duterte clinch an agreement from China for Asean?

Manila had said that a legally binding Code of Conduct (CoC) in the South China Sea was on the agenda, but Singapore Prime Minister Lee Hsien Loong said it may take another three years.

If China really wants to prove its goodwill in Manila, Xi could suggest it may happen considerably sooner.

The last Chinese President to make a state visit to the Philippines was Hu Jintao in 2005. That occasion also marked the 30th anniversary of bilateral relations, which is as auspicious a time as any.

This Tuesday’s visit by Xi will be the first Chinese state visit in 13 years. That is an auspicious number in Chinese, but not so in Western culture.

Will it be auspicious for the Philippines, the only Christian-majority country in the region once colonised by Spain and then the US? Duterte’s original style of leadership may yet make the difference.

By Behind The Headlines Bunn Nagara

Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia.

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Bigger thriller in Manila: Asean point man to deal with China

Point man: Asean has designated Manila its ‘leader’ in dealings with China, but can the moody Duterte, here shown bonding with Xi on a visit to Beijing in 2016, clinch a an agreement from China for the regional association? — AP

https://youtu.be/iMB26dijZAE https://youtu.be/tedFwDyW2Uo

NOW that the quartet of Asean-related summits is over for the year, so should the niggling criticisms. At least they should – more important matters are at hand.

Over the week Singapore hosted the 2nd RCEP (Regional Comprehensive Economic Partnership) Summit, the 13th East Asia Summit, the 21st Asean Plus Three Summit, and – not least – the 33rd Asean Summit.

These summits were held because it was time they were, and Singapore hosted them because it was its turn. But criticisms were not far behind.

US President Donald Trump was a no-show, and so was Chinese President Xi Jinping. Vice-President Mike Pence and Prime Minister Li Keqiang attended instead.

Trump was criticised for his absence, which allegedly “left the region wide open” for Xi’s China to make further inroads here. That complaint was limited only by Xi’s own absence.

Philippine President Rodrigo Duterte was also criticised for not attending an “informal breakfast summit” between Asean and Australian leaders.

His said it was only an informal event, and it was over breakfast which he did not eat.

A casual observer may be forgiven for sensing that there must be more important developments than these scheduled rounds of handshakes and photo opportunities. There are.

One of these begins in two days: Xi’s state visit to the Philippines, following the scheduled 30th Apec Summit in Papua New Guinea.

Duterte had made three visits to China as President, inviting Xi to visit Manila each time. This will be Xi’s first state visit, coming upon the third invitation to him.

There will be handshakes and photo opportunities too, but the substance and symbolism now may be more than the recent multiple summits in Singapore and Papua New Guinea.

The Philippines has been vocal about rival claims to territory in the South China Sea. The previous The region is generally unsettled by China’s recent occupation and construction of islands, with Vietnam remaining most disturbed. Duterte’s critics have also blamed him for being soft on Beijing.

However, Xi’s visit is expected to be smooth with an emphasis on the positives. These include mutual interests deemed to be larger than interminable disputes over distant rocks and islets.

Last year Chinese Vice-Premier Wang Yang visited Manila for four days amid more audible protests over territory such as Benham Rise. Yet the visit proceeded unhindered.

This time it is President Xi himself, for a state visit of only two days, with no particular complaint against China outstanding. It will also be after one full year of China having become the Philippines’ main trading partner.

For both sides the focus will be quite intense on specific projects backed by Chinese assistance. Duterte left the merrymaking in Papua New Guinea early to return home to prepare for Xi’s arrival.

For China, it would demonstrate to the region how it can cooperate with even a country locked in dispute with it to mutual benefit. This gains added significance when it is the Philippines, historically a US ally.

For the Philippines, there is a host of projects and programmes on Duterte’s wish list requiring Chinese aid. They span his ambitious 9-trillion peso (RM717bil) “Build, Build, Build” infrastructure plan covering all three regions of the Philippines: Luzon, Visayas and Mindanao.

These come under the Six-Year Development Program (SYDP) signed last year with China as a framework for the Philippines’ “Golden Age of Infrastructure.” It is to be Duterte’s legacy for his country.

The 75 projects include a water pump and irrigation scheme, a dam, a north-south railway, a highway, bridges, a park and a rehabilitated power plant. Economic growth is projected to outpace debt.

Duterte is clear-minded enough to know that only China is able and willing to provide the assistance needed. No other country or combination of countries is in a position to do so.

There are also plans for more Chinese business investments, as well as a framework agreement for joint oil and gas explorations at sea. The latter are understood to cover some disputed areas, with China agreeing to only a 40% share of recoverable deposits.

Countries in dispute over territory and the reserves found therein tend to shy from joint exploration, as legally this may imply recognition of the other disputing party’s claim.

But since this condition applies equally to both parties, the Philippines may be confident that China would also be obliged to acknowledge the Philippine claim. Can there be a lesson here for other Asean countries with claims to the South China Sea?

To ensure the success of Xi’s visit, there had been a positive build-up of Philippines-China relations in recent months. Xi’s state visit in turn is envisaged to lead to even better bilateral relations.

Last August, joint simulated naval exercises were held in Singapore among Asean countries and China without US participation. Manila defended that decision by saying that the “tabletop” drill was meant only for neighbouring countries in the region.

Now as Xi prepares for his visit, the US Pacific Fleet is reportedly readying a series of naval operations as a “show of force” in the South China Sea and the Taiwan Straits. In response to China’s stated concern, the Philippines said it will have no part in those operations.Xi’s visit is important not just for the Philippines but also Asean, which had designated Manila the “point man” in dealings with China. Can Duterte clinch an agreement from China for Asean?

Manila had said that a legally binding Code of Conduct (CoC) in the South China Sea was on the agenda, but Singapore Prime Minister Lee Hsien Loong said it may take another three years.

If China really wants to prove its goodwill in Manila, Xi could suggest it may happen considerably sooner.

The last Chinese President to make a state visit to the Philippines was Hu Jintao in 2005. That occasion also marked the 30th anniversary of bilateral relations, which is as auspicious a time as any.

This Tuesday’s visit by Xi will be the first Chinese state visit in 13 years. That is an auspicious number in Chinese, but not so in Western culture.

Will it be auspicious for the Philippines, the only Christian-majority country in the region once colonised by Spain and then the US? Duterte’s original style of leadership may yet make the difference.

By Behind The Headlines Bunn Nagara

Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia.

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Malaysia's flight MH370 mistakes reflect stagnant politics; Bad apples in NZ sex crime.

Malaysia is poised to escape the middle-income trap, but also ready to fall back into it.

Normally the middle-income trap refers to countries with per capita GDP ranging from $1,000 to $12,000. GDP per capita in Malaysia already reached $1,000 by 1977, and $11,000 by 2013. After ups and downs over almost four decades, it seems Malaysia could walk out of the middle-income trap very soon.

Nonetheless, according to the Asian Development Bank that created the concept, GDP per capita is only a superficial indicator. The more accurate definition of the middle-income trap is that when a country enters the ranks of middle-income countries, a series of problems emerge, including rising labor costs, a lack of technological innovation, and subsequent economic stagnation.

There are two aspects of the definition: rising productivity and good governance. The essence of governance here means encouraging reasonable competition to maximize the value of talent and give boost to innovation.

Malaysia's poor response following the disappearance of flight MH370 reflected the fact that the country is still way behind in terms of governance. Behind the chaotic information are the flaws in Malaysia's system of governance.

There are both systematic and cultural reasons behind Malaysia's poor governance. But it is more related to the lack of secularization.

One driving force in the rise of Malaysia's GDP per capita has been the export of abundant raw products such as oil and rubber.

Malaysia is a multi-ethnic country, with Malays making up 68 percent of the population, Chinese 24.6 percent, and Indians 7 percent. According to the law, Chinese Malaysians, who were historically dominant in the economy despite their smaller numbers, cannot take positions as top leaders; and Malays must make up two-thirds of ministers and parliamentary members, and three-fourths of civil servants.

Malays also enjoy special policies in other fields such as college admission and civil servant recruitment. Malays even enjoy a higher quota in the issuing of taxi operation licenses.

Some Malays simply acquire the licenses and rent them to Chinese, collecting unearned income.

This rigid system which shows special care for Malays, to a certain extent, helps different ethnic groups to stay in their own places and thus boosts social stability. But this also closes the channel for upward mobility because it fails to provide a reasonable platform for competition.

The special privileges enjoyed by Malays give leeway for corruption. And in terms of governance, these privileges translate into a conservative group with vested interests and a lack of talent.

The modernization of Malaysia's governance is also related to Islamic modernization.

In 2001, then prime minister Mahathir Mohamad announced that Malaysia was a Muslim country. Current Prime Minister Najib Razak also declared in 2007 that Malaysia has never been a secular country.

Even today, some states in Malaysia still maintain elements of Sharia law. Different religious populations have different civil laws, even when living in the same place.

Islam is not a negative element. However, integrating religion with the law and politics rather than separating them may cause social conservatism and isolation.

In fact, this is a misinterpretation that sees Malaysian politics as strictly controlled by the elite. What's dysfunctional is not elite politics itself, but a rigid, dull system that is responsible for selecting the political elite.

Malaysia is determined to enter the ranks of developed countries by 2020. But judging from its handling of the MH370 incident, Malaysia's modernization will take far longer than this.

Source: By Ding Gang Source:Global Times Published: 2014-3-19

Bad apples -Malaysian envoy in NZ sex crime 

Read more at: http://english.astroawani.com/news/show/malaysian-envoy-in-nz-sex-crime-named-38804?cp

A photo of the Malaysian High Commission in Wellington, New Zealand.

KUALA LUMPUR: The Malaysian diplomat who is at the centre of an alleged sexual assault case in New Zealand has been identified as Muhammad Rizalman Ismail.

His identity was allowed to be revealed after media organisations challenged a judge's decision to grant permanent name suppression, The New Zealand Herald reported today.

The identity of Muhammad Rizalman, 38, who worked at the Malaysian High Commission in Wellington, was previously concealed due to a immunity order imposed by a Wellington District Court judge on May 30.

However, the High Court at Wellington today held an emergency hearing to overturn the immunityruling and it was successful.

Meanwhile, the Malaysian Foreign Affairs Ministry said it will not waive Muhammad Rizalman's diplomatic immunity just yet. But they are prepared to do so, if necessary, so that the suspect can be prosecuted under the New Zealand law, its Minister Datuk Seri Anifah Aman said.

He said the Malaysian government is committed in ensuring the transparency of the investigation of this case.

"If it is absolutely necessary that we think it is best to (waive his immunity) we will do it without hesitation," he told a press conference in Wisma Putra here today.

Anifah also said, the Malaysian government has confidence with the Defence Ministry's (Mindef) board of inquiry (BOI) that they will communicate with the New Zealand authorities, adding that they will not hesitate to take stern action against the suspect.

"Mindef will not hesitate to act under the Armed Forces Act 1972, if it is proven beyond doubt that Muhammad Rizalman is responsible and guilty of the offense as charged," he said.

He said the waiver would be deemed necessary when New Zealand requested for Muhammad Rizalman's return, out of belief that the investigations in Malaysia were not done properly.

However, he informed that it was the New Zealand authorities who had allowed the man to be brought back to Malaysia in May.

Besides that, Muhammad Rizalman has also undergone medical checks at the Mindef Medical Centre on May 29 which include physical and mental tests.

Anifah said blood and urine tests were also conducted and the results were satisfactory. Muhammad Rizalman is now at the Tuanku Mizan Military Hospital to have his mental and emotional health assessed.

On the Malaysian High Commission's website in New Zealand, Muhammad Rizalman, who had previously claimed diplomatic immunity, is listed to be Defence staff assistant, with the rank of a warrant officer II.

The man was arrested after he allegedly followed a 21-year-old woman to her house on May 9 and attacked her.

Sources: Astro/The Star/Asia News Network

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