A Welcome Lull

The year 2017 passed with nothing matching the political spectacles of 2016 or the economic vagaries of 2014–15. Less drama was probably welcomed, and the Southeast Asian region, as with much of the world, waited to see the eventual outcome of Donald Trump's election and the Brexit vote, while seeking to manage economic growth amid relative stability in commodity prices and currency values, and freedom from major shocks.

Between 2016 and 2017, Southeast Asian economies increased or maintained economic growth. Investment and trade kept healthy levels, boosted by improved conditions in the world's major economies, export markets and investment sources. In 2017, prospects of new economic opportunities unfolded, as well as challenges in regional and multilateral relations. China officially launched the Belt and Road Initiative. And the Trump presidency tempered stances that previously were more hostile towards trade surpluses, and completed a cordial, non-confrontational East Asia tour in November.

An upswing in exports, alongside sustained domestic and foreign direct investment (FDI), bodes well for economic growth ahead. However, increased trade deficits with China are a regional cause for concern. Country-specific deficits in trade and the current account, which make economies dependent on capital inflows, and in government budgets, which considerably derive from infrastructure development, highlight the importance of facilitating prudent and productive investments and expenditures, and competitive exports.

The backdrop of macroeconomic stability and steady growth set the tone for policy considerations of a more long-term and structural nature. While each Southeast Asian country has distinct circumstances, constraints and priorities, three salient and emergent issues warrant our attention. The first revolves around structural change and the future of manufacturing. Southeast Asia faces challenges in building productive capacity, upgrading skills, promoting innovation and adapting to technological change. Second, the region also grapples with labour market issues: generating employment and wage growth, alongside societal demands to safeguard welfare and protect the vulnerable. Third, infrastructure is a burgeoning priority. Southeast Asian countries have committed to massive transportation and utility projects, which hold out potential to generate multiplier effects, but also pose challenges in project delivery and financial sustainability.

Presidential Election

An amendment to the constitution in November 2016 reserved the office of the president for a particular ethnic group if a representative of that group had not been president for five consecutive terms. Other changes also tightened the criteria for those seeking the post: candidates from the private sector must have been the chief executive of a company with at least $500 million in shareholders’ equity (up from $100 million) on average for the most recent three years. Subsequently, in February 2017, Parliament amended the Presidential Elections Act (PEA). The key part of the amendment meant that President Wee Kim Wee is considered to have served the first presidential term in Singapore. Given that President Wee and subsequent holders of the office were from the Chinese or Indian communities, the 2017 Presidential Election would be reserved for a member of the Malay community.

A legal challenge was mounted by former PAP MP Dr Tan Cheng Bock, who in 2011 had come within a whisker of the presidency. Tan submitted that President Wee Kim Wee, unlike his successors, was not elected by Singaporeans and did not serve six-year terms. Therefore, the five presidential terms should only be counted from the term of President Wee Kim Wee's successor, Ong Teng Cheong (1993–99). If Tan's argument held, this would have made the 2017 Presidential Election an open one that any individual could have contested. Tan, who stated that the reason for his challenge was to give Singaporeans a choice, saw this application at the High Court dismissed, prompting him to appeal to the Court of Appeal, which also rejected his application, in August 2017.

Three candidates from the Malay community put themselves forward. One was Halimah Yaacob, former Speaker of Parliament and widely seen as the government's candidate. The other two hopefuls were Farid Khan, chairman of a marine services firm, and Salleh Marican, chief executive of a listed property company. The Presidential Elections Committee (PEC) found that Khan and Marican did not meet the requirement of having led a company with an average shareholder equity of $500 million in the three most recent years. The rejection of their eligibility by the PEC meant that Halimah Yacob was declared president by walkover on 13 September 2017.

The challenges of ethnic pluralism dominated Myanmar's landscape in 2017, with the long-simmering discord in Rakhine State escalating to large-scale violence and an unprecedented exodus of refugees, just as the government's peace negotiations with ethnic armed groups ground to a standstill. Entering her second year in office, State Counsellor, National League for Democracy (NLD) leader and Nobel Peace Prize laureate Aung San Suu Kyi promised to rule “Together With the People” for development, peace and reconciliation. As the year wore on, she faced widespread international criticism for how she and the Defence Services managed the evolving Rakhine State crisis, while domestic popular support grew around the Rohingya issue and regional allies — especially China — rallied behind the military and the State Counsellor. It was a retrograde year for the history books. The feel-good narrative about Myanmar's remarkable transitions was replaced with the kind of denunciations by UN officials and others of “ethnic cleansing” and “crimes against humanity” reminiscent of military rule from 1988 to 2011.

First Anniversary Woes

Late March marked the NLD's one-year anniversary of the historic and peaceful transfer of power from one political party to another — the first since independence from Britain in 1948. For all its flaws, the 2008 constitution established a degree of predictability and a structure of government largely accepted in principle by both the army and the newly empowered democracy movement led by the NLD. Thanks to reforms begun in 2011, thousands of people have used their new political freedoms to vent frustrations, expose abuses and demand action.

By late March, grumbles of discontent were heard as observers noted the NLD had accomplished little more than a reduction in the number of ministries, but notably had made few policy moves in the direction of improving the economy, increasing jobs, offering crucial services, building infrastructure or resolving the violence that plagued the western and northeastern parts of the country. When the majority of the electorate voted for the NLD in 2015, it was likely a vote against the old dictatorship and in support of the democracy movement. However, it was also an expression of desire for material progress. Identifiable, concrete signs of improvement in everyday lives had not yet materialized by the anniversary-mark, nor through the rest of 2017.

As foreshadowed in Southeast Asian Affairs 2017, key developments in 2016 helped shape Southeast Asia's regional environment in 2017 and the domestic developments of the eleven countries covered in this volume. As discussed by Lee Hwok-Aun, the improvements in the global economy and the wider East Asian one meant economic headwinds were positive for Southeast Asia in 2017. The beginning of the Trump administration in the United States of America has added a new source of regional geostrategic and geoeconomic uncertainty. In contrast, China's growing influence and assertiveness in the region is a source of geostrategic and geoeconomic certainty. The five-month siege of Marawi City and fears of Rohingya radicalization in Myanmar and the refugee camps in Bangladesh are a reminder that the threat of violent extremism is a structural rather than a cyclical factor. Election cycles in the region's democracies and leadership renewal cycles in the non-democracies were the most important determinants of domestic politics in most regional states.

Southeast Asia and the Great Powers

The year 2017 heralded the coming of more great power rivalry in the Indo- Pacific region, a geopolitical framework of Japanese origin but one adopted by U.S. president Donald Trump and featuring prominently in official U.S. documents like the National Security Strategy (NSS) of December 2017 and the National Defence Strategy (NDS) soon after. China's assertiveness and pressures on other countries had been leading to a pushback from the United States and its allies.

There were at least two important indicators of this. The first was the Quadrilateral Security Dialogue (the Quad), an informal forum of Japan, Australia, the United States and India to discuss security challenges in the Indo-Pacific. Though not a formal military alliance and still at the discussion stage, it is likely to evolve further. Second, the NSS and the NDS for the first time describe China (together with Russia) as a strategic competitor and the most significant security challenge to the interests of the United States and its allies and friends in the region, replacing terrorism. There were also more freedom of navigation (FON) operations conducted by the U.S. Navy in the South China Sea.

The Trump Administration

Two chapters in the regional section of this volume deal with major-power policies for the region, by Joseph Liow Chin Yong and by Walter Lohman.

Comprehensive Relations with a Military Pillar

Vietnam–Cambodia relations are described officially as “comprehensive” and indeed have political, economic, security (military and police), cultural and other facets. Politically, there are close and tightening links between the two countries’ ruling parties, symbolized by the fact that in a speech to the Communist Party of Vietnam (CPV) Congress in January 2016, General Ngo Xuan Lich, about to be promoted to Minister of Defence, placed the Cambodian People's Party (CPP) as second among the foreign political organizations with which the CPV was strengthening bilateral cooperation, behind only that of Laos. The comradeship entails general efforts “to closely coordinate and to strengthen the exchange of information and experiences in party-building work” and the two sides speak of it as a “special relationship”, the formulation used to describe the relationship between Cambodia and Vietnam (and Laos and Vietnam) from 1979 to 1990. During an April 2017 visit to Phnom Penh to meet with Cambodian Prime Minister Hun Sen, Vietnamese Prime Minister Nguyen Xuan Phuc described links as flourishing, declaring that “especially in the recent years and months, Vietnam–Cambodia relations have been very much more familial, affectionate, trusting and intimate”.

Within this framework, the Vietnam–Cambodia military ties embodied in the links between the Vietnam People's Army (VPA) and Royal Cambodian Armed Forces (RCAF) are characterized as a “main pillar”. This is a realm in which the Vietnamese believe they can and should continue to have a very special place, rooted in their unique role in militarily toppling Pol Pot's Democratic Kampuchea in January 1979 and directly building Cambodia's security forces for a decade thereafter. In bilateral contexts with a military flavour, Hun Sen has been prone to affirm that “without the help of Vietnam, Cambodia would absolutely not be where it is today”.

Two overarching themes of VPA–RCAF cooperation are that, historically, “always at the most difficult times, there has been only Vietnam helping Cambodia”, and that, currently, the VPA is ready to assist the RCAF “in all circumstances”, including at any time “when the CPP is encountering difficulties”. Hun Sen has described bilateral relations like one of “lips and teeth”, with a basis in a “political relationship” between the two countries’ armed forces. In historical Asian Communist parlance, the notion of a lips and teeth relationship has referred to one of militant solidarity in wartime against a common enemy.

During the period 2012–16, Vietnam was the tenth-largest importer of arms globally. This is an impressive figure given that Vietnam ranked thirty-seventh in the world in terms of its gross domestic product (GDP) in purchasing power parity terms and forty-eighth in the world in nominal terms. This chapter discusses why Vietnam made such large arms purchases, what specific weapon systems and platforms it acquired and for what purpose.

States procure arms for a variety of reasons: to defend themselves from perceived threats, to develop capabilities to suit specific needs, to acquire modern military technology, to gain prestige and to modernize their existing weapons and platforms. Force modernization (or defence modernization) may be conceptualized as two distinct yet interrelated processes. The first consists of reconditioning and upgrading existing stocks of weapons and platforms with new technology. The second process involves the acquisition of more modern sets of platforms and weapon systems to meet new roles and missions.

This chapter focuses on force modernization in Vietnam from the mid-1990s to the present and is divided into seven parts. Part 1 provides a brief historical overview of the Vietnam People's Army until the early 1990s when the conflict in Cambodia ended. Part 2 discusses naval modernization as a response to new security challenges in the South China Sea in the post–Cambodian conflict period. Parts 3 and 4 examine the modernization of the air defence air force and land force, respectively. Part 5 focuses on Vietnam's development of a national defence industry to support force modernization. Part 6 presents an overview of Vietnam's defence budget. Part 7 evaluates Vietnam's force modernization programme.

Part 1: Historical Overview

The Vietnam People's Army (VPA) was founded on 22 December 1944 as a small guerrilla force. Within ten years it had grown into a regular army of 80,000 grouped into seven infantry divisions equipped with heavy artillery and 320,000 grouped into independent regiments and battalions at the regional and local level, largely armed by China. These combined forces defeated the French in the First Indochina War, 1946–54.

After partition in mid-1954, the VPA was reorganized along conventional lines for the defence of North Vietnam. During this period, and especially during the Vietnam War (1965–75), the VPA expanded to include air, air-defence and coastal naval forces.

In a survey conducted by the ISEAS – Yusof Ishak Institute in May–June 2017, one may be alarmed by the level of conservatism and exclusivism expressed by the Malay respondents living in Johor. For example, 89 per cent of the Malays believed that Malaysia is an Islamic state, and 75 per cent supported the implementation of hudud laws in Johor (punitive Islamic laws which include stoning, whipping and amputation as modes of punishment). One would expect those living in the rural states of Kelantan, Terengganu and Kedah, the states which were once governed by conservative Islamic party PAS (Islamic Party of Malaysia), to demonstrate such views. Yet, these sentiments were expressed by Malays residing in the highly urbanized, modern state of Johor, which is ruled by a religiously moderate sultan and the Malay nationalist party, UMNO (United Malays National Organisation). Moreover, observers have regarded Johor as a bastion of moderate, cultural and Sufi (spiritual) Islam. Is Johor experiencing a wave of Salafism-Wahhabism? In this chapter, I argue that Johor is not undergoing the Salafism-Wahhabism that may be experienced in some other Malaysian states; yet, this does not necessarily translate into a less exclusivist mode of thinking among the masses.

One has to go back a century to understand the nature of Islam practised in Johor, and how its religious elites have warded off influences from the Middle East. Historically, Islam in the state was tied to the royal courts, and Sufism was the dominant mode of orientation. In 1916, Haji Abdul Karim Amrullah, an Islamic religious scholar (ulama) from Sumatra, who was influenced by the reformist movement in the Middle East, made a sneering remark about the Mufti of Johor. “To become a Government Mufti in Malaya is a great glory”, he said. “You have an official uniform, with a whole banana-comb of epaulettes on the shoulder, a jubbah [Arabian-style garment] embroidered with gold thread, a silk turban, and your own car. The ra'ayat [people] fear and obey you, eat the scraps from your table, your spat of sireh [betel leaf]. And if you want to get married … Bismillah [anytime with God's consent].”

Thailand in 2017 has been relatively stable, despite the fact that a decade-long political struggle has not come to an end. In fact, a widely anticipated process of national reconciliation has never taken place; hence, tensions between contending groups will continue to challenge Thailand in the immediate and long-term future. Despite this there were several important factors in 2017 that helped contain the conflict and which, in turn, maintained the stability of the military government. Such stability has, first and foremost, been preserved by restrictions on political freedom in the kingdom. The death of King Bhumibol in October 2016 and the year-long period of mourning, during which political activities were deemed inappropriate and socially unacceptable, further silenced opposition voices.

However, with the military holding power and the political bargaining between elites in different factions still unsettled, uncertainties cloud the future of Thai democracy. Illustrative of such uncertainties is the case of the charges against former prime minister Yingluck Shinawatra in the latter half of 2017 for negligence in regard to the rice-pledging scheme. The fact that Yingluck managed to flee the country in September added uncertainty to the future of the pro-Thaksin front and its leadership.

On the economic front, Thailand's economy experienced slow growth. Some policies were launched to stimulate the stagnant economy, in particular the Thailand 4.0 model, with the aim of upgrading Thailand to an innovative economy. However, it is unclear whether these policies will work as intended. The country's low economic performance has gradually affected all levels of the population, particularly the middle-class and the poor. Income disparity between the haves and have-nots remains a major challenge to Thailand's attempts to step up to a high-income economy.

Regarding foreign relations, China is still an important factor in Thailand's foreign policy. Since the early period of the military government, when the junta sought international support amid strong criticism from Western nations, the country's reliance on China has continued. And while October saw the normalization of Thai–U.S. relations, tensions could resurface in the future, especially on trade issues. While the direction of Thai–U.S. ties remains unclear, Thailand will face difficulty in balancing Beijing's influence. After all, Thailand still relies on China for assistance with its economic recovery, so it cannot reduce the latter's heavy influence on policy calculations.

Malaysia was in election mode in 2017 as many were expecting Prime Minister Najib Razak to call a snap election to take advantage of a seriously divided opposition. The upcoming election will be a win or bust battle for Najib, as he attempts to reverse consecutive slides in the number of seats won by the ruling Barisan Nasional (BN) in recent general elections, amid concerns among voters about bread and butter issues. Meanwhile, the new opposition coalition, Pakatan Harapan (PH), made former prime minister Mahathir Mohamad its chairman, to lead the challenge against BN and Najib. Mahathir's comeback provides a boost to an opposition that has been plagued by inter- and intra-party schism. Nonetheless, without the largest Malay opposition party — Parti Islam SeMalaysia (PAS) — in its fold, Pakatan has a difficult, if not impossible, task to unseat the BN. As the year came to a close, Najib solidified his grip both on his party, the United Malays National Organisation (UMNO), as well on the administration, leading to optimism within the party about the upcoming election. However, the UMNO leader kept the whole nation guessing about the election date up to the year-end. The embattled premier looks set to stretch the current parliament close to its full five-year term, which expires on 24 June 2018. When finally called, the election will be one of the country's fiercest ever political battles, pitting Najib against his former mentor, Mahathir.

Despite the intense power struggle, Malaysia's economy was on a strong growth trajectory in 2017. The unexpected growth was driven by strong domestic demand and strengthening exports. Another positive trend in Malaysia's economy in 2017 was the strengthening of the ringgit, which had been undervalued for quite some time. However, critics argued that the solid economic numbers did not reflect the reality on the ground, as many Malaysians, especially the lower income group, were struggling to cope with the rising cost of living. Another alarming trend in the Malaysian economy was the government's spiralling debt burden, caused by an exponential increase in operating expenditures.

On the diplomatic front, Prime Minister Najib Razak faced mounting domestic criticism for being too pro-China, consequently undermining Malaysia's sovereignty and its status as a middle power.

While election years in Cambodia are always eventful, 2017 proved to be even more so than expected. While the months leading to the June commune elections brought the customary machinations and jitters, it was the post-election developments that dashed whatever hope for political change may have been engendered by the results of the last two elections. As the ruling Cambodian People's Party (CPP) moved to consolidate its power in anticipation of the forthcoming elections in 2018, the country spiralled away from whatever measure of political openness may have been achieved in recent years. While election-related violence is not unprecedented, as forecast in the frequent references to “colour revolution” and imminent eruption of “social chaos”, the crackdown against regime opponents in the months following the June elections was wholesale and decisive. The consequences affect not only the upcoming 2018 elections but potentially the next electoral cycle as well. The hoped-for democratic transition into which the international community had poured massive financial and political investment over the last quarter of a century appears more elusive than ever.

Still smarting from its precarious win in the 2013 elections, the CPP was confronted with yet another disconcerting outcome in the 2017 commune elections. Despite the ruling party's efforts to turn the political tide, the Cambodian National Rescue Party (CNRP) successfully secured 5,007 council seats (to the CPP's 6,503) and 489 out of the 1,646 commune chief seats, a tenfold increase from their win in the 2012 elections. Though short of the 60 per cent that the party had projected, the CNRP did secure 44 per cent of the vote, compared to the CPP's 51 per cent. This narrowing margin is significant because it reveals not only a wide base of support for the opposition in urban centres but, even more significantly, an erosion of the CPP's political control in rural areas that have been the party's traditional base, where the majority of Cambodians live and where the ruling party has long-established political infrastructure. At 85 per cent of registered voters, voter turnout was impressively high, an indicator of popular optimism about the prospect of change, bolstered in no small part by the earlier performance of the opposition party, despite the preponderant power and repressive grip of the CPP.

Looking Back

When done poorly, efforts to understand and explain other cultures and societies earn justified and withering critique. Where scholarly appreciation lacks empathy, depth or context it is not a surprise that opposition should emerge. The charge of orientalism is one that still echoes through the halls of knowledge. It is a blunt rebuke to those accused of reifying the Other. Avoiding the common tendencies to essentialize complex subject matter requires skill, breadth and compassion. The political situation in which studies of human societies occur is crucial, and the difficult reality is that neutral enquiry, of the type imagined in some methodological textbooks, always proves an illusion. Academic analysis, of whatever type, should begin with an appreciation that power and knowledge sit in uneasy and permanent conversation. Knowledge of society, politics, culture, history, language and economics, in whichever disciplinary tradition, should therefore start with questions about how the world works, including through close scrutiny of scholarly practices and mentalities.

It was in such a quest, for academic and practical knowledge, that what we now recognize as Southeast Asian Studies emerged after the Second World War, just as a new region emerged from the colonial shadows. The colonial machines transplanted to this region from Britain, France, the Netherlands and the United States had, in their time, devoted immense energy to research enquiries that helped secure their exploitative rule. But, from the 1950s, the new nation-states of this region — wedged between China and India — found themselves the subjects of a new type of concerted analytical attention. Interest in such Area Studies increased with Cold War competition between the Soviet Union and the United States, and with Southeast Asia's rolling, often violent, struggles for independence and ideological direction.

During the second half of the twentieth century, a Southeast Asian core coalesced, initially, around a group of societies with relatively consistent pro-Western policies — Indonesia, Singapore, Malaysia, Thailand and the Philippines — ruled by various styles of nationalist strongmen. These five countries came together in 1967 as the Association of Southeast Asian Nations, marking a key moment in nation-building and region-building projects.

The year 2017 was an important one to assess the performance of the new government of Laos. Prime Minister Thongloun Sisoulith tackled key problems of Lao governance and economy — most notably corruption and illegal logging — earning him both domestic and international approval. However, Laos is still facing numerous socio-economic challenges such as weak legal institutions, poverty, environmental degradation, and a civil society subdued.

According to the 8th Five-Year National Socio-Economic Development Plan (2016–20), Lao economic politics is focused on graduating from the status of being a least developed country (LDC), not least through mega projects like hydropower dams, mines and large-scale infrastructure projects — negative social and ecological side effects notwithstanding. China and many ASEAN countries compete in large-scale investment in these fields. The Lao–Chinese railway linking Kunming with Vientiane is a case in point.

This chapter gives an overview of political and economic tendencies in the Lao PDR at the beginning of the new five-year cycle.

The Tenth Party Congress and its Aftermath

The year 2017 saw widely noticed political decisions of the new Government of Laos. The government addressed key challenges mentioned in the 8th Five-Year National Socio-Economic Development Plan (2016–20), such as the fight against corruption, illegal logging, and uncontrolled investment. This raised cautious hopes for more efficient and transparent governance. Prime Minister Thongloun Sisoulith gained a public image of a pragmatic and responsible politician. However, Laos still faces many problems: poverty and low education, environmental degradation, pressure on civil society, and the negative ecological and social impacts of hydropower dams and mining projects.

Meanwhile, the dynamic economic sector — with a growth of slightly below seven per cent in 2017 — dominated the Lao news and the political agenda. Largescale investment projects such as hydropower dams, coal plants and, not least, the huge Lao–Chinese railway project indicate Laos’ ongoing reliance on natural resources and increasing regional connectivity. The high social and environmental costs of the government's obsession with such mega projects became evident in 2017 as well. This chapter gives an overview of political and economic tendencies — and their social implications — in the Lao PDR.