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15200 results in ISEAS-Yusof Ishak Institute

Page 203 of 760

  • 20 - A New Competition Agency Learns to Deal with Smes: The Case of the Hong Kong Competition Commission

  • from Section 3 - Country Studies
  • Edited by Michael T. Schaper, Cassey Lee
  • Book:
    Competition Law, Regulation and SMEs in the Asia-Pacific
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    05 August 2017
    Print publication:
    27 July 2016, pp 345-358

  • Summary

    This chapter describes the evolution of competition law in recent years in the Hong Kong Special Administrative Region. It discusses the reasons giving rise to the implementation of the Competition Ordinance, its major features, and the reaction of the small business sector to the new law. A number of enforcement actions have already been undertaken by the Hong Kong Competition Commission against small and medium-sized enterprises (SMEs), and it is suggested that a focus on small enterprises is a logical and somewhat predictable step by the new agency.

    Introduction

    The Hong Kong Special Administrative Region (HKSAR) is a small jurisdiction whose economy is currently in transition from an entrepôt trade to a service-based economy. Since China's accession to the World Trade Organization (WTO) in 2001, Hong Kong's role as an international trade and services centre has increased. The SAR's economy is largely supported by low taxes, an educated workforce, and the rule of law. Major groups in the shipping, logistics, transportation, energy, telecoms, and retail markets have secured dominant positions through massive infrastructure investments and government deals. Yet 98 per cent of Hong Kong companies are small and medium-sized enterprises (SMEs) and serve the local market, which consists of some 7 million people population with a gross domestic product (GDP) per capita comparable to the United Kingdom or Japan. In 2014, Hong Kong's SMEs (defined by the government as a manufacturing business which employs fewer than one hundred persons in Hong Kong; or a nonmanufacturing business which employs fewer than fifty persons in Hong Kong) employed 48 per cent of the local workforce (Trade and Industry Council 2014).

    Over the years, businesses have played a significant role in shaping the governance of Hong Kong. In Hong Kong's political system, the Chief Executive is the head of the Executive Council, which comprises of members of government as well as non-official members. The Chief Executive is elected by a 1,200-strong election committee, of which a majority is returned by selective categories of professions. This system favours the business community, as the election committee is heavily influenced by pro-Beijing business people and long-established business interests. Among the Executive Council, a substantial number of people have extensive business experience.

    The legislative branch, known as the Legislative Council, consists of a single chamber.

  • 7 - The Application of Per Ses to Smes: The Type 1 Error No One Notices?

  • from Section 2 - Smes And Competition Law
  • Edited by Michael T. Schaper, Cassey Lee
  • Book:
    Competition Law, Regulation and SMEs in the Asia-Pacific
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    05 August 2017
    Print publication:
    27 July 2016, pp 123-142

  • Summary

    In this chapter, we consider the impact of per se laws on small and mediumsized enterprises (SMEs). Drawing on Australia's unusual adjudication/ enforcement model, we assess SMEs’ use of legitimate mechanisms designed to avoid overreach of the per se prohibitions, as well as the enforcement of those prohibitions against SMEs. These measures provide a basis for comparing compliance and non-compliance by small business and their larger counterparts.

    Our analysis demonstrates that SMEs hardly ever attract regulatory attention for potentially lessening competition. Yet, in Australia, they feature in almost 50 per cent of per se proceedings, and are responsible for almost 80 per cent of matters resolved via (non-judicial) undertakings. At the same time, SMEs are under-represented as users of Australia's statutory immunity processes. These factors combine to suggest that per se prohibitions impose a competitive hindrance which disproportionately affects SMEs as against larger businesses.

    In designing competition laws, therefore, one must be wary of an overzealous approach to per se prohibitions. If, as the Australian experience suggests, there is little or no prospect that conduct by SMEs will give rise to a “pernicious effect on competition”, then the law should be slow to impose conclusive presumptions to the contrary.

    Introduction

    “The true test of legality is whether the restraint imposed is such as merely regulates and perhaps promotes competition or whether it is such as may suppress or even destroy competition.” (Justice Brandeis, Chicago Board of Trade vs United States 1918)

    Small and medium-sized enterprises (SMEs) are the heartbeat of the modern economy. Despite increasing corporatization and globalization, they remain responsible for most economic growth and innovation — indeed former U.S. President Ronald Reagan observed, “Entrepreneurs and their small enterprises are responsible for almost all the economic growth in the United States” (Reagan 1988). For all their economic significance, however, SMEs tend to be treated as the “exception” rather than the rule when it comes to competition laws.

    In this chapter, the appropriateness of per se laws for SMEs is examined, remembering that:

    The rationale for per se rules is to avoid a burdensome inquiry into actual market conditions in situations where the likelihood of anticompetitive conduct is so great as to render unjustified the costs of determining whether the particular case at bar involves anticompetitive conduct (Jefferson Parish Hospital District No. 2 vs Hyde 1984).

  • 13 - SME Law and Abuse of a Superior Bargaining Position in Japan

  • from Section 3 - Country Studies
  • Edited by Michael T. Schaper, Cassey Lee
  • Book:
    Competition Law, Regulation and SMEs in the Asia-Pacific
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    05 August 2017
    Print publication:
    27 July 2016, pp 230-242

  • Summary

    Japan's policy towards small and medium-sized enterprises (SMEs) has gone through several major changes in its philosophy and practices over the last century. In the period immediately after World War I, Japanese government strategies were principally aimed at developing a well-ordered market and encouraged the grouping of enterprises. In the aftermath of World War II, this policy changed to be essentially focused on pro-competitive policy settings during the post-war Occupation Period. However, under the 1963 SME Basic Act, national SME policy changed once more, this time to focus on deterring the abuse of superior bargaining position. Japanese SMEs have often suffered from such abuses and, as a result, several pieces of law (including the Antimonopoly Act and the Subcontract Act) have been enacted to deal with the issue. This chapter gives a review of these regulations, and discusses some cases arising from its application.

    Japanese SME Policy

    Japan, an island country with a population of approximately 126 million, has a political system similar to that of many Western nations, but has evolved its own unique set of competition laws and small and medium-sized enterprise (SME) policy responses.

    Some institutional structures are very similar to those in most other developed nations. For example, the nation is a constitutional monarchy with a parliamentary system of government. Japan's elected legislature, the Diet, consists of two elected chambers: the House of Representatives and the House of Councillors. The head of the executive branch of the Japanese government, the Prime Minister, holds office with the approval of the Diet. Of all the nation's administrative organizations, the Ministry of Economy, Trade and Industry (METI) is the most significant body in terms of its influence on the nation's economic and industrial policies. Japan also has a Small and Medium Enterprise Agency (the SME Agency), which was established under METI, and is responsible for SME policy. The courts operate independently of the executive branch and are largely corruption-free.

    In Japan, a SME is defined in one of several ways under Article 2 of the Small and Medium-sized Enterprise Basic Act. In the manufacturing, construction, or transportation sectors, it is a firm whose capital does not exceed 300 million yen, or whose number of employees does not exceed 300.

  • 15 - Competition Law Implementation and Smes: Singapore's Experience

  • from Section 3 - Country Studies
  • Edited by Michael T. Schaper, Cassey Lee
  • Book:
    Competition Law, Regulation and SMEs in the Asia-Pacific
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    05 August 2017
    Print publication:
    27 July 2016, pp 258-275

  • Summary

    This chapter provides a ten-year review of the Singapore Competition Act from its introduction in 2005 up until 2014. The Competition Commission of Singapore (CCS) was established in 2005 to administer and enforce the Act. The CCS had the immediate task of helping businesses, especially small and medium-sized enterprises (SMEs), make the transition towards competition law compliance. However, CCS's enforcement experience and stakeholder engagement surveys over the last decade have revealed that most SMEs continue to be unaware of the prohibitions of the Act. CCS has had to modify its SME engagement strategy, innovating along the way. In the decade of its existence, the CCS has learnt some important lessons that may prove helpful to other competition authorities.

    Introduction

    Singapore is a recent entrant to the fold of countries subscribing to competition law. It has been ten years since the Singapore Competition Act was introduced and it is timely to review its introduction and implementation. How was competition law received by the small and medium-sized enterprises (SMEs)? What steps have been taken by the Competition Commission of Singapore (CCS) — established in 2005 to administer and enforce the Act — to address SME concerns, especially as they are the ones least able to adapt to changes in regulation?

    Singapore is a small and open economy. Its nominal gross domestic product (GDP) in 2014 was S$390 billion1 (Statistics Singapore 2014) and its trade to GDP ratio was 351 per cent (World Bank 2016), one of the highest in the world. SPRING Singapore (2014), the government agency responsible for SMEs, reported in 2014 that 99 per cent of businesses in the country were considered to be SMEs, contributing almost 50 per cent of GDP. SMEs are defined as:

    1. • Enterprises with annual sales turnover of not more than S$100 million; or

    2. • Enterprises with an employment size of not more than 200 workers.

    This chapter begins by introducing the rationale for competition law in Singapore. As a small and open economy, Singapore does not quite fit the “typical profile” of a country that needs competition law. We next describe how Singapore prepared the business community for the implementation of the Act.

  • 17 - Smes and Malaysia's New Competition Law: Experiences to Date

  • from Section 3 - Country Studies
  • Edited by Michael T. Schaper, Cassey Lee
  • Book:
    Competition Law, Regulation and SMEs in the Asia-Pacific
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    05 August 2017
    Print publication:
    27 July 2016, pp 292-308

  • Summary

    On 1 January 2012, the Competition Act 2010 came into operation in Malaysia. The Malaysia Competition Commission (MyCC) has faced significant challenges educating Malaysia's small and medium-sized enterprises (SMEs) on the need to comply with this new law.

    Despite petitioning to the contrary, the Malaysian Government did not exempt SMEs from application of the law. However, the MyCC has since adopted a helpful position to the small business sector in its guidelines. Agreements, other than serious cartels, entered into by businesses with low market shares are considered to not affect competition so the Act does not apply. It is likely that many agreements entered into by SMEs will benefit from these rules.

    Most of the cases investigated by the MyCC to date have involved SMEs. In many cases, trade associations have facilitated the illegal arrangements. Notwithstanding the significant advocacy efforts of the MyCC, there is still a worryingly low awareness and understanding of the law. The MyCC has experienced substantial difficulties in disseminating information to the widespread, multilingual SME community. Even those businesses aware of the law have been slow to undertake compliance. Trade associations and business groups have a key role to play in helping SMEs to understand and comply with the law.

    This chapter briefly explains the early policy considerations, examines the cases decided to date, and the advocacy work undertaken by the MyCC, and finally considers what more needs to be done to improve SMEs’ understanding of Malaysia's competition law.

    Introduction

    As part of its commitment to become a self-sufficient industrialized nation by the year 2020 (Vision 2020), Malaysia has recently adopted a competition law regime. The Competition Act (CA) was passed by the Federal Parliament in April 2010, and came into force on 1 January 2012. Being new is not all bad — there is a plethora of case law and experience available from all around the world from which the Malaysia Competition Commission (MyCC) can learn. However, there are also significant challenges for a new, inexperienced competition authority to meet the expectations of the business and government communities in enforcing the new legislation.

    The MyCC is an independent statutory body created by the Competition Commission Act 2010 with responsibility for enforcing the Act. Its main role is to protect the competitive process for the benefit of consumers and businesses.

  • 9 - How Competition Law May Affect Franchised Smes in Apec Economies

  • from Section 2 - Smes And Competition Law
  • Edited by Michael T. Schaper, Cassey Lee
  • Book:
    Competition Law, Regulation and SMEs in the Asia-Pacific
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    05 August 2017
    Print publication:
    27 July 2016, pp 156-174

  • Summary

    The business format franchise model has been widely adopted in many nations throughout the Asia-Pacific region because it provides an opportunity for individuals to establish their own small to medium-sized business as a franchisee. It also enables thriving businesses to expand quickly, and without compromising quality, into foreign and domestic jurisdictions as franchisors. Competition law, however, often impacts on franchise operations. The effects arise both from the general impact of competition law on business but also because of the vertical and horizontal structures associated with the franchisor/franchisee relationship. This chapter identifies the relevant competition laws throughout the Asia-Pacific Economic Cooperation (APEC) economies and provides examples of the competition law breaches that franchise networks must avoid. In particular, it examines the difficulties of market definition associated with franchise models and the challenges faced by competition regulators in communicating policy to franchisees and small and medium-sized enterprises (SMEs).

    Introduction

    Numerous small and medium-sized enterprises (SMEs) throughout the twenty-one Asia-Pacific Economic Cooperation (APEC) economies are operated as business format franchises. Two forms of franchising are widely recognized. In product franchising, a franchisor supplies branded products or services to a franchisee (seller), but does not control all aspects of how the franchisee conducts the retail business. The other form, business format franchising, is more allencompassing. It involves a franchisor creating a retail business, testing it, and resolving any problems, then documenting every aspect of the business and, finally, advertising for franchisees to purchase and operate franchised clones. The franchisor sells its franchisees a licence, typically for a fixed term. Franchisees then invest their own time and finances in establishing legally independent, but functionally dependent businesses, under the franchisor's brand while following the rules set out by the franchisor. The focus of this chapter is on business format franchising.

    This model of franchising is increasingly popular, and has become ever more versatile and sophisticated since the mid-twentieth century. Franchising currently exists along a spectrum, from being a widely studied, highly regulated, and pervasive business model in countries such as Australia and the United States, to an unregulated, data-poor, fledgling activity in countries such as Papua New Guinea.

  • 5 - Competition Regulator Engagement with the Small Business Sector

  • from Section 1 - Theories And Basic Concepts
  • Edited by Michael T. Schaper, Cassey Lee
  • Book:
    Competition Law, Regulation and SMEs in the Asia-Pacific
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    05 August 2017
    Print publication:
    27 July 2016, pp 85-102

  • Summary

    What constitutes “best practice” in terms of the interaction that a competition agency has with its own national small business constituency? This chapter discusses what “engagement” is, provides an overview of the general concepts and issues involved in developing an engagement framework, and examines some of the actual tools used in engagement, with a specific focus on Australian examples.

    Small businesses can be both the victims of anti-competitive practices and the perpetrators of offences against consumers. Engagement by competition regulators with small businesses is both about their rights and their responsibilities, but should these be approached separately or holistically?

    Research suggests that regulators often wish to act in certain ways to deliver upon their regulator objectives but find that statute law either prohibits or fails to facilitate sound engagement approaches. Discretion, though, must be weighed against predictability, transparency, and accountability. The approaches to the issue of discretion taken by different nations, and how this relates to small businesses are examined.

    Introduction

    Despite a plethora of inquiries into regulatory burdens, good regulatory design, and the regulatory circumstances in many industries and across a wide range of countries, little attention has been paid to how regulators interact with businesses, especially small ones. Yet this is critical, as the Queensland Chamber of Commerce and Industry of Australia noted:

    “… in many cases it is the approach of regulators — their communication, advice and support, enforcement and reporting requirements — that have the most significant impact on business owner[s]” (PC 2013, p. 37).

    The characteristics of small businesses can warrant a different approach to engagement by regulators, including by agencies tasked with promoting competition and consumer protection. As noted by the Council of Small Business Organisations of Australia (COSBOA):

    … The previous [Australian Competition and Consumer Commission (ACCC)] chairman showed good skills and abilities in communicating with large businesses, but in our view he showed no understanding in how to communicate with the small business community. He did not understand the difference between big and small business, indeed we always felt that he demanded that small business have the same skills and abilities as big business (COSBOA 2013, p. 5).

    Although the competition law obligations of businesses vary between countries, the scope of matters that can attract the attention of competition regulators is always narrower for small businesses.

  • 2 - Smes, Competition Law, and Economic Growth

  • from Section 1 - Theories And Basic Concepts
  • Edited by Michael T. Schaper, Cassey Lee
  • Book:
    Competition Law, Regulation and SMEs in the Asia-Pacific
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    05 August 2017
    Print publication:
    27 July 2016, pp 17-48

  • Summary

    SMEs (small and medium-sized enterprises) account for over 95 per cent of enterprises in APEC (Asia-Pacific Economic Cooperation) economies. There are differences in the concentration of SMEs between developed and developing economies. The role of SMEs in economic growth is best understood within a theoretical framework focusing on firm dynamics and firm size distribution. The entry and exit of small firms is a critical aspect of economic growth. There is some empirical evidence indicating that economic growth is associated with competition law. Micro-level evidence is likely to be needed to investigate how competition law affects SME's role in economic growth.

    Introduction

    The concept of “competition” has a near mythical status in economics. Economists have often used Adam Smith's “invisible hand” to illustrate the point that competition amongst buyers and sellers seeking to maximize their gains also benefits society. Less attention has been paid to Smith's cognizance that sellers can collude to the detriment of consumers. Likewise, Joseph Schumpeter has argued that the prospects of market power is also a key driver of innovation. Such contradictory perspectives on the role of competition have continued to perpetuate themselves in modern post-war theories of economic growth as well as the attendant empirical studies. Thus, the role of competition in economic growth is far from clear. To add to the predicament of policymakers and regulators seeking more direct answers, the nature and role of SMEs in economic growth is likely to be inconclusive and possibly even elusive as well.

    Despite the existing knowledge gap, competition laws — legislation promoting market competition — have been implemented in many countries. To date, more than 130 jurisdictions around the world have implemented competition statutes in one form or another. It is thus useful to reassess what we know about SMEs, competition law, and how both are related to economic growth.

    The purpose of this chapter is to provide a brief synthesis of what is known in the research literature, by examining the theoretical and empirical relationships between SMEs, competition law, and economic growth. The chapter will attempt to critically reflect on a few key questions. First, what is the nature and role of SMEs in the economy? Second, what role do SMEs play in economic growth? Finally, how does competition law affect this role?

    To examine the above issues, this chapter begins with a discussion of the nature and role of SMEs in national economies.

  • 14 - Competition Law, Policy, and Smes in South Korea

  • from Section 3 - Country Studies
  • Edited by Michael T. Schaper, Cassey Lee
  • Book:
    Competition Law, Regulation and SMEs in the Asia-Pacific
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    05 August 2017
    Print publication:
    27 July 2016, pp 243-257

  • Summary

    Small and medium-sized enterprises (SMEs) have played a significant role in the process of Korea's successful economic development. This is the result of various governmental policies that have been enacted to foster SMEs. As economic circumstances (both internal and external) have changed, the focus of Korean SME law and policies has shifted from unilateral protection or support of SMEs to reinforcing the economic significance and competitiveness of SMEs. Consequently, the importance of competition policies to SMEs has also grown. The main body of competition law in Korea, the Monopoly Regulation and Fair Trade Act (MRFTA), contains certain exceptions applying to SMEs and provisions for their protection. Other legislations have been enacted to ensure fair transactions for SMEs and franchisees. The MRFTA and related laws aim to create a free competitive market to address the anti-competitive and unfair transactional structures that small firms may be exposed to.

    Overview

    In the process of Korea's rapid and successful economic development, small and medium-sized enterprises (SMEs) have played a major role. This is the result of both specific stipulations in the Constitution, and due to various SME promotion and support policies that have been successfully implemented. But against a backdrop of government-led economic policies that have traditionally prioritized large conglomerate (chaebol) growth, Korean SME policies may be considered relatively lacking, especially when considering the earlier stages of Korea's economic development.

    For much of the last few decades, Korean SME policies had been focused on protection policies or on policies in which SMEs played a supplemental role to large conglomerates. More recently, the Korean government has succeeded in amending its policies in response to internal and external changes in national economic circumstances. It has been moving towards reorganizing its legal system to promote and support SMEs so that the economic roles and competitiveness of small firms can be strengthened.

    The significance and value of SMEs can vary in different ways, depending on the stage of economic development of the nation involved. SMEs can be considered to have major significance for a rapidly developing country, since promoting them may help build an industrial base, expand employment opportunities, balance development in different regions of the country, and establish a stable social infrastructure.

  • 19 - China's Anti-Monopoly Law and the Sme Sector

  • from Section 3 - Country Studies
  • Edited by Michael T. Schaper, Cassey Lee
  • Book:
    Competition Law, Regulation and SMEs in the Asia-Pacific
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    05 August 2017
    Print publication:
    27 July 2016, pp 328-344

  • Summary

    The small and medium-sized enterprise (SME) sector has not been a primary focus of anti-monopoly policy in China. However, it does make up a large and growing part of the domestic economy. The Anti-Monopoly Law (AML), enacted in 2007, does not contain any specific exemptions for SMEs. Industry associations often play an important role in undertaking activities that potentially breach the AML, and a number of different enforcement actions have already been undertaken against such arrangements by some of the different regulatory agencies responsible for ensuring compliance with the law. The adoption of more even-handed enforcement of the competition law against state sector monopolists and SME cartels would likely benefit the SME sector as a whole, enhance consumer welfare, and assist in China's stated policy aim of encouraging the growth of the domestic consumer market.

    Introduction

    The small and medium-sized enterprise (SME) sector has not traditionally been a priority concern for most competition agencies globally, for the trite reason that small enterprises generally do not possess market power and, therefore, cannot exercise it to distort competition. Only in the narrowest of markets, or where the small enterprises combine with other enterprises to engage in collaborative anti-competitive acts (usually through the agency of a trade association) (Këllezi et al. 2014), do small enterprises register on a competition agency's “radar” screen.

    Small enterprises are more often considered to be the victims of the aggressive use of market power. Upstream sellers with market power (input suppliers), or downstream distributors who have monopsony power or who control access to the ultimate customers (for example, supermarkets), are often seen as more likely targets of antitrust enforcement than SMEs. Moreover small retail enterprises may be required to enter into vertical arrangements with manufacturers or wholesalers that might be disadvantageous to them.

    However, as mentioned above, it is usually through hard-core cartel-like practices on price, quantities, or market division (often coordinated by a trade association or through bid-rigging agreements) that the SME sector is likely to receive the attention of antitrust agencies.

    In China, due to its particular history and political economy since 1949, the private SME sector was negligible until the reform and opening process began in 1978. Since that time, however, there has been an explosion in the SME sector, and the nation has seen the creation of millions of small businesses.

  • Foreword

  • Edited by Michael T. Schaper, Cassey Lee
  • Book:
    Competition Law, Regulation and SMEs in the Asia-Pacific
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    05 August 2017
    Print publication:
    27 July 2016, pp ix-x

  • Summary

    In many Asia-Pacific economies, competition law and regulation has been in operation for decades, setting the rules of the game for business. Typically the law covers the behaviours of dominant firms (i.e. vertical arrangements) and anti-competitive practices in markets (i.e. horizontal arrangements). But while such regulation is designed as a general framework for firm behaviour, those frameworks have not always kept pace with modern developments.

    Competition law was traditionally seen as something to guide the behaviour of large or dominant firms. But the role of Asia-Pacific Economic Cooperation (APEC) small and medium-sized enterprises (SMEs) is changing as they become more connected to the international economy. Electronic commerce and global supply chains are encouraging them to become more globalized. New technologies are acting as disruptive forces to existing markets, and international supply chains are altering the traditional nature of vertical arrangements.

    These changing realities have implications for modern competition law and regulation. Regulatory authorities need to understand the new roles of SMEs, and communicate their legal obligations.

    Policymakers need to design systems that encourage harmonized or similar commercial standards across borders, and there needs to be common views about how to enforce behaviours across borders with appropriate cross-border judicial resolutions. Public and private dispute resolution systems need to be accessible to SMEs.

    My own experience in competition law in the 1990s was that competition laws were not particularly well designed for SMEs, and that SMEs were not particularly well informed about them. It is very pleasing to see so much progress since then, as this book spells out.

    Congratulations to the ISEAS – Yusof Ishak Institute and the authors for drawing our attention to these issues. This book and the seminar that it is based on are important steps in remedying the gaps in knowledge and policy in the Asia-Pacific.

  • Foreword

  • William T. Tow
  • Book:
    Bipolarity and the Future of the Security Order in East Asia
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    09 March 2019
    Print publication:
    22 July 2016, pp v-vi

  • Summary

    The economic, political, strategic and cultural dynamism in Southeast Asia has gained added relevance in recent years with the spectacular rise of giant economies in East and South Asia. This has drawn greater attention to the region and to the enhanced role it now plays in international relations and global economics.

    The sustained effort made by Southeast Asian nations since 1967 towards a peaceful and gradual integration of their economies has had indubitable success, and perhaps as a consequence of this, most of these countries are undergoing deep political and social changes domestically and are constructing innovative solutions to meet new international challenges. Big Power tensions continue to be played out in the neighbourhood despite the tradition of neutrality exercised by the Association of Southeast Asian Nations (ASEAN).

    The Trends in Southeast Asia series acts as a platform for serious analyses by selected authors who are experts in their fields. It is aimed at encouraging policy makers and scholars to contemplate the diversity and dynamism of this exciting region.

  • Bipolarity and the Future of the Security Order in East Asia

  • William T. Tow
  • Book:
    Bipolarity and the Future of the Security Order in East Asia
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    09 March 2019
    Print publication:
    22 July 2016, pp 1-33

  • Summary

    Not long after the Cold War, Aaron Friedberg, a prominent American representative of the realist outlook on international security, argued that a “new multipolar sub-system” was beginning to emerge in East Asia after the Cold War, making that region “ripe for rivalry”. Among other impediments to regional stability, he argued that the Association of Southeast Asian Nations (ASEAN) was no more than a “loose collection of the region's less powerful states” with no real legacy of cultural identity or institutional collaboration. Friedberg concluded that, unlike in Europe, the type of institutionalism ASEAN designed to mitigate Asian tensions comprised “a very thin gruel indeed”. This relatively dour outlook was contested at the time, not only within ASEAN but also by those who credited that organization as representing a more promising trend in Asian stability and order-building.

    The ASEAN Regional Forum (ARF) convened its inaugural meeting in July 1994 as an extension of the ten ASEAN members’ annual dialogue with ten external powers, including those pan-regional “great powers” nominally recognized as shaping Asia's balance of power: the United States (U.S.), the People's Republic of China (PRC), Japan, and India.

    ASEAN's initiation of the ARF constituted an effort to diversify rather than completely negate the U.S. postwar bilateral alliance network. The latter had long dominated Asia-Pacific security politics but Washington was gradually realizing the value of supporting new multilateral security initiatives as an effective supplement to its bilateral alliances. The ARF embodied, soon after it was created, an effort to impose a distinct ‘Asia-Pacific Way’ as the preferred avenue for pursuing overall regional-order building, as Amitav Acharya noted. He further observed that Southeast Asia's cultivation of pan-Asian regionalist discourses in the 1950s — with their emphasis on sovereign inviolability and their rejection of formal NATO-like regional collective defence arrangements — was a uniquely Southeast Asian sub-regional pathway for shaping Asian security politics. Northeast Asia — constrained by great power geopolitics — could not replicate this approach. Over time, and for their own diverse reasons, the region's great powers gradually came to accept the principle of “ASEAN centrality” for underpinning Southeast Asian security.

    More than twenty years after the ARF's founding, the ASEAN centrality approach as the best means for pursuing regional order-building is being seriously questioned. Realist critics have reiterated Friedberg's original assertion that growing strategic competition emanating from an increasingly multipolar Asia-Pacific security environment and especially

  • Bipolarity and the Future of the Security Order in East Asia

  • William T. Tow
  • Book:
    Bipolarity and the Future of the Security Order in East Asia
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    09 March 2019
    Print publication:
    22 July 2016, pp vii-viii

  • Summary

    EXECUTIVE SUMMARY

  • • ASEAN is in danger of becoming marginalized as East Asian security becomes increasingly shaped by such volatile flashpoints as a nuclear North Korea and a South China Sea increasingly dominated by quarrels over sovereignty and maritime security.

  • • Accordingly, the notion of “ASEAN centrality” is now being seriously challenged and is unlikely to prevail against the growing bipolar security environment shaped by China and the United States.

  • • ASEAN and other Asia-Pacific states could gravitate toward one of five alternative order-building scenarios: (i) A Sino-American condominium that defines and accepts each other's geopolitical sphere of influence; (ii) The replacement or substantial revision of the United States’ bilateral alliance system with the expansion of multilateral norms and instrumentalities; (iii) The gradual predominance of an “Asia for Asians” concept led by China but endorsed by a substantial number of Southeast Asian states; (iv) Effective balancing and hedging by smaller states and “middle powers”, leading to eventual great power acceptance of a regional power equilibrium; (v) An intensification of regional “community building” via an amorphous but wide-ranging series of economic, ideological and strategic compromises to make war unthinkable and to strengthen regional interdependence.

  • • However, none of these five scenarios is likely to predominate in a literal sense. Instead, the “realist” explanation for understanding security in the region is the most accurate forecast for understanding an East Asian security environment that is becoming increasingly disorderly.

  • • ASEAN can still play a constructive — if not central — role in shaping East Asia's strategic environment by working with China and the United States to strengthen confidence-building in regional security politics and to encourage their respect for strategic constraint.

  • Foreword

  • Ahmad Fauzi Abdul Hamid
  • Book:
    The Extensive Salafization of Malaysian Islam
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    09 March 2019
    Print publication:
    13 July 2016, pp v-vi

  • Summary

    The economic, political, strategic and cultural dynamism in Southeast Asia has gained added relevance in recent years with the spectacular rise of giant economies in East and South Asia. This has drawn greater attention to the region and to the enhanced role it now plays in international relations and global economics.

    The sustained effort made by Southeast Asian nations since 1967 towards a peaceful and gradual integration of their economies has had indubitable success, and perhaps as a consequence of this, most of these countries are undergoing deep political and social changes domestically and are constructing innovative solutions to meet new international challenges. Big Power tensions continue to be played out in the neighbourhood despite the tradition of neutrality exercised by the Association of Southeast Asian Nations (ASEAN).

    The Trends in Southeast Asia series acts as a platform for serious analyses by selected authors who are experts in their fields. It is aimed at encouraging policy makers and scholars to contemplate the diversity and dynamism of this exciting region.

  • The Extensive Salafization of Malaysian Islam

  • Ahmad Fauzi Abdul Hamid
  • Book:
    The Extensive Salafization of Malaysian Islam
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    09 March 2019
    Print publication:
    13 July 2016, pp vii-viii

  • Summary

    EXECUTIVE SUMMARY

  • • The form of Islam normatively understood and practised in Malaysia, i.e. Malaysian Islam, has undergone myriad changes since the 1970s as a result of gradual Salafization. Powered by Saudi Arabian largesse and buoyed by the advent of the Internet, this new wave of Salafization has eclipsed an earlier Salafi trend that spawned the Kaum Muda reformist movement.

  • • Recent surveys suggest that there has been a rise in the level of extremism among Muslims in Malaysia. While the majority is far from being enamoured by the Islamic State of Iraq and Syria (ISIS), the Wahhabi-Salafi doctrine that ISIS claims to represent in unadulterated form does appeal to many of them following the decades-long Salafization of Islam in the country. This tallies with media reports on increasing numbers of Malay-Muslim youth harbouring an attraction towards radical Islamist movements such as ISIS.

  • • Salafization, referring to a process of mindset and attitudinal transformation rather than the growth of Salafi nodes per se, is not restricted to individuals or groups identified as “Salafi”, but rather affects practically all levels of Malay-Muslim society, cutting across political parties, governmental institutions and non-state actors. It has resulted in Islamist, rather than Islamic, ideals increasingly defining the tenor of mainstream Islam in Malaysia, with worrying consequences for both intra-Muslim and inter-religious relations.

  • • Responses to the Wahhabi-Salafi onslaught from the Malay-Muslim ruling elite in Malaysia have been ambivalent, and have had weak counteracting effects on the Salafization process.

  • The Extensive Salafization of Malaysian Islam

  • Ahmad Fauzi Abdul Hamid
  • Book:
    The Extensive Salafization of Malaysian Islam
    Published by:
    ISEAS–Yusof Ishak Institute
    Published online:
    09 March 2019
    Print publication:
    13 July 2016, pp 1-41

  • Summary

    Several surveys conducted over the past few years by the U.S.-based Pew Research Centre show a growing appeal of Islamist extremism in Malaysia. While absolute numbers may still point to Malaysian Muslims being generally unattracted to radical notions of Islam, some figures pointing in the opposite direction appear staggeringly high when compared to similar figures for Indonesia, particularly since the general impression, in view of the greater number of terrorist attacks in Indonesia, is that Indonesian Islam is much more radical than Malaysian Islam.

    These figures have in fact been quoted by several commentators as a warning against the possibility of Malaysian Muslims gravitating towards Islamist violence as manifested by the likes of the Islamic State of Iraq and Syria (ISIS, also known as the Islamic State of Iraq and the Levant (ISIL), or simply the Islamic State (IS) or as Daesh, after its Arabic acronym) and Jemaah Islamiyah (JI) (cf. Raj 2015, Abuza 2016). Already hundreds of Malaysians are known to have joined Katibah Nusantara, the Malay-speaking chapter of ISIS in the Middle East (Chalk 2015, pp. 10–11, Muhammad Haziq and Jasminder 2016, Farrah Naz and Aliza 2016).

    Much of the statistics is surprising. For example, proportionately fewer Malaysian Muslims (8 per cent) express worry about Muslim extremist groups than do Indonesian Muslims (53 per cent); the former are concerned more, at 31 per cent, about Christian extremists. And at 18 per cent, the proportion of Malaysian Muslims approving suicide bombing as justifiable is more than double the comparable figure of their Indonesian co-religionists, which is at 7 per cent (Pew Research Center 2013a: 68–71).

    A later survey put Malaysian Muslims’ support for suicide bombing as often or sometimes justified at 27 per cent, as compared with the Indonesian figure of a mere 6 per cent (Pew Research Center 2013b). More Malaysian Muslims (11 per cent) also express a favourable view of ISIS than do Indonesian Muslims (4 per cent) (Poushter 2015). It is also telling that Malaysian Muslims greatly surpass their Indonesian counterparts in messianic fervour, with 62 per cent of the former in comparison to only 23 per cent of the latter expecting the redeemer Imam al-Mahdi's advent during their lifetime (Pew Research Center 2012, p. 65).

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