Violent extremism in Indonesia continued to be low-tech and low-casualty, but groups continued to proliferate from Sumatra to Sumbawa, and there seemed to be an inexhaustible supply of recruits. The typical terrorist suspect was not a mass killer with global ambitions; he was more likely to be one step up from a petty criminal whose efforts to make simple pipe bombs almost always failed. There were no women among the 66 arrested and 21 suspects killed during 2013. One attempted suicide bombing killed only the bomber. Guns were in high demand, used for fund-raising robberies and revenge attacks on police — terrorists managed to kill three officers, down from eight in 2012. While police continued to be the primary target, several plots were hatched, all unsuccessful, to avenge attacks on Muslims in Myanmar. Despite the generally low capacity of wouldbe terrorists, however, concerns were mounting that three factors could lead to new enthusiasm for jihad at home: anger over deaths of suspects in police operations; releases from prison of convicted extremists; and the return of Indonesian fighters from Syria.

Most of the Islamist violence during the year was attributable to two networks, the Mujahidin of Eastern Indonesia (Mujahidin Indonesia Timur, MIT), based in Poso, Central Sulawesi, and the Mujahidin of Western Indonesia (Mujahidin Indonesia Barat, MIB), based in greater Jakarta and West Java. Both were alliances that included splinter groups of Darul Islam, the venerable sixty-five-year-old Islamic insurgency, and defectors from JAT, but the two were not formally linked. At year's end, MIT was still alive, if besieged; MIB had been largely crushed. The once-feared Jemaah Islamiyah, which since 2007 had disengaged from violence in Indonesia, was reburnishing its reputation as a jihadi organization through its channels to Syrian Islamist rebels.

In addition to Islamist groups, a tiny but growing anarchist movement with international links launched a number of arson attacks across the country from Jakarta to Aceh to South Kalimantan. The media paid no attention, much to the chagrin of those involved.

Mujahidin of Eastern Indonesia

MIT, led by Santoso alias Abu Wardah, a former member of JI's affiliate in Poso, grew out of a JAT military cell in Central Sulawesi that was formed in 2010 in the aftermath of the break-up by police of a militant training camp in Aceh.

During the last fourteen years (1999–2013), budgetary authority for spending a significant portion of the national revenue for activities to be carried out by the local apparatus of Indonesian national ministries has been delegated to sub-provincial governments and parliaments, that is town municipalities and county districts, known as kabupaten. At the moment, the core amount is provided through the General Allocation Fund (DAU) which is set at least 26 per cent of Net Domestic Revenue. Regions with major natural resources that bring in foreign revenue also receive a percentage of those revenues, depending on the particular natural resource. There is also a provision for the special allocation of additional funds. This policy direction was also later strengthened by the introduction of direct elections for town mayors and county heads (bupati) as well as governors of provinces. The policies embodied in this new delegation of power, legalized by a series of laws after 2000, are known as the desentralisasi policies.

There can be little doubt that among Indonesian political scientists, and the few Indonesia specialists outside the country, desentralisasi has been one of the most written-about topics in recent scholarly literature on Indonesian politics. There is a plethora of Indonesian honours, masters and doctoral theses on this topic. In realpolitik terms, desentralisasi in and of itself has not brought about major changes in Indonesian politics. The policy has not brought about a change in direction, in terms of either economic or social strategy nor changed — as yet — the underlying character, outlook and activity of those who wield power in Indonesia or their subjects. However, as I have stated earlier, there is also no doubt that the coming of desentralisasi is a resultof two colossal changes in both the political and economic format of Indonesia: the end of authoritarian rule and of Suhartoist crony capitalism.

Reformasi and the Absence of Desentralisasi

Perhaps the best starting point for an analysis of the phenomenon of desentralisasi in Indonesia over the last decade is to note that advocacy for decentralization was completely absent within the movement against authoritarian rule that developed in the 1990s. While I will argue that in its current form, it is a result of the end of authoritarian rule, it was not a result intended by the forces that composed the pro-democracy movement.

Introduction

An assessment of political and security developments in Southeast Asia over the last year will reveal three trends that, while not necessarily new, nevertheless highlight the continued challenges faced by both individual Southeast Asian states as well as ASEAN, the Association of Southeast Asian Nations. First, ASEAN faced the challenge of re-establishing regional cohesion, a task that had taken on greater import in the wake of the debacle of 2012 when the inability of members to arrive at a consensus for a joint communiqué at the conclusion of its July foreign ministers’ meeting cast doubt on the organization's unity. Second, the year also saw a deepening of engagement with major powers. In part a continuation of an ongoing trend of regional diplomacy, there was nevertheless also a clear security underlay to this engagement, stemming from heightened concern over increased Chinese assertiveness in the broader East Asian region. A significant aspect of this trend was the deepening engagement with Japan on the part of several Southeast Asian states. Third, the imperative of domestic stability came to the fore of regional affairs as several Southeast Asian regimes came under pressure for political change both at the ballot box and in the street. Predictably, the preoccupation of several governments on domestic affairs had a negating effect on foreign policy and regionalism.

ASEAN: Sustaining Centrality and Rebuilding Cohesion

The year 2013 saw Brunei assume chairmanship of ASEAN under trying circumstances. Its predecessor, Cambodia, had been in the spotlight for its failure to shepherd the Association to a unified position on matters pertaining to territorial claims in the South China Sea the previous year, leading to a strain on the organization's motto of “One Vision, One Identity, One Community”. During its time as ASEAN Chair, Cambodia was assessed by many observers to have fallen under the influence of China, a significant investor in Cambodia and one of the claimants to contested waters and territories in the South China Sea. This resulted in the ASEAN Chair stymieing discussions on the South China Sea at various regional fora during the year, including the infamous 9 July 2012 ASEAN Ministerial Meeting in Phnom Penh when the Association failed to find consensus for a joint communiqué for the first time in its history.

Raw Wounds

Thailand in 2013 once again faced the ghosts of its recent and turbulent past. As Prime Minister Yingluck Shinawatra sought to further consolidate the political control her Pheua Thai Party achieved at the 2011 election, struggles to determine the distribution of power among the country's social, political and economic elite intensified. In the long-running battle to define the future of Thailand — and the role of popular electoral mandates in the country's governance — the aggressive tactics of anti-government forces broke an uneasy and unstable stalemate. It was the mobilization of large-scale anti-government protests in November and December 2013 that left the country in a difficult position at year's end. The aim of toppling the “Thaksin regime” remained unfulfilled while many of the most powerful forces in the kingdom have made clear their discomfort with the deposed Prime Minister's continued popularity and perceived political meddling. Thaksin's use of the Pheua Thai government as a vehicle for his ambitions to return to Thailand and undo the damage of the 2006 coup remain central to a power struggle that will soon enter its second decade. As the end of King Bhumibol Adulyadej's reign looms, the expectations of further violence and instability are sparking new flashpoints. At the same time significant violence continues in the southern-most provinces, with no signs of immediate diminution.

Uprising Redux

The catalyst for the anti-government uprising in Bangkok towards the end of 2013 may well have been accidental, or at least the result of clumsy miscalculation. The Pheua Thai government introduced legislation to grant amnesties to a wide variety of figures implicated in the past decade's political turbulence with the knowledge that, as before, Thaksin's inclusion among those to be exonerated would be contentious. This deal was the product of some negotiation between the government and other powerful forces, particularly the army. It would have significant advantages for Thaksin but others would similarly benefit. However, a number of different groups, including “yellow” and “red” street forces, made the determination, for their own reasons, that the amnesty was inappropriate. In November 2013, The Economistreported that “[t]he government's latest attempt to get Thaksin Shinawatra back has united almost everyone against it”.

Introduction

The year 2013 marked the mid-way point in the tenure of the Vietnam Communist Party (VCP) Central Committee elected at the eleventh national party congress in 2011. During the year the Central Committee began to assert its prerogative as the party's executive authority between national party congresses. The Central Committee's new political assertiveness has been at the expense of party Secretary General Nguyen Phu Trong and his supporters in the Politburo. The Central Committee's assertiveness also strengthened the power and influence of Prime Minister Nguyen Tan Dung.

Outside party circles, as events in 2013 illustrated, Prime Minister Dung was widely criticized for his handling of the economy. The Prime Minister and his Cabinet did poorly in the first vote of confidence conducted by the National Assembly.

During the year political activists, bloggers and journalists became more vocal in criticizing corruption and the party's efforts to entrench further its role as “the force leading state and society” in the state Constitution. The state responded to these challenges by stepping up repression against its critics.

In contrast, Vietnam's external relations went from strength to strength. Prime Minister Nguyen Tan Dung played a high-profile role internationally delivering major addresses to the Shangri-La Dialogue in Singapore and the United Nations General Assembly in New York. Senior Vietnamese leaders paid visits to all the major powers and Vietnam hosted official visits by government leaders from Japan, South Korea, China and Russia. Vietnam also forged strategic partnerships with five countries. Vietnam increased the number of strategic partnerships from eight to thirteen.

Domestic Politics

This sub-section reviews major domestic developments under six headings: anticorruption campaign, seventh Central Committee plenum, National Assembly vote of confidence, eighth Central Committee plenum, political repression, and constitutional amendments and leadership changes.

Anti-Corruption Campaign

In 2011, during his first term in office as prime minister, Nguyen Tan Dung set up the Central Steering Committee for Anti-corruption and appointed himself as chair. The Steering Committee made little progress. Early in his second term, Prime Minister Dung was removed as chair and replaced by party Secretary General Trong. In January 2013, Trong appointed Nguyen Ba Thanh, secretary of the Da Nang municipal party committee, to head the Central Commission on Internal Affairs.

This extended essay was written in late 2013 and early 2014, before the April 2014 election campaigns. One of the first lines written was: “There is a certain Jokowimania afoot”. The March announcement by Megawati Sukarnoputri that the Indonesian Democratic Party of Struggle (PDI-P) would nominate Joko Widodo as its presidential candidate has accentuated this. Media coverage — including the social media — has narrowed down the formal political struggle for governmental power as one between Widodo, the kabupaten (district) capitalist, and Prabowo Subianto, representing the billionaire Djojohadikusumo family. At a certain level, it is a fight between kabupaten capitalism and crony capitalism, although there is no doubt much more behind this.

The emergence of a kabupaten capitalist as a presidential candidate, without doubt, has been possible as a direct result of the last ten years of decentralization, especially providing guaranteed funds over which local government can exercise some autonomy, giving local mayors and bupati greater room to nuance and market the implementation of policies as their own (when in fact such policies originated with international financial institutions working through the national government). The institution of direct elections for mayors and bupati has accentuated this trend. In decentralized Indonesia, Widodo has gone from head of the local businessmen's association, to mayor of a medium-sized town in Java, to governor of the province of Jakarta, and now, to being a presidential candidate of the Republic of Indonesia. He has done this through the PDI-P in a period when the PDI-P no longer has an obvious presence of big capitalists and former cronies in its ranks. The PDI-P is more perceived as being associated with other “rising stars” in regional politics, such as the mayor of Surabaya, “Ibu Risma” (Tri Rismaharini) and the governor of Central Java, Ganjar Pranowo.

Writing this preface before the 9 April 2014 elections, it is tempting to predict results. While it is likely that Widodo's candidacy will increase the vote for the PDI-P, at least a little, it remains the case that it is unlikely that there will be any one party or serious coalition of parties, which will be able to claim that it represents a majority of the population.

The peace process in the southern Philippines is making progress after a banner year in 2012, in which the Moro Islamic Liberation Front (MILF) and the government signed a peace pact a decade-and-a-half in the making. Known as the framework agreement, it will grant real autonomy to Muslim-majority Mindanao and the adjacent Sulu archipelago, and put the MILF in charge of a new region, the Bangsamoro, for an interim period. President Benigno Aquino III has set the stage for the MILF's transformation from an antagonist of the Philippine state into a mainstream political actor.

In 2013, the MILF and the government slogged through yet more negotiations necessary to flesh out further details of the framework agreement. But the real drama lay elsewhere. Into the limelight stepped a descendant of the sultan of Sulu whose followers invaded eastern Malaysia with tragic consequences in February and March; an alleged new terrorist alliance whom the government blamed for a sharp uptick in violence in central Mindanao in July and August; and a faction of the Moro National Liberation Front (MNLF), the MILF's predecessor, which fought a weeks-long battle with the military in September.

When the discontents and opportunists circling the peace process acted provocatively, the MILF and the government found themselves working together to shield the framework agreement from the fallout. Through these incidents, this chapter examines the moderating effect of the peace process on the MILF, and the potential implications for the southern Philippines in the years ahead.

The 2012 Framework Agreement and the Peace Process

Shortly after signing the framework agreement in a lavish ceremony in the presidential palace in Manila on 15 October 2012, the MILF held a press conference at its headquarters, Camp Darapanan, a forty-five minute drive outside Cotabato City, in central Mindanao. The camp sits on the edge of the Liguasan marsh, a watery expanse home to communities sympathetic to the MILF. The chairman, Al-Haj Murad Ebrahim, appeared dressed in a dark suit with a striped tie and made brief remarks from behind a lectern to the journalists perched on plastic chairs set in neat rows before him. Murad was exuding a statesman-like aura that day. The atmosphere was in stark contrast to Murad's last encounter with the press at Camp Darapanan.

The post-Suharto political economy, i.e., post-cronyism, has facilitated a decentralization (introduced during a period of technocratic interregnum under President Habibie and supported by international donor forces) that is set in an anational, political framework. This reflects the absence of any strong national, class-based, political agency that can assert its agenda nationally — whatever that might be. A weakened layer of ex-crony conglomerate capital, no longer protected by the military-backed centralistic Suharto regime, lost its ability to assert a clear national agenda over the plethora of small and medium capitalists operating at a local level, who themselves do not operate on a national scale or have a clear national development perspective. This has accentuated the dysfunctional aspects of decentralization, both in terms of capture of local government and corruption as well as inability to deal with the unevenness/heterogeneity/factor immobility of the archipelago. This weakness also makes it easier for international capital to assert its interests in the formulation of national economic policy. The inadequacy — or in some cases, the complete inability to formulate solutions or identify potential “solutional” trends in the available literature — reflects the absence of a focus on the question of social class and political agency. I hope this essay shows that an analysis which searches for trends that relate to such an agency will yield more explanatory and interesting results and point to the kind of further research agenda that may be useful.

According to the estimates of the International Monetary Fund (IMF), the growth momentum of the Southeast Asian economies moderated to around 5.2 per cent in 2013 compared to 5.4 per cent in 2012. Private consumption was strong and investment, albeit weak, benefited from increased public infrastructure outlays. Subdued exports due to significant external headwinds continue to hold back economic growth in the region. Among the Southeast Asian economies, the Philippines is estimated to have maintained an impressive growth rate of 6.8 per cent in 2013, while Indonesia, Malaysia and Thailand were the laggards with growth rates of 5.3 per cent, 4.7 per cent and 3.1 per cent respectively. Myanmar gained investors’ confidence all through 2013 following progress in domestic reforms, and Cambodia and Laos rode high on increased construction activities.

As each of the Southeast Asian nations have some distinct economic characteristics, aggregate figures may mask the diversity in performances and challenges being faced at country levels. This chapter gives a simultaneous account of macroeconomic performance and policy challenges at the regional and country level.

Mixed Global Trends Affecting the Region

In 2013, growth slowdown in two of the biggest economies of Asia — China and India — hampered the GDP growth of the smaller economies of Southeast Asia (see Figure 1). In 2013, growth in China was estimated to hover around 7.6 per cent and in India around 3.8 per cent. Such lukewarm growth rates are a significant change from the rates of the past decade, when China averaged 10.2 per cent growth and India 7.2 per cent. The slower growth rate in China is attributed to government policy to enter into a more sustainable growth path, while deceleration in India is on the back of poor infrastructure and lack of structural reforms.

The growth slowdown in China adds noticeably to the already softening regional export trends. This is because China, in addition to being a global economic heavyweight also rose as a global trading power. China has become increasingly important for Southeast Asian countries, both as an exporter and importer. The share of exports to China in the region's total exports rose from 5.1 per cent in 2002 to 9.3 per cent in 2012 (see Table 1). As a share of GDP, exports to China increased from 3.4 per cent to 5.9 per cent over the same period.

The 2013 ASEAN Security Outlook states that ASEAN is facing “increasingly complex geopolitical challenges…” in Southeast Asia. This review examines the interplay of these challenges and how ASEAN and its Member States have dealt with them in order to maintain ASEAN centrality.

ASEAN Chairmanship of Brunei Darussalam

The ASEAN Chairmanship rotates among Member States in English alphabetical order. After Vietnam in 2010, normally it would have been the turn of Brunei Darussalam to chair ASEAN in 2011. Indonesia had asked and Brunei Darussalam as well as the rest in ASEAN agreed to let Indonesia take the turn of Brunei Darussalam in 2011. Indonesia's main reason was that if it were to wait for its normal turn, which would come in 2013 after Cambodia in 2012, it would be saddled with double responsibilities of chairing ASEAN and APEC in the same year in 2013.

Myanmar had also swapped its turn in chairing ASEAN in 2016 with Laos in 2014. Myanmar wanted to secure the opportunity for the current elected government to showcase itself in the international community before its term ends in 2015. Laos had no problem waiting until 2016, and the rest in ASEAN was supportive, especially in the light of the positive political changes in Myanmar under the leadership of President Thein Sein.

Although Brunei Darussalam is the smallest Member State (with only about 400,000 of population), the sultanate has well-trained English-speaking bureaucrats to run the ASEAN Chairmanship efficiently. From the start, Brunei Darussalam kept a low profile as the ASEAN Chairman. Its emphasis was on getting ASEAN back to basics, working hard to implement what Member States had already agreed upon, putting the ASEAN house in order through quiet diplomacy, and avoiding rekindling old problems like those in the South China Sea.

Brunei Darussalam showed some concern about the steadily rising number of ASEAN meetings. ASEAN now has more than thirty ministerial bodies, which are served by over 100 committees of senior officials, task forces, working groups, etc. In 2012 the number of ASEAN meetings at all levels exceeded 1,000 for the first time in the forty-five years’ history of the organization.

One of the first changes introduced by Brunei Darussalam was to forego convening an informal meeting of ASEAN Foreign Ministers in early 2013.

Introduction

With two years of sustained liberalization under its belt, the Myanmar government in 2013 continued to recalibrate its economy and society. Domestically, the economy accelerated, crucial legislation was passed, media restrictions were relaxed, and negotiations for an unprecedented, nationwide ceasefire accord gained valuable traction. Myanmar's hosting of the World Economic Forum's East Asian Summit, the signing of an international atomic energy agreement, and its new role as chair of ASEAN demonstrated the government's commitment to expanding its foreign relations. By December, approved cumulative foreign direct investment rose to US$44 billion dollars, a strong indication of international confidence in the country's future.

Yet, the momentum of the previous two years was somewhat constrained by deep social cleavages that emerged earlier in the year. Sectarian violence, ethnic tensions, and labour disputes were significant concerns for Thein Sein's administration in 2013, thereby dampening some of the euphoria and enthusiasm associated with the reform process. The government's expansion into rural areas of the country — where local authorities had traditionally exercised more autonomy — was met, at times, with predictable resistance. Local interests and priorities came into conflict with national ones over land use, resource extraction and the extent of government authority. Back in Naypyidaw, noticeable fissures between the executive and legislative branches began to appear as potential candidates for the 2015 presidential elections sparred conspicuously over a range of issues.

President Thein Sein began the year by highlighting the need to develop “mutual trust” between the government and the people, a message that his administration had been stating publically since taking office. Speaking to the nation via radio, still the best technology of communication available, the short speech referred to the political reforms of the previous two years and described a new framework for economic and social reforms. His speech was more than good politics. By associating socio-economic relief efforts with the political reconciliation process, Thein Sein hoped to connect with communities who lacked confidence in the state's institutions or who had yet to feel the effects of the recent reforms. Naypyidaw's expanding role in local political and economic matters was a key dynamic for 2013 and a continuity of interaction that has characterized the history of Myanmar state-society relations.

Southeast Asia in 2013 remained resilient in the face of economic, political, and security challenges. It maintained an estimated economic growth rate of 5.2 per cent, slightly below the 5.4 per cent achieved in 2012, despite slower growth in China and India and only nascent recoveries in Europe and the United States, which did not do much to change subdued external demand for Southeast Asian economies. There was considerable diversity in performance and challenges faced at the country level, as Sanchita Basu Das elaborates in her chapter “Southeast Asian Economies: Waiting for a Rebound” in this volume. Economic growth is expected to pick up in 2014.

Geopolitics drew more attention. The East China Sea tensions escalated and Sino-Japanese relations continued to deteriorate. On the South China Sea, there were some signs of flexibility on the part of China on multilateral discussions with ASEAN on a Code of Conduct but otherwise the situation remained unchanged. Major power engagements with Southeast Asia increased further during the year because of the perceived importance of the region to their interests, which was, on balance, a plus for the region and for ASEAN. In domestic politics, the situation in Thailand caused particular unease.

This Introduction attempts to bring together some of the salient themes in this volume, while recognizing that they are not exhaustive and will not do justice to all the authors. The four themes selected are: enhanced major power engagement; ASEAN developments; political stability and change; and internal violence manifested in insurgencies and terrorism.

Enhanced Major Power Engagement

The increased tempo of major power engagement with Southeast Asia and ASEAN is highlighted both by Joseph Liow/Rajni Gamage and Malcom Cook in their respective chapters. China's engagement continued at a high level, including visits by President Xi Jinping and Prime Minister Li Keqiang to several countries, with offers to boost investments, trade, and connectivity. The United States continued to build on its strategy of “re-balance” to the region militarily, diplomatically and economically, even though President Obama had to miss a cluster of high level meetings including the US-ASEAN Summit and the East Asian Summit (EAS) because of pressing domestic concerns.

It is my pleasure to present the forty-first edition of Southeast Asian Affairs. This annual review has become an important source of information and analysis for all those interested in developments in Southeast Asia.

Despite the slow-down in China and India and sluggish growth in the developed countries, Southeast Asia still achieved a 5.4 per cent estimated economic growth rate in 2013. By the end of the year, there was optimism that growth in 2014 will pick up as external demand from the advanced economies recovers. The year 2013 was also marked by yet another of the major natural disasters that parts of the region are prone to, this time supertyphoon Haiyan which struck central Philippines and caused major losses to life and property.

The political scene in Southeast Asia presented a mixed picture. The stalemate and uncertainty in Thai politics persisted. Troubling signs appeared of Buddhist-Muslim polarization in Myanmar. However on the whole there were no big surprises, except perhaps for the electoral setback experienced by the ruling party in Cambodia. On the broader geopolitical canvas, Sino-Japanese relations were even more difficult and tense than the year before, posing a challenge to ASEAN and other powers that have been working to facilitate harmonious relations between the major players for the sake of regional stability. Tensions in the South China Sea remained contained but were by no means dissipated. Southeast Asian countries’ hopes for progress in negotiating a Code of Conduct with China did not materialize.

I would like to thank the authors and the editor as well as others who have helped to make this publication possible. Needless to say, the chapters in the volume contain a wide variety of opinions and perspectives which do not necessarily reflect the views of the Institute.