Saturday, March 28, 2015
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Author: Alice Beban France, Cornell University

While the majority of Cambodians live off the land, access is precarious. Recently the Cambodian government has been making some encouraging reforms, but troubling signs remain.

Rapid, unregulated development with unclear property rights has left an estimated 770,000 people affected by land disputes. Smallholder property claims are pitted against companies with Economic Land Concessions (ELCs), long-term leases that allow for the development of land for industrial agricultural purposes. Development programs awarding private communal land titles have so far done little to stem the tide of disputes.

New land disputes continued to erupt in 2014 and there have already been reports of new urban eviction threats in 2015. The central problem is the opacity of the land sector. It is unclear whether or not the recent ELC cancellations are meaningful because there is almost no public data available for state land boundaries, titled areas, or agribusiness investment.

In a pre-election land titling push in 2012–14, thousands of university students were sent around the country to survey and title land to more than 600,000 land owners occupying state land. The government has promised that titling will continue in 2015 under the auspices of the Department of Land Management. In Cambodia’s chaotic post-conflict scramble for resources, land titling has long been held out by the government and donors as key to quelling disputes and spurring investment.

But, a growing number of reports link Cambodia’s land titling campaign with land grabbing and deforestation, particularly in indigenous communities. An alarming number of people whose land was surveyed by the student volunteers are still waiting for their land title. Seventy-four per cent of people whose land was surveyed between 2012–14 are still waiting for at least one title according to an upcoming nationwide report from the NGO forum. People whose land was passed over and left untitled by the student measurement teams are worried.

In the wake of the titling campaign, some people have sold land under pressure from powerful urbanites buying up large swathes of land. These deals fly under the radar of government and CSO monitoring. In Ratanakiri, northeast Cambodia, land sales have continued inside an indigenous community awarded Communal Land Title. The logic of promoting the collateral potential of land title for farm investment is also questionable in a country with high amounts of rural indebtedness and a high-risk banking sector.

A lot more than land title is needed to provide land security in Cambodia. Titles, community training and stakeholder meetings provide nicely packaged quantitative data for donor agencies but the real outcome measurement remains: are people still losing land?

Some innovative approaches to tackling this question have emerged, including exposing the roles of consumers and investors tied to increased commercial land pressure. The Blood Sugar Campaign, targeting European and US sugar buyers, has encouraged the European Union to launch an investigation. A new report exposes the illegal timber trade satisfying Chinese demand for luxury timber and the International Finance Corporation (IFC, part of the World Bank) is currently investigating a complaint about an IFC funded rubber company filed by sixteen upland communities.

Community activists have become more closely linked nationally and regionally. Donors are realising the need to move beyond brief technical fixes to more long-term support for legal and community empowerment. Discourses linking land rights with food security and the need for dignified farming livelihoods are also growing.

But activism is limited by ongoing intimidation and harassment including the imprisonment of Boeung Kak lake activists for blocking traffic, frequent reports of harassment, attempts to buy off community activists and NGOs, and the recent refusal to extend the visa of a foreign activist. The National Assembly is quietly debating draft media laws that will restrict freedom of speech, agricultural laws that may restrict farmers’ crop choices and includes punishments for those who do not abide by the rules. There is also a controversial NGO Law requiring greater government oversight for NGOs. These regressive legal maneuvers may affect the ability of communities and NGOs to fight for their land.

Cambodia’s experience with the student-led land titling campaign shows that ‘big man rule’ can accomplish a massive amount in a short time. When Hun Sen speaks, people listen. Cambodia’s ruling regime is built on land as a political tool. Land is distributed to elites to bring them into the orbit of the prime minister and facilitate the private accumulation of national resources. Land title is given to poor people as part of pre-election campaigning.

The challenge for the government now is to use this big man power to create long-lasting change rather than short-term political gain. This requires more than gifting land titles or confiscating under-performing or already logged land concessions. Fundamental changes to social policy are needed that see land not as a political tool but as a livelihood.

Alice Beban France is a PhD Candidate with the Department of Development Sociology at Cornell University funded by an award from Fulbright-Hays.  

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Time to sow the seeds of land reform in Cambodia

Authors: Murray Hiebert and Nigel Cory, CSIS

Malaysian opposition leader Anwar Ibrahim’s seven-year fight against sodomy charges ended on 10 February 2015. His five-year prison sentence was widely seen as a victory for his political opponents in using the law to silence him (again). The opposition coalition will struggle to overcome the loss of its leader. But Prime Minister Najib Razak is expected to face minimal international pressure on the verdict.

Anwar’s case was seen by many as an attempt by the ruling United Malays National Organisation (UMNO) party, which has been in power since Malaysia’s independence in 1957, to eliminate Anwar from the political landscape. In 2013, the opposition coalition came close to achieving Malaysia’s first change of government. It won the popular vote in the national elections, but fell short of gaining a majority of seats in the highly gerrymandered electoral system. Anwar was seen as the lynchpin to the opposition’s success.

There were accusations of political interference in Anwar’s sodomy trial from the start. Reports stated that Najib met the man Anwar allegedly sodomised two days before the act reportedly took place in 2008. Anwar’s lawyers raised questions early in the trial about whether the DNA samples had been properly maintained and had possibly been contaminated. They also expressed concern that the major evidence presented against Anwar was the alleged victim’s statements which were never corroborated by other sources.

In January 2012, a High Court judge agreed that the DNA had been compromised and acquitted Anwar. But the Court of Appeals overturned this ruling in March 2014. The judges argued that the High Court had made a mistake in doubting the integrity of the DNA and reinstated the original guilty verdict and a five-year prison sentence. At the time, the United States and other countries condemned the verdict saying that it showed Malaysia’s judiciary was neither independent nor fair.

The opposition coalition is at a critical juncture as it prepares to elect new leaders. The problem is that there is no clear successor. The next generation significantly lacks Anwar’s charisma and political skill. In the meantime, the opposition leadership has fallen to Anwar’s oldest daughter Nurul Izzah Anwar. The 34-year-old, who has twice served as a member of parliament, represents the next generation in political leadership, but there are many doubts about her ability to fill Anwar’s shoes.

The opposition’s task of rebuilding is made harder with the death of Nik Aziz Nik Mat in February 2015. Nik Aziz was the head of the opposition Pan-Malaysian Islamic (PAS) party, one of the component parties of the opposition coalition. Anwar and Nik Aziz were essential in keeping the disparate members of the coalition together and on message. The contest to replace Nik Aziz in his own party will be crucial to determining PAS’s future in the opposition. There is a faction within PAS that wants to break away to join UMNO because of their shared Islamic values and policies.

Najib has not gained much politically from Anwar’s removal as his main opponents are within his own party. Former prime minister Mahathir Mohamad has mounted an increasingly bitter fight to undermine and remove Najib.

Although the domestic struggles are obvious, the foreign policy implications for Malaysia are less clear. Malaysia is safe from criticism from its neighbours in ASEAN as the group adheres to the principle of non-interference in the affairs of other countries. The problem for Najib is that the international spotlight will focus on Malaysia in 2015 as it serves as the chair of ASEAN and the host of the East Asia Summit (EAS).

The United States’ cautious reaction to Anwar’s jailing stands in contrast to its condemnation of Malaysia following his first imprisonment. The US appears to have decided that it cannot afford disengagement and high-handed rhetoric because it has considerable interests attached to the 2015 ASEAN summit and EAS meeting. Malaysia also plays a critical role in the Trans-Pacific Partnership trade negotiations, which could be completed this year.

The US administration appears to remain committed to building its comprehensive partnership with Malaysia. It has maintained its invitation for Najib to visit Washington ahead of the EAS. Protests about Anwar’s imprisonment will likely arise during Najib’s visit, but the White House seems likely to downplay those concerns due to its broader interests in Malaysia and the Southeast Asian region.

Murray Hiebert is a senior fellow and deputy director of the Sumitro Chair for Southeast Asia Studies at CSIS.

Nigel Cory is a researcher with the Sumitro Chair for Southeast Asia Studies at CSIS and previously served as an Australian diplomat in Malaysia.

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How will the jailing of Anwar Ibrahim impact Malaysia’s foreign relations?

Author: Peter Drysdale, East Asia Forum

This week is the fourth anniversary of Japan’s disastrous Tohoku earthquake and the massive tidal wave that fractured the ageing Fukushima nuclear power facilities, leading to a shutdown of Japan’s 48 nuclear power plants on top of the six decommissioned at Fukushima. Finally rated at a magnitude of 9.0, the earthquake was the most powerful recorded in Japan and the third most powerful in the world since modern measurements have been taken in 1900. Over 18,000 people perished or were lost, most of them in the tsunami that followed the quake. The tsunami reached heights of over 40 metres and washed through three to four storey buildings as it swept cars, trucks, boats and planes away on its path inland. The tsunami inundated the Fukushima nuclear facility causing level 7 meltdowns at three reactors and requiring evacuations within a radius of up to 20 kilometres. The earthquake shifted Honshu, Japan’s main island, 2.4 metres to the east towards the Americas and its force moved the earth on its axis by an estimated 10–25 centimetres.

Japanese Prime Minister Shinzo Abe bows to Emperor Akihito and Empress Michiko in front of the altar for the victims of the 11 March 2011 earthquake and tsunami at the national memorial service in Tokyo, Japan, 11 March 2014. (Photo: AAP).

These are the terrifyingly impressive physical effects of the Tohoku tragedy. The way in which the impact effects of a disaster on this scale were managed is a testimony to the resilience and capacity of the Japanese people — not only their remarkable capacity to face natural calamity stoically but also the social capital, skills and organisational know-how they brought to dealing with it on a grand scale and with great efficiency. Casualties would have been much higher if systems had not been put in place or if warning systems had not been heeded in coping with the event. The national government, Self Defense Forces and civil society swung into action expeditiously. Both civilian and emergency services displayed remarkable effectiveness in coping with the immediate disaster. International assistance was forthcoming and accepted rapidly. Though thousands of displaced residents still live in temporary accommodation and the fallout from Fukushima nuclear power facility breakdown is still far from under control, Japan’s immediate response to its worst natural disaster in modern times is widely and properly seen as witness to the strength of Japan’s national character.

Yet Tohoku exposed disturbing flaws in Japan’s social and institutional structures that have raised deep questions about trust in national governance and continue to drive national self-reflection.

How could the nuclear accident and meltdown at Fukushima have happened amid assurances of the safety of Japan’s large nuclear energy program?

The Japanese nuclear energy industry’s pre-disaster regulation system was constricted by what has been called the Galápagos syndrome — that is, it was allowed to evolve independently of regulatory best practices elsewhere in the world. Japan’s Nuclear Safety Commission even dismissed International Atomic Energy Agency (IAEA) recommendations in 2008 ‘claiming the current nuclear regulation system had been functioning effectively to ensure safety at an outstanding level, even by international standards’. But, the old regulatory agencies — the Nuclear and Industrial Safety Agency (NISA) and the Nuclear Safety Commission (NSC) — lacked teeth and their constitution was deeply conflicted. NISA was located within the Ministry of Economy, Trade and Industry (METI), involving a serious conflict of interest, as illustrated by METI’s plan, announced in 2010, to increase Japan’s energy self-sufficiency to 70 per cent by 2030, the vast bulk of this to be made up by nuclear. This would have represented a massive expansion above the roughly 30 per cent of Japan’s energy supplies, which were met by nuclear prior to 3/11. The utilities under regulation in turn were compromised by employing officials post first retirement (amakudari) in key jobs affecting regulatory compliance and the upgrading of standards. The risks in Japan’s nuclear program were under-estimated and a genuinely independent risk-assessment and regulatory agency was absent. As Yoichi Funabashi and Kei Kitazawa point out the ‘culture of secrecy and technical loftiness within the Japanese nuclear community…, allowing the industry to minimize the disclosure of detailed information about its operation, and to develop its own safety assurance practices’ did not measure up to global standards.

Japanese politics was dominated by energy, as Llewelyn Hughes points out in the wake of the disaster of 11 March 2011. The Japanese government’s decision ‘to shut-down all the remaining 48 nuclear units introduced real concerns of brownouts, previously unthinkable in Japan’s gold-plated power system. The parliament commissioned the first independent inquiry in Japan’s post war history, and gave it the task of finding out what happened, and how a similar event can be avoided’.

In 2012, a new regulatory agency, the Nuclear Regulation Authority (NRA) was established under the umbrella of the Ministry of the Environment to replace NISA and NSC. It has adopted newer stricter safety standards. It has approved the re-opening of four nuclear power units (Kyushu Electric’s Sendai units No. 1 and 2 and Kansai Electric’s Takahama units No. 3 and 4). But there remains a major question of public trust in the Japanese government’s applying the lessons of Fukushima in its rush to re-open Japan’s closed nuclear power plants.

In this week’s lead essay, Tatsujiro Suzuki calls this loss of trust, which has not been sufficiently resolved even four years after the accident, ‘the most serious challenge that nuclear policymakers and the nuclear industry now face in Japan’. As Suzuki reports, just two weeks ago, the Tokyo Electric Power Company (TEPCO) issued a press release saying that the source of high radiation levels in one of its drains (leading into the sea) came from a puddle of rainwater that had accumulated on the rooftop of Unit 2 at the Fukushima Daiichi Nuclear Power Station… This particular incident was worse than usual because TEPCO was aware of the high level of radioactivity in the drain but failed to notify either the Nuclear Regulation Authority or the local government’. There is a climate of self-censorship in the media (that even impinged upon the one year anniversary address of the Emperor) that gives priority to not causing a panic among the public over research to establish how bad the Fukushima fallout is in all its knock-on effects and making information publicly accessible. There are also concerns about talk of bringing NRA under the direct control of the Cabinet Office, contrary to best regulatory practice and international advice, after a three-year review of the authority.

These are big stakes issues. As Simon Avenell also writes this week, the experts at Tokyo University reckon that there is a 70 per cent chance that a magnitude 7.0 or higher quake will hit Tokyo by 2016 and a 98 per cent chance it will hit in the next 30 years. So, in the face of these probable events, being confident about the management and regulation of Japan’s nuclear power facilities is no mere technical matter.

Peter Drysdale is Editor of the East Asia Forum.

See the original post here:
Rebuilding trust after the Fukushima disaster

Author: Aurelia George Mulgan, UNSW Canberra

Australia’s farmers, particularly beef producers, may have celebrated too early when the Japan–Australia Economic Partnership Agreement (JAEPA) took effect on 15 January 2015. The deal may be gazumped by another that is taking shape between Japan and the United States in the Trans-Pacific Partnership (TPP) negotiations. Some elements of the proposed US–Japan agreement are reminiscent of the kind of bilateralism — or US-specific agricultural market concessions — that characterised Japan’s trade policy in earlier decades. Those deals significantly disadvantaged Australian agricultural exporters.

Japan has a long history of offering inducements to the US government in order to settle difficult multilateral trade negotiations. In December 1993, at the 11th hour of the General Agreement on Tariffs and Trade negotiations, the Japanese government agreed to place tariffs on all remaining agricultural import restrictions and commit to a minimum access arrangement on rice imports. The deal was worked out principally in bilateral negotiations between the United States and Japan. It included ‘special treatment’ on rice that, since 2000, has virtually guaranteed market access for 360,000 tons of US rice annually. This accounts for roughly 47 per cent of Japan’s 770,000-ton minimum access tariff-free quota for rice imports.

Australia also gained country-specific concessions from JAEPA. This included preferential access for a large volume of pork and exemption from Japan’s ‘gate price safeguard’, as well as a country-specific quota for chicken meat. Australia also won duty-free quotas for natural cheese and other cheese products, as well as for ice cream and yoghurt.

But there is supposed to be a big difference between a bilateral economic partnership agreement and the TPP. Despite the TPP’s aspirations to be both a multilateral and a free trade agreement, in reality it looks like being neither. Negotiations have been proceeding on two fronts simultaneously: among all 12 participating countries and bilaterally between particular countries, principally Japan and the United States.

This dual-track trade diplomacy will inevitably result in bilateral agreements between particular countries with carve outs and country-specific concessions. The TPP will not observe one of the fundamental principles of the multilateral trading system: most-favoured-nation (MFN) treatment. The TPP participants will not only discriminate against countries that are not parties to the agreement but also countries that are. This means that any US-specific concessions on agriculture will not apply to Australia. And yet extending MFN status is how you make originally bilateral agreements into multilateral ones.

The deal that is shaping up between the United States and Japan on agricultural market access is likely to contain several provisions that will affect Australia.

Rice, wheat and sugar will be exempt from tariff reduction. But in return for maintaining these tariffs, Japan is examining a 50,000-ton special import quota for American rice in addition to the current 770,000-ton tariff-free minimum access quota.

Tariffs on American beef will be reduced from 38.5 per cent to 9 per cent over 10 or more years. There will be a 20–30 per cent reduction in tariffs on cheaper pork, from the current tariffs of 482 yen (US$4.03) per kilogram to around 100 yen (US$0.83) per kilogram. The 4.3 per cent tariff on high-end pork will also be removed and tariff quotas will be set for some dairy products with low level tariffs. Finally, the terms of the deal will not be applied to other countries.

Offers along these lines were made by TPP Minister Akira Amari to the United States in the TPP meeting last November. They were turned down. But now more stars appear to be aligning in the domestic politics of both the United States and Japan.

Since last November, both countries have significantly adjusted their positions. The US side has changed its stance to allow a certain level of tariffs to remain on key ‘sensitive’ agricultural items. At the same time, Japan has been prepared to accept a greater reduction in tariffs on the condition that a relatively low trigger level can be established for safeguard measures that will kick in if there are surges in imports. It is currently predicted that a TPP ministerial meeting will be held before the end of February when the Japan–US talks will be settled.

Australia has a limited defence against these measures. Its beef exporters, for example, will be paying a 30.5 per cent tariff on frozen beef and 32.5 per cent on fresh beef. These are expected to fall to 23.5 per cent in 15 years and 19.5 per cent in 18 years respectively.

JAEPA does include a provision for a review that can be triggered immediately if Japan provides one of Australia’s competitors with a better deal on beef. This provision aims to provide Australia with equivalent treatment, but it is not necessarily guaranteed and would be subject to bilateral negotiations at the time. Naturally, it would also have important implications for Japan’s relations with the United States, Australia’s main beef competitor in the Japanese market.

On rice, Australia can request that Japan allocate more minimum access rice for them as well. But, given Japanese farmers’ sensitivities on rice market issues, the outcome is by no means certain either. Japanese farmers are against the increases in minimum access rice even from the United States.

For Japan, the special minimum access deal put in place to settle agricultural market negotiations with the United States more than 20 years ago still generates large deficits in the special account budget of the Ministry of Agriculture, Forestry and Fisheries. Between 2002 and fiscal 2013, it accumulated a deficit of 277.8 billion yen (US$2.3 billion). This fiscal burden would only increase if the United States were granted another 50,000-ton special rice quota.

It seems that ‘getting in first’ — as Australia did with the JAEPA — may have only conferred a temporary advantage in Australia’s export trade in beef and other agricultural products with Japan.

Aurelia George Mulgan is Professor at the University of New South Wales, Canberra. She is co-editor with Masayoshi Honma of The Political Economy of Japanese Trade Policy (PalgraveMacmillan forthcoming 2015) and is grateful for Professor Honma’s assistance in writing this article.

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What the TPP portends for Japan–Australia agricultural trade

Author: Fu-Kuo Liu, National Chengchi University

The results of Taiwan’s local elections, held in November, came as a big surprise to many not only in Taiwan. The ruling Kuomingtang (KMT) was defeated by an unprecedented margin. The results were a sharp reversal from those of the 2012 presidential election, won by the KMT. In the municipal mayoral elections, the KMT came away with only one out of six municipalities and five out of sixteen municipal cities and counties. The results have significantly changed Taiwan’s political landscape. But they should not be considered a referendum on cross-strait relations.

Taiwanese President Ma Ying-jeou speaking at a campaign rally before Taiwan's local elections. President Ma resigned from his position as chairman of the Kuomingtang soon after the election results were confirmed, leaving the party in chaos. (Photo: AAP).

While most surveys conducted prior to the election predicted a likely loss for the KMT, none envisioned a defeat on such a scale. Many are wondering why the ruling government was so badly crushed. Importantly, the outcome breaks the pattern of traditional party strongholds at the local level in Taiwan. It may directly impact the 2016 presidential election and result in a possible change of course in cross-strait relations, which have been flourishing.

President Ma Ying-jeou resigned from his position as chairman of the KMT soon after the election results were confirmed, leaving the party in chaos. Ma’s unpopularity plagued the party during the campaign. His administration has been seen as indecisive, capricious, ineffective, weak, lacking momentum, and short-sighted. Two important groups of swinging voters determined the election: frustrated KMT supporters who chose not to vote and uncertain young voters who turned out in unprecedented numbers.

The Sunflower Movement, which began as a student demonstration in March 2014, clearly reflected the public’s concerns about the future of the nation and the future course of cross-strait relations. The government mishandled the occupation of the Legislative Yuan by students for over a month last year. Worse still, the government has not actively responded to students’ requests for a transparent and constitutional procedure for legislative scrutiny of cross-strait deals. The legislature’s decision not to ratify the Cross-Strait Service Trade Agreement (CSSTA) between China and Taiwan has been interpreted as a clear sign of rising anti-China sentiment in Taiwan society.

The crux of the political impasse, however, is the rivalry between President Ma and the speaker of the Legislative Yuan, Wang Jin-pyng, who is also a vice chairman of the KMT. Although the KMT has held a majority of seats for six years, most of Ma’s policy efforts have been crippled in the legislature. Ma’s tendency to circumvent legislative scrutiny on cross-strait deals has meant that legislators, dissatisfied with Ma’s methods, have boycotted proposed legislation. KMT supporters are frustrated with the ineffective and weak governance of Ma and his party. This election was definitely a vote of no confidence in the Ma administration.

Taiwan’s political landscape is always sensitive to cross-strait relations and regional security. While the decision of swinging voters to opt for the DPP won’t necessarily be permanent, it does add to the unpredictability of the future of cross-strait relations.

Following the KMT’s defeat, Beijing has tried hard to figure out what exactly is happening in Taiwan and is questioning whether it should adjust its present course, characterised by a relatively benign cross-strait policy. Similarly, the US government was surprised to learn that Ma has become such an unpopular figure among voters but has declined to make any clear comments on the future of cross-strait relations. It also stresses that the US continues to encourage both sides to improve relations.

All this has led some commentators to suggest that the vote was essentially a referendum on cross-strait relations. But this is mistaken. The elections were held at the local level and cross-strait issues were not touched upon at all throughout the campaign. Even the DPP quickly made clear that it would be wrong to interpret the election as a referendum on the KMT’s mainland policy. The election results should not be interpreted either as a failure of China’s or the KMT’s cross-strait policy.

Some worry about the increasing tendency towards anti-China sentiments rising up from Taiwan’s grassroots. It is true that the political changes in motion may add more unpredictability to cross-strait relations. In order to convince voters that it deserves their support, the DPP has to commit to finding common ground with China in the next few months. This is by far the greatest challenge to the independence-oriented party and its leadership.

The KMT’s defeat signaled an end to Ma’s exclusionist way of conducting cross-strait relations. But while the loss was a serious blow to the KMT and to the morale of its government, it does not mean that victory is out of reach in the 2016 general and presidential elections. The KMT will soon elect a new chairman to lead the party out of the woods. The big question is not how Beijing and Taipei should move forward quickly but how Taiwan’s leaders can convince its people to support further cross-strait economic development.

Fu-Kuo Liu is a professor at the Institute of International Relations, National Chengchi University, Taiwan.

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Taiwan’s shifting political landscape

Author: Peter McCawley, ANU

An embarrassing fact about ASEAN governments that is generally avoided in public policy discussions is that the capacity of most ASEAN states is quite limited — much more limited than they, and the international community, generally wish to admit. Until it is recognised that state capacity is limited, it will be hard to understand the implications for public policy.

A construction worker builds iron reinforcement column at a high rise office building construction site in Indonesia's capital Jakarta on April 22, 2013. Asia-Pacific growth will edge up this year on the back of a recovery in the US and emerging nations, a United Nations study said April 18, 2013, but it urged governments to take bolder steps to lift millions out of poverty. (Photo: AFP)

It is not easy to measure the capacity of a state. Essentially, the concept is closely related to the power it can exercise. Power, in turn, can be measured and exercised in various ways — including politically, coercively through the military and police, legally, and administratively.

Levels of taxation and expenditure are two important measures of the capacity of a state. The level of taxation is a good measure because it reflects the power of a state to collect revenues from citizens to provide public goods. From another point of view, expenditures are a better measure because the size of expenditures indicates the ability of a state to respond to the expectations of citizens and to provide the goods and services that citizens expect from their governments.

Surprisingly, statistics on levels of taxation and expenditure in ASEAN are somewhat opaque. The key data are not readily accessible. Having comparable figures on the fiscal capacity of ASEAN states more widely available would be a useful first.

Figures for government spending across ASEAN throw up some startling facts. As a benchmark, the average level of government spending in Australia and New Zealand in 2012 was around US$16,800 per person. By comparison, the average level of government spending across ASEAN in the same year was around US$730.

The figures for government spending across ASEAN naturally vary from country to country. In oil-rich Brunei the government spent over US$15,000 per person in 2012. Government spending in Indonesia, the largest country in ASEAN, was slightly below the average, at about US$600 per person. And in Myanmar, the fiscal capacity of government was very limited indeed, with annual spending at around US$40 per person.

These extraordinary differences in per capita government spending may be interpreted in different ways. One view is that the different levels are not surprising because they reflect, naturally, the different levels of income per capita in the different countries. While this is doubtless true, it is also true that the expectations of ordinary citizens across ASEAN in a globalising world are increasingly influenced by international comparisons. While state capacity is limited, expectations of the state are not.

Another view is that international comparisons of this kind need to be adjusted for purchasing power parity (PPP) differences between countries. But while it is true that notable price differences exist between countries, these differences often reflect large disparities in the quality of goods and services. And PPP measurements often fail to allow for the fact that the prices of many goods on which governments spend their money are set in international markets. The world price of building infrastructure (quality-adjusted) is often quite similar in different countries.

This picture of the limited economic capacity of governments in most ASEAN countries is worrying. It suggests that it would be useful to undertake the painful and controversial task of reassessing strategies of state management and of public service delivery. What are the implications for policy and for the delivery of public programs? More broadly, what should the state’s role be when resources are so sharply constrained?

Three main steps seem to be needed. First, there needs to be discussion of the generally-accepted paradigm of a strong economic state which, among other things, promises to protect the populace from the ravages of uncaring market forces. In fact, market forces are often dominant in poorly-regulated informal economies across ASEAN. Governments frequently try to impose regulation on these markets but generally fail.

A second step, therefore, would be to recognise the problems that arise when there are excessive expectations about the role that the state can play. Clearly ASEAN states cannot provide the range of services that are available in the OECD welfare states. It would be best if the challenges of designing governments to live with very limited budgets were more widely discussed.

It is hard to avoid the impression that, at least in the low-spending ASEAN states, many branches of government are badly over-stretched. Too often political leaders over-promise and under-deliver. Put simply, governments are trying to do far too much with far too little. The result is a vicious circle: citizens become disillusioned with governments and see little reason for paying taxes or even user charges for government services, thus exacerbating the problem of limited resources for the public sector.

A third step towards reconsidering the role of the state is to define the role of government carefully. To be effective, this would need to go well beyond the dozens of programs of public management reform which have been outlined for ASEAN governments in recent years. The measures that are needed to match the functions of governments more closely would be controversial. Governments should identify strict economies in the range of services they provide, improve revenue collection procedures at all main levels of government (including by state-owned enterprises through higher user charges), and systematically simplify administrative services. They should also review the scope of their activities to design an approach where governments ‘steer, not row’ and strengthen their ability to regulate the outsourced provision of services to communities.

Reconsidering the role of the state is needed not as a response to Western pro-market ideology but because, quite simply, states in the region are trying to do too much with too little. And both government failure and market failure are the result. Government failure often exacerbates market failure because overstretched governments cannot perform even basic regulatory functions properly. A pragmatic and determined approach to reform is needed to strengthen the operations of both governments and markets in the region.

Peter McCawley is a Visiting Fellow at the Crawford School of Public Policy at The Australian National University.

This article appeared in the most recent edition of the East Asia Forum Quarterly, ‘The state and economic enterprise’.

Continued here:
Strengthening the state and market in ASEAN