Southeast Asia's Dry Spell

Posted on Wednesday, March 31, 2010 by Prashanth Parameswaran



Southeast Asia is currently weathering its worst drought in decades. The dry spell, which could stretch far into 2011, threatens to curb vital industries, drive up food prices, and trigger water shortages.

Analysts attribute the drought to the resurgence of the El Nino-Southern Oscillation (ENSO), a recurring climate pattern that has raised ocean temperatures across the Pacific by up to a decade high of two degrees.

The current dry spell will have dire consequences for Southeast Asia. The Mekong River is at its lowest level in 50 years, and could deprive millions of water necessary for irrigation and drinking. Major agricultural producers are also projected take a hit. Malaysia and Indonesia, two of the world’s largest producers of palm oil, could see their projected industry targets slashed by 5 to 10 percent. Thailand and Vietnam, together responsible for half of world rice exports, have indicated they may scale down their crop production estimates by one million tons.

The crisis will likely energize future efforts to formulate climate change mitigation strategies. Southeast Asian countries may eye innovative ways to reduce their reliance on global agricultural supplies and improve energy efficiency. Genetically-modified rice grains are already being bred in Indonesia and Vietnam, and could be in production in 2012. Meanwhile, the Philippines, whose hydroelectric power plants are paralyzed by water shortages, is considering using some of the $250 million in climate change-related aid it will receive from multilateral organizations over the next few years to promote solar and other renewable energy sources.

The dry spell could also catalyze more regional efforts. Within the next few years, experts from 11 Asian countries (6 from Southeast Asia) are expected to provide publicly available estimates of ENSO impacts and identify coping strategies for affected nations under the Southeast Asian Ministers of Education Organization. If successful, that could produce the first wave of standardized climate change forecasts for affected countries.

Whether these piecemeal efforts will be enough, however, remains to be seen as temperatures are predicted to rise 4.8 degrees Celsius by 2100. The Asian Development Bank projects that the total cost of climate change could be as much as 6.7% of GDP in major Southeast Asian countries by that year, with regional rice yields declining by about 50 percent on average from 2020. Billions of dollars will be required for the region to adapt to climate change in the next few decades, along with bold policy shifts such as stemming illegal logging and deforestation and integrating systems for water resource management, which have seen limited progress thus far.

If these broader-based measures are not undertaken soon, drought will be only one of Southeast Asia’s long list of climate-related problems in the future.

Low Fertility and the Future of South Korea

Posted on Friday, March 26, 2010 by Matthew Hallex

South Korea is a graying nation. Like many of its neighbors in East Asia, South Korea has experienced low fertility rates, leading to an aging population. In 2009 the South Korean birthrate hit a four year low following a progressive decline in average number of children per woman from nearly six in 1960 to 1.3 in 2007. While the government has enacted policies to encourage South Koreans to start families; the nation’s low fertility could threaten the health of the economy and its national security.

A low birthrate and an aging population are likely to take a toll on the South Korean economy. Older workers command higher wages but are less productive than younger employees. Over time the labor force will shrink, while the number of pensioners will increase. In 2007 there were seven workers in South Korea for each pensioner; this will decline to 4.5 workers per pensioner in 2020 and to only 1.4 workers by 2050. The erosion of the tax base and the growing strain on governmental entitlements coupled with lower productivity will likely slow South Korean economic growth.

South Korea’s low fertility rate has security implications as well. The falling birthrate substantially reduces South Korea’s military aged manpower. This consideration contributed to the scheduled reduction of the Army from 560,000 personnel in 2004 to 371,000 in 2020. While advanced weapons systems and other force multipliers should allow the military to continue defend South Korea, other missions such as offense or post-conflict stabilization and peacekeeping have greater manpower requirements.

The South Korean government has instituted new policies in an attempt to drive up the flagging birth rate. The “Saeromaji Plan 2010” announced in 2006 provided subsidies for daycare, tax and housing incentives for large families and expanded maternity and childcare leave. Despite these policies, South Korea can be a family unfriendly place. South Korea’s business culture still demands long hours which make it difficult for women to raise a family while continuing their careers. This presents difficult financial choices as the cost of parenthood balloons with education expenses such as private tutoring, which is considered necessary for university entrance.

Pro-natalist government policy is unlikely to make a change in South Korea’s declining birthrate without significant changes in the country’s work culture and attitude towards women in the workplace. As South Korea’s labor force shrinks and dependence ratio rises, declining productivity and increasing government spending will be detrimental to economic growth. While advanced weapons systems will likely ensure that the South Korean army will still be a formidable fighting force, its shrinking ranks may restrict its ability to undertake post conflict stabilization tasks - something that may be necessary should the communist regime in North Korea collapse.

Under the Radar News 3.26.10

Posted on by Matthew Hallex

A weekly compilation of underreported developments in Asia

  • The World Health Organization has invited Taiwan to attend the 2010 World Health Assembly. This will be the second time that Taiwan attends as an observer, under the name “Chinese Taipei”.

  • Indonesia plans to deploy an additional four battalions of troops to Papua to provide additional security against Papuan separatists. The Indonesian military has been accused of systemic abuses of human rights in Papua.

  • Guangdong in southern China will be making its provincial budget public this year. Publicizing the budget, which has in the past been regarded as a state secret, is a step forward in efforts to increase government transparency and fight corruption.

  • The UN country head in Cambodia has been threatened with expulsion after he called for a longer period for public review of a proposed anti-corruption law. Critics of the proposed law believe that it would be used by the government to silence critics.

  • Plans to allow permanent foreign residents of Japan to vote in local elections have meet with staunch opposition. Critics of the plan have suggested that extending voting rights to foreign residents would weaken Japan ’s position in territorial disputes with China and South Korea.

  • Russia plans to assist Vietnam with construction of a new naval base to house Vietnam ’s fleet of Russian-built submarines. Vietnam has also requested assistance in construction of a naval repair facility that may service visiting Russian ships.

  • The Burmese government has ordered civil servants to leave the Kokang region, inhabited by the ethnic-Chinese Wa, in the north of Burma . This move has heightened fears that the conflict between the central government and Wa separatists may restart.

  • Controversy has erupted in Taiwan over the Taiwanese Air Force’s failure to intercept a Russian bomber that strayed into Taiwanese airspace in January.
  • Under the Radar News 3.19.10

    Posted on Friday, March 19, 2010 by Matthew Hallex

    A weekly compilation of underreported developments in Asia

  • The World Health Organization has invited Taiwan to attend the 2010 World Health Assembly. This will be the second time that Taiwan attends as an observer, under the name “Chinese Taipei”.

  • Indonesia plans to deploy an additional four battalions of troops to Papua to provide additional security against Papuan separatists. The Indonesian military has been accused of systemic abuses of human rights in Papua.

  • Guangdong in southern China will be making its provincial budget public this year. Publicizing the budget, which has in the past been regarded as a state secret, is a step forward in efforts to increase government transparency and fight corruption.

  • The UN country head in Cambodia has been threatened with expulsion after he called for a longer period for public review of a proposed anti-corruption law. Critics of the proposed law believe that it would be used by the government to silence critics.

  • Plans to allow permanent foreign residents of Japan to vote in local elections have meet with staunch opposition. Critics of the plan have suggested that extending voting rights to foreign residents would weaken Japan’s position in territorial disputes with China and South Korea.

  • Russia plans to assist Vietnam with construction of a new naval base to house Vietnam’s fleet of Russian-built submarines. Vietnam has also requested assistance in construction of a naval repair facility that may service visiting Russian ships.

  • The Burmese government has ordered civil servants to leave the Kokang region, inhabited by the ethnic-Chinese Wa, in the north of Burma. This move has heightened fears that the conflict between the central government and Wa separatists may restart.

  • Controversy has erupted in Taiwan over the Taiwanese Air Force’s failure to intercept a Russian bomber that strayed into Taiwanese airspace in January.
  • Trade Talks Lay Foundation For Free Trade Across the Pacific

    Posted on Thursday, March 18, 2010 by Matthew Hallex

    This week marked the first round of negotiations on the Trans-Pacific Partnership (TPP) in Melbourne, Australia. The TPP began in 2006 as an agreement between Singapore, New Zealand, Brunei and Chile to eliminate trade barriers by 2015. They have been joined by negotiators from the United States, Australia, Peru and Vietnam for talks that could expand the Partnership and break down the barriers restricting access to their larger markets. While originally founded as an agreement between small states, the Partnership is envisioned as the foundation of a larger Asia Pacific trading bloc that could one day include China, Japan and South Korea.

    The current round of negotiations is unlikely to have a major impact on international trade in the near future. The United States already has concluded free trade agreements with four of the Partnership nations and its volume of trade with the remaining three states; Vietnam, Brunei and New Zealand, is small. Lowering trade barriers, however, is important to small economies like New Zealand whose key trade competitors, Australia and Chile, already enjoy unfettered access to the US market.

    While the TPP may not lead to a significant short term growth in trade, it does reflect longer term regional concerns. The United States fears being left out of economic integration in the Asia Pacific region. An East Asia Free Trade Area excluding the United States would cost the US economy $25 billion in exports to the region. For the US, the TPP could serve as the foundation for a larger trade bloc that would not only integrate the growing economies of Asia but also ensure continued US access to Asian markets. Observers note the symbolic significance of the TPP as the momentum of other U.S. – Asia trade agreements have languished in recent years. As the Obama administration and USTR express confidence about Congressional approval of the TPP, and the move could reinvigorate the U.S. – Asia trade agenda.

    The TPP also supports the complementary trade and economic interests across the Pacific. Exports from Latin America feed the growing demand for commodities in Asia, while Asian manufacturers look at Latin American consumers as an untapped market. As economic interaction between Latin America and Asia continues to grow, both sides will benefit from engaging in a formal trade group.

    While the Trans-Pacific Partnership may not make a significant impact on global trade in the immediate future it may be the first step to a more integrated Pacific region that bridges Asia and the Americas. Lower trade barriers in the region will fuel further economic growth in Asia and reaching across the Pacific to include the United States and Latin America promises to extend such economic opportunity to reach a far larger audience.

    Under the Radar News 3.11.10

    Posted on Friday, March 12, 2010 by Matthew Hallex

    A weekly compilation of underreported developments in Asia

  • North Korea’s foreign trade shrank for the first time since 1998 due to UN sanctions to following its nuclear test last May. The drop in trade along with last year’s unsuccessful currency reform is likely to put great pressure on the fragile North Korean economy.

  • Foreign workers rallied in Tokyo demanding greater job security and employment benefits. While Japan has very restrictive immigration laws its shrinking labor force makes it increasingly dependent on workers from abroad.

  • Australia and Indonesia have reached an agreement to combat human trafficking. This agreement comes as part of an Australian-Indonesian effort to improve military and counterterrorism cooperation and to fight transnational crime.

  • North Korea has established a new army division to manage its growing force of intermediate-range ballistic missiles. These missiles could target American bases in Okinawa and Guam in the case of a conflict on the Korean peninsula.

  • Officials in China have announced plans for a high speed rail network extending from China to Europe and Southeast Asia. Should the ambitious plan be realized it would reduce China’s dependence on sea lanes that it lacks the naval forces to effectively patrol and protect.

  • Burma has deployed troops to its border with Thailand and China in anticipation of conflict with ethnic rebels. This is the first time the government has deployed troops to the area since the 1995 cease fire agreement with ethnic Mon rebels.

  • Thailand denied a visa to the sister of the Dalai Lama who was planning on visiting a Tibetan cultural festival there. The Thai government expressed concerns that her speech would criticize China’s role in Tibet and damage Sino-Thai relations.
  • Asia’s new strategic energy resource?

    Posted on Thursday, March 11, 2010 by Tiffany Ma



    As countries in the Asia region grapple with meeting future energy demands, many are looking to a new energy frontier of natural gas – predominantly methane – frozen under the sea and in permafrost regions.

    Japan, South Korea and China are emerging as global leaders in developing considerable regional reserves into a potential energy source. The Nankai Trough south of Japan, contains an estimated 50 trillion cubic meters of methane, a significant amount in light of government projections that 1.1 trillion cubic meters could satisfy Japan’s natural gas consumption for 14 years. Similarly, South Korea has discovered significant deposits off its eastern coast, estimated to be up to 600 million tons, which could satisfy demands for up to 30 years. In China, the recently uncovered reserves in the Qinghai-Tibet plateau have been hailed as comparable to the discovery of the Daqing oilfield as the reserve could satisfy consumption for up to 90 years. Although there are significant geological and environmental challenges in harvesting the gas, all three countries anticipate commercial extraction within the next 5 to 10 years.

    If a significant portion of the methane can be captured and utilized as energy, this resource has the potential to alter the regional energy landscape. For the worlds’ top two natural gas consumers Japan and South Korea, it can alleviate dependence from imports, particularly shipments through the Malacca Strait chokepoint. Their existing natural gas infrastructure and high demand volumes will allow them to maximize the benefits from investing in new natural gas resources in their neighborhood.

    While China’s energy outlook is expected to be dominated by coal and oil, natural gas holds an increasing share in the country’s energy mix. In 2008, China became a net importer of natural gas and demand is projected to triple by 2030. It has also been investing in import facilities and improving its domestic gas network. For China, the newly discovered methane reserves can offset reliance upon shipped imports, although it is unlikely to replace imports from the recently unveiled Central Asia pipeline due to geopolitical considerations. In the long term, the domestic methane reserves also represent an opportunity to fulfill China’s national goal of capitalizing on indigenous energy resources.

    Although championed as the “gas resource of the future”, frozen methane also presents a climate change hazard. If released into the atmosphere, methane is 25 times more potent than carbon dioxide as a greenhouse gas. Even when used as energy, carbon dioxide remains the end product of methane processing. Whether as an energy savior or climate disaster, frozen methane is poised to change the region’s global energy and climate change outlook.

    Under the Radar News 3.5.2010

    Posted on Friday, March 5, 2010 by Matthew Hallex

    A weekly compilation of underreported developments in Asia

  • China has announced plans to amend its election laws to increase the number of deputies representing rural areas in the National People's Congress. Currently each rural deputy represents four times as many people as his or her urban counterparts.

  • South Korea has grounded most of its F-5 fighter fleet after two aircraft crashed into a mountain during a training exercise. South Korea operates 170 F-5 fighters which originally entered service in the United States in the 1960s.

  • The Vatican has secretly appointed a new delegate to China. China and the Holy See have no official diplomatic relations due to tensions over the Vatican’s recognition of Taiwan as well as control over the appointment of bishops in China.

  • China has sent three million US dollars in aid to Chile following the massive earthquake which racked the South American country. China has been expanding its aid and development efforts in Latin America in an attempt to expand its trade and influence in the region.

  • Japan’s second plutonium fueled nuclear reactor entered operation in Ehime Prefecture. Reprocessing of spent nuclear fuel and reuse of plutonium in new reactors reduces the amount of nuclear waste produced by Japan’s nuclear power plants and reduces Japan’s dependence on foreign sources of uranium. Critics of reprocessing point out that it creates a supply of plutonium that could be used in a nuclear weapon.

  • Malaysian peace monitors have returned to the Southern Philippines in order to support peace efforts between the government of the Philippines and Moro Islamic Liberation Front (MILF.) The peace monitors were withdrawn in 2008 after MILF rebels broke the cease fire agreement that the two groups had reached in 2004.

  • The Singapore Navy issued a warning that terrorists may be planning attacks on oil tankers transiting the Malacca Straits. While international naval patrols have substantially reduced piracy in Southeast Asia, terrorism remains a significant concern.

  • China has passed a new National Defense Mobilization Law. This law outlines the process for mobilizing the PLA for war as well as dealing with natural disasters or civil strife.
  • China Taking the Lead in Global Shipbuilding

    Posted on Tuesday, March 2, 2010 by Matthew Hallex



    While the financial crisis has dampened international trade, the expansion of the Chinese economy and its growing demand for imported energy and commodities has driven a demand for shipping. China’s demand for oil is project to hit an all time high this year and this thirst for energy is projected to require the construction of 80 additional very large crude carriers (VLCC) by 2015. VLCCs are the largest oil tankers that can transit through the Malacca Strait from the Persian Gulf to East Asia and displace between 200,000 and 320,000 deadweight tons.

    Increasingly, global demand for merchant shipping, including oil tankers, is met by Chinese shipyards. In Asia, the industry is traditionally dominated by Korean and Japanese shipyards but the low labor and capital costs of Chinese yards have allowed China to surpass its neighbors. In 2009 China supplanted Korea as the world’s largest shipbuilder, producing almost 35% of the world’s total civilian shipping output. While the financial crisis had caused a decline in orders for new merchant ships a government stimulus allowed the state-owned China State Shipbuilding Corporation and the China Shipbuilding Industry Corporation, which dominate the shipbuilding sector in China, to increase their share of global production. Currently, Chinese firms produce mostly less complex bulk cargo carriers. However, increasing technological innovation and growth of human capital in China is allowing it to compete in more technologically advanced and value added sectors of the market including very large crude carriers and liquid natural gas tankers.

    The stimulus was aimed at shipbuilding not simply to generate employment but also to boost a strategic industry. Expansion of commercial shipyard capacity has also allowed for increased production of warships for the PLAN. The experience that China’s shipbuilders have gained producing increasingly large and complex civilian ships also build the experience with large hull production necessary for the production of large warships for the PLAN, such as the projected amphibious assault ships, large destroyers and potentially a future aircraft carrier, although such project would also require China to develop its indigenous electronics and armaments industries.

    China’s large fleet of civilian ships also serves a defense function. The PLAN has explored arming merchant vessels to provide fire support for amphibious attacks. Furthermore, there is a new initiative to standardize civilian cargo ships to meet military transportation needs which has strategic benefits in both peace and war time. Container vessels can also be converted to serve as platforms for the operation of helicopter, V/TOL aircraft and UAVs as demonstrated in the Falklands War. Finally, Civilian ships could also be used for mine laying, surveillance or troop transport in the event of conflict in the Taiwan Strait.

    Chinese dominance of the shipbuilding sector may not only displace foreign workers but also undermine a strategic industry in other nations faced with a need to modernize and expand their own navies.

    (Photo Credit: Shanghai Daily)

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