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Laos’ rapid economic growth path has so far avoided macroeconomic cliffs


Author: Buavanh Vilavong, Vientiane

Laos is one of the fastest growing economies in Southeast Asia. On average the country’s economy has grown by 7.5 per cent per year and trade by 17 per cent per year since 2000, reflecting the importance of trade as a key driver of its growth. While Laos is on its way to graduating from ‘least developed country’ (LDC) status, the nation still needs to overcome ongoing macroeconomic and structural challenges.

Laos’ Prime Minister Thongloun Sisoulith speaks at the plenary session of the World Economic Forum on ASEAN at the Convention Center in Hanoi, Vietnam, 12 September 2018 (Reuters/Kham).

In March 2018, the United Nations Economic and Social Council announced that Laos was eligible to graduate from LDC status for the first time. Laos’ gross national income per capita reached US$1996 in 2017, well above the graduation threshold of US$1230, and its human assets index reached 72.8 compared to the threshold of 66. Its economic vulnerability index reached 33.7, slightly higher than the threshold of 32 or less.

This means that Laos has passed the thresholds for per capita income and the human assets index. The economic vulnerability index, which measures the country’s resilience to economic shocks and instability, is arguably still to be met. But only two of the three criteria must be met to be eligible for graduation. If Laos can fulfil the criteria again in the 2021 review cycle, it will be formally removed from the list of LDCs by 2024.

Economic growth is expected to remain robust at 6.7 per cent when the official numbers are announced despite flooding-related disasters. Agriculture and industry are expected to expand by 2.5 per cent and 7.7 per cent, respectively. Manufacturing continues to grow, particularly within the Savannakhet, Vientiane and Champasak special economic zones. The services sector is set to grow by 7.6 per cent, up from 4.4 per cent in 2017.

Declining demand around the world is driving down the prices of commodities such as mineral ores and rubber, which are key income-generating exports for Laos. Still, there is optimism that Laos will succeed in its graduation goal. To that end, the government has set economic growth targets of 7.3 per cent in 2019 and up to 7.5 per cent in 2020.

Macroeconomic instability remains a worry due to growing public debt, revenue shortfalls, financial sector risks and limited buffers to shocks. In January 2017 the International Monetary Fund raised the country’s risk of external debt distress from moderate to high. An annual roundtable meeting with development partners in Vientiane in December 2018 called for the Lao government to put greater emphasis on achieving effective fiscal policy administration while implementing a comprehensive strategy for debt management.

To its credit, Laos is already taking steps to maintain macroeconomic stability. There will be fiscal consolidation, with the deficit expected to decrease to below 5 per cent of GDP in the 2018 numbers. The government strengthened public revenue administration and efficiency by introducing electronic tax payments, while adjusting current spending in the first half of 2018. Fiscal consolidation should slow down the accumulation of public debt, but that may not be enough to reverse the rising debt-to-GDP ratio.

Another challenge for Laos is a structural one. Laos is still mainly reliant on the production and export of natural resources, with minerals and electricity accounting for 30 per cent of GDP and 60 per cent of total exports. At the same time, the share of traditional exports such as timber, garments and agricultural produce is steadily declining. Three trading partners (China, Thailand and Vietnam) absorb 70 per cent of the total export share.

Because most of Laos’ export earnings are derived from resource-based products, the country must ensure its export-led growth is sustainable. That may be achieved by diversifying into non-resource activities. Export diversification may help Laos cushion itself from potential negative shocks associated with dependency on natural resource exploitation. It can also contribute to lessening economic vulnerability, which is one of the three criteria for LDC graduation.

Going forward, Laos should aim to weather its current macroeconomic challenge and improve the country’s business environment so that the private sector can thrive.

An immediate priority is to take bolder steps on fiscal consolidation and fiscal discipline. These should include improving tax administration and modernising fiscal revenue collection to reduce the budget deficit.

Public investment needs to be re-prioritised and scaled back, particularly in the hydropower sector given the growing importance of the resource sector in the economy. More importantly, achieving strong and robust economic growth in the long run will need vibrant private sector development. This includes addressing constraints to doing business, investing in human capital and improving transport infrastructure.

Buavanh Vilavong is the Deputy Director General of the Department of Industry and Commerce in Laos.

This article is part of an EAF special feature series on 2018 in review and the year ahead.

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India bides its time in the Indian Ocean


Author: Abhijit Singh, Observer Research Foundation

New Delhi’s strategic circles are abuzz with speculation of a defence infrastructure upgrade at India’s Andaman and Nicobar islands in the Bay of Bengal. According to media reports, the government is on the cusp of finalising a 10-year plan to create additional infrastructure for troops, warships, aircraft and drones on the islands. This follows news that the Indian navy has commissioned a third naval aviation base on the islands.

Indian Navy marine commandos demonstrate their skills during Navy Day celebrations in Mumbai, India, 4 December 2018 (Photo: Reuters/Francis Mascarenhas).

The trigger for these developments is China. At the Raisina dialogue in January 2018, Indian naval chief Admiral Sunil Lanba was candid in stating India’s concerns vis-a-vis growing Chinese presence in the Indian Ocean. The People’s Liberation Army Navy (PLAN), the Admiral claimed, is a resurgent force with a near permanent presence in the northern Indian Ocean. He suggested China’s ongoing naval modernisation is a challenge to the Indian navy in its maritime backyard. With over 80 warships commissioned in the last five years, the PLAN is indeed seen by many as a threat to India’s strategic primacy in South Asia.

For many Indian observers, Beijing’s Belt and Road Initiative is a strategic precursor to Chinese naval bases in the Indian Ocean. With Beijing stepping up naval shipbuilding in recent years, including aircraft carriers, China’s naval leadership seems intent on increasing its strategic reach. Recent reports suggest that of Beijing’s six planned aircraft carriers, two will be deployed in the Indian Ocean.

The prospect of a bigger Chinese footprint in the Indian Ocean is prompting Japan and the United States to expand their own maritime operations. A Japanese helicopter carrier visited Colombo last year, and the United States established a temporary air logistics hub in Sri Lanka. Australia too has revealed plans to up its naval engagement in the region.

Yet, the Indian navy, South Asia’s principal security provider, is struggling to get its act together. Despite the expected force build-up in the Andaman Islands, India’s naval modernisation plans are yet to come to fruition. Submarine plans are moving slowly and its indigenous aircraft carrier program is facing chronic delays from steadily declining budgets, technological hurdles and bureaucratic holdups.

The bigger challenge for the Indian navy is its inability to keep track of Chinese submarines in the near seas. India’s naval leadership is ramping up surveillance in the sub-continental littorals, with reconnaissance aircraft operating regularly from bases in the Andaman and Nicobar islands. But it is not clear if the Indian endeavour is achieving any more success than in the past.

Recent initiatives, such as a round-the-year deployment of ‘mission-ready warships’ near Indian Ocean chokepoints, an information-sharing pact with Japan and a new ‘fusion centre’ in Gurgaon have expanded domain awareness. Still, there is little evidence this has improved the effectiveness of submarine searches. Unfortunately, India’s underwater surveillance capability remains subpar and a rumoured proposal for a wall of undersea microphones in the southern Bay of Bengal seems to have been abandoned.

Meanwhile Beijing’s military aid to Pakistan is sparking fears of a Chinese encirclement of India. With the conclusion of a contract for four Chinese Type 054A ships (armed with the deadly CM-302 SSM anti-ship missiles) at a nominal price of just over US$200 million apiece for the Pakistan Navy, Islamabad will acquire an entire line of sophisticated frigates for a fraction of the cost that New Delhi spent on acquiring a fleet of stealth frigates from Russia. A proposal for the supply of eight Chinese Yuan class submarines would further strengthen Pakistan’s underwater prowess, giving it an edge over India.

New Delhi’s continuing wariness about a ‘maritime Quad’ is not helping matters. Despite recent improvements in the Malabar exercises with the United States and Japan, the engagement still does not include Australia, a key partner in the Indo-Pacific. At Raisina, Australian Foreign Minister Marise Payne made a compelling presentation of her country’s Indian Ocean priorities. But Delhi’s ‘hedge and engage’ approach towards China does not allow for an accommodation of Australia in the Malabar.

India’s approach intrigues Western analysts, with some even describing India as a weak link in the Quad. But Indian policymakers may have good reason to be sceptical. There is lack of clarity over what a naval Quad really means for Indian interests. Unlike Pacific democracies that emphasise a ‘rules-based order’ in Asia, New Delhi sees the Quad as an opportunity to develop its military capabilities. But assistance is not readily forthcoming. Despite talk of converging security interests, neither the United States nor Japan are making any concrete offers to help India improve critical maritime defensive capabilities–in particular anti-submarine warfare.

More importantly, the trigger for a balancing coalition in Asia is still not clear. Regardless of its new logistical hubs in South Asia, China still has not crossed India’s thick ‘redlines’. Chinese warships have not posed a physical threat to Indian interests or challenged Indian sovereignty in its territorial waters. Neither has any Chinese submarine ventured close to Indian islands with malign intent.

New Delhi, it seems, is reluctant to play its trump card too early. If Beijing overplays its hand in littoral South Asia, Indian policymakers believe that would be a good time to announce a naval Quad. Until then India should respect the Wuhan spirit. The problem is that there’s no way of knowing if Japan, Australia and the United States would then still be interested.

Abhijit Singh is Senior Fellow and Head of the Maritime Policy Initiative at the Observer Research Foundation in New Delhi.

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Rebuilding ASEAN’s financial safety net


Authors: Kim Song Tan, Singapore Management University and Manu Bhaskaran, Centennial Asia Advisors

Singapore and Indonesia signed a US$10 billion bilateral swap agreement (BSA) in October 2018, allowing the two countries to assist each other through US dollar loans during financial stress. The move signals a willingness by ASEAN countries to play a bigger and more direct role in strengthening the region’s financial stability — but there is still much more to do.

Ministers and central bank governors pose during a photo session at ASEAN+3 Finance Ministers and Central Bank Governors' Meeting on the sideline of Asian Development Bank (ADB)'s annual meeting in Yokohama, Japan on 5 May 2017 (Photo: Reuters/Issei Kato).

The new BSA reflects increased unease among some ASEAN countries about the region’s existing financial cooperation arrangements. The most important is the Chiang Mai Initiative Multilateralisation (CMIM), a US$240 billion swap agreement among the ASEAN+3 countries (ASEAN plus China, Japan and South Korea).

The CMIM was implemented in 2010 when multilateralism was on the rise and a new international financial architecture was taking shape. The new order involved sharing greater responsibility for crisis management between regional organisations and global institutions.

In theory, the CMIM offers a strong and credible vehicle for crisis prevention and resolution. It provides a bigger pool of resources than pre-existing swap agreements between ASEAN and China, Japan and South Korea as well as the US$2 billion ASEAN Swap Agreement between ASEAN monetary authorities. By consolidating the network of BSAs under the CMIM, decision-making during crises is streamlined. By subjecting 70 per cent of emergency fund drawdown to IMF approval, the CMIM addresses the moral hazard problem associated with a multilateral fund.

Still, there are increasing concerns among ASEAN members about the CMIM’s effectiveness and whether it represents the right financing arrangement for ASEAN. Specifically, there are concerns that the CMIM’s interests may not align with ASEAN’s.

As China, Japan and South Korea provide 80 per cent of the funding for the CMIM, they are the key decision makers and must approve any assistance to ASEAN countries in crisis. Also, ASEAN+3 can only approve the first 30 per cent of the funds that a country in crisis needs. The remaining 70 per cent is subject to the IMF approval process.

ASEAN countries have been uncomfortable with the CMIM’s decision-making structure for some time. They are exposed to shocks distinct from those affecting China, Japan and South Korea. These East Asian economies are not as sensitive to the political and economic vulnerabilities that ASEAN countries face, and so their decisions may not adequately address the region’s needs. ASEAN needs a regional financial arrangement that is fully under its control.

Many ASEAN countries also find the role of the IMF program onerous, particularly for short-term financing to boost liquidity (as opposed to longer-term funding to correct fundamental economic imbalances).There is still a strong stigma associated with IMF assistance due to its role during the Asian financial crisis, making it politically difficult for many ASEAN governments to request assistance from the IMF.

This stigma constitutes a major risk as an ASEAN country facing a temporary balance of payments shock may have no recourse to sizeable liquidity support until it is too late, since the bulk of the CMIM’s funds are linked to the IMF. The stigma has effectively reduced the CMIM to a largely non-operational role.

The past 10 years of volatile global capital flows demonstrates the CMIM’s shortcomings. Although no ASEAN country went into a crisis during this period, several ASEAN countries needed emergency financial assistance during the so-called taper tantrum in 2013. They did not utilise the CMIM for this purpose, even though such assistance is a core aspect of its remit.

Instead, ASEAN countries are resorting to bilateral swap facilities with central banks within and outside Asia. As the Indonesia–Singapore BSA shows, they are also turning to fellow ASEAN countries for assistance. Such alternatives weaken the CMIM’s creditability and effectiveness as the region’s main financing mechanism.

ASEAN should rebuild its own crisis management arrangement as an additional financial safety net. This could begin with a reconstructed and substantially strengthened ASEAN Swap Agreement (ASA) governed by representatives from ASEAN countries only. This would enable greater control over the speed and the outcome of the fund disbursement process. Policy dialogue and surveillance efforts supporting the ASA can draw on ASEAN’s existing economic consultation process and the ASEAN+3 Macroeconomic Resource Office’s (AMRO’s) surveillance work.

The new ASA could be designed as a liquidity facility to primarily address liquidity shocks and be viewed as complementary to the CMIM. In the event of a liquidity shock, the ASA would provide the second line of defence after the country’s own reserves, with the CMIM forming the third line of defence. ASEAN shouldering the initial funding responsibility in a crisis would greatly facilitate subsequent funding from the CMIM.

The current ASA fund of US$2 billion is inadequate. It should be at least US$50 billion. This is neither unrealistic nor infeasible. Compared with the pre-Asian financial crisis period when ASEAN countries had a mere US$164 billion in international reserves, they now have more than US$900 billion.

ASEAN has made enormous progress in growth and development and is now one of the world’s fastest-growing and most dynamic regions. Still, another financial crisis absent a strong and credible crisis prevention and resolution mechanism may derail that progress, making a new ASA an important priority.

Kim Song Tan is Professor of Economics at Singapore Management University.

Manu Bhaskaran is CEO of Centennial Asia Advisors, a regional consultancy group.

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The Mekong region is caught in a tug-of-war


Author: Nguyen Khac Giang, VEPR

For the Mekong countries, including Thailand, Laos, Myanmar, Cambodia and Vietnam, 2018 was a big year both domestically and regionally. Key developments from last year will inevitably continue to shape the politics of the region in 2019. In terms of domestic affairs, the most worrying trend is the consolidation of autocratic power in almost all countries.

Vietnamese Foreign Minister Pham Binh Minh, Prime Ministers Thongsing Thammavong of Laos, Prayuth Chan-ocha of Thailand, Li Keqiang of China, Hun Sen of Cambodia and Myanmar's Vice President Sai Mauk Kham (L-R) hold hands as they pose for pictures during Lancang-Mekong cooperation leaders' meeting in Sanya, Hainan province, China, 23 March 2016 (Photo: Reuters/China Daily).

In Vietnam, the sudden death of president Tran Dai Quang in September 2018 created a huge power vacuum, which was filled by Vietnamese Communist Party chief Nguyen Phu Trong. By merging the two most powerful positions in Vietnamese politics, he has become the strongest Vietnamese leader since the death of Ho Chi Minh in 1969, edging the communist state towards the Chinese model of centralised rule.

Cambodia, in theory a multi-party democracy, has practically become a one-party regime after a sham election that saw Prime Minister Hun Sen’s Cambodian People’s Party win all parliamentary seats in July 2018. He is now one of the world’s longest-serving heads of government, having held the premiership for 33 years since 1985.

Things are no better in Thailand. Four years after seizing power, the military junta has made — and broken — five promises to hold a general election to establish a civilian government. Even if the sixth promise is fulfilled in February 2019, it will be difficult to see swift change, as the junta will exploit all means available to dominate the electoral process.

In Myanmar, the intensifying Rohingya crisis has not only created Southeast Asia’s biggest humanitarian concern but also exposed the reluctance of Aung San Suu Kyi and her National League for Democracy to complete the democratic transition that started in 2011.

The autocratisation of the Mekong region has significant implications at a time when its giant neighbour China continues a long march to the south. China has committed billions of US dollars in concessional loans and credit to Mekong countries via the Lancang-Mekong Cooperation (LMC), an ambitious initiative which was launched in 2016. But the LMC’s actual impact remains to be seen. While the LMC is ostensibly aimed at creating a ‘shared future of peace and prosperity’, China can use it as part of a carrot and stick strategy due to its largely opaque and non-binding frameworks.

It should be noted that Beijing has a record of working closely with autocracies. Beijing has helped leaders in Central Asia guard against ‘colour revolution’, provided African autocrats with an alternative model of development and has aided socialist Venezuela in crisis. A less democratic Mekong region will be more exposed to China’s strategy of buying influence, which often involves closed-door negotiations and dealings.

The LMC, as well as other established regional mechanisms such as the Mekong River Commission and Lower Mekong Initiative, have also failed to address the core issue which theoretically binds Mekong countries together: transnational water management. In July 2018, a section of the Xe-Pian Xe-Namnoy hydropower dam in southern Laos collapsed, reportedly killing 34 people, leaving 97 missing and displacing 6000 others. The collapsed part of the dam was only an auxiliary section and the whole project is built in one of the Mekong’s tributaries instead of the main stream. Needless to say, it could have been an even greater catastrophe.

In Vietnam, for example, hydro dams are considered to be time bombs ticking over the head of the Mekong Delta on which 90 per cent of Vietnam’s rice exports depend. Despite the incident, the Laos government resumed its dream of becoming ‘a battery for Asia’ by permitting work to continue on several hydro projects. Beneficiary countries of the hydropower boom such as Thailand and China gave condolences and support to Laos but continued building their own dams. China, for instance, has built 7 and has plans for a further 21 dams on the Mekong — plans formulated without consultation with lower-Mekong countries.

The ongoing trade war between China and the United States also has the potential to impact the Mekong region both economically and politically. If the trade war accelerates, investors will consider countries like Vietnam and Thailand, and to a lesser extent Cambodia, as shelters to circumvent higher tariffs and other technical barriers. Exports from the Mekong region to the United States, many of which are substitutes for Chinese goods, will also benefit from the trade dispute. On the other hand, the region also bears the risk of a flood of Chinese goods into domestic markets, which is already a big issue.

More broadly, the Mekong region will continue to be a battlefield for influence between the two global superpowers. The rumour that China seeks to build a military base in Cambodia, although dismissed by Hun Sen, should be a serious warning for Washington. Of the five Mekong countries, only Vietnam is wary of China’s charm offensive due to a lingering sovereignty dispute in the South China Sea. The superpowers’ tug-of-war will perhaps come to play a key role in shaping the region’s development trajectory.

Nguyen Khac Giang is the lead political researcher at the Vietnam Institute for Economic and Policy Research (VEPR) at the Vietnam National University in Hanoi.

This article is part of an EAF special feature series on 2018 in review and the year ahead.

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Indonesia’s struggle with renewable energy


Author: James Guild, RSIS

Indonesian President Joko ’Jokowi’ Widodo inaugurated the 75-megawatt Sidrap Wind Farm in South Sulawesi in July 2018. Built by the foreign firm UPC Renewables at a cost of US$150 million, Sidrap is the first grid-connected wind farm of any meaningful scale in Indonesia and is expected to generate power for up to 70,000 households. This was welcome news for those wondering how Indonesia was going to achieve its ambitious goal of sourcing 23 per cent of its energy from renewable sources by 2025. But does this mean Indonesia is on the cusp of a clean energy revolution?

A woman takes pictures of wind power plant propeller blades in Sidenreng Rappang, Sulawesi Island of Indonesia, 15 January 2018 (Photo: Antara Foto/Yusran Uccang via Reuters).

If history is any indication, there is reason to be sceptical. According to state-owned utility company PLN, installed capacity of grid-connected solar in 2017 was just 7.98 megawatts, while wind power stood at a negligible .88 megawatts. This is a tiny fraction of Indonesia’s total installed capacity in 2017 of 55,925 megawatts. PLN-operated geothermal and hydropower plants accounted for a larger share at 4,134 megawatts, almost all of which was added decades ago. Power purchased from independent developers has not been much better. Coal continues to dominate, with PLN consuming over 54 million tons to run its plants in 2017.

In early 2018, the government capped the price of domestic coal at US$70 per ton, well below the global market price. Indonesia has large coal reserves and this ensures that coal-fired plants will have access to a steady supply of cheap fuel at least through the 2019 election season. While this may be politically expedient, it makes it very difficult for renewable technologies to compete with fossil fuels.

These disappointing numbers are compounded by the fact that, according to the International Energy Agency, Indonesia is endowed with a wealth of potential renewable energy sources. They estimate the country has the potential to develop 75,000 megawatts of hydropower, 4.80-kilowatt hours per square meter per day of solar, 32,654 megawatts of biomass and holds 40 per cent of the world’s geothermal reserves at around 28,000 megawatts.

So why is the sector stagnant?

There are a number of reasons, the first being cost. While the levelised cost of renewables has dropped dramatically in the last few years, inducing investment at scale in Indonesia is still a more expensive proposition than in places that have seen faster growth, such as China and India. This is because regulatory uncertainty and a cumbersome bureaucracy tend to inhibit investor interest unless PLN is willing to pay above market prices. This adds to the cost, even in an era of increasingly inexpensive renewables.

But PLN is not flush with cash. Indonesia has a constitutional mandate to provide affordable electricity to its people, putting the utility in a tough spot when it comes to developing a sustainable financial model. The Ministry of Energy, not PLN, sets the consumer price of electricity. These rates have been frozen through the build-up to the election. With its ability to raise revenue constrained, PLN must keep costs down in order to remain solvent. With access to cheap domestic coal and no political appetite for passing the high initial costs of renewable technologies onto the public, the most prudent way to keep costs in check is to lean into inexpensive fossil fuels.

Even when the government has shown a willingness to shoulder the cost of developing renewables, the policies put forward have been badly designed and poorly implemented. Since 2011, Indonesia has experimented with a number of pricing mechanisms and feed-in tariff schemes — PLN entered into private agreements to off-take power generated by independent renewable developers at fixed prices. The problem is that the regulatory frameworks governing these agreements have frequently changed and bureaucratic red tape and ministerial communication breakdowns have driven down investor confidence.

For instance, the pricing mechanism for geothermal power was initially pegged to oil prices, which then changed to a ceiling price for all of Indonesia and finally ended up as a feed-in tariff that was rolled out by the Ministry of Energy without consulting the Ministry of Finance. The regulatory uncertainty and coordination breakdowns go a long way in explaining the lack of growth in the sector.

Ultimately, developing clean energy in the country is more of a want than a need at the moment. Indonesia has large coal reserves and is one of the world’s largest net exporters of coal. It is somewhat insulated from fluctuations in global coal prices. It is not as motivated to develop alternate energy sources as other countries that depend on coal imports, such as the neighbouring Philippines where renewable energy development has exploded in the last few years.

The fossil fuel industry in Indonesia is immensely powerful — it is the primary source of fuel for energy throughout the archipelago and has played a dominant role in the country’s economy for decades. In an energy market where fossil fuel interests are so powerful, it is not surprising that renewables have struggled to find a foothold.

There have been a few promising signs recently, including Sidrap and a few small-scale wind and solar plants in Eastern Indonesia that have reached financial close. But until PLN and the Ministry of Energy can work out how to address some fundamental challenges — keeping generating costs down while financing renewables at scale, improving poor policy design and drumming up real political momentum to challenge the powerful extractive industry lobby — it is unlikely that renewables will pose a serious challenge to fossil fuels in Indonesia in the near future.

James Guild is a PhD candidate in Political Economy at the S. Rajaratnam School of International Studies in Singapore. You can follow him on Twitter at @jamesjguild.

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FTTH APAC Conference 2019


Apr 15, 2019Apr 17, 2019

Opening hours: 
9:00 – 17:00

Hilton Wuhan Optics Valley Hotel

Location address: 
9 Chunhe Road, Huashan Eco City East Lake High Tech Dev Zone, Wuhan


CRU Events

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Number of exhibitors: 

Major exhibits: 

The FTTH APAC Conference offers an unrivalled opportunity for you to raise your corporate profile to an audience of 500+ senior executives and provides a unique platform to network/do business with the hard-to-reach influencers of the sector.

Various sponsorship packages are available and have been designed to help you:

  • Reinforce your position in the market and increase your brand awareness
  • Educate potential customers and showcase your products/ expertise
  • Improve your networking and provide you with an opportunity to build better relations with potential and existing clients

    A supporting exhibition offers you the opportunity to raise your profile and engage with customers.

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    The FTTH Council Asia Pacific is very excited to bring its 14th annual FTTH APAC Conference to Wuhan, China’s optics valley on 15-17 April 2019. After a very successful event in the Philippines, the 2019 event will see the continued collaboration between the FTTH Asia-Pacific Council and CRU Events.

    Wuhan is home to many of the world’s leading optical communications companies; the city has become synonymous with the latest advances in telecom technologies. Connecting the business, policy and technology of fiber to everywhere, the FTTH APAC Conference in 2019 will attract more than 500 senior executives from the region’s telecom regulators, policy makers, network operators, municipal leaders and solutions providers.

    This year’s conference theme is focused on “5G Smart Cities Enabled by Fiber” and will be a chance to explore how the Asia Pacific telecom industry is continuing its deployment of FTTx and deep fiber to the network edge as a converged platform from which smart cities and 5G networks can be built. As the FTTH APAC Conference is well established as an essential meeting point for the Asia Pacific telecoms market, this event promises to be a fantastic chance gain market insights and network with hard-to-reach decision makers.

    The three day programme will focus on:

  • Hear telecom operators from across Asia Pacific share their strategies on deep fiber deployment
  • Understand regional policy developments and their impact on network investment
  • Discover case studies from municipal leaders on most effective smart city strategies
  • Gain technical insights on how converged FTTx networks enable 5G coverage and Smart City functionality
  • Meet with leading innovators and experts looking to build partnerships and improve network deployment
  • Explore converging wireless fronthaul and backhaul networks with fiber to the home and business

  • Show Contact


    Kay Beloe


    (+44) 0207903444


    Mailing address: 

    Chancery House, 53-64 Chancery Lane

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    London WC2A 1QS

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    ASIAN (H)

    Can Abe get Japan back on the North Korea bus?


    Author: Yoshihide Soeya, Keio University

    In the current flurry of summitry involving North Korea, Prime Minister Shinzo Abe’s generally hardline approach makes Japan the odd man out. But that trend is beginning to change.

    At the UN General Assembly in September 2017, Abe outlined his hardline approach to North Korea in no uncertain terms: ‘Again and again, attempts to resolve issues through dialogue have all come to naught … What is needed … is not dialogue, but pressure’. A year later at the 2018 assembly, the same Abe said that he is now ‘ready to break the shell of mutual distrust with North Korea’ and ‘meet face to face with Chairman Kim Jong-un’.

    Japan's Prime Minister Shinzo Abe and South Korea's President Moon Jae-in shake hands as they attend the ASEM leaders summit in Brussels, Belgium, 19 October 2018 (Reuters/Francois Lenoir).

    This striking shift in attitude was seemingly caused by the three summits that took place in the first half of 2018: between Kim and South Korean President Moon Jae-in in April, Moon and Abe in May, and Kim and US President Donald Trump in June.

    The Moon–Abe meeting attracted comparatively little attention. But it was an important occasion that influenced Abe’s attitudes toward both South and North Korea. According to an anonymous source, the initial half of the meeting consisted of one-on-one talks between Moon and Abe. Although the content remains undisclosed, one can reasonably guess that Moon briefed Abe about his discussions with Kim and Kim’s seriousness about his initiatives.

    Then came the Trump–Kim summit. Although not many surprises came out of it, the fact that such a meeting took place was important. It provided a critical impetus for Abe to begin changing his attitude, indicated by his address at the UN General Assembly in September.

    The main discourse in Japan after these developments concerns whether Japan missed the bus. Supporters of Abe’s hardline policy tend to argue that it has not, and that Japan should wait until Kim comes courting before seeking a Kim–Abe summit. In the meantime, pressure remains an effective tool while dialogue is seen as a way for North Korea to deceive others, including not only Japan but South Korea and even Trump. A related point made by this camp is that Kim started coming out of isolation simply because pressure worked.

    Under this premise, the Abe administration is making a not-so-subtle effort to influence Trump’s policy on two main issues: the abduction of Japanese citizens by North Korea and ensuring that Trump does not make concessions easily on security-related issues.

    Abe has repeatedly expressed his determination to resolve the abduction issue during his tenure, and links it to solving the nuclear issue. It is somewhat ironic that the abduction issue is an obstacle for Abe to the realisation of a meeting with Kim at which Abe wants to find a way to solve the issue. The key to Japan’s strategy toward North Korea is whether Abe can decouple the abduction issue from the nuclear and missile issues, and take an active part in dealing with the latter.

    If Japan gets involved in the ongoing process of change, naturally the goal should be diplomatic normalisation with North Korea. In this context, it is useful to revisit the Pyongyang Declaration signed by former Japanese prime minister Junichiro Koizumi and North Korean leader Kim Jong-il in September 2002.

    The declaration lays out a comprehensive framework and roadmap toward diplomatic normalisation, and is still treated as valid by both Tokyo and Pyongyang. Significantly, both sides confirmed in the declaration the necessity of promoting dialogue and complying with related international agreements to resolve the security problems on the Korean Peninsula.

    International circumstances at the time of the Pyongyang Declaration were different. Aggressive policies from the United States had pushed North Korea into a corner, and only then did Kim Jong-il make a strategic decision to cultivate a slim route to survival through Japan.

    Among the Japanese, including Abe himself who accompanied Koizumi as deputy chief cabinet secretary, this memory of North Korean concessions must be still vivid. The lesson was that pressure against an isolated North Korea works to the advantage of Japan.

    Today, US–North Korea relations appear to be evolving in a quite different direction. China is also working with North Korea closely and Russia is supportive of Kim’s bold moves. Now Japan is the odd man out, advocating the most hardline position toward North Korea among the five parties. Under these circumstances, Japan might well be a low priority for North Korea. And this is why Abe has started to change his stance.

    There remains strong underlying distrust of North Korea in many policy circles in Japan. But in all likelihood, an Abe–Kim summit will be realised only if Japan gets seriously involved in the dialogue process. For Abe to change his current approach, the bottom-line requirement is to assume that Kim is serious about his long-term strategic goals to establish a peace regime on the Korean Peninsula as a means to guarantee regime survival and achieve economic prosperity. Whether denuclearisation will be achieved in the process is still uncertain.

    What is needed now is a strategy of flexible response with a measure of trust in Kim’s proclaimed end-goals, backed by a firm resolve to denuclearise North Korea. There are always chances for the process to stall. But the important thing for the rest of the international community, including Japan, is not to turn expected failures or delays into self-fulfilling prophecies.

    Does Abe have the skill and cunning to pull off such a gesture? This will be a major challenge on the road to a Kim–Abe meeting.

    Yoshihide Soeya is Professor of Political Science at Keio University

    A longer version of this article originally appeared here on Global Asia.

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    ASIAN (H)

    Governing Hong Kong in Xi’s new era


    Author: Peter TY Cheung, University of Hong Kong

    Hong Kong’s position in China’s governance framework is becoming clearer. Mainland authorities have achieved a degree of jurisdiction over Hong Kong through a repertoire of different initiatives that may ultimately affect the city’s reputation as a global business hub. If Hong Kong becomes more like a mainland city, will foreign countries still find it an attractive place to do business?

    Hong Kong Secretary of Justice Teresa Cheng speaks during a ceremony to mark the beginning of the legal year in Hong Kong, China, 14 January 2019 (Photo: Reuters/Tyrone Siu).

    The interpretation of the Basic Law handed down by the Standing Committee of China’s National People’s Congress’ (NPCSC) in late 2016 regarding legislators’ oath-taking set the scene for Beijing to steer Hong Kong’s legal and constitutional order.

    The Hong Kong Special Administrative Region (SAR) government under Chief Executive Carrie Lam is adopting an administrative approach to discipline activists that are seen to be testing Beijing’s political ‘red line’. For Beijing, this red line represents threats to national sovereignty and security, central authority and the socio-political stability of the mainland.

    In 2018, administrative power was used to bar alleged pro-independence candidates from entering by-elections. Candidates had hoped to fill the seats of six directly elected pan-democratic or localist legislators disqualified by Hong Kong courts after the NPCSC’s interpretation was handed down.

    In addition to sentencing several young activists and trying three initiators of the Occupy Central movement, Lam’s government disbanded the pro-independence Hong Kong National Party for threatening national security and violating the Basic Law. This is how political conundrums are being tackled in Hong Kong today.

    The pending passage of legislation aimed at deterring and punishing those who publicly ridicule the national anthem is helping to synchronise Hong Kong’s laws with those of the mainland. This political–legal order is evolving through interpretations of the Basic Law and through NPCSC decisions, which are subsequently implemented by Hong Kong’s courts and administration. This evolution reveals how jurisdiction over the city will be exercised moving forward.

    Beijing repeatedly reminds Hong Kong to expedite national security legislation and to strengthen national identity by educating its younger generation. Central officials are also increasingly placing emphasis on the applicability of the Chinese constitution in Hong Kong. Whether these developments will recast the rule of law as one based not on the common law but instead on something more akin to that employed on the mainland remains a critical question for those who continue to endorse ‘one country, two systems’.

    Concerns about waning freedoms were sharply highlighted by the Foreign Correspondents’ Club incident, where a young pro-independence politician was invited to make a speech despite warnings from the Chinese Ministry of Foreign Affairs. The club’s former president was later denied both a renewal of his work visa and entry into Hong Kong. The government and establishment political forces believe that such actions are justified. Together with the earlier Causeway Bay Bookstore incident and the mysterious disappearance of a mainland Chinese billionaire, these events cast a shadow over Hong Kong’s freedom and rule of law.

    Aside from positioning Hong Kong as a key base for President Xi Jinping’s Belt and Road Initiative, Lam’s government is actively embracing planning associated with the Greater Bay Area (GBA). Under Xi’s direct steering, GBA is a way for Hong Kong to further integrate with its neighbouring Pearl River Delta cities economically, socially and perhaps even politically. Xi has also pledged his support to help Hong Kong develop into an international centre of innovative technology.

    This GBA planning, which was initiated by Beijing to embed Hong Kong in its system of mainland development, has profound long-term implications for the ‘one country, two systems’ policy. Lam has formally joined the Chinese policy process as a member of the Leadership Small Group on the GBA.

    The much-touted reduction in administrative barriers, taxes and other restrictions to facilitate demographic movement and business activities in the GBA might deepen the region’s integration and expand the opening of cities in the delta. But it may also erode Hong Kong’s unique status as an SAR that enjoys a high degree of autonomy. Will Hong Kong find itself edged into a position where it no longer enjoys greater room to manoeuvre?

    Even more symbolic of growing integration is the completion of the high-speed rail link and the Hong Kong–Macau–Zhuhai bridge that significantly enhances connectivity between Hong Kong and the mainland. But the controversial arrangement of co-location in the West Kowloon terminus — which provides for the full enforcement of Chinese laws inside the mainland port area and throughout the entire railway — was undertaken in accordance with a decision made by the NPCSC. It was not made through an interpretation of the Basic Law or through an incorporation of mainland laws into the Basic Law’s annex three, followed by local legislation.

    Developments in 2018 suggest that Hong Kong’s two systems will gradually move towards the one country model. Whether the mainland’s exercise of legal and administrative power over Hong Kong will quell frustration over the lack of democratic reform, fuel more apathy and resistance or encourage more compliance with Beijing’s political prerogatives remains to be seen. What is clear is that in Xi’s ‘new era’, Hong Kong is poised to align itself closely with the parameters of Chinese governance well before 2047.

    Peter TY Cheung is Associate Professor of Politics and Public Administration at the University of Hong Kong.

    This article is part of an EAF special feature series on 2018 in review and the year ahead.

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    No plebiscite surprises in the southern Philippines


    Author: Steven Rood, ANU

    Overwhelmingly Christian, the Philippines has long contended with armed resistance by organised movements of Philippine Muslims. Under the first-ever president elected from the Muslim-majority island of Mindanao, Rodrigo Duterte, the Philippine government has managed to pass a law supported by both Muslim separatist movements, the Moro National Liberation Front (MNLF) and the Moro Islamic Liberation Front (MILF), leading to hopes for peace and greater development in the southern Philippines.

    Ebrahim Murad, Chairman of the Moro Islamic Liberation Front (MILF), casts his vote during the plebiscite on the Bangsamoro Organic Law (BOL) at a voting precinct in Sultan Kudarat, Maguindanao province, Philippines, 21 January 2019 (Photo: Reuters/Marconi B Navales).

    That law — the Bangsamoro Organic Law (BOL) — was overwhelmingly ratified during the first phrase of a plebiscite on 21 January 2019, passing everywhere except Sulu and Isabela City. By agreeing to ratify the BOL, citizens are voting to put the law — which provides for the creation of the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) in place of the current Autonomous Region in Muslim Mindanao (ARMM) — into effect. Preparations are underway for the second phase of the plebiscite on 6 February 2019.

    It has long been clear that the residents of Muslim-dominated areas in Mindanao are in favour of the results of the peace process detailed in the 2014 Comprehensive Agreement on the Bangsamoro. In January 2016 a survey was undertaken on the attitude of voters in the ‘core territories’ of the proposed Bangsamoro under the draft Bangsamoro Basic Law (the version previous to the BOL that was stalled in Congress after the January 2015 Mamasapano incident). The January 2016 survey findings mirror the January 2019 outcome. It is not surprising that attitudes are stable on an issue that has been on the agenda for years, in an attempt to solve a problem that has dragged on for decades.

    What can be learned from this continuity about controversial plebiscite results in Cotabato City and Sulu, and the likely outcome of the plebiscite’s second round?

    Cotabato City voted in both 1989 and 2001 against joining the ARMM, leading some to believe that the positive result in 2019 was due to irregularities. But in 1989 and 2001 the MNLF and MILF rejected the plebiscites since they did not agree with the Organic Law being ratified. In 2019 almost all elements of the movements endorsed the BOL. Turnout shows one resulting difference: in 2001 just over 25,000 votes were cast in Cotabato City, whereas in 2019 the figure was over 80,000.

    Cotabato City Mayor Cynthia Guiani-Sayadi did campaign vigorously against the inclusion of the city in the BARMM. But she was unsuccessful in the face of overwhelming initial odds (more than 70 per cent approving already in 2016), as well as President Duterte’s explicit endorsement of the BOL in a rally days prior to the plebiscite. Still, her campaign seemed to have the effect of reducing the margin of victory to 60 per cent.

    Sulu’s negative vote bolsters Sakur Tan, the patriarch of Sulu’s dominant political clan. Sulu has a number of contending political clans, but the plebiscite result indicates that the Tan clan’s ‘unipolar’ moment continues as those Sulu leaders who backed the law and the BARMM have been faced down.

    According to the BOL, Sulu’s negative result is outweighed by the rest of the ARMM’s positive result since the ARMM voted as one geographic area. There is a petition before the Supreme Court questioning this provision since the 1987 Constitution provides that ‘only provinces, cities, and geographic areas voting favorably’ will be part of an autonomous region. The legal argument is about whether the ratification of the BOL amounts to the creation of an autonomous region or merely an amendment to the organic law governing it. The Supreme Court may still allow Sulu to opt out.

    Municipalities in Lanao del Norte and villages in North Cotabato near the ARMM — additional areas designated as part of the ‘core territory’ of the Bangsamoro in the 2014 Comprehensive Agreement — will likely vote ‘yes’ in the plebiscite’s second round.

    This includes six municipalities that voted to join the ARMM in 2001 but were unable to because the province of Lanao del Norte as a whole did not vote to join, and 38 villages in North Cotabato in the same situation (plus 29 others who petitioned to join for a total of 67). These areas approved of the Bangsamoro Basic Law in 2016 and will almost certainly vote to join the BARMM.

    But the BOL specifies that they can only join if their local government unit (the province of Lanao del Norte and the seven relevant municipalities in North Cotabato) vote to allow them to do so. Some or all of the villages in North Cotabato may well be allowed to join since indications, such as the endorsement of municipal and provincial politicians, are favourable.

    In Lanao del Norte this will almost certainly not happen. Despite attempts by the national government and other peace advocates to persuade them otherwise, the powerful Dimaporo political clan that rules Lanao del Norte backs a ‘No to Division’ campaign.

    Interestingly, the same legal theory that requires Sulu’s vote to be submerged in the larger ARMM tally also indicates the need for this ‘double majority’ by municipal voters and a majority of all the voters in the province. A Supreme Court ruling in favour of the Sulu petition might allow the six municipalities to join the BARMM. A ruling against will leave them out in the cold.

    The likely Lanao del Norte result is problematic since the powerful MILF leader known as Commander Bravo is based in these municipalities that would not join the Bangsamoro. Widely respected and feared, he launched an offensive in August 2008 into other areas of Lanao del Norte when a previous government-MILF agreement was suddenly aborted. This time efforts led by the government’s chief peace official, retired general Carlito Galvez, brought Dimapora patriarch Abdullah ‘Bobby’ Dimaporo into a meeting with Commander Bravo, but no concrete agreements were reached.

    The outcome of the Supreme Court case must be awaited. Until then, the second phase of the Bangsamoro plebiscite will deliver further insights on the southern Philippines’ unfolding political future.

    Steven Rood is a Visiting Fellow in the Department of Political and Social Change, The Australian National University. He is also a Fellow and Board Member of Social Weather Stations in the Philippines.

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    Ardern’s Labour-led government delivers on policy promises in New Zealand


    Author: Stephen Levine, Victoria University

    New Zealand Prime Minister Jacinda Ardern has continued with her ‘relentlessly positive’ approach in both rhetoric and policy, demonstrating poise and grace while dealing effectively with an opposition National Party. Opposition leader Simon Bridges is a distant second (in single digits) in ‘preferred prime minister’ polls, with his continued leadership in jeopardy.

    New Zealand's Prime Minister Jacinda Ardern talks to representatives of South Pacific island nations during the APEC Summit, in Port Moresby, Papua New Guinea, 17 November 2018 (Photo: Reuters/David Gray).

    Having been out of power for nine years, Ardern’s Labour Party is making significant progress on a range of policy fronts. The government has raised the country’s minimum wage and resumed contributions to the superannuation fund established under the last Labour-led government (but deferred during the National government’s time in office). It has also initiated an ambitious housing program intended to build 100,000 homes over a 10-year period.

    Young New Zealanders and their parents are being catered for by an end to first-year tertiary fees, while senior citizens benefit from subsidies for their power bills over the country’s chilly winter months. Some steps are shared with Labour’s coalition partners, including a suspension of further offshore oil and gas drilling (the Greens) and a ban on purchases of homes by non-resident foreigners (New Zealand First).

    Upon entering office, the interest and excitement generated by Ardern’s 2017 election campaign transferred itself to the international stage. She was given celebrity treatment during her September 2018 visit to New York, with televised appearances seldom reserved for New Zealand prime ministers. She set a precedent at the UN General Assembly by bringing her three-month-old baby into the chamber. Travels to other international meetings — APEC, the East Asia Summit and the Pacific Islands Forum — produced their own moments.

    With a general election still two years away, Ardern and her government have the initiative. In December 2018 the government announced its intention to hold a binding referendum on the use of marijuana for recreational purposes. The timing of the referendum, to be held at the 2020 general election, was immediately criticised by an opposition convinced that the referendum will boost turnout among the country’s left-leaning young voters. A promise to enact legislation to reduce child poverty in New Zealand was also fulfilled in December, a concept so attractive that only a solitary dissenting voice prevented the vote from being unanimous.

    The Minister of Finance approaches 2019 in a strong position, with a stable economy evidenced by meagre unemployment, substantial economic growth, low interest rates and the prospect of larger-than-expected multi-billion dollar surpluses. He can pursue further spending initiatives in his next budget, already foreshadowed by an economic blueprint focussing on New Zealanders’ ‘well-being’.

    The three-party coalition is functioning smoothly despite intermittent differences of opinion over policies and priorities. New Zealand First’s leader Winston Peters performed responsibly as acting prime minister during Ardern’s six-week absence on maternity leave, and the Greens’ co-leader James Shaw is taking a leading role in promoting climate change initiatives. Even parliamentary approval of the revised Trans-Pacific Partnership accord, achieved without the Greens’ support but with the backing of the National Party, was unable to disrupt the relationship among the coalition partners.

    An ongoing challenge for Prime Minister Ardern — one that she seems, by inclination and outlook, perfectly capable of meeting — is to maintain the government’s positive approach and demeanour. National remains ahead of Labour as the country’s most popular party in many polls despite setbacks and embarrassments involving several of its members of parliament. The political challenge for the Prime Minister is to make her government so successful that Labour moves past National, while allowing the Greens and New Zealand First to retain credit for their distinctive contributions. This is never an easy task, but a necessity in New Zealand’s electoral politics.

    In December 2017, I observed that ‘the new government’s principal challenge for 2018 will be to demonstrate that it is able to work towards some of its more ambitious goals — ending child poverty, reducing inequality and acting on climate change — while protecting what New Zealanders also value: a strong and competitive economy’. Looking back, Prime Minister Ardern’s government is managing more than creditably to strive towards these objectives. The 2019 political year will see a Labour–New Zealand First–Greens government with more than a year’s experience finding its way against a conservative opposition weakened by leaks and scandals, and so offering limited hindrance.

    Stephen Levine is Professor of Political Science at Victoria University of Wellington. He is editor of Stardust and Substance: The New Zealand General Election of 2017, Victoria University Press, launched in September 2018 by Prime Minister Ardern.

    This article is part of an EAF special feature series on 2018 in review and the year ahead.

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