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ASIAN (H)

Burden-sharing a remedy for falling birth rates in East Asia

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Author: Mary C Brinton, Harvard

East Asian countries now have the lowest fertility rates in the world. Japan was the first in the region to experience birth rates below population-replacement level, dipping below two children per woman in the late 1970s.

Playtime at a Babu Land childcare centre at a Toyota plant in Japan (Photo: Toyota Motor Corporation).

While Japan’s current fertility rate is higher than those of other societies in East Asia such as Singapore and Hong Kong, its decades of low fertility mean that it is the most rapidly ageing population in the region and is facing severe labour shortages. The Japanese government reported that fewer babies were born in 2018 than in any year since 1899, the first year that records were kept. Other East Asian societies look to be on track to follow in Japan’s footsteps.

There are two solutions to population decline: increase immigrant flows or raise the birth rate. East Asian societies show mixed records on the former. Japan has wrestled with debates over immigration for decades and only recently started to adapt its policies to incorporate more foreigners into the labour force. Whether new migrants will come to Japan only short term or stay in the country to marry and raise families is an open question. More foreign labour will certainly help alleviate labour shortages, but whether it will have a more enduring effect remains to be seen.

If immigration is not necessarily the panacea, what is? Making it possible for women to participate in the labour market and simultaneously have two or more children if they wish to. Higher rates of female labour force participation throughout East Asia are helping to alleviate the developing labour shortages. But how compatible is women’s work with childrearing? It is here that pervasive gender inequality — both at home and in the workplace — exerts a strong dampening effect on governments’ efforts to raise the birth rate.

Japan and South Korea are cases in point. Their demographic crises have brought into sharp relief the difficulties that married women face in trying to manage responsibilities in the workplace and at home. Gender inequality is extremely high in both of these spheres in the two countries.

International surveys consistently show that Japanese and Korean men contribute the least to housework compared with men in other OECD countries. The average Japanese or Korean married woman does 80­–90 per cent of housework and childcare. Similarly, gender inequality in the workplace is stark, partly as a result of long work hours and the demand for ‘face time’ in the office.

Talented women who endeavour to compete on an equal footing with men generally feel pressure to adopt the working style expected of their male counterparts. This involves extended work hours and a willingness to respond unquestionably to last-minute managerial demands and companies’ implicit requests to forego time with family in lieu of projects at work.

These demands create a collision course for dual-earner couples unless they have the benefit of co-residing with a mother or mother-in-law who will pick children up from daycare or school and bear a large share of childrearing. Women lacking such support and working in full-time jobs are more likely to have only one child. Childcare leave helps women return to work after giving birth and high-quality public daycare is a boon to working parents. But neither of these alleviate the time squeeze between home and workplace caused by long working hours.

Studies of dual-earner couples in many parts of Europe demonstrate that the propensity to have a second child is related to the share of household work done by the male partner. Recent research shows that this is the case in Japan as well and demonstrates empirically that Japanese men’s share of housework is lower if they work in large companies where they are generally surrounded by men whose behaviour is similar. If these men shift to companies where their male peers are doing more housework, they themselves increase their housework share.

This suggests that peer effects among men in the same workplace may be operating to maintain or reduce gender inequality at home. This greater sharing of household time demands can in turn make it more likely that dual-earner couples will proceed to have a second child.

But reducing women’s household time demands is not necessarily the whole story. In Hong Kong, Singapore and Taiwan it is much more common for couples to rely on paid household help and caregivers than in countries such as Japan and South Korea. Yet even though some of the time burdens on women are reduced, fertility is still low. Why?

This brings us back to the demands of the workplace, but it also raises the question of whether the severely competitive educational systems and labour markets in East Asian societies might also be contributing to low fertility. Young single men and women complain of not having time to date or to find the right partner. This results in ever-later marriages and some of the highest non-marriage rates in the post-industrial world. Highly competitive educational systems also factor into parents’ calculation about whether they should invest all of their resources in one child or spread them out among two or three children.

The evidence is clear that gender inequality and fertility are closely linked in many East Asian societies, particularly in Japan and South Korea. The relationship between the two may not explain low fertility in every country equally well. But without more reasonable expectations of both sexes in the workplace and more equal contributions of both sexes at home, it is likely that fertility in East Asia will not increase.

Mary C Brinton is the Reischauer Institute Professor of Sociology at Harvard University.

This article is abridged from a version that appears in the latest issue of East Asia Forum Quarterly on Investing in Women.



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ASIAN (H)

Can Japan contribute to equitable development in ASEAN?

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Author: Fumitaka Furuoka, University of Malaya

The establishment of the ASEAN Economic Community (AEC) in December 2015 was a notable milestone in the economic integration of Southeast Asia. However, despite the AEC’s ambitious vision, the on-the-ground reality of Southeast Asian regionalism continues to raise some concerns. One such concern is the vast income gap among the ASEAN member states, which might become an obstacle to developing a true sense of regional solidarity and unity.

Japan's Prime Minister Shinzo Abe takes his position next to Singapore's Prime Minister Lee Hsien Loong for a group photo with ASEAN leaders at the ASEAN–Japan Summit in Singapore, 14 November 2018 (Photo: Reuters/Edgar Su).

Per capita income in the region’s richest country, Singapore, is over six times higher than in the poorest, Myanmar. ASEAN member states regard the vast income gap as a ‘matter of urgency’. To enable equitable development, the AEC requires that older ASEAN member assist newer members (known as the CLMV countries: Cambodia, Laos, Myanmar and Vietnam) in their efforts to enhance their economic capacity. Since 2000, when ASEAN leaders adopted the Initiative for ASEAN integration, the older six member have been supporting CLMV countries in five key areas: food and agriculture, international trade, small and medium-sized enterprises, education, and health and wellbeing.

According to a recent study, the CLMV countries are divided by a two-layer economic structure: Cambodia and Vietnam have been successful in bringing down the income gap with their older and richer ASEAN peers while Laos and Myanmar have lagged behind.

Outside of Southeast Asia, the Japanese government is showing its awareness of the importance of enabling equitable development in ASEAN. In 2011, it announced the ASEAN–Japan plan of action. Under this initiative, Japan provides foreign aid to CLMV countries in order to narrow the income gap among ASEAN members. In particular, Japan is focusing on six areas: supporting human resource development, providing technical cooperation, organising seminars, offering training programs, promoting harmonious labour relations and giving assistance to local governments.

Japan is giving two types of foreign aid as economic assistance to CLMV countries. There are bilateral grants that recipient countries have no obligation to repay and bilateral loans that require repayment with an interest rate. Myanmar is the largest recipient of Japanese bilateral grants among CLMV countries. In 2017, Japan unveiled thirty new grant projects to CLMV countries, with half to be implemented in Myanmar.

The major projects to receive Japan’s aid funds are related to emergency food assistance and the expansion of broadcasting equipment, each receiving 2.2 billion yen (US$19.8 million). Cambodia was another key grant recipient of Japanese aid (3.2 billion yen or US$28.8 million) in 2017, including funds for the expansion of water supply systems as well as mine clearance and landmine victim assistance.

CLMV countries are also among the favoured destinations for Japan’s bilateral loans. In 2017, the Japanese government pledged bilateral loans exceeding 20 billion yen (US$180.1 million) to 24 megaprojects all over the world. The main recipients were CLMV countries, where 6 out of the 24 megaprojects were to be implemented. In total, Japan promised bilateral loans to 12 projects in CLMV countries, including the 6 megaprojects.

Myanmar, where seven projects are to be implemented, is the largest recipient of Japan’s bilateral loans among CLMV countries. These projects include constructing the Bago River bridge (31 billion yen or US$279.2 million), improving the Yangon–Mandalay railway (25 billion yen or US$225.2 million) and improving water supply. Japan also promised to provide 90.1 billion yen (US$811.7 million) to Vietnam for another megaproject, the construction of the Ho Chi Minh City Metro.

But Japan is not the only major source of economic assistance to CLMV countries. Under the Belt and Road Initiative, the Chinese government provides a vast amount of aid for infrastructure projects in Laos, where national income amounts to only US$12 billion. China has offered it US$6 billion to construct a 418-kilometre railway. Despite the potential for tangible and enormous economic impact, concerns have been voiced that this massive provision of aid might have a hidden agenda. These criticisms stem from conditions for the aid provision, with materials for the railway and construction workers to be imported from China.

CLMV countries need vast amounts of funds for the rapid development of their physical infrastructure and human capital necessary to catch up with their richer ASEAN peers. The question is whether CLMV countries will be more inclined to seek financial assistance from Japan or China. Foreign aid programs provided by the Japanese and the Chinese governments have their own strengths and weaknesses. Undoubtedly, the aid provided by China would enable rapid economic transformation on a colossal scale.

Japan is not able to match the scale of China’s foreign aid, due to its economic woes, financial constraints and ageing population. But the quality of Japanese aid assistance programs — they have been continuously refined over more than sixty years —  would be a valuable complementary economic resource for achieving equitable development in the region.

Fumitaka Furuoka is Associate Professor at the Asia-Europe Institute, University of Malaya.



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ASIAN (H)

South Korea’s missing middle power diplomacy

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Author: Jeffrey Robertson, ANU

These days it is inviting debate at best, and ridicule at worst, to say that South Korea is not a middle power. Fuelled by South Korean government campaigns, there is broad scholarly and media agreement that South Korea is a middle power.

South Korean President Moon Jae-in and Qatar's Emir Sheikh Tamim bin Hamad Al Thani attend a signing agreement following their meeting at the presidential Blue House in Seoul, South Korea, 28 January 2019 (Photo: Reuters/Chung Sung-jun).

Taking a contrarian view on this topic provides significant insight into the shortcomings of current South Korean foreign policy. This has recently come to the fore in South Korea’s attempts to address issues relating to North Korea.

In 2017–18, South Korea understandably pursued crisis diplomacy as the threat of immediate conflict increased with inflammatory US and North Korean rhetoric. This required high-level decision-making, close coordination between partners and allies, clear initial signalling, limited and achievable goals, and a willingness to compromise. South Korea’s crisis diplomacy was highly successful and managed to rein in US and North Korean excesses and reduce the risk of miscalculation and conflict.

But the effectiveness of crisis diplomacy is limited by time and does not provide tools to transform the root causes of tension.

Assuming a behaviour-based definition of middle power, South Korea’s crisis diplomacy should have immediately been followed by characteristic middle power diplomacy. As soon as security tensions reduce, a middle power initiative should be launched.

South Korea could have actively increased its negotiating leverage by working with other middle powers (coalition building) and pursued innovative, creative diplomatic instruments to secure South Korean objectives (activist diplomacy). It could have also utilised tools that provide middle powers with comparative advantage (niche diplomacy) and promoted its efforts as ‘the right thing to do’ for a responsible member of the international community (good international citizenship).

Without middle power diplomacy, South Korea has effectively allowed its foreign policy to be steered by the vagaries of North Korea and the United States — one apparently incompetent and unpredictable, the other impenetrable and incorrigible (in fact these criticisms are interchangeable). South Korea has no negotiating leverage vis-a-vis the two actors, and no capacity to constrain their actions. It has allowed its agency to be subsumed by them.

Western media coverage of the Singapore and Hanoi summits highlight this fact. For most viewers, the entire issue concerned the United States, North Korea, and host Vietnam. South Korea hardly rated a mention.

South Korea now has no control over the structure of future agreements, institutions, or instruments to be used. This means that current diplomatic endeavours based on high-level summitry leave it little room for flexibility. Any successes can unravel with a change of government in two (US President Donald Trump), three (South Korean President Moon Jae-in), or six (second-term Trump) years.

North Korea could potentially secure its medium-term aims to reduce constraints on its economic activity without any impact on its long-term aim to maintain a credible deterrent to external intervention. Failures can be blamed on changed policies in partner states and the entire game can be played again later.

There are several reasons that could explain why South Korea is unable to use middle power diplomacy to address issues relating to North Korea.

Foreign policy formulation in South Korea is strictly hierarchical. Ideas and initiatives start with presidential advisors and pass downwards to be implemented by the foreign ministry. Rarely are core initiatives formed within the ministry. This means that if the small coterie of presidential foreign policy advisors is cognisant of middle power diplomacy, then ideas will flow. If their interests lie in other areas, middle power diplomacy will be absent.

Organisational culture within the foreign ministry is also highly conservative, hierarchical, and risk averse — new, creative and innovative ideas are less readily accepted. There is less willingness to open up and interact with non-traditional foreign policy actors.

The concept and understanding of how middle power diplomacy works is still relatively new in South Korea despite the popularity of the term. Realism remains the most dominant paradigm to understand international relations and major power competition remains the most popular subject. Rarely do schools of international studies include course content on middle powers or Australian or Canadian foreign policy. While the term ‘middle power’ has risen dramatically and is used in numerous academic papers, a deeper understanding of what the concept means is yet to spread widely.

South Korea is not yet using middle power diplomacy. It started the engine with crisis diplomacy but is no longer steering the vehicle. And without middle power diplomacy, the vehicle will ultimately end up in the same fiery crash that has befallen previous attempts to address issues relating to North Korea — or worse. Moon may be pursuing a new approach to North Korea, but it is not middle power diplomacy.

Jeffrey Robertson is a Visiting Fellow at the Asia-Pacific College of Diplomacy at the Australian National University and Assistant Professor at Yonsei University in South Korea. He is author of Diplomatic Style and Foreign Policy: A Case Study of South Korea (Palgrave 2016).



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ASIAN (H)

Singapore’s mechanism design approach to housing policy

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Author: Sock-Yong Phang, Singapore Management University

Despite being a land scarce city-state with close to 6 million people, Singapore has achieved a high homeownership rate of 91 per cent. Its 2018 median house price to median household income ratio was just 4.6, in contrast to Hong Kong (20.9), Sydney (11.7), Los Angeles (9.2) and London (8.3). The framing of affordable and inclusive housing as socio-political goals led the government to design mechanisms to most efficiently achieve these goals.

General view of apartment blocks consisting of private and public housing in Singapore, 27 September 2018 (Photo: Reuters/Kevin Lam).

Mechanism design is often described as the ‘reverse engineering’ part of economics. A policymaker starts with the goals to be achieved, and then works backwards to decide what mechanisms (such as legislation, institutions or the market) or incentives can best achieve these desired outcomes.

While mechanism design has been successfully applied in numerous settings from the hiring of new doctors to kidney exchange, it is not typically used to describe housing market interventions. Yet it is widely recognised that in fast-growing cities, markets and profit-driven institutions are unlikely to deliver decent housing at prices affordable to low-income households, leading governments to intervene in numerous ways. In many contexts, common policy responses such as rent control and restrictive land use regulations actually act to limit supply and increase housing prices.

Well-designed mechanisms for affordable housing that have stood the tests of time are fair, transparent and not overly complicated. They are subject to constant oversight, and require regular re-engineering and improvement. Conversely, poorly designed mechanisms can result in substantial welfare losses, with the 2008–09 subprime crisis as the most dramatic example.

During the colonial period, there was a critical housing shortage in Singapore. Pre-war shophouses, slums, squatter colonies and zinc-roofed settlements dotted the landscape. The first elected government in 1959 had a vision ‘to provide decent homes equipped with modern amenities for all those who needed them’. It established the Housing and Development Board (HDB) in 1960 to clear and redevelop slums and urban areas, develop rural or agricultural areas for resettlement, and erect housing and other real estate. In those early days, the HDB faced tremendous obstacles when acquiring land for redevelopment and resettlement.

At the time of separation from Malaysia and independence in 1965, the Parliament of Singapore adopted all the provisions of the Malaysian Constitution with one exception: the right to adequate compensation in the event of compulsory land acquisition. Soon after, Parliament enacted the Land Acquisition Act that gave powers to the government and its agencies to acquire land at prices fixed on a date determined by legislation. Today, 90 per cent of land belongs to the government and 81 per cent of the resident population live in high-rise HDB flats, which comprise 73 per cent of the housing stock.

Another goal was ‘a home-owning society’ that Singapore’s visionary founding prime minister Lee Kuan Yew considered essential for social and political stability. To enable low-income households to afford to own their homes, the government transformed the pension fund, the Central Provident Fund, into a housing provident fund in 1968. Employees and employers had to make compulsory contributions to the employee’s account. Savings could then be withdrawn for down payment and mortgage payments to purchase HDB flats sold on 99-year leases, with housing loans also provided by the HDB.

This mortgage design mobilised domestic savings on a nation-wide basis and made homeownership the default choice for households. Not surprisingly, the homeownership rate climbed rapidly from 29 per cent in 1970 to 88 per cent by 1990.

HDB’s allocation mechanisms and calibrated housing grants are based on means testing and household profiling, which help ensure priority for first-time homeowners and net housing prices that are within five years of annual salary. A secondary market for HDB flats was created in the 1980s and deregulated over time. Resale at market prices served a few purposes: household mobility, affordable housing for those not eligible for subsidised HDB housing and market valuation of HDB flats.

The housing market is carefully segmented with subsets based on household characteristics. Spatially though, land use planning has integrated different housing types for inclusive neighbourhoods. Ethnic quotas regulate resale transactions to achieve a ‘healthy mix’ in HDB estates.

To increase private housing supply, the government reformed land use planning processes, and held periodic land auctions for private housing and for upper middle-income housing developments. It also amended legislation to remove gridlock over redevelopment of properties held by multiple owners. Differentiated buyer stamp duties (up to 24 per cent of price) are used to curb foreign, speculative and investor demand.

Today, Singapore faces new challenges of an ageing and more diverse population. The HDB housing stock is also ageing and the values of flats will depreciate to zero at the end of their 99-year leases. In response, the government has designed various schemes for housing equity withdrawal and put in place voting mechanisms to allow for early en-bloc redevelopment.

Singapore shows it is possible for a global city to achieve affordable and inclusive housing with extensive and multipronged interventions appropriate to its circumstances. Its policies and practices have been ‘exported’ to several developing countries, but housing markets are incredibly complex. Outcomes have varied and depend on specifics of policy design, and local political and social contexts.

Sock-Yong Phang is Celia Moh Chair Professor of Economics at the Singapore Management University.



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ASIAN (H)

The Philippines needs to rethink its agricultural policy

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Author: Marife M Ballesteros, PIDS

The Philippines has one of the longest running land reform programs in the world, dating back from the early 1900s. But the government is struggling to update its policies to suit the demands of the modern world.

Land reform was initially instituted as a developmental program involving mainly the distribution of public lands. But by the early 1970s, it became a strategy to jump-start agriculture productivity by dismantling the hacienda estate system and eliminating inefficient tenancy arrangements in the Philippine agriculture sector. The program then shifted to a redistributive welfare scheme that was compulsory and implemented nationwide for both publicly and privately held land used for agricultural purposes.

Farmers use a threshing machine at a rice field in Calumpit town, Bulacan province, north of Manila, Philippines, 23 April 2018 (Photo: Reuters/Romeo Ranoco).

Over time, land reform has lost its political appeal. The budget for land acquisition and distribution has diminished from 0.44 per cent of GDP in 1988–1991 to 0.15 per cent of GDP for 2010–2016. At the turn of the 21st century, Congress had started to cut the budget for land acquisition and distribution. It gave low priority to the acquisition of new private land and directed the Department of Agrarian Reform to focus on support services for the more than 2.8 million land reform beneficiaries.

The current administration is also facilitating the use of agricultural land for non-agriculture purposes. The Department of Agrarian Reform’s first Administrative Order of 2019 simplified this process of land conversion by doing away with necessary productivity and land use clearances from the Department of Agriculture and the Housing and Land Use Regulatory Board.

A major accomplishment of the land reform program is the abolition of the hacienda estate system in all but the sugar-producing province of Negros Occidental. The more than 40 years of redistributive land reform placed roughly 83 per cent of total agricultural land in the country under the reform program. Average farm size has been reduced to 1.29 hectares — less than half the 1980 average of 2.84 hectares. Of the total 5.56 million farms in 2012, about 57 per cent are less than one hectare and only 0.03 per cent are farms with an area of 50 hectares and over.

On the other hand, the agriculture sector remains uncompetitive. Small farms are failing to move out of subsistence agriculture and into agribusiness. Land reform is partly to blame as the protracted and poor implementation of the program is moving the agriculture sector backwards. Agricultural land property rights have been complicated by legal restrictions on the transferability of land-reform awarded lands, a multiplicity of owners or rights to land, and errors in land reform coverage and beneficiary identification. These issues complicate land transactions and hinder investment into the sector.

Unfortunately, the government continues to ignore the warnings signs and is addressing the issue by intensifying controls on transfers of ownership, lease arrangements and on other contracts entered into by agrarian reform beneficiaries.

With globalisation and the onset of the Fourth Industrial Revolution, land reform as a redistributive strategy has become obsolete. In recent years, the routes to poverty alleviation in rural areas have increased. Impact studies also note that new ownership of land through land reform programs as a means to improve welfare is complicated. Labour statistics also show a declining share of agriculture in the labour force. Increasingly, the younger generations of farming households are better educated and equipping themselves with skills that are needed in either industry or the services sectors.

There is no way forward but to enable small farms to leapfrog into industrial agriculture systems.

One way is for the government to support land consolidation schemes such as block farming. Block farming is a land consolidation concept that allows farmers to individually manage farms under consolidated operations. This can bring about economies of scale for crops that require significant inputs and mechanisation. Block farming has been shown to reduce production costs, increase farm productivity and incomes, and enable farmers to establish agribusiness activities.

Land consolidation can also be done through joint farming. This involves land exchanges and sale to improve efficiency of agricultural land production. In countries that practice joint farming, government issued preferential policies on land transfers and transactions allow for temporary land acquisition, land renovation, and repurchase or lease of land tenures by the original owners.

Another strategy to enable agribusiness is contract farming. Contract farming provides small farmers with access to technology, technical guidance, financing and new markets through partnerships with global firms. With higher and better quality production, linking agriculture to domestic and global manufacturing and industry systems becomes easier.

Whichever path forward Philippine policymakers choose, the government has to provide the infrastructure and the legal and policy environment for these arrangements to flourish.

Dr. Marife M. Ballesteros is Vice President of the Philippine Institute for Development Studies (PIDS).



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ASIAN (H)

Time to speak up about the South China Sea

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Author: Lyle J Morris, RAND Corporation

There appears to be a collective aversion among government officials and heads-of-state in Southeast Asia to speak up in public about Chinese transgressions and coercion in the South China Sea. Such reticence is based on misplaced fear of Chinese repercussions and does a disservice to regional interests, undermines deterrence and needlessly concedes leverage in negotiations with China on territorial disputes or a South China Sea Code of Conduct.

Activists display placards as they chant slogans during a rally to protest alleged harassment of Philippine fishermen at the Scarborough Shoal in the disputed South China Sea, Makati, Metro Manila, Philippines, 12 June 2018 (Photo: Reuters/Erik De Castro).

This sentiment was on display in a recent interview with Singapore’s Defence Minister Ng Eng Hen, who downplayed concerns over Chinese activities in the disputed waters. Ng said calling China a regional hegemon was a matter of ‘opinion’, gave credence to China’s ‘peaceful rise’ narrative and highlighted China’s positive role in economics and trade. All were unprompted comments made in the context of discussing the South China Sea disputes.

Other leaders in Southeast Asia, such as Philippines President Rodrigo Duterte, have also made accommodating statements that seem to downplay China’s actions in the South China Sea. ASEAN chairman statements are noteworthy for their relatively benign rhetoric and failure to include terms such as ‘erosion of trust’ or ‘militarisation’ of the South China Sea due to Chinese actions. In some cases, China has successfully lobbied the bloc to remove such language.

Directly opposing Chinese coercion in the South China Sea is antithetical to some leaders in Southeast Asia who may fear that new or enhanced postures could antagonise China, the region’s largest trading partner. But directly calling out China’s breaks from the status quo or intimidation tactics may not necessarily put these countries at risk of Chinese countermeasures. Words, and their cognitive effect in the region and in Beijing, could be used to greater effect as an important tool to push back against Chinese coercion.

To be clear, words alone will not solve the territorial disputes with China. But they could signal the principles that countries stand for and the concerns that they hold. They could set the tone for negotiations, enhance morale and communicate resolve. Words also matter a great deal to China. One needn’t look further than the sensitivity with which China regards ASEAN chairman statements on the South China Sea as an example.

There is only one country undermining stability in the South China Sea: China. It has reclaimed over 3000 acres of land — far more than any other claimant — on its occupied features in the Paracel and Spratly islands. It has built military facilities on its claimed islands that support the forward deployment of air, naval and land-based assets, and deployed missiles on them.

China increasingly uses both government and non-government assets to deny other nations’ legitimate use of resources in their exclusive economic zones in the South China Sea. It called an international legal ruling on its maritime claims illegitimate and a piece of ‘waste paper’. And it engages in unsafe and unprofessional behaviour when coming into contact with aircraft and naval vessels of the United States and other nations.

Most of these activities constitute clear breaks of international law and violations of the consensus in the 2002 Declaration on the Conduct of Parties in the South China Sea between ASEAN and China.

China’s actions in the South China Sea are not disputed by officials and academics in the region. Highlighting these facts should not be controversial. Yet leaders in almost every country in Southeast Asia seem to be meeting China’s strategy of changing the status quo through coercion with quiet accommodation. While this may be because leaders fear potential consequences from China, such fears are overblown.

What is needed is a cognitive shift in how officials in Southeast Asia approach the public signalling of the China problem in the South China Sea. Southeast Asian leaders should consider dropping the notion that speaking up publicly about Chinese activities that threaten and undermine basic norms of peace and stability will harm their relations in the region or with China.

Countries in the region should cease viewing the South China Sea disputes as a binary choice between war with China and accommodating Chinese activities, as Ng and others have suggested. Calling out Chinese transgressions is unlikely to lead to war. To the contrary, it could incrementally bolster morale and possibly prompt other leaders to feel less insecure about speaking up themselves.

Lyle J Morris is a senior policy analyst at the nonprofit, nonpartisan RAND Corporation.



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HISPANIC (H

Medicare Remote Patient Monitoring: CMS Allows “Incident to” Billing

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medicaid

CMS just announced a clarification that remote patient monitoring under CPT code 99457 may be furnished by auxiliary personnel, “incident to” the billing practitioner’s professional services.  An “incident to” service is one that is performed under the supervision of a physician (broadly defined), and billed to Medicare in the name of the physician, subject to certain requirements, one of which is discussed below.  The announcement came in a technical correction issued March 14, 2019 and is effective immediately.  This is a highly-anticipated change among remote patient monitoring companies, as we discussed in greater detail in our previous coverage.

The newest code for remote patient monitoring, CPT code 99457, went live in January 2019.  It offers Medicare reimbursement for “Remote physiologic monitoring treatment management services, 20 minutes or more of clinical staff/physician/other qualified healthcare professional time in a calendar month requiring interactive communication with the patient/caregiver during the month.”

When the final rule for the 2019 Physician Fee Schedule was published in November 2018, CMS stated that CPT code 99457 describes professional time and “therefore cannot be furnished by auxiliary personnel incident to a practitioner’s professional services.”   With this technical correction, CMS deleted that sentence, instead replacing it with: “We thank commenters and confirm that these services may be furnished by auxiliary personnel incident to a practitioner’s professional service.”  This is a welcome revision long-awaited by telehealth providers.

The change now allows RPM services to better mirror Chronic Care Management (CCM) services (CPT code 99487, 99489, and 99490).  However, the default rule for incident to billing under Medicare requires direct supervision, not general supervision.  Direct supervision means the physician and auxiliary personnel must be in the same building at the same time (albeit not the same room).  In contrast, general supervision does not require the physician and auxiliary personnel to be in the same building at the same time, and the physician could instead use telemedicine to exert general supervision over the auxiliary personnel.

For CCM Services, CMS created a regulatory exception allowing “incident to” billing under general supervision.  Unfortunately, the recent technical correction for RPM does not state that CPT code 99457 can be delivered under general supervision.  Indeed, CMS has not revised the RPM regulations to allow an exception to the default requirement of direct supervision.  While the correction is good news for providers and patients, changing the RPM rules to expressly allow incident to billing of CPT code 99457 under general supervision will make a huge difference in operations and business models, thereby allowing more patients to enjoy the quality-improving benefits of remote patient monitoring.

Providers and technology companies seeking a change to allow general supervision should consider submitting comments to CMS on this topic once the 2020 Physician Fee Schedule proposed rule is issued (typically the beginning of July).  We will continue to track these rules and changes as they develop.

Want to learn more?

Join a deeper discussion of remote patient monitoring and regulatory issues at the American Telemedicine Association’s 2019 Annual Conference and Expo in New Orleans on April 14-16, 2019.  Read the current program agenda and register here.

For more information on telemedicine, telehealth, virtual care, remote patient monitoring, digital health, and other health innovations, including the team, publications, and representative experience, visit Foley’s Telemedicine & Digital Health Industry Team.



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ASIAN (H)

Water sharing in Indonesia key to smothering transboundary haze

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Authors: Michelle Ann Miller and Zu Dienle Tan, NUS

With 2019 expected to bring hotter and drier-than-usual El Niño weather conditions to Southeast Asia, concerns are heightened about a recurrence of the 2015 haze crisis. The episode of chronic transboundary air pollution that choked the region in a blanket of acrid smoke had severe health, economic and environmental impacts.

Indonesian soldiers try to extinguish a peat fire in Kampar, Riau, Sumatra island, Indonesia, 6 October 6, 2016 in this photo taken by Antara Foto. Picture taken October 2016 (Photo: Antara Foto/Rony Muharrman/via Reuters).

Indonesia, a major haze-producing country, claims to be better prepared for the next intense dry season, expected to start in June this year. Indonesia’s confidence is linked to major land reforms undertaken in the aftermath of the 2015 haze crisis. In 2016, President Joko Widodo introduced a moratorium on burning, draining and deforesting 4.9 million hectares of peatlands, amending a 2014 regulation.

The primary source of transboundary haze comes from biomass burning in peat swamps. When naturally saturated peat swamps are drained for plantation agriculture, they become highly flammable in the dry season months of June to September, increasing the risk of biomass fires that release massive quantities of carbon into the atmosphere.

While Indonesia is taking strides to restore the health of degraded peat ecosystems, current legislation contains major oversights that are igniting new problems in government efforts to combat transboundary haze. There is a critical lack of knowledge about the role of water in preventing and suppressing deep peat fires. At the same time, the government’s zero-burning policy invalidates indigenous knowledge of controlled burning practices that is needed to adapt to the rapidly changing hydrological conditions of Indonesia’s peatlands.

Indonesia’s Riau province on the central east coast of Sumatra is a leading perpetrator and victim of transboundary haze. Half of the province is composed of peatlands. Riau also hosts two-thirds of Indonesia’s pulp and paper production, covering around 1.7 million hectares, along with more than 2.4 million hectares of palm oil plantations.

When companies with global operations build dams upstream of communities, they often expose neighbouring peatland communities to harsher seasonal variations in the form of droughts and floods. The closure of company dam sluice gates in the dry season for retaining water on their concessions reduces the flow of water to smallholder farmers and communities, creating localised hotspots of heightened fire risk. Without readily available water, many peatland communities are left unprepared to effectively respond to haze-inducing wildfires. In the rainy season, when plantation companies open their dam gates, they release excessive rainwater that floods surrounding communities.

Inter-seasonal changes in water availability are encouraging fishermen to work in the dry season. Their discarded cigarettes on combustible biomass have become a commonly cited cause of haze-belching wildfires.

The government has so far adopted a hands-off approach in dealing with water-sharing issues between companies and communities. No big plantation company has been prosecuted for withholding water from adjacent communities. Nor have major perpetrators of groundwater pollution been brought to justice for leaking pesticides and fertilisers into communities that bear the cumulative burden of public health problems.

Overlooking the underlying problem of water sharing will exacerbate existing tensions between companies and communities. If water-sharing arrangements cannot be fairly resolved, the use of fire as a weapon to express grievances is likely to contribute to future episodes of transboundary haze.

The inability of peatland communities to optimally function under conditions of dry season water shortages fuels government and company narratives that local people are incapable of managing their own resources. Yet the current government ban on the use of fire for clearing land has delegitimised traditional controlled burning practices, which are now punishable by jail terms and hefty fines.

For generations, indigenous groups such as the Dayaks of Central and West Kalimantan have practiced controlled burning to remove excess biomass, destroy pests and prepare land for planting. Likewise, farmers in Riau’s Bengkalis Regency used to create fire breaks before the fire ban by felling trees within a given perimeter and herding fire into the centre of an enclosure to contain it. Before and during burning in the late wet season, farmers knew that they needed to remain mindful of wind strength and direction to minimise the chance of uncontrolled flames.

Failure to distinguish between safe burning and uncontrolled or accidental fires impedes the capacity of communities to sustainably adapt to the rapidly changing hydrological landscape of Indonesia’s drained peat swamps. By targeting peatland communities, Indonesia’s current anti-haze legislation is missing the root cause of the problem, which rests heavily on unequal water-sharing arrangements.

Both water and fire knowledge must be shared in ways that are inclusive of peatland communities if governance efforts to deal with predicted El Niño conditions are to succeed. As a starting point, existing water-sharing arrangements between companies and communities that incubate dry season hotspots must be pushed toward fairer resolution.

Without greater attention to the nuances in how peatland communities manage their own fire and water resources, government efforts to combat transboundary haze are unlikely to succeed in the longer term.

Michelle Ann Miller is Senior Research Fellow at the Asia Research Institute, National University of Singapore.

Zu Dienle Tan is a PhD candidate in the Department of Geography, National University of Singapore.



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Abe’s underperforming Russia policy faces growing political backlash

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Author: James D.J. Brown, Temple University Japan

The June 2018 encounter between US President Donald Trump and North Korean leader Kim Jong-un was not the only momentous summit to take place in Singapore last year. The city-state also hosted Japanese Prime Minister Shinzo Abe’s meeting with Russian President Vladimir Putin in November at which they agreed to accelerate peace treaty talks based on the countries’ joint declaration of 1956. 

Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe make a joint statement following their meeting at the Kremlin in Moscow, Russia 22 January 2019 (Photo: Reuters/Alexei Druzhinin).

This agreement represents a significant concession by Japan. The 1956 joint declaration mentions only Shikotan and Habomai, the smaller two of the four islands whose disputed status has prevented Tokyo and Moscow from sealing a peace treaty since 1945. Putin has long accepted the validity of the 1956 joint declaration. But until now, Japanese governments have considered the promise of two islands insufficient, especially since they account for only 7 per cent of the disputed landmass.

After Abe’s unilateral concession in Singapore, the leaders met again in December to agree that foreign ministers Taro Kono and Sergei Lavrov would have responsibility for the accelerated talks and would meet early in the new year. Abe began 2019 in a positive mood and it was rumoured that he was aiming to conclude an outline agreement when Putin visits Osaka for the G20 summit in June.

This sense of optimism did not last long. On 9 January, the Russian foreign ministry summoned the Japanese ambassador to complain that recent statements by the Japanese leadership ‘grossly distort’ the agreement reached in Singapore. In particular, Moscow was angered by Abe’s comments about the need to gain Russian residents’ understanding about the islands’ transfer to Japan.

Since then, things have not improved. Despite Abe’s visit to Moscow on 22 January and meetings between Kono and Lavrov in January and February, there is no sign of the promised acceleration. Instead, Russia is taking every opportunity to raise additional hurdles.

Lavrov is demanding that, as a first step, Japan must recognise the results of the Second World War, including Russian sovereignty over all the disputed islands. In other words, Japan must give up its territorial claim and trust that, after signing a peace treaty, Moscow will keep its promise to transfer Shikotan and Habomai.

Lavrov is also presenting Japan’s security relationship with the United States as an obstacle, asserting that Russia and Japan are far from international partners and that conditions for concluding a peace treaty are ‘entirely absent’.

This is humiliating for Abe. As well as conceding to base negotiations on the 1956 joint declaration, he has worked hard to cultivate personal ties with Putin, describing him as someone who is as ‘dear to me as a partner’. Since returning to power in December 2012, Abe has visited Russia nine times. Putin has only been to Japan once.

Abe has offered economic incentives and distanced Japan from Western criticism of Russia. This included introducing only token sanctions after the annexation of Crimea in March 2014 and refusing to join G7 partners in expelling diplomats after the Skripal case in March 2018. Abe has also reportedly promised Putin that he would not permit US forces to be stationed on Shikotan and Habomai if the islands were transferred.

None of this has softened Russia’s stance, yet Abe seems determined to offer further inducements. On 15 February, it was reported that Japan is considering eliminating visa requirements for short-term Russian visitors. Then on 19 February it was made public that the government is encouraging Japanese companies to invest in Russia’s Arctic LNG-2 project by promising to finance up to half their stake.

While Abe persists with this policy, he is starting to face domestic opposition. To begin with, there is little public enthusiasm for the two-island deal. A Nikkei survey in January found that only 11 per cent of respondents were willing to settle for just two islands. The media is also growing frustrated with the government’s unwillingness to discuss its approach to the talks.

Criticism of the government’s Russia policy is also a feature of the current parliamentary session. Most notably, opposition parties are attacking Abe and Kono for ceasing to use the terms ‘inherent territory’ and ‘illegal occupation’ to describe the disputed islands. These phrases remain official policy but the Japanese leadership is avoiding them for fear of provoking Russia. Additionally, Kenji Eda of the Constitutional Democratic Party has condemned Abe’s continual visits to Russia as ‘a foreign policy of paying tribute’.

There are also rumblings within the ruling Liberal Democratic Party (LDP). Shigeru Ishiba, who challenged Abe for the party leadership in September 2018, criticises the government’s reluctance to explain its Russia policy and takes issue with Abe’s refusal to use the terms ‘inherent territory’ and ‘illegal occupation’. Likewise, Fumio Kishida — a former foreign minister who sees himself as a leading candidate to replace Abe — has used these sensitive phrases, distancing himself from the Prime Minister.

More broadly, a meeting of the LDP’s foreign affairs research committee on 29 January saw many members calling for the government to adopt a tougher stance towards Russia. Given the serious unpopularity of the policy, it is questionable whether Abe could even secure ratification for a peace treaty within the lower house.

Territorial talks with Russia were once seen as a way for Abe to burnish his legacy. Recently, they are looking more like a political liability.

James D.J. Brown is Associate Professor and Academic Program Coordinator for International Affairs at Temple University Japan.



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Renewed calls for constitutional change in Myanmar’s ‘military-state’

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Author: Melissa Crouch, UNSW

Constitutional change was a 2015 election campaign promise of Myanmar’s National League for Democracy (NLD) and Aung San Suu Kyi. As the 2020 elections loom large, they are now revisiting the proposal to recapture the attention and support of the people.

Supporters of National League for Democracy on a campaign rally for the by-election in Yangon, Myanmar, 1 November 2018 (Photo: Reuters/Ann Wang).

Over the past three years, the NLD government has been busy dealing with a wide range of governance issues. The peace process has been particularly difficult and hit a number of obstacles. It is unlikely that it will be able to show progress in this area.

The NLD is instead turning to amending the military-enacted constitution to stimulate electoral momentum. Reforms could potentially affect the military’s role in governance, and so the move is mired in controversy.

To begin with, the NLD raised this legislative motion on the date of the commemoration of U Ko Ni — a lawyer and former advisor to the NLD — who was assassinated on 26 January 2017. Ko Ni was the country’s most vocal advocate for constitutional reform. His death has had a chilling effect on efforts to amend the Constitution.

When the NLD proposed forming a committee to amend the Constitution in the national legislature, the military claimed that they had failed to follow the correct procedure.

All of the military members of parliament refused to vote on the motion as a show of defiance. They have done this on a handful of other occasions, such as when the NLD proposed creating the Office of State Counsellor specifically for Aung San Suu Kyi. The military has also suggested they may not participate in the legislative committee.

Then in early February a group of pro-military protestors held a demonstration in downtown Yangon. The protestors waved two flags — the national flag and a blue flag with a white dove, a symbol of peace. The rally used a mixture of nationalist pride and appeals to peace to suggest that the Constitution should not be changed.

The military’s position has been challenged with a large counter-rally by pro-democratic actors calling for constitutional change.

After the legislature went ahead and approved the committee, the military warned that the ‘essence’ of the Constitution must not be changed. So, what is at the core of the Constitution? Why is it so contested?

There are three essential elements as designed by the military.

First, the military has a constitutional role as the leading body in national governance. This means that the military sits in the legislature and military appointees hold some high-level ministerial positions. The military also exercises informal influence over the government administration and the judiciary.

The military’s role in ‘national politics’ is said to be distinct from its role in ‘party politics’. This distinction means that the military claims to independently oversee the political system though does not technically have its own political party. The Constitution facilitates the military’s monopoly on power.

Second, the Constitution is animated by an ideology developed during the period of direct military rule (post-1988). Known as ‘Our Three Main National Causes’, this ideology supports the role of the military in governance.

This ideology has three elements: non-disintegration of the Union, non-disintegration of national solidarity, and the perpetuation of sovereignty.

The emphasis on non-disintegration represents the rejection and denial of the secessionist and separatist demands of ethnic groups. The non-disintegration of national solidarity is based on a fixed number of official ‘national races’ and the idea that they must not challenge Burman privilege. The reference to sovereignty relates not so much to fears of external interference, but rather to fears of internal disorder and conflict with ethnic armed organisations. The Constitution demands loyalty to these three principles.

The third key element in the Constitution organises the state around the idea of coercive centralism. Coercive centralism describes the relationship between the branches of government and between the Union and the sub-national units. There is a strong culture of coercive cooperation and collaboration among the institutions of the state. The courts cannot act effectively as a check on the power of the executive or legislature and the military remains entirely unaccountable.

These three elements are at the core of the Constitution and form the basis of the ‘military-state’ in Myanmar — the co-existence of military and civilian authorities.

These three principles link to and reinforce the role of the military in leading the country, silencing secessionist claims and promoting an exclusive idea of national races. These principles are repeated consistently and regularly throughout the Constitution.

The NLD fundamentally disagrees with the leading role of the military in governance and its ideology, as well as the structural advantages the Constitution grants to the military.

But this move to form a committee is unlikely to lead to major changes to the essence of the Constitution. It is instead the NLD’s chance to put on the record its demands for constitutional change, a mandate they will no doubt pick up again if they are successful in the 2020 elections.

Melissa Crouch is Associate Professor at the University of New South Wales and is the author of The Constitution of Myanmar: A Contextual Analysis.



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