Introduction

The financial scandal surrounding eFishery, one of Indonesia’s prominent agritech startups, has sent shockwaves through the nation’s investment landscape. Once hailed as a unicorn disrupting aquaculture, eFishery’s fall from grace in early 2025 was swift, thrusting it into domestic and international spotlights for all the wrong reasons.

An internal investigation uncovered large-scale fraud, exposing gaping discrepancies between the company’s published reports and reality. This incident not only tarnished the once-celebrated reputation but also raised pressing questions about the integrity and sustainability of Indonesia’s burgeoning tech sector.

Given the fraud’s sheer scale and public exposure, eFishery’s case offers hard lessons for future startup founders, investors, employees and policymakers alike. This report examines its impact on Indonesia’s business landscape and whether it could dim the country’s allure as a destination for foreign direct investment (FDI).

What Happened?

Founded in 2013, eFishery set out to revolutionise Indonesia’s aquaculture industry with innovative smart fish-feeding technology. Starting with automated feeders, it grew into an end-to-end platform offering feed, financing, and market access to fish and shrimp farmers.

By mid-2023, the company had raised more than US$294m from 28 institutional investors – including Softbank, 42XFund, Temasek, 500 Global and Northstar Group – achieving a US$1.4b valuation and the coveted “unicorn” status.

The unravelling began in December 2024 when a whistleblower alerted a board member to accounting irregularities. A subsequent investigation by FTI Consulting revealed a web of deceit, with eFishery’s top management having inflated revenues from US$157m to US$752m and reported a US$16m profit against an actual US$35m loss for the first nine months of 2024.

Signs of fraud could be traced all the way back to 2018, with the company maintaining dual financial reports – one for internal use, another for investors – while claiming 400,000 operational fish feeders against a true count of 24,000.

A fictional network of companies facilitated “round-tripping” funds through forged invoices and contracts, deceiving auditors from PricewaterhouseCoopers (PwC) and Grant Thornton. In mid-December, investors ousted founder-CEO Gibran Huzaifah and co-founder-CPO Chrisna Aditya, installing interim leadership.

Too Noble to Fail

This elaborate deception did not occur in a vacuum—investors played a role too. What makes eFishery’s case unique is how the company is positioned – or positioned itself – in the grand narratives surrounding tech startups.

eFishery’s fraud hid behind a compelling mission: empowering marginalised fish farmers and boosting micro, small and medium enterprises (MSMEs). This narrative resonated deeply with Indonesian stakeholders, casting the company as a socially driven innovator.

This feel-good social mission was further hyped by eFishery’s public narratives conveyed during the onset of tech winter in 2022. During that challenging period that also affected other companies, many Indonesian tech startups underwent extreme downsizing and struggled to secure funding.

Surprisingly, eFishery stood out and seemed to be weathering the storm well.

It was able to secure Series C funding worth US$90m. Furthermore, the company brought forth the narrative that it contributes to 1.5% of total aquaculture GDP in 2022, prompting one of its key investors to say that the company was more profitable than GoJek, an Indonesian decacorn.

Later in 2025, the same investor changed his tone and called the eFishery situation “embarrassing”.

This blend of noble intent and apparent success made eFishery a poster child for tech startups, but it only amplified the shock when the scandal broke. eFishery’s financial scandal extinguished the dreams of many of its innocent employees who just want to work for a company with commendable socioeconomic missions, at least on paper.

What the Investors Missed

Early warning signs – like rapid scaling and outrageous revenue projections – are often dismissed amid Indonesia’s tech boom. Yet, fraud is hardly a rarity in business—its nature and scale varies widely.

One of our sources, a former global banker with insider knowledge on eFishery’s case, told us that he knows at least two other major Indonesian startups that have manipulated accounts. What makes the eFishery case particularly concerning is that, according to various reports, its investors had adhered to standard due diligence protocols yet still failed to detect the fraud.

At least four firms reportedly have conducted financial audits and due diligence on eFishery: PwC, Grant Thornton, EY and KPMG. PwC later denied such report. Investors also engaged six surveyor firms to validate eFishery’s market position. Additionally, Kroll was tasked with conducting background checks on the company’s executives.

Yet, despite extensive research and investigations, the fraud went undetected. eFishery’s investors reportedly interviewed former CFO and found no red flags. However, the departure of a key executive responsible for overseeing cash flow should have raised concerns—at the very least, a yellow flag.

It appears that the investors primarily focused on verifying numbers, figures and data found in company documents. While they did attempt to assess its market position by hiring survey firms, they failed to investigate whether eFishery had actually produced almost half a million fish feeder machines.

The investors likely understand the importance of thorough due diligence—not just financial, but also reputational and on-the-ground investigations. However, these procedures are often overlooked because they are considered time-consuming and expensive. Moreover, fund managers often operate under tight deadlines, making deep scrutiny difficult.

Nevertheless, the outcome of these instances of oversight is significant.

The magnitude of eFishery’s deception highlights the need for enhanced scrutiny on tech startups. Worse, it suggests that standard due diligence practices may not be sufficient for Indonesian businesses, especially in high-growth sectors like tech. A more investigative, forensic approach – one that includes independent verification of production claims, supply chain audits and anonymous employee interviews – may be necessary to truly assess risks.

Damage

Notably, this scandal is not an isolated case; similar failures, such as those of Theranos and WeWork, have occurred elsewhere in the globe. These incidents underscore the need for investors to balance optimism with scepticism, ensuring that due diligence processes are robust and comprehensive.

eFishery’s collapse, however, hit hard and wide. Employees uninvolved in the fraud activities face job insecurity and market stigma—social media posts already suggest some employers shun ex-staff from recent layoffs. Meanwhile, investors appear incompetent, creditors worry about repayment, and farmers grapple with disrupted orders and loans.

For risk-averse investors, the eFishery debacle serves as a stark reminder of the importance of stringent due diligence. Traditional investors may adopt more rigorous evaluation processes, incorporating investigative methods and reputational due diligence – usually employed alongside financial and legal due diligence – to uncover potential risks that may be hidden underneath piles of the company’s documents.

Conversely, while venture capitalists are accustomed to the high-risk nature of startup investments, the eFishery incident may prompt a reevaluation of risk assessment frameworks.

Moving forward, it is best that tech startups are also subjected to thorough operational audits, such as via site visits and employee interviews to determine a company’s procedures, processes, and management practices. These on-the-ground due diligence should be conducted openly or discreetly.

An example for the latter is to covertly investigate how many trucks or cargo vehicles come and go from a company’s site to determine its activities. A case from 2016 supports this. Then, a Singapore-listed company was caught red-handed attempting to mislead potential investors by falsely asserting that its FnB products were widely available in China—claims that were easily debunked by visiting retail outlets in key cities in the mainland.

The real victim, however, is Indonesia’s business ecosystem and economy, particularly pertaining to FDI. The erosion of trust caused by eFishery’s misconduct may deter foreign investors, especially major banking institutions, from considering Indonesia as a destination country due to heightened concerns over risk management. This scepticism could lead to a more cautious approach towards investing in Indonesia as a whole, not just its tech sector.

Moreover, this could weaken investor confidence beyond the tech industry, which could slow down mergers and acquisitions (M&A) as well as business partnership. This is because foreign investors would prioritise risk management and governance, which could hinder Indonesia’s efforts to attract FDI in higher value-added industries beyond raw materials.

Therefore, eFishery’s scandal would likely lead to a slowdown in investment activities as investors require more thorough due diligence encompassing financial, legal, operational and reputational aspects. This heightened scrutiny could extend decision-making timelines and increase transaction costs.

In addition, it might also cast a shadow over tech-centric business models, leading to increased scepticism and potentially hindering the growth as well as adoption of technological innovations. Tech startups might find themselves in a more difficult situation to secure funding, which could push them to come up with new buzzwords and “strategies” in an attempt to make themselves look credible in front of investors. Alternatively, they may need to go the “anti-startup” route, i.e. developing a more disciplined and accountable approach to its business model as well as adopting a more prudent approach to using investors’ money.

Fraud is Here to Stay

Despite the uproar, there is a potential that not many changes will take place when the dust finally settles.

While venture capitalists might take a pause and hold back, other investors might quickly put aside their concerns and explore the next new opportunities. The root cause of eFishery’s fraud is investors’ expectation of ultrafast and accelerated growth, which is a common phenomenon in the tech startup scene. Bear in mind that this is the industry that attracts moneyed individuals with such jingoism as “growth hacking” or “blitzscaling”.

So long as the expectation for an unrealistic growth pace rules the game, the eFishery debacle is unlikely to be the last of its kind.

Venture capitalists have an advantage over others because this is their playing field. They know the funding game and inherent risks attached to tech startups such as eFishery. Those who parked their money under eFishery would not have bet all their money on this one company, as they understand the importance of portfolio diversification. As such, it is difficult to believe that all of these big names acted so surprised in unison after the news broke.

Meanwhile, the reputation of the founders is tarnished. They have become a subject of ridicule in social media and discussed as a case study of a company-gone-wrong in MBA classes. They are also engulfed in legal suits.

The people, on the other hand, would eventually move on. Given Indonesians’ forgiving nature and tendency to forget history, eFishery’s  case would likely be forgotten soon, especially by those who were not directly impacted. The case might be different for the company’s employees, beneficiaries and MSMEs attached as part of its supply-chain ecosystem.

If there is one thing that we could learn from eFishery’s case, it is that history tends to repeat itself and we always struggle to learn from it to avoid a recurrence in the future. Just as past financial crises were fuelled by speculation, overvaluation and reckless risk-taking, we also see overvaluation, overspeculation, and overreliance on debts and external capital in eFishery’s case.

So long as these remain the practices in the business, we can expect similar cases to happen in the future.

Aftermath

In the short term, eFishery’s collapse would ripple through Indonesia’s tech sector, making funding – already scarce – even harder to secure. The fallout may also affect non-tech industries seeking foreign partnership, M&A or investment due to diminished trust. Additionally, the traditional tech mantra of “move fast, break things” might face greater scrutiny, with businesses promoting this approach viewed with scepticism.

Yet, this fallout opens doors for change. The eFishery’s debacle presents a multitude of opportunities, not only for the betterment of investment in the tech sector but also for new businesses to thrive and Indonesia’s chance to increase its reputation as a trustworthy FDI destination. The case could pave the way for the rise of firms specialising in business investigation – equipped with local knowledge and strong on-the-ground investigative skills – to strengthen investors’ due diligence process.

Ironically, the smallest victim might be the fishery sector itself, which eFishery tried to disrupt in the first place. While eFishery’s collapse is significant, it is unlikely to disrupt the overall farmed fish supply. eFishery is just a small fish in a big pond of Indonesia’s giant aquaculture industry, one of the largest in the world that employs more than six million people.

The case also presents opportunities for less popular players with integrity in the aquaculture sector to rise and fill the gap left by eFishery. Several startups are also engaged in the fishery sector, some of which have developed breakthrough aquaculture technologies such as an inland farming system for highly commercial saltwater fish like grouper.

We are aware of another fishery startup that competed with eFishery for a contract to supply fish to one of the country’s largest mining companies. Its approach to technology development and deployment is more conventional (focusing on hardware development rather than software) with less emphasis on digital tech.

With the lessons provided by eFishery’s case, these players can establish and execute a more feasible and balanced business model while still empowering local aquaculture farmers across the archipelago. Through the case, eFishery – inadvertently – might also provide a valuable experience and knowledge for their honest, hard-working employees who might even take up the mantle left by their employers and start their own high-impact, social-driven startups that continue to empower marginalised communities in Indonesia.

Looking up and beyond, this case can serve as an inflection point for Indonesia to seriously build a reputation as a trustworthy FDI destination. Starting in tech, particularly in tech investment, policymakers and stakeholders in this sector should utilise this momentum to create a healthier tech ecosystem, one that is grounded in governance and sustainable growth, not just hype and made-up numbers.

Understanding Trump’s Tactics

In the first few weeks since his inauguration, President Donald Trump followed through on his campaign promises to impose tariffs on other countries.

Initially, his administration imposed 25% tariffs on goods from Canada and Mexico – except for energy imports from Canada at 10% – plus additional 10% tariffs on all Chinese products coming into the United States.

The media and pundits quickly signalled the return of Trump’s trade war. However, it is worth considering that Trump’s imposition of high tariffs is not an end in itself – it is part and parcel of his psychological warfare with other countries.

This was demonstrated when Trump decided to delay the tariffs on Canada and Mexico after “fruitful” discussions with both countries’ leaders. In this regard, tariffs should be understood simply as an economic tool to achieve the United States’ national interests, though critics have decried and deemed it illegal.

Trump’s co-written book The Art of the Deal gives an insight into his aggressive and assertive negotiation tactics in doing business, which he has applied to his political game as well. This negotiation style involves setting the initial terms aggressively – terms which may be bold and ambitious – to set the standard and tone of the negotiations around this reference point.

This is called the anchoring tactic, though he likes to impose extreme terms to turn the negotiations in his favour. His recent ordeals with Mexico and Canada exemplify this – he has also issued follow-up threats of increased tariffs should these countries retaliate.

Trump understands that his unpredictability has given him an advantage over others, thus making his threats more effective. He succeeded; following these salvo of threats, Canada and Mexico agreed to address the issue of drug smuggling and illegal immigration in exchange for a one-month pause in tariffs.

Unlike his first term – which saw him imposing tariffs on others and allowing negotiations only after some time had passed – this time he had reached an agreement with Canada and Mexico before any real actions were taken.

This is exactly what Trump hopes to achieve. He is using aggressive tactics by instilling fear and unpredictability to get what he wants before really starting a tariff war. In fact, a tariff war might be something that he does not desire after all, as it would cause inflation in the United States.

Sun Tzu might have approved – in The Art of War,he postulated that a “skillful leader subdues the enemy’s troops without any fighting.”

Past Lessons

As this is his second and last presidency, Trump understands that he is running out of time to achieve his political agenda. He hopes to quickly achieve concessions that others will make in exchange for not imposing high tariffs.

Although Trump has toyed with the idea of running for a third term, the odds are almost zero. The US Constitution limits a person from getting elected more than twice as a president and it would be very difficult to amend the constitution because of its rigidity.

Constitutional expert Bruce Fein argues that one possible way for Trump to hold on to power is by disregarding the law, though this is very unlikely to happen given that the United States has a long democratic tradition that provides checks and balances. A case in point: Trump’s bid to hold onto power after he lost the 2020 election was unsuccessful.

Even more important is that Trump seemed to have learned lessons from his first presidency.

After a years-long trade war with China, Trump concluded his Phase One trade deal successfully. This trade deal appeared to be a massive victory for the United States, as China pledged to protect intellectual property rights and agreed to purchase more goods from the United States to correct the trade imbalance between both countries. However, China failed to fulfil its obligations under the Phase One trade deal.

Trump is not keen to repeat this mistake, which could explain why Trump would want to achieve concessions as soon as possible.

He is using this plan of reciprocal tariffs as a bargaining tool for countries to reduce tariffs or eliminate non-tariff barriers.

A recent poll run by Reuters showed that over 90% of economists believe that the rapidly shifting trade policies would increase the likelihood of a recession, which could lead to unintended consequences of Trump’s own doing. This is a situation that Trump would want to avoid.

Weeks before he unveiled his “Liberation Day” plan, Trump also announced the imposition of 25% tariffs on all aluminium and steel imported to the United States without any exceptions or exemptions.

Interestingly, after a phone call with Australia’s prime minister, Trump said that an exemption for Australia is under consideration, given that Australia is one of the few countries with which the United States has a trade surplus. Such statements have sent an ambiguous signal to other countries, thus prompting countries such as South Korea to also request exemptions.

Trump also managed to extract concessions from India and Japan, both of which promised to buy more goods from the United States. Before the meeting with Trump, Modi announced that India would cut import tariffs on selected products. Following the meeting between both leaders, India agreed to buy more energy from the United States, thus aligning with Trump’s goal to make the United States the leading energy supplier.

Trump’s tariff tactic would be a mainstay in his administration – his unveiling of a base 10% global tariff on the rest of the world suggests he is willing to play this long, uncomfortable game with both allies and enemies alike.

Trial and Error

However, this kind of psychological tactic may not always work.

The United States and China were unable to come to an agreement and have since led to China’s quid pro quo levies. While the Chinese do not want to back down from the trade tensions with the United States, news reports from early March showed that Trump might visit China in April to hammer out a deal. This indicated that Trump might not be interested in fighting a tariff war.

Though the prospect of Trump visiting China has been dampened by Chinese countermeasures against his recently announced global tariff plan, he responded by threatening to further increase tariffs on China by 50%, in addition to the recently announced 34% tariffs as part of the Liberation Day plan. This led to over 100% cumulative tariffs on Chinese goods exported to the United States.

Due to the price and quality competitiveness of Chinese products, Chinese products are not easily replaceable. Since American consumers have to bear the brunt and inflation is expected to rise, Trump will be put in a difficult position, potentially prompting a revision to his tariff policies.

Impacts to Southeast Asia

Trump announced his Liberation Day global tariff plan on 2 April 2025, a drastic move that caused stock markets across the globe to tumble. A baseline of 10% tariffs on all exports to the United States are imposed, but all Southeast Asian countries are levied different rates of tariffs depending on their trade balance with the United States.

Cambodia and Laos are slapped with the highest tariffs (at 49% and 48%, respectively), followed by Vietnam (46%), Myanmar (44%), Thailand (36%), Indonesia (32%), Malaysia and Brunei (24%), the Philippines (17%) and finally Singapore (10%).

Barely a day after the new regime came into effect, however, Trump announced a 90-day pause on tariffs for 75 countries, including those in ASEAN. This hard reverse adds on to the psychological pressure that Trump aims to impose on leaders of other nations.

Before the Liberation Day announcement, ASEAN countries had diverse responses to the ongoing situation. Vietnam was already restless and expressing willingness to purchase more US agricultural products, open its market to US investments and refrain from imposing retaliatory measures. Thailand, on the other hand, was seen to be slow in responding to the trade issue and had no clear negotiation strategy, which was a great concern for the private sector in Thailand.

The Philippines and Malaysia appeared more optimistic, holding the opinion that the United States’ tariff policies have less direct implications on them. Both believed that they should maximise the existing regional trade agreements and diversify their trade partners in light of the steps pursued by the Trump administration.

Needless to say, the announcement must have sent massive shocks across the region, especially to countries with no concrete strategy and response plan.

Moving forward, ASEAN countries need to understand that Trump’s end goal is not to have a tariff war with the rest of the world. The United States is simply using threats of tariffs to force other countries – particularly those who have trade deficits with the United States – to reduce or remove tariffs and non-tariff barriers.

If this is a psychological war, how should Southeast Asian countries respond to it?

In such a setting, it is never a good idea to fully accede to the demands, as it would only lead to more concessions. We have seen, for example, how Vietnam’s good offer to the United States was being rejected.

Instead, countries should preserve their autonomy and continue to engage with the United States to get a mutually beneficial deal. A good instance is how the president of Mexico handled Trump – she kept a “cool head” and persuaded Trump with evidence that the deployment of Mexican soldiers to the borders has slowed down the flow of fentanyl.

Such a diplomatic approach led to praises from Trump and also to Trump’s decision to reverse some of the tariffs. Though Trump also reversed some of the tariffs on Canada, Trump continues to target its prime minister due to the latter’s more aggressive approach.

As ASEAN chair this year, Malaysia bears a huge responsibility to ensure that ASEAN has a united and coordinated response towards the trade issue. Prime Minister Anwar Ibrahim has engaged some ASEAN leaders and called for a united front against this challenge.

If ASEAN is divided and chooses to negotiate bilaterally with the United States, the deals that each member secures would be different, potentially benefiting the United States more than ASEAN collectively. In the negotiation, ASEAN must present the hard facts to the United States, showing that the tariffs would not only harm ASEAN but would also be equally damaging to the US economy. If it is indeed psychological warfare, then ASEAN needs to know that it goes both ways.

Introduction

The strategic visit of South Korean President Yoon Suk-Yeol to Singapore marked a significant moment in the evolving relationship between the two nations, particularly in their collaborative efforts to strengthen supply chain resilience.

The partnership promises to enhance both countries’ economic standing in an increasingly interconnected global economy.

South Korea’s industrial expertise, particularly in semiconductors, complements Singapore’s status as a global logistics hub.

Yet, despite these clear advantages, the collaboration faces challenges stemming from geopolitical tensions and supply chain vulnerabilities. Addressing these issues requires concerted efforts in diversification, policy alignment and digital innovation.

In this essay, we will examine the opportunities presented by the partnership, the obstacles it faces and solutions that both nations can adopt to ensure a resilient and mutually beneficial supply chain.

The Strategic Importance

The relationship between Singapore and South Korea has steadily grown over the years, marked by increasing trade, investment and diplomatic engagements. The two countries – both economically advanced and highly dependent on external trade – share an interest in ensuring the stability of their supply chains. Indeed, the Singapore-South Korea partnership offers numerous advantages for both countries.

Singapore’s importance as a gateway to Southeast Asia provides South Korea with access to the broader ASEAN market. Singapore’s position as a regional hub offers South Korean companies a reliable base from which to expand their operations throughout the region.

The logistical advantages of Singapore’s world-class port, airport and infrastructure offer South Korea an efficient supply chain network that can support the transportation of goods across Southeast Asia.

ASEAN, with its burgeoning middle class and increasing demand for high-tech products, represents a key market for South Korean exports.

Meanwhile, South Korea’s technological prowess offers Singapore a crucial partner in industries such as electronics, semiconductors and automotive production. The semiconductor industry, in particular, stands out as a key area of cooperation.

With global shortages of semiconductors disrupting industries worldwide, Singapore can benefit from South Korea’s expertise in this critical sector, helping the city-state secure a more resilient supply chain for its industries.

Innovation is another key area. Singapore’s focus on becoming a “Smart Nation” aligns with South Korea’s leadership in sectors such as AI, 5G technology and biotechnology.

Collaborative efforts in these areas can lead to advancements that benefit both countries, particularly as they seek to integrate cutting-edge technologies into their supply chains.

Furthermore, enhanced connectivity with South Korea allows Singapore to further solidify its role as a critical node in the global supply chain, making it an attractive destination for international investments. At the same time, increased South Korean trade and investments provide Singapore with a more diversified economic portfolio, reducing its dependence on traditional trading partners such as the United States and China.

President Yoon’s visit to Singapore signified an intention to deepen these economic ties, particularly in sectors where both nations have strategic interests.

Discussions during the visit emphasized the importance of building a resilient supply chain that could withstand external shocks, such as those caused by geopolitical tensions or global crises like the Covid-19 pandemic.

This focus reflects a broader trend where nations seek to diversify their supply chains to minimize risks associated with over-reliance on any one market or region.

Challenges and Potential Problems

Despite the clear advantages, several challenges could undermine the partnership’s potential.

The most significant is the ongoing geopolitical tension between major global powers, particularly the United States and China. Both Singapore and South Korea have strong economic ties with these two giants, and the increasing rivalry between Washington and Beijing poses risks to their supply chains.

For example, South Korea’s semiconductor industry is deeply integrated with both the US and Chinese markets, making it vulnerable to any trade restrictions or sanctions imposed by either side.

Similarly, Singapore’s position as a neutral trading hub could be threatened if tensions escalate and force the city-state to choose sides.

Another challenge is the vulnerability of global supply chains to external shocks. The Covid-19 pandemic exposed the fragility of just-in-time manufacturing systems and subsequent disruptions in logistics have highlighted the need for greater supply chain resilience.

Both South Korea and Singapore are heavily dependent on external trade, and any disruption in global supply lines can have a significant impact on their economies.

In particular, over-reliance on specific industries such as semiconductors leaves both countries exposed to sector-specific shocks.

Finally, regulatory and policy differences between Singapore and South Korea present hurdles that could slow down the partnership’s progress.

While both countries are known for their business-friendly environments, differences in regulatory standards, particularly in emerging industries like AI and biotechnology, could create friction in cross-border collaborations.

Harmonizing these regulations will be essential for ensuring smooth trade and investment flows between the two countries.

Solutions and Strategies for Success

To address these challenges, both Singapore and South Korea must adopt strategies that enhance the resilience and sustainability of their supply chains.

One key solution is the diversification of supply chains. By investing in alternative sources for critical materials and technologies, both countries can reduce their dependency on any one market or region.

For example, South Korea could explore sourcing semiconductor components from suppliers outside of China, while Singapore could look to diversify its energy sources to ensure a stable supply for its industries.

Digital connectivity also plays a crucial role in enhancing supply chain resilience. Both countries are already leaders in digital innovation, and expanding joint ventures in digital infrastructure – such as blockchain-enabled supply chain management systems – could help streamline trade processes and improve transparency across borders.

Collaboration in fintech and digital payment systems can further enhance the efficiency of cross-border trade, making it easier for businesses in both countries to engage in seamless transactions.

Moreover, establishing new bilateral agreements aimed at addressing regulatory barriers is crucial. By harmonizing regulations in key industries like technology and logistics, Singapore and South Korea can facilitate smoother trade and investment flows.

These agreements could also include provisions for joint research and development (R&D), encouraging public-private partnerships that drive innovation in areas such as AI, biotechnology and clean energy.

Conclusion and Recommendations

In conclusion, the Singapore-South Korea supply chain partnership holds great promise for both countries, offering mutual benefits in terms of economic growth, technological advancement and supply chain resilience.

However, to fully realize these benefits, both nations must address the challenges posed by geopolitical tensions, supply chain vulnerabilities and regulatory differences.

By diversifying their supply chains, enhancing digital connectivity and aligning policies through bilateral agreements, Singapore and South Korea can create a more robust and future-proof partnership. Continuous dialogue, innovation and adaptability will be key to ensuring the success of this collaboration in the face of an ever-changing global landscape.

Introduction

In the last decade, President Joko “Jokowi” Widodo has transformed the eastern Indonesia region from an economic backwater to a strategic area for economic development under his administration.

By emphasizing the urgent need of commodity downstreaming policy for nickel and copper, Jokowi has carried out his ambitious vision to expand investment from the private sector and strengthen the manufacturing sector in the eastern region.

For instance, in late 2023,  Jokowi went to Fakfak Regency in West Papua for the ground-breaking ceremony of what will soon become the largest fertilizer production factory in the Asia-Pacific region.

Furthermore, Halmahera Island in North Maluku Province was christened as another nickel mining site in 2018, cementing Jokowi’s vision of commodity-driven strategy for economic development. 

Moreover, in 2015, an area of more than 3,000 hectares in Morowali Regency in Central Sulawesi was allocated for nickel-manufacturing industry to produce essential components for electric vehicle battery.  

Although Jokowi has encountered sharp criticisms from civil society and academia alike during his second term, particularly on his pro-investment policy, his approach to foster development in eastern Indonesia has resulted in several achievements.

For instances, North Maluku – a regency that was dependent only on agricultural and marine products – has now been painted as performing exceptionally well. Its growth rate reached 24.85% (YoY) in the third quarter of 2022 – the highest economic growth compared to other provinces in the same time period.

Besides, the province of Central Sulawesi also maintained a stable economic performance during the Covid-19 pandemic even as other provinces suffered from contraction. In 2020, the province’s economy’s growth almost reached 5%, owing to its nickel-manufacturing sector built under Jokowi’s administration.

However, evidence indicates that some challenges in Jokowi’s administration will persist into the next administration, which is projected to be led by Prabowo Subianto based on latest election result. Some of these challenges are elaborated below.

Land Possession Disparity: Story from East Nusa Tenggara (NTT)

Evidence shows that Jokowi’s developmentalism has brought new problems, such as disparity of land possession, to the fore. Severe disparity of land ownership was evident, for example, in NTT, where a number of Strategic National Projects (PSN) were established. NTT has also become the site for the National Strategic Tourism Area (KSPN), specifically in Labuan Bajo and Rinca Island.

However, instead of resolving poverty that is afflicting the communities in NTT, these government-led development projects have resulted in the disparity of land ownership between investors and the locals. 

These projects often serve as a basis for land-grabbing practice by the government. For instance, it occurred in Komodo Island where local communities had to be relocated because their settlement was to be converted into a KSPN in 2020.

In 2022, the Agrarian Reform Consortium (KPA) reported that more than 700,000 hectare of land in NTT belonged to the government and investors. Meanwhile, each household of the 775,100 small farmers in NTT only possessed less than half a hectare. This severe land disparity occurred in the same year that NTT’s economy was reported to experience a 3.05% growth rate.

In addition, there are also number of agrarian conflicts which imply the locals’ reluctance to welcome national projects in the area. The KPA also reported that number of agrarian conflicts in the province increase quite drastically from 17 cases in 2020 to 38 cases in 2021. Last year, this number grew to 61.

High Growth Rate, Low Welfare

While Jokowi’s rigorous developmentalism looks dazzling from afar, welfare distribution remains an issue for local communities.

It is a major issue in Central Sulawesi and North Maluku, two provinces that have seen economic boon from the nickel-manufacturing industry.

Evidence indicates that this boon has not able to generate welfare equally for local communities. In fact, although North Maluku saw remarkable economy growth in 2022, ironically, the provincial Gini ratio also experienced a hike in the same year from 0.279 in March to 0.309 in September.

A similar phenomenon took place in Central Sulawesi. Regencies in the province saw a major gap among themselves in terms of per capita gross regional domestic product (GRDP)  in 2020 despite the fact that provincial GRDP rate rose slightly from roughly 61 million rupiah to almost 64 million rupiah in the span of a year thanks to the manufacturing sector.

For example, the aforementioned Morowali gained more than 500 million rupiah of its GRDP per capita while neighbouring regencies such as Morowali Utara did not even acquire a quarter of this figure. On top of that, more remote regencies including Banggai Kepulauan and Banggai Laut had the lowest regional GRDP per capita rate in the same period.

These examples demonstrate that Jokowi’s industrialization thrusts do not confer trickle down benefit to the people. Lucrative activities of nickel-manufacturing has only contributed growth to industrial areas such as Morowali but are incapable to distribute welfare to local communities in surrounding areas.

The Threat of Undernourishment

Human resource takes a hit as well. Despite Jokowi’s pledge to focus on human resource development programs in his second term, nonetheless, this remains a problem in eastern Indonesia.

For example, the high Prevalence of Undernourishment (PoU) index is not comprehensively addressed. The PoU indicates the affordability of foods in each region. Increase in PoU rate mean a serious threat of undernourishment in the population.

In fact, the PoU indices in Sulawesi, Maluku and Papua are relatively high compared to Jawa from 2017 to 2023 as shown in figures below. For instances, in 2022, the PoU indices in Maluku and North Maluku region reached 30%, or triple the national average rate. Paradoxically, the high figures of undernourishment in these provinces still persisted even as the nationwide figure declined in 2023.  

This chart implies Jokowi’s developmentalism in eastern Indonesia has yet to bring about socio-economic benefits, such as a reduction in undernourishment, to the region.

Prabowo-Gibran: Jokowi 2.0?

Though official counting is still ongoing, the recently held presidential elections almost decidedly determined that Prabowo Subianto will succeed Jokowi as president. Prabowo has many times pledged to continue Jokowi’s vision of the country and, with the latter’s son Gibran Rakabuming Raka in his ticket and Jokowi’s own tacit though overt support, this might seem to be the case in the future.

Prabowo-Gibran pair has repeatedly articulated continuity and economic advancement as key messages of their campaign. They have signalled their eagerness to continue the success of downstream industries under Jokowi’s administration and other pro-growth policies. They have also indicated that Jokowi’s development policies will be used as the foundation to continue development under the grand vision of Indonesia Maju (Developed Indonesia).

The retired general has even planned to expand Jokowi-era policies with his plan to carry on downstreaming projects on 21 potential natural commodities  that are available in Indonesia, ranging from coal to fishery products.

From these potential commodities, several of them could be found in the eastern Indonesia region, such as nickel in Central Sulawesi and North Maluku, copper in Papua, asphalt in Southeast Sulawesi, and marine products in the Maluku archipelago. These ambitious projects are expected to generate welfare through economic growth and job creation for local communities.

Nevertheless, the experience from Jokowi’s developmentalism shows that while commodity downstreaming policy has indeed triggered economic growth, the locals have not necessarily benefitted from it.

Furthermore, Jokowi’s development programs have created serious problems in eastern Indonesia such as land dispossession, economic stagnation for the locals and high prevalence of undernourishment.

It is important for the upcoming administration to recognize the problems that it must address, not simply pledging to continue the policy that has been in place for almost a decade.

Conclusion

Jokowi’s administration has brought about a number of development projects in eastern Indonesia through massive investment in the manufacturing, mining and tourism sectors, among others. Jokowi has been successful in shifting national development projects which were previously concentrated in Jawa to the eastern part of Indonesia. However, Jokowi’s development approach in eastern Indonesia has not significantly increased the welfare of the local communities.

Left unaddressed, the ongoing disparity between those in the Jawa and eastern Indonesia would continue to hinder Indonesia’s overall development. It is therefore a serious problem to be tackled by the next administration. If Prabowo-Gibran regard themselves as the successor of Jokowi, then it is incumbent upon them to improve on Jokowi’s pro-growth policies. 

These policies should be coupled with a commitment to ensure welfare redistribution for local communities in eastern Indonesia, considering that is where the gap lays today. By putting “redistribution” as a key focus in their policy plan, it is not impossible for Prabowo-Gibran to achieve the Indonesia Maju that Jokowi has dreamed of.

Introduction

To developing countries, there will always be some constraints to development, such as limited natural resources, lack of skills as well as underdeveloped human capital.

Theorists have proposed the term “catch up development”, or convergence development theory, as a roadmap for these countries to move up the scale. This idea of “catching up” requires developing countries to copy the developmental policies of their more developed counterparts.

For example, previous decades saw countries such as Japan and South Korea adopting Western countries’ policies such as investing in export-oriented industries. These two governments have actively intervened in their economy, especially through nurturing and guiding the market to support its industrialization. As a result, various industries netted positive benefits, including agriculture, textile, automobile and electronics.

Latin American countries such as Mexico and Argentina have adopted this strategy too, especially in the early phase of national development through their import substitution industrialization. In their context, these governments intervened heavily by stimulating domestic production as a substitute to imported goods, in order to protect domestic industries.

Recently, Indonesia has also come up with its version of catch up strategy by pivoting towards industrial policy. The strategy of which aimed at boosting its downstream industries and shift away from a resources-based economy. This strategy is reflected by the enactment of raw material export ban and local content requirement. It is hoped the country could industrialize and build up the capabilities for high value manufacturing goods such as electronics in the future.

The idea of catch up development is a “grand-narrative” that is used to justify the industrial strategy to further economic development. However, we contend that such a narrative is insufficient to comprehend Indonesia’s move towards industrialization, but rather useful to interpret the country’s evolution of developmental policy.

Development as a Discourse in Indonesia

Discourse on development can be defined as how ideas shape the economic policy of development. It is not firmly fixed, but rather shaped by the contestation of competing ideas.

In the New Order era (1967-1998), the popular discourse on development was characterized as a developmentalist style of economic stability aimed at promoting growth and protecting domestic industries.

To achieve that, the Indonesian government restricted domestic competition, though in practice the move was susceptible to rent-seeking activities by state apparatus, military officers and businessmen within the circle of President Soeharto. These activities ranged from granting protection from imported products, awarding contracts without due process and providing access to cheap loans.

Those policies were heavily influenced by thinkers and technocrats such as Nitisastro and Habibie. However, disagreement and disunity among the technocrats and state bureaucrats at the time resulted in the absence of a clear industrial strategy and low industrial competitiveness.

The 1998 financial crisis forced the Indonesian government to implement reforms in order to secure assistance from the International Monetary Fund (IMF). These reforms led to the  opening up of the Indonesian economy and minimized the role of the state in the economy.

This soon would change during the second Yudhoyono administration, which was characterized by the re-emergence of a developmentalist agenda called “new developmentalism”. This new paradigm was characterized by government intervention in the domestic market, state support for local companies and state-owned enterprises (SOEs) supplied by more orthodox neoliberal policies aimed at promoting foreign investments in manufacturing activities.

This paradigm persists during the Jokowi administration, where it gains popular support. The idea of development in this era is shaped by nationalist and populist discourses and supported by interest of oligarchs.

For example, the discourse of economic nationalism has been amplified especially during the Indonesian government’s success in acquiring 51% of ownership from the largest foreign mining companies, PT. Freeport Indonesia. The timing seems on point, as it was done shortly before the 2019 elections where the usage of economic nationalist discourse helped to bring Jokowi to power for the second time. Such discourses then translated to the country’s developmental strategy in building downstream resource industries.

The Political Economy behind Indonesia’s Industrial Strategy

What is the context behind the nationalist discourse and the return of industrial policy in Indonesia?

From the colonial era, the Indonesian economy has long been characterized by the resource extraction and the dominance of the political and business elites. In the post-New Order era, this pattern of elite dominance persists, whereby oligarchs forge alliance with state apparatus at local and national level, leaders of mass organizations, and sometimes military or police commanders. Such an alliance serves a function to mobilize the masses, becoming some sort of power consolidation that helps power holders such as Jokowi to easily advance and implement his developmentalist policies and agenda.

Another factor is what scholars and economists call a “premature deindustrialization”, a state of the economy when the economic activity moves away from manufacturing production before an economy reaches maturity point.

This particular notion of  deindustrialization is not a rare case in developing countries. Following the 1998 financial crisis, manufacturing value added to the Indonesian GDP dwindled and has never recovered since then. As a result, Indonesia has suffered from “jobless growth” and declining real wages.

There are many explanations for this, ranging from incomplete reforms to financial liberalization policies and to commodity boom.

In the early 2000s, Indonesia experienced a commodity boom, marked by significant increase in commodity prices from early 2000s until early 2010s. The boom was a response to the growing demand in the emerging markets – such as China – to sustain its rapid industrialization.

The rise of China has also squeezed Indonesia’s labor-intensive, low-skilled manufacturing activities. Thus, the Indonesian government responded by shifting away from manufacturing to extractive sectors. The newly attained extractive regime of the 2000s gave way to the rise of oligarchs in certain commodity sectors, such as coal and palm oil.

In the international context, globalization gives rise to the establishment of an international or regional network of production. Nevertheless, comprehensive analyses of the global commodity chains determine that raw material exporter states in a marginalized position. Meanwhile, deindustrialization, alongside the increasing activities of resource extraction, means that Indonesia is becoming increasingly at a peripheral position on the global/regional supply chain.

Indonesia’s open-door policy towards foreign investment during the commodity boom does not help either. Indonesia actively appeals to foreign investors to park their money in natural resource extraction sectors, which require low-skilled workers and large sum of capital but add low value to the Indonesian economy. This has placed Indonesia as a resource exporter country, but one which economy struggles to evolve.

This condition seems to be picked up by the government. From as early as 2009, the Indonesian government through its Law on Mineral and Coal Mining has built a regulation that require the domestic and foreign companies to build domestic processing facilities. This strategy is called resource-based industrialization. The idea is to stimulate manufacturing activities in downstream sectors.

There are many strategies at play to achieve the policy goals of building downstream industries. One of which is mobilizing its state-owned enterprises. For example, PT. Aneka Tambang (Antam), Tbk has been directing its capital to build smelters for processing critical minerals such as nickel and bauxite.

Other than that, through bargaining and political settlements with foreign entities and domestic business elites, the Indonesian government has been successful in pressuring multinational companies such as PT. Freeport Indonesia to agree giving up 51,23% of its ownership to the state-owned PT. Indonesia Asahan Aluminium (Inalum).

The condition above shows that the pattern of alliance between state apparatus-business elite persists and is used alongside the nationalist discourse by the Indonesian government to spur economic transformation to move away from raw mineral extraction towards the domestic mineral processing activities.

Conclusion

The article argues that the return of industrial policy in Indonesia is not simply a matter of economic strategy, but is also driven by various factors. Premature deindustrialization, as a result of the global commodity boom, has caused Indonesia’s economy to lack added value, which thus puts an imperative for bringing back industrial policies.

Meanwhile, ideas on development are internally contested, yet successive administrations have succeeded in defining the discourse of industrialization as the driver of economic development. This discourse has supported the Indonesian government’s legitimacy to enact industrial strategies to catch-up with its developed counterparts. The Indonesian resource-based industrialization strategy is aimed at creating added value to the previously resource extractive regime. However, shifting strategies so far does not translate to the reform of power structure. Using the discourse of nationalist economic development as stated above, the Indonesian government’s strategy has been effective in legitimizing its policy of resource downstreaming.

Introduction

It has been more than two decades since the concept of blue economy was proposed to the world and since then the concept has progressed through its adoption by international organizations, academia, and the private sector.

Previously understood as a solution to sustainable use of sea resources, the blue economy has expanded in scope, now encompassing such dimensions as economic growth, social inclusion and sustainability for all.

Sustainable management of ocean resources is not without its challenges. The implementation of the blue economy faces challenges from various directions, including the climate crisis, habitat degradation, unfair trade and overfishing. According to the World Bank Group, 57% of fish stocks are fully exploited and another 30% are over-exploited, depleted or recovering.

Fish stocks worldwide are affected by illegal, unreported and unregulated fishing (IUU fishing), which is responsible for roughly 11 to 26 million tons of fish catches annually, or US$10-22 billion in unlawful or undocumented revenue.

The Conundrum of IUU Fishing

IUU fishing is a complex dilemma and a major hindrance for nation states to achieving sustainable management of the fisheries ecosystem. IUU fishing involves activities conducted in contradiction to national or international laws.

IUU fishing encompasses such instances as fishing in a country’s waters without permission, fishing in areas beyond one’s national jurisdiction and a range of violations against the rules of Regional Fisheries Management Organization (RFMO). Specifically, IUU fishing also includes various offenses such as fishing in restricted zones, landing in unauthorized ports, possessing false licenses, falsification of catch data, mismanaging fisheries, using prohibited gear, capturing protected species, engaging in illicit activities like human trafficking and drug smuggling, operating stateless vessels or under flags of convenience, employing dangerous, harmful, or banned methods and substances, and subjecting workers to forced labor as well as abusive working conditions.

Thus, the conduct of IUU fishing extends from the concerns of flag, coastal, post and market states. Based on this, we could conclude that a range of actors with competing interests are responsible to tackle IUU fishing.

The Complexities of Regulating IUU Fishing

Several international efforts have been undertaken to combat IUU fishing.

The most evident international law addressing IUU fishing is the United Nations Convention on the Law of the Sea (UNCLOS). This magna carta of the sea treaty encompasses a wide range of state duties and obligations such as the flat state, coastal state, activities in the high seas, governance of migrating fish, as well as the ground stone for the establishment of RFMO.

Under UNCLOS, states also established an implementing agreement namely the UN Fish Stock Agreement  for the management of migratory fish stocks and raising state obligations over resources and registration of vessels.

The United Nations Food and Agriculture Organization (FAO) also established a Compliance Agreement addressing the management measures for the preservation of marine resources on the high seas and strengthening the responsibilities of flag states. In 1995, FAO introduced a voluntary code of conduct for responsible fisheries, which up to date over 170 members of FAO have voluntarily adopted.

Furthermore, in 2001 FAO also issued an International Plan of Action to prevent, deter and eliminate IIU fishing as a toolbox for states to develop national plans of action to combat the conundrum,. The document also serves as a reference for regional cooperation to assist states in harmonizing their policies.

In fact, since the mid-1990s, numerous efforts have been made on a global, regional and national scale to address IUU fishing. These initiatives encompass voluntary and binding international and regional agreements, enhancements in monitoring, control, and surveillance (MCS) efforts, collaborative intelligence sharing, and the deployment of innovative technologies for the identification and tracking of fishing vessel activities.

Despite these global legal efforts, it is apparently not enough to tackle and eliminate IUU fishing.

According to the 2021 IUU Fishing Index by Global Intiative, the global score across all state responsibilities and types of indicators went down from 2.29 to 2.24 in 2019, representing only a small improvement.

Therefore, IUU fishing persists as a substantial global challenge, exerting detrimental environmental, social and economic consequences which are all inconsistent with the aims of blue economy.

IUU Fishing in Indonesian waters

As an archipelago, Indonesia is faced with multitude of challenges associated with IUU fishing. In the maritime sector, Indonesia is a significant contributor, accounting for approximately 34% of the fish products from the ASEAN region reaching global markets. The economic impact of IUU fishing in Indonesia is anticipated to be as high as USD 3 billion annually.

Issues of IUU fishing have received noteworthy attention by the Indonesian government. In 2014, Indonesian President Joko “Jokowi” Widodo declared an anti-IUU fishing plan, prohibiting illegal fishing in Indonesia and introducing the policy of sinking vessels caught engaging in the activity.

During the same period, the then-Minister of Maritime Affairs and Fisheries implemented additional policies, such as Regulation Number 56/PERMEN-KP/2014 which was designed to halt the exploitation of fish resources by foreign-made fishing vessels with sizes ranging from 150 to 400 gross tons.

In 2015, through Presidential Regulation No.115 of 2015, the government established Task Force 115, tasked to eradicate illegal fishing. The task force operates by maximizing the use of operational personnel and equipment (such as ships, aircraft and other technologies) belonging to the Ministry of Maritime Affairs and Fisheries, the Navy, the Police, the Attorney General’s Office, and other relevant institutions.

Regardless, due to large scale and complexities of IUU fishing, it is still difficult for the government to completely eradicate the conundrum. Combatting the issue has been a priority for Indonesia as it is included in one of the Maritime Defense and Security programs. Furthermore, apart from enhancing MCS system, it has been suggested that local fishing communities are to be involved in cooperating and combatting against IUU fishing.

Tackling IUU Fishing: A Collaborative Effort

Tackling IUU fishing requires a multitude of approaches involving not only states, but also private actors, societies, civil organizations and academia.

On 5 December 2022, the Center for World Trade Studies of Universitas Gadjah Mada, in collaboration with Circular Economy Forum 2023 and WTO Chairs Programme, held the International Workshop on Blue Economy.

Recognizing the importance for Indonesia as an archipelagic state and a member of ASEAN, the implementation of blue economy becomes increasingly compelling. The forum maintained that the application of the blue economy in Indonesia is intended to tackle environmental degradation, particularly in the maritime sector, while also serving as a catalyst for national and global economic development.

One of the panels of the forum specifically discussed the international regulation on fisheries and international economy practice. Several of the speakers addressed on how the WTO Fishery Subsidies Agreement (FSA), which was proposed by the EU and Indonesia, could serve as a basis to pressure states to prevent harmful subsidies being contributed to the conduct of IUU fishing. The FSA will prohibit certain forms of fishery subsidies that contribute to overcapacity and overfishing as well as eliminate subsidies that contribute to IUU fishing.

Furthermore, members are obliged to take special care and exercise due restraint when granting subsidies to vessels not flying their flag and when granting subsidies to fishing or fishing related activities regarding stocks the status of which is unknown.

Such approach, if taken into concrete steps, could become a profound way for states to tackle IUU fishing. However, the agreement would only come into force after two-thirds of the WTO member states register their approval. Despite this, the forum serves as a testament of how academia could contribute towards combatting IUU fishing as a pretext to promoting the blue economy.

Steps Forward

The complexity of IUU fishing is not only rooted in the variety of activities involved, but also the concern of overlapping jurisdictions, prompting some scholars to consider it as an act of transnational organized crime.

Thus, a collaborative effort is required to establish not only legal instruments, but also to enforce these regulations. Such collaborative effort must be coordinated and in line with achieving the goals of the blue economy in sustainably managing ocean resources for the benefit and livelihood of all.

Everyone needs to realize that our ocean resources are limited. If it is not up to us to save them for future generations, then no one else would carry out the task.

Introduction

South Korea has experienced significant economic growth over the past few decades, emerging as a global economic powerhouse. However, in recent years, the country has faced the challenge of stagflation—a combination of stagnant economic growth and high inflation.

To overcome this economic dilemma, South Korea has recognized the potential of creative economy as a key driver of innovation, job creation and sustainable growth. This essay will delve into the role of the creative economy in alleviating South Korea’s stagflation, examining its impact on various sectors and its potential for fostering economic resilience and inclusivity.

Creative Economy

Creative economy encompasses a wide range of activities that involve the generation or exploitation of knowledge and creativity, leading to economic value and job creation. It includes sectors such as design, media, arts, culture, and technology. Creative economy is characterized by its ability to foster innovation, nurture entrepreneurship and promote cultural diversity.

South Korea’s innovation in terms of creative economy is not only limited to its pop culture industry, but also other sectors, such as technology and science. We can see the cutting-edge design of every Samsung mobile phones that are highly competitive in various market of the globe. Samsung Galaxy Flip, Note, Fold, and other flagship products frequently top the market.

Furthermore, other cultural products infused with innovation include webtoons by Naver/Line, an online manhwa (manga-like publication) that now become inspiration of several hits South Korean drama. This means South Korea has incorporated its huge pop culture icons into other sectors that and this amplifies its creative innovation to the next level.

Promoting Growth

Leveraging on innovation and technological advancement could be an option to promote growth in South Korea’s stagnating economy. With the promotion of collaboration between creative industries and traditional sectors like manufacturing and services, the country can stimulate economic growth through the introduction of novel products, services and business models. It is worth noting that there is ample opportunity for South Korea’s creative economy to further expand, offering a promising avenue to mitigate the impacts of stagflation.

For example, initiatives like the Creative Economy Promotion Act have facilitated partnerships between startups, corporations and the government to create innovative solutions to societal challenges. The integration of creative thinking and technology can also enhance productivity and competitiveness.

South Korea’s leadership in the technology sector, particularly in areas like semiconductors and telecommunications, can be further strengthened by infusing creative elements into these industries. By incorporating design, user experience and storytelling into technological advancements, South Korea can create products and services that resonate with global consumers, thereby boosting exports and reducing the impact of stagflation.

Another significant role of the creative economy in alleviating stagflation is job creation. The creative industries have the potential to generate employment opportunities, particularly for young people and those with creative skills. By investing in creative education and training programs, South Korea can develop a skilled workforce that is adaptable to changing market demands.

This not only addresses the issue of high youth unemployment but also enhances the country’s economic resilience. Creative industries are often more resilient to economic downturns as they offer diverse job opportunities across various sectors. In times of crisis, such as the Covid-19 pandemic, creative economy can provide a buffer against stagflation by fostering job creation and income generation.  

Cultural Diplomacy and Soft Power

The creative economy also plays a pivotal role in enhancing South Korea’s cultural diplomacy and soft power. South Korean popular culture – including K-pop music, television dramas and films – has gained immense global popularity, contributing to the country’s image and influence worldwide. By capitalizing on the global demand for Korean entertainment and cultural products, South Korea can expand its export markets and reduce its reliance on traditional industries, thereby alleviating the impact of stagflation.

Moreover, South Korea also could expand its network or popular culture into the non-traditional market of them. Southeast Asia, North America and Europe could be the traditional market and still be emphasized for growth, but exporting its K-pop products to less traditional markets such as the Middle East and Africa region could be additional income that generate more growth.

Moreover, the cultural exchange facilitated by the creative economy can strengthen diplomatic relations and promote cross-cultural understanding. Collaborative projects between South Korea and other countries, such as joint film productions or cultural festivals, foster people-to-people connections and create economic opportunities.

Cultural exchanges can diversify South Korea’s export base, reduce trade imbalances and enhance its global presence. For example, Bebas is a film that was jointly produced by Indonesian and South Korean filmmakers. Members of boyband groups EXO and BTS have also been hired for commercial brands ambassadors in Indonesia. Moreover, Indonesian diva Rossa has collaborated with SM Entertainment in making contents.

What Southeast Asian Countries Could Consider

South Korea’s creative economy can potentially contribute to Southeast Asia’s economic growth in several ways.

Knowledge and Technology Transfer

South Korea has a strong base in technology and innovation, particularly in areas like information technology, electronics and manufacturing. Through collaboration and knowledge sharing, South Korea can help Southeast Asian countries enhance their technological capabilities and promote innovation-driven industries. This transfer of knowledge and technology can lead to the development of new industries, job creation and increased productivity.

For example, investment by South Korean companies in Southeast Asian countries could generate ripple effect of growth, such as Hyundai investment in Indonesia that produce Indonesian-based design of Creta and Stargazer vehicles.

Entrepreneurship and Start-up Ecosystem

South Korea’s focus on fostering entrepreneurship and supporting start-ups has been instrumental in its creative economy initiative. Southeast Asian countries can benefit from South Korea’s experience in building vibrant start-up ecosystems, including the establishment of incubators, accelerators and networks for venture capital. This support can encourage local entrepreneurs and innovators, spurring the growth of creative and knowledge-based industries. Examples include Indonesia’s Sinar Mas Land that collaborated with South Korean start-ups.

Cultural and Creative Industries

South Korea’s cultural and creative industries – such as K-pop, K-drama and gaming – have gained global popularity and generated substantial economic value. Southeast Asian countries have their own rich cultural heritage and creative potential. South Korea’s experience in promoting and exporting its cultural products can provide valuable insights and partnerships for Southeast Asian countries to develop and market their own cultural industries, such as a content showcasing Indonesian’ Komodo Island in South Korean-made online game, Ragnarok. South Korean makers knew these potentials deeply, thus incorporated various elements to elevate the marketing of the game. This model could emphasize creative economy in different ways than before and could be an alternative option for Southeast Asian producers.

Collaboration and Investment

South Korea’s management for creative economy emphasizes collaboration between different stakeholders, including the government, private sector, academia and civil society. South Korea can foster partnerships with Southeast Asian countries, facilitating investments, joint research and development projects, as well as technology transfers. This collaboration can enhance regional integration and create a reliable environment for economic growth and innovation. Most Southeast Asian countries still have no integrated or a cohesive creative economy plan; therefore this particular option could be a model for developing a holistic creative economy policy.

Skills Development and Education

South Korea’s focus on human capital development, particularly in science, technology, engineering, arts and mathematics (STEAM) can inspire Southeast Asian countries to invest in skills development and education. By emphasizing STEAM education and vocational training, Southeast Asian countries can cultivate a skilled workforce capable of driving innovation and creativity in various sectors.

Conclusion and Ways Forward

Thus, from pointers above, we could see South Korea’s experience with the creative economy can serve as a alternative role model for Southeast Asian countries in boosting their economy. To conclude, the ways that could be summarized from arguments above are as follows.

Diversification of the Economy

South Korea’s creative economy strategy aims to diversify its economy by focusing on innovation-driven industries and the development of cultural and creative sectors. This approach helped South Korea reduce its heavy reliance on traditional industries and exports. Southeast Asian countries facing stagflation can learn from this and prioritize the development of creative and knowledge-based industries to create new sources of growth and employment opportunities.

Job Creation and Economic Resilience

The creative economy can play a crucial role in job creation, especially in sectors like arts, culture, design and technology. By promoting entrepreneurship and supporting start-ups in creative sectors, South Korea was able to generate new jobs and increase the resilience of its economy. Southeast Asian countries can emulate this approach to stimulate job growth and provide opportunities for their growing populations, helping to mitigate the negative impacts of stagflation.

Export-Oriented Cultural Industries

South Korea’s success in exporting its cultural products, such as K-pop and K-dramas demonstrates the potential of the creative economy in driving exports and attracting international audiences. Southeast Asian countries can leverage their unique cultural heritage and creative talents to develop export-oriented cultural industries. This can boost foreign exchange earnings and contribute to economic growth, reducing the impact of stagflation.

Technological Advancement and Innovation

The creative economy is closely linked to technological advancement and innovation. South Korea’s focus on fostering technological capabilities, such as advancements in information technology, electronics and telecommunications, helped drive its creative economy initiatives. Southeast Asian countries can prioritize investments in research and development, promote innovation ecosystems, and enhance technological capabilities to stimulate economic growth and address the challenges of stagflation.

Collaboration and Regional Integration

South Korea’s approach to the creative economy involved collaboration between various stakeholders, including the government, private sector and academia. This collaboration facilitated regional integration and the exchange of knowledge and resources. Southeast Asian countries can foster similar collaboration among their stakeholders, promoting regional integration and creating synergies that can address the challenges of stagflation collectively.

Lastly, while South Korea’s experience with the creative economy provides valuable lessons, it is important for Southeast Asian countries to adapt these strategies to their unique contexts and challenges. Factors such as cultural diversity, institutional frameworks and economic structures will influence the implementation and effectiveness of creative economy initiatives in each Southeast Asian country.

However, it is important to note that the applicability and effectiveness of South Korea’s management for creative economy in Southeast Asia may vary based on the unique socio-cultural, economic and institutional contexts of each country. Thus, tailored approaches and local adaptations are essential to ensure maximum benefits and successful implementation of creative economy initiatives in Southeast Asia.

In conclusion, the role of the creative economy in alleviating South Korea’s stagflation cannot be overstated. By promoting innovation, technological advancement, and job creation, the creative economy could be another mean for promoting growth. Southeast Asia could follow those steps as South Korea will likely to stay as the drive for Asian cultural economic hegemon.

Introduction

China’s Belt and Road Initiative (BRI) aims to boost global economic growth and link the East Asia region to Europe through physical infrastructure projects. China has been expanding its massive infrastructure projects throughout Oceania, Africa, Latin America and Asia, significantly broadening China’s dominance in the regions.

The expansion of Chinese influence is a byproduct of the BRI that Southeast Asian states, including Cambodia, have had to weigh in when deliberating whether or not to participate in this mega initiative. While it is indeed a cause for concern, destination countries in return would receive many benefits, including economic development, heightened people-to-people exchange and some geopolitical advantages.

The BRI has been particularly successful in making inroads in Cambodia. The proliferation of BRI projects in the country is displayed through numerous infrastructure projects, large amount of investment and financial assistance.

Economic Boon for Cambodia

In terms of economic development, Cambodia has attracted around US$2.32 billion of Chinese investment in 2021, thus retaining China’s position as the top investor in the country. Cambodia also benefits from trade with China, mainly exporting garment and agricultural products to the Middle Kingdom which currently is the biggest importer of Cambodian rice.

This extensive growth of Cambodia’s economy has inevitably led to the growth of income for those in the agricultural sector and created employment opportunities for Cambodians. ASEAN Secretary-General Kao Kim Hourn has even stated that the BRI has provided a huge contribution to the irrigation system of Cambodia which largely ensured the food security.

Furthermore, China has also loaned Cambodia approximately US$237 million in soft loan deals and canceled US$89 million of Cambodian debt to China. Such cooperation has sustained the economic growth of Cambodia and also assisted Cambodia to broaden its market globally. 

Infrastructure projects are regarded as the BRI’s most important undertaking, with many such of projects in Cambodia aiming to improve the people’s livelihood. These include the Sihanoukville Special Economic Zone, Phnom Penh-Sihanoukville Expressway and the Morodok Techo National Stadium. The Morodok Techo National Stadium, for instance, has enabled Cambodia to host the SEA Games 2023 successfully. Among the upcoming projects are new international airports for Siem Reap and Phnom Penh, a future expressway connecting Phnom Penh and Bavet, bridges as well as roads.

People-to-People Exchange

The BRI has also paved the way for more people-to-people exchange between the two countries. Scholarship programs, cultural exchange, tourism and cooperation in the health sector are among the manifestations of the BRI in Cambodia.

The scholarship programs, for example, have provided thousands of Cambodians with the opportunity to pursue higher education in China, improving Cambodia’s human resource potential and the competitiveness of Cambodian students. Currently, about 2000 Cambodians have received such scholarships.

The BRI has also brought many Chinese tourists to Cambodia which boosts local tourism industry and opens employment opportunities. The establishment of direct flights between the two countries has supported for this. In 2019 alone, two million tourists from China generated around US$1.8 billion in revenue for Cambodia. The Covid-19 pandemic disrupted this flow of people and cash but the two governments are still actively promoting two-way travel nonetheless, with Cambodia expecting to attract one million Chinese tourists in 2023. 

The health sector should be considered as well. During the pandemic, China provided over 20 million doses of Covid-19 vaccines to Cambodia, christening Cambodia as the world’s most vaccinated country. China also provided medical team assistance to manage the pandemic as well, facilitating a quick reopening of the country’s economy.

Geopolitical Advantages and Disadvantages

The BRI has also provided geopolitical advantages to Cambodia. The expansion of Chinese influence has provided a check to the United States’ decades-long effort to become the sole influential superpower in the region. Spooked by this, the United States has responded by promoting the Build Back Better World Initiative (“B3W”), President Joe Biden’s counter to the BRI that he brewed with other G7 countries. From a macroscopic view, such a competition of strategic development plans allows Cambodia and Southeast Asia to reap benefits from both sides.

Moreover, the expansion of Chinese influence in Cambodia has brought significant security ties between the two countries. China has provided various forms of security equipment assistance to Cambodia and aimed to assist the nation in developing its military base. For instance, the Chinese government provided a military training program, weapons and military equipment. China recently provided support for Cambodia to expand and improve its Ream Naval Base, which enhances Cambodia’s capability but making the United States nervous over Cambodia’s apparent gravitation towards China’s orbit.

However, some disadvantages cannot be overlooked. Regardless of the benefit of the competition between China and the United States, Cambodia, like other Southeast Asian states, is increasingly getting to a point where it would be forced to choose a side, which is a risk to the region and the country’s geopolitical stability.

For instance, Cambodia has been encouraged by the United States to maintain its independent and balanced foreign policy for the sake of the Cambodian people’s interest. With both the United States and China trying to cast influence on Cambodia, with varying degrees of success, Prime Minister Hun Sen has been forced to iterate that Cambodia will remain neutral and not choose between the two.

Cambodia should also be aware of the need to maintain neutrality and assure ASEAN centrality in this growing climate of global power contest, ensuring regional cooperation to offset the possible implication of geopolitical tension in the region. While Cambodia needs China for the sake of national interests and development, the country must also guard against the undue influence that could undermine its national sovereignty.

Moreover, massive infrastructure projects ushered by the BRI could lead to a debt crisis for small states like Cambodia. It should be noted that the infrastructure development in Cambodia is not free but a loan that China offers in the long term. Currently, Cambodia owes China around US$4 billion and this figure will continue to grow as long as Cambodia keeps approving Chinese development plans.

The onus is now on the Cambodian government to manage its humungous debt to China properly. Neighboring Laos, in comparison, owes China US$12.2 billion, or half of its foreign debt, at the time when it is facing a shortage of foreign reserves while not yet being able to service its debt to China, plunging the nation to a debt crisis and a state of national emergency.

Cambodia should consider Laos as a cautionary tale and reminder to exercise good governance when handling Chinese financial loans and projects. This can be done by prioritizing anti-corruption agenda, improving transparency and ensuring accountability.

Conclusion

In conclusion, Cambodia should embrace the BRI due to the positive benefits in terms of infrastructure development, economic development, people-to-people exchange and some geopolitical advantages. The country, however, must exercise caution as to the potential geopolitical disadvantages – rising from the intensification of US-China rivalry – and the loss of national sovereignty due to China’s undue influence.

Indeed, the BRI has benefited Cambodia tremendously, yet it must remain neutral and enhance regional cooperation with the rest of the Southeast Asian states to mitigate the risks of the superpowers’ rivalry. Additionally, Cambodia must also be aware of the risk of a debt crisis that might transpire from bad management of Chinese investment.

Introduction

Turkey’s economic and political situations have been deteriorating progressively over the last decade. The macroeconomic indicators that started to decline in 2011 became more obvious in 2013. Turkey’s government transformed into authoritarianism in 2016 and its economy faced a crisis in March 2018, before a full-blown depression occurred two years later when the pandemic hit.  

The government adopted a variety of economic strategies throughout this tumultuous period, most of which were at odds with one another. Numerous shifts taken by the government had also been difficult for both businesses and investors.

Turkey’s economic woe is not unanticipated. Two decades of steady economic development were followed by shakes and wobbles in recent years. Turkey also took on significant amounts of debt in foreign currencies to support growth. However, Turkey’s economy is sensitive to exchange-rate shocks that have an exaggerated impact on the value of Turkish lira due to low currency reserves in comparison to debt. Simply put, Turkey lacked the financial means to efficiently and swiftly quell minor economic problems before they grew into more serious ones.

This essay explains Turkey’s present economic downturn. It begins by outlining the present economic situation in Turkey and then looks at the effects of the massive earthquakes that wreaked havoc in the southeastern part of the country.

Turkey is currently bracing for a rising budget deficit, new inflationary pressures and a hit to its gross domestic product (GDP). The essay also focuses on Turkey’s shift to Southeast Asia to counter economic and strategic challenges. The Association of Southeast Asian Nations (ASEAN) may be a fresh avenue for Turkey to diversify its economic relationships given the unpredictability of its relations with the European Union and the United States.

There is no possible long-term revival for the Turkish economy without a thorough reform of the system and its administrators. Moreover, important factors include societal acceptance, commercial backing and favorable international circumstances. The essay concludes with a review of Turkey’s economic prognosis and proposed remedies for the current crisis.

Turkish Economy in the Present Context

Turkey’s economy is currently in a dire state. According to the most recent figures, the nation is significantly indebted to foreign investors, totaling US$451 billion. The government also owes US$185.3 billion in short-term foreign debt.

Despite the devaluation of its currency, Turkey’s current account deficit has persisted due to high cost of energy and commodity prices, exacerbated by Russia’s invasion of Ukraine. This indicates that the higher cost of imported products is not enough to reduce demand and the cheaper cost of the Turkish labor has not sufficiently boosted the competitiveness of local industries.  

Additional conditional liabilities associated with megaprojects, developed through public-private partnerships (PPPs), are thought to total about US$160 billion. After excluding the effects of swap agreements, the Central Bank of the Republic of Turkey’s (CBRT) net official reserves decreased significantly from US$71.1 billion in 2011 to US$52.3 billion in 2022. In order to safeguard and guarantee holders of Turkish lira against foreign currency (FX) risk, the Ministry of Treasury and Finance and the CBRT have also put in place a pricey mechanism. The value of FX-protected deposits was about US$75.34 billion as of the end of September 2022.

While Turkey’s population is expected to expand at a pace of 1-1.5%, its potential GDP growth rate is roughly 3-3.5%. The long-term growth potential of the nation is constrained by bad infrastructure investment choices, a subpar educational system, inefficient use of public funds and state bank credits, and low confidence in the future. Inflation rate in Turkey is at 83.45%, which is the highest level in 24 years and it might reach triple digits if there is a further currency shock. The unemployment rate is 10%, but when discouraged employees are taken into account, it approaches 20%. The monthly minimum wage is about US$300, which is what two-thirds of workers make. The young population, especially the most educated, are pressured to emigrate due to widespread poverty and limited opportunities. All in all, Turkey faces a magnitude of challenges to achieve sustained growth and prosperity. Society is losing faith in the future and this has sparked a wave of young people eager to emigrate to wealthy nations.

The Earthquake and Economic Woes

The infamous 6 February 2023 earthquake occurred before the scheduled on 14 May 2023 and mounted pressure on President Recep Tayyip Erdoğan, who is facing the most challenging re-election campaign of his two-decade leadership. Erdoğan had intended to provide some economic respite to an electorate frustrated by increasing costs before the key elections, but annual inflation is already running at close to 83.45%. In order to address the requirements of 13.5 million impacted individuals — 15.7% of Turkey’s population — and repair extensive damage across 10 provinces, the catastrophe response now needs a major increase in public funding. The government’s anticipated budget deficit of 3.5% of GDP in 2023 is therefore expected to rise to as much as 5% of GDP, endangering Turkey’s current account deficit and other economic weaknesses.

The growing budget deficit, new inflationary pressures and a hit to its GDP are looming over Turkey’s horizon. Although the administration expects economic growth of 5.3% on average between 2023 and 2025, many analysts previously predicted that the economy would only grow by approximately 3% at most as a result of current insecurities and anticipated post-election austerity measures.

The economic effects of the earthquakes are now expected to cause that rate to decrease a little bit more. A reasonable estimate places the price of demolished flats alone at US$6.3 billion, assuming that the buildings that fell held roughly 6,000 units, each of which was worth an average 2 million (US$105,000). The amount would increase to US$10 billion when taking into account damaged structures that are no longer functional.

Turkey’s total GDP is predicted to be impacted by the impending economic downturn in the 10 afflicted provinces. The calamity poses a threat to the region’s agricultural production, which makes up 15% of the nation’s total. Turkish food inflation, which was 71% in January 2023, might be fueled by a fall in agricultural supply. Due to the interruptions in business and industrial activities, the Ministry of Treasury and Finance would receive less tax income. All tax obligations in the area have already been postponed by the government until the end of July 2023. According to official figures, the 10 impacted provinces generated 7.5% of 2.3 trillion (US$122.1 billion) in tax receipts last year. In a similar vein, delays in loan repayments in these provinces might put banks under pressure.

Turkey’ Turn to Southeast Asia: Implications for Economic Revival

As part of the country’s Asia Anew Initiative, Turkey is committed to expanding ties with ASEAN Member States (AMS). The strategy was announced in 2019 and is meant to diversify connections with Asian countries in education, military, trade, technology, culture and political discussion, though Turkey has yet to take any significant measures under the program.

With the Turkish lira losing its value against the dollar, Turkey’s economic situation is dire and the government is reaching out to Southeast Asia, though historically Turkey has had minimal engagement with the region. Turkey has expanded its presence in the region by establishing embassies in Brunei, Cambodia, Laos and Myanmar from 2015 onwards, while ASEAN accorded Turkey Sectoral Dialogue Partner status in 2017.

Turkey’s relations with AMS still have space to grow. No AMS is now among Turkey’s top 15 commercial partners, although Turkey does have free trade agreements with Malaysia and Singapore, which went into effect in 2015 and 2017 respectively. Turkey and Thailand are negotiating a free trade pact that could increase bilateral commerce by up to 40%. Currently, Thai exports to Turkey account for the vast bulk of the bilateral commerce, which is valued at US$1.6 billion annually. In late 2010, Turkey and Indonesia agreed to work together to enhance trade from US$1.5 billion annually to US$10 billion, and the two are now in negotiations for a free trade agreement called the Turkey-Indonesia Comprehensive Economic Partnership Agreement.

Turkey and Malaysia

Turkey has a unique tie with Malaysia, a Southeast Asian nation with a long history and vibrant culture. Ever since diplomatic ties between Malaysia and Turkey were established in 1964, the two countries have been close allies and brothers. One of the first countries to help Turkey in the search and rescue (SAR) of earthquake victims was Malaysia, through the Special Malaysia Disaster Assistance and Rescue Team (SMART), which was able to mobilize effectively within 24 hours.

Malaysia has been in the forefront of relief and rescue efforts to identify earthquake victims as a sign of solidarity with those impacted by the tragedy. According to Prime Minister Datuk Seri Anwar Ibrahim, apart from the 2004 Indian Ocean earthquake and tsunami, the Turkish-Syrian earthquake is the biggest calamity in recorded history. It is one of the reasons why Malaysia is paying special attention to the Turkey-Syria earthquake.

Anwar’s recent visit to Turkey, which was arranged at the request of Erdoğan, shows not only the former’s sincere support and encouragement for the Malaysian rescue teams working on the disaster sites but also his solidarity with the victims.

While Anwar’s rate of travel is related to the easing of Covid-19 travel restrictions and a general reopening of the area, his diplomatic engagement with nations like Turkey demonstrates his determination to make the most of the period of time while he is still relatively politically secure. Anwar would fill the critical leadership void in after years of political crisis if he can keep the window open by maintaining public approval and, more importantly, the support of his coalition partners. Such overseas trips, intended to attract foreign commercial interest to Malaysia would be key to achieving public approval and gaining the support of his coalition partners. This could, thus, allow Kuala Lumpur to stop underperforming and even exceed expectations.

Cooperation in disaster response and management may also likely open doors for more economic cooperation. Malaysia is now being sought after by Turkey as a potential commercial partner in the ASEAN region. In an effort to strengthen their economic ties across a range of industries, Malaysia and Turkey aim to trade RM20.87 billion annually by 2025.

Year 2023: Turkey’s Year of Transition?

The year 2022 was not good for Turkish economy. The country’s typical gross energy imports increased from US$3-4 billion per month to US$7-8 billion during the dramatic surge in global energy costs last spring as a result of Russia’s invasion of Ukraine. Last year’s rebound in tourism and an increase in energy imports have not made up for it and the current account deficit – the gap between imports and exports of all kinds of goods and services – keeps growing. Turkey is approaching a presidential election soon; thus, this year will be a crucial turning point for the country. Whether incumbent Erdoğan retains his position or not, the outcome of that election will have a significant impact on Turkey’s populace, economy, currency and democracy.

Erdoğan’s response to the tragedy, as well as any demands for answers as to why so many structures were not adequately built to resist such shocks, will now be crucial to his political future. There could be a backlash if the rescue operation is deemed to be conducted improperly. The buildings themselves, and which ones have collapsed, are of course another problem. There may be severe repercussions for  if these were constructed in accordance with the new norms but without government oversight. In an effort to address the country’s rising cost of living, Erdoğan called for an early election in May. According to a number of commentators, the action demonstrates Erdoğan’s desire to win a second term in office before his contentious economic policies backfire.

The Future of Justice and Development Party (AKP)

Erdoğan has undoubtedly been affected by the enormity of the catastrophe. It took him some time to make an appearance in public and he has spent a lot of time defending the state and his government in his speeches and visits across the affected areas. Naturally, he began searching for “the guilty,” or poor construction workers and looters he could blame and shift responsibility to. It is challenging to think that the area would be able to recover enough to hold elections. It is difficult since many residents are expected to scatter around Turkey in search of refuge with family and friends, in addition to the damage of property and deaths.

His AKP failed to get a majority of votes in Hatay at the 2018 parliamentary elections out of the four affected provinces (Adiyaman, Gaziantep, Hatay and Kahramanmaraş), though it remained the leading party. In the upcoming election, he would likely be losing these votes.

Political aftershocks from this earthquake will undoubtedly continue. Erdoğan was already in the midst of his most difficult reelection campaign prior to the earthquake, despite the country’s numerous economic problems. However, he gave the impression that he was holding his ground by manipulating the legal system and removing rivals, politicians, and parties. The earthquake will undoubtedly and radically change voters’ projections, and despite Erdoğan’s political abilities, a wave of unrest is on the horizon.

The fact that Erdoğan has made it obvious he has no desire to cede authority and would do whatever it takes to maintain it suggests that his actions may not always be consistent with the democratic process. This year’s election will be a turning point for Turkey as it approaches the 100^th anniversary of its republic. A further descent into authoritarianism and cronyism under Erdoğan’s administration would likely result from another five years in office. If there is a final departure before the bridge to save Turkish democracy will be determined by this election.

Turkey must be positioned within the framework of the world economy. The construction industry has been at the heart of Turkey’s economic expansion, which has received plaudits from several international organizations. The situation in Turkey is a specific illustration of what occurs when neoliberalism and the collapse of democracy coexist.

The opposition, a six-party alliance, still has not chosen a candidate for president and has its own challenges. If they prevail, it would be challenging for them to rule since Erdoğan supporters may still readily occupy public institutions. Or they could take over government agencies that have been completely gutted and are no longer operational. However, that this is more about taking one step to make things better and less about things getting perfect.

After a string of corruption scandals, economic problems, and a deadly earthquake, Erdoğan’s administration entered power 20 years ago with the promise of cleaning up Turkey. It appears Turkey has come full circle and, in some respects, gone backwards in terms of democracy, which, in my opinion, is a really tragic picture.

Addressing the Crisis

Maintaining financial stability and keeping inflation under control should be the first priority for whoever is in charge of the government. It will be difficult to generate robust development and enhance economic well-being without resolving these two problems. It is also essential to adopt accommodative fiscal policy since small firms and widespread poverty both pose serious financial challenges.

Achieving this equilibrium will be a very difficult undertaking for an economy like Turkey that is highly indebted in hard currency. Reaching medium-term development goals means tackling problems outside of the economy, such as foreign policy and education. Due to Erdoğan’s reluctance and the United States’ veto as part of the restrictions imposed under the Countering America’s Adversaries Through Sanctions Act (CAATSA), the Erdoğan administration does not have access to funds from the International Monetary Fund (IMF).

In order to be convinced that a new, more stable period is beginning, international investors and markets will be watching not just the next general elections but also the municipal elections in March 2024.

Short-term policy normalization and confidence-building will be relatively simple tasks if the opposition parties prevail in the 2023 elections because they already have an agreement on this. These immediate goals will be easily attained by their collaboration. Their performance in the local elections of 2024 will be a crucial test of their cohesiveness and continuity of policy as their inter-party harmony is still in doubt. The opposition will be given a startlingly high foreign debt as well as a state budget that is incredibly weak financially, making it harder for them to meet their medium-term goals.

Additionally, the society will have high expectations on a number of fronts after years of economic misery, which will be hard to meet all at once. The opposition parties’ economic platforms do not diverge significantly in the medium term, but their stances on welfare and lending by state banks might spark a heated discussion. If Erdoğan is re-elected to power, the government may impose stricter capital controls on foreign currency deposit accounts or attempt to forge new financial relationships by making concessions on foreign policy. As the government would not have enough space to conduct structural reforms, it will probably try to treat the problem’s symptoms by severely constraining free markets. In order to keep the economy humming, cheap labour and loans will be employed as the primary instruments and public pressure will probably be increased to get individuals to comply.

Whoever wins the 2023 election, whether it is the current administration or the opposition alliance, will have to battle for a better economy in the face of difficult global financial conditions. In terms of developing markets, Turkey is slipping to the bottom and approaching the group of nations, which also includes Pakistan, Tunisia and Egypt, where international lenders have serious doubts about their capacity to make timely loan repayments. Thus, achieving medium-term goals will require more than just the proper policies and strong public support.

Conclusion

Since the latter half of 2021, Turkey has experienced a more serious economic slump following the reduction of interest rates by Central Bank and rising inflation. By the end of that year, a significant economic downturn started, with living standards being negatively impacted by extraordinarily high inflation rates and support for the president’s AKP, which has championed economically questionable policies. Turkish poll-of-polls data from May 2022 showed that the AKP’s support had fallen below 30%. In order to gain popular support ahead of the elections that will take place by June 2023, Erdoğan, who personally opposes hiking interest rates to combat inflation, may try to raise Turkey’s reputation abroad and pursue foreign business prospects.

Early 2023 saw signs of improvement for Turkey’s struggling economy after a challenging year. However, two massive earthquakes with magnitudes of 7.8 and 7.5 struck Turkey and neighboring Syria on 6 February 2023, killing over 45,000 individuals (at the time of writing), injuring and displacing thousand others. Thousands of structures were damaged and the overall economic loss is estimated to be in the tens of billions of dollars. Uncertainty surrounds the overall cost of the damage brought on the earthquakes, but experts agree that it will not be less than US$10 billion and may even reach US$84 billion, or 10% of GDP.

Turkey has pursued monetary easing, using both conventional and unconventional methods to reduce the lira’s devaluation, which has raised the financial burden of businesses with foreign-currency debt. This is in contrast to other nations that have tightened their monetary policies in response to the post-pandemic and surge in global commodity prices, induced by the war in Ukraine.

Nevertheless, despite the fact that this unconventional approach has helped Turkey’s economy grow at a time when the majority of nations are experiencing a recession, it has also increased the nation’s vulnerability to a financial crisis, with market-based indicators of default risk tangibly rising over the past year. After the election next year, the Turkish government could adopt more traditional and conservative economic policies. However, because the nation’s long-term economic condition will continue to improve, the risk of a recession will persist. Turkey’s economy is probably going to expand slowly or stall. The administration needs financial support from foreign development banks, but their contribution will be modest and given in installments because of how poorly the government is getting along with the West. Regardless of how the next elections end out, Turkey’s economy has several obstacles and the path ahead is certain to be difficult.

Introduction

The signing of the RCEP on 15 November 2020 signified the establishment of the largest free trade agreement (FTA) in the world. The agreement comprises ten members of the Association of Southeast Asian Nations (ASEAN), Australia, New Zealand, China, Japan and South Korea. Even after the exit of India, the RCEP constitutes no less than 30 percent of world’s gross domestic product (GDP). The deal also covers 27.4 percent of world’s trade, only a little smaller than the European Union (EU) that makes 29.8 percent.

An interesting element of the RCEP is the vaunted “ASEAN centrality” principle. RCEP’s 2012 Guiding Principles and Objectives document states that “negotiation for the RCEP will recognize ASEAN centrality in the emerging regional economic architecture”. Likewise, the FTA’s Joint Leaders’ Statement, launched in November 2020, also explicitly mentions that “the RCEP agreement is the most ambitious FTA initiated by ASEAN, which contributes to enhancing ASEAN centrality in regional frameworks and strengthening ASEAN cooperation with regional partners”.

How is ASEAN centrality defined? What is the position of RCEP’s ASEAN centrality amidst economic and political dynamics of Asia-Pacific region? What are the challenges for ASEAN leaders to maintain centrality in trade sector? While RCEP is an economic agreement, the involvement of regional major and secondary powers makes it imperative to analyse the deal from a (geo)political perspective.

Defining ASEAN Centrality

There are at least two definitions on ASEAN centrality. First, centrality means ASEAN as a forum provider. RCEP is a part of ASEAN “Plus X” forums that gather and arrange cooperation with external powers. In the security arena, ASEAN’s most high-profile forums are the East Asia Summit (EAS) and the ASEAN Regional Forum (ARF). EAS’ membership includes powerful countries such as the United States (US), China, Russia and India, whereas the ARF even includes the EU and North Korea. Meanwhile, in trade sector, in addition to the RCEP that convenes five ASEAN’s dialogue partners, the Association has developed six separate ASEAN “Plus One” FTAs. Second, centrality means the driver of substance. ASEAN should develop substantial cooperation within its various forums. For example, there have been expectations for the RCEP to negotiate a truly substantial (rather than a mere rhetoric) “high-quality agreement”, meaning to comprehensively liberalise trade barriers in substantially all sectors, so that it would maximize economic gains and domestic reforms. Among these two definitions, many academics evaluate that ASEAN has only shown a modest progress in achieving centrality, by preferring forum membership to substance.

Why has ASEAN centrality emerged? In a region where rivalry has persisted between China and Japan, China and the US, China and India, and South Korea and Japan, any regional initiatives from one will be treated suspiciously by another power. ASEAN has met this challenge by projecting open, inclusive and non-confrontational images to its “Plus X” frameworks, therefore making these external powers convenient to accept ASEAN’s initiatives. Southeast Asian countries have benefited from this situation since, as a collection of small and medium powers, they have had the opportunity to voice their concerns among these external giants.

The Three Challenges

After the RCEP, ASEAN confronts three challenges to maintain centrality in trade regionalism: the first relates to being a forum provider and the next two pertains to centrality of substance.

Apart from the homework to lure India back to the RCEP (and perhaps, in the long run, to entice the US and Russia to join the FTA), ASEAN should be watchful of any possible forum alternatives. ASEAN’s forums will remain attractive in so far as rivalry and distrust among external powers continue to exist. Should external powers achieve some degree of understanding and develop a common platform to cooperate, there will no longer be a need for ASEAN to be an honest broker. A case in point is the possible conclusion of the long-stalled China-Japan-Korea (CJK) FTA. After the finalisation of RCEP, both Japan and China have expressed their optimism regarding the prospect of CJK-FTA. The trilateral FTA is difficult since it involves the long-standing Japan-China and Japan-Korea rivalries. ASEAN’s proponents may exultantly declare that the RCEP has become the first FTA between these politico-economic rivals. Yet, a successful negotiation of CJK-FTA may potentially reduce the tension among the three countries, and even evolve into a distinct Northeast Asian institution that is independent from ASEAN forums. Another case in point is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The FTA was once named Trans-Pacific Partnership (TPP), and was politically strategic to serve US’ engagement policy in the Asia-Pacific under President Barrack Obama. President Donald Trump pulled the country out of the deal in 2017, however, the new President-elect Joe Biden had indicated US’ return. Interestingly, soon after RCEP’s signing, Chinese President Xi Jinping has also expressed his country’s interest in joining the deal. If this scenario comes true, then the CPTPP will economically far outweigh the RCEP. Geopolitically, the CPTPP may serve as a platform to negotiate cooperations and future relations among the two most powerful countries, and these prospects will likely make the ASEAN centrality run out of stream. At the time being, it is definitely too early to tell the likely occurrence of these dim scenarios (from ASEAN’s view) of CJK-FTA and CPTPP. However, in the long run, ASEAN needs to cautiously observe these regional developments.

Second, ASEAN leaders need to emphasize the substantive contribution of ASEAN centrality. RCEP is oft-repeatedly described as of a lower quality than the CPTPP for its less ambitious agendas in regulating investment and intellectual property rights, as well as the absence of labour and environmental chapters. However, the RCEP has actually provided different substantial contributions. Rather than simply an economic agreement that promises economic benefits, RCEP is essentially a part of ASEAN’s geopolitical instrument to entangle conflicting external powers in a joint platform of cooperation. To be clear, RCEP may not extirpate the gamut of profound politico-military conflicts in the Asia-Pacific. Yet, providing a platform for communication and collaboration is a necessary stepping stone to conflict reduction. Therefore, RCEP is an instrument of peace. Another area of contribution is the representation of developing countries’ interests in the RCEP. Substantively, RCEP incorporates special and differential treatment (SDT), economic and technical cooperation, and trade facilitation mechanism. These points are easily overlooked, or even underestimated, given the massive “high-quality FTA” narratives from developed countries and large businesses. Not all developing countries are comfortable with such a demand since it potentially brings massive distributional costs and structural adjustments. While it is indeed true that the RCEP also aims to be a “high-quality” FTA, the incorporation of the above-mentioned elements mean that the developing members still retain some room for policy and pace of adjustments. Politically, joining a regional agreement is a typical strategy of weak developing countries as it allows them to build a common bargaining position against the more powerful developed countries. Therefore, ASEAN has indeed provided some substantial contribution to ASEAN centrality, and the challenge here is to elevate these frequently neglected achievements more widely.

Third, substantively, the principle of ASEAN centrality should be directed to engage civil society organizations (CSOs). Despite the people-centred rhetoric, many ASEAN meetings, especially FTA negotiations, are held secretively without sufficient public deliberations. During RCEP’s negotiations, it was only when the hosts (as Indonesia did) initiated a separate forum for CSOs that the latter could directly express their concerns, yet as testified by a Jakarta-based CSO activist, the forum was brief and its content was too general. Such a top-down process is a typical ASEAN’s reach-out strategy to the CSOs, in which the former limits the latter’s participation in “ASEAN-created spaces” only. ASEAN should consult the CSOs more meaningfully. It is indeed true that ASEAN centrality processes are of high-level security nature, nevertheless, trade is different. FTAs, including the RCEP, will affect the livelihood of small farmers, labours, and other ordinary citizens, hence the opportunity to create a more inclusive ASEAN centrality.

Conclusion

The completion of the RCEP is a milestone for ASEAN centrality. However, the road ahead is still a hard slog. ASEAN leaders should rivet to address the above-mentioned challenges to maintain future relevance in the Asia-Pacific.