Five Events That Will Shape Southeast Asia in 2015

As we prepare to leave 2014 behind, we explore five events that are expected to shape the coming year in Southeast Asia:

Elections in Myanmar. Parliamentary elections slated for Myanmar in late 2015 will test whether the country’s nearly four-year transition from military rule to democracy can be sustained. Even if the elections are inclusive, transparent, and credible, Myanmar’s people will still not accept that the country has turned the democratic corner unless the constitution is amended to address the military’s remaining veto grip on reform. For those changes to take shape will necessitate talks hammering out a compromise among the country’s political elite, including President Thein Sein, military commander Min Aung Hlaing, parliamentary speaker Shwe Mann, opposition leader Aung San Suu Kyi, and ethnic minority representatives.  

The earlier euphoria over the reforms launched in 2011 is over and the year ahead will be a tough one as key parties jockey for position in the run-up to the elections. Talks between the government and armed ethnic groups, which reached an optimistic point in August, took a step back in September when military representatives appeared to reverse course on an earlier agreement in principle to form a federal army with ethnic forces. Hammering out a compromise action plan on dealing with the disenfranchised Rohingya in the western state of Rakhine appears more difficult as the elections loom on the horizon. 

Ruling on Philippines’ South China Sea case. A tribunal at the Permanent Court of Arbitration in The Hague will likely rule on the Philippines’ case against Chinese claims in the South China Sea by the end of 2015. That decision could be the most significant by any tribunal established under the United Nations Convention on the Law of the Sea and, one way or another, it will mark a watershed for the South China Sea disputes. If the judges find that they do not have jurisdiction, it will dim the hopes of using arbitration as a peaceful means of resolution in the future.

But if the judges do find jurisdiction, they will almost certainly rule China’s nine-dash line an invalid claim to maritime space. In that case, Beijing, which maintains that it will not take part in the proceedings and refused to submit its arguments against the Philippines’ case to the tribunal by a December 15 deadline, will face some difficult choices. China does not want to flout an international tribunal’s ruling and be labeled an irresponsible player in the international system, with the substantial if unquantifiable costs that would entail. The Philippines will look to the United States, Japan, its fellow ASEAN states, and other partners to rally international support in affirming the tribunal’s ruling in an effort to convince Beijing to eventually clarify its nine-dash line claim.

Thailand’s return to democracy delayed. Prime Minister Prayuth Chan-ocha and the other generals who seized power in a military coup in May following months of political tumult no longer anticipate holding elections in late 2015 as they had originally promised. Officials say the council appointed to draft a new constitution needs more time to complete wide-ranging political reforms. The coup’s immediate goal seems to be to eliminate for good the political influence of former prime minister Thaksin Shinawatra, whose allies have won every election since 2001.  

In the longer term, it appears the coup was launched to ensure that the military will be in charge of the country’s political levers at the critically sensitive time of the royal succession. King Bhumibol Adulyadej, who has reigned for nearly seven decades and celebrated his 87th birthday in early December, has been in fragile health for years. Discussion about the royal family and succession is sharply curtailed by the country’s draconian lèse-majesté laws. All political activities that would be needed to prepare for elections, including activities by political parties, have been banned. 

Prognosis for the Trans-Pacific Partnership (TPP). U.S. Trade Representative Michael Froman has told members of Congress that he expects the 12-nation TPP deal to be hammered out by mid-2015, which would allow Congress to ratify the deal by the end of next year before the 2016 presidential campaign reaches fever pitch. Japanese prime minister Shinzo Abe was returned to power in December 14 parliamentary elections with a strong majority, which should make it easier for him to make a deal with the United States on market access for agricultural products and autos, two issues that have hobbled the TPP talks for months. To be sure, there are other difficult issues holding back an agreement, including labor rights, state-owned enterprises, and intellectual property rights. 

Officials from Japan and other countries have said it is difficult for them to table their final negotiating offers until Congress passes Trade Promotion Authority (TPA), which allows the legislature to approve or disapprove a trade agreement but not amend it. Incoming Republican chairpersons of key congressional committees have said in recent weeks that they hope to pass a TPA bill in early 2015. TPP negotiators plan to hold another informal round of talks in late January and a ministerial meeting a month or two later in a full-court press to conclude the negotiations. Completion of the TPP is critical for Washington to demonstrate that its rebalance to Asia includes economic as well as security components.

Progress on ASEAN Economic Community. ASEAN can be projected to make significant progress in reducing barriers to regional trade in goods under the ASEAN Economic Community (AEC) by the grouping’s December 31, 2015, deadline. But liberalization in financial and other services, freer capital flows, and labor mobility are expected to lag behind despite efforts by Malaysia, the 2015 ASEAN chair. The deadlines have been defined by ASEAN as more aspirational than binding. The grouping’s leaders never thought the less-developed countries would achieve the 2015 integration goals, but it is clear that the more-developed economies will also struggle to meet their targets.

Liberalizing financial services would provide huge opportunities for ASEAN and for foreign companies interested in the region because it would help foster more resilient economic growth.
One of the biggest concerns among ASEAN nations about opening up financial services and capital markets is fear of financial contagion and exchange rate volatility, even though integration would provide opportunities for risk sharing. Nonetheless, ASEAN’s economic integration efforts have already led to increased foreign direct investment in the grouping, which rose to $122 billion in 2013, up from $20 billion 12 years earlier.

(This Commentary originally appeared in the December 18, 2014, issue of Southeast Asia from Scott Circle.)

Murray Hiebert is senior fellow and deputy director of the Sumitro Chair for Southeast Asia Studies at the Center for Strategic and International Studies in Washington, D.C. Gregory Poling is a fellow with the Sumitro Chair.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2014 by the Center for Strategic and International Studies. All rights reserved.


Murray Hiebert
Senior Associate (Non-resident), Southeast Asia Program
Gregory B. Poling
Senior Fellow and Director, Southeast Asia Program and Asia Maritime Transparency Initiative