Table Of Content© 2000 Institute of Southeast Asian Studies, Singapore
The Institute of Southeast Asian Studies was established as an autonomous
organization in 1968. It is a regional research centre for scholars and other
specialists concerned with modern Southeast Asia, particularly the many-faceted
problems of stability and security, economic development, and political and social
change.
The Institute’s research programmes are the Regional Economic Studies
(RES, including ASEAN and APEC), Regional Strategic and Political Studies
(RSPS), and Regional Social and Cultural Studies (RSCS).
The Institute is governed by a twenty-two-member Board of Trustees
comprising nominees from the Singapore Government, the National University
of Singapore, the various Chambers of Commerce, and professional and civic
organizations. A ten-man Executive Committee oversees day-to-day operations;
it is chaired by the Director, the Institute’s chief academic and administrative
officer.
SOUTHEAST ASIAN AFFAIRS 2000
EDITORIAL COMMITTEE
Chairperson Chia Siow Yue
Editor Daljit Singh
Production Editor Tan Kim Keow
© 2000 Institute of Southeast Asian Studies, Singapore
INSTITUTE OF SOUTHEAST ASIAN STUDIES
© 2000 Institute of Southeast Asian Studies, Singapore
Cataloguing in Publication Data
Southeast Asian affairs.
1974–
Annual
1. Asia, Southeastern.
I. Institute of Southeast Asian Studies.
DS501 S72A
ISSN 0377-5437
ISBN 981-230-095-3 (softcover)
ISBN 981-230-096-1 (hardcover)
Published by
Institute of Southeast Asian Studies
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© 2000 Institute of Southeast Asian Studies, Singapore
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© 2000 Institute of Southeast Asian Studies, Singapore
FOREWORD
We are pleased to present the twenty-seventh issue of Southeast Asian Affairs, a
comprehensive annual review of political and economic trends and develop-
ments in Southeast Asia.
Designed to be easily readable yet in-depth, informative and analytical, the
annual has come to be a standard reference for scholars, policy-makers, private
sector executives, and journalists, who seek to understand and keep up-to-date
on the dynamics of Southeast Asian developments.
The year 1999 saw the economies of Southeast Asia recovering from the
regional crisis and the focus of attention shifting to the sustainability of the
recoveries. However, Indonesia still faced serious challenges.
I take this opportunity to thank the authors who have contributed to this
publication. While the Institute encourages the statement of all points of view
in the publication, the authors alone are responsible for the facts and opinions
expressed in their articles. Their contributions and interpretations do not
necessarily reflect the views of the Institute.
Chia Siow Yue
Director
Institute of Southeast Asian Studies
April 2000
© 2000 Institute of Southeast Asian Studies, Singapore
CONTENTS
FOREWORD v
INTRODUCTION ix
THE REGION
Southeast Asia in 1999: A False Dawn? 3
Daljit Singh
Southeast Asia: Towards a Sustained Recovery? 25
Anne Booth
How Valid Are the South China Sea Claims
under the Law of the Sea Convention? 47
Jon M. Van Dyke and Mark J. Valencia
The East Timor Crisis: A Test Case
for Humanitarian Intervention 64
Leonard C. Sebastian and Anthony L. Smith
BRUNEI DARUSSALAM
Brunei Darussalam: Weathering the Storm 87
Mohamad Yusop bin Awang Damit
CAMBODIA
Cambodia: Hun Sen Consolidates Power 101
Milton Osborne
INDONESIA
Indonesia: Democratization and the Threat of Disintegration 115
Harold Crouch
The Indonesian Economy under Abdurrahman Wahid 134
Hadi Soesastro
LAOS
Laos: An Episode of Yo-Yo Economics 147
Yves Bourdet
© 2000 Institute of Southeast Asian Studies, Singapore
viii Contents
MALAYSIA
Unfinished Crises: Malaysian Politics in 1999 165
Khoo Boo Teik
Malaysia’s Alternative Approach to Crisis Management 184
Mahani Zainal Abidin
MYANMAR
Myanmar: Political Stasis and a Precarious Economy 203
Tom Wingfield
The Failure of Myanmar’s Agricultural Policies 219
Peter G. Warr
THE PHILIPPINES
The Philippines: Governance Issues Come to the Fore 241
Miriam Coronel Ferrer
SINGAPORE
Singapore: A Vision for the New Millennium 259
Jasmine S. Chan
Singapore: Information Technology in an Intelligent Island 276
Arun Mahizhnan
THAILAND
Thailand: Farewell to Old-Style Politics? 285
Suchit Bunbongkarn
The Thai Economy: Stabilization and Reforms 296
Pichit Likitkijsomboon
VIETNAM
Vietnam: The Politics of Immobilism Revisited 311
Carlyle A. Thayer
© 2000 Institute of Southeast Asian Studies, Singapore
INTRODUCTION
The big story in Southeast Asia in 1999 was the economic recovery the speed
and strength of which, like the severity of the 1998 downturn, caught many by
surprise. Malaysia and Thailand, two of the three countries most affected by
the crisis saw gross domestic product (GDP) growth rates of 5.4 and 4.1 per
cent, respectively. Thailand recovered while following prescriptions of the
International Monetary Fund (IMF), Malaysia behind the shelter of capital
controls. The sustainability of these two recoveries and the merits and pitfalls
of resort to capital controls were matters of considerable debate during the
year.
However, equally significant were developments in Indonesia. The coun-
try’s economy barely grew in 1999 after declining 13.7 per cent in 1998, though
growth for 2000 was projected at 3–4 per cent. The new government of Presi-
dent Abdurrahman Wahid was making a start in tackling the huge challenges
facing the country. The restructuring of the battered financial sector still had
a long way to go, and total public debt could rise to 145 per cent of the GDP.
1999 saw East Timor deciding to break away from Indonesia in a referen-
dum. The violence perpetrated by Indonesia-backed militias drew much ad-
verse publicity in the world’s media. When Indonesia agreed to international
humanitarian intervention, Philippines, Thailand, Singapore, and Malaysia
made contributions.
With the formal admission of Cambodia as the tenth member, ASEAN
finally attained its goal of being a ten-nation Association. But there were also
unprecedented doubts about the credibility of the Association, a problem that
it has sought to address, starting with the Hanoi summit of December 1998.
Bilateral relations between some member countries, though better than in
1998, remained problematic.
Apart from the developments in East Timor and the uncertainties posed
by Indonesia, the regional security environment remained relatively benign.
Tensions in the Spratly Islands increased somewhat, though there was no danger
of any major conflict. In the broader East Asian region, Sino-U.S. relations
were volatile, but ended the year on a better note. Developments relating to
Taiwan continued to be a potential danger to the U.S.-China relationship.
Southeast Asian Affairs 2000 addresses these issues from a regional perspec-
tive in the first four chapters. The rest of the volume consists of ten country
surveys and five special theme articles, of which three deal with the economies
of the three countries most affected by the regional crisis, namely, Indonesia,
Malaysia, and Thailand.
Daljit Singh
Editor
Southeast Asian Affairs 2000
© 2000 Institute of Southeast Asian Studies, Singapore
ISEAS DOCUMENT DELIVERY SERVICE. No reproduction without permission of the publisher:
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Southeast Asian Affairs 2000
SOUTHEAST ASIA IN 1999
A False Dawn?
Daljit Singh
If 1998 was the year of economic crisis, 1999 was the year of recovery. The
pervasive gloom of 1998 receded somewhat, but Southeast Asia still, at best,
presented a mixed picture. Economic recovery among the older members of
the Association of Southeast Asian Nations (ASEAN) generated a palpable
sense of optimism. Even Indonesia, with its battered economy, could inspire
some hope after it held a relatively peaceful and fair parliamentary election,
followed by a presidential election which resulted in the establishment of a
democratic government with the moral and political legitimacy to govern. But
there was also tragedy, followed by humanitarian intervention in East Timor
and, for Indonesia, enormous uncertainties remained. Elsewhere, the reforms
needed to deal with the weaknesses in state and corporate governance which
the crisis had highlighted were only partially addressed, raising doubts about
the sustainability of the recoveries. Conditions in Laos, Myanmar, and Vietnam
were worse than in 1998. The durability of the new democracy in Indonesia
was not assured, while in the rest of Southeast Asia, progress towards more
tolerant, enlightened, and democratic societies was patchy, mixed with stassis,
even regression.
ASEAN sought to overcome a crisis of credibility. The broader Asia-Pacific
strategic environment remained relatively benign. There were, however, more
signs of Sino-American competition. China’s claims and posture in the South
China Sea remained a troubling long-term strategic lever against Southeast
Asia.
The Association of Southeast Asian Nations
A Question of Credibility
ASEAN has become a feeble managing vehicle [of the Southeast Asian
regional order] … ASEAN has been diminished in international stand-
ing and, in important respects, is not the same entity that was set up in
1967 based on a set of common understandings about reconciliation
among governments of convergent political outlooks. (Michael Leifer)1
DALJIT SINGH is a Senior Research Fellow at the Institute of Southeast Asian Studies,
Singapore.
© 2000 Institute of Southeast Asian Studies, Singapore
4 Daljit Singh
ASEAN has overextended itself — with members so vastly different as
Myanmar and Singapore it has lost credibility, and its ability to provide
any semblance of security across maritime Southeast Asia has been
undermined. (Paul Dibb)2
ASEAN’s inability to deal with the challenges posed by intransigent
regimes in Myanmar and Cambodia was mirrored by its ineffectiveness
in dealing with transnational issues … ASEAN disarray throughout the
year was the product of many factors … (Carlyle A. Thayer)3
The above are but three examples of sceptical assessments of ASEAN.
Regional governments, or at least some of them, did acknowledge that the
Association had a credibility problem. At the ASEAN Ministerial Meeting (AMM)
in Singapore in July, Prime Minister Goh Chok Tong stated:
… whether or not criticisms that have been levelled at ASEAN are de-
served, they exist. This is a fact we must deal with, because perceptions,
even inaccurate perceptions, can define political reality.
Foreign Minister Jayakumar said: “… the essential challenge that ASEAN faces
is one of credibility. But I can state with confidence that we have taken a firm
step forward in beginning a process of renewal.” Earlier, at the Hanoi summit
in December 1998, Thai Prime Minister Chuan Leekpai had observed that the
crisis had “raised doubts and questions about whether ASEAN can regain its
vibrancy and vitality. Some have gone so far as to write us off”, while Malaysian
Prime Minister Mahathir had noted that the crisis had “created the impression
of an ASEAN in disarray”.
Critics have pointed to a number of events or ASEAN’s response to them
which diminished ASEAN’s credibility. They include the admission of Myanmar
into the Association in 1996; the haze over Indonesia, Malaysia, Brunei, and
Singapore in 1997 caused by fires in Indonesia; Hun Sen’s coup in Cambodia
in 1997 which overturned the power-sharing arrangements in the coalition
government sanctioned earlier by the United Nations Transitional Authority
in Cambodia (UNTAC); the regional economic crisis; the deterioration of
bilateral relations between some ASEAN member countries in 1998; and de-
velopments in East Timor in 1999.
However, a blanket censure of ASEAN’s behaviour in relation to these
developments would be unfair because ASEAN’s performance was in fact a
mixed one. It would have been unrealistic, for instance, to expect ASEAN to
prevent or resolve the regional economic crisis. It was caused by a combination
of external factors like massive short-term capital flows and domestic weak-
nesses in individual ASEAN countries, in relation to both of which there was
little that ASEAN as an organization could do. As ASEAN Secretary-General
Rudolfo Severino has said, blaming ASEAN for failure to deal with the crisis
is “something akin to blaming the OAS [Organization of American States] for
the financial crisis in Mexico some years ago, or for the forest fires in Brazil,
or the OAU [Organization of African Unity] for Africa’s recent sorrows”.4 Yet,
© 2000 Institute of Southeast Asian Studies, Singapore
