Briefing MONTHLY #37 | April 2021
Asian students | ASEAN relations | Japanese investment
Are they coming and where from? April has been a big month for new hopes and mixed signals on Australia’s biggest immediate export conundrum – the return of students from around the region to education and training institutions.
New minister Alan Tudge kicked off with a fresh gameplan for post-COVID international education. It reflected the sea-change in Coalition government thinking from the sunny uplands of endless (think Chinese) foreign student flows five years ago to the current discontent with China-dependent universities complaining about the impact of the pandemic.
He has told education institutions to wind back their dependence on students from the two most populous countries in Asia (China and India) and look elsewhere – just like the wine and barley exporters.
But the universities have only added to the complexity of this issue with some of the most China-dependent Group of Eight institutions reporting unexpectedly large profits despite the COVID complaints, while the Australian National University, which pioneered a foreign student cap, has reported a big loss.
Ironically, despite bilateral tensions, China has made it easier for its students to continue their Australian degrees online at home, while India has not done this, prompting its students to look towards countries with less severe travel restrictions.
Some state governments, specifically NSW and Victoria, are taking the first steps towards running student quarantine programs after federal government equivocation.
And the Asia Taskforce A Second Chance report has backed continued engagement with Chinese students as a potential stabilising force in in bilateral commerce. But the results from international student surveys are mixed.
The 2021 QS International Student Survey found 58 per cent of students would study in a country with borders already open, while 42 per cent said they would wait for their preferred country. While good COVID management made Australia attractive, students are also more willing these days to switch country choices, making a clear return timetable important for Australia. Meanwhile, a survey of Chinese students found that 57 per cent would either reject, or might reject, studying in Australia if relations between the two countries were not good.
And a new forecast by the Mitchell Institute suggests international education export revenue could halve to $20 billion by the end of next year, although universities will suffer less than other training and service providers.
Education has long been a key part of Australia’s regional engagement, from its status as a big export revenue earner to its soft diplomacy role educating the future leaders of the region, starting with the old Colombo Plan in the 1950s. But Tudge’s consultation paper on a new strategy seems to take this much further by placing the “rebalancing of global political and economic power” alongside online education and university viability as reasons for a new approach.
While education providers have not been told how to replace plentiful Chinese and Indian students with others, they have been told that future foreign enrolments should be determined more by Australia’s skills needs than what foreign students or countries actually want or need.
This reflects Australia’s post-pandemic concern about skills shortages. But ten years ago it was the abuse of a short-term training focus for education visas by both students and training providers which was partly responsible for triggering a diplomatic row with India.
- Read why Alan Tudge thinks the number of international students on-campus in Australia is no longer sustainable here.
INDIA: Multi-level crisis
The resurgence of COVID-19 in India is likely to have implications for the country and the world that linger long after India has recovered from having the highest daily case rate in the world since the pandemic started last year.
At home Prime Minister Narendra Modi has managed to retain strong public support despite persistently mishandling several major domestic challenges during his time in office due to apparent hubris and centralised power.
Whether this will change due to his government’s mishandling of the second wave of COVID remains to be seen, but the results from state elections in the next week may provide an early indication.
The Australian government has made India a key part of its security and economic strategy for dealing with a more assertive China, most recently at the summit of leaders from the Quadrilateral Security Dialogue.
That bilateral relationship could face challenges now if India turned more inward in response to the pandemic shock and internal political tensions. At the same time, Australia could face a backlash from closing its borders to Indian Australians returning from India at a time when the country is running short of medical supplies.
At the regional level India is involved in a battle for hearts and minds with China over democracy and diplomatic alliances and may well lose some lustre as China gains credibility from its economic recovery and vaccine distribution diplomacy.
An interesting cultural contrast is also emerging in the way the Modi government allowed massive Hindu religious gatherings to occur despite rising COVID infections when neighbouring Muslim societies are restraining traditional post-fasting month travel and celebrations. Countries with ethnic Chinese communities also sought to restrain Chinese New Year gatherings this year due to COVID risks.
Indian national and state governments are both to blame for complacency over the predictable likelihood of a pandemic second wave, according to this India Today article.
MYANMAR: Peacemaker wanted
Southeast Asian leaders at the April 24 summit in Jakarta. Picture: Indonesian Presidential Office.
Reducing violence in Myanmar may now depend on how fast a special envoy can visit the country and start some form of communication between the military junta and the diverse opposition groups.
Appointment of the envoy was a key part of the five-point consensus statement agreed at the special Association of Southeast Asian Nations (ASEAN) summit, which saw regional leaders meet coup leader Min Aung Hlaing, but avoid treating him as the country’s leader. Former Singapore prime minister Goh Chok Tong and former Indonesian foreign minister Hassan Wirajuda are reportedly possible candidates.
Opposition groups have criticised the summit for failing to push ahead with a proposal to call for the release of political prisoners. But the call for all groups in Myanmar to begin dialogue on peace implies that one of the early tasks for a special envoy will be to seek the release of key people from the previous government such as Aung San Suu Kyi.
Meanwhile, in an indication the Myanmar conflict may require some form of broader foreign military intervention, the former United Nations Representative in East Timor Ian Martin has said an international civil protection mission will be needed to stabilise the situation.
Martin says in a Bangkok Post article that the UN Security Council won’t be able to agree on any effective action and other countries would not be likely to undertake a military intervention. But a civilian protection mission backed by the UN, ASEAN, and regional countries would create space for negotiations.
- The ASEAN chairman’s five-point statement is here.
KOREA: Three strikes
The government has suddenly lost popularity due to a slow COVID-19 vaccine rollout, senior ruling party figures have resigned due to sex scandals, and rising housing prices are frustrating voters again. This is not Australia, but the fortunes of South Korean president Moon Jae-in since he triumphed at one of the world’s first post-COVID elections last year bear a striking similarity to the challenges also facing Australia’s prime minister. Left-wing Moon could not avoid special elections in Seoul and Busan to replace mayors from his Democratic Party and has been forced to reshuffle his Cabinet in response to the victories in those key cities by conservative candidates. The sharp reversal of fortunes compared with last year suggest Korea’s conservative People’s Power Party is on the way back for next year’s presidential election with many implications for regional diplomacy.
- Chung Min Lee, from the Carnegie Endowment for International Peace, says Korea’s ruling left-wing elite became complacent in power.
SINGAPORE: Stuck on 3G
Singapore’s second prime minister Goh Chok Tong got six years preparing to take over from founding leader Lee Kuan Yew and its third Lee Hsien Loong (Lee’s son) got 13 years as deputy prime minister.
Heng Swee Keat had done two years as deputy prime minister and chosen future prime minister before his sudden resignation this month declaring that he was too old to deal with the challenges facing the country in the post-COVID era.
How long the country’s new fourth generation (or 4G) leader will get to learn the ropes in a mandarin-like political structure now remains to be seen.
That’s because Heng remains the deputy leader in the Cabinet reshuffle notionally designed to try out some new talent. This tiptoeing through the monochromatic top ranks of the People’s Action Party only raises the question of whether the people will finally have more say choosing their nation’s leader.
- Grace Ho explains how leadership has changed through time in this exhaustive The Straits Times piece.
SAMOA: Not so FAST
Political change occurs even slower than Singapore in even smaller Samoa where the Human Rights Protection Party (HRPP) has ruled for 39 years.
And three weeks after the April 9 election there was still no clear result after the one-year-old Fa’atuatua I le Atua Samoa ua Tasi (FAST) Party won a dead heat of 25 seats each with HRPP in the 51- seat parliament.
FAST’s leader and former Deputy Prime Minister Sa’o Faapito Fiame Naomi Mata’afa broke with the government over its attempts to undermine judicial independence and so the result suggests popular support for better governance in a Pacific country.
- Samoa was the first independent nation in the region in 1962. This piece from The Conversation argues it has resumed its place as a regional leader of self-determination and democracy.
DEMOCRACY: Digital divide
As Myanmar delivers a real time lesson in the democratic pressures in Southeast Asia, the early findings from an Asia Foundation civic space project reveals some broader challenges. Interviews with 450 people across the region have found:
- There are many restrictions on freedom of speech and action throughout the region. COVID-19 and cyber-security laws are making this worse.
- Civil society organisations are struggling for funding with reduced aid and sustained funding with government money mostly directed service delivery.
- Ideological divisions within and between these groups are rising amid social and political polarisation. Democracy activists are often split over tactics. A generational divide means established movements struggle to attract younger new members. There is a disconnect between traditional civil society and newer youth activism reflecting new technology skills differences and new generational values.
Finding the right balance... Frances Adamson speaking in Melbourne. Picture: Asia Society Australia
Australia’s most senior diplomat Frances Adamson has declared Southeast Asia (along with the Pacific) to be the part of the world “that most acutely engages Australia’s national interests” in a back-to-basics speech which has only underlined how the Myanmar crisis challenges Australia’s international outlook.
In a week when the China relationship got worse, the Afghan withdrawal raised questions about overreach, and Australia’s climate change record came under new pressure, the Department of Foreign Affairs secretary said Southeast Asia now also faced a crucial five years. “What will ultimately matter most in these coming years, is the ability of our region to find the right balance between competing powers and in the face of unsettling trends,” she said.
In the past year the government has outlined about $500 million in new general aid and at least $400 million in COVID support to the region of eleven countries (including Timor Leste), underlining its renewed priority.
But as the Myanmar crisis has raised questions about the credibility of ASEAN and about splits in regional unity, Adamson tentatively sketched out two quite distinct policy approaches to dealing with a group of countries becoming potentially more fractious as they become more important to Australia’s China-plus economic and security strategy.
She said study of regional languages had almost halved over the past two decades and the government needed to find ways to encourage more understanding of Southeast Asia because it was “a national asset and crucial sovereign capability”.
Meanwhile, despite the strong focus in recent years on the role of the ASEAN institution in broader regional economic and diplomatic architecture, Adamson said that DFAT had been working to strengthen bilateral relationships with Indonesia, Malaysia, and Singapore (Comprehensive Strategic Partners); Thailand and Vietnam (Strategic Partners); and the Philippines (Comprehensive Partner). She pointed out that this had mainly happened in various ways in just the last year and “possibly hasn’t got as much attention as it deserves.”
- Watch the secretary's entire speech here.
Chinese language skills in the Australian public service lag the general community, robbing the government of an increasingly useful skill when many government decisions have a China angle. A new Lowy Institute policy brief says that while Mandarin is the second most spoken language in the Department of Foreign Affairs and Trade after French, only 1.2 per cent of diplomats speak it compared with the 3.7 per cent of Australians who speak Mandarin or Cantonese. When it comes to Chinese heritage, 2.3 per cent of DFAT employees qualify, although 5.9 per cent of Treasury staff have Chinese heritage. That beats the community share of 5.6 per cent.
The brief argues: “A better harnessing of the skills and knowledge of this community – including via improved recruitment processes, better use of data, skills-matching, and reviewing and clarifying security clearance processes and requirements – would have substantial benefits for Australian policymaking in one of its most important bilateral relationships.”
About three quarters of Australians support donating some of the country’s domestically produced COVID vaccine to Papua New Guinea in a sign of support for the government’s vaccine aid program. A YouGov poll for the Australian Council for International Development (ACFID) found 76 per cent of people supported providing one million out of 50 million doses of local vaccine to the country. And 84 per cent either “strongly” or “somewhat” agreed that the Australian Government should be supporting PNG to help stop the spread of the virus.
The government has been reluctant to heavily promote its increase in aid spending on the Pacific and Southeast Asia in the past year in an apparent concern about voter disapproval. But the poll shows there is support for aid when it is explained well. Vaccine support is now budgeted at $632 million with distribution of 10,000 Astra-Zenica doses to regional countries getting under way in early April. ACFID chief executive, Marc Purcell said: “This poll should reassure politicians of all stripe that the public overwhelmingly back swift and decisive action to vaccinate the people of PNG.”
DEALS AND DOLLARS
Trade minister Dan Tehan has embraced the idea of a Team Australia approach to boosting Australian business engagement in Asia promising that DFAT will take on a new role to “see we are all on the same page.”
And he says it is important to also support Asian language study to improve Asian literacy in the business community and to contribute to the “softer side of diplomacy.”
Tehan was speaking at the launch of the Business Council of Australia/Asia Society Australia publication A Second Chance, which has proposed both a Team Australia approach and measures to boost awareness of Asian cultures at senior levels of business.
Charting an Australian business rebound in the region after COVID and tensions with China, Tehan said: “It’s not going to be government-led; it’s not going to be business-led; it's not going to be a society-led; it’s not going to be cultural-led; It’s going to require all of us doing our bit and playing a part and, in particular, in navigating the changing relationships that we're starting to see in the Indo-Pacific. That’s where this report is so important because it gives us a blueprint – it gives us a roadmap – as to how we can do that.”
Noting that previously as education minister he had protected language study from tuition fee increases, he said: “It’s going to be that softer side of diplomacy, that cultural diplomacy, all those aspects of it are going to be really important in growing and understanding both with our relationships, and also understanding each other. We should never, ever sit back and think we truly understand our neighbours, because it's something you have to continually grow.”
Japanese investment in Australia continued to diversify amid the pandemic last year even though there were few new entrants to the country due to travel restrictions.
The Herbert Smith Freehills latest annual review identifies 28 deals last year compared with 41 in 2019 but says the momentum is picking up fast this year. (The numbers include both new inward investments and sell downs of existing equity).
It says there was an acceleration in the sectoral shift by established Japanese investors which saw divestments (for example, in coal) and a focus on new sectors such as renewable energy, infrastructure, healthcare, and digital transformation.
“The diversity of new target sectors suggests both the continuation of Japanese inbound investment and an increase in the diversity and sophistication of the Australian economy,” the report says. “It is recognition by Japanese companies of the importance of the relationship with Australia and that demonstrating growing awareness of the breadth of the opportunities for Japanese companies in Australia.”
Japanese companies have been both diversifying from traditional resources investments and taking greater control of new investments for some time, but this year’s review says there is now an additional trend towards non-merger and acquisition activity in which the companies are entering collaborations and alliances. These range from a Hitachi Corporation alliance with BizCubed on smart agriculture to J-Power’s funding agreement with Genex Power on a wind farm.
And while Japanese companies have long been invested in economic infrastructure, they are looking to invest in social infrastructure, including hospitals where MM Capital Partners bought a 9.9 per cent stake in the Royal Adelaide Hospital last year.
While Japanese investment is still rolling into Australia, the size of the hole left by the failed purchase of logistics company Toll Holdings by Japan Post is only still emerging.
The post office turned financial services company has now sold Toll Global Express – which constitutes about 40 per cent of Toll – for $7.8 million to private equity investor Allegro Funds.
Japan Post paid $6.5 billion for Toll in 2015 and has already written off $4.9 billion in 2017 but the company has continued to report losses for the past two years. Nikkei reported Japan Post would still assume several billion dollars in debt and record a loss of US$624 million from the sale. The losses reflect an astounding story of mismanagement, and worse, inside what was the biggest Japanese takeover in Australia but, as the last Herbert Smith Freehills report suggests, other companies don’t appear to have been discouraged.
Coca-Cola Amatil chief executive Alison Watkins says the company’s Indonesian business has been the biggest disappointment of her time at the company, which has now been taken over by its European associate. She told The Australian Financial Review: “For the sake of the Indonesian team, who’ve done so much hard work [and] who’ve had a tough economic backdrop there for the majority of the last few years, I’d have loved to have seen the full potential of Indonesia unleashed. However... there is massive potential there and some day soon I’m sure we’ll see the full potential realised.” Coca-Cola European Partners is buying the company for $9.8 billion and in effect removing yet another Australian-controlled food export or manufacturer from the Asian business scene. Amatil now has operations in Indonesia, Fiji, Samoa and Papua New Guinea but has also had businesses in South Korea and the Philippines in the past.
The number of Chinese companies listed on the Australian stock exchange has more than halved over the past three years in another measure of declining economic engagement. Eagle Health, a company which sells throat lozenges and face masks, was delisted in early April for failing to lodge audited financial statements, taking the number of remaining companies to 20. That compares with 55 in late 2017 when tougher standards were introduced for emerging market companies, which mostly came from China. Australia has been second only to Singapore for regional listings by Chinese companies and remains fourth globally.
We pledge to demonstrate that free and democratic nations, working together, are able to address the global threats from COVID-19 and climate change while resisting challenges to the free and open rules-based international order.
- US President Joe Biden and Japanese Prime Minister Yoshihide Suga (April 16)
The United States and China are committed to cooperating with each other and with other countries to tackle the climate crisis, which must be addressed with the seriousness and urgency that it demands.
- US Special Presidential Envoy for Climate John Kerry and China Special Envoy for Climate Change Xie Zhenhua (April 17)
It’s difficult to imagine the United States winning the long-term strategic competition with China if we cannot lead the renewable energy revolution. Right now, we’re falling behind.
- US Secretary of State Antony Blinken (April 19)
China has committed to move from carbon peak to carbon neutrality in a much shorter time span than what might take many developed countries, and that requires extraordinary hard efforts from China.
- Chinese President Xi Jinping (April 22)
It's vital for all of us to show that this is not all about some expensive, politically correct, green act of bunny-hugging, or however you want to put it.
- British Prime Minister Boris Johnson (April 23)
ASIA'S SECOND WAVE
ON THE HORIZON
Australian government Budgets do not normally provide a framework for the big foreign policy debates of the moment.
But the May 11 Budget is likely to only underline the growing dichotomy between the declining diplomatic relationship with China and the reality that overall export revenue has not suffered so much yet.
It will all be about iron ore. The commodity is now trading at about $180 a tonne, which is about three times what the government estimated in its financial update late last year and the highest level in a decade. And it is mostly all about China’s faster recovery from the pandemic.
So, a government that has been prepared to risk other export products such as wine over diplomatic policy differences with China, is still counting on that same country to underpin its Budget and economic recovery.
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Briefing MONTHLY is a public update with news and original analysis on Asia and Australia-Asia relations. As Australia debates its future in Asia, and the Australian media footprint in Asia continues to shrink, it is an opportune time to offer Australians at the forefront of Australia’s engagement with Asia a professionally edited, succinct and authoritative curation of the most relevant content on Asia and Australia-Asia relations. Focused on business, geopolitics, education and culture, Briefing MONTHLY is distinctly Australian and internationalist, highlighting trends, deals, visits, stories and events in our region that matter.
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