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Poverty in Southeast AsiaCambodia and other Southeast Asian nations struggled economically well before the pandemic and COVID-19 threatens to send millions of people further into poverty.  The Southeast Asia Strategy Act shows the United States’ commitment to supporting Southeast Asian nations in an effort to promote peace and stability and alleviate poverty in Southeast Asia.

The Association of Southeast Asian Nations (ASEAN)

The Association of Southeast Asian Nations (ASEAN), an inter-governmental organization made up of 10 member states, has worked for decades to facilitate economic growth and prosperity in Southeast Asia. Established in 1967 in Thailand, ASEAN was originally comprised of five member states: Indonesia, Malaysia, the Philippines, Singapore and Thailand. Over the next several decades, ASEAN membership grew to 10 nations. This happened when Brunei Darussalam, Cambodia, Lao PDR, Myanmar and Vietnam joined the partnership.
The primary aim of ASEAN is to encourage economic cooperation, development and growth in Southeast Asia. ASEAN member states also work together to facilitate the more effective usage of agricultural resources in the region, fostering growth in trade between ASEAN member states and the international community at large.

Finding Security

After the United States pulled out of the Trans-Pacific Partnership (TPP) in 2017, safety, security and economic prosperity have been uncertain in the region. This led to fears of increased Chinese aggression and dominance in Southeast Asia. ASEAN member states are seeking reassurance that the United States will help the states maintain economic independence from China.

The Southeast Asia Strategy Act, introduced in the House by Reps. Ann Wagner and Joaquin Castro on February 15, 2021, aims to reaffirm the United States’ support for ASEAN member states. The Southeast Asia Strategy Act, which passed in the House in April 2021, would mandate that the federal government “develop and submit to the appropriate congressional committees a comprehensive strategy for engagement with Southeast Asia and ASEAN.” The strategy must include a description to expand “broad based and inclusive economic growth” in the region.

Importantly, ASEAN member states invest heavily in the United States economy — more than China and India combined. These states collectively generate more than half a million U.S. jobs. The United States has never articulated a “comprehensive strategy” in the region before. However, “ASEAN diplomats and U.S. think tanks are eager for the U.S. to be on the record about its plans to engage with ASEAN.” The Southeast Asia Strategy Act would prompt the United States to do just that.

Working Together

ASEAN’s work to facilitate economic growth in Southeast Asia is vital. An ASEAN report in 2020 emphasized the commitment of ASEAN member states to providing a “social protection framework” that is responsive to emerging risks and vulnerabilities in the region, including climate change, disasters and economic crises. According to the report, the social protection framework would help protect citizens from destitution, poverty and decreasing income rates.

By working together, ASEAN member states have made strides toward reducing poverty in Southeast Asia, improving childhood health outcomes and increasing access to higher quality basic education. Thailand improved rates of child stunting from 25% to 11% over a span of 30 years. This was through specific community-based nutritional initiatives in poverty-stricken areas. In addition, Vietnam’s remarkable basic education system shows the benefits that ASEAN member states bring about for citizens. This was successful in part “due to the nation’s commitment to education reform and substantial public spending.”

The Road Ahead

The United States’ support of ASEAN member states is crucial in the effort to mitigate the economic impacts of COVID-19. This is also needed to support future economic growth and prosperity in Southeast Asia. Mandating that the United States federal government devise a cohesive strategy will help in the support of ASEAN member nations. The Southeast Asia Strategy Act will fight poverty in the region by encouraging the United States to help. This will assist in facilitating the important work ASEAN has done to support economic growth over the past several decades.

Thomas McCall
Photo: Flickr

RCEP will benefit Asia's impoverishedOn November 15, 2020, 15 Asia-Pacific countries signed The Regional Comprehensive Economic Partnership (RCEP). The RCEP is a free trade agreement (FTA) establishing new relationships in the global economy. The 15 countries that signed the trade deal account for 30% of all global gross domestic product and impact more than two billion people. The new economic opportunities that will emerge from the RCEP will benefit Asia’s impoverished.

The Introduction of the RCEP

In 2011, the Association of Southeast Asian Nations (ASEAN) Summit introduced the RCEP. Simultaneously, another free trade agreement, the Trans-Pacific Partnership (TPP), was undergoing development. The TPP’s existence failed to come to fruition when former U.S. president, Donald Trump, removed the U.S. from negotiations in 2017. Consequently, this led many Asia-Pacific nations to negotiate with each other to make the RCEP become a reality. The ASEAN Secretariat has declared the RCEP as an accelerator for employment and market opportunities. The RCEP has been seen as a response to the absence of U.S. economic involvement and a form of stimulating the economy due to the COVID-19 pandemic.

RCEP Regulations

The RCEP has a set of new regulations that made it enticing for many nations to join. As much as 90% of tariffs will be eliminated between participating countries. Moreover, the RCEP will institute common rules for e-commerce and intellectual property. The trade deal will also include high-income, middle-income and low-income nations.

RCEP Benefits for the Philippines

Allan Gepty, a lead negotiator from the Philippines, assures that the RCEP will benefit the low-income country in many ways. The RCEP will mean more investments in sectors such as e-commerce, manufacturing, research and development, financial services and information technology. Moreover, the trade secretary, Ramon Lopez, also believes the Philippines will benefit because the RCEP will bring job opportunities. In a country where the poverty rate stood at 23.3% in 2015, the RCEP will benefit Asia’s impoverished.

Supporting Myanmar’s Economic Growth

According to the World Bank, a way to promote the reduction of poverty in Myanmar is supporting the private sector to create job opportunities. Furthermore, vice president of the Asian Investment Bank (AIIB), Joachim von Amsberg, also believes the RCEP will benefit Asia’s impoverished. He sees the RCEP as a way to grant small and medium-sized enterprises (SMEs) more access to markets, thus creating more job growth and promoting infrastructure development.

Industries Impacted by the RCEP

Many other nations will benefit from the RCEP as well. Textile and apparel (T&A) is a key sector under the RCEP. While countries such as Australia and Japan have high labor and production costs, many others do not. The RCEP will increase investment to lower-cost and less skilled countries such as Myanmar, Cambodia and Laos. The trade deal will also impact the country of Vietnam. Vietnam will benefit from its exports which include footwear, automobiles and telecommunications. Furthermore, Vietnam is could also benefit from the exporting of agriculture and fisheries products. Malaysia anticipates greater opportunities in travel, tourism and the aviation industry. Malaysia is expected to increase its GDP between 0.8% and 1.7% through the RCEP.

The Potential for Poverty Reduction

The RCEP is the biggest trade deal in Asia-Pacific’s history. The trade deal is predicted to add US$186 billion to the global economy and 0.2% to the gross domestic product of each participating nation. Also, free trade agreements allow emerging economies to become more sustainable. According to the World Bank, poverty is reduced by boosting international trade. Global trade expands the number of quality jobs and encourages economic growth. The RCEP came at a time when there are future uncertainties due to the COVID-19 pandemic and its economic impacts. Many anticipate that the RCEP will benefit Asia’s impoverished.

Andy Calderon
Photo: Flickr