Analysis of Southeast Asian Nations Five Connectivity Index | Opinion

By Chen Yiyuan

Located at the crossroads to Belt and Road connecting the continent and the sea, Southeast Asian countries are at the junction of some of the world’s most important sea routes. As the first countries to rally around the 21st Century Maritime Silk Road Initiative, Southeast Asian countries have been key partners and top priorities in construction of the Belt and Road promoted by China. After years of steady progress, China and Southeast Asian countries have secured great achievements in Belt and Road construction to enhance connectivity. According to a census conducted by a subject group, the overall performance of Southeast Asian countries ranked first compared to the other regions along the Belt and Road in 2017. Some countries in ASEAN region are seeing major improvements.

In 2017, Southeast Asian countries topped the list in terms of the degree of connectivity with China compared to the other regions along the Belt and Road. Southeast Asian countries averaged 63.76 (>60 points) in five connectivity, nearly 10 points higher than the average of 55.25 points scored by the other regions along the route. Southeast Asia as a region was graded “connective link type” in the degree of connectivity, one grade higher than the other areas along route, graded “good link type” overall.


Effective Policy Coordination

In 2017, Southeast Asian countries scored 12.40 points on average in policy coordination, higher than the average of 10.96 points scored by the other countries along the Belt and Road. In the framework of the Belt and Road, Cambodia, a member of ASEAN, and China enjoyed the partnership with the strongest base, the highest degree of mutual-trust and the most abundant cooperative achievements.

China and ASEAN, the regional organization, have realized complete synergy of development strategies. In November 2017, ASEAN, for the first time, issued the official document China-ASEAN Joint Statement on Further Deepening Infrastructure Connectivity Cooperation to respond to ASEAN’s overall development plan and China’s proposal of Belt and Road synergy at the 31st ASEAN Summit and Related Summits held in Manila. ASEAN promised to synergize its Master Plan on ASEAN Connectivity 2025 with China’s Belt and Road Initiative to realize further connectivity between China and ASEAN countries.

China proposed to tightly align the Belt and Road Initiative with the Two Corridors & One Ring Strategy of Vietnam, the Global Maritime Axis Strategy of Indonesia and the Rectangular Strategy of Cambodia. China and ASEAN countries reached consensus on strategy synergy and agreed to work together on the Thailand 4.0 Strategy, the Philippines’ Ambition 2040 and “Build, Build, Build,” Development Plan, the Brunei 2035 Vision Development Strategy and Laos’ strategy of turning itself from a landlocked country into a land-linked country.


Big Progress in Facilities Connectivity

Facilities connectivity is a pillar of the Belt and Road Initiative. Across nearly five years of construction, Southeast Asian countries have achieved major progress in facilities connectivity. In 2017, Southeast Asian countries were of potential link type in facilities connectivity scoring 9.87 points on average, higher than the overall average of 9.71 points scored by the other countries along the Belt and Road.

Among them, Cambodia, Singapore, Malaysia, Vietnam and Thailand were of good link type. Laos and Timor-Leste were of weak link type. Cambodia leaped to the first spot of Southeast Asian countries in facilities connectivity. Furthermore, its facilities connectivity in the field of energy was far ahead. On April 10, 2017, in the presence of President Xi Jinping and Myanmar President Htin Kyaw, China and Myanmar signed an agreement on a crude oil pipeline project. The project is now officially in operation, transporting 200,000 barrels of crude oil per day.

The year 2017 was great for Southeast Asian countries in construction of facilities connectivity, especially railway building. In 2017, construction of the China-Laos Railway and China-Thailand Railway started successively. The Jakarta-Bandung Express began construction. Construction of the China-Laos Railway officially started at the end of 2016. To the north, the China-Laos Railway will connect to Mohan Railway, a new railway link in Yunnan Province, China. To the south, it will connect to railway links in Thailand, Malaysia and other countries.

On September 4, 2017, President Xi Jinping and Thailand’s Prime Minister Prayuth Chan-ocha signed a document on railway construction. On December 21, the first phase of the China-Thailand Railway Cooperation Project was officially launched. Construction of the China-Thailand Railway, China-Laos Railway and Jakarta-Bandung Express made clear that the Belt and Road would help ASEAN countries become linked by railways stretching across Eurasia to seize true connectivity.

Bilateral communication technology remains at a relatively high level with the score of 4.65 on average between China and Southeast Asian countries. Over the past few years, Chinese enterprises have actively participated in construction of communication facility connectivity in Southeast Asian countries. In 2017, China Telecom in association with local business partners set up a consortium that won a bid to become the third telecom provider in the Philippines.


Unimpeded Trade

ASEAN is one of the world’s freest trade regions, and the countries in this region are the most important trade partners of China. Due to naturally close ties in economics, China and ASEAN have established the world’s third largest free trade zone boasting the greatest population in the world. Degree of unimpeded trade in Southeast Asian countries ranks first compared to other areas. In terms of unimpeded trade, ASEAN is of smooth link type and the only region that reaches the grade.

In 2017, trade volume between China and ASEAN countries hit US$514.82 billion, up 13.8 percent year-on-year. For the first time, China and ASEAN countries comprehensively enhanced the China ASEAN free trade zone. The practical and efficient approach accelerated integration of the regional economy in this area. China and ASEAN fully leverage ASEAN’s bigger market, favorable trade conditions and better investment environment to greatly increase economic and trade exchanges between the two sides and efficiently boost economic development of all countries.

Chinese investment into the ASEAN countries reached US$9.47 billion in 2017. Among them, Singapore, Malaysia, Laos and Indonesia ranked at the top, securing investment of US$3.19 billion, US$1.46 billion, US$1.39 billion and US$1.09 billion respectively. China is the biggest investment source country for Cambodia, Laos and Myanmar. Singapore is the biggest ASEAN investor in China with US$4.76 billion accounting for 93.7 percent of total ASEAN investment in China.


Progress in Financial Integration

ASEAN countries boast the highest level of financial integration compared to the other areas along the Belt and Road. They are of the connective link type, scoring 12.50 points on average, two levels higher than the potential link type. However, the degree of financial integration in this region varies from country to country, with much difference and obvious gaps. Singapore, Indonesia, Thailand and Malaysia are of the smooth link type. Cambodia, Vietnam and the Philippines are of the connective link type. The countries of good link type account for 72.7 percent. Myanmar and Timor-Leste are of the weak link type.

In the aspect of financial cooperation, ASEAN countries have the highest degree of RMB internationalization compared to other overseas areas. China and Singapore, Malaysia, Thailand and Indonesia have either signed or planned to renew agreements on currency exchange. China has started overseas RMB settlement services in Singapore, Bangkok and Kuala Lumpur. Singapore is the world’s second largest offshore RMB center. Direct exchange between the RMB and Philippine Peso is already well underway. Alipay has already started e-pay services in Singapore, Malaysia, Thailand, the Philippines, Indonesia, Cambodia, Laos, Myanmar and Vietnam. It is now widely used by businesses in Southeast Asian countries, especially in areas dense with Chinese tourists.

In banking system cooperation, member countries of ASEAN have joined the Asian Infrastructure Investment Bank (AIIB), which is an important source of funding to guarantee construction of infrastructure in Southeast Asian region. In 2017, AIIB approved the Philippines’ Manila Floor Control Project and provided US$207.6 million in financing, and granted a loan of US$125 million to Indonesia for hydropower equipment upgrading and dam maintenance. It also provided a loan of US$100 millions to Indonesia Regional Infrastructure Development Foundation Project to transform slums in Indonesia and build low-rent housing.


Close People-to-People Bonds

According to predictions, ASEAN countries top the list of people-to-people bonds. The index of tourism is dominant, scoring 5.59 points on average, higher than the average of 4.35 points of countries along the Belt and Road. Thailand ranked first among 94 countries along the Belt and Road, one spot up from the previous year. Countries that reached the level of smooth link type were Thailand, Vietnam, Indonesia, Singapore, Malaysia, the Philippines, Cambodia and Laos. Myanmar is of connective link type. Brunei is of good link type, below the average of countries along the Belt and Road.

Tourism is a cooperation field with great common interest, a solid foundation and tremendous potential. China and ASEAN countries are each other’s largest overseas tourist destinations and sources of customers. Over 2,700 flights shuttle to and from China and ASEAN countries each week. The year 2017 was China-ASEAN Tourism Cooperation Year. In November 2017 at the China ASEAN 10+3 Summit, both sides issued the China ASEAN Tourism Cooperation Declaration. On March 16, 2017, the opening ceremony of China-ASEAN Tourism Cooperation Year was held in Manila, capital of the Philippines, to put an important achievement of the China-ASEAN Leaders Meeting into practice.

In 2017, a strong increase in overseas students in China evidenced China and ASEAN countries building closer ties in scientific and technological exchanges. Supported by the Belt and Road Initiative, the Chinese government gave students from ASEAN countries assistance for their studies in China. In 2017, the number of Indonesian students studying in China surpassed 14,000. China became Indonesia’s second largest overseas study destination.

China and ASEAN countries maintain close ties in non-governmental exchanges. ASEAN countries’ websites are popular with Chinese internet users. In recent years, under the framework of the Belt and Road, exchanges between think tanks of China and ASEAN countries have become increasingly frequent. This development indicates that either bilateral or multilateral dialogues play an important role in deepening bilateral exchanges and developing bilateral relations. The boom of regional country studies in China is a necessary and a direct result of the Belt and Road Initiative. Research of ASEAN countries is dominant in China. Thailand is atop the list in non-governmental exchanges with China compared to other countries in the ASEAN region. Thailand is also the most popular ASEAN country for Chinese internet surfers and the country with the most sister cities in China. Vietnam is right next to Thailand with the second spot in internet attention and popularity in mass communication.

Copyedited by Tian Yuerong

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