The Indo-Pacific Economic Framework for Prosperity (IPEF) Ministerial meeting was held in Los Angeles, USA on September 8-9, 2022, in which fourteen countries took part.[i] Representatives from seven ASEAN countries including Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, attended the IPEF Ministerial meeting.[ii] IPEF, which is a US-lead initiative was announced at the Quad Summit in Tokyo on May 24, 2022, and has been welcomed by most ASEAN countries, as they see it as a sign of Washington’s renewed economic engagement in the region, through its four broad pillars which are i) Trade (ii) Supply Chains (iii) Clean Energy, Decarbonisation, and Infrastructure and (iv) Tax and Anti-Corruption.[iii] By strengthening economic partnership amongst the participating countries, the initiative seeks to enhance resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness which will be fundamental in building the economies of the future.[iv]
The soaring prices of oil including cooking and other basic food items have been felt across Southeast Asia since the Ukrainian conflict. Given that the region is already reeling from high inflation and the economic aftershocks of the COVID-19 pandemic, IPEF is seen as an opportunity by the seven ASEAN countries that have joined all four pillars of the IPEF as they see the potential for deeper economic integration in order to help mitigate the fallout being experienced from the ongoing conflict and to meet any future crisis. The emphasis of IPEF towards strengthening economic resilience and capacity building for example through technical assistance to expand digital inclusion may also help transform growth in ASEAN.[v] Amongst IPEF’s four broad pillars which include clean energy, could help the ASEAN countries avoid the future impact of the energy crisis currently being experienced due to the ongoing Russia-Ukraine conflict. In recent times, Indonesia’s capital and other cities have witnessed massive protests on account of sharp increase in fuel prices as a consequence of the government reducing fuel subsidy.[vi] President Jokowi’s popularity as a consequence of his decision to increase fuel prices has also taken a hit, with approval rating declining by 10 percent points to 62.6 percent from 72.3 percent in August 2022.[vii] At the ASEAN–US Special Summit held on May 14, 2022, in Washington DC, both sides agreed to enhance energy transition and resilience through the facilitation of clean and renewable energy development.[viii] In this regard, IPEF could play a direct role through financial and technical assistance or an indirect supporting role through mobilising private finance for clean energy and infrastructure in ASEAN.[ix]
However, while the US has emphasised that through the IPEF, it proposes to build a partnership to promote shared economic interests, there is an element of caution amongst ASEAN countries. While IPEF could be perceived as an economic initiative that will allow the US to better compete with China in the region, it has a strong strategic undertone. This puts Southeast Asian countries in a spot as they want to avoid negative repercussions on them of the US-China strategic competition. Therefore, the perception of IPEF having an anti-China bent could impact the success of the initiative.[x]
Five years after the US left the Trans-Pacific Partnership (TPP), the IPEF seems to be a positive step towards US re-engagement and commitment in the region. However, it would still leave the US outside the growing network of trade agreements China has established with the ASEAN countries. Therefore, through its four broad pillars, the IPEF would need to offer constructive ideas in order to make it credible and ensure it addresses key economic concerns which would help build on the post-pandemic recovery.
Given ASEAN’s strategic position in the Indo-Pacific and being at the centre of various multilateral cooperation and trade agreements, the initiative could create a positive perception in the non-IPEF countries as well. Therefore, in being inclusive, IPEF would need to engage with a wide range of partners across the region which would help bring tangible benefits. This collective effort can prove to be crucial in order to help make the Indo-Pacific region an engine of global economic growth and recovery and would contribute to cooperation, stability, and peace in the region.
*Dr. Temjenmeren Ao, Research Fellow, Indian Council of World Affairs, New Delhi.
Disclaimer: Views expressed are personal.
[i]At the IPEF Ministerial meeting, India was represented by Mr Piyush Goyal, Union Minister of Commerce & Industry, who stated that “..on three out of the four pillars related to supply chains, tax & anti-corruption, and clean energy, India was comfortable with the outcome and text and have joined the declaration...”. See://Ministry of Commerce & Industry, September 10, 2022, https://pib.gov.in/PressReleasePage.aspx?PRID=1858243. Accessed on?
[ii]“Indo-Pacific Economic Framework for Prosperity (IPEF) Ministerial”, Ministry of Foreign affairs of Japan, September 10, 2022, https://www.mofa.go.jp/press/release/press3e_000449.html, Accessed on September 14, 2022.
[iii]“Indo-Pacific Economic Framework holds value, but it’s unclear if it will counter China’s influence says Senior Economist David Dapice”, ASH Centre for Democratic Governance and Innovation, Harvard Kennedy School, https://ash.harvard.edu/indo-pacific-economic-framework-holds-value-it%E2%80%99s-unclear-if-it-will-counter-china%E2%80%99s-influence, Accessed on September 15, 2022.
[iv]“Statement on Indo-Pacific Economic Framework for Prosperity”, Ministry of External Affairs, May 24, 2022, https://mea.gov.in/bilateral-documents.htm?dtl/35353/, Accessed on September 14, 2022.
[v]Sherillyn Raga, “How will Southeast Asia benefit from the Indo-Pacific Economic Framework?”, ODI, July 18, 2022, https://odi.org/en/insights/how-southeast-asia-will-benefit-from-the-indo-pacific-economic-framework/, Accessed on September 21, 2022.
[vi]Sebastian Strangio, “Protests Erupts in Indonesia Over Fuel Price Rises”, The Diplomat, September 9, 2022, https://thediplomat.com/2022/09/protests-erupt-in-indonesia-over-fuel-price-rises/, Accessed on September 15, 2022.
[vii]“Jokowi’s popularity drops over fuel price hikes that have stoked protests”, The Straits Times, September 20, 2022, https://www.straitstimes.com/asia/se-asia/jokowis-popularity-drops-over-fuel-price-hikes-that-have-stoked-protests, Accessed on September 20, 2022.
[viii]“Joint Vision Statement of the ASEAN-US Special Summit, 2022”, ASEAN, May 14, 2022, https://asean.org/wp-content/uploads/2022/05/Final-ASEAN-US-Special-Summit-2022-Joint-Vision-Statement.pdf, Accessed on September 21, 2022.
[ix]Sherillyn Raga, “How will Southeast Asia benefit from the Indo-Pacific Economic Framework?”, ODI, July 18, 2022, https://odi.org/en/insights/how-southeast-asia-will-benefit-from-the-indo-pacific-economic-framework/, Accessed on September 21, 2022.
[x]Matthew P. Goodman and Aidan Arasasingham, “Regional Perspectives on the Indo-Pacific Economic Framework”, Centre for Strategic and International Studies, April 11, 2022, https://www.csis.org/analysis/regional-perspectives-indo-pacific-economic-framework, Accessed on September 15, 2022.