THE NAVIGATOR
MAY 2024
RISING TENSIONS AND STRATEGIC MANEUVERS
By Dr Manali Kumar, Editor-in-Chief
Welcome to the May edition of The Navigator – 9DASHLINE’s flagship newsletter which reviews important developments across the Indo-Pacific. This month, we explore key regional security, economic, and political trends shaping the region’s future.
Our two issue briefs this month focus on Taiwan and Indonesia. Lai Ching-te’s presidential inauguration has been marred by protests against a power grab by opposition party KMT; Taiwan seems to be headed towards choppy waters. Elsewhere in the region, Indonesia — home to the Association of Southeast Asian Nations (ASEAN) secretariat — has long been viewed as a key stabilising force during periods of turbulence. As its young population increasingly integrates the Internet into all areas of their lives, it also offers unique opportunities for tech and social media companies.
Next up, the Region Review section provides a concise analysis of key developments across the Indo-Pacific, offering a comprehensive overview of the region's most significant events. The Indo-Pacific is a region in flux, where strategic, economic, and political factors are interwoven, leading to a dynamic and often volatile regional order. Although geopolitical tensions are intensifying, primarily driven by China's assertive actions and the strategic responses from other regional powers, economic dependencies and trade relationships will remain pivotal in the region. The region's stability and prosperity hinge on balancing these diverse and sometimes conflicting dynamics, requiring nuanced and collaborative approaches to governance, security, and economic development. In case you missed them, we also link to some of the most insightful expert analyses published on 9DASHLINE towards the end.
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LAI INAUGURATED AMID A DIVIDED LEGISLATURE
By Daniel McIntyre
Taiwanese have been on the streets protesting (17, 21, 24, and 28 May) against what is seen as an illegitimate attempt by the Kuomintang (KMT) to concentrate power in the legislature, where it and other opposition lawmakers have a combined majority, at the expense of the executive. The legislation was passed on 28 May. As China threatens Taiwan’s national security, KMT politicians appear indifferent, or worse, seem to be working with the CCP to hobble Lai Ching-te’s presidency.
The protestors have mainly focused on the opposition ramming through legislation without adequate scrutiny. In this regard, the parallels with the 2014 Sunflower movement — students protesting against “black box” treatment of legislation with national security implications — are hard to ignore. The Taiwan Bar Association, among others, has raised concerns that the opposition’s legislation poses a real threat to Taiwan’s democracy. However, other analysts are more sanguine, and view the KMT’s actions, and brawling in the legislature, as par for the course for the rough-and-tumble Taiwanese democracy.
Lai faces numerous challenges on the domestic front. He will want to address the widening wealth gap, stagnant wages, and skyrocketing property prices that caused so many young people, disillusioned with the status quo, to vote for the third-party alternative Taiwan People’s Party. The question now is to what extent the opposition parties will cooperate with Lai to help make his presidency a success. Inaugurated on 20 May, his presidency is already beset by challenges. For Beijing’s reaction to his inaugural address, see China below. Read more about the political developments in Taiwan and prospects for the Lai administration in 9DL’s Dr Zsuzsa Anna Ferenczy’s IN DIALOGUE with Taiwan correspondent William Yang.
INDONESIA GOES DIGITAL: BRIDGING THE WORLD’S LARGEST ARCHIPELAGO
By David MacSweeney, Founder at 9DASHLINE
In the race to decouple and de-risk, Vietnam is increasingly becoming the byword for Asia's go-to destination. However, when it comes to technology, the US, Europe, and others should not overlook Indonesia, the world's third-largest democracy and fourth-most populous nation. Half the country’s population — approximately 125 million people — is under the age of 30.
Internet penetration in the country has risen from 78.1 per cent in 2023 to 79.5 per cent in 2024, with a rate of 87.02 per cent among those aged 12–27 and 93.17 per cent within the 28–43 age group. With the government planning to launch nine super-apps — ranging from digital identity to health services — by the end of 2024, Indonesia is set to present an increasingly lucrative market and customer base for the global digital economy due to the inevitable integration of data and commerce.
The recent development of local 'super-apps' such as Gojek, Dana, Shopee, and Grab — providing a range of services including shopping, travel, and digital payments — within a single platform has unsurprisingly proved wildly successful. However, on the development side, despite a large and young tech-savvy population, one Global Startup Ecosystem Index notes that Indonesia has the largest divergence between its Global Output (18) and Global Rank (41). Amid heightening geostrategic competition and Indonesia's rising leadership on both the regional and global stage — note its successful handling of the 2022 G20 summit and its recent support for institutions like the International Court of Justice — this gap might better be seen as an opportunity to seize rather than a problem to overcome.
In an increasingly digitalised world, Indonesia's market size, geostrategic location, and growing international influence offer opportunities for businesses and states to achieve mutually beneficial growth and leverage in areas such as investment, regulation, and digital infrastructure. However, what is clear is that as we face a period of growing volatility in global affairs, cash-rich autocratic states, and value-lite tech and social media giants are unlikely to ignore the opportunity Indonesia presents for harvesting cross-cutting data, outright profit — and influence.
ACROSS THE INDO-PACIFIC
South Asia
Indian warships have arrived in Manila amid rising tensions with China, following visits to Singapore, Malaysia, and Vietnam. This move strengthens maritime partnerships and coincides with India's recent delivery of BrahMos missiles to the Philippines. Additionally, India signed a long-term agreement with Iran to develop the Chabahar Port, enhancing regional connectivity. Trade data shows China has overtaken the US as India's largest trading partner, with significant dependencies on Chinese imports, particularly in the telecom and EV sectors.
The Taliban in Afghanistan violently suppressed protests in Badakhshan against a poppy cultivation ban, killing two. Army Chief Qari Fasihuddin threatened more military action if the unrest continued. The ban has caused severe economic losses, increased unemployment, and highlighted potential challenges to Taliban authority in non-Pashtun regions.
Australia and Bangladesh will expand trade and cooperation on security, following talks during Australian Foreign Minister Penny Wong's visit to Dhaka. The visit aims to enhance engagement in the Indian Ocean region and support Bangladesh's transition to developing country status. Both countries seek practical solutions for shared challenges, including climate change, regional security, and people smuggling. Wong will also visit Rohingya refugee camps in Cox’s Bazar.
Southeast Asia
Vietnam’s leadership has experienced significant political upheaval with the appointment of General To Lam as president and Tran Thanh Man as chairman of the National Assembly. This shift highlights the increasing influence of the security apparatus under General Secretary Nguyen Phu Trong's anti-corruption campaign. With half of the Politburo now composed of police or military officials, there is growing concern about Vietnam potentially becoming a police state, impacting civil society and political stability ahead of the 2026 leadership transition.
The Philippines, Australia, Japan, and the US have strengthened security ties to counter China’s actions in the South China Sea. Recent incidents, like China’s use of water cannons against Philippine vessels, have heightened tensions. The four nations will enhance joint military drills and patrols, reflecting a shared commitment to regional stability and freedom of navigation. This cooperation marks a strategic pivot for the Philippines, emphasising its stance against Chinese aggression and reinforcing alliances with other democracies.
Microsoft announced significant investments in Thailand, including new cloud and AI infrastructure, AI training for over 100,000 people, and a new ‘data centre region’. This aligns with Thailand's "Ignite Thailand" vision to become a regional digital economy hub. The initiative supports the growing developer community and AI-driven sectors like tourism. Prime Minister Srettha Thavisin highlighted this as a milestone in Thailand’s digital transformation. Additionally, the Thai government is encouraging EV manufacturing, with companies like Tesla exploring Thailand as a potential hub to diversify from China, leveraging favourable tax benefits and a skilled workforce.
Myanmar’s Junta Defense Minister Adm. Tin Aung San urged increased military recruitment efforts, threatening serious action against those resisting conscription. Meanwhile, the Arakan Army seized a key border guard base in Maungdaw, Rakhine State, prompting junta evacuations and intensified conflict in the western border region. The AA's offensive continues as Myanmar's internal conflict escalates, affecting both military and civilian lives.
East Asia
China signalled its displeasure with Taiwanese President Lai Ching-te’s inaugural address on 20 May with large-scale military exercises surrounding Taiwan from 23 to 24 May. Analysts have said that Lai departed from his predecessors’ framing of Taiwan-China relations in significant ways. In an analysis for CSIS, Bonny Lin and Brian Hart said large-scale exercises are likely to become a regular occurrence to punish Taiwan and the US. China has stepped up its squeezing of Taiwan. On 24 May it was reported that China had rejected some imports of Guatemalan goods, a country that still recognises Taiwan. Authors of an AEI report (released 13 May) warned that the US is too focused on deterring a military invasion while neglecting “the likelier scenario” of a coercion campaign to bring Taiwan under its control. They warned that an intensified isolation campaign could begin as soon as Lai takes office, to bring it to heel by 2028.
In Japan, a succession of negative stories about its economy — GDP projected to fall behind India’s faster than expected, economic contraction in the first quarter of 2024, and the yen trading at its lowest level in three decades — have been tempered somewhat by some analysts arguing that the soft yen will help boost investment and benefit the government. The weak yen is also reviving Japan’s appeal as a manufacturing hub, a reversal of the offshoring of production trend which started in the 1990s. See Seohee Park for 9DASHLINE on the yen in a turbulent global economy.
Meanwhile, debate in South Korea on whether the nation should acquire nuclear weapons has re-emerged in the face of North Korea’s advancing nuclear weapons capabilities and the possibility of a second Donald Trump presidency. This is due to scepticism about the reliability of the US’ extended nuclear deterrent. For more on this, check out this 9DASHLINE article by Yulgok Kim. Sungming Cho said recently that he stands by his War on the Rocks assessment that a military conflict on the Korean Peninsula is more likely than in the Taiwan Strait.
The Pacific
In New Caledonia, unrest over proposals to allow more Europeans to vote in provincial elections led Paris to declare a state of emergency. France deployed hundreds of additional police and security forces to quell the violence and accused Azerbaijan of inciting unrest after reports of a deal with separatists. During a swift visit, President Macron announced the vote's delay and confirmed French troops would remain "as long as necessary".
Amid rising tensions, Australia’s Prime Minister Anthony Albanese blamed a Chinese fighter jet for endangering one of its military helicopters operating in the Yellow Sea. Budget documents revealed on 14 May show Australia will allocate a record USD 37 billion to defence for the next fiscal year. USD 12 billion will be spent on upgrading northern defence bases over the next decade. The budget underscores Australia's commitment to military readiness and supporting allies like the Philippines against Chinese assertiveness in the South China Sea. Australia appears to have facilitated the "extrajudicial extradition" of an Australian resident to China for trial, breaching Chinese-Australian police protocols and raising concerns about Beijing's extraterritorial influence.
Australia secured a new security deal with Tuvalu amid concerns that a previous agreement gave Canberra veto power over Funafuti’s future agreements with third countries.
In contrast, New Zealand plans to reduce its defence budget by 6.6 per cent for the year ending June 2025, lowering its defence spending from 1 per cent to 0.9 per cent of GDP. China's ambassador to New Zealand suggested Beijing might see Wellington's potential participation in AUKUS as "taking sides".
Fiji may re-establish the country's intelligence service to combat transnational criminal organisations. Amid allegations that Chinese debt-trap diplomacy contributed to the grounding of Vanuatu's national airline, Virgin Australia and Qantas have applied to operate in its place. Meanwhile, Australia agreed to contribute USD 323 million to the Asian Development Bank but insists on reforms to how the bank funds major projects in the region.
On 27 May, CCP official Liu Jianchao, widely expected to become China's next foreign minister, met with Vanuatu's Prime Minister Charlot Salwai during a visit to the Pacific Island nation, which is being courted by both Beijing and Washington. New Zealand's Pacific outreach continues with Foreign Minister Winston Peters recently visiting Papua New Guinea, New Caledonia, and Tuvalu, with his visit to New Caledonia postponed.
Finally, engineers and representatives from the US Department of Defense met with government leaders and residents of Palau to discuss the proposed designation of a new defence site in Peleliu.
THE BEST OF 9DASHLINE
This month, we spotlight some of 9DASHLINE’s most thought-provoking articles that explore China’s attempts to expand its influence across the Indo-Pacific and responses by other major powers.
Sri Lankan economy: Crisis, consolidation, and collaboration
Sri Lanka has been grappling with an economic crisis since 2019, which has led to the collapse of Micro, Small and Medium Enterprises (MSMEs). China’s involvement in Sri Lanka has become more contentious among the population over the past few years, and as the government tries to stabilise the country’s economy with support from international actors, Soumya Bhowmick (Associate Fellow, Observer Research Foundation) explores how ties with India are improving.
Nobody likes a bully: China’s grip over the South China Sea is slipping
As China continues to press its territorial claims in the South China Sea, countries in the region are beginning to push back. Here, Cmdr. Jonathan Dorsey (US Navy Fellow, Stimson Center) explains how SCS neighbours are employing public information awareness, maritime security engagements, and additional defence investments to counter China.
China’s global security blueprint — implications for Western security agency
China’s ambitions to transform the global order have become more conspicuous under President Xi Jinping’s leadership. In this insightful article, Bernardo Mariani (Consultant, Peace and Conflict Resolution Evidence Platform) explains China’s strategic goals and their implications for the West.
Europe is doing too little, too late in Southeast Asia
As Europe tries to de-risk and diversify its trade and supply chains away from China, Southeast Asia has emerged as an important alternative. Here, Dr Denis Suarsana (Country Director for Indonesia and Timor-Leste, Konrad Adenauer Foundation) analyses the potential of the five emerging ASEAN countries (Indonesia, Malaysia, Philippines, Thailand and Vietnam) to serve as the EU’s economic partners.
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