Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 9 - Evidence - Meeting of April 2, 2014
OTTAWA, Wednesday, April 2, 2014
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 4:50 p.m. to study security conditions and economic developments in the Asia-Pacific region, the implications for Canadian policy and interests in the region, and other related matters.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: Honourable senators, we are the Senate Standing Committee on Foreign Affairs and International Trade studying security conditions and economic developments in the Asia-Pacific region, the implications for Canadian policy and interests in the region and other related matters.
To Mr. Nehru and Ms. Angeles, we apologize for the delay, but we had to vote. It's a priority in Parliament that we vote. We're pleased that you were able to readjust your schedules to continue presenting before us.
We have narrowed our study now to four countries, those being Myanmar, Singapore, the Philippines and Indonesia. While we are interested in all possible issues on Asia-Pacific, those are the countries of concentration at the moment. We are very pleased that you can add to our debate on security conditions and/or economic developments in Asia-Pacific.
I'm going to turn to Mr. Vikram Nehru, Senior Associate and Bakrie Chair in Southeast Asian Studies, Carnegie Endowment for International Peace, coming by video conference from Washington, and then I will turn to Ms. Leonora Angeles, Associate Professor of Community and Regional Planning and Women's and Gender Studies, University of British Columbia. We would ask for your starting comments and then senators would like to ask questions of you. We will turn to that part later. We have approximately one hour.
Without further ado, Mr. Nehru, the floor is yours. Welcome to the committee.
Vikram Nehru, Senior Associate and Bakrie Chair in Southeast Asian Studies, Carnegie Endowment for International Peace, as an individual: Thank you very much, Madam Chair. It is a great honour to be with you today, even if virtually.
I was told yesterday that I should speak on the upcoming Indonesian elections, and I would be happy to do so. If you have any questions on Indonesia or the rest of Southeast Asia for me after my presentation, I would be very happy to respond, if I can.
In slightly less than a week, in fact, on April 9, Indonesia will go to the polls to elect their representatives to legislatures at Indonesia's three tiers of government: at the centre, at the province and in the districts. In all, a total of 187 million voters will have the chance to select among more than 200,000 candidates to fill nearly 20,000 seats. Indonesia uses an open list proportional representation system and, after the United States, it is the largest single-day election in the world. Voting by overseas Indonesians has already begun.
On July 9, exactly three months later, after the legislative elections, the country will vote again, this time for the president. Only parties or coalitions of parties that have won either 25 per cent of the national vote or 20 per cent of parliamentary seats at the centre have the right to nominate a presidential candidate together with a vice-presidential running mate. The system ensures that there can be at most four but more usually three or even two presidential candidates in the presidential race. If no presidential candidate wins the majority of the vote in the first round, then there will be a run-off, and that will be in September. The new president and Parliament will be inaugurated in October this year.
Indonesia's elections are important simply because Indonesia is an important country. It is the fourth most populous country in the world, the world's third largest democracy, home to the largest Muslim population, the sixteenth largest economy in the world, a member of the G20, and the largest and arguably the most influential member of ASEAN, the Association of Southeast Asian Nations, comprising nations that occupy a strategic location in Asia, straddling the Malacca Straits in the shadow of the world's two giants, China and India. Therefore, the election in Indonesia will not just be important for Southeast Asia but important for Asia and indeed the rest of the world.
As important, these elections will be a break from the decade-long rule by the previous president Susilo Bambang Yudhoyono, who will not be able to stand again because he has completed his two five-year terms, as required under the constitution. As a result, the new president will therefore signal a significant change in the direction that Indonesia is likely to take.
It is also true that even though Susilo Bambang Yudhoyonom, or SBY, as he is commonly known, has ruled over an Indonesia that has been stable, grown rapidly, become a member of the G20, he did not really utilize his landslide victory in 2009 and translate that into bold new reforms. On the contrary, his administration has been marked by prevarication and risk-averse policies, and it has earned him a reputation of indecisiveness.
As a result, although Indonesia's stock in the world has climbed, as reflected in its membership of the G20, SBY's popularity has waned within Indonesia. At the same time, domestic and foreign policy challenges have only grown. Indeed, it has become very clear now that the electorate is looking for someone who embodies the very antithesis of SBY. There are two prominent candidates that stand out. The first is Joko Widodo, or Jokowi, as he is called in Indonesia, the current governor of Jakarta. The second is Prabowo Subianto, an ex-general who promises a return to the decisiveness of the Suharto era.
Jokowi has led every presidential poll by a significant margin and is the current favourite to win the presidential election. He belongs to the PDI-P, the Indonesia Democratic Party of Struggle, which is led by Megawati Sukarnoputri. She graciously put aside her ambitions to become president and instead proposed Jokowi's nomination from the PDI-P, a shrewd move that will ensure that the PDI-P will do well in the legislative elections of April 9.
Jokowi's rock-star popularity stems from his down-to-earth demeanour and his emphasis on hands-on, practical, non-political, grassroots solutions to basic issues like sanitation, flood control, water supply, transport and the like. His unpolished, hesitant, unscripted speeches have become part of his appeal.
Prabowo Subianto also presents a contrast with SBY, but in a very different way. He promises stronger executive power and greater decisiveness, including an aggressive populism. As commander of Indonesia's special forces, he was associated with human rights abuses in East Timor. As a strategic reserve commander at the time of Suharto's downfall, he was accused of kidnapping democracy activists, for which he was discharged from military service and put on a U.S. visa black list. He is being projected as Indonesia's Lee Kuan Yew, and his campaign is being bankrolled by his billionaire brother Hashim Djojohadikusumo.
The other two possible presidential candidates, Aburizal Bakrie, a business tycoon whose fortunes have shrunk as commodity prices have declined, and Wiranto, the commander of the armed forces under Suharto and the minister of defence under President Habibie, are much further behind in the polls.
If Jokowi and Prabowo are indeed the two leading presidential candidates, with possibly Bakrie as the third, then the Indonesian electorate will be confronted with a genuine and stark choice on the country's political direction. Jokowi, with the support of Megawati, will likely lead the country towards gradual democratic consolidation with occasional adjustments.
On the other hand, Prabowo will likely push for a stronger presidency and a weaker Parliament and judiciary. It will be a genuine battle of different visions for the future of the country.
At this point, Jokowi looks to be the landslide winner, perhaps winning even in the very first round and not having to go to a runoff.
But three months is a lifetime in politics, and especially in Indonesian politics. The first step will be to see what the legislative elections reveal about the mood of the electorate. These results will not be finalized and announced by the election commission until May, although unofficial results from polling organizations, which have proved to be reasonably accurate in the past, would be broadcast soon after the elections.
Let me stop here. I would be happy to answer any questions and listen to your reactions to this presentation. If you do want to know more about the Indonesian elections and the details of the electoral process in Indonesia, please visit the Carnegie Endowment for International Peace's website at www.ceip.org. We have several articles, a terrific infographic, as well as presentations by some of the world's leading authorities on Indonesian politics.
The Chair: Thank you, Mr. Nehru.
We will now turn to Ms. Angeles.
Leonora C. Angeles, Associate Professor of Community and Regional Planning and Women's and Gender Studies, University of British Columbia, as an individual: Good afternoon. It is my privilege and pleasure to speak to the Senate this afternoon.
I was told to prepare some notes regarding gender development and security issues focusing on the Philippines. I want to mention that I am currently a principal investigator of two research projects, funded by the Social Sciences and Humanities Research Council in Canada, that relate to this topic.
I'm looking at the first project on comparative state feminism in Southeast Asia, looking at the Philippines and Thailand. Another is a three-year partnership development grant focusing on collaborative governance of urbanizing watersheds, which is focusing on Angat River, a watershed and river region of national significance. It supplies 97 per cent of Metro Manila's water needs, and 10 per cent of its electricity, and it is facing a difficult tragedy of the commons problem. It is not being looked after well, particularly at the local level.
I want to discuss the implications of gender and development to Canadian interests in the Philippines, particularly in the Southeast Asian region.
I want to bring the attention of our Senate committee members to the linkage between the disasters in the Philippines — it is a very disaster-prone country — to poverty and climate change, as well as how climate migration would have implications for the presence of Filipinos in Canada. This linkage between disaster, poverty and climate change and migration has social, environmental and gender dimension. This leads me to your concern, which is around security, and by this I mean not just in terms of sources of political instability, but also broader issues of human security concerns.
As far as political instability and security, there are four major sources I can highlight. One is with regard to the ongoing Mindanao conflict in the Philippines. The second one is with regards to the long standing dispute around the Spratly Islands in the southern part of the Philippines. The third one is with regard to the national democratic front-led insurgency in many parts of the country, although that has declined somewhat over the years. The last source would be the elite competition that has been a long-standing feature of Philippine political culture and political economy.
In two years, the Aquino-led government will be going to the national polls to elect the successor to the regime. I want to point out that the Philippines is a very young population, with the bulk of the demographic profile belonging to the 15 to 45 years of age. This is of interest to many countries in East Asia, Europe, and of course North America where you have an aging population, and we look to countries like the Philippines, India, and China where the population is relatively young.
The biggest asset, as far as the Philippines is concerned, is really its people. We have about 100 million people, more than 10 per cent of which are living and working abroad. The majority is overseas contract workers or as we call in it Canada, temporary foreign workers. We have about 650,000 Filipinos in Canada now, about 75,000 temporary foreign workers, and Canada is now the third highest source of remittance going to the Philippines. This is really significant because Canada was not even on the radar screen some 10 years ago. It is third after the United States and Saudi Arabia.
There are three issues I could highlight as far as the gender and development implications here that I think should be a priority for Canadian national interests in the Philippines and Philippine national interests where there would be convergences of interests.
One is in education, another is in entrepreneurship, and the third is in remittance for development.
Under education and entrepreneurship there is an ongoing CIDA-funded project with the Philippine Commission on Women, formerly the National Commission on the Role of Filipino Women called GREAT Women Project for women's economic empowerment and transformation.
There are two other major projects that the PCW are doing now, focusing on strengthening government mechanisms in mainstreaming gender in reproductive health and violence against women, and another one funded by UNIFEM.
I think the GREAT project of CIDA right now is along the lines of education for entrepreneurship. One of the areas that could be strengthened is how much of that remittance money going to the Philippines — about 10 to $15 billion annually — and how it is being used to address fundamental development issues so that we don't have to depend on migration as a major source of revenue for the country.
I will be more than happy to welcome any comments and questions to my presentation, and I hope that what I have prepared is along the lines of what you are expecting. Thank you very much.
The Chair: I do have a list of senators who want to place questions. There are two separate areas, but I think we can place the questions together.
[Translation]
Senator Fortin-Duplessis: I want to congratulate both of you on your presentations. My first question is for Mr. Nehru.
You recently wrote an article, last March, on the leadership Indonesia has to provide within the ASEAN. In that regard, do you believe that the new president in Indonesia who will take power on July 9 will have an impact on the role Indonesia plays within the ASEAN? You talked in your presentation about the three candidates to the presidency. However, those candidates want to dissociate themselves from the way in which the current president is governing. They want to change directions. I do not know if this will have a big influence within ASEAN.
[English]
Mr. Nehru: Should I answer that immediately, Madam Chair?
The Chair: Yes.
Mr. Nehru: Thank you very much for your question. You are absolutely right that this is going to be a big issue and an immediate departure from the past.
The reality is that, under Susilo Bambang Yudhoyono's administration, Indonesia has played a very active role in foreign policy and foreign affairs. It has been a major player in ASEAN, and, as I mentioned earlier, it has become a member of the G20. It has been a major player in the WTO, and it has also been a very influential member of APEC. A lot of this was driven by SBY's desire to place Indonesia on the world stage and to be seen, indeed, as a world statesman.
I think you will find that, irrespective of who becomes president after October this year, in Indonesia, there will be a shift in the way Indonesia runs its foreign affairs. Certainly, if Jokowi becomes president, he will focus almost entirely on domestic issues, and Indonesia's role in foreign policy will decline and it will not have the same global prominence as under SBY.
As far as Prabowo is concerned, if he were to become president, I would see a much more muscular foreign policy, a much more aggressive foreign policy, very clearly advancing Indonesia's interests, and not necessarily a foreign policy, though it's difficult to say at this stage, that would try to work primarily through ASEAN, which has been SBY's major plank.
All in all, I think, yes, there will be a shift in the way Indonesia runs its foreign policy. It will be a much more diminished role than before, which will be unfortunate, because, as I mentioned in my article, it is important, Indonesia being the largest and most influential member of ASEAN, to try to get ASEAN to cooperate on defence issues and much more on economic issues because ASEAN unity in all of these spheres will be critical to deal with the major and most important foreign policy question that Southeast Asia is facing, which is the rise of China.
Let me stop there, and I'll be happy to take on any further questions.
[Translation]
Senator Fortin-Duplessis: Indonesia has obtained good reviews on the risk of political and social problems in the last Asian Political Risk Index of the Political Monitor, an advisory and research organization that looks at Australian political risks. According to the summary of that report published in the Jakarta Globe, the risk in Indonesia is essentially linked to youth unemployment, to government corruption, to ethnic and religious tensions, and to the poor functioning of political institutions. This puts a brake on the country's future economic growth.
Do you agree with that assessment or are they completely mistaken, in your opinion?
[English]
Mr. Nehru: I must admit, I haven't read that particular piece of risk analysis, but many of the issues raised in that seem about right to me.
What's happening in Indonesia, for the first time, over the last 10 years compared to the previous 30 years, is that inequality is rising and rising rapidly. One of the reasons why inequality is rising rapidly is because you have substantial growth driven by commodity price increases and the growth of mining and plantations, whereas manufacturing and agriculture have stalled in comparison. So real wages in Indonesia, in the informal sector, have been either stagnant or declining, so, despite the fact that you've had very rapid growth over the last 10 years, the people at the bottom end of the income distribution spectrum haven't benefited as much as those that have benefited at the top end of the income distribution spectrum. This, in a sense, represents the biggest risk, the risk of social strife. It is one reason why Jokowi has so much popularity. When he was mayor of Solo, before he became mayor of Jakarta, he introduced health schemes for the poorest people. He introduced free education for the poorest people in Solo. He has followed that up in Jakarta in exactly the same way, and he has done it in a way that has not been fiscally irresponsible. He has done it in a fiscally responsible way. That is one reason why he is so wildly popular because he is addressing a genuine need that has emerged as a result of the pattern of growth in Indonesia over the past 10 years.
Senator Ataullahjan: Indonesia, we realize, is a very important player in the Asia-Pacific. It is also the most populous Muslim country in the world — 86 per cent Muslim. What is the relationship between Islam and politics in Indonesia, and does religion play a major role in elections? What influence does this have on political stability?
Mr. Nehru: That's a terrific question. This is the fourth election after Suharto's departure. In the early elections, the Islamic parties played a reasonably important role, even though the secular parties dominated the election scene and the political scene.
Over time, it's interesting to note that the role of the Islamic parties has actually declined, in part because they themselves have been the target of scandals, of corruption. For the largest Islamic party, the PKS, recently, there was a minister from the PKS who was found to have indulged in corrupt practices and has been convicted or at least taken to court by the anti-corruption commission. This has led to a decline in the popularity of the Islamic parties, and I don't think they will play a significant role in the upcoming elections.
There's another reason why their influence has diminished, and I think that is because the main secular parties have gradually shifted their position and become much more supportive of Islamic groups and have basically brought in Islamic groups within their larger tents. Though they remain secular in many respects, increasingly, Islamic issues are beginning to play a role even in their thinking. It's very interesting to note that, under SBY's administration, there have been growing instances of religious intolerance. Within Indonesia, Christian churches, for example, have been targeted in different parts of the country. There have been acts of vandalism and violence by small, extremist Muslim groups, without appropriate action being taken by the authorities. This, in fact, has been one of the criticisms made against SBY, that he has been indecisive and not firm enough in dealing with some of these law and order issues that have emerged. It's one of the reasons why Prabowo has a lot of appeal in the upcoming elections because he is projecting himself as somebody who will be decisive in dealing with such issues. Incidentally, Prabowo's brother, who is bankrolling his candidacy, is a Christian.
Senator Ataullahjan: Ms. Angeles, when we're discussing gender equality, we often become so focused on the role of women that we forget about the men. What is the role of men in gender development? I believe you have looked at this topic in terms of Filipino masculinity.
Ms. Angeles: I agree there is a tendency among scholars and development practitioners to conflate women and gender. When we want to take gender issues and gender equality seriously, certainly it is not just about women because gender issues really involve gender relations, relationships between women and men, identities and sexualities and other axes of social difference.
I believe many of the issues I mentioned earlier have a lot to do not just with women but also with men. We have seen, for example, with the migration of women to many parts of the world, that there is a feminization of overseas contract labour. This has created a huge pool of househusbands, or men who passed on the task of doing actual housework, managing the home, to other female members of the household. This has led to destabilization of more traditional gender role expectations.
You see, the Philippines is also one of the top countries in the world with the highest gender empowerment measure, or GEM, and also a very high gender development index, or GDI. It's top in Asia. Again, if we look at the reason behind it, it's because there's relatively little gender discrimination as far as a preference for sons. You also don't have a preference for sons in terms of schooling, and you also have no barriers to women's political participation.
What is happening to men as a result of this is that when you have a society that still believes in the traditional role of the men as the male breadwinner, the male family provider, and you see it's the women who are actually taking up the slack, then it does create a situation where male identity and masculinity become more insecure. I think it has a lot of implications for the types of jobs where men go now. For example, the high economic growth rate in the Philippines has not been due to the growth of industrial manufacturing, which is traditionally a male occupation or a male-dominated sector. This sector has stagnated, which means fewer jobs for men but more jobs for women because of the growth of the service sector.
Also, we could attribute the high economic growth rate in the Philippines to what you would consider more speculative investment or an unproductive sector of the economy, such as real estate? Who are also in real estate? Most of the jobs in real estate also go to women, although much of the capitalists are very much driven by big tai-pans in the Philippines. What is happening, therefore, in the larger political economy does have implications for gender relations and what is happening to the family and the household. The Filipino family is still a major bedrock of Filipino social institutions.
Senator Johnson: Mr. Nehru, countries in the Asia-Pacific region have experienced riots in recent years as their population protested the dramatic rise in basic foodstuffs such as rice. Can you tell us which countries in Southeast Asia are especially vulnerable to these riots and why? What are the future prospects for food security in the Asia-Pacific region?
Mr. Nehru: That's a big question. Let me see if I can answer to the best of my ability.
One of the interesting things about Southeast Asia is the heavy reliance on rice. Rice is the most important staple in virtually every Southeast Asian country. The feature about rice is that even while domestic production in the major rice-producing countries is very large and consumption is very large, the international rice market is actually very thin.
The major rice producers in the region are Thailand and Vietnam. India has become a major exporter and now, hopefully, with reforms, Myanmar could also once again re-enter the international market as a major exporter.
The reality is that international rice trade is a very small fraction of total rice consumption. The consequence of this feature of rice in Asia is that small disruptions in production can lead to major instances of very sharp price increases, and that's exactly what happened in 2008. In 2008, India imposed an export restriction — export ban, actually — on rice because they were concerned with their own food security. That led to Thailand introducing its own restrictions. Consequently, the price of rice skyrocketed upwards, and countries like the Philippines suddenly found that they could not get access to rice imports. They needed about two million tonnes at the time.
This is going to be a periodic problem. The standard prescription for good rice security, which is international trade in foodstuffs, is frankly not good enough for Asian countries. Asian countries, therefore, have to develop their own systems of managing food security through food stockpiles.
An advance on this was made by the ASEAN+3 group, which is ASEAN together with China, Korea and Japan, which have agreed to put together a rice stockpile, a food stockpile, for the region as a whole. This is one of those international initiatives that could potentially go a long way, although the details of this have still to be worked out.
This continues to be an important point. Even as these countries grow and even as their production grows, the reality is that they will continue to be faced by insecurities as far as rice is concerned most predominantly in the region.
Senator Johnson: What measures, then, are being taken domestically and regionally to address the causes of food riots and to strengthen the food security?
Mr. Nehru: There haven't been that many food riots, frankly, in the recent past, but the major reason for food insecurity is sudden shortages of food. Countries can overcome this challenge by doing several things but, first of all, making sure they have adequate import arrangements for food, including forward market arrangements — in other words, committing to purchasing imports in advance, six months to a year ahead. Second, they can make sure they have adequate stockpiles at home. Third, they can ensure that in instances where there is sudden hoarding, for example, or sudden increases in price, that they have instruments available to subsidize the poor to protect them against sudden rises in price. This, in fact, was done in Indonesia to good effect in 2008 and 2009. There are methods by which countries can deal with this, but, in the end, they are dealing with a structural problem, and that structural problem is not going to go away unless they develop their own stockpile arrangements and manage them well.
Senator Johnson: Professor, I personally have had experience with Filipino women who have worked with members of my family for many years. I know that they send back an enormous income to the country. Do you have any figures for me on the way they support their families at home? I have read recently that they continue to want to come over and do this.
Ms. Angeles: As I said earlier, the Philippines is very dependent on remittance; you're right. Canada is now the third largest country source of that remittance after the United States and Saudi Arabia. Much of this really goes into consumption. We have been looking at some of the statistics, and it hasn't really changed much since the 1970s when the Philippines first sent its overseas contract workers to the Middle Eastern countries.
Over time, there has been a little bit of extra money as remittances improved, which go into education and of course a little bit of entrepreneurial business development. If you think about why much of this is going to consumption — a majority of Philippine families are highly dependent on remittances sent by their families from abroad — that money goes into food, housing, clothing and some big-ticket items like major appliance purchases, but education is a major priority.
The other reason is that the Philippines also has a very high cost of food relative to income; much of the expenditure of most households go into food. Why? We cannot feed ourselves. Thailand, according to the ecological footprint analysis done by Bill Rees, one of my SCARP colleagues at UBC, it is the only country in Southeast Asia that could adequately feed itself, as I mentioned earlier, but the Philippines is not at all able to feed itself.
This is a big problem. Much of that is going to consumption, and I support the idea of how we can look at addressing the aging and decaying rural infrastructure in order to have a more balanced agricultural-industrial linkage within the country to address food security. If we are so dependent on very expensive foodstuffs and the domestic agricultural input is low, people who are dependent on remittance are still going to suffer all the more compared to people who could afford high food prices.
Senator Downe: I want to follow up on Senator Johnson's question. How much money is being sent back from Canada? You indicated in your presentation that we're the third highest after the United States and Saudi Arabia. What is the actual dollar figure?
Ms. Angeles: I'm trying to get the actual statistics for you. If it's possible at all, you can go to another question for me or for my colleague, and I will just look for the data for you.
Senator Downe: My second question is: You indicated we are the third highest, so I'm just wondering how many citizens of Canada are involved in sending money back. How big is the population that's actually participating in sending remittance? I assume it is not a hundred per cent.
Ms. Angeles: No, it is not a hundred per cent. Families that have a huge percentage of the share would be temporary foreign workers who have not been able to bring their family members to Canada. And so those who still have ties to the Philippines are largely temporary foreign workers. But with the bilateral kinship system in the Philippines, as well as close family ties, which has several degrees of affiliation, it is not uncommon for families in Canada who already have their nuclear family here to still send remittance to nieces, nephews, cousins, especially during times of disaster.
I am trying to get the statistics for you.
Senator Downe: When you find them, just interject the number and we will carry on.
The Chair: I will come back to you, Ms. Angeles, for these figures.
Senator Oh: My question is about Indonesia. What are the potential implications of Indonesia's presidential and parliamentary election on its regional and global role, particularly on the Southeast Asia market, because Indonesia is the only member of the G20? What is the future outlook on ASEAN after the election in Indonesia?
Mr. Nehru: As I mentioned earlier, if Jokowi were to become the president, as all indications suggest he will, then we are likely to see — and this is purely speculative — that foreign policy will be the domain of a technocrat that will be appointed as foreign minister in Indonesia. Unlike under SBY, Jokowi is probably not going to take a big or important role as far as foreign policy is concerned.
That means Indonesia's emphasis towards ASEAN will probably continue as in the past, but not necessarily with the backing or the support of the president as has happened the last 10 years. I don't think there would be a significant change in Indonesia's foreign policy, which incidentally has ASEAN at its very core, at the very centre. It is an ASEAN-centred foreign policy and I don't think that will change. I think Indonesia will continue to play an important role in APEC and it will continue, obviously, to represent the rest of Southeast Asia in the G20.
I don't foresee too many fundamental changes in Indonesia's foreign policy under Jokowi. If Prabowo were become president, it is more or less the same story, except I believe there would be a much more active participation of the president in advancing Indonesia's interests in these regional organizations. There would be a much clearer effort to use and leverage international organizations and international settings, like the G20, to advance Indonesia's interests. It will be a much more active foreign policy.
Again, if you read through Prabowo's speeches on foreign policy, he does see Indonesia as having to maintain its position between China and the United States, for example, as being the bridge between the West and the Muslim world. So he does not foresee a significant change in the positioning of the country, but it would probably be a much more muscular foreign policy towards the same end.
Senator Oh: What about the protection of human rights in Indonesia when the new government comes in?
Mr. Nehru: Indonesia, ever since the departure of Suharto, has put democratization and human rights at the very core of its polity. These are the hallmarks for which it is justifiably proud, although, in recent years — recent months — these bouts of religious intolerance have somewhat tarnished that image. Nevertheless, Indonesia's national commission on human rights is an active organization, but not as powerful as it really could be.
In the future, under Jokowi, there will probably be some greater effort towards support for human rights because Jokowi has been someone who has championed the causes of the poor and the causes of those who don't have access to public services of any kind — health, education, and so forth. I suspect that, under his administration, human rights will be championed.
Under Prabowo, I worry that a much more forceful presidency and an effort by him to combat corruption in a muscular fashion, an effort by him to try to weaken the judiciary and Parliament is likely to be the case if he were to become president. That could potentially have harmful effects on human rights in the country.
Of course, it is not clear as to how he would be able to do that, given that Indonesia's Parliament is an independent entity, a powerful entity. It could potentially be a struggle, but, under his presidency, one would have to be concerned about the standards of human rights in Indonesia.
Senator Robichaud: What efforts are being made in both countries that you are speaking to us about regarding the production of food to lessen their dependence on imported materials?
Mr. Nehru: Sorry, could you repeat the question?
Senator Robichaud: Certainly. What efforts are being made to produce food so as to lessen their dependence on imported food?
Mr. Nehru: Indonesia has had a long history of reasonably good agriculture policy. Under Suharto, for example, there was the famous BIMAS program, which provided credit to farmers. There was a rural infrastructure program, and there was, of course, a very active program to introduce high yielding varieties of rice and other crops. Indonesia has had a history of very active agriculture production policy.
The challenge for Indonesia has not been government efforts to try to increase food production. It has been the incentive for food production, as a result of the real exchange rate, especially over the last 10 years.
Over the last 10 years, there's been an appreciation of the real exchange rate in Indonesia, and an appreciation of the real exchange rate has meant that production of tradeables has been discouraged, not just manufacturing but also agriculture.
As a consequence, the incentives for agriculture production have not been as great as in the past. So that's been one big challenge.
The second big challenge has been that Indonesia's investment in infrastructure has declined as a share of GDP. In fact, infrastructure investment in Indonesia is a small fraction of where it should be. Currently, it is around 2 to 3 per cent of GDP. It should really be closer to 10 per cent of GDP. A significant part of that infrastructure is needed in rural areas for agriculture development, particularly rural transport but also irrigation investment.
The third aspect is to organize farmers in groups to make sure that they have access to credit, to high yielding varieties of seed and to extension services. Organizing farmers in that way has made progress, especially, for example, in East Java, but there could be significantly more progress made in that direction.
There's been a lot going on in Indonesia. I think Professor Angeles has mentioned that, in the Philippines, agriculture production has been a serious challenge, and it has been a serious challenge because of land policy in agriculture, in part.
There have been periodic efforts to reallocate land, to redistribute land, but these have not been particularly successful in the Philippines. As a result, yields have not increased that much, and agriculture production, consequently, has suffered.
A second challenge in the Philippines, again, has been infrastructure, and connectivity between food-producing areas and their markets has been a second challenge.
A third has been the traditional issue of access to credit, seed and extension services.
The Philippines has a particularly big challenge in agriculture production, and I think that's one of the reasons why, in the Philippines, poverty has not declined as rapidly, especially in the rural areas, as one would expect, given such rapid growth over the last several years. I'm sure Professor Angeles can speak more to that point.
Ms. Angeles: I agree; there are mainly two types of policies being used by the Philippine government — indirect policies, with regard to overall taxation of the agricultural sector relative to the industrial sector, and more direct policies that are relatively unsuccessful, as Professor Nehru said.
We have failed in agrarian reform policy over the years. We have an aging rural infrastructure that has not been given adequate support over the years, and we have seen a decline in government investment in agriculture, largely because it is not really considered an important priority, although they will pay lip service to the rural poor and the agricultural sector. We have seen declining rates of investment to address the aging and decaying rural infrastructure, irrigation and dam, like the Angat dam that I mentioned earlier, which supplies 100 per cent of the irrigation to the rice-producing province of Bulacan and partly in Pampanga. The dam is going to face a major disaster if it is not repaired soon. We have areas that badly need farm-to-market roads in order to get agricultural produce quickly into the market and a big problem with rural usury. Agricultural credit is not readily available to farmers, and so they fall prey to users who charge incredibly high rates of interest. From our research in Bulacan, which is where the Angat dam and the Angat River are located, we are seeing rates of around 360 to 500 per cent annual interest rates on credit to farmers because they have no collateral to provide, other than the land. We see a lot of farmers who are very much indebted.
After that, climate change is a very significant factor that has been causing much of the decline in agriculture productivity.
In Bulacan and other places, we see the cycles of drought and flooding. Farmers are very much affected by this, and there are areas that used to have three cycles of planting and harvesting that have now been reduced to two. With climate change, we're seeing the return of some pests and rats that have never been seen before.
These are some trends we are seeing now. The government has invested more into the service sector and the highly dependent sector on remittance, and the caregiving economy is getting bigger in the Philippines. We also have the call centre industry, which is a part of the service sector.
The Philippines has become a major haven for retirement of seniors, not just from North America but also from Europe and East Asia.
Because the government is building infrastructure, definitely agriculture has become neglected. What keeps the economy afloat is the remittance money, including US$2.1 billion from Canada in the year 2011 and a little bit of decline in 2012, to 1.9 billion. But consider the increase from around $600 million only in 2006. That's how much of an increase we have seen in remittance from Canada to the Philippines between 2006 and 2012 alone.
Senator Downe: I have a question on your numbers. What is the source of your information?
Ms. Angeles: We have a network of researchers based at the York Centre for Asian Research, headed by Phil Kelly, a colleague of mine from geography, looking at transnational migrant economies in Asia. We were originally looking at three countries in the region, and we have concentrated on the Philippines. The data from that research came from the Central Bank of the Philippines.
Senator Demers: Thank you very much for your answers.
Ms. Angeles, the economic potential of the Philippines is partly related to trends in in-bound foreign direct investment trades and economic cooperation. Which countries are the Philippines most important commercial partners, and which sectors?
Ms. Angeles: Interestingly, the United States has declined over the years. With regard to foreign direct investment, I'm not on top of this research topic. I can give you an update if you want, but the last time I checked, we have a lot more FDIs coming from Japan, Taiwan, Korea and China, which eclipse the United States in terms of foreign direct investment. The United States is still a significant economic partner. In terms of sectors, we still have a lot of this, in terms of the basic industries, industries outside of manufacturing.
The Chair: I'm wondering, in the interests of time, if you could provide this detail to the clerk once you are able to compile it.
Ms. Angeles: Yes.
The Chair: That would be very helpful.
Ms. Angeles: I will ask my colleague who is doing this type of research to give me more updated information.
The Chair: Thank you very much. That would be helpful.
Senator Housakos: I will try to be brief. My comments are in regard to the Southeast Asian area, and I guess it applies to all Asia-Pacific countries. If we look at the whole region and the various countries in that region in terms of economic, social and political development, would you agree that there's a discrepancy in those areas? It seems that the vast majority of the countries in Asia-Pacific and Southeast Asia have different speeds. When it comes to their economic development, they're on one speed; when it comes to their social development, they have another gear; and when it comes to their political development, they have another gear.
What kind of hindrance has that been in expanding Canadian relations with those countries? Canada also has a propensity, wherever we go in the world, to be trade-minded in whatever we do. Maybe our potential to build our relationship in that part of the world is not only necessarily in terms of trade, but maybe we can expand our relationship in terms of the political and social development aspect of things.
An example would be Canada, which has a renowned and well-respected independent public service. It is an expertise we developed through the years. Maybe that's an expertise we can shift to countries like that and have something above and beyond just trade relations where we're trying to sell our resources and Canadian companies are trying to find cheap labour.
There are a couple of questions in there. Could you comment on the barriers in building a relationship between Canada and some of the countries, given the three different value sets they have when it comes to economic, social and political development? As well, what specific areas Canada should focus on, above and beyond economic trade with these countries?
Mr. Nehru: I think it is important to recognize that Southeast Asia is actually composed of very disparate countries. You have four middle-income countries: Thailand, Indonesia, the Philippines and Malaysia. You have four low-income countries: Cambodia, Laos, Myanmar and Vietnam. Then you have two small entrepôt countries: Singapore and Brunei.
They really are very different. To characterize them and paint them with the same brush would actually not be particularly useful.
There is one common feature for all of these economies, and that is the rapid growth in trade, as you mentioned. This rapid growth in trade has been behind the economic growth of these countries over the last 35 to 40 years.
Over the last 30 years, there has been a significant increase in trade between these countries and China. The average annual growth rate of trade between Southeast Asia and China has been 20 per cent per year. That far eclipses growth in intra-Southeast Asian trade, which is more like 12 per cent per year.
Increasingly, these countries are being drawn into the gravitational orbit, if you wish, of the Chinese economy and are becoming part of the Asian production chain. In fact, trade with Europe, the United States and the Americas has been declining as a share of total trade over the last 30 years, and this is something to keep in mind.
You are quite right that social indicators are seriously problematic in the low-income countries: Cambodia, Laos, Myanmar and Vietnam. They are rapidly improving in the middle-income economies. Of course, they probably exceed some of the advanced economies in Singapore. Again, they are very different across this spectrum of 10 countries.
As far as political development is concerned, yes, I think these 10 countries have very different political regimes. Indonesia stands out as being a remarkably democratic country with an electoral system which seems to be, at least so far, beyond reproach.
There are some concerns in Malaysia. There have been allegations of gerrymandering and so forth in Malaysia.
Thailand is confronted with a huge political crisis, and I'm not clear how it's going to come out of that political crisis. I think it is democracy at work in Thailand, but those democratic forces are potentially being undermined.
The Philippines is an interesting example of a political system that is now beginning to deliver under President Aquino. We will have to see where that goes.
I see very different political regimes in all these countries, but if I were to characterize the region as a whole, I would say there has been a steady advance towards democracy, with occasional setbacks. For example, the opening up of Myanmar has been very encouraging. We will have to see what happens in the 2015 elections, whether they will be free and fair, but my bet is that they will be free and fair and that we might see a change in government.
All in all, I'm hopeful on the democratic front. I see the economic growth and the rise of the middle class in Southeast Asia as pushing governments towards opening up, becoming more democratic, respecting human rights and delivering greater public services. I see a positive outcome as a result of the economic growth towards raising both social indicators and improving the democratic functioning of these countries. Thank you.
The Chair: I think we've run out of time, so if you would please make a quick intervention. Thank you.
Ms. Angeles: There are three areas where Canada can contribute. One is in education and human resource development; second is in entrepreneurship, particularly in private sector development for domestic economic expansion; and thirdly, where Canada is well known, in environmental leadership and resource management, where all Southeast Asian countries could really tap into Canadian expertise. The overall goal is to expand and secure the middle class in these countries. Those are the three areas where I think Canada can make a contribution.
The Chair: I'd like to thank both of our witnesses for their indulgence in our late start and for their contributions. You have touched on dimensions we have not touched on in our study to this point. We appreciate the information and the time you have taken.
Senators, we had other witnesses, but we will have to reschedule them to another day.
(The committee adjourned.)