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.
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
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
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
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
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
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.
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
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
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.
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
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
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
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
Senator Johnson: What measures, then, are being taken domestically and
regionally to address the causes of food riots and to strengthen the food
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
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
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
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
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
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
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,
A second challenge in the Philippines, again, has been infrastructure, and
connectivity between food-producing areas and their markets has been a second
A third has been the traditional issue of access to credit, seed and
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
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
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
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
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
(The committee adjourned.)