"What's Happened" #2 (March 10-17)
A busy week for Germany and Southeast Asia, while the EU's Commissioner for International Partnerships made friends in Cambodia and Laos, plus an interview with Anne Cox on Vietnam's trade unions.
It was a busy week for Germany-Southeast Asia relations. Malaysian Prime Minister Anwar Ibrahim was on a six-day tour of Germany, mostly talking up his country’s importance in global supply chains. “We are a dynamic economic fit for the 21st century and the perfect partner for German businesses,” he said in a keynote address to a small business conference. (On March 13, the New York Times ran a piece about Malaysia’s rise in the global microchip supply chain.) Anwar’s visit also gave German Chancellor Olaf Scholz the opportunity to talk about his country’s vision of relations with Southeast Asia. “The Indo-Pacific region is of great importance to Germany and the European Union,” Scholz said after a meeting with Malaysian Prime Minister Anwar Ibrahim in Berlin. “This is why we want to intensify political and economic relations.” However, things got dicey when Palestine was brought up in a joint press conference. “Where have we thrown our humanity, why this hypocrisy?” Anwar said, adding that Western countries should put an end to their "selective" and "ambivalent" attitude. Scholz, seemingly a little peeved, reiterated that Germany bears a special responsibility for Israel.
Thai Prime Minister Srettha and Philippine President Ferdinand Marcos Jr. also visited Germany last week. Michael Nienaber of Bloomberg published an interesting article on Germany’s efforts to forge better relations with these three Southeast Asian states. Speaking at a joint news conference with Marcos Jr. on March 12, Scholz called on China and regional countries to resolve tensions in the disputed South China Sea peacefully. “This is about adhering to international law, ensuring the freedom of navigation. We are working to ensure that the UN Convention on the Law of the Sea (UNCLOS) is being adhered to by all its parties,” Scholz said. “We want to do whatever we can to help settle tensions in a peaceful manner. Therefore, ASEAN’s negotiations on a code of conduct for the South China Sea is therefore of the utmost importance, de-escalation must always be our priority.”
Marcos Jr. also spoke at the Philippine-German Business Forum:
Thai PM Srettha, the “salesman of Siam”, used his meeting with Scholz to mainly discuss business. They explored avenues to bolster cooperation in areas of mutual interest, focusing on political and economic collaboration, including high-level exchanges. They discussed clean energy initiatives, green transition, and Thailand's potential as an electric vehicle (EV) production hub. Additionally, they addressed knowledge and technology transfer in sustainable agriculture, infrastructure development via Thailand's Landbridge project, and people-to-people relations. The agenda encompassed human resource development, vocational education, support for Thai-EU Free Trade Agreement negotiations, and negotiations for Schengen visa exemptions for Thai passport holders. Furthermore, they discussed collaboration on regional and global issues such as climate change and global security. On March 13, Srettha delivered a keynote speech at the Annual Reception of the German Association for Small and Medium-Sized Businesses (BVMW), themed "Future Day for SMEs." He outlined his "Ignite Thailand" vision, addressing global challenges like climate change and geopolitics. Srettha assured the German business sector of Thailand's vast potential for advancing trade and investment cooperation. He extended an invitation to BVMW to establish its regional office in Thailand, aiming to promote and facilitate investment by German SMEs in Thailand and the broader region. (Time magazine published this interesting and detailed essay on Srettha on March 12). Scholz also said that Germany supports Thailand's bid to become a member of the Organisation for Economic Co-operation and Development (OECD).
Also of note, the European Commissioner for International Partnerships, Jutta Urpilainen, visited Cambodia from March 12-13 to strengthen EU-Cambodia relations and discuss areas of cooperation, including sustainable development, human rights, and trade. The Commissioner met with Cambodian government officials, civil society representatives, and EU Member States' ambassadors to exchange views on regional and global issues. “Now is a good time to take stock and visit Cambodia. I want to see where we are in our cooperation, especially now, after the elections and the formation of a new government,” she said. She added:
I also had the opportunity to speak with several European businesses. It was quite nice to hear that European companies are committed to supporting Cambodia as it integrates with this regional market. Economically Cambodia is more integrated to this region. This is something which we definitely support, and it was nice to hear that our companies are on the same page when it comes to this objective.
In Phnom Penh, she oversaw the signing of four new EU programs in Cambodia, totalling $85.6m, aimed at fostering development and addressing key challenges, after a meeting with Cambodian Deputy Prime Minister and Minister of Economy and Finance Aun Pornmoniroth on March 12. These programmes include the Global Gateway flagship “Education for green and digital jobs”, and two Team Europe initiatives on “Green Agribusiness and Decent Jobs” and “Green Factories and Decent Jobs” (more info here). “Global Gateway”, a Team Europe scheme, pledges €300bn in public and private investments from 2021 to 2027.
Her visit comes amid a general warming of relations between Cambodia and the EU, kickstarted by the “change” of government in Phnom Penh last year when Hun Manet replaced his father as premier. Brussels has seen this as a reason to renew ties, which have been salty since Cambodia’s authoritarian turn in 2017. Hun Manet’s visit to Paris in January was a major landmark. Human rights and democracy, lacking in Cambodia, were brought up in conversations Urpilainen held with Cambodian officials and in the post-visit statements. “The European Union is committed to its partnership with Cambodia, based on our values and on human rights principles, to accompany the delicate transition,” Urpilainen stated. And Igor Driesmans, the EU ambassador to Phnom Penh, said: “We were delighted to host Commissioner Urpilainen in her first trip to the ASEAN region and launch significant European investments, here in Cambodia. We hope her visit has deepened the connection between the EU and Cambodia going forward as we work in partnership to ensure that our programs in the country are done through a value-based approach with human rights, sustainability and green innovation at its core.”
Urpilainen then visited communist Laos, where on March 14, alongside officials from Germany and France, she launched a new Global Gateway flagship “Team Europe Partnership with Laos to boost sustainable trade and investments in agriculture and forestry sectors”, a scheme known as TICAF. It focuses on coffee, tea and forest-based value chains, and connectivity to markets. The program receives funding from various sources, including grants from the EU (€28m), France (€4.65m), and Germany (€11m), alongside a concessional loan from the European Investment Bank (€50m). Urpilainen commented: “The Team Europe Partnership with Laos to boost sustainable trade and investments in agriculture and forestry sectors (TICAF) is a significant step in accomplishing our shared goals, in line with the EU Global Gateway investment strategy. Together, we are building a future where economic prosperity goes hand in hand with environmental sustainability, leaving no one behind”
IN BRIEF
Strategic Partners
Thailand expects to complete its negotiations over a free trade agreement with the European Union by the end of next year, Prime Minister Srettha Thavisin said on March 12 during a state visit to France. The FTA aims to enhance economic cooperation between Thailand and the EU. Negotiations have progressed positively, focusing on various sectors, including trade, investment, and sustainable development. Trade discussions resumed last year following a nearly decade-long hiatus. Negotiations had stalled in 2014 after a military coup displaced Thailand's civilian government. The coup, staged by the Thai military, prompted the EU to suspend talks. Upon arriving in France on March 9, Srettha engaged with executives from more than 20 prominent French companies spanning various sectors such as automobiles, aviation, clean energy, fashion, sports, hospitality, and tourism. Additionally, Srettha held discussions with Formula 1 executives who expressed interest in Thailand as a potential venue for hosting a Formula 1 motor racing event.
French arms manufacturer Nexter Defense System is keen on establishing a lasting partnership with Indonesia, aiming to deepen their ties beyond mere sales transactions. Recognizing Indonesia's strategic importance in Southeast Asia, it expressed interest in contributing to the country's defence capabilities and technological advancement. With Indonesia's growing defence needs, Nexter Defense System seeks to collaborate on various fronts, including naval defence systems, radars, and digital technology integration. The envisioned partnership is poised to enhance Indonesia's defence industry and bolster its sovereignty. Both parties aim to foster a mutually beneficial relationship, ensuring sustainable development and security in the region for years to come.
Green Agenda
The New York Times ran a lengthy article on March 14 (“Can Europe Save Forests Without Killing Jobs in Malaysia?”), which serves as a useful primer on the ongoing debates about whether Brussels’ environmental policies will impact Malaysia and Indonesia, the world’s two largest palm oil producers.
During President Ferdinand Marcos Jnr’s visit to Germany, he said he is actively pursuing collaboration in renewable energy with Germany, aiming to enhance its sustainable energy sector. Recognizing Germany's expertise and advancements in renewable technologies, Philippine officials are keen on fostering partnerships to accelerate the country's transition towards cleaner energy sources. Discussions encompass various aspects, including policy frameworks, technology transfer, and investment opportunities. With a shared commitment to combating climate change and promoting green growth, both nations seek to leverage each other's strengths to drive renewable energy development. This collaboration holds the potential to significantly contribute to the Philippines' renewable energy targets while fostering international cooperation in the fight against climate change.
Money Matters
The Philippines recently secured approximately $5bn in investment pledges from German and American firms, promising significant growth potential in key sectors like healthcare and energy. President Ferdinand Marcos Jr, during his three-day working visit to Germany, finalized investment pledges totalling $4bn from German companies. In Germany, the Philippines signed eight investment agreements covering solar cell manufacturing, automotive modification, and military-grade armoured personnel carriers production. Other deals involved potential projects like a hospital training centre, innovation hub, digital healthcare partnership, and farmland rehabilitation.
Vietnam Airlines announced the launch of new routes to Europe. The expansion saw the airline introducing flights connecting Hanoi and Ho Chi Minh City to several European cities, including Frankfurt, Paris, and London.
A Singaporean semiconductor startup will invest €3.2bn to establish a chipmaking facility in Italy, generating jobs and aligning with the EU's tech investment strategy. Silicon Box's move aims to bolster Europe's semiconductor production, reducing reliance on China. Italian officials anticipate economic growth and plan financial support, pending EU approval. The initiative underscores efforts to fortify supply chains and stimulate innovation in Italy's high-tech sector, diversifying its traditionally export-oriented economy.
Temasek, Singapore's sovereign wealth fund, is expanding its investments in the US and Europe.
In March, Temasek, with a global investment portfolio valued at $156bn, invested $1.3bn to acquire a 5% stake in Spain's Repsol, a major oil and gas corporation. Additionally, Temasek purchased a 5% stake in German chemicals firm Evonik Industries AG for over $780m during the same period
Vietnam embraces Denmark's renewable energy initiatives, as announced by Deputy Prime Minister Tran Hong Ha at a meeting with the Deputy Head of Mission of the Danish Embassy in Vietnam, Mette Ekeroth, and President and the CEO of Vestas Group, Anders Runevad, on March 13. The collaboration aims to enhance Vietnam's sustainable energy sector and reduce carbon emissions. This partnership underscores Vietnam's commitment to green development and highlights Denmark's expertise in renewable energy technologies.
Unilever will partner with Europe & Asia Commercial Ltd in Myanmar. This joint venture, with combined annual sales surpassing €100m, focuses on manufacturing, marketing, and distributing home and personal care products. Pier Luigi Sigismondi, Unilever's president for Southeast Asia and Australasia, said that “the combination of a growing economy, increased political stability and strong demographics make Myanmar a strong market opportunity for the long term”. The collaboration establishes Unilever EAC Myanmar Company Limited, merging their respective Home & Personal Care businesses. This comes at a time when many European companies have exited Myanmar because of the ongoing civil war.
Odds and Sods
China Daily ran a piece on Southeast Asian filmmakers trying to crack foreign markets. Kamil Othman, chairman of the National Film Development Corporation Malaysia, commented that Southeast Asian countries should work together to develop movies by "following the European Union style of doing things".
A Myanmar rights group urged Italy to impose sanctions on a crony of the military junta. The call came after reports surfaced of Italian investments in Myanmar, potentially benefiting the junta. Justice for Myanmar (JFM) specifically called on Italy to target resident Rachel Tayza, also known as Htoo Htwe Tay Za, the daughter of Myanmar junta arms broker Tay Za. On March 11, French lawyers William Bourdon and Lily Ravon reported Tayza to the Italian authorities on behalf of the rights group as a director of firms owned by her family’s EU-sanctioned Htoo Group of Companies. The JFM called on Italy to freeze Tayza’s assets and expel her from the country. DW produced this rather interesting update on developments in Myanmar:
Reports suggest France will support Thailand's push for visa-free travel, enhancing bilateral tourism, after Prime Minister Srettha Thavisin met with French President Emmanuel Macron. The move aims to reciprocate Thailand's visa exemption for French citizens, fostering stronger diplomatic ties. Thai officials propose extending visa waivers from 30 to 45 days, hoping to attract more French tourists.
Bare-faced self-publicity
In my Diplomat column, I asked what’s worse for Southeast Asia: a retreating United States, or an economically stagnant China? (“Southeast Asia’s Uncertain Global Outlook”, March 13)
And for my Radio Free Asia column, I argued that Washington (and Brussels) must avoid blurring the line between the Communist Party of Vietnam and the Vietnamese state. (“The US need not appease the Communist Party to engage with Vietnam”, March 9)
Q&A
For DW last week, I wrote this piece on the EU’s ongoing problems with trying to get Vietnam to accept trade unions (“Vietnam likely to permit worker unions to appease EU critics”, March 12). One of my sources was Anne Cox, a Senior Lecturer at the School of Business, Faculty of Business and Law, University of Wollongong. Last year, she published this interesting journal article with Stéphane Le Queux (“Towards an independent workers’ voice in Vietnam?”, in Labour and Industry) on the establishment of e establishment of workers’ representative organisations in Vietnam. Here’s my longer interview with Anne.
This month, Reuters quoted several UN officials saying that Vietnam will ratify the UN International Labor Organization's Convention 87, which allows the free establishment of trade unions, this year. What are your thoughts on this?
The question has never been whether but when Vietnam rectifies CO87. The pressure to rectify CO87 comes from both external and internal forces. Externally, Vietnam is compelled to give relatively greater weight to world economic forces and vulnerability to external influences. Vietnam’s population and geographical size are comparable to a middle-size province in China; so unlike its powerful neighbour, Vietnam cannot afford to delay ratifying this UN convention. Vietnam has participated in many FTAs in recent years, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Vietnam-European Union Free Trade Agreement (EVFTA), and the Investment Protection Agreement between Vietnam and the European Union (EVIPA). Unlike old-generation FTAs, new-generation FTAs or FTAs WTO-Plus such as the CPTPP or EVFTA not only regulate trade or tariff issues but also go well beyond trade to address areas sometimes with no relation, at least visible and direct, with trade, such as human rights and freedoms, the environment, the fight against poverty, and labour rights, etc. This shift stems from the perspective of ‘fair trade,’ aiming to prevent a ‘race to the bottom,’ where countries reduce the cost of goods and services by disregarding labour standards or harming the environment.
Hanoi’s move would comply with commitments made before signing the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA). If Vietnam was to allow independent trade unions to operate, what impact would it have on Vietnam-Europe relations?
Influences from trade partners such as Canada and the European Union are believed to have significantly contributed to Vietnam’s decision to ratify the convention after extensive deliberation. Notably, Canada is presently evaluating Vietnam’s labour standards to ascertain their alignment with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), to which both nations are signatories. Additionally, Hanoi has assured Ottawa of its commitment to ratify Convention 87 by January 2024—a deadline that has now elapsed. Failure to meet this deadline might provide Canada with grounds to bring Vietnam before the dispute resolution panel of the CPTPP, potentially resulting in sanctions and penalties against Vietnam. The European Union has also voiced concerns about Vietnam’s labour rights standards within the framework of the EU-Vietnam Free Trade Agreement, which became effective in 2019. A delegation from the European Parliament’s Subcommittee on Human Rights visited Hanoi, from 4th to 6th April 2023, following a previous visit by the subcommittee in 2017. During the visit, members of the European Parliament addressed the human rights situation in Vietnam subsequent to the ratification of the EU-Vietnam Free Trade Agreement. The delegation expressed apprehensions regarding the deteriorating human rights conditions in Vietnam, particularly regarding the diminishing space for civil society, the misuse of vague provisions of the criminal code to suppress dissenting voices, the harassment of activists, restrictions on freedom of expression, and violations of freedom of religion and belief. Emphasizing the importance of Vietnam’s full compliance with its international and domestic human rights obligations, the delegation reiterated the EU’s offer of increased cooperation with Vietnam to enhance the human rights situation in the country. Furthermore, the delegation urged for the immediate and unconditional release of all political prisoners and prisoners of conscience in Vietnam, including leaders of non-governmental organizations, journalists, and environmental activists.
In 2022, Vietnam signed the Just Energy Transition Partnership with G-7 countries, which will provide Vietnam with $15.5bn in funding to assist its green energy transition. Vietnam’s imprisonment of organised and high-profile climate activists was a sticking point in negotiations, but the G-7 ultimately acquiesced despite the activists remaining behind bars, all of whom were dubiously charged with tax evasion.
What is the situation in Vietnam regarding labour activity?
Internally, the rapid and uninterrupted growth in the number and extent of ‘wildcat’ or illegal strikes is worrying investors, who are putting pressure on the government to put a halt to industrial disturbance. Siu and Chan pointed out in 2015 that Vietnam was the most strike-ridden country in the region. In order to attract international capital, Vietnam has provided a reservoir of low-wage labour and a legal framework where it can be exploited without too many problems. As elsewhere, the pacification of industrial relations is a strong imperative. The rise in power of workers’ grassroots militancy over the last two decades in Vietnam has taken place outside the framework of official trade unionism. The multiplication of wildcat strikes in the foreign-invested sector is the result of workplace activists organising in a form of industrial ‘guerrilla’ action in the vein. Under intensive pressure, both internally as a consequence of workers’ agitation and externally from international organisations, the Vietnamese government has made it legal for workers to establish ‘enterprise-level worker organisation’ (tổ chức của người lao động tại doanh nghiệp, WO) - local workers’ organisations independent of trade union structures, in the new 2019 Labour Law, which came in effect on 1 January 2021.
Overall, the new legal provisions make WOs and trade unions technically equivalent in legal status in terms of rights and obligations in the legitimate representation of employees’ rights and interests in labour relations. As such, the legislation extends the freedom of association of workers outside the party boundaries, with the choice of either joining a VGCL union or setting up their own representative organisation. However, clear restrictions were imposed on WOs. First, the legislation does not allow WOs to act beyond the local company level, thus preventing sectoral or regional coordination which would provide considerable leverage to workers’ collective action. While unions are allowed (and supposed) to intervene in labour policy debates at all levels, (national and organisational levels), WOs, in contrast, are only allowed to do so at the enterprise level. Second, it is unclear how WOs can financially support themselves. Third, while Article 178 allows WOs to engage in strike action, the provisions around the right to strike in Article 198 of the Labour Law apply to all representative bodies: WOs must therefore abide by the same legal and technical constraints as trade unions (Articles and 200, 201 and 202). There are many hurdles surrounding the right to lawfully strike. To start with, Labor law has broad provisions on the list of businesses that are not allowed to strike (which may limit the right of workers to strike). Engaging in mediation is required; if mediation fails, a court must authorise the strike. Strike actions require five days’ notice. Prior to the strike, a list of claims must be displayed, and a ballot must be organised, resulting in a majority vote.
How will the Vietnamese Communist Party cope with new labour groups?
It is unavoidable that when Vietnam joins CO87 (October 2024), it will need to further adjust and amend domestic laws, especially the content of the 2019 Labor Code and the 2012 Trade Union Law. The existence of union pluralism at the grassroots level is inevitable. However, Vietnam has long insisted that the process of participating in CO87 must satisfy both the requirements of the Convention and be in harmony with unique national factors. So, the real question is how Vietnam internalises CO87. Will Vietnam allow independent trade unions to operate? Vietnam has a long political tradition of collective leadership and power sharing among its most senior party leaders. Nguyen Phu Trong was elected as the Communist Party of Vietnam (CPV)’s General Secretary in 2011 and 2016. In 2021, he was re-elected, becoming the third leader of Vietnam to ever secure a third term (after Hồ Chí Minh and Lê Duẩn). CPV is exceedingly on guard and will keep a close eye on the development of WOs. The Communist Review, which is the official organ of political theory of the CPV’s Central Committee states that the introduction of WOs has the potential to affect many aspects of the political life of the country and sees the need to ‘control’ the development of workers’ representative organisations, especially in enterprises with foreign direct investment and enterprises outside the state sector. In order to do so, the Communist Review emphasises two main strategies: reforming and strengthening trade unions and restricting WOs’ activities at the level of individual enterprises. In their own words, the Communist Review (in 2022) advises that “it is necessary to have a good solution to control the scope of operation of WOs in terms of space (within each enterprise) and activities that must be limited in labour relations. Do not allow these organisations to develop into political forces, especially opposing political forces”.
Interestingly, according to several high-profile outlets, the CPV has issued a broad-ranging directive calling for further restrictions against the activities of civil society groups, including trade unions, and increasing scrutiny of foreign organizations and Vietnamese nationals travelling abroad. The document, known as Directive 24, issued in July 2023, was obtained by Project88, a Bangkok-based human rights organization focused on Vietnam. While the organization was unable independently to verify the authenticity of the directive, references to it in several CPV media outlets suggest that it is genuine. As stated in Project88’s English translation, in Directive 24, the CPV stated “The comprehensive and deep international integration and implementation of trade agreements has created new difficulties and challenges for national security.” This has provided openings for “hostile and reactionary forces” to “increase their sabotage and internal political transformation activities…forming ‘civil society’ alliances and networks, ‘independent trade unions,’ creating the premise for the formation of domestic political opposition groups.” As such, Directive 24 calls for increased scrutiny of people taking advantage of international commitments that Vietnam has made to mobilise and form opposition political organizations that implement ‘colour revolutions’ and ‘street revolutions.’ It is noted that by law, any social unrest that threatens the integrity of the communist regime will be promptly suppressed by the forces of law and order (article 209 of the Labour Law).
Rectifying CO87, the constraints on forming independent trade unions will not stem from an institutional framework but from an operational one. Vietnam’s one-party system rigorously oversees independent organizations across various civic domains, including religious entities, educational institutions, non-governmental bodies, climate advocacy factions, and labour unions. Despite facing criticism from Western entities and ratifying UN conventions, this grip on control is unlikely to loosen. At the end of the day, Vietnam still holds certain cards in these negotiations. When Vietnam adheres to international standards on the surface, its attractiveness as a burgeoning manufacturing centre adjacent to China, with competitive labour costs, is poised to increase.
Simultaneously, its broader geopolitical importance for Western countries amid escalating tensions with China is also expected to escalate. While Vietnam will ratify Convention 87, it will also find workarounds to pre-empt genuine labor union formation. Since 1st January 2021, there has not been one single WO established in Vietnam. One of my interviews conducted in Ha Noi with the Vietnam General Confederation of Labour in December 2023 revealed that WOs cannot be formed in practice, at least for now. The Labor Code lacks specific provisions outlining the fundamental administrative steps necessary for establishing and registering WOs. It does not specify the documents to be completed or the government office responsible for their submission. While a decree elucidating and legislating such procedures was anticipated to be issued in 2020, it has yet to materialize as of December 2023. Consequently, employees seeking to formalize a WO within their enterprise are simply unable to do so.
Unofficial worker representatives (UWRs) are workers, foremen or line managers, and former workers who want to protect the interests of themselves and other workers. UWRs have gathered force within the last few years and now have the ability to accumulate pressure and strategically coordinate strikes in several companies at the same time in a particular industrial zone or province. The CPV harbours fear that if they can gather external support, UWRs and WOs can undermine and potentially overturn the communist regime. Thus, it is predicted that UWRs and leaders of WOs will be closely watched, and a range of outcomes can be envisaged including the likeliness that they could become themselves co-opted and operate as the ‘eyes and ears’ of the unions, thus turning into a strategic tool from the Party’s point of view in order intervene to prevent the spread of conflicts. The Vietnamese authorities have dual intentions, namely the curbing of the accumulation of power and developing the existing institutions. While fundamental changes in the current institutional setting are happening, the authoritarian and corporatist imprints prevent a more pronounced weakening of unions and real power for WOs. In theory, the coexistence of traditional and new unionism could enhance union autonomy by preserving the significance of the former while incorporating the latter. However, despite the creation of a more favourable environment for pluralism, traditional unionism will continue to dominate and maintain close ties with the Communist Party. At least in the near future and without a significant shift or alteration in the governing authority or political system, WOs will not be able to mitigate the pronounced power imbalance between labour, employers, and the government in Vietnam.