Very interesting interview for those interested in our regional and international affairs Just ignore the first 3 minutes of the intro in the Malay language if you don't understand Bahasa.

Worth 93 minutes of you time. Download & watch at your leisure.

Kishore Mahbuhani, a Singaporean diplomat, Mahbuhani is brilliant.

Eoin Treacy's view

Thank you for this video which I agree highlighted a number of interesting themes. The challenge for governments in Asian countries is how to balance the demands for loyalty coming from the world’s superpowers. That’s a particular challenge for those that have historically depended on US support for markets and military protection. They now see their primary growth engine in China while China’s Belt and Road program is the primary source of FDI for many potential projects.

What I found particularly interesting is the deferential tone reserved for talking about China while they are much more willing to point out the USA and Europe’s failings. At this stage everyone understands that calling out China’s failings results in swift retribution.

As Mahbuhani pointed out China is now a tiger. It doesn’t take lightly to anyone stepping on its tail. Perhaps the better anthropomorphic way of thinking about China is as a dragon. Dragons of legend are capricious and powerful, can burn cities to the ground but are also beautiful, majestic and capable of wonderous feats. They also tend to be jealous of their treasure and susceptible to flattery.

The willingness of Singapore to look at what has been successful elsewhere and to follow through with action to replicate best practice at home is a testament to good governance. Singapore was also instrumental in educating China’s reformist administration. The lesson they picked up was that it is possible to maintain single party rule when economic development is championed. They also learned that economic governance and social governance are not the same thing.

The point Ray Dalio has made and which Mahbuhani also highlights is the USA is very divided and needs to find a new vision for the vast majority of the population to coalesce around. Arguably, the USA is a plutocracy which means it is controlled by the wealthy. One might argue that has always been the case but is certainly truer today than ever before. We have never seen an election where so much money was poured into campaigns. The fact that it is now possible to buy shares in a company that claims in its prospectus it has connections to the Secretary of State is a fresh example of the low ebb to which governance has fallen.

China is also devolving on the governance front and looking inward. Deploying predicative policing in Xinjiang, in tandem with mass sterilization of the Uighur population, forced labour camps (most recently in harvesting cotton), free speech crackdowns in Hong Kong and an acrimonious dispute with Australia all point towards an administration that prizes security over everything. 

Against this background ASEAN is walking a fine line of not wishing to offend either great power. It’s a practice they have been accustomed to for a long time and should continue to succeed. I do wonder what Mahbuhani says to his American friends in private.

The MSCI ASEAN Index has been ranging since 2011 but is currently rebounding from the lower boundary near 600 and a sustained move below that level would be required to question medium-term upside potential.