Technology and Innovation

Some Good News For a Change: Mark Clifford’s The Greening of Asia

Picking up a copy of Mark Clifford’s new book The Greening of Asia: The Business Case for Solving Asia’s Environmental Emergency (Columbia University Press, forthcoming March 2015) is a good way to start the New Year. Clifford, the executive director of the Hong Kong–based Asia Business Council, offers an in-depth look at how entrepreneurs and entrepreneurial companies in Asia are making important contributions to energy, land, and water conservation and efficiency through technological and policy innovation. Coming on the heels of the recent U.S. and Chinese pledges to do more to address climate change, the book adds to the sense that there is real potential to change the world’s environmental future for the better. Published as part of the Columbia Business School Publishing series, The Greening of Asia adopts a case study approach to charting Asia’s green path forward. Clifford offers an engaging mix of personal profiles of business leaders that reveals how and why these leaders have adopted such a strong commitment to integrating best environmental practices into their businesses. For example, Malaysia-born Olivia Lum, founder and chairman of Hyflux, a Singapore-based global leader in membrane technology and desalination plants, first got a taste of doing the right thing by working at Glaxo Pharmaceutical, which was one of very few companies that treated its wastewater in Asia when there were no economic incentives to do so. Lum went on to found Hydrochem, which later became Hyflux. Clifford also backs up his positive vision with impressive numbers. Hong Kong’s Swire Properties’ property portfolio grew 7 percent in 2012, but its energy consumption dropped by 11 percent; 22 percent of India’s Infosys’ power comes from renewable sources, and the company is aiming for 50 percent; and Manila Water in the Philippines provides water to more than three times the people that the government managed to serve before water provision was privatized—many households now pay one-twentieth what they did previously. One of the book’s greatest strengths is Clifford’s ability to place the cases in the broader context of the region’s economic and political situation. He has worked in Asia for almost twenty-five years, and understands the political economy of the countries in which these companies operate. He notes, for example, that China’s top-down development of wind power has resulted in spectacular rates of wind turbine production. However, a failure to develop enough grid connection, distorted pricing policies, and weak quality control have also contributed to a situation where China is better at “installing wind turbines than generating electricity from them.” In 2013, although wind turbines accounted for 5 percent of installed capacity, wind produced only 2.6 percent of China’s electricity in 2013; overall, China continues to lag behind the United States in wind generation as a result. Clifford’s book is not without its weaknesses, but they are mostly editorial. Case studies transition somewhat abruptly, leaving the reader to figure out the connection from one to the next. Also, as with any case-study driven book, it is not always clear why one company was selected over another, except that the author had great access to particular companies or people. These are small points, however. Overall, the book is a terrific reminder that innovation and a core commitment to sustainability can push change in ways in transformative ways. That gives us all something to celebrate in 2015.

by Elizabeth C. Economy December 30, 2014 Asia Unbound

Malaysia

Why Air Disasters Keep Happening in and Around Indonesia

In the past year, Malaysia’s aviation industry has suffered an unprecedented number of tragedies. Although the odds of any person boarding a flight dying in a plane crash are about 1 in 11 million, three Malaysia-based aircraft have apparently gone down, with no survivors. The latest, AirAsia Flight QZ8501, had been traveling from Surabaya, Indonesia, to Singapore when it vanished over the Java Sea. To some extent, the three Malaysian air disasters are just brutal bad luck. Still, they point to several disturbing trends that raise the question of whether flying in peninsular Southeast Asia is completely safe. The air market in the region has embraced low-cost carriers, leading to a proliferation of flights throughout Southeast Asia, stretching air traffic controllers, and possibly allowing some airlines to expand too rapidly. Indonesian carriers, air traffic controllers, and Indonesian airspace in general have become notorious for weak safety regulations. AirAsia has responded to this crisis much more rapidly than state carrier Malaysian Airline did after the disappearance of Flight MH370 last March, but the opaque, authoritarian politics of Malaysia—which are common in Southeast Asia—will likely make the search and rescue operation, and any inquiry into why the flight crashed, more difficult than necessary. For more on my analysis of Southeast Asia’s aviation climate, go to: http://www.businessweek.com/articles/2014-12-29/why-air-disasters-keep-happening-in-southeast-asia#r=most%20popular.

by Joshua Kurlantzick December 30, 2014 Asia Unbound

China

2014: The Top Ten Stories in China’s Health Sector

1. China formally enters post-Global Fund era By the end of 2013, the Global Fund to Fight AIDS, Tuberculosis, and Malaria officially closed its portfolio in China. Having approved $1.81 billion to support China’s fight against the three diseases, the Global Fund was the largest international health cooperation program in China. One decade of the Global Fund’s presence in China has left behind a mixed legacy. With the departure of the Global Fund, sustaining the existing level of achievement becomes a daunting challenge. Already, the government has eliminated one trademark of the Global Fund: the Country Coordinating Mechanism (CCM). 2. China declares war on pollution In March, Premier Li Keqiang declared at the opening of the annual meeting of the National People’s Congress (China’s parliament), “We will resolutely declare war against pollution as we declared war against poverty.” This is believed to have been the first time that an official at the highest level of government has formally acknowledged the presence of an environmental crisis. China is on track to invest more than five trillion RMB ($817 billion) in tackling the crisis during the Twelfth Five-Year Plan (2011-2015). The order of magnitude of this government response reflects a growing recognition of the health implications of the environmental crisis: outdoor air pollution, for example, has been linked to 1.2 million premature deaths in China, nearly 40 percent of the global total. 3. China is anointed a world leader in tuberculosis control In March, the World Health Organization (WHO) announced that China has achieved the Millennium Development Goal target for reversing tuberculosis (TB) incidence by 2015. According to the Lancet, between 1990 and 2010, China more than halved the prevalence of smear-positive TB. The WHO representative in China noted that “over the last 20 years, China has been the single country that has shown the biggest gains in TB control in the world.” The Lancet piece attributes China’s success in TB control to the government’s commitment to the directly observed therapy, short course therapy, or DOTS. 4. Debate over genetically modified food intensifies The debate and public scrutiny over the safety of genetically modified (GM) food have grown more intense in China. Chinese scientists and Ministry of Agriculture officials have supported the application of GM technologies to staple crops such as rice and corn. But the public remains skeptical about the safety of the GM food. The debate has heated up since a well-known TV host travelled to the United States to investigate American attitude toward GM food. In May, the PLA banned all GM grains and oils from military supply. 5. There is growing consensus on the limits of China’s healthcare reform Following a survey released by the independent Horizon Research Consultancy Group, it has become increasingly clear that that the healthcare reform has not been as successful as the government would like the public to believe. Over the past five years, the government has spent more than $657 billion on healthcare. But in March, Professor Zhong Nanshan said that there had been no significant progress in increasing access and affordability, or in improving relationships between patients and healthcare providers. The former Minister of Health Gao Qiang shared Zhong’s sentiments in a recent speech. China’s failing healthcare reform has also received extensive coverage by leading magazines such as the New Yorker and Time. 6. China fines Glaxo nearly $500 million for bribery Chinese crackdown on corporate corruption claimed a major victim in September, with GlaxoSmithKline being fined $485 million—the largest ever corporate fine in China—for its role in a corruption scandal that came to light in the summer of 2013. The verdict not only marked the end of big pharma’s go-go years in China, but also highlighted the political risk of doing business in China. 7. China sends emergency health aid during the Ebola outbreak China has responded to the Ebola outbreak in West Africa with unprecedented generosity. In October, it announced a fourth round of emergency funding to Western African countries, bringing its total commitments to $123 million. In November, it announced plans to send an additional five hundred medical personnel to West Africa, bringing the total number of medical workers and experts at the forefront of fighting Ebola to one thousand. The WHO welcomed China’s new commitment, calling it “a huge boost, morally and operationally.” 8. China releases its first proposed nationwide smoking ban in public spaces In November, the State Council’s Legislative Affairs Office released draft regulation on tobacco control for public consultation. The proposed regulation bans smoking in all indoor public areas and certain outdoor ones, as well as all forms of tobacco advertising, promotion, and sponsorship. China is the world’s largest producer and consumer of tobacco, which causes roughly one million deaths annually in China. China joined the Framework Convention on Tobacco Control in 2005, but due to resistance from the tobacco industry its anti-tobacco policies are among the least effective in the world. The former Ministry of Health in 2011 issued its own ban on smoking in indoor public areas, which was largely disregarded. 9. There is significant increase in private investment in the healthcare industry In contrast to the lack of progress in China’s healthcare reform, there has been a significant increase in private investment in China’s healthcare sector. Driven by economic growth and demographic change, private equity groups, pharmaceutical makers, healthcare providers, and Internet and E-Commerce companies all poured record amounts of money into hospitals, biopharmaceutical businesses, and medical device industries. A new round of mergers and acquisitions has been underway, involving deals worth a record total of $11.3 billion in the first eleven months of this year. 10. China plans to stop using the organs of inmates beginning next year In response to longtime international pressures, Chinese officials say that China will halt harvesting the organs of executed prisoners for transplant beginning in 2015. This new development could add uncertainty to China’s organ supply. It is estimated that each year three hundred thousand patients need organ transplants, but only around ten thousand organ transplants are conducted in China annually. According to an article published in the Lancet in 2011, about 65 percent of transplants are organs from deceased donors, 90 percent of whom were death row prisoners.

by Yanzhong Huang December 30, 2014 Asia Unbound

North Korea

Sony Hack: North Korea’s “Toughest Counteraction” to Obama’s “Proportional” Response

For most Americans and for President Obama, the turn of events over the last few days feels like a happy ending: 1) Sony and Seth Rogen have defended the American right to free speech, regardless of its quality; 2) the bad guys and their leader have been deprived of their internet connection for at least nine hours, plus the deplorable North Korean human rights record made its debut Monday on the agenda of the UN Security Council; 3) the Obama administration can claim victory for giving Sony and a few independent theaters some backbone while helping to formally expose North Korea’s human rights tragedy to the light of day. But, the North Koreans being North Koreans, it is unlikely that this story will end on Christmas Day. So it is worth revisiting the rambling albeit authoritative December 21 statement from North Korea’s National Defense Commission (NDC) to understand how Pyongyang is likely to view the latest turn of events. Interestingly, the NDC statement makes clear that despite the novelty of a state actor attacking a private corporation, North Korean authorities hold the U.S. government responsible for allowing The Interview to go forward in the first place. Guardians of Peace leaks of internal Sony communications include a conversation between Sony Pictures CEO and Chairman Michael Lynton and Assistant Secretary of State Daniel Russel in which Russel (correctly) did not object to the movie going forward and predicted that North Korea’s steamy reaction would eventually blow over. More intriguing, because they are not (yet?) backed by specific leaks to date, is the NDC’s reference to the U.S. human rights envoy Robert King (although not mentioned by name), who is alleged to have encouraged Sony to keep insults to the dignity of Kim Jong-un in the movie as a means by which to “vex the north Korean government.” Though the NDC statement attempts to maintain distance from the Guardians of Peace, it expressed satisfaction that the movie would be canceled and expressed praise for the “righteous deed” of the group of hackers, “which prevented in advance the evil cycle of retaliation—terrorism sparks terrorism.” Thus, a central question for consideration is whether and how North Korea may retaliate. In this respect, despite President Obama’s emphasis on the need for a U.S. “proportional” response and his references to the attack as an instance of “cybervandalism,” the North Korean rhetorical response, as usual, was anything but proportional. In the midst of North Korea’s denial of responsibility for the attack and distancing from the Guardians of Peace, the NDC stated that “our toughest counteraction will be boldly taken against the White House, the Pentagon and the whole U.S. mainland, the cesspool of terrorism, by far surpassing the ‘symmetric counteraction’ declared by Obama.” So much for the Obama administration’s signaling that a proportional response could serve as escalation control. Now the question is whether or how North Korea would make good on its threats, or at the least make more ominous threats in even more threatening language. Undoubtedly, the release of The Interview will draw additional threats and bluster from Pyongyang. Stephen Colbert long ago pointed out the foolishness of getting into a “threat down” with North Korea. (Note to North Korea: The Colbert Report did not end because of objections from Pyongyang.) That the North Korean leadership sees it as a hostile act is evidence of its own sense of vulnerability. The danger is that to the extent that Pyongyang feels cornered, it is likely to seek even more destructive ways to lash out, including through its ongoing nuclear and missile development, than were on display in the Sony hack.

by Scott A. Snyder December 24, 2014 Asia Unbound

China

The Top Ten Stories in South Asia, 2014

It was a busy news year in South Asia, with events that will have far-reaching consequences for the region. Between India’s historic election, a hard-won unity government in Afghanistan, and ongoing political turmoil in Pakistan combined with shocking terrorist attacks, South Asia made the front pages around the world for many different reasons. Like last year, I’ve tried to sift through the year’s developments and assess which will have lasting effects on the countries in the region and beyond. Herewith my personal selection of 2014’s most consequential stories in South Asia: The Bharatiya Janata Party (BJP) wins single-party majority in India, Narendra Modi becomes prime minister: Every general election in India is the world’s largest, and the 2014 elections to India’s Lok Sabha (House of the People) broke previous records. More than 550 million citizens turned out to vote in a nine-phase election stretching across six weeks. Narendra Modi took campaigning to a new level, criss-crossing the country to campaign, even appearing as a hologram before crowds he could not reach in person to stump for economic growth and good governance. And the BJP triumphed, coming out of a decade in opposition to secure a single-party majority, a feat not seen in India in thirty years. Markets responded positively to the news of a clear political mandate, with the Bombay Stock Exchange index reaching a then-record high the day the results were announced. While Modi placed great emphasis on economic growth during the campaign, his government’s reform efforts once in office have been less dramatic than expected; observers are now looking to his first full-year budget, due in February. Following protracted disputes, Ashraf Ghani and Abdullah Abdullah agree on power-sharing unity government in Afghanistan: The 2014 presidential election in Afghanistan unfolded over a lengthy five months, with an April first round, a June runoff, and ongoing accusations of election tampering thereafter. Intensive U.S. diplomacy through September helped achieve a power-sharing agreement for a “unity government,” allowing the country to move forward at a delicate time with international forces in the process of drawing down—and questions about regional stability increasingly voiced. With major high-level visits, China further cements development, economic, and strategic ties with Afghanistan, Bangladesh, Maldives, Nepal, Pakistan, and Sri Lanka: 2014 was the year that the People’s Republic of China unveiled its Silk Route and Maritime Silk Route connectivity strategies for the larger Asia region, complete with maps and major bilateral visits with South Asian countries. India has long worried about Chinese “encirclement” through what some analysts have termed a “string of pearls” presence throughout South Asia; in 2014 senior official bilateral visits at the head of government/head of state level took place between China and Afghanistan, Pakistan, Sri Lanka, Maldives, and Bangladesh, plus a foreign minister-level visit to Nepal (a 2014 visit of Nepal’s prime minister to China for an expo did not involve a Beijing stop). Each of these visits resulted in substantial announcements of economic assistance especially focused on infrastructure development. China has become a major economic partner—in many cases the top trading partner and/or leading foreign investor—in much of South Asia. President Xi Jinping’s visit to India in September began with economic optimism but quickly turned to tension after Chinese troops incurred across the undemarcated border with India. U.S. and NATO troops complete handover of security operations in Afghanistan, scaling back to supporting role: December 2014 marked the ceremonial end of NATO responsibility in Afghanistan, as well as the transition of U.S. troops to a “train and support” mission, with Afghan security forces now in the lead. The international troop presence will remain at around thirteen thousand in early 2015, with the drawdown to resume on its path to phasing down to a small assistance role by the end of 2016. At its peak in 2011, the international coalition troop presence in Afghanistan was 140,000. Many countries in the region fear that a rapid drawdown could result in regional instability, as in Iraq, if Taliban and other terrorist attacks increase. Pakistani civilian government squeezed between military and street mobs, another setback for democracy: Pakistan’s prime minister, Nawaz Sharif, came to power in a 2013 election widely heralded as a triumph for Pakistani democracy: the first peaceful transfer of power from one civilian government to another. Yet a year later, Sharif found his government beset with problems—especially a months-long “sit-in” street protest led by Imran Khan and the Pakistan Tehreek-i-Insaaf party that derailed the government from accomplishing anything for 126 days. Khan demanded that the democratically elected government step down as he claimed its victory was due to poll rigging. (Note: Khan called off his sit-in following the Taliban attack on a school in Peshawar in December.) Indian economy begins to pick up, regains “stable” rating, institutional investors return to India: During the last three years of India’s previous government, the country’s once-bright investment story lost its luster due to numerous corruption scandals and a more difficult investment environment. In 2012, Standard & Poor’s lowered its outlook on India to “negative.” Since India’s credit rating was already at BBB-, the lowest investment grade, a negative outlook put India at risk for downgrade to junk status. Prime Minister Modi, elected this year on a mandate for growth, made pitching for foreign investment among his top foreign policy priorities. Institutional investors came back quickly, pleased with the outlook for doing business, and India regained a “stable” outlook for its credit rating. Economic growth ticked up to 5.6 percent (from 5.0 percent in 2013), with both the IMF and World Bank forecasting growth over 6 percent in 2015. With a $2 trillion economy, India is the region’s economic engine. Awami League’s Sheikh Hasina reelected to five-year term in Bangladesh in low-turnout election: Following months of street violence and threats by the opposition party Bangladesh National Party (BNP) to boycott the national elections in Bangladesh should a caretaker government not oversee the process, Prime Minister Sheikh Hasina went ahead with elections on January 5. Half the seats were uncontested, due to the BNP’s boycott, and the ruling Awami League was reelected handily amid violence that killed eighteen. Official figures put voter turnout at 40 percent, but press reports suggested lower turnout of some 20 to 30 percent. The South Asian Association for Regional Cooperation (SAARC) summit convenes after three-year delay, passes important agreement on regional energy: The regional association covering the least-integrated region in the world, SAARC, has long been troubled by the difficult relationship between India and Pakistan, which has prevented the association from accomplishing anything significant in trade and interconnectivity. Making matters worse, the host country responsible for the summit in 2012—Nepal—failed to pull together a meeting in 2012 (and again in 2013) due to its own internal political troubles. That said, once the gathering convened in November 2014, it actually managed to result in an agreement on regional energy signed by all eight countries. Agreements on regional rail connectivity and motor vehicles, however, were not concluded when Pakistani Prime Minister Nawaz Sharif, the sole hold out, declined to sign. Taliban attack school in Peshawar, more than 130 children murdered: On December 16, Taliban terrorists attacked children attending a military school in Peshawar. As Pakistan and the rest of the world came to learn of the horrors unleashed on innocent schoolchildren—and as the Pakistani Taliban came forward to claim responsibility for the attack, termed a “reprisal” for military attacks on the Taliban—the gravity of Pakistan’s uncontrolled terrorism problem began to sink in. A public debate has resumed within Pakistan about the country’s direction, and its relationship to the Taliban, while arrests of the December 16 perpetrators are underway. Nearly simultaneously, a Pakistani court granted bail to one of the Mumbai attack planners, a Lashkar-e-Taiba terrorist, leading some leading experts to question whether the Peshawar attack would result in any change after all, or whether it would be business as usual, as usual. Sri Lankan president calls early election, surprise defection creates viable opposition candidate: Sri Lanka’s strongman president, Mahinda Rajapaksa, has handily won election twice, and his current term runs through 2016. In November, he invoked a provision in the Sri Lankan constitution that allows for early elections, which could theoretically allow him to secure a mandate through to 2022. Yet in a surprise development, an opposition candidate emerged when Maithripala Sirisena defected from Rajapaksa’s own party (as well as his cabinet) to energize and lead an umbrella opposition coalition. Sirisena appears to be attracting more support, with additional members of parliament leaving Rajapaksa for Sirisena. Rajapaksa is embattled internationally, with successive UN Human Rights Council resolutions raising questions about his government’s responsibility for human rights and humanitarian law violations at the end of the country’s civil war in 2009. His increasingly centralized management of Sri Lanka has also raised questions domestically about authoritarianism. The election has been set for January 8, 2015. Follow me on Twitter: @AyresAlyssa

by Alyssa Ayres December 24, 2014 Asia Unbound