Is the US Ready to Expand Its Strategic Economic Footprint in Southeast Asia?

pacific money | Economy | Southeast Asia

During her recent visit to the Philippines, Vice President Kamala Harris indicated that the United States is ready to intensify its economic participation in strategic sectors.

Is the United States ready to expand its strategic economic footprint in Southeast Asia?

US Vice President Kamala Harris visits a Philippine Coast Guard ship off the island of Palawan, Philippines, on November 22, 2022.

Credit: Twitter/Vice President Kamala Harris

US Vice President Kamala Harris landed in Manila last week, a visit intended to send a signal to the Philippines that they can count on the United States to economic and defense assistance. In addition to reaffirming defense ties, Harris announced a series of economic agreements covering energy, telecommunications and nickel mining. Amid rising geopolitical tensions with China, the visit also sent a broader message that the United States may be taking more seriously expanding its strategic presence in Southeast Asia by appealing to the economic interests of key regional allies.

november was a whirlwind month of summits for Southeast Asia, with the region hosting dignitaries and heavyweights from around the world at the G-20 in Bali, the ASEAN annual meeting in Phnom Penh, and the APEC summit in Bangkok. One of the overriding messages emanating from the region, reinforced time and time again at summits, was that Southeast Asian countries do not want to focus on geopolitical tensions between the great powers, but on their own economic agendas and development goals. As the region’s economic profile grows, the question is less about choosing sides and more about ASEAN countries facing off against global rivals like China and the US: what do they have to offer us?

For the past few years, it could be argued that China has been quicker to draw with a response. Through the Belt and Road initiative, as well as through other channels, China has increased its direct economic engagement with Southeast Asia at a faster rate than the United States, particularly in strategic sectors such as telecommunications and transportation. Examples of such a commitment include the Jakarta-Bandung high-speed rail line nearing completion in Indonesia; a metro line, the first of its kind, recently opened in Hanoi; and Chinese investment activity in the filipino Y Indonesian Telecommunications sectors

The initiatives presented by Vice President Harris in Manila could be interpreted as a US response to this Chinese activity, since they cover many of the same sectors, especially energy and telecommunications. What Reported by Rappler, Harris indicated that the US was “looking at a partnership with NOW Telecom for the deployment of 5G technologies in the Philippines” and that the US Department of Energy would partner with the Philippines to develop new forms of energy production, including renewable energy. Civil nuclear cooperation was even mentioned.

But perhaps the most interesting event of Harris’s trip was the announcement that the US would invest in the nickel-cobalt processing industry downstream of the Philippines. Nickel is an essential input in the manufacture of lithium-ion batteries and is expected to be in high demand as global clean energy transitions gather steam in the coming years.

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Indonesia, which has the world’s largest crude nickel ore deposits, has been enforcing bans on the export of raw nickel to increase investment in their downstream industries. On the whole, this has worked and resulted in significant investment (particularly from China) in industrial parks on Sulawesi, which are likely to be very important links in the next generation of clean energy supply chains.

The country with the world’s second largest supply of nickel ore? That would be the Philippines. US plans to invest in the Philippine downstream nickel industry would suggest that they have realized the importance of nickel in clean energy supply chains and the strategic need to ensure US companies have access to it.

At this point, the initiatives that Harris announced last week are only laying the groundwork; They send a signal to the Philippines about the readiness of the United States to intensify economic engagement in strategic sectors such as energy, telecommunications and nickel, sectors in which China has so far been most active regionally. We will have to wait and see to what extent these initiatives actually translate into reality. It is also unclear whether this approach is likely to spread beyond the Philippines, which already has a uniquely deep relationship with the United States.

But simply getting the message across is important, because he says the United States can no longer be satisfied with sitting back and waiting for a rules-based global system of free trade and the normative lure of American values ​​to do the heavy lifting in the region. Instead, management is actively focusing on strategic sectors and coming to the table with concrete plans for what it can offer potential partners and allies.

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