ASEAN–GCC Relations in Transition: Diplomatic Engagement to Economic Integration

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Read and Download the paper: ASEAN–GCC Relations in Transition- Diplomatic Engagement to Economic Integration

Regional cooperation is one of the factors that shapes economy of any country. The awareness of the importance of this cooperation is one of the backgrounds for the establishment of regional cooperation organizations such as ASEAN (Association of Southeast Asian Nations) and GCC (Gulf Cooperation Council). ASEAN (Association of Southeast Asian Nations) is a regional organization that accommodates Southeast Asian countries to enhance economic and security cooperation. ASEAN consists of 10 member countries, including Brunei, Thailand, Indonesia, Cambodia, Philippines, Myanmar, Malaysia, Vietnam, Laos, and Singapore – although Timor Leste is slated to become 11th member. On the other hand, Gulf Cooperation Council (GCC) accommodates 6 Middle Eastern economies. As one of the largest economic blocks in the world, ASEAN cooperates with Saudi Arabia, the United Arab Emirates, Qatar, and other GCC member countries in the spheres of economy, trade, as well as cultural exchange. Although trade and investment activities between ASEAN and Gulf Arab countries have been carried out since the 1970s, the relationship between ASEAN and the GCC was only established in 1990 through the first contact between ASEAN and the GCC. At that time, the Minister of Foreign Affairs of Oman,

Yousuf Bin Alawi as Chairman of the GCC Council of Ministers expressed the GCC’s desire to establish formal relations with ASEAN….

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COGGS Impact Paper: ASEAN in Addressing Drug Trafficking in the Golden Triangle Region

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Click below to Download the Paper

ASEAN in Addressing Drug Trafficking in the Golden Triangle Region (2)

Introduction

Muhammad Indrawan Jatmika

Asisstant Professor, International Relations Department Universitas Pembangunan Nasional Veteran Jawa Timur

Adrian Naufal Rizqullah

Student, International Relations Department Universitas Pembangunan Nasional Veteran Jawa Timur

Drug trafficking is a significant threat that has garnered substantial attention in Southeast Asia. Classified as a form of transnational crime, drug trafficking poses a severe threat to international security and stability (Anggraini, 2016). The issue of illicit drug trade has been a long-standing problem in the region, making Southeast Asia one of the areas most affected by this global challenge. Central to this issue is the Golden Triangle, a region recognized as a major hub for drug production and trafficking. The Golden Triangle spans parts of Eastern Myanmar, Northern Thailand, and Western Laos, making it a focal point for the cultivation, production, and distribution of opium on a global scale. During the 1970s and 1980s, this region emerged as the world’s largest opium producer (Anggraini, 2016). The Golden Triangle remains one of the largest narcotics-producing regions globally, contributing approximately 60% of the world’s opium and heroin supply (BNN, 2018). The thriving drug trade in this region is facilitated by international drug cartels and syndicates, which have established extensive networks with groups operating in Iran, Pakistan, and Afghanistan. These networks are instrumental in smuggling narcotics into Southeast Asia through the Golden Triangle, further establishing the region not only as a production hub but also as a strategic transit route for drug trafficking (Othman, 2004). The countries within the Golden Triangle—Myanmar, Thailand, and Laos—are often characterized by weak border controls, which exacerbate the problem of transnational crime. This lack of effective oversight has been exploited by non-state actors, who pose significant threats to regional security. These actors utilize the Golden Triangle as a transit point to supply narcotics to other Southeast Asian nations. According to the United Nations Office on Drugs and Crime (UNODC), Southeast Asia’s narcotics trade is one of the busiest globally, rivaling the Golden Crescent region (comprising Afghanistan, Pakistan, and Iran) in the Middle East (Yanuarizki, 2016).

In addition to serving as a trafficking route, the Golden Triangle is a leading producer and cultivator of opium (Yanuarizki, 2016). Myanmar, Thailand, and Laos are the primary contributors to drug production in Southeast Asia. In northern and western Laos, local farmers cultivate opium extensively for distribution, predominantly within the region. Due to its strategic location, Thailand often serves as the initial destination for drugs transported from Myanmar and Laos before being distributed to other areas. Beyond opium, the Golden Triangle is also known to produce various narcotics, including methamphetamine, amphetamine, heroin, kratom, and marijuana (Anggraini, 2016). The repercussions of drug trafficking extend beyond the borders of the Golden Triangle, impacting other countries across Southeast Asia. This issue demands the attention of the Association of Southeast Asian Nations (ASEAN), a regional organization that has taken an active role in addressing transnational crime, including drug trafficking (Anggraini, 2016). Many Southeast Asian countries are characterized by weak governmental institutions, which contribute to the prevalence of transnational crimes, including drug trafficking. The rapid evolution and increasing scale of the drug trade necessitate immediate and coordinated responses from ASEAN as a regional organization. ASEAN has actively facilitated collaboration among Myanmar, Thailand, and Laos to address these challenges (Aryani & Leksono, 2017).

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GCC-Africa Ties: Can Desert Find Comforting Shade of Green?

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Ayanangsha Maitra, Prattyush Kala

AS THE STORMS of pragmatic geopolitics unsettle old certainties, their ripple effects—most visible in the soaring prices of essential food across African nations—are compelling the Gulf and Africa to recalibrate their equations. Gulf Cooperation Council (GCC), the phenomenally prosperous hexad, is testing new paths for diversification and influence, making Africa, a prime ground for their engagement, soft power and development as well as capacity building partner. The fastest growing markets, and logistical corridors of Africa offer new possibilities to GCC but the one major generic factor brings the two regions together: the linguistic fraternity. At least 10 nations in the mosaic continent of 54 nations speak Arabic.

[ Screen grab , Business Insider Africa]
With lack of arable land in the region, Saudi Arabia, the UAE, and Qatar have turned to the  nations across the continent, known for its vast arable as well highly fertile lands not only to secure affordable food supplies but also to stabilize energy flows through investments in solar, wind, and LNG projects.

 

Saudi Arabia’s Export & Import Composition with Africa, 2023
[ Courtesy: Atlas of Economic Complexity and Control Risks ]
Political stability across geographies of Africa remains a priority for GCC. Horn of Africa and Red Sea regions are adjacent to critical maritime routes like Suez Canal. The blue line has been under watch of the GCC. GCC nations have expanded their military bases and increased diplomatic presence to safeguard trade as well as project power. Eritrea (Assab port, leased for 30 years) and Somalia host military bases of  UAE. UAE also runs bases on Socotra and Perim islands in Yemen in order to secure strategic maritime routes like the Bab El Mandeb Strait and the Gulf of Aden, support counter-terrorism, anti-piracy efforts, and provide regional influence through military and economic cooperation.

In the horn region, Saudi Arabia has inked a 92-year contract to build and operate a Saudi Logistics City in Djibouti’s port area. This logistics zone is intended to serve as a major hub for Saudi exports and commerce across Africa. Djibouti port is a critical gateway for African trade, and the logistics zone will provide Saudi Arabia with enhanced access to African markets. 

 

Top Trade Partners of Middle East and North African (MENA) Countries
[ Courtesy: Visual Capitalist]
The cultural dimension is also significant as the bonhomie gets warmer. GCC nations have been funding the building and renovation of mosques, Arab-Islamic centers, and cultural events across Africa. Saudi Arabia, the UAE, Qatar, and Kuwait, have come in the help of Ethiopia, Kenya, Senegal, Sudan, Nigeria, and Egypt for cultural and societal needs. The Gulf’s humanitarian aid efforts in Africa are also highly commendable.

Economic partnership is the forefront of the GCC-Africa ties. Over $100 billion has been invested by GCC countries in Africa in recent years, with the UAE leading at $59.4 billion, followed by Saudi Arabia with $25.6 billion, and Qatar at $7.2 billion. These investments have primarily targeted capacity building in the continent, infrastructure, energy, agriculture, and logistics. In the shipping domain too, GCC has made a significant mark. UAE’s DP World, operates ports in over ten African nations, transforming them into regional trade hubs and creating massive local employment. Saudi Arabia’s ACWA Power has committed $7 billion to several energy projects – which are enabling access to electricity, healthcare, and education.

Saudi Arabia, the UAE, and Qatar have contracted to get access to large tracts of farmland in Ethiopia, Sudan, Kenya, and Tanzania to produce cereals, fruits, and. Saudi Star’s rice farm in Ethiopia  is projected to expand to 500,000 hectares. Gulf  enterprises are also investing in agro-processing units, ensuring value-added food production before export. Complementary infrastructure, including irrigation systems (e.g., Qatar in Senegal, Saudi-funded dams in Mali and Chad) and logistics (e.g., DP World’s ports), strengthens food supply chains.

Africa’s food inflation rate is a significant factor for greater level of cooperation. Horrifying increases in prices for staple items such as cereals, meat, dairy, oils, fruits, and vegetables send shockwaves to households to the political corridor. Global South actors such as Angola, Burundi, Egypt, Ethiopia, Ghana, Kenya, Tanzania, Malawi, Nigeria, Sudan, South Sudan, South Africa, Uganda, Zambia are facing severe food inflation.

At a time edible essential items are hitting hard across Africa,  UAE has invested in livestock, poultry, fish processing, and date palm cultivation in Egypt, leveraging the country’s global leadership in date production. Saudi Arabia, through SALIC, has acquired significant stakes in Olam Agri Holdings, with Egypt as a key node. The $5 billion injection from the Saudi Public Investment Fund into Egypt in 2025 underscores the Gulf’s long-term commitment to agribusiness, infrastructure, and food processing. Egyptian ministries are streamlining policies to facilitate such investments, while promoting joint ventures, tech collaboration, and regional food security strategies involving Egypt, the UAE, Jordan, and Iraq.

Nevertheless, triangular partnerships between GCC, South Asia, and Africa are  emerging. In these arrangements for food security and economic integration, South Asia provides agri-tech and expertise, Africa offers land and labour, and the GCC supplies capital and logistics. The partnership is growing into other sectors, including mining (e.g., lithium in Zambia), tourism, real estate, and industrial development.

Saudi Arabia and UAE have earned reputation in several African defence headquarters, by offering professional military training. The gulf nations are active in conflict mediation, as seen in Qatar’s involvement in Chad and the Congo-Rwanda peace talks. Furthermore, GCC are engaging with the African Union and AfCFTA to influence policy and trade standards across the continent.

Regional conflicts dent Middle East performance in 2025 Soft Power Index | Arab News

Yet, these challenges weigh heavily on the capitals of both the GCC nations and African states. Political instability in several African states, including military-led governments, sovereignty concerns around land acquisitions and foreign military presence, and competition from other global actors like China and EU pose risks. In an era of multipolarity and coalition, areas of cooperation are emerging faster. These may range from port access for landlocked African nations, development of healthcare and education infrastructure, industrial investments in critical minerals and hydrocarbons, upskilling African youth for Gulf labour markets, easing migration and visa policies, to spheres of technological collaboration in climate-resilient agriculture.

Being the bridge nation between the two, Egypt comes into the scene with big prospects and bigger dreams. Strategically located at the intersection of Africa, the Middle East, and Europe, the resurgent economy offers Gulf investors access to COMESA and AfCFTA markets, while the Suez Canal facilitates efficient trade flows. GCC sovereign wealth funds – such as Saudi Arabia’s PIF and UAE’s ADQ – have invested billions in Egyptian companies and infrastructure, using the country as a launchpad into Africa. Egypt’s strong diplomatic ties with both the GCC and African nations further position it as a mediator and platform for development collaboration. Through the Egyptian Agency of Partnership for Development (EAPD), Gulf-backed aid and technical assistance are channelled into African development initiatives.

GCC-Africa bonhomie goes far beyond cultural affinity. It is emerging as a strategic recalibration that integrates economic ambition with geopolitical foresight, development diplomacy, and shared aspirations for stability.

Security cooperation is strengthening, but food security remains the decisive front where futures will be won or lost. Africa’s fertile lands and growing agricultural capacity, combined with GCC expertise in agri-tech, fertilizers, irrigation systems, and farmer upskilling, can forge a pathway to mutual resilience. As Africa explores its abundance of Rare Earth Minerals, the Gulf finds yet another opportunity to contribute meaningfully – helping the continent unlock prosperity while diversifying its own economic future in a sanction-disrupted global marketplace.

 

GCC nations like UAE, with its reputation as a hub for agricultural science and growing ambition as a global AI enabler, is well-positioned to empower Africa with AI Technology. GCC has the ability to upskill African farmers and producers into more productive, applying superior technologies. Saudi Arabia and Qatar, with their deep financial and knowledge resources, can complement this vision by powering Africa’s transitions in energy, connectivity, and mobility – essentials for building a 21st-century knowledge economy.

For GCC nations to cement a constructive role in Africa’s transformation, it must think long-term, prioritize trust-driven partnerships, and align itself with each African nations aspirations. While the two are vocal about South-South cooperation, basics such as food and energy security, and upskilling youths should be kept on top priority in an era to be governed by AI. As robust Global South actors African partners across public and corporate have to learn from the past in order to remain a committed partner of the GCC.

[ Ayanangsha Maitra  and Prattyush Kala work at COGGS. Opinions expressed not necessarily reflect the view of COGGS. ]

GCC-Africa Ties: Can Desert Find Comforting Shade of Green? Read Post »

Will Red-Carpet Treatment to US Goods Boost Indonesia’s Economy?

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Dhea Marsha Ananda

 

THE PROGRESS OF Indonesia‘s international trade is key to economic progress, with a focus on shifting from a commodity-based economy to investment, production, and high-value services through strategic policies. The goal of Indonesia’s economic transformation is to improve international trade ties and solidify Indonesia’s position as a global economic leader by focusing on the development of human resources, energy, infrastructure, transportation, public finance, industry, trade, and agriculture. Indonesia’s international trade growth is also influenced by far sighted economic policy. The closed model of Indonesia’s international trade has given way to a more open, globally linked model that is centered on exports as the world economy changes.

 

Indonesia’s trade strategy has developed rapidly, with the aim of becoming a competitive and advanced economic power. One of the strategies driving Indonesia’s economy is export-import activities, by reforming tariff policies and increasing export competitiveness. Currently, Indonesia is focusing its efforts on increasing export activities as a strategy to expand its market reach. Specifically in June 2025, Indonesia’s exports saw an increase of 11.29% year-on-year, reaching a total of U$ 23.44 billion, which is higher than the market forecast of 10.41% (Suroyo, 2025). This surge can be attributed to several factors, including:

I. Acceleration of exports in anticipation of US tariff policy

This may occur due to new tariff policies from the US. Indonesia has successfully reached an agreement that reduces US tariffs from 32% to 19%, and exporters are accelerating shipments before the deadline takes effect.

II. Non-oil and gas export performance

III. Commodities such as metal ore, slag, and ash experienced a surge of up to 3,736.49%.

IV. Animal/vegetable fats and oils increased by 22.5%, contributing 2.85%.

V. Precious metals and jewelry rose by 104.44%, contributing 2.59%.

VI. The agriculture, forestry, and fisheries sectors showed an increase of 49.55%.

As a result, exports have achieved positive cumulative growth. As of June 2025, Indonesia’s national export value reached US$135.41 billion, marking a 7.70% increase compared to the same period in the previous year. This growth reflects the strengthening performance of the international trade sector, driven by efforts to optimize export markets and diversify leading commodities.

Tabel 1. The Value of Exports (Million US$), 2025

 

This happened because of an evaluation of import and export tariffs. In the recent most trade negotiation, Indonesia has eliminated tariffs on more than 99% of US goods and scrap all non-tariff barriers facing American firms. However, there are exceptions for certain products, such as alcoholic beverages and pork, which are specifically excluded from the zero percent tariff provision. The US government reduced import duties on Indonesian goods from 32% to 19% in reaction to this strategy.

The US Census Bureau reports that between January and May 2025, US exports to Indonesia came to $ 4.21 billion, or Rp 67.4 trillion. In comparison, during the same period, U.S. imports from Indonesia reached $13.92 billion, or nearly Rp 222 trillion. In 2024, the United States exported goods worth  $10.15 billion (around Rp 162 trillion) to Indonesia, while its imports from Indonesia amounted to $28.05 billion (approximately Rp 448 trillion). The following 10 biggest non-oil and gas export goods from the United States to Indonesia in 2024 are the target of the 0% tariff policy, according data from the United Nations (UN) Comtrade cited by Trading Economics (July 17, 2025):

I. Seed oil, grains, oleaginous fruits, seeds, and fruits, with a combined worth of $ 1.26 billion (about Rp 20.1 trillion).

II. Boilers, machinery, and nuclear reactors, totaling $1.11 billion (about Rp 17.7 trillion).

III. Organic compounds, which are worth about Rp 14.6 trillion ($ 914.96 million).

IV. Animal feed, residues, and food industry waste, totaling $ 618.06 million (about Rp 9.8 trillion).

V. Spacecraft and aircraft valued at $ 523 million, or roughly Rp 8.3 trillion. 6. Electronic and electrical equipment, valued at around Rp7 trillion ($438.46 million).

VI. Electronic and electrical equipment, valued at around Rp7 trillion ($438.46 million).

VII. Waste, fibrous cellulose products, and wood pulp, valued at $400.76 million (about Rp6.4 trillion).

VII. Equipment for photography, technology, medicine, and optics, worth $ 271.24 million (about Rp 4.3 trillion).

VIII. Food items, dairy products, eggs, and honey, totaling $214.76 million (about Rp 3.4 trillion).

IX. Plastics, valued at around Rp 3.2 trillion ($ 204.36 million).

It is anticipated that imposing zero percent tariffs on certain items will boost market access, boost bilateral trade volume, and promote expansion in key industries in both nations. It can conclude that Indonesia’s 2025 international trade policy transformation is a strategic move toward improving economic competitiveness through tariff policy reforms and export activity optimization.  The 11.29% increase in exports in June 2025 is concrete proof that the national economy may benefit from quicker shipping tactics, commodity diversification, and the performance of the non-oil and gas industry. Mutually beneficial trade relations have been strengthened through bilateral trade cooperation with the United States, which includes the implementation of zero percent tariffs on the majority of commodities, a reduction in US import tariffs on Indonesian goods from 32% to 19%,  Trade data indicating a surplus for Indonesia suggests significant possibilities for further market expansion and Indonesia has the potential to become one of the major economic powers in the world if it adopts a consistent and deliberate approach.

 

[ Dhea Marsha Ananda is an intern at COGGS. ]

References

Budiman, A. T. (2025). Hit by US tariffs, Indonesia plans to sell shrimp to China instead. PANDEGLANG: Reuters.

Dewi, N. K. (2025). 99 Persen Produk AS Dipatok Tarif 0 Persen Masuk Indonesia. Kok, Bisa? Jakarta: Tempo.com.

Gulo, D. P. (2024). ANALISIS DAMPAK KEBIJAKAN PERDAGANGAN BEBAS ASEAN TERHADAP PERTUMBUHAN EKSPOR INDONESIA KE PASAR ASEAN. Jurnal Ilmiah Ilmu Administrasi Negara , 751-760.

Sudarshan Varadhan, F. N. (2025). Indonesia nickel slump piles pressure on coal miners hit by falling exports. Singapore: Reuters.

Suroyo, G. (2025). Indonesia’s exports rise again in June as U.S.-bound shipments jump. Jakarta: Reuters.

WARDANA. (2024). Indonesia’s Trade Policy Regime amidst Global Challenges. The University of Adelaide SA 5005 Australia, 1-6.

 

 

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Bears, BRICS and Garudas: How Indonesia “Socialized” with Russia?

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Andhini Octa Maharatih and Alinda Rana Permata Surya

 

On the sidelines of the 28th St Petersburg International Economic Forum , June 18-21 2025, Russian President Vladimir Putin held a meeting with President of Indonesia Prabowo Subianto during his state visit. [Photo: RIA Novosti/ Kremlin Photo Bank. ]
◉  THE RELATIONSHIP BETWEEN Indonesia and Russia has been warm since before Indonesia’s independence. Russia (the Soviet Union) played a role in supporting Indonesia’s independence and actively advocated for its right to sovereignty. Even after Indonesia officially gained independence, cooperation between Indonesia and Russia (the Soviet Union) has continued to this day, beginning during the era of Indonesia’s first president, Soekarno. The closeness between Indonesia and Russia has been reflected in strong diplomatic relations and bilateral cooperation since 1950—five years after Indonesia became an independent nation. These diplomatic ties have been mutually beneficial. Early on, Indonesia purchased a pair of fighter jets and two helicopters from Russia. In return, Russia requested payment in the form of Indonesia’s primary commodities, such as rubber and palm oil.

In addition to defense and economic cooperation, Moscow offered several scholarships for Indonesian students to study in the nation. Nikita S. Khrushchev, the Soviet leader at the time, warmly welcomed Indonesian students to the University of Russia in Moscow in 1960. Infrastructure development, such as the construction of the Bung Karno Stadium, was also credited largely to Soviet support.

 

Why Indonesia Prefers Russian Defence Supply Over American?  

Indonesia has viewed Russia as a strategic partner in defense and security technology development. In addition to being a producer of modern weaponry, Russia offers relatively low prices and simpler regulations for defense equipment sales. Although Indonesia has not yet fully developed its own defense equipment, Russia has shown openness to technology transfer, allowing Indonesia to modify and adapt this technology domestically. This contrasts with the United States, whose strict regulations are seen as less favorable to Indonesia. As a result, Russia has become a more attractive partner for long-term defense and diplomatic cooperation.

Although relations cooled after the Indonesian Communist Party’s (1965 G30S) rebellion—when Indonesian students in Russia were repatriated—ties gradually improved after the political situation stabilized.

 

New Order and Post-Suharto Era

During the New Order regime, Indonesia leaned more toward the West due to the lingering effects of the communist threat. Under President Soeharto, Indonesia’s relationship with Russia began to recover after 22 years, marked by a diplomatic visit to Russia in 1989.

Following this, Indonesia entered a difficult period of political transition, facing domestic conflicts that required inward focus. Relations with Russia improved again under President Megawati Soekarnoputri, the fifth President of Indonesia. Under her leadership, cooperation that had stalled was revived in 2003, especially in technology and economic development.One example was the cooperation between Vneshtorgbank and PT Bank Mandiri to support Indonesia’s banking system during a global financial crisis. Although Megawati’s presidency was brief, she reopened channels for engagement between the two nations.

President SBY’s Era

President Susilo Bambang Yudhoyono (SBY) continued and expanded this cooperation. Beginning in 2007, SBY intensified Indonesia’s bilateral relations with Russia, focusing on new areas such as investment, defense, and natural resources—including bauxite, aluminum, oil, and gas. These areas marked a new phase in Indonesia–Russia cooperation.

President Susilo Bambang Yudhoyono also promoted soft power diplomacy, particularly in tourism, and collaborated with Russia in defense modernization. Cooperation included technology transfers to Indonesia’s domestic defense industries such as PT Pindad, PT Dirgantara Indonesia, and PT PAL.

Indonesia’s closeness with Russia was evident during SBY’s presidency, especially in economic sectors. For instance, palm oil exports—although only 2% of Indonesia’s total exports in 2011—were considered significant. When talks of Indonesia joining BRICS arose, SBY remained neutral, stating that Indonesia was transitioning from a developing to an emerging economy and aimed to strengthen its national economy before joining.In competing for the Russian market, Indonesia faced challenges, especially from European countries dominating exports. To increase competitiveness, Indonesia sought to promote exports of automotive products, footwear, tires, and furniture. Trade between Russia and Indonesia increased by 4.9% in the 2011–2014 period for non-oil and gas sectors and continued to improve in 2016.

 

Jokowi’s Era, Connectivity and Strategic Expansion

Under President Joko Widodo (Jokowi), Russian investment in Indonesia significantly increased. Jokowi encouraged local governments to establish sister-city relationships to attract long-term and sustainable investments. Several sister-city partnerships were established, including:

  • Jakarta–Moscow (continued from SBY’s era)
  • Palembang–Belgorod
  • Yogyakarta–St. Petersburg
  • Magelang–Tula

The nature of these city connectivity projects are different, while all of them cementing Indonesia- Russia ties. The Magelang–Tula partnership, for instance, is based on similarities in geographical conditions. Tula is an advanced city in industry and agriculture, while Magelang, located between Mount Merbabu and Mount Sumbing, has a cool climate suitable for highland farming. The partnership, however, focuses more on public services, branding, economic development, and environmental management.

Meanwhile, the Yogyakarta–St. Petersburg partnership emphasizes cooperation in arts, culture, tourism, and education—proving effective in strengthening diplomacy during the Jokowi era. Long-term investments were also pursued, such as the oil refinery in the Jenu area, Tuban. This refinery, under cooperation between PT Pertamina and Russian company Rosneft, has been under construction since 2016 and is projected to process 30 million liters of fuel daily, with a capacity of 320,000 barrels per day. This project aims to enhance national energy security and reduce fuel imports.Despite geopolitical challenges such as the Russia–Ukraine conflict, Indonesia maintains a neutral, “free and active” foreign policy—supporting Ukraine’s independence while still partnering with Russia.

 

Indonesia in BRICS

[Foreign Minister of Indonesia Sugiono during the arrival of head of delegations at Kazan Expo to attend the 16th BRICS summit in Kazan, Russia. Kirill Zykov / BRICS-KAZAN- RIA Novosti]
Indonesia’s diplomatic presence is expected to grow further following its entry into BRICS on January 6, 2025. This move comes amid a global trade war triggered by U.S.-imposed tariffs. BRICS aims to challenge Western dominance, particularly that of the U.S. and its allies. Indonesia’s entry strengthens the bloc and provides new opportunities for economic cooperation. As a BRICS member, Indonesia can benefit from easier access to Russian defense technology and increased investment opportunities. Russia, in turn, sees Indonesia as a vital partner in Southeast Asia and a gateway to ASEAN markets. This partnership opens new avenues for cooperation in energy, technology, defense, and trade. On the global stage, both nations are likely to support each other in international forums—especially regarding world order reform, state sovereignty, and support for Palestine. Indonesia’s free-active foreign policy adds value to BRICS, helping position the bloc as an alternative for developing nations beyond Western influence. However, Indonesia must balance its global diplomacy carefully, ensuring that closer ties with Russia do not strain its relationships with Western nations like the U.S. and EU. With Indonesia joining BRICS and Russia seeking to expand its global influence, the bilateral relationship is expected to become more intensive, strategic, and mutually beneficial.

Also Read: The Falcon and Bear Braving a Storm: UAE and Russia in the Dawn of Multipolarity

[ Andhini Octa Maharatih and Alinda Rana Permata Surya are interns at COGGS from Surabaya, Indonesia, and students of International Relations at UPN Veteran Jawa Timur University. The opinions expressed do not reflect the views of COGGS. ] 

 

 

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Economist Rajiv Kumar at GSEF 2025: Six Defining Global Transitions

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In a speech at the plenary session of Global South Economic Forum, Rajiv Kumar, a prominent economist and advisor to COGGS, delivered a powerful message on the world’s ongoing transformations and the pivotal role the Global South can play in shaping the new world order. Here’s a detailed look at his key arguments and the call to action he extended to the international community at the forum on June 17, 2025.

The World in Historical Flux

 

While addressing the GSEF, Kumar, the former Vice Chairman of Niti Ayog,  Indian government’s finance planning thinktank opened by stressing that the world is currently experiencing an “unprecedented historical transition.” He argued that the magnitude and nature of these changes are unlike anything seen before, presenting both challenges and opportunities, especially for the nations of the Global South.

Six Defining Global Transitions

Drawing from his forthcoming book, “The Everything All At Once: The Six Global Transitions in the World Today,” Kumar outlined the six critical transformations shaping our era:

I. Geopolitical Shift: The previous notion of “the end of history” is now outdated. Instead, Kumar says, “a new history is beginning at the moment,” marked by shifting global power dynamics.

 

II. Geoeconomic Fragmentation: He challenged the idea that the world is economically flat, explaining that barriers, protectionism, and fragmentation are on the rise.

III. Geophysical Realignment: The locus of prominence is shifting from the Euro-Atlantic world back to the Asia-Pacific – a return to a historical norm prior to Western hegemony.

IV. Technological Revolution: Kumar described today’s technological advances, especially in artificial intelligence, as more dramatic and rapid than any prior industrial or technological revolution. He warned of an imminent “singularity,” where machine intelligence outpaces human intelligence.

V. Climate Change Crisis: He highlighted the urgent threat climate change poses, particularly to the Global South, criticizing northern nations for rhetorical support without adequate action. Kumar warned of a narrow 20-year window to avert irreversible damage.

VI. The Rise of the South: Noting that 85% of the world’s population resides in the South, contributing some 40% of global GDP—and now driving global growth more than advanced economies—Kumar underscored the region’s economic and demographic dynamism.

The Opportunity: Making This the Century of the South

Amidst these transitions, Kumar made a compelling case for the Global South to “work together in solidarity and strategic collaboration.” He further emphasized that the South is not monolithic but contains its own “north” and “south.”

He identified the expanded BRICS grouping (now including countries such as the UAE, Ethiopia, Egypt, Indonesia, among others) as the ideal platform to drive this movement forward. However, he urged BRICS to become more than a “talking shop,” advocating for concrete progress on:

  • Climate change mitigation,
  • Food security,
  • Harnessing artificial intelligence for development,
  • Exploring the creation of a new reserve currency.

India and China: Partners in Shaping the South

Economist Rajeev Kumar highlighted a special responsibility for India and China, the two largest civilizational economies. He acknowledged China’s lead, especially in strategic technologies, and proposed that “as a senior partner we look towards China to give us the lead for how to create the South-South cooperation and make it effective, implementable and operational.”

 

Kumar concluded with a call to devise “the modality for BRICS and, within that, India-China bilateral cooperation to play the role of making the 21st century the century of the South.” He appealed for the opportunity to design and operationalize “a new world order which is rule-based and not hegemonic.”

 

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ASEAN Economic Integration in the Face of Global Shocks: Towards Sustainable Supply Chains

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Andhini Octa Maharatih and  Dhea Marsha Ananda

ECONOMIC INTEGRATION INVOLVES aligning and unifying economic policies between countries by reducing or eliminating tariff and non-tariff barriers, with the primary goal of boosting trade and lowering economic costs. One such example is the ASEAN economic integration that formed the ASEAN Economic Community (AEC). ASEAN economic integration is when  ten member countries join together to form a single market-based economic community with the aim of creating an efficient and integrated single market and production base across all member countries. There are several stages in economic integration:

I. ASEAN Free Trade Area (AFTA): Established in 1992 with the aim of reducing tariffs and non-tariff barriers among ASEAN members. The six member countries began to gradually reduce their tariffs until 2010, when tariffs were reduced to 0–5 percent. Vietnam, Laos, Myanmar, and Cambodia, which joined later, were given additional time until 2015.

II. Complementation of Brand-to-Brand/ASEAN Industrial Cooperation (AICO): This policy has been in effect since 1988 and allows manufacturing companies throughout ASEAN to lower their tariffs. One such industry is the auto parts industry.

III. AEC Blueprint 2015 and 2025: The AEC was formally established at the end of 2015, with the aim of creating a single market and production base for ASEAN member countries. The AEC Blueprint 2025 enhances integration through connectivity, digitalization, inclusion, and regional competitiveness..
IV. Regional Economy and RCEP Regional Comprehensive Economic Partnership(RCEP) was signed in November 2020 by ASEAN together with Australia, China, Japan, South Korea, and other countries. Since January 2022, RCEP will expand trade integration in the Asia-Pacific to cover 30% of the world’s total population and GDP.

The purpose of this economic integration stage is to identify differences in the levels of development and capacity of ASEAN member countries. With this, ASEAN can move from a basic stage of integration to a deeper one with minimal risk and allow time for all ASEAN member countries to adapt.

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Additionally, economic integration has a primary scope of a common market, where trade regulations and service standards begin to align. There is also harmonization of priority sectors, meaning ASEAN has selected 12 specific sectors to enhance competitiveness and intra-regional investment. Following that is financial integration, where ASEAN has an ASEAN+3 inter-country savings fund to assist countries in the event of a sudden financial crisis. Lastly, there is the institutional framework or ASEAN’s main rulebook to ensure all countries integrate under clear rules. Besides the rulebook, there are mechanisms to monitor ASEAN’s progress to ensure integration is carried out in accordance with plans and regulations (Menon, 2010).

ASEAN economic integration also faces several challenges and has its advantages. The ASEAN Economic Community has created a single market and a shared product base of more than 600 million consumers, as well as expanding market opportunities for companies within the ASEAN region. Integration also encourages domestic reform in many ASEAN member countries, such as legal transparency, investment climate, and better governance. Additionally, it has positioned ASEAN as a global production and integration hub through the Regional Comprehensive Economic Partnership (RCEP). However, despite the numerous benefits, the ASEAN Economic Community also faces challenges such as economic disparities among member states, for example, the significant differences in GDP per capita among ASEAN members, which hinder policy harmonization and market access. There are also institutional limitations, as ASEAN relies on consensus and lacks a strong central authority, leading to slow policy implementation and inconsistencies across member states. Finally, there are non-tariff barriers such as inconsistent product regulations and trade procedures (Kiyoshi Kobayashi, 2018).

It can be concluded that economic integration creates an open and unified area to expand the market. In a systematic effort to build a Single Market and a unified production base among ASEAN member states, ASEAN economic integration is being implemented in stages. The AEC has enhanced economic opportunities, inclusive growth, and regional competitiveness in ASEAN. However, full success still depends on ASEAN’s ability to address internal issues such as development delays, infrastructure problems, and legal challenges.

Supply Chain  in ASEAN

The supply chain in the ASEAN region is a system of cooperation between ASEAN member countries in effectively managing services, goods, information, and investment. It manages everything from raw materials, manufacturing processes, distribution, to the end consumer (Secretariat, 2023). The supply chain aims to improve ASEAN’s economic competitiveness at the global level by maintaining the smooth flow of trade, especially amid the challenges of the economic crisis. In addition, ASEAN also wants to have a supply chain that is inexpensive, fast, and stable. To achieve these objectives, ASEAN has a framework that serves as its primary guide: efficiency, ensuring that all processes are carried out efficiently without wasting time, costs, or resources. Resilience is also a key component, preparing systems to remain operational even during crises and ensuring that trade continues uninterrupted.

The supply chain in ASEAN can operate effectively due to investment coordination, where each country agrees to jointly fund infrastructure and technology projects. There is also the adoption of new technology, with ASEAN encouraging all parties to use modern technology in logistics and trade. Finally, there is the enhancement of human resource skills by training workers to manage modern logistics systems.

ASEAN’s main focus area currently is digital supply chain innovation, where ASEAN focuses on technology integration for the industrial revolution and the transformation of traditional transformations into digital ones in order to compete globally. Supply chain efficiency and resilience are ASEAN’s main focus in facing current global challenges. The five focus areas currently being developed by ASEAN are cross-border regulation and tariff cost reduction, digital transformation as a form of efficiency and more effective and easy supply chain tracking, ASEAN vertical integration both between companies and between countries to encourage partner trade and improve information exchange in the integrated supply chain, and finally industrial innovation to ensure product quality, durability and efficiency in the regional realm with easy access..

Meanwhile, the five ASEAN strategies and main actions in the regional supply chain include specific digitalization as a strengthening of the ASEAN single window, disaster mitigation policies for supply chain resilience and reduction of non-tariff measures that hinder, third is the diversification of sources and markets to be targeted as a strong regional coordination, fourth is the sector development roadmap as a coordination tool between the public and private sectors during economic obstacles, the last is economic corridors to improve the supply chain through an interconnected infrastructure network in market demand and supply, facilitating technology transfer through innovation partnerships and investment promotion to accelerate digitalization in the ASEAN economic sector.

 

 

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One example of a Southeast Asian country is Thailand. Thailand is actively strengthening its position with a strategy of combining national policies and multilateral cooperation, strengthening its position as the regional logistics hub of ASEAN. The National Economic Policy Committee and relevant Thai government ministries are responsible for improving the connectivity of the ASEAN supply chain. In February 2024, Thailand ratified IPEF Pillar 2: Supply Chain Agreement. This provides access to mechanisms such as the supply chain council, crisis response network, and labor rights advisory board to enhance resilience against global disruptions. Additionally, operational implementation includes high-speed rail projects connecting Don Mueang and Suvarnabhumi airports. This project is scheduled to begin in 2025–2026 as part of the EEC infrastructure integration.

Initiatives such as real-time tracking, automation systems, and predictive analytics are enhancing the digitization of logistics to support operational efficiency and supply chain transparency. Thailand’s main objective in using this strategy is to reduce dependence on a single source (such as China), increase diversification, and improve resilience to pandemics and geopolitical disruptions. To achieve this goal, however, issues such as cross-agency policy synchronization, cross-sector investment stability, and interoperability between ASEAN countries must be addressed.

Despite several challenges, such as human resources, funding, and cross-border systems and sectors within them, it is hoped that this framework will enable ASEAN to position itself and maintain the integrity of its supply chain amidst the current global conditions. ASEAN’s efforts to increase efficiency and break away from dependence on a single resource source are challenging, given that ASEAN countries are not yet fully developed. Therefore, a monitoring system and policy implementation that maintains ASEAN’s centrality is necessary.

 

Climate Resilient Infrastructure : ASEAN’s Effectiveness in Disaster Mitigation
Southeast Asia is vulnerable to natural disasters amidst the current climate change issue. Geographically, ASEAN is located in coastal areas prone to flooding due to rising sea levels. Southeast Asia is located in the Pacific Ocean, which is vulnerable to other natural disasters such as earthquakes, tsunamis, and active volcanic eruptions. Furthermore, current global warming is triggering a number of new challenges, such as rising temperatures and long-term droughts. According to the AADMER work program report, 2,916 natural disasters were recorded from 2012 to 2020 due to climate change. Unexpected climate change certainly impacts the condition and resilience of existing infrastructure in Southeast Asia. Southeast Asia, as a global economic and agricultural growth network, needs to implement disaster mitigation to minimize direct losses caused by unpredictable extreme weather. Concrete steps such as early warning systems and collective cooperation are needed for climate-resilient infrastructure planning. ASEAN plays a crucial role in implementing disaster mitigation. If not implemented optimally, a domino effect could occur, harming many parties.

Dramatic eruption of Mount Sinabung in North Sumatra, Indonesia, with massive ash cloud.
ASEAN, as a hub for global economic activity, is also experiencing increased energy consumption, given the industrial revolution and the significant increase in demand for natural resources, which also contribute to excessive carbon emissions and the greenhouse effect. Urbanization is also making the ASEAN region increasingly densely populated, requiring protection. Dependence on fossil fuels as a profitable commodity needs to be reduced to create a zero-emission region in line with the 2050 Net Zero Emission target. This is one of ASEAN’s challenges in mitigating natural disasters caused by climate change.

As a regional organization, ASEAN has adopted a key framework to be implemented in response to climate change. One such framework for mitigating natural disasters caused by climate change is the ASEAN Agreement on Disaster Management and Emergency Response (AADMER), which addresses an early warning system that encompasses comprehensive information and communication regarding natural disasters and public awareness to promptly respond to impending disasters. Planning and coordination with national and regional stakeholders to reduce losses, including utilizing military functions as public facilities for mobilization and safety, are also crucial. Collaborative and partnership efforts are also needed to assess the challenges faced by member countries, discuss them with regional organizations, stakeholders, partners, and allocate resources to invest in developing disaster management tools. However, ASEAN member countries certainly face a number of challenges.

According to the AADMER work program report, the challenges faced focus on data sharing and interoperability among member countries. ASEAN requires technical assistance to manage and share data and information regarding early warning systems. ASEAN is still working to strengthen partnerships with the AHA center (ASEAN Coordinating Center for Humanitarian Assistance on Disaster Management), disaster management offices, and other stakeholders. Furthermore, ASEAN is also working to develop risk assessments through relevant actors. Furthermore, what needs to be improved is the involvement of external parties to focus on scientific approaches that align with the AADMER vision to further explore disaster mitigation.

Meanwhile, other challenges such as technological and resource disparities are major obstacles to improving disaster mitigation facilities. Member countries like Singapore have successfully created an underground tunnel waste disposal system to address flooding and process waste and water more environmentally friendly, while Indonesia has developed a Carbon Capture and Storage (CCS) network in an effort to reduce carbon emissions. Meanwhile, less developed countries like Timor Leste, Cambodia, Laos, and Myanmar must face extreme heat and erratic rainfall patterns. In addition to vulnerable economies, government efforts to attract investors are challenging due to competition among ASEAN countries to fulfill their national interests. Other member countries like Vietnam, Indonesia, and Thailand have left the four less developed ASEAN member countries even further behind in terms of more appropriate disaster mitigation planning.

ASEAN has made significant strides in proposing work programs such as AADMER and leveraging relevant organizations and institutions to assist with disaster mitigation preparation. However, current challenges require further action, particularly regarding the equitable distribution of disaster mitigation facilities for member states vulnerable to natural disasters and extreme weather. With Timor-Leste in the group, ASEAN also needs to expand its reach to collaborate with East Asian countries with superior disaster mitigation systems and technology. This will allow for more predictable climate change impacts on ASEAN and mitigate significant long-term losses.

[ Andhini Octa Maharatih and  Dhea Marsha Ananda are Indonesia based interns at COGGS. Opinion expressed doesn’t reflect the view of the organization. ]

References

Kiyoshi Kobayashi, K. A. (2018). Economic Integration and Regional Development: The ASEAN Economic Community. New York : Routledge (Taylor & Francis Group), Abingdon & New York.

Menon, H. H. (2010). ASEAN Economic Integration: Features, Fulfillments, Failures and the Future. ADB Working Paper Series on Regional Economic Integration, 1-34.

Secretariat, A. (2023). Framework on ASEAN Supply Chain Efficiency and Resilience. Jakarta: The ASEAN Secretariat.

The ASEAN Secretariat. (2020). ASEAN AGREEMENT ON DISASTER MANAGEMENT AND EMERGENCY RESPONSE (AADMER) 2021-2025. ASEAN Secretariat. https://asean.org/wp-content/uploads/2021/08/AADMER-Work-Programme-2021-2025.pdf

ASEAN. (2021). ASEAN State of Climate Change Report. The ASEAN Secretariat. https://asean.org/wp-content/uploads/2021/10/ASCCR-e-publication-Correction_8-June.pdf

Asian Development Bank. (2009). The Economics of Climate Change in Southeast Asia: A Regional Review. ASsian Development Bank. https://www.adb.org/sites/default/files/publication/29657/economics-climate-change-se-asia.pdf

Fransiskius, & Affabile, R. (2025). Peran Indonesia Sebagai Norm Entrepreneur Dalam Konsepsi Sentralitas ASEAN Melalui Inisiatif Karbon Lintas Batas Berbasis Teknologi Carbon, Capture and Storage (CCS), 7(01). 10.24198

Deep Tunnel Sewerage System. (2025, March 4). PUB, Singapore’s National Water Agency. Retrieved July 24, 2025, from https://www.pub.gov.sg/Professionals/Requirements/Used-Water/DTSS

Building Resilience of Health Systems in Asian Least Developed Countries to Climate Change. (n.d.). UNDP Climate Change Adaptation. Retrieved July 24, 2025, from https://www.adaptation-undp.org/projects/building-resilience-health-systems-asian-least-developed-countries-climate-change

Andrew Potter, P. C. (2011). Developing a supply chain performance tool for SMEs in Thailand. An International Journal, 20-31.

              

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Will ASEAN Membership Be Turning Point for Timor-Leste’s Economy?

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Suryo Bimantro, COGGS Intern

AFTER MORE THAN a decade as an observer and applicant, metal rich Timor-Leste is set to officially join the Association of Southeast Asian Nations (ASEAN) this year, with its membership scheduled to be formally ratified at the 47th ASEAN Summit in October 2025. Timor-Leste’s entrance into the Southeast Asian organization represents its decade-long struggle and progress as a “juvenile nation” that achieved national sovereignty and independence in the 2000s. Accepting Timor-Leste would also signify ASEAN’s emphasis on regional inclusivity and integration among nations within the region, despite significant economic and institutional disparities. This move would prioritize the development of Southeast Asian regionalism and unification above all else.

Such integration could potentially help improve Timor-Leste’s struggling economy. According to a 2025 report by the International Monetary Fund (IMF), Timor-Leste is ranked as one of the poorest nations in the Southeast Asian region, with a total GDP of approximately $2.1 billion USD and a GDP per capita of only $1,490 USD. ASEAN membership could also bring viable solutions to the critical issues the country is currently facing.

(46th ASEAN Summit. Courtesy: The Star)

This article’s main purpose is to explain how Timor-Leste’s integration into ASEAN could offer opportunities for multilateral cooperation that would assist in national development and help address the challenges the nation continues to face. After all, multipolarity within ASEAN cannot be achieved if member countries focus solely on self-serving development.

ASEAN perceives its goal for economic cooperation as a priority for all its members without exclusion. This would provide Timor-Leste with the grand opportunity to learn from ASEAN states with longer experiences in maintaining and developing their economies. ASEAN has the capability to provide intensive training sessions for Timor-Leste’s government officials—sessions that provide expert insights and knowledge-sharing discussions within important subjects such as international trade, finance, tax management, resource management, and various other subjects that could help the Timor-Leste government to prepare its entry into the ASEAN economic framework, the next stage for its potential development within the Southeast Asian region itself.

Currently, this intensive training program has been done this year, specifically during the 11th–13th of March, 2025, in Timor-Leste’s capital city, Dili. This program involved several key actors, which include the Deputy Secretary-Director of the ASEAN Economic Community, the Asian Development Bank Country Director, the Malaysian Ambassador of Timor-Leste, the ASEAN Ministry of Foreign Affairs and Cooperation of Timor-Leste, and the rest are the ASEAN Secretariat staff, who are positioned as the trainers within the program. Every actor mentioned has the sole mission of preparing the economic and institutional readiness of Timor-Leste’s existing ministries and agencies as they finally integrate the nation into becoming a part of the ASEAN economic domain. If ASEAN’s intensive training program succeeds, it could bolster several solutions for some of Timor-Leste’s ongoing internal issues.

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Beyond Oil & Gas

According to the Ministry of Trade and Industry of Timor-Leste, the country is suffering from an overreliance on gas and oil exports. Specifically, around 90% of Timor-Leste’s exports consist of gas and oil, with little room for other industries to participate in international trade. An overreliance on oil and gas may demonstrate a country’s wealth in natural resources, but it also reveals vulnerability and a lack of progress within a country’s economy. Fundamentally, globalization has made the world economically interconnected. If the prices of both oil and gas were to decrease significantly in the future due to the global transition toward clean and renewable energy, then Timor-Leste’s export revenues could suffer a downturn, causing a halt in its economic development.

This applies similarly if the prices of oil and gas were to increase, in the form of the infamous Dutch Disease—an economic phenomenon where an overreliance on a specific sector drives up a country’s currency value. This could alleviate the country’s poverty rate and stimulate internal development in the short term. However, in the long term, there’s a risk that it would allow cheap foreign imports to overtake the country’s industries, preventing the private sector from growing or competing fairly, while foreign businesses become powerful stakeholders and slowly monopolize the economy from within. The people of Timor-Leste would not only suffer significantly from higher poverty rates, but they would also face rising inflation, a lack of innovation and sustainable development, and a cycle of exploitation that is indirect in nature.

With ASEAN’s capacity-building program and intensive training sessions, member states could take advisory roles in managing Timor-Leste’s overreliance on oil and gas by helping the country discover new natural resources, develop industrial skills, implement human resource capacity-building methods, and pursue various other initiatives to strengthen Timor-Leste’s market diversification and improve its dwindling private sector.

To further increase the chances of success for these diversified markets, ASEAN member states could open trade barriers between Timor-Leste and themselves—or even call upon nations within the Asia-Pacific region, such as Japan and South Korea, to begin investing in Timor-Leste’s diversified markets while engaging in more bilateral or multilateral trade activities. What’s the point of diversifying an economy if you can’t even diversify your consumers?

Obviously, oil and gas industrial dependency won’t just disappear in the short term; this is why ASEAN economic cooperation must prove itself to be stable, efficient, and continuous in providing strong results with Timor-Leste’s ministries and agencies.

Tapping into Minerals

As mentioned previously, an overreliance on two natural resources wouldn’t aid Timor-Leste’s survivability in the long term before it eventually turns into a fallen state. This is why more markets, especially within the private sector, need to be formed to expand Timor-Leste’s international trade and human resource capacity—markets that will be formed from the rich and plentiful mineral resources within the lands of Timor-Leste itself.

According to a 2003 study by Francisco da Costa Monteiro, Director of Energy and Minerals within Timor-Leste, Timor-Leste’s natural resources are abundant, encompassing not only the vast oil and gas reserves within the land but also a variety of rich minerals discovered within Timor-Leste’s coastal environments. These minerals are divided into two categories—metallic and non-metallic—to simplify understanding.

 

Metallic Minerals Gold, copper, manganese, silver, and chromite.
Non-Metallic Minerals Sand, gravel, limestone, clay, bentonites, kaolinites, marble, gypsum, and phosphate.

The fact that Timor-Leste’s rich minerals are scattered throughout the country yet it could barely develop its economy proves the vast, untapped potential it currently has. Firstly, its metallic minerals could provide market ideas that could diversify the economy and expand trade flows with other countries.

 

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Gold Copper Manganese Silver Chromite
Gold could serve both as an export-oriented market and a domestic manufacturing market. A lot of developed countries see the value of gold in many luxury brands and jewelry industries.

 

ASEAN must remember to advise Timor-Leste’s development regarding their human resource capacity in manufacturing to ensure gold will not just solely be used for foreign extraction, but can also be used as a new job market for gold manufacturing domestically.

 According to the International Copper Study Group (ICSG), copper mining would reach an approximate number of 23.5 million tonnes within 2025, a 2.3% increase from 2024. This significant rise proves that copper mining could be a great asset for Timor-Leste’s developing economy. It would attract foreign investments, trade, and cooperation from both ASEAN and the entire global domain potentially.

 

Copper are used for manufacturing vehicles such as motorcycles and cars while also being a foundational material for phones and computers, objects that are central to the modern Southeast Asian contemporary culture nowadays.

 

Despite the harsh labor, this could prove to be a great economic diversification mechanism for Timor-Leste, though its sustainability over the future is questionable due to the rise of clean and renewable energy alternatives. That’s where the ASEAN economic cooperation comes in and discusses the issue with Timor-Leste.

 Another form of useful mineral that Timor-Leste’s officials could unearth to diversify it’s economy would be the manganese mineral, a mineral that could strengthen metallic materials such as steel, a very important mechanism to have within foreign aviation, shipment, and even military industries if properly maintained. Just like these other materials, silver holds a wide range of usage in terms of manufacturing itself. Silver is used to manufacture phones, computers, laptops, televisions, circuit boards, batteries, and so much more. It’s possible to improve upon a country’s trade and innovation, which is truly remarkable. Just like other materials here, chromite also serves as a hardening material for aerospace, aviation, transport, and other manufacturing industries.

Through these discoveries alone, Timor-Leste proves itself to be a hotspot for many manufacturing-based industries. Through ASEAN economic cooperation, ASEAN could assist in Timor-Leste’s maintenance of these valuable minerals, creating jobs in the mining sector, logistics, manufacturing, sales and marketing, shipment and trade, and even finance. This could raise a new wave of skilled workers who could improve their livelihoods every time minerals are extracted or manufactured—a true capacity-building program born from the country’s rich natural resources.

ASEAN must provide sufficient advisory not only on proper management but also by connecting Timor-Leste with potential trade partners within and outside the region to ensure that trade flows and revenues increase rather than remain stagnant. Besides trade partners, advisory efforts should also focus on talent building through education and training programs for the youth of Timor-Leste in order to prepare for the introduction of new technology and manufacturing-based businesses across the country.

The Case of Corruption

The last and most crucial problem that ASEAN could assist Timor-Leste with would be the cycle of corruption, which could potentially destabilize all these capacity-building efforts. According to the Corruption Perceptions Index (CPI) in 2024, Timor-Leste ranks 70th out of a total of 180 countries around the world in terms of corruption, proving it to be less corrupt in comparison to other countries—though this result might be due to the country’s small population.

Through ASEAN economic integration, Timor-Leste could potentially lower that ranking even further through ASEAN’s collaborative platform, ASEAN-PAC (Parties Against Corruption), which was previously labeled as SEA-PAC (Southeast Asian Parties Against Corruption) in 2004.

The collaborative platform serves as a regional cooperation mechanism that provides extensive knowledge-sharing on anti-corruption methods and strategies; training programs to develop skill sets to counter corruption schemes; exchanges of expertise between countries through certified and experienced personnel and officials to help implement anti-corruption strategies within Southeast Asia; and conferences to gather ideas and strategies among ASEAN member states to further anti-corruption development across the region.

If Timor-Leste does not view its integration into ASEAN-PAC as a possibility, then all potential revenue growth from mineral resources, international trade, and many of its diversified markets could be at risk from the grasp of internal corruption—especially given that the country upholds democracy as its primary form of governance.

The bigger the economy, the merrier the people. The merrier the people, the more confident they are in raising children. The more confident the people become in having children, the more the population increases. As the population increases, centralized supervision becomes harder to manage within a full-blown democracy. Immense population growth begins to exert more and more plurality of morals and ethics as society grows, creating more hidden blind spots for those intelligent enough to exploit vast revenues for themselves among thousands or even millions of others around them.

[ Suryo Bimantro is an intern at COGGS and based in Surabaya, Indonesia. Opinions expressed those are his own. ]

References:  

  1. https://asean.org/asean-secretariat-supports-timor-lestes-asean-integration-with-phase-2-of-capacity-building-programme/.

 

  1. Top Export-Import Countries. 2023. “Top Export-Import Countries.” Trade Information Portal. 2023. https://timor-lestetradeportal.com/id-id/site/display/808.

 

  1. ‌Da Costa Monteiro, Francisco, Vicenti Da, and Costa Pinto. 2003. “Exploring Timor-Leste: -Minerals Potential.” https://www.pecc.org/resources/minerals-a-energy/1264-exploring-timor-leste-minerals-potential-paper/file
  2. Chen, Jackson. 2025. “Global Copper Surplus to More than Double in 2025 – ICSG.” MINING.COM. April 30, 2025. https://www.mining.com/?p=1177704.

 

‌Woolwine, C.S. 2019. Cyclic. https://cms.kpk.go.id/storage/tinymce/uploads/pdf/1733102405_E-Booklet-ASEAN_PAC.pdf

 

Will ASEAN Membership Be Turning Point for Timor-Leste’s Economy? Read Post »

Vietnam’s Challenges to be Critical Mineral Powerhouse

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Indoor display of Vietnamese flags and a map highlighting national unity symbols.Iftah Al Aqliyah

AS THE WORLD moves towards a green energy future, demand for critical minerals such as nickel, silicon, lithium, copper, and other rare earth elements (REE) is increasing because these are the key components in the production of products like electric vehicles (EVs), wind turbines, and solar panels. Located in Southeast Asia, Vietnam, is a major market for China, the US, Japan, South Korea, and the European Union. Beyond being a key market, the aspiring economic power also serves as a strategic partner in the region’s energy transition. The critical minerals project supports the development of green energy technology industries, boost environmental standards and place the nation in the map of global clean energy transition. This is evidenced by Vietnam’s commitment to achieving net-zero carbon emissions by 2050 at the COP26 Summit in Glasgow and the receipt of funding through the Just Energy Transition Partnership (JETP) program amounting to US$15.5 billion, while also launching the Power Development Plan VIII (PDP8). However, Vietnam faces significant challenges in meeting domestic demand for critical minerals and ensuring sustainable management.

 

 

Increase in Critical Minerals in Vietnam

Vietnam’s participation in commitments under the Action program for Transition to Green Energy and Mitigation of Carbon Dioxide and Methane Emissions from Transport is driving major development in renewable energy in 2021-2050. On a regional scale, projections from APEC Outlook show that the expansion of clean energy generation and electric vehicles (EV) will increase demand for critical minerals such as nickel, copper, cobalt, lithium, silicon and rare earth elements (REE) in the Asia Pacific region, including Vietnam. Demand for critical minerals on a regional scale is expected to increase in 2031-2040 compared to 2020 by 4.7 times (Huy, 2023). According to Phung Quoc Huy et al. (2024) total critical minerals demand is expected to reach 415 kilotons (kt) from 2021 to 2030 and increase to 2,133 kt from 2031 to 2050, or 15 times the 2021 level. Silicon and copper are the minerals most in demand due to the expansion of solar energy and the construction of power grids. It is estimated that copper accounts for 60% of total mineral demand, particularly for transmission systems, wind turbines, and electric vehicles (Huy et al., 2024). In addition, the need for nickel, cobalt and lithium for electric vehicle batteries will increase, especially as the local automotive industry such as VinFast grows. Although Vietnam has the second largest REE potential in the world, its use is still not maximized in terms of value-added exploration, production, processing and export.

 

Challenges in Critical Minerals Management

Vietnam’s domestic processing capacity : The nation’s domestic processing capacity is still low despite having many mineral reserves. Production of nickel, cobalt and copper has not met the surging demand. According to statistics, Vietnam produced only 16,881 tons of copper in 2021, despite demand for copper reaching more than 260,000 tons during the 2021-2030 period (Huy et al., 2024). On the contrary, cobalt production in the country is still below 200 tons per year.

 

Infrastructure and Technology Limitations: Vietnam has not successfully mastered the refining technology of minerals such as REEs that require complex and expensive chemical processes. Most mining facilities in Vietnam focus on extraction, not downstream. This hinders Vietnam from developing domestic value and acting as a value-added global supplier (Hiep, 2023)

 

Weak Regulation in Vietnam:  The regulatory framework in Vietnam is still not strong and inconsistent in its implementation which hinders the overall development of the minerals sector. The complexity of licensing procedures, poor inter-agency coordination, and corrupt practices at the local and national levels exacerbate the investment and environmental monitoring situation. These conditions create hesitation for local and foreign investors (Dung et al., 2021).

 

Political Pressure and Dependence: Vietnam’s REE potential has attracted the attention of major countries such as the United States, China and Japan. For example, Vietnam signed an MoU with the US on a partnership for REE exploration and development (Nguyen et al., 2019). This  joint venture certainly offers benefits and investment opportunities, but there is a risk of external dependency and possible exploitation of natural resources without fair and sustainable technology transfer.

copper oil lamp, macro, decoration, vintage, tradition
A copper-made lamp.

 

Vietnam’s ability to manage critical minerals is crucial to the continued transition to renewable energy. Rising interest in lithium, cobalt, copper and REEs is a result of reducing carbon emissions. However, limited production, infrastructure and technology, and weak regulations are barriers to achieving certain targets. Therefore, Vietnam needs to make necessary refomrs by strengthening policies and building sustainable international cooperation.

 

(Iftah Al Aqliyah is an intern at COGGS and student at  Department of International Relations,  UPN “Veteran” Jawa timur University, Surabaya, Indonesia)

References

Dung, N. T. K. D., Luan, P. V., Chinch, V. T., & Duoe, T. V. (2021, November 10). An Overview of Rare Earth Ores Beneficiation in Vietnam. 10.29227/IM-2021-02-20

Guthrie, C. (2023, October 23). Rare earth arrests rock Vietnam’s critical minerals plans. Mining Magazine.

Hiep, L. H. (2023, November 8). Vietnam’s Rare Earth Ambitions: Economic and Strategic Drivers. FULCRUM. Retrieved Juli Jumat, 2025, from https://fulcrum.sg/vietnams-rare-earth-ambitions-economic-and-strategic-drivers/

Huy, P. Q. (2023). Estimation of Required Critical Minerals for Clean Energy Technology in the APEC Region and Risks of Supply Chain Disruption. Asia Pacific Energy Research Centre. https://www.researchgate.net/publication/378302856_Estimation_of_Required_Critical_Minerals_for_Clean_Energy_Technology_in_the_APEC_Region_and_Risks_of_Supply_Chain_Disruption

Huy, P. Q., Sweetnam, G. E., & Hien, T. T. (2024). Shifting Toward Clean Energy Technology: Assessing Vietnam Critical Minerals Demand and Domestic Resources. IOP Conference Series: Earth and Environmental Science. 10.1088/1755-1315/1395/1/012001

Nguyen, N. B., Boruff, B., & Tonts, M. (2019, June 27). The Regulatory Framework and Minerals Development in Vietnam: An Assessment of Challenges and Reform. MDPI, 11. 10.3390/su11184861

Nguyen, U. (2023, April 13). Vietnam’s Rare Earth Mining Industry: An Overview. Vietnam Briefing. Retrieved July 25, 2025, from https://www.vietnam-briefing.com/news/rare-earth-mining-vietnam.html

 

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Singapore’s Dual Identity: Heart of Global South, and Soul of North?

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Alvino Adian Denata

SINGAPORE, A SMALL nation in Southeast Asia that achieved independence in 1965, has become one of ASEAN’s most prominent economic powerhouses. With a high average income, quality of life and a good bureaucracy, Singapore has a good reputation in the global arena, compared to neighbouring countries, one of the proofs is that Singapore’s passport is the strongest passport in the world. The rapid development in the fields of technology, health, education and fast infrastructure makes the condition of Singapore become stable and become a country in the spotlight of the world. This article will briefly discuss Singapore’s journey from a small colonial trading post to a global financial centre, and will also analyse how it has evolved to challenge traditional classifications of the country and highlight the complexities of its dual identity.

Historical Context : From Colony to Economic Power House

In 1819, Stamford Rafles of the British colony, first landed in the area today known as Singapore to establish a post point for strategic trade needs, especially for British colonies in the Southeast Asian region. Until 1824, the territory officially fell to the British from the Sultanate of Johor. Within just few years, Singapore, along with Penang and Malacca, formed the Straits Settlements under the British which later became a Crown Colony. Over the years Singapore developed as a port and a point of attraction for traders from various parts of the world, until the end of World War II where the Japanese power managed to weaken British power, which was used by Singapore to achieve self-government under the British Commonwealth.  Singapore joined the Malaysian federation on 16 September 1963, which lasted for two years.  Then decided to become independent on 9 August 1965.

Under the leadership of Lee Kuan Yew, Singapore significantly transformed into a highly developed country, starting with implementing rapid industrialisation and building industrial zones to attract foreign investment, as well as focusing on human resource development. Singapore also focused on opening up to multinational companies by providing infrastructure, legal and tax guarantees that became a major attraction. By investing heavily in education, they are able to produce a skilled and productive workforce. Singapore has made its way into the world’s spotlight after experiencing an average GDP increase of 7% since independence and achieving a 9.2% increase per year in the first 25 years. Continuing to focus on education, infrastructure and technology, Singapore is fast becoming a first world country in the third world region in less than half a century.

Identity Classifications: Global South or  Global North?

However despite Singapore’s rapid economic development, the country is still classified under the Global South classification, due to its geographical and cultural ties. So, what really is the difference between the Global South and the Global North?

The global south is defined as a region occupied by developing or even underdeveloped countries. It is generally located in the southern hemisphere, and is often associated with a history of colonialism. In some scholars’ views, the global South is regarded as a region that serves as a means of exploitation for the North in the world order of global capitalism. On the other hand, the North is defined as a group of developed countries that have large economic, political, economic and dominance powers. The North is considered as the controller of the world, as a form of dependence, seen in the utilisation of the South’s raw natural resources that provide many benefits to the North, while the return is the destruction of the earth’s environment.

The division of these two economic groups is not entirely correct, because many criteria overlap and sometimes do not match the grouping labels they get compared to the facts on the ground, such as Singapore. As a reminder, this grouping is not only oriented towards regions, but rather economic inequality and strength in the global arena. From the facts and notions constructed, this classification creates a metaphorical narrative, which cannot be fully interpreted. In the current era, many developing countries have finally erased the boundaries of the North and South in the contemporary era, which means that identities and classifications are no longer appropriate. So is this classification actually based on the division of the world, economically, or is it just a paradox for the sake of global domination of the big countries in the north, which massively control the major world bodies.

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The Paradox of the North and the South: Singapore’s Perspective

Despite having a strong history and culture with the global South, Singapore is well qualified to enter this world-dominated region from an economic and institutional perspective. With a GDP per capita of USD 82,000 (2023), Singapore can even rival the GDP figures of the United States and Switzerland. With rapid alignment in technology, standard of living and quality, Singapore is getting closer to the North in this regard. Singapore is also an economic centre with institutions such as MAS, which can compete with similar institutions in the US. Singapore is home to over 1,000 multinational companies, with a stable legal, political and economic climate. With a human development index score (reaching 0.939 in 2022), Singapore has been able to improve the level of health services, education and reduce crime, which is almost equivalent to the welfare of Nordic countries.

In terms of more general international relations theory, namely dependency theory, the South tends to be highly dependent and trapped in a long cycle with the North, while Singapore is the centre of all sectors that the South depends on the North. From the explanation above, clearly, the substance and function of Singapore is a North World country. This grouping is really just a homogenising label that forgets other factors.

Singapore has a unique situation that doesn’t fit neatly into usual categories. It isn’t clearly part of the Global South, which usually includes countries that are less developed or have trouble getting resources, nor is it like the typical Global North countries because of its location and culture. This mix of things creates a confusing situation. Even though Singapore is very wealthy, similar to many Northern countries, its income inequality is closer to that of poorer nations. This is shown by its Gini coefficient, which is around 0. 38 after taxes and transfers.

Singapore relies heavily on labour from South Asia, which is often paid low salaries and works in sectors such as construction and domestic care. The government conducts elections, but the People’s Action Party (PAP) has been in the lead for many years. The system is often criticised for not providing much freedom, which is in contrast to South Korea’s liberal system. However, the system helps maintain the country’s stability, which is considered important in the South. Singaporeans enjoy a lifestyle influenced by global trends such as Western media and products, but remain connected to Asian traditions. It shows that with strong leadership, investment in human capital, and openness to international trade, a small country lacking natural resources can be successful. But it also raises questions about equity, resilience, and preserving cultural identity in an increasingly globalised world. Singapore’s success is a good example for developing countries, showing that rapid modernisation can be achieved with tight management and a practical economic plan. However, its small size, lack of natural resources, and unique history make it difficult for other countries to replicate its model. In addition, the use of strict government control has fuelled discussions about the balance between freedom and development. Singapore shows that economic growth can happen alongside cultural and geographical differences, challenging the usual idea that only Northern countries set the standard for what it means to be developed.

Conclusion

Singapore is a clear example of how the global classification between the ‘Global South’ and the ‘Global North’ no longer fits today’s reality. On the one hand, geographically and historically, Singapore is at the centre of the global South-rooted in a context of colonialism, territorial dependency and limited natural resources. But on the other hand, the country has evolved into an entity that operates with the ‘soul’ of the global North-high standards in terms of technology, education, economic stability, and institutional structures.

This contradiction becomes clearer when we realise that even though Singapore has the same or even better development indicators as the North, it still falls under the South. This suggests that this classification is more of a geopolitical construct than an accurate reflection of a country’s condition. Moreover, Singapore demonstrates the irony of modernity: a highly developed country that still faces high income inequality; an economically efficient and competitive country, but with tight political control; a country that is considered a model of development, but is difficult for other developing countries to emulate because of its uniqueness.

Singapore is not only an exception, but also a challenge to the dominant narrative of development. As such, Singapore stands as a paradox of global identity: it is a ‘Global South country that has become a globalised nation. So why is the country with the world’s strongest passport still being debated?

 

[ Alvino Adian Denata is an intern at COGGS and student at Department of International Relations, UPN “Veteran” Jawa Timur, Surabaya, Indonesia. The opinions expressed are the author’s own. ]

References

Chase-Dunn, C. &. (1995). Discusses global economic structures, core-periphery model relevant to Global North-South. World-Systems Analysis. Annual Review of Sociology, 387-417.

Elkan, R. v. (1995). Singapore’s Development Strategy. In M. K. Bercuson, Singapore A Case Study in Rapid Development (p. 75). Washington DC: International Monetary Fund.

SG101. (2025, July 16). 1959-1965: Early Economic Strategies. Retrieved from https://www.sg101.gov.sg/: https://www.sg101.gov.sg/economy/surviving-our-independence/1959-1965/

Zhou, P. (2025, May 8). The History of Singapore’s Economic Development. Retrieved from https://www.thoughtco.com/: https://www.thoughtco.com/singapores-economic-development-1434565

 

Singapore’s Dual Identity: Heart of Global South, and Soul of North? Read Post »

Indonesia Morowali Industrial Park: Largest Nickel Factory’s Economic Gain, Ecological Loss

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Andhini Octa Maharatih

 

AS INDONESIA ASPIRES to achieve its dream, the archipelagic nation of Southeast Asia requires  heavy investment to support its economic growth. With natural resources such as nickel, coal, gold, and minerals, more than 38 foreign mining companies, both public and private, have invested in Indonesia due to the low cost of raw materials, relatively low wages, and strategic location rich in natural resources. This has undoubtedly contributed to Indonesia’s economic growth and development. In 2024, the Ministry of Investment and Downstream Industry recorded investment growth of 15.24% and downstreaming of 21.6%, making it the largest contributor to economic growth in Indonesia. China is one among of the five major countries eager to invest in Indonesia.

Indonesia Morowali Industrial Park

PT Indonesia Morowali Industrial Park (IMIP), built by Shanghai Decent Investment Ltd under the Tsingshan Group and engaged in the nickel industry to be used as materials such as stainless steel, UV batteries and carbon steel, specifically in Morowali, Central Sulawesi. Established since 2014, IMIP has created extensive employment opportunities for the people of Sulawesi, almost 93% of whose workers are from Indonesia and has become one of the largest nickel companies in Indonesia with a percentage of 50%. In addition, compliance in paying royalties and taxes makes this company increasingly provide long-term benefits to the country’s foreign exchange that continues to flow. PT IMIP also certainly has a significant impact on economic growth recorded 71% and ranks 10th as a company that influences economic growth achieved by national strategic projects.

Workers Safety inside World’s Largest Nickel Factory

However, despite significant economic growth, a number of workplace accidents remain, despite compliance with occupational safety and health regulations. In 2023, a workplace accident occurred when a furnace exploded, sparking a fire. This fire resulted in numerous fatalities, with more than 13 workers killed and others suffering serious and minor burns. A similar incident occurred in 2022, when a nickel shelter exploded at the company’s unit. This accident left numerous workers injured, forcing them to silence their voices for the sake of the company’s reputation. The explosion generated a cloud of smoke that was inhaled by residents due to the company’s proximity to residential areas.

Not only in 2023, but in 2025, work accidents also occurred in the IMIP area, which is prone to landslides caused by heavy rainfall and vulnerable points that can cause flooding. Reports from the Ministry of Environment revealed that there are practices that can endanger the surrounding community and the environment. There is a practice of open dumping, which drains floodwater into the sea without intensive waste treatment, causing some residential areas to be inundated. Disposal of nickel slag and tailings in several vulnerable areas is also not being addressed by the government, which of course can result in heavy metal pollution that is detrimental to marine life and soil fertility.

In addition to the discovery of open dumping practices, a work accident resulted in the deaths of three workers due to a landslide that occurred in the tailings pond disposal area due to heavy rain. The community is naturally concerned about this because, in addition to being close to residential areas, tailings are hazardous waste, which, if not intensively managed, could expose residential areas to toxic waste. The public believes the frequent accidents are a result of poor safety measures. Some are demanding an evaluation and improvement of the safety of the tailings waste facility to prevent similar incidents in the future.

Indonesian mining performance data shows that PT IMIP’s working conditions rank eighth with score 29 among nickel companies in Indonesia, with a low level of occupational safety monitoring for its workers. These recurring incidents have prompted media outlets to investigate the frequent accidents. However, the media are not permitted to delve deeper into the company’s safety procedures. In response to public disappointment, PT IMIP frequently engages in social and environmental sustainability initiatives to maintain public acceptance. These initiatives include the provision of cleaning facilities, garbage trucks, mangrove planting in coastal areas, community involvement in waste management, and more. This has led to speculation that the company is deliberately greenwashing itself to maintain a positive public image despite the high number of workplace accidents and the potential for waste to disrupt the natural ecosystem.

Therefore, the state needs to oversee the ongoing down streaming process. Full government oversight and firmness are required to provide special treatment for problematic companies. ESG issues are currently being touted internationally, in connection with the 2030 SDGs. This is not only about preserving the environment but also about creating a safe space for indigenous communities to enjoy the natural resources inherited from their ancestors. Developing countries are often faced with the trade-off between investor-friendly approaches and the sacrifice of the environment and long-standing indigenous communities due to their ambitions to generate economic growth on the international stage. However, the state also needs to be firm in taking action against foreign companies that violate regulations by thoroughly investigating the issues, building adequate facilities, and ensuring public freedom of expression.

[ Andhini Octa Maharatih is a COGGS intern and student at Department of International Relations,  UPN Jawa Timur Veteran University. ] 

References: 

https://kemenlh.go.id/news/detail/negara-tidak-boleh-lengah-menteri-lh-sidak- kawasanindustri-nikel-di-morowali-temukan-pelanggaran-lingkungan-serius https://www.bkpm.go.id/id/info/siaran-pers/rosan-realisasi-investasi-terus- bertumbuhindonesia-konsisten-jalankan-hilirisasi https://responsibleminingindonesia.id/id https://jdih.esdm.go.id/common/dokumenexternal/UU%2032%20Tahun%202009%20(P PLH).pdf https://mongabay.co.id/2025/06/25/klh-temukan-pelanggaran-lingkungan- serius-di-imip/ https://imip.co.id/wp-content/uploads/2025/02/IMIP-ESG-Report- 2023.pdf

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Cryptocurrency in Global South Trade: The Iran Case Study Analysis | Read Now|

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Vericko Dhuha Zahir Negara, COGGS Intern

[Abstract : This research looks at how cryptocurrency’s role is becoming more important as an alternative in international trade, especially for countries that are not well-supported by the usual global financial system. As the SWIFT network is being used more often as a tool for political reasons to apply sanctions and control economies, many countries particularly in the Global South are looking for alternative solutions. Cryptocurrency, which is based on blockchain technology, allows people to send money directly to each other without needing banks. This reduces reliance on traditional financial institutions, cuts down on costs, and makes it easier to send money across borders quickly. Using the World-Systems Theory and the concept of Decentralized Finance, this study shows how blockchain-based currencies give countries like Iran more control and stability by helping them avoid sanctions and manage their economy better. The research used a qualitative-descriptive approach, looking at information from academic papers, news articles, and reports from organizations to spot trends. The results show that cryptocurrency’s role helps trade happen in ways that traditional systems don’t allow, and it changes how global economics works by being a clear, fast, and politically neutral option compared to conventional systems. ]

 

INTERNATIONAL TRADE IS an important aspect for a nation to increase its economic growth. One of the biggest elements of international trade is the Society for Worldwide Interbank Financial Telecommunication also known as SWIFT, which has been the backbone of banks from various nations. However, SWIFT is not a neutral system; it has been used as an international political tool in the form of sanctions and other economic limitations (Cipriani et al., 2023). SWIFT works as a safe communication provider between banks, because of that almost any transnational currency operates under SWIFT. As a result, anytime when a nation or company has limited actions by SWIFT it can result in an economic crisis or a bankruptcy. This phenomenon of economic limitations has increased over time due to SWIFT not being a neutral system. SWIFT has increasingly become a political control tool to give sanction and limit any country’s economic activities if that country is considered a threat. This results in cost issues and regulatory restrictions that blocks developing countries from reaching not only western market but also the global market to gain a higher profit. For example, most Global South nations are submitted to this system which creates unequal dependency and makes them

vulnerable to sanction and other political-economic pressure. For that reason, many nations and companies tried to find a way to do international trade without relying on SWIFT’s system. This led them to blockchain technology, which uses cryptocurrency that was invented by an unknown individual called Satoshi Nakamoto back in 2009. Blockchain eliminates the needs of banks correspondent, documents, and time needed. Cryptocurrency offers real-time transaction or remittance, low cost, and direct access from buyer to seller without relying on banks.

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[Iranian saffron and pistachios are famous for quality and highly in demand in the US market, despite sanctions]

Theoretical Framework

This research was conducted using the World-System theory as a way of understanding the world as a hierarchically structured capitalist system, with a dominant core and an exploited periphery (Wallerstein, 2004). According to Wallerstein, the capitalist world system began around the 16th century in Europe, through colonial expansion, international trade, and the formation of modern nation-states. Since then, this system has continued to develop into a global system with one hegemony that switches over time. World-systems theory supports an interdisciplinary approach by integrating historical, political, economic, and cultural analysis within a measured framework. On top of that, this research will also apply the Decentralized Finance (DeFi) concept. DeFi is a new model in the finance world that utilizes blockchain technology and smart contracts to provide financial services without intermediaries like banks (Zetzsche et al., 2020). This technology allows users to access financial services by peer-to-peer with just the internet and digital wallet. DeFi allows users to avoid traditional or conventional ways of international transaction or remittance which is more costly and time-consuming. As a whole, DeFi is a model that changes how transnational finance activities work.

Methods

Every data was collected through in-depth literature studies, news articles, academic publications, and any documents related to blockchain, cryptocurrency, and SWIFT. On top of that, data analysis was carried out by identifying patterns, themes, and narratives that emerged from the collected data, which were then interpreted. This approach allows the author to describe things in detail while keeping it concise. In addition, the qualitative-descriptive method enables the author to remain adaptable to the different matters of the subject regarding international trade. This method aims to provide understanding of the dynamics of the phenomenon being studied.

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The  Case of Iran 

Global South countries’ challenges are often stacked on top of another with systemic issues, international actors interfering, lack of facilities or technology, and internal economic issues. This creates a demand for trusted and self-custodial currency which led to digital coin using Blockchain technology (Böhmecke-Schwafert & Moreno, 2023). Cryptocurrency and blockchain offer faster, cheaper, and more accessible cross-border transactions, such as remittances and trade, while avoiding international restrictions. Due to many Global South countries facing both internal and external trade challenges, this pushes them to switch to a currency that can avoid those challenges. The implementation of Blockchain in the Global South can improve the Global South’s position and profit as a raw material supplier within the global supply chain, rather than being limited by conventional trade systems. Blockchain’s transparency and traceability facilitate Global South in international trade especially for agriculture and natural resources (Eliason, 2022). Even with the risk of being hacked and losing digital coins, the trend of utilizing cryptocurrency is not slowing down, instead it creates other ways to store digital coins such as using cold wallets. Global south countries develop domestically controlled blockchain and support cryptocurrency legal matters to increase digital currency exposure and trust around the world. On top of that, blockchain and cryptocurrency should also support local manufacturers, SMEs, cross-border trade, and remittances among Global South citizens (Eliason, 2022).

Since the United States withdrew from the JCPOA nuclear deal in 2018, Iran has been re-imposed on \economic sanctions. These sanctions primarily target Iran’s oil sector and financial system. As a result, Iran’s currency exchange rate has plummeted, while inflation has sky-rocketed. In this economic state, both the Iranian government and civilians have begun seeking alternative, more stable stores of value and exchange rates. One widely used solution is cryptocurrency. There are several key reasons why crypto has become so attractive to Iran. First, cryptocurrencies are used as a hedge against inflation and currency devaluation. Many Iranians store their wealth in crypto, which is considered more stable than conventional currencies. Second, cryptocurrency allows the government and businesses to evade international sanctions, particularly from the US. Since 2019, the government has officially supported Bitcoin mining, taking advantage of cheap domestic electricity. On top of that, Iran uses crypto as a digital currency for export commodities. In August 2022, Iran began using crypto directly to pay for imports. The government is also exploring the use of gold-backed digital coins with Russia to strengthen bilateral transactions and avoid the US dollar and SWIFT. This move by Iran sparked a response from the international community. The US government expanded its list of sanctioned entities, including companies in the United Arab Emirates, Turkey, and Hong Kong that help Iran sell oil and launder money through crypto. The US Treasury Department has also increased cooperation with blockchain intelligence agencies to track suspicious transactions. However, the effectiveness of this law enforcement remains limited as Iran actively seeks new ways to evade detection, including through anonymous decentralized finance protocols. Because of that, International policy needs to be more integrated to both support cryptocurrency as an alternative for international relations actors to have a new trade system that is operated under blockchain technology.

 

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Conclusion

Cryptocurrency has caused a big shift in how countries trade internationally, especially for those facing difficulties in the current global financial system. SWIFT, which is a system that has been used a lot in international banking, is sometimes controlled by politics and can limit certain countries from accessing the global market, especially those in the Global South. Cryptocurrency offers a different way for these countries to take part in the economy. It works through blockchain technology, which doesn’t need third parties like banks. This makes transactions faster, cheaper, and more open. This is especially helpful for countries that are under sanctions or facing financial limits, like Iran. Cryptocurrency also helps more people and businesses around the world to take part in financial activities. With decentralized finance, people can connect directly with others without needing traditional banks. This is especially useful for small businesses and even governments. On top of that, blockchain’s ability to track transactions helps in areas like farming and exporting raw materials, which are important for many countries in the Global South. This makes their role in global trade stronger. Though there are risks like hacking and unclear rules, more people are using cryptocurrency, showing how important it is. In the end, cryptocurrency is a brand new technology that gives people more control over their money and challenges the conventional financial systems. It creates new paths for trade that are fairer, more open, and not controlled by political power or banks.

 

[ Vericko Dhuha Zahir Negara is a COGGS Intern and Student at International Relations
Faculty of Social and Political Sciences National Development, University “Veteran” of East Java, Surabaya, Indonesia]

 

References

  1. Marco Cipriani, Linda S. Goldberg, & Gabriele La Spada (2023). Financial Sanctions, SWIFT, and the Architecture of the International Payment System.
  2. Slatvinska Valeria, Demchenko Vitaliia, Tretiak Kateryna, Hnatyuk Rostyslav, & Yarema Oleg (2022). The Impact of Blockchain Technology on International Trade and Financial Business. DOI:10.13189/ujaf.2022.100111
  3. Patrick Schueffel (2021). DeFi: Decentralized Finance- An Introduction and Overview
  4. Dirk A. Zetzsche, DouglasW.Arner, & Ross P. Buckley (2020). Decentralized Finance
  5. Immanuel Wallerstein (2004). World-System Analysis An Introduction.
  6. Rose Mahdavieh (2022). State Adoption of Cryptocurrency: a Case Study Analysis of Iran, Russia, and Venezuela.
  1. Moritz Böhmecke-Schwafert & Eduardo García Moreno (2023). Exploring Blockchain-based Innovations for Economic and Sustainable Development in the GlobalSouth: A Mixed-Method Approach based on Web Mining and Topic Modeling.
  1. Antonia Eliason (2022). BLOCKCHAIN, TRADE, AND THE GLOBAL SOUTH:

ENTRENCHING SUPPLY CHAIN ROLES.

  1. Reuter (2025). S. issues additional Iran-related sanctions, Treasury website shows.
  2. Arab News (2022). How Iran is cashing in on cryptocurrencies to evade US sanctions.

 

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