INTRODUCTION

It is not often that a country changes the geographic definition of its primary strategic environment. But that is precisely what Australia has done in recent years by embracing the concept of the Indo-Pacific.

Below is a personal perspective on what lies behind this change from the Asia-Pacific to the Indo-Pacific and the key strategic challenge facing the Indo-Pacific: how to reach a new strategic equilibrium in the region as U.S. primacy is challenged by a China with ambitions to become the predominant power in the region.

The Asia-Pacific, with Northeast Asia and Southeast Asia at its strategic centre, has been the conceptual foundation of Australian strategic thinking for most of the post-World War II period. It was seen as a coherent strategic system bringing in the major powers and also reflecting a long period of trade and investment integration, best captured by the Asia-Pacific Economic Cooperation (APEC).

Australia saw this economic integration as giving the Asia-Pacific added coherence. The Asia-Pacific construct provided a framework for thinking about the management of major power relationships especially the vital U.S.–China relationship. It was Australia's frame of reference for charting the strategic impact of shifting economic weight, most notably the extraordinary expansion of the Chinese economy.

In more recent years, however, Australia has moved from Asia-Pacific to Indo-Pacific to describe the crucible of its strategic environment. And a large part of that shift is driven by how we see India.

WHAT IS THE INDO-PACIFIC?

The concept of the Indo-Pacific as a single strategic system is very much a work in progress. It is both an act of imagination and a recognition of an emerging structural shift in our strategic environment.

At its heart, the Indo-Pacific reflects two propositions. First, that the maritime environment is likely to be the primary focus of strategic planning and strategic competition over the next several decades. Secondly, that India's strategic focus will over this period shift well beyond India's immediate neighbourhood and embed India in the strategic dynamics of the broader region in a way it has not in the post-war period.

These two propositions do not, in themselves, create a coherent Indo-Pacific strategic system.

The economic, political, strategic and cultural dynamism in Southeast Asia has gained added relevance in recent years with the spectacular rise of giant economies in East and South Asia. This has drawn greater attention to the region and to the enhanced role it now plays in international relations and global economics.

The sustained effort made by Southeast Asian nations since 1967 towards a peaceful and gradual integration of their economies has had indubitable success, and perhaps as a consequence of this, most of these countries are undergoing deep political and social changes domestically and are constructing innovative solutions to meet new international challenges. Big Power tensions continue to be played out in the neighbourhood despite the tradition of neutrality exercised by the Association of Southeast Asian Nations (ASEAN).

The Trends in Southeast Asia series acts as a platform for serious analyses by selected authors who are experts in their fields. It is aimed at encouraging policymakers and scholars to contemplate the diversity and dynamism of this exciting region.

THE EDITORS

Series Chairman:

Choi Shing Kwok

Series Editor:

Ooi Kee Beng

Editorial Committee:

Su-Ann Oh

Daljit Singh

Francis E. Hutchinson

Benjamin Loh

EXECUTIVE SUMMARY

INTRODUCTION

At its eighth national congress in 1996, the Communist Party of Vietnam (CPV) set the target of turning Vietnam into an industrialized economy by 2020. However, in April 2016, National Assembly Chairwoman Nguyen Thi Kim Ngan acknowledged that Vietnam would not be able to achieve that goal. Documents of the CPV's twelfth national congress in January 2016 also acknowledged this failure. Specifically, the political report of the congress replaced the target of “creating foundations to turn the country into a basically modern and industrialized country by 2020” in the eleventh congress's political report by “creating foundations to turn the country into an effectively modern and industrialized country soon”. The replacement of the deadline “by 2020” with the vague term “soon” reflects the Party's more realistic view of the economy as well as its cautious assessment of the country's industrialization prospects.

Among the reasons for Vietnam's failure to achieve the goal was its inability to grow a strong local manufacturing base and develop key strategic industries to provide a strong momentum for the country's industrialization. The automotive industry is one of the primary examples. Despite repeated efforts, Vietnam's automotive industry has been based mainly on a handful of assembling facilities, and supporting industries have remained largely undeveloped.

Recently, Vietnam's hopes for an indigenous automotive industry were rekindled when Vingroup, the country's largest private conglomerate, started in September 2017 the construction of a manufacturing complex in the northern city of Hai Phong and announced plans to develop a national car under the brand of Vinfast. Within a year, Vinfast managed to develop two prototypes, a sedan and a sport utility vehicle (SUV), which debutted with great fanfare at the 2018 Paris Motor Show. The company plans to put its first cars on the market in 2019.

While it is still too early to tell whether Vinfast will be successful, the way the company is rolling out its strategy, the great potential of the Vietnamese car market, the strong support that the Vietnamese government is lending the company, and the generally positive reception the Vietnamese public has shown for its first models, have all given rise to the hope that Vietnam will eventually be able to develop its own automotive industry. The impetus shown by Vinfast, if sustained, may also become a significant landmark along Vietnam's economic development and industrialization path.

The economic, political, strategic and cultural dynamism in Southeast Asia has gained added relevance in recent years with the spectacular rise of giant economies in East and South Asia. This has drawn greater attention to the region and to the enhanced role it now plays in international relations and global economics.

The sustained effort made by Southeast Asian nations since 1967 towards a peaceful and gradual integration of their economies has had indubitable success, and perhaps as a consequence of this, most of these countries are undergoing deep political and social changes domestically and are constructing innovative solutions to meet new international challenges. Big Power tensions continue to be played out in the neighbourhood despite the tradition of neutrality exercised by the Association of Southeast Asian Nations (ASEAN).

The Trends in Southeast Asia series acts as a platform for serious analyses by selected authors who are experts in their fields. It is aimed at encouraging policymakers and scholars to contemplate the diversity and dynamism of this exciting region.

THE EDITORS

Series Chairman:

Choi Shing Kwok

Series Editor:

Ooi Kee Beng

Editorial Committee:

Su-Ann Oh

Daljit Singh

Francis E. Hutchinson

Benjamin Loh