Asia-Pacific

10 Global Themes

Regional Flashpoints

Table of Contents

    1. Fragmented reconnecting of the region after Covid-19

    Country(s)/territory(s) impacted: Regionwide, particularly China, Hong Kong and Macau.

    Triggers:

    Sporadic outbreaks of Covid in the Greater China region; emergence of new vaccine-resistant virus strains.

     

    • Countries in the Asia-Pacific region adopted a more conservative approach to border control during the pandemic. Most countries swiftly closed their borders to foreign travellers in 2020 and have been more cautious in their reopening in 2021 compared to other regions (e.g. Europe). 2022 will likely see an uneven landscape of government Covid-19 strategies in the region, driving policy uncertainty in cross-border travel and business exchanges.
    • Many governments have started gradually easing border restrictions as of late 2021, indicating a policy shift toward endemic management away from a zero-case approach. As vaccination rates continue to rise, the need to sustain economic activity and support growth means that more countries in the region will open up heading into 2022. Countries that are heavily reliant on foreign business exchanges and tourists, such as Malaysia, Thailand, the Maldives, and Singapore, will lead the reopening process. While efforts to resume normal economic activity will be the prevailing trend in the coming year, regional governments' track records suggest the region as a whole will maintain a cautious approach. If Covid infection rates spike over the next 12 months, authorities across the region will likely reimpose border restrictions and local lockdowns more decisively than the rest of the world.

    • China will remain an outlier in the border reopening process, as Beijing shows no signs of changing its zero-Covid strategy despite the highly transmissible Delta variant presenting a significant challenge to this policy. With the Beijing 2022 Olympic Winter Games already excluding overseas spectators, China is unlikely to relax border controls in the near future. In addition, the focus on maintaining social stability in preparation for the Chinese Communist Party's (CCP) national congress next autumn could further delay the reopening of Chinese borders. The tight border controls and quarantine rules also extend to Hong Kong and Macau, which are largely synchronising their Covid policies with the mainland. As a result, disruptions to international travel will continue for much of 2022.

    2. Security clampdowns on extremism in Southeast Asia

    Country(s)/territory(s) impacted: Indonesia, the Philippines.

    Triggers:

    Successful counter-insurgency/counter-terrorism operations in Indonesia and the Philippines, including comprehensive prevention of violent extremism programmes; pandemic-related constraints on militant operations.

     

    • The steady decline of terrorist activity in Southeast Asia is likely to continue in 2022 as a result of successful counter-insurgency and counter-terrorism programmes in countries such as Indonesia and the Philippines. The socio-economic fallout and restrictions linked to the Covid-19 pandemic have also constrained terrorist and militant groups. As the two main centres of terrorism in Southeast Asia, authorities in Indonesia and the Philippines have prioritised domestic counter-insurgency and counter-terrorism initiatives, which in addition to the continued crackdown by security forces, have also included greater emphasis on de-radicalisation.
    • Indonesia has largely dismantled the Jemaah Islamiyah (JI), which was once the most active terrorist organisation in the country. Although JI has not carried out a terrorist attack since 2011, there are concerns of a possible revival of the group through a recruitment drive from Islamic State (IS)-affiliated fighters. Indonesian security forces arrested hundreds of suspected JI members this year, while also proactively cracking down on the remaining cells of the fractured Jamaah Ansharut Daulah (JAD), the IS branch in Southeast Asia. The JAD was blamed for several attacks in recent years, including the 2018 Surabaya bombings and the 2021 Makassar cathedral bombing.

    • Under President Rodrigo Duterte's hard-line policy on insurgency and organised crime, security forces in the Philippines have also undertaken a concerted crackdown, resulting in an improving security landscape. Militant and terrorist groups such as the ISIS-affiliated Abu Sayyaf Group (ASG), the Bangsamoro Islamic Freedom Fighters (BIFF) and the New People’s Army (NPA) have all seen their capabilities weakened by security clampdowns.
    • Law enforcement actions, combined with the impact of strict lockdowns on finance, communication and recruitment, will make it harder for terrorist and insurgent groups to recover in Southeast Asia. That said, more collaboration in counter-insurgency and counter-terrorism missions among regional stakeholders is necessary to mitigate the risk of resurgent extremist activity after the Taliban’s takeover in Afghanistan.

    3. Geopolitical impacts of health security measures

    Country(s)/territory(s) impacted: Regionwide, particularly China, Japan, India, and Taiwan.

    Triggers:

    Fresh Covid-19 outbreaks or new variants necessitating the rollout of booster jabs or new vaccines; governments increasing health spending or infrastructure; disputes over health-related trade.

     

    • In 2022, as governments across the Asia-Pacific lay out plans for economic recovery, strategies to address shortcomings in health are set to feature prominently. Countries will compete over health-related resources, shaping a complex operational environment for businesses in healthcare, pharmaceutical and medical science industries. For instance, major economies with well-developed health sectors, such as China, India and Japan, will be vying for overseas business opportunities, as governments are likely to increase investment and budgets for healthcare after the pandemic. There are also likely to be preferential terms and incentives offered to attract health investment.

    • Vaccine diplomacy has been a prominent feature of China and the US jostling for influence in the Asia-Pacific region over the past 12 months. As home to some of world's leading emerging markets, the Asia-Pacific will remain a focal point for vaccine diplomacy in the rollout of new vaccines or booster shots to deal with virus mutations. In particular, Beijing will look to further cement its leading position in terms of regional Covid-19 vaccine provision in 2022. However, access to vaccines has been used as geopolitical leverage; major powers will continue to use vaccine exports (donation and sales) to compete for influence in the region – China to Southeast Asia and Afghanistan, India to its neighbours, and Japan to Taiwan.

    • In addition to securing enough vaccine doses, many governments will bolster self-sufficiency in providing essential health resources. Noting lessons from the disruption of supplies to personal protective equipment during the pandemic, authorities will likely seek to strengthen their own manufacturing capacity or diversify their overseas supply chain. A stronger emphasis on health security in the post-pandemic era will translate into a higher risk of relevant sectors becoming embroiled in geopolitical rivalries and diplomatic quarrels.

    Total Chinese Vaccine
    Donations Only

    Datapoint 1
    %
    % Rise in _____

    Total Chinese Vaccine Donations & Transactions

    Datapoint 1
    %
    % Rise in _____

    4. Elections shaping government stability risks

    Country(s)/territory(s) impacted: the Philippines, South Korea, India, Australia, Japan, Thailand.

    Triggers:

    Unrest sparked by electoral tensions; political instability if popular mandates are not secured; disputes over election results disrupting power transitions.

    • 2022 will see a number of vital elections in the region as many countries still contend with the pandemic. A failure to ensure a cohesive government following an election will undermine economic recovery and increase instability. Incumbent governments will therefore be tempted to implement populist policies and avoid controversial reforms in the months running up to important elections.
    • In March, voters in South Korea will choose President Moon Jae-in's replacement, who will serve a single five-year term. The ruling Democratic Party candidate Lee Jae-myung has proposed introducing a universal basic income and is also likely to maintain Moon's policy stances towards Japan and North Korea. The main conservative opposition People's Power Party's candidate is likely to be more hawkish towards Pyongyang after Moon's unsuccessful attempts to engage with South Korea's northern neighbours. Ongoing investigations into corruption scandals for both main parties could ultimately be pivotal to the electoral outcome.
    • Similarly, Philippine President Rodrigo Duterte is ineligible to run for a second term when the country elects a new president in May. Although Duterte's five-year term has been highly controversial owing to his heavy-handed crackdown on drug crime and volatile foreign relations, he remains popular. Consequentially, there is a good chance that an ally of Duterte will take office. This is likely to see a continuation of policies that raised allegations of human rights abuses and pushed the EU to consider removing trade privileges offered to the Philippines. Elsewhere, federal elections will be held in Australia by 21 May 2022, where Prime Minister Scott Morrison is hoping for a second term. There are also suggestions that Thailand could hold a general election as anti-government protests continue, but the military government in Bangkok has a track record of delaying polls.

    • Seven Indian states will hold Legislative Assembly elections, with farmer protestor groups pledging to ensure that the ruling Bharatiya Janata Party (BJP) does not win Uttar Pradesh, increasing the risk of unrest in the lead-up to the polls. Meanwhile, the Japanese House of Councillors (the upper house) election will be an important barometer of public approval for the new prime minister, Fumio Kishida.

    5. China's quinquennial Communist Party congress

    Country(s)/territory(s) impacted: China, Hong Kong, Taiwan.

    Triggers:

    Last meetings of CCP 19th Congress setting the tone for the next national congress; leadership changes in key provincial administrations.

     

    • 2022 will be a particularly important year for China. More so than other years, the government's policy focus will be on maintaining stability as the ruling Chinese Communist Party (CCP) prepares for the 20th National Congress in the autumn. The quinquennial gathering of the CCP's representatives from across the country will oversee major changes in the party's senior leadership. However, General Secretary Xi Jinping looks set to stay on for a third five-year term, going against the party's convention of retirement after two terms. Several other members of the CCP Politburo Standing Committee (PSC) – China's top decision-making body – will be replaced. As a result, party officials jostling for position in the higher echelons of power will intensify behind the scenes. Fresh appointments and reshuffles of key provincial party leadership positions will be key indicators displaying the CCP's internal preparations for the all-important congress.
    • Although nobody in the CCP can mount a serious challenge to Xi's authority currently, the party leadership will seek to further tighten its grip on control in the run-up to the congress. Authorities will step up efforts to suppress any voice of dissent and adopt a risk-averse approach on socio-economic policy. This may translate into further clampdowns on private businesses and closer scrutiny of foreign entities following the targeting of domestic internet tech giants and the real estate sector in 2021. The government will also strengthen security and information monitoring, leading to stricter censorship next year in order to mitigate any risk of social unrest. Against this backdrop, international press, tech firms and NGOs will experience a further narrowing of their operational space.

    • In foreign affairs, Beijing will maintain a hardened and assertive stance in order to demonstrate Xi Jinping's strength and bolster his legitimacy ahead of the congress. While pragmatism will prevail in certain areas – for example, on climate change – Beijing is unlikely to compromise on key contentious issues, including the South China Sea disputes, Taiwan and human rights. The extra sensitivity attached the CCP congress will therefore drive regional tensions between China and other major stakeholders, most notably the US, Australia, and Japan.

    6. Regional impact of the Taliban’s takeover in Afghanistan

    Country(s)/territory(s) impacted: Afghanistan, Pakistan, China, India, Tajikistan, Turkmenistan, Iran, Russia.

    Triggers:

    Failure of the peace process; diplomatic engagement with the Taliban; Failure to maintain stable governance in Afghanistan; terrorist activities of ISIS-K.

     

    • The Taliban takeover and the withdrawal of US and allied forces from Afghanistan was a seismic event in 2021 with far-reaching consequences. The outcome has been an enhanced threat of terrorism globally, an influx of refugees into Pakistan and other neighbours, a humanitarian and economic crisis in Afghanistan itself, a potential increase in the global narcotics trade and the opening of opportunities for Pakistan and China to consolidate positions of regional leadership. This complex fallout of the Taliban’s return to government in Kabul will have regional impacts into 2022 and beyond.
    • In Afghanistan, the threat of attacks by the Islamic State of Khorasan Province (ISIS-K) will continue to destabilise the security environment. ISIS-K will target the Taliban’s leadership in an attempt to undermine the new regime, in which factionalism is likely to further weaken government stability. In order to reduce the confidence of foreign governments in the Taliban’s ability as security guarantors, ISIS-K is likely to plan large-scale attacks to attract international media coverage in the coming year. Precedent suggests that the minority Shia community and their infrastructure, such as public mosques, will remain key targets.

    • As the international community accepts the reality of the Taliban takeover, debates over the Islamist extremist group's legitimacy in government will continue into 2022. EU member states and key regional stakeholders such as India have preferred a collective approach to diplomatic recognition of the Taliban, though a consensus will likely be difficult to reach. Pressed by the unfolding socio-economic crisis and limited resources, the Taliban government will continue to engage through direct and indirect channels with foreign actors to secure its immediate interests, such as resuming cross-border trade, air travel, diplomatic and other exchange programmes, and procuring aid.

    7. Consequences and opportunities of the climate crisis

    Country(s)/territory(s) impacted: Regionwide, particularly India, Bangladesh, Maldives and the Philippines.

    Triggers:

    Non-sustainable lifestyle practices; unchecked exploitation of natural resources; conflict between short-term economic growth and sustainable development; weak regulatory oversight on environmental protection and climate change.

     

    • On the back of media focus and publicity surrounding the COP26 conference in 2021, climate change is likely to feature strongly in the public eye across the region in 2022. As a key location for emerging markets and leading manufacturing hub, the Asia-Pacific is facing significant impacts from the effects of climate change. This is was highlighted by one report from Nanyang Technological University and Glasgow University, which estimated that Association of Southeast Asian Nations (ASEAN) states could lose 35% of their GDP as a whole by 2050 due to the effects of climate change and natural hazards.
    • Among other priorities, Asian governments are likely to focus on energy security and push for greener sources in the next 12 months. Not only does India’s and China’s reliance on fossil fuels make them susceptible to commodity price hikes and shortages, it also represents a major challenge to the clean energy transition and decarbonisation. The renewed impetus on energy security and emission reduction will create significant investment and business opportunities for foreign companies. Many countries in the region will require large sums of foreign aid and technological support in their transition to cleaner energy. India in particular represents a favourable proposition for investors, as the country permits 100% foreign direct investment in the renewable energy sector and has pledged to reach carbon neutrality by 2070.
    • In addition, the fallout from the pandemic and the need to spur economic recovery mean that governments with limited resources may prioritise short-term growth over the environment. This is especially the case in Australia, South Korea and the Philippines, where crucial elections will take place in 2022. Such a policy stance will drive climate activism in places, including disruptive protests, boycott movements and targeted demonstrations against business entities associated with fossil fuels and polluting activities.Graphic: Please see the below proposal from the team. If too difficult, just let us know and we’ll use an iStock image instead.

    • As the international community accepts the reality of the Taliban takeover, debates over the Islamist extremist group's legitimacy in government will continue into 2022. EU member states and key regional stakeholders such as India have preferred a collective approach to diplomatic recognition of the Taliban, though a consensus will likely be difficult to reach. Pressed by the unfolding socio-economic crisis and limited resources, the Taliban government will continue to engage through direct and indirect channels with foreign actors to secure its immediate interests, such as resuming cross-border trade, air travel, diplomatic and other exchange programmes, and procuring aid.

    • Title of Graphic
      Economic impact of floods, cyclones and bushfires (in GDP) between 2010-2020 across the Asia-Pacific
      Notes
      • We would like a map graphic similar to sample below, but showing only the Asia-Pacific region and not the whole world;
      • The map will have circles representing three types of natural disaster (floods, cyclones and bushfires) in the respective countries;
      • Each category has a designated colour (Floods- Blue; Cyclones- Green; Bushfires-red);
      • Each circle should be coloured as per the designated category colour and each category will represent a colour scale- i.e. Highest costs being darkest shade to lowest costs being the lightest. For example for floods: 

       

      • There is no need to size the circles in proportion to the costs.
      Category Tables
      FLOODS
      China 2021 24 billion
      Pakistan 2010 9.5 billion
      Malaysia 2014-2015 560 million
      Thailand 2017 300 million
      Nepal 2019 232 million
      Dark Blue (China) to Light Blue (Nepal)

      CYCLONES
      India 2020 USD 13 billion
      Philippines 2013 USD 2.98 billion
      Tonga 2018 USD 356 million
      Dark green (India) to light green (Tonga)

      BUSHFIRES
      Australia 2020 4.4 billion
      New Zealand 2020 1.3 million
      Dark red (Australia) to light red (New Zealand)

      Map example

    8. Pandemic-driven increase in cyber attacks  

    Country(s)/territory(s) impacted: China, Vietnam, North Korea, Australia, ASEAN members.

    Triggers:

    Resurgence of Covid-19 infections; prolonged economic decline; development of new medical technologies.

     

    • The trend of state-backed cyber actors targeting industries of strategic value will continue in 2022 as governments try to mitigate the adverse effects of the Covid-19 pandemic. With its complex geopolitical landscape, multiple flashpoints and longstanding territorial disputes, the Asia-Pacific region will remain a key battleground for state-sponsored malicious cyber activities, which in turn is liable to drive regional tensions.
    • Financially-motivated attacks by North Korean state-sponsored actors will continue to grow in scope. Pyongyang-linked hackers have improved their cyber offensive capabilities after deepening connections with Russian cyber criminal groups (such as Trickbot) in 2021. This improvement in cyber espionage and intellectual property (IP) theft capabilities has been largely utilised to mitigate the constraints of the Covid-19 pandemic and international sanctions on the economy. With these external factors likely to persist into 2022, there is a high risk of states continuing to target industries of strategic value to their post-pandemic recovery plans, such as healthcare or energy.

    • In response to these growing threats, regional governments will continue to push for better cooperation and greater resources to safeguarding cyber security for critical industries. The Australian government launched its "International Cyber and Critical Technology Engagement Strategy" in late April to strengthen the Asia-Pacific region's cyber and critical technology resilience to cyber attacks. Such efforts are likely to alleviate some of the long-term concerns related to these threats. However, the significant amount of time and funding required to implement these initiatives means that entities operating in critical infrastructure – such as energy, technology, and healthcare – will remain vulnerable to malicious cyber activity throughout 2022.

    • Graphic: Please recreate and insert the four Pie Charts – “North Korea and China Cyber Targets”. Please include the caption: “Source: Microsoft’s 2021 Digital Defence Report”.

       

      Please include the titles and labels of each pie chart. However, there is no need to include the lengthy descriptions underneath each chart (as shown in the image).

    9. Tightening of data and social media regulation

    Country(s)/territory(s) impacted: India, China, Hong Kong, Singapore, Australia.

    Triggers:

    Growing political dissent and protests on social media platforms; leaks of consumer information online; organisation of extremist activity on social media.

     

    • Governments in the region will continue their crackdowns against large tech firms and social media platforms in the coming year to counteract the tech sector's growing influence during the Covid-19 pandemic. In China and India, authorities have reduced the space for critics of the government to express grievances. Chinese regulators have undertaken sweeping curbs on tech, ranging from tightening censorship and data storage rules to anti-trust investigations.
    • Regulatory uncertainty has driven several foreign firms, including LinkedIn and Yahoo, to exit China already. As Beijing looks to maintain a tight grip ahead of the ruling party's congress in the autumn of 2022, this crackdown is likely to receive fresh impetus. Similarly, India is seeking to exercise greater control over the industry to silence criticism of the government's response to the Covid-19 crisis. These crackdowns highlight the increasingly challenging operating environment for tech companies in the Asia-Pacific.

    • In Australia and Singapore, governments have also introduced new regulations aimed at breaking tech giants' apparent monopoly on digital spaces. Although this trend will bring more opportunities for smaller tech firms in the region, big tech’s established market share, range of services and close cooperation with regional governments will help retain their dominance in the region in 2022 – albeit with higher operating costs and compliance standards.

    10. Regional instability driving organised crime

    Country(s)/territory(s) impacted: Myanmar, Bangladesh, Thailand, Laos, Cambodia, Vietnam, Malaysia, Indonesia, the Philippines, Afghanistan, Pakistan.

    Triggers:

    Instability in Myanmar amid coup fallout; Myanmar’s increasing dominance over the production of synthetic drugs; worsening socio-economic crisis in Afghanistan.

     

    • Southeast Asia is currently witnessing a significant rise in activities related to the production and distribution of illegal drugs, which is likely to continue in 2022. The surge in drug-related activities is due to the combined factors of the turmoil cause by the Myanmar coup, a previous drop in supply following the onset of the Covid-19 pandemic, and the reallocation of law enforcement resources towards the control of Covid-19 infections.
    • Known as the Golden Triangle, the area comprising Myanmar’s Shan State, northern Thailand and adjacent parts of Laos has traditionally been a major hub for illegal drug production. The United Nations Office on Drugs and Crime (UNODC) has said drug seizures in the region are currently at their highest in years, having documented 87 major seizures in 2021 up to August – nearly two-thirds of which occurred since June. In Thailand, seizures of methamphetamine were up 73% compared to the first half of 2020. Meanwhile, Myanmar-based drug cartels have taken over the production of synthetic drugs such as methamphetamine and fentanyl from China amid rapid expansion of the illicit market.

    • Since the February coup, Myanmar has been in a state of turmoil as ethnic armed organisations and civilian resistance groups challenge the military junta. Fighting has concentrated in Myanmar’s border regions, which includes Shan State. With the formal economy on the brink of collapse and the attention of Myanmar’s security forces averted by anti-junta resistance, organised crime syndicates have thrived. With the anti-junta resistance showing strong determination, instability in Myanmar highly likely to persist in 2022, providing further opportunities for drug cartels.
    • Although the Taliban has vowed to crack down on the narcotics trade since coming to power in Afghanistan, an ensuing and worsening socio-economic crisis leaves many Afghans without a viable alternative source of income. The UNODC reported that poppy cultivation had increased 37% during the pandemic, and without international recognition and access to critical foreign aid, the Taliban will likely rely on this for income over the coming months. This could further exacerbate the region's problem with drugs (including domestic consumption) and organised crime.

    10. Regional Flashpoint Topic 10

    Country(s) Impacted: US, Canada, Mexico

    Text

    Datapoint 1
    %
    % Rise in _____
    Datapoint 2
    %
    % Rise in _____

    Ready to find out more?

    Request a PDF copy of the full report.

    Keep up to date with our latest news

    Sign up to receive our latest updates and news directly to your inbox. By joining our mailing list you have direct access to our annual & mid-year reports, weekly podcasts, and events.

    Scroll to Top