Foreword

Summary

Southeast Asia's economic performance in 2006 was one of the best since the financial crisis almost a decade ago. The better economic growth in the European Union, Southeast Asia's growing economic linkages with the dynamic Chinese and Indian economies, and a reviving Japanese economy all held promise for continuing good economic prospects over the medium term, notwithstanding a likely US slowdown in 2007.

On the political front, 2006 saw major change in Thailand and Timor-Leste. A military coup in Bangkok removed the Thaksin government from power and the new ruling elite struggled to find a political formula that would ensure stability for the future. In Timor-Leste old political cleavages resurfaced and erupted into violence that resulted in a change of government and UN intervention once again to restore stability. Elsewhere in Southeast Asia there was more continuity than change. Indonesia, the largest country of the region was moving on the right path to achieve political stability and improved governance under the able leadership of President Susilo Bambang Yudhoyono, though more needed to be done to remove the disincentives to investment. Aceh, where a former rebel leader was elected governor in free and fair elections, served as a model of reconciliation between former adversaries.

Internationally, ASEAN continued its efforts to build a stable regional order in Southeast and East Asia through bodies like the ASEAN Regional Forum, the East Asia Summit, the ASEAN+3, and the various ASEAN+1 processes. It was in the happy position of being courted by the major powers and had concluded or was negotiating free trade or economic partnership agreements with a number of these countries.

Southeast Asian Affairs 2007, like the previous 33 editions of this flagship publication of ISEAS, provides an informed and readable analysis of developments in the region. I am confident it will continue to be of interest to scholars, policy- makers, diplomats, and the media. I wish to thank both the editors and the contributors for the work they have put in to bring out this volume.