Despite major security concerns, some ASEAN nations are open to partnering with Huawei to develop their 5G networks. Can debates in Europe and the US offer any lessons for Southeast Asia?
At the end of January, the UK announced that it would defy the US and allow the Chinese tech company Huawei to provide parts of its 5G network. Downing Street concluded that Huawei’s equipment was necessary to keep costs down but set clear limits over Huawei’s involvement.
Huawei is one of the world’s main suppliers of 4G and 5G technology and a leader in supplying antenna and base station hardware. However, the US has urged its allies to exclude the Chinese telecom giant over security fears.
Senior US officials told the UK government it would be “nothing short of madness” to use Huawei in Britain’s networks, warning that its technology would provide a backdoor to mass Chinese state surveillance. In an attempt to pressure its ally, the US warned that if the UK allowed Huawei into its network, it might be forced to halt or reduce intelligence sharing between the two nations.
As the trade war scales down, the tech war heats up. The US has demonstrated that preventing the rise of a Chinese tech sector is a national priority and it has no reservations about forcing allies to choose between maintaining close US relations and accepting low-cost 5G networks.
In this clash between two tech titans, smaller nations are being forced to pick sides. Given the transformative potential of 5G for the internet and digital economy, the stakes are extremely high.
Nowhere is this more pertinent than in the ASEAN region, where relations with China as both a major economic partner and aggressive South China Sea claimant are already on a knife-edge.
The EU’s approach has been the pursuit of multiple vendors
Despite American lobbying efforts, many countries have allowed Huawei to continue working on 5G in their markets. EU powers like Germany, France, as well as India, and a handful of Southeast Asian nations like Malaysia and the Philippines have already expressed a willingness to work with the tech firm.
The Common Market in Europe favours a multi-vendor approach to 5G. Avoiding over-reliance on a single firm promotes competition and reduces the obvious security risks.
Huawei’s production know-how and manufacturing capabilities give the firm an edge in this over its competitors, which is why the UK opted to allow them into its 5G market. Despite US sanctions blocking access to US-made components, the company is already ramping up production of 5G base antennas.
The Chinese company had 65 commercial deals for 5G rollouts across the world by January 2020, half of them in Europe. The firm’s EU based rivals reported similar numbers, with Ericsson at 78, and Nokia at 63 commercial deals. With no clear dominant player, countries that adopt a multi-vendor approach are avoiding taking steps that could put them at a disadvantage further down the road.
There is no consensus within ASEAN on how to deal with Huawei
Despite differences in approach, most governments and security agencies in the West agree on the security risks Huawei poses.
The company’s close ties to the Chinese Communist Party, from whom it enjoys considerable state patronage through subsidies and propaganda, have prompted concerns. Security experts say the threat of backdoor surveillance by the Chinese government is a threat in domestic 5G networks.
For the US and European nations, the threat is acute. Smaller nations like those in Southeast Asia appear less concerned. For them, the debate around Huawei has been more focused on economic realities and geopolitics.
Even US allies in the region, like Thailand, the Philippines, and Singapore, have not banned Huawei from their 5G networks. Part of the reason for their reluctance is the lack of an alternative. There are no US brands currently making 5G equipment. The two Nordic brands are 20% to 30% more expensive than Huawei.
Thailand and the Philippines have allowed Huawei into their 5G development plans. Singapore, one of the closest US-allies in the region, is still debating the topic, but all indications suggest the adoption of an EU-style, multi-vendor approach with Huawei playing a role in non-core 5G network operations.
Elsewhere in the region, some nations have been more vocal in their defence of Huawei. Malaysian Prime Minister Mahathir Mohamed openly objected to US sanctions. A long-time critic of the West, Mahathir is known for his “Look East” policy for developing his country. Addressing the security concerns, Mahathir asked: “What is there to spy in Malaysia?”
Cambodia is also rolling out its 5G network with the help of Huawei.
In Indonesia and Myanmar, Huawei is not banned, but it faces competition from Chinese rival ZTE. Like Huawei, ZTE is also under scrutiny. It is part-owned by the Chinese government, elevating the firm’s security risks.
The only major nation in the region that has resisted Chinese involvement in domestic 5G networks is Vietnam. Despite close economic ties with its northern-neighbour, Vietnam is fiercely protective of its independence and is wary of any Chinese security threat. Vietnamese telecom companies, including the state-owned Viettel, have explored the possibility of collaboration with Nokia and Ericsson rather than Huawei.
For the rest of ASEAN, security concerns take a back seat to economic development.
A balanced approach to Huawei will unlock economic savings while protecting network integrity
The multi-vendor approach to Huawei holds the most promise. Excluding players before the market has developed global standards and firm has emerged dominant could put ASEAN nations at a disadvantage in the future. Huawei’s merits, including its competitive prices, make it difficult to build a convincing case to lock them out of 5G markets completely, even with the evident security risks.
Allowing Huawei access to 5G markets, while at the limiting its control over core network infrastructure, would keep costs down, reduce the margin for Chinese surveillance, and prevent another telecom giant from building a monopoly in a sector as critical as 5G infrastructure.
Singapore is currently exploring something along these lines. It seeks to create a level playing field where Huawei and other firms like ZTE, Nokia, and Ericsson can all have a role in the country’s 5G rollout.
Given the magnitude of economic potential 5G technology holds, Southeast Asian nations can ill-afford to shut out a major player like Huawei. Creating a level playing field for all the competitors in the 5G space, while acknowledging the inherent security risks associated with Chinese telecom firms, is the best option, under the existing circumstances.