Thailand moves full steam towards regional integration

[Jonathan Fairfield]

Thailand moves full steam towards regional integration

Achara Deboonme

The Nation

BANGKOK:-- Impressive facts derail any lingering rumours we are poorly prepared for the advent of the AEC this month

Big corporate names like Bangkok Bank, Charoen Pokphand Foods, Siam Cement Group and Thai Beverage - all representing different Thai industries - share a view that the domestic economy is becoming too small to meet their ambitions and so are venturing overseas to take advantage of growth opportunities that the Asean Economic Community (AEC) has to offer.

Asked how ready his company is for the AEC, Charoen Pokphand Foods president and CEO Adirek Sripratak simply said: "We established a strong footprint in Asean, not in recent years but over 30 years ago."

Long before the imminent regional economic integration that will establish Asean as a single market and production base, these companies have been making their presence felt in many of the 10 member-states of the sub-region. Bangkok Bank already has branches in every Asean member except Brunei. Charoen Pokphand Foods operates in Cambodia, Laos, Malaysia, the Philippines and Vietnam.

In 2014 Siam Cement Group saw its annual sales revenue in Asean, including exports from Thailand, rise 18 per cent, to Bt100.9 billion, or 21 per cent of the group's total sales revenue. More than a quarter of its 35,000-strong workforce are non-Thai Asean citizens manning overseas operations.

In the past five years, many more Thailand-based companies have looked beyond the country to benefit from integration and its promise of free flow of investment, capital and skilled labour. Among the 50 companies featured in the SET 50 Index, 70 per cent have established operations in one or more Asean country.

Bank of Thailand data shows that net investment outflows from Thailand to the other Asean members have been constantly increasing over the past four years. Thai Direct Investment to Asean hit Bt84 billion in 2012, rising from Bt69 billion in 2011.

The figure fell off in 2013, when Thailand was hit hard by international political instability, before peaking at Bt100 billion in 2014.

Regulations-wise, Thailand is at the forefront in complying with the AEC Blueprint. According to the Commerce Ministry, Thailand has implemented more than 80 per cent of the measures outlined in the blueprint.

At the national level, several plans have been introduced to bring about seamless connectivity.

Thailand lies at the centre of the East-West Economic Corridor, a road link that extends from Vietnam to Myanmar. Road upgrades have been carried out in the past few years and plans are underway to invest in new rail projects to facilitate passenger and goods transportation. Chief among them is the 873-kilometre, North-South double-track route from Nong Khai on the Lao border to Map Ta Phut at the heart of the country's Eastern Seaboard industrial zone.

Deputy Prime Minister Somkid Jatusripitak also envisages an East-West rail link, to complement the North-South project and to make Thailand a true connectivity hub. The new project would provide a line to link up Thailand, Laos and Myanmar.

"This will immediately turn Thailand into the centre of the AEC," Somkid said.

The road and rail links are expected to boost trade among the Asean nations and other neighbouring countries. To cash in on the connectivity, the Thai Cabinet recently approved in principle the establishment of special economic zones in six border provinces, aiming to draw foreign investors that hope to benefit from the integration.

Thailand is also prepared to play a major role in Mekong sub-regional trade. The Bank of Thailand recently raised the limit on Thai currency one can carry across the border from Bt500,000 to Bt2 million, in an attempt to increase baht-denominated trade in the region. Foreign companies can also borrow in baht even if they do not trade with Thai companies or operate in the Kingdom.

The opportunities are huge, but not all Thai companies are embracing the integration wholeheartedly.

Those in the service sector could be affected the most, since the AEC heralds the free flow of professionals in eight skilled-labour groups - doctors, dentists, nurses, engineers, architects, accountants, surveyors and tourism workers.

Dusit International Group, the oldest Thai hospitality group, foresees that the AEC will bring greater demand for business and leisure travel. Yet it remains to be seen how the group will be affected by the free flow of personnel in the tourism industry.

Small and medium-sized enterprises, which constitute over 70 per cent of the more than 600,000 registered companies in Thailand, are wary of the possible negative impacts, fearing the AEC will toughen competition and threaten their viability.

To address these fears, the Commerce Ministry has conducted over 200 training courses since 2012, with an estimated 25,000 small and medium-sized entrepreneurs, farmers, educators, government officers and members of the public taking part. Through a network of 18 government agencies and private organisations, an additional 41 sessions have been held for over 9,100 participants. More information on integration is available through the AEC Centre in Bangkok, which now has over 37,500 members. Similar centres have been established in every other province, covering over 70,000 members.

Still, more needs to be done to fully capitalise on the opportunities that come with regional integration, according to Surin Pitsuwan, former secretary-general of the Association of Southeast Asian Nations.

"Given the relatively small intra-regional trade, Thailand needs to do more to reap the maximum benefits to be offered by the AEC," he said at a recent conference in Bangkok.

Despite the challenges posed by the AEC, Thailand as a whole looks set to move forward and to grow together with its increasingly close regional neighbours.

Source: http://www.nationmultimedia.com/opinion/Thailand-moves-full-steam-towards-regional-integra-30275547.html

-- The Nation 2015-12-24

[eliotness]

Same with the Common Market that evolved into the EU, the big companies are, will be, the main benefactors, SMEs will struggle to reap any benefits.

[torpedo1970]

"This will immediately turn Thailand into the centre of the AEC," Somkid said.

Dream on!

There is a lot more needed before that happens

[Redline]

Hub

[NongKhaiKid]

Is it just me or does anyone else think that LoS have delusions of grandeur and harbour the belief that they will be the AEC's top dog ?

[waldroj]

"East-West", "North-South"!

The centre of the universe (if you believe the hype).