Special Economic Zones in CLMTV

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I spent two days last week at a workshop on special economic zones in Southeast Asia for the United Nations (UNCTAD), in conjunction with ASEAN and support from a number of other partners. I was invited to speak on the topic of Special Economic Zones (SEZs) in CLMTV (Cambodia, Lao PDR, Myanmar, Thailand and Vietnam): Significance, Impact and Linkages. The audience consisted of representatives of eight Southeast Asian nations, academics and private sector representatives and we met at the Amari Watergate Hotel here in sunny Bangkok.

The issues involved are complex and opinions diverse: in India, for example, SEZs are seen as a means of land-grabbing and reviled by most people while in China they are revered as part of the means of enabling hundreds of millions of people to lift themselves from poverty while retaining monolithic political control. Here in the Mekong region, they are part of the Factory Asia paradigm of import-substituting, export-oriented intensive manufacturing based (at least initially) on low labour cost competitiveness. One question is how to involve local companies and individuals as part of the global value chains being created by firms through forward and backward linkages. The provision of infrastructure and connectivity is necessary but not sufficient in achieving this.

Attending the workshop is part of my consultancy with the UN, which now requires me to complete various reports and I will be busy with that over the next couple of weeks.

Collaborative Research Framework for Addressing Issues Arising from the Next Phase of the ASEAN Economic Community, 2015

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Last week I attended a  Symposium on Collaborative Research at Nilai University in Malaysia on Advancing ASEAN Integration through Cooperative Education. This was organized in conjunction with the University of San Carlo in the Philippines. I was invited to give a presentation on the topic of collaborative research and to be part of a team to try to bring about some joint projects. The symposium was successful and I hope we can make more progress on these projects.

Towards Seamless Connectivity: Transforming Multi-Modal Transport System into Economic Corridors

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Attended this seminar on “Towards Seamless Connectivity: Transforming Multi-Modal Transport Systems into Economic Corridors” at the Mandarin Hotel. The seminar was organized by the Network of East Asian Thinktanks (NEAT), Institute of Asian Studies, Chulalongkorn University and other institutions. The keynote speaker was Ambassador Pradap Pibulsonggram, Thai Representative to ASEAN Connectivity Coordinating Committee (ACCC).

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Multi-modal transportation involves two or more different types of transport, such as truck, train and ship. These follow specific routes (e.g. the Asian Highway Network) and the issue is how to make those long corridors into value creating areas, rather than just land being travelled over without stopping. There is no simple answer to this question, hence the seminar (which will continue for two days, although not for public consumption).

Sustainable Growth Strategies for 999 Company in the Era of the ASEAN Economic Community: Medical equipment and Supplies Trading in Thailand during Changing Environmental Conditions

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This is the second of the papers to be presented of the IFRD Conference next month, co-authored with Dr. Wilaiporn Lao-Hakosol:

Sustainable Growth Strategies for 999 Company in the Era of the ASEAN Economic Community: Medical equipment and Supplies Trading in Thailand during Changing Environmental Conditions

Abstract

As a consequence of the ongoing establishment of the ASEAN Economic Community (AEC), cross-border trading, intra-regional trading and international trading businesses start to pose new challenges to certain industries in Thailand. One of the problematic areas is the trading of medical products, since medical and health personnel are among the professions that will obtain the privileges of the free flow of labour-across all ten Southeast Asian nations. Although this industry is not much affected by economics per se, it still has to adjust its corporate strategies. One of the reasons is the moving in of medical suppliers (commonly known as principals) to set up their own branches with the intention of re-acquiring distributorships from local traders. How is a trading company going to prepare not only for its survival but, also, for its market share in this intense yet growing industry? This study investigates the key environmental and trading factors to analyse the company’s existing strategies and practices and, then, formulates a set of recommendations for the 999 Company.

Key words: distributorship, local traders, medical products, principals,

Wilaiporn Laohakosol and John Walsh, School of Management, Shinawatra University

SME Development Plans in the Light of the ASEAN Economic Community and Their Implementation in Lao PDR

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Southiseng, Nittana and John Walsh, “SME Development Plans in the Light of the ASEAN Economic Community and Their Implementation in Lao PDR,” paper to be presented at the International Conference on Commerce, Financial Markets and Corporate Governance/2nd International Conference on Research Methods in Management and Social Sciences (Shinawatra University, Thailand: February 7th, 2015).

Abstract:

Small and medium-sized enterprises (SMEs) are integral to the regional economic development and growth of the ASEAN because they account for more than 96% of all enterprises and some 50-85% of domestic employment in ASEAN member states is provided by SMEs. SMEs contribute some 30-53% of regional GDP and 19-31% of exports. For this reason, SME development of ASEAN is embedded in the third pillar of the ASEAN Economic Community (AEC) Blueprint, namely, equitable economic development, and its development would directly contribute towards achieving the implementation of the third pillar. SMEs not only contribute to income and employment generation of the region, therefore, but also reinforce gender and youth empowerment through business participation, as well as their widespread presence in non-urban and poorer domestic regions. In the Lao context, the 7th National Social-Economic Development Plan recognized that growth in SMEs is also essential for poverty reduction and the graduation of Laos from least developed country (LDC) status as SMEs contribute to raising standards of living for people and are the foundations of industrialization and modernization of the Lao economy. This is shown in the fact that, in 126,913 enterprises nationwide which had 345,138 employees in the private sector of the country, 99.8% of them were SMEs and employed 83% of the workforce. Most, 64.5%, belonged to the trade sector, followed by the processing industry sector at 19%. They were mainly located in the capital Vientiane (22.7%), Savannakhet province (11.4%) and Vientiane province (10%). For this reason, the integration of SMEs in Laos into the international market economy and increasing their competitiveness and resilience are priorities for the long-term SME development policy, which should create favourable conditions for the establishment of the AEC in 2015. This study is based on recent secondary policy frameworks and reports available at the institutions with mandates to promote the development of SMEs and facilitate their access to finance, information, technology and markets. The development plan of SMEs from 2011-2015 aimed to address the obstacles faced by SMEs and to enhance their competitiveness in six prioritized areas: improve regulatory conditions; access to finance; formation of new entrepreneurs; increase provision of business development services (BDS); enhance business linkages and increase productivity and access to markets. To achieve these goals requires constant efforts to improve human resources, provision of access to finance, technology, innovation and markets as well as internationalization through policy support measures, supplementary activities and appropriate communication.

Thai-Japanese Public-Private Sector Relationships: The Case of Special Economic Zones

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I will be presenting this paper at the forthcoming 4th International JSA-ASEAN Conference: State and Non-State Actors in Japan-ASEAN Relations and Beyond 2014:

Thai-Japanese Public-Private Sector Relationships: The Case of Special Economic Zones

Abstract

In order to outflank obstructive non-elected institutions, recent democratically-elected Thai governments have increased their use of the private sector. This may be seen in the case of some privatization ventures and through more open tendering for infrastructure development, as for example in the case of water management projects. A further aspect of this may be found in the governance of special economic zones (SEZs), which are the venues for large amounts of Japanese investment in Thailand and beyond. The floods of 2011 provided confirmation, if any were needed, of the importance of SEZs in global manufacturing and distribution networks. In seeking to reassure Japanese (and other) companies that the closure of the SEzs would not be permitted to recur, the Thai government dealt with companies on an individual basis, which has also been the case with labour market initiatives such as the provision of apprenticeships. Such arrangements can be problematic politically because there are constitutional and administrative regulations concerning the extent and means by which government agencies can enter into agreements with overseas commercial interests. This paper explores the different ways in which arrangements have been made and are or are not permissible and discusses the effectiveness of the current situation and how it might be improved. Focusing on the relationships between the government, the Industrial Estates Authority of Thailand, private sector SEZ management companies and public and private sector Japanese interests, the paper then explores the ways in which SEZs are currently operated and then considers how the reduction of negative externalities can be managed so as to meet the vision of the Eco-Industrial Village concept. Policy recommendations are drawn from this analysis and a future research agenda outlined.

Achieving the ASEAN Economic Community 2015: Challenges for Member Countries and Businesses

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My review of Achieving the ASEAN Economic Community 2015: Challenges for Member Countries and Businesses, edited by Sanchita Bindu Das, has been published at Asian Integration here.

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The ten member states of the Association of Southeast Asian Nations (ASEAN) represent a significant bloc of some 600 million people, all of whom now (with the transition from autocracy to some form of democracy and openness in Myanmar) are part of the capitalist system of production and consumption. ASEAN has already achieved one of its principal goals by helping to ensure that no two active members of the Association have gone to war with each other. This in itself is no mean feat.

Read the full review here.