Regulating the Governance of Special Economic Zones in the Greater Mekong Subregion

 

I am back from the International Research Symposium on Public Management in Asia: Innovation and Transformation, which was held at the Education University of Hong Kong. My paper was “Regulating the Governance of Special Economic Zones in the Greater Mekong Subregion.”

Abstract:

 

The countries of the Greater Mekong Subregion (GMS) (i.e. Cambodia, Lao PDR, Myanmar, Thailand and Vietnam) have all adopted the special economic zone (SEZ) as a means of facilitating their trajectory through the Factory Asia paradigm of import-substituting, export-oriented intensive manufacturing based on low labour cost competitiveness. The SEZs supplement and in some cases supercede the previously built places of development which are industrial estates and industrial parks of various sorts. They offer the benefit of having demonstrated success (as the hundreds of millions of Chinese people raised out of poverty testifies) with a political system that does not require democracy or political pluralism. This is also not required by the international treaties that are in place in ASEAN and in its relationships with trade partners. In terms of governance, each country has introduced new legislation to regulate SEZs and, thereby, encourage further inflows of foreign direct investment (FDI) and the benefits it is believed that will bring. The range of legislation includes prime ministerial decrees and comprehensive laws aiming to provide all-encompassing treatment of activities. By definition, these regulations apply to specific pieces of territory and not to the remainder of the country. They may also be limited in time, as in Vietnam, where the use of SEZs as a policy experiment is most clearly evident. However, it is not clear that international best practice has been achieved in SEZ governance because each country feels the need to adopt an individual approach to it and each has designed SEZ policy for its own developmental and political goals. These goals range from the need to maintaining good relationships with China in the case of Kyaukphu SEZ in Myanmar to the security issue of migrant workers in Thailand’s proposed border SEZs to the fostering of cross-border activities in the Mohan-Boten zone. This paper examines the different legal frameworks that have been used to regulate SEZs in the GMS and seek to identify which aspects are more useful in attracting FDI and in delivering developmental goals more generally. The paper then goes on to explore the extent to which these regulations may be brought into national usage, which is based on international comparisons.

Keywords: development, governance, Greater Mekong Subregion, policy, special economic zones

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Savan-Seno Special Economic Zone and Industrial Development in Lao PDR

 

 

On Friday, I attended the 3rd National and International Conference on Politics, Philosophy and Economics at Rangsit University in Bangkok, which was organized by the Political Science Association of Kasetsart University, which is an active body with various conferences and journals published. It was not a very large conference but it was a friendly one and well-organized.

My presentation was entitled “Savan-Seno Special Economic Zone and Industrial Development in Lao PDR,” which was successfully conducted. There is a full-text version of the paper available but only the abstract was included in the conference proceedings so I will wait to see if it gets published (in revised form) elsewhere.

Spatial Economic Initiatives in Thailand

Last week I attended the International Conference on Thai Studies (http://www.icts13.chiangmai.cmu.ac.th/) held at the International Conference Centre in Chiang Mai (http://www.cmecc-mice.com/).

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(Walden Bello acting as discussant).

My paper was “Spatial Economic Initiatives in Thailand.”

Abstract

In common with other mainland Southeast Asian countries, Thailand has historically been dominated by a primate city, Bangkok, in which all principal economic, social, political, religious and monarchical institutions have been concentrated. Awareness of the problems that this concentration has caused has been recognised in developmental plans since the 1950s, when efforts at decentralization were first introduced. Assisted by improvements in transportation infrastructure made during the Cold War period, initiatives such as the creation of the Northern Region Industrial Estate have been intended to develop other parts of the country to modify migration flows and reduce income inequalities which have become more marked through the years. The Board of Investment has been instrumental in offering incentives to foreign and domestic investors in industrial estates to the north of Bangkok in Pathum Thani and Ayutthaya, where good roads link the places of production with the markets of the capital and the main port of Laem Chabang. Currently, the border special economic zone policy aims, insofar as its objectives have been coherently stated, to promote development in border regions which can take advantage of cross-border trade and investment. In these efforts, success has usually been achieved when public sector agencies have provided what private sector interests wanted and this is likely to continue in the future. This paper explores the various economic spatial initiatives that have taken place in the country and attempts to analyse when and where these have been successful and what lessons failures have been able to provide.

Keywords: Thailand, special economic zones, economic geography, regional development

Thailand’s Border Special Economic Zones and Precarious Life and Work

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I have returned from the NUS workshop on Living in an Age of Precarity, which was very successful.

This is the abstract of my presentation.

Thailand’s Border Special Economic Zones and Precarious Life and Work

John Walsh, Shinawatra University

ABSTRACT

Thailand’s proposed new special economic zone (SEZ) policy calls for more than ten projects in border areas across the country. After the military coup in 2014, it was stated that the SEZs would be used as internment camps for migrant workers as part of the campaign against the poor initiated by the junta. That policy has now changed to using day migrants in value-adding activities that will help lift Thailand out of the Middle Income Trap. These top-down approaches instil little confidence that genuine market demand or complementarity of production assets will lead to thriving SEZs with skilled and well-rewarded employees. Indeed, the presence of SEZs located across the Lao and Cambodian borders suggests there will be over-capacity of industrial space and, hence, under-utilisation of sites and the driving down of costs, including wages. Existing SEZs are already lying unused or, as in the case of Boten, stand as tribute to the damaging effects of cowboy capitalism. These examples suggest a flaw in the claim for SEZs in Thailand that they are different from industrial estates and not paces of pollution, contestation and social problems. This paper investigates the logic of the border SEZs in Thailand in the light of projects across the Mekong Region and, specifically, considers the extent to which they promote safe, decent and stable employment, in contrast to the precarious work and lifestyle of the factory hand and family members.

Keywords: employment, Mekong Region, precarity, special economic zones, Thailand

The Development of Dawei Special Economic Zone

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Announcing: Walsh, John, “The Development of Dawei Special Economic Zone,” The Myanmar Journal, Vol.2, No.2 (2015), pp.9-26, available at: http://www.komyra.com/bbs/board.php?bo_table=articles&wr_id=33.

Abstract: This paper uses a case study approach to explore the role of the Dawei special economic zone (SEZ) in the economic development of Myanmar, in the context of promotion of cross-border investment by neighbouring Thailand, which intends to take advantage of the presence of that SEZ. The SEZ is due to be built by the Thai corporation ITD, which has been facing problems with the mobilization of sufficient amounts of capital, resistance at the local level, political disturbances and other issues. Is it possible for this project to be completed and, if so, what are the difficulties (in addition to those already enumerated) that should be overcome and how should the resultant issues be addressed. The potential impacts of this development and the prospects of it being completed are also considered.

Key words: Asian Highway Network, connectivity, industry, Myanmar, special economic zone,

The Special Economic Zones of the Greater Mekong Subregion: Land Ownership and Social Transformation

I have returned from the Land Grabbing Conference held by RCSD at Chiang Mai University. It was a well-attended conference with many interesting speakers – unfortunately, I was only able to attend the first day.

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This was my paper:

The Special Economic Zones of the Greater Mekong Subregion: Land Ownership and Social Transformation

Abstract

Special economic zones (SEZs) are geographical areas bounded in space and time that are aimed at encouraging inward investment by privileging capital above labour and above the general legal system. In the Greater Mekong Subregion (GMSR), which consists of Cambodia, Laos, Myanmar, Thailand and Yunnan Province and Guangxi Zhuang Autonomous Zone of China, SEZs have been used extensively and with considerable success according to quantitative measures. In general, these measures have promoted the Factory Asia paradigm of low labour cost competitiveness in import-substituting, export-oriented manufacturing. This is a paradigm that is limited in time and ends with the effect known as the Middle Income Trap, which now affects Thailand and can only really be exited by qualitative change in economy and society to promote innovation and creativity. In other parts of the GMSR, states have not progressed so far along this trajectory and, in Laos and Myanmar, are at the very early stages of their journeys. In the majority of cases, SEZs are built with public sector support and, in particular, with assistance in obtaining land. Often, as in the case of Dawei SEZ in Myanmar, this has involved the forcible relocation of the villagers from an area the size of Singapore. At least some of the dispossessed villagers have mounted armed resistance to this relocation and halted construction. This may be seen as a form of creative destruction during the process of what Polanyi called the great transformation. Social relations and social capital are among the assets that are transformed into market relations as land itself is redefined and reconfigured as commercially important space. This paper explores the variety of SEZs in the GMSR and the way they interact with the people who once lived on or near the land they now occupy. Remedial social policy options are explored.

Keywords: Greater Mekong Subregion, land, special economic zone, transformation

The full-text version of the paper is online at the conference website (here).

Myanmar Embraces the Factory Asia Paradigm

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Walsh, John, “Myanmar Embraces the Factory Asia Paradigm,” paper to be presented at the 1st International Conference on ASEAN Studies,” organized by the Pridi Banomyong International College, Thammasat University (October 3rd-4th, 2015).

Abstract

Some of the more important sites where rapid economic development will take place in Myanmar in the years to come are the special economic zones (SEZs) which will host the Factory Asia paradigm: import substituting, export oriented, low labour cost manufacturing based on the movement of labour from manufacturing to industry (pre-Lewisian point) and then suppression of workers’ rights (post-Lewisian point). This will, presumably, take place in the designated areas of Dawei, which will be dominated by Thai capital, and Thilawa, which will be dominated by Japanese capital. Peripheral SEZs in border areas have also been proposed but these are jeopardized by continued attempts to ensure autonomy for ethnic and tribal groups opposed to central Burman rule. The SEZs will be linked to the places of consumption and production across Asia by the Asian Development Bank’s Asian Highway Network, which consists of road and rail links which will, in the case of Myanmar, connect Yangon and Manadalay to Kanchanburi in Thailand (and hence China to the north via Route 3) and the eastern border of India and, hence, make numerous potential export industrial sectors profitable which were not profitable with the existing level of physical and social infrastructure. There will be a human cost to pay for this transformation, despite aggregate increases of income overall. Alienation, state-sponsored violence and family conflicts are all to be expected, since these have routinely been found in the other countries to have embraced the Factory Asia paradigm. This paper explores the likely trajectory of development to be followed in Myanmar based on the history of neighbouring countries and the potential impact on the workers and family member involved in this paradigm. Policy recommendations are drawn from the analysis.

Keywords: Asian Development Bank, Asian Highway Network, Factory Asia, Special Economic Zones, Thailand

John Walsh, Shinawatra University

More details here.