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.

Thailand’s Border Special Economic Zones and the Reconfiguration of Cross-Border Social, Labour and Commercial Relations

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I am back now from the InterAsian 5 Conference at Seoul National University in Korea (http://www.ssrc.org/programs/child-component/interasia-program/interasian-connections-conference-series/interasian-connections-v-seoul-2016/). It was a successful and interesting event with more than a hundred scholars joining a series of workshops with pre-prepared and pre-circulated papers. This was mine:

Thailand’s Border Special Economic Zones and the Reconfiguration of Cross-Border Social, Labour and Commercial Relations

Abstract

Border special economic zones have been announced as the next step of developing the Thai economy and making qualitative, structural changes to it. Yet it is not clear how such zones differ from the currently employed industrial estates, which have done sterling service in fueling rapid economic growth for several decades and continue to be important elements in the economy. This paper explains the issues behind this policy and the ways in which estate might hope to become a zone.

Keywords: border, industrial estate, middle income trap, special economic zone, Thailand

It is likely that in due course the collected papers from each of the workshops will appear as a journal special issue or book in due course.

Impacts of the Special Economic Zones of Lao PDR

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This is a paper that I am going to present at the 5th Lao Studies Conference to be held in July this year.

Abstract:

One of the principal policies for rapid economic development in Lao PDR is the creation of special economic zones (SEZs). These areas aim to encourage inward investment by providing stable infrastructure and tax breaks in various categories to potential domestic and international investors. Hosting factories on this basis enables the country to pursue its trajectory along the Factory Asia paradigm (low labour cost competitiveness in export-oriented, import-substituting manufacturing). In addition to direct effects of increased employment, this also offers possible spillover effects in the form of industrial deepening and technology transfer. SEZs are generally located near to large markets or population bases or the intersections of transportation routes. If successfully managed, SEZs act as magnets for new forms of development and provides demand for social and public services. Social relations are also affected because many of the people drawn from the agricultural into the industrial sector will be women. The Lao government is planning to build an additional 41 SEZs and specific economic zones with the view of creating another 50,000 jobs and adding US$2,400 to local per capita incomes. International investors in both private and public sectors will be invited to contribute to these projects. This paper explores the existing use of SEZs in the country and their impact on local conditions from various perspectives (e.g. social, environmental, legal and geographic) and then attempts to predict likely impacts to be caused by the future constructions. Policy recommendations are derived from this analysis.

Keywords: Factory Asia paradigm, infrastructure, Lao PDR, social relations, special economic zones

The prgoramme for the conference is now online at: http://www.laostudies.org/sites/default/files/public/Program%20%28As%20of%20April%203%2C%202016%29.pdf.

 

Uneven Development and the Special Economic Zones of the Greater Mekong Subregion

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Announcing: Walsh, John, “Uneven Development and the Special Economic Zones of the Greater Mekong Subregion,” Journal of Perspectives on Development in the Greater Mekong Region, Vol.3, No.1 (January-June, 2015), pp.1-16, available at: http://icmr.crru.ac.th/Journal/Journal%205/1%20Uneven%20Development%20and%20the%20Special%20Economic.pdf.

Abstract:

The use of industrial estates in the Greater Mekong Subregion (GMS) has been very successful in terms of numbers of projects launched, number of factories opened, amount of goods manufactured and so forth. However, although aggregate levels of creation are impressive, it is not clear that the value added to the economies involved overall is very high. One important means of enhancing the quality of the connectivity between economic actors located within an industrial estate and other economic actors in the wider economy. This would involve connectivity that would be characterized as becoming greener and smarter. This paper argues that the concepts of environmental friendliness and intelligent relationships can be folded into the construct of connectivity as a framework for analysis. This is used to inform the study and discussion of a series of case studies of industrial estates within the GMS and helps to refine a future research agenda.

KEYWORDS Connectivity, Greater Mekong Subregion, Industrial estates, Special economic zones, Uneven development

Thailand’s Border Special Economic Zones and the Reconfiguration of Cross-Border Social, Labour and Commercial Relations

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This is the abstract (only 95 words for a 9,000 word paper) for the presentation at the InterAsian event at Seoul National University (http://www.ssrc.org/programs/child-component/interasia-program/interasian-connections-conference-series/interasian-connections-v-seoul-2016/):

Abstract

Border special economic zones have been announced as the next step of developing the Thai economy and making qualitative, structural changes to it. Yet it is not clear how such zones differ from the currently employed industrial estates, which have done sterling service in fueling rapid economic growth for several decades and continue to be important elements in the economy. This paper explains the issues behind this policy and the ways in which estate might hope to become a zone.

Keywords: border, industrial estate, middle income trap, special economic zone, Thailand

3rd International Conference on Skill Development and Technological Innovation for Economic Growth

I have just attended the 3rd International Conference on Skill Development and Technological Innovation for Economic Growth organized by the Institute for Management Studies, Ghaziabad. I was the chief guest and gave an address in the opening session on connections between India and ASEAN. My conference paper was:

Special Economic Zones and Industrial Policy in Thailand

Abstract

Whether under military or democratic rule, successive governments in Thailand have consistently used industrial policy to try to improve economic performance and enhance economic development. Previously, industrial estates were used as an aspect of entering and then passing through the Factory Asia paradigm. However, as Thailand now seeks to exit the Middle Income Trap, industrial estates are to be supplemented by special economic zones (SEZs), which are to be located in border provinces to take advantage of cross-border complementarities with neighbouring Myanmar, Lao PDR, Cambodia and Malaysia. Industrial policy, which remains a controversial subject, involves a range of different activities and requires appropriate coordination and evaluation of results. In the Thai context, this has involved a number of different ministries and other government agencies and there have been some overlaps of responsibility and inefficiencies caused as a result. This paper explores the historical experience of industrial policy in Thailand with a view to analyzing the role of SEZs within current and future policy. The incoherent policy platform currently being promulgated will be considered and recommendations made for a more rational set of policies and means of governance for the future.

Keywords: industrial estates, industrial policy, middle income trap, special economic zones, Thailand

Sa Khrai Special Economic Zone

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I spent two days last week in Amphur Sa Khrai in Nong Khai province in the northeast of Thailand as part of a team exploring special economic zones (SEZs) there. The current government has announced that Nong Khai is one of five to be invited to open SEZs according to the cross-border development concept. The Nong Khai administration has decided that two areas in Sa Khrai will be used for this purpose.

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The land selected is in public hands and not currently being used very productively. Apparently, it is high enough not to be at risk of flooding and there is a supply of artesian water that can be used. There is a plan to use a private sector partner to provide solar power to supplement the conventional electricity to be supplied by EGAT (Electricity Generating Authority of Thailand).

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The purpose of the trip was also to start explaining to local people and stakeholders about what the SEZs will mean for them and their lifestyles. Even though it will be a few years before they are ready for business, it is now time to begin planning for the future.

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The people seemed interested, at least, perhaps (for some, anyway) because the value of their land is going to increase so much. The whole area will change, since infrastructure will be required at a high level in order to attract international investors. There is also the prospect of a large number of good quality jobs.

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The River Mekong was looking impressive as ever – I heard that the level had risen significantly over the previous few hours and a flood was expected but we seem to have escaped that for the moment.

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The riverside on the Thai side is being built further to provide a place to promenade and to connect with the market and restaurants with a view to future growth in the tourism industry (which is currently down 90% in Nong Khai, according to estimates).