Intra-regional trade essential for full

Economy March 15, 2014 00:00

By Pichaya Changsorn

The Natio

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Asean needs a new class of young people who are ready to work across borders if it wants to realise benefits from the regional economic integration fully, says a former secretary-general of the association.

Surin Pitsuwan said one of Asean’s challenges to achieving its goal of economic integration was to increase its intra-regional trade, and that would not be possible unless more residents of Asean countries were working in other members of the trading bloc.

"To be an economic community, you need to trade with one another more and more," Surin said.

"To survive, an economy now has to invest more outside itself."

Currently, only one-fourth of Asean’s trade is conducted within the region, while intra-regional trade in the European Union is over 75 per cent.

It is 65-68 per cent in the case of the North American Free Trade Agreement.

Speaking at a dinner organised by the British Embassy for the British Chevening Scholarships Alumni on Thursday, Surin described many challenges facing this diverse region if it is to achieve its goal of establishing the Asean Economic Community at the end of next year.

Except Singapore, Brunei and Malaysia, where incomes per capita exceed US$10,000 (Bt323,000) per year, the rest of Asean is "struggling" to get out of the "middle-income trap".

Thailand and the other Asean members, he said, needed to reform and invest more effectively in education, science and technology, and innovations.

"The AEC is going to be attractive but not for members who are not prepared and competitive," Surin said.

He said countries around the Mekong River would have the challenge of improving their infrastructure in a bid to attract foreign investors, building roads, dams and power plants.

Those countries needed to tackle important issues such as transparency, rule of law, decision-making and good governance.

Surin believes the AEC has implications beyond economics, since developments in politics, democracy, transparency and the rule of law could affect investor confidence.

"[The economic] integration will demand that we are more open to each others, because everybody has a stake in each other … you go down, you drag us all down," he said.

Citing the fact that half of AEC’s population will be Muslim and more than half will speak Malay, Surin said the unique demography of Thailand’s provinces in the deep South could be a "national asset" if Bangkok did not force everyone to conform to its "high culture".

Surin warned about the extensive expansion of cronyism in every part of the country, as favouritism and personal connections carry more weight than performance and a merit-based system, resulting in bureaucracy not functioning in the best interest of the country.

"It’s going to be a tremendous problem. If you don’t realise it, realise it now," he said.