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Thailand in a strange state, as countdown to AEC looms

Confused and befuddled by a debilitating political divide, the kingdom has a lot more than regional business on its mind

Thailand is, arguably, the country with with best geographic location in the Asean Economic Community that will be set up in the not-too-distant future.

In addition, the nation's economic strength is better than many in the region. But in terms of positive factors, that's about it. The AEC countdown waits for nobody, and one thing is sure: Thailand will not make great strides into uncharted territory. Many people may blame domestic politics, but it's just one of a few negatives concerning the Kingdom.

Let's count the factors that could hamper Thailand's AEC ambitions. Insurgency problems in the deep South may prove more troublesome than they have been. There's also a trust issue with Singapore, where Thaksin Shinawatra has popped in and out. Laos, Vietnam, Cambodia and Myanmar will be drawn closer together economically and they consider Thailand to be anything but a trustworthy pal. Laos hates Thailand's "superiority complex" while Cambodia won't easily forget everything that happened over the past few years. Vietnam is fast becoming a fierce competitor on many fronts. And despite having a large number of migrant workers in Thailand, Myanmar does not have the strongest economic and political ties with us. Language versatility is not Thailand's strong suit. Foreign investment is still siable and bigger than many AEC countries but political uncertainties are not helping. Foreign labour can become a highly-complicated issue and the country's attractiveness as an offshore production base for firms from other countries has gone down. And when it comes to an ageing population, Thailand and Singapore stand out, although the latter boasts a lot more positives to compensate that.

Then there is the issue of transparency, which foreign investors give a lot of importance to. Some AEC countries are worse off corruption-wise but Thailand is also far from being the region's least corrupt nation. While close competitors are trying to put their houses in order, Thailand appears to be having trouble deciding what corruption is and talk about this is simply political "smearing".

The good news, though, is that the AEC a marathon undertaking, not a 100-metre sprint. The blossoming of a regional market will make an immediate impact on economic and social lives but there are long-term issues that allow changes of plans, reconsideration and fixing of mistakes. Thailand will be hoping to ride out its own political storms and maintain its status as a key regional economic hub. A lot, though, will depend on the domestic reform process, which has yet to even begin. Bad news is that while Thailand's strengths may have served it well before the AEC, they may not necessarily be big advantages when the regional trade liberalisation scheme kicks in. And while weaknesses like a lack of language skills and border problems with neighbours may have been overlooked prior to the AEC, these things may come to haunt Thailand big time after the free market is in place.

Tourism may gain, but the farming sector faces a rough ride. AEC will challenge friendships, pitting them against economic interests, throughout the region. Thailand is not the only one to be forced to strike a balance between business competition and the ties that really bond the regional neighbours.

How big of a role sincerity or mutual trust will play when AEC begins remains to be seen. But indications are that such a role will be substantial. Thailand, with its great geography, holds no advantage in terms of relationships. Some problems have been caused by our own making but others not. As the country looks at infrastructure, business powers and legal complexities in preparation to the AEC being set up, it's worth noting that the human aspects require attention too.

Countries in our region are more or less ready for the big change, and every nation is anxious. Thailand, however, is in a peculiar place. Many factors are adding to our nervy prelude to the grand regional scheme, and not all of them are related to business.


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