Page 1 of
2 ASEAN lightweights get
by in the big world By Alan Boyd
SYDNEY - When Singapore exposed the
delusion of Southeast Asian trade integration in
the 1990s by individually pursuing the first
preferential tariffs negotiations outside the
10-member Association of Southeast Asian Nations
(ASEAN), it was the 10-member grouping's small
emerging-market economies that seemed to have the
most to lose.
The implications for
Vietnam, Laos, Cambodia and Myanmar seemed clear:
the export orders they desperately needed to close
the
intra-regional wealth gap would be diverted
elsewhere, and the foreign investments that in the
1980s and 1990s helped lift the region's now
richer members out of economic backwardness would
likely follow suit.
But new research
suggests that ASEAN's less developed members,
representing some of Asia's poorest and most
economically isolated nations, have adjusted just
as well as their more economically developed
neighbors to the pressures of globalization. A
report released last month by the International
Monetary Fund (IMF) on free trade agreements
(FTAs) in Asia as a whole argues that there has
been negligible impact on the trade prospects of
Vietnam, Laos and Cambodia, known collectively as
Indochina. Myanmar, the fourth underdeveloped
state, was not included in the study; however, its
trade figures indicate a similar trend.
About 50 bilateral FTAs have been enacted
or are being negotiated by Singapore, Malaysia,
Indonesia, Thailand, Brunei and the Philippines -
ASEAN's most advanced members. While in line with
global trends, the move toward more bilateralism
is also a frustrated reaction to the bloc's own
tortuous progress toward greater economic
integration through the ASEAN Free Trade Area
(AFTA).
Notably, none of these FTAs
involves Indochina, which has been denied full
status in AFTA until 2015 under a two-track
development plan adopted when those three
countries joined ASEAN in the mid- and late 1990s.
The other states are scheduled to remove tariffs
from all products on their inclusion lists by
2010. As an interim measure, the six big countries
agreed to help out their neighbors through two
integration packages announced in 2000 and 2001
that would support specific sectors such as
infrastructure and human resources.
But
the Indochinese nations have said they received
relatively little of the promised aid, while pleas
for coordinated marketing fell on deaf ears. One
reason, no doubt, was the perceived threat by
ASEAN's more developed members of greater
competition in low-cost-product sectors, which
were already shaky with China's emergence as the
world's low-cost factory floor. A case in point
was the textiles trade, which provides a
disproportionate share of export earnings for
labor-intensive Indochina.
Vietnam lobbied
unsuccessfully for ASEAN to act as a single entity
in exporting textiles and garments when the
multilateral Uruguay Round quota regime ended in
2005, arguing that its producers would be undercut
by World Trade Organization members. Rival
manufacturers in Thailand, Malaysia, Indonesia and
the Philippines, which benefited from preferential
WTO tariffs, ensured there was no helping hand for
Vietnam, which finally joined the WTO this year.
Not surprisingly, the Indochinese
countries are pursuing an increasingly independent
path. In 2004, they set up a separate sub-group to
promote economic integration and jointly attract
foreign investment, thus reinforcing the economic
gulf within ASEAN. Trade and investment ties
between Indochina and the rest of ASEAN had been
largely static since 1997, when the region's
economic bubble burst under the impact of
declining currency values, unsustainable debt
loads and subsequent banking crises.
The
intra-ASEAN wealth gap has since narrowed
somewhat, but is still wide: Myanmar had a per
capita gross domestic product (GDP) of US$110 in
2005, compared with $26,500 for Singapore and
$17,000 for oil-rich Brunei. Vietnam, the most
developed Indochinese country, had in the same
year a per capita GDP of $640, Laos $620 and
Cambodia $400. At a social level, 34% of
Cambodia's population was living below the poverty
line in 2005, according to the United Nations'
Human Development Report. The corresponding
figures for Thailand and Malaysia were less than
2%, while no one in Singapore or Brunei was
classed as falling under the poverty line.
Globally integrated But while
Indochina's leaders have been openly critical of
other members' recent preoccupation with FTAs, the
self-centered nature of ASEAN's trade
liberalization may have actually worked in their
favor. The author of the IMF study, Patrizia
Tumbarello, contends that countries excluded from
FTAs have not been
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
