Thailand and the ASEAN Launch

Key Points

• ASEAN Economic Community launching on 31st December.
• Thailand is considered the geographic hub of the region.
• Hopes for ASEAN grid to be backbone of regional development.

While many across Southeast Asia will be combining their New Year celebrations this year with raising an additional cheer to the launch of the Asean Economic Community (AEC), Ms Apiradi Tantraporn will be settling down in her office on Bangkok’s Nonthaburi Road and preparing for bigger challenges ahead. Ms Apiradi is Thailand’s Minister of Commerce and she sees the creation of the 633 million person union as just the first step towards increased global free trade.

“We cannot stop with the ASEAN Economic Community,” says Ms Apiradi. We must look for the next step in advancement, which is why regional leaders have been pushing forward plans for the Regional Comprehensive Economic Partnership (RCEP). This trade community will incorporate the major economic powers of China, India, Japan, South Korea, Australia and New Zealand to the existing 10 ASEAN nations. This will bring a population of over 3.38 billion people together and about half of the world’s trade. If the implementation of this plan is successful, RCEP could change the picture of global trade as well as being an exciting frontier for Thailand’s regional trading capabilities.

“We can connect India to Vietnam to China, we are very strategically positioned in the heart of Asia. However in order to fully benefit from our positioning as hub of the region we need to strengthen our trade links to foster more trade through Thailand.”

By Southeast Asian standards where ASEAN member states see GDP growth per Promoting knowledge transfer across Thailand: IFEC collaborates on sustainability projects with local communties in the most rural areas.

www.ifec.co.th annum average a healthy 5%, the Thai economy has been sluggish of late. The AEC is seen as a catalyst to revive that and Thai business leaders share Ms Apiradi’s passion for open markets and taking Thailand to the world.

In a country that in the past has been criticised as being slow in opening up to the world, the debate is not about the benefits of regional integration but rather how quickly the country can position itself as Asia’s business gateway.

Cultural understanding

Mike Plaxton, an Englishman and long term Southeast Asia resident is CEO of FWD Life Insurance. Mr Plaxton sees building a cultural understanding as the first step towards cross-border success and explains, “The region is diverse. Thailand, Myanmar, Laos and Cambodia are very similar, they’ve all got a Buddhist background. Singapore, The Philippines, Vietnam and Malaysia are all quite different, and Indonesia is a huge country in its own right with the population of four or five of its neighbours.

“The big challenge is how do we bridge those cultures, how do we cooperate with one another? I don’t expect they will ever go for the full union that Europe has gone for; building a massive bureaucracy in the centre would be a mistake. Thailand’s best chance would be to be a part influencer rather than a total influencer.”

Mr Plaxton’s understanding of cultural sensitivities is shared by Mr Viritpol Komolrochanaporn, Managing Director of UHM Group, who initially found challenges in regional expansion: “In Asia, the mindset of people in each country is different but one thing that is valued across the region is sincerity. We had to learn the differences between the nations though, the differing ways they thought, the way they did things.

“For instance, we have a factory in Vietnam and their conceptual thinking is quite different from ours. For example, if you say, ‘Get me a cup of coffee. I want one spoon of sugar and one spoon of cream.’ They may go to the kitchen and think, ‘Maybe one spoon of sugar is too sweet. I will put in half.’ Now this would never happen in Thailand! Instructions are followed to the letter.” On a regional basis it took us about a year to successfully integrate our strategies.”

However, Thai companies are learning these cultural lessons rapidly. The Stock Exchange of Thailand now sees its role to not just facilitate Thai business but to act as the gateway to the entire Greater Mekong Sub region (GMS), where Thailand is investing heavily in the underdeveloped but rapidly growing markets of Myanmar, Cambodia and Laos. And the rest of the world is being invited to join the party.

Building Asia’s new business hub

While Thai companies expand internationally the “land of smiles” is just as prepared to continue welcoming foreign investors in to the country. The ASEAN region can act as a bridge between east and west, geographically central, culturally influenced by Europe, India, China and Japan, and open to investment from all.

It is a position that Air Chief Marshal Thares Punsri, Chairman of the National Broadcasting and Telecommunications Commission wants to see Thailand exploit more rapidly. Mr Thares, one of many public sector leaders seeking to increase the nation’s global competitiveness, states: “We should really have become the hub of Asia five or six years ago. We have the GMS countries to the north, and more than that, we can connect to India and China. We haven’t fully used that to our benefit in the past. Geographically and logistically we are in a great place, now we have to complete our infrastructure roll out. There are opportunities to invest in building both hard and soft infrastructure, and foreign investors are playing an important role in this.”

In addition to increased telecommunications infrastructure, investment is being poured into energy and transport infrastructure. Mega projects such as the Thai-Chinese railway development are moving ahead at speed, further cementing Bangkok’s position as the gateway to the opportunities in the north.

“For multinationals considering where in Asia to set up Thailand makes for a very, very unique opportunity,” confirms Mr Ben Taechaubol, CEO of ambitious property group Country Group Development PCL. “The workforce is more dynamic, costs are good but the most important thing, the thing that is sometimes immeasurable, is the quality of life. That is where Bangkok and Thailand excels.

“If you combine it all together, the cost of living, the cost of doing business, the infrastructure that we have, the luxury offering in hotels, retail and property, it makes it a very suitable place for multinationals to set up their headquarters.”