Economics

Southeast Asia hopes a new common market will give it clout, but it may have a weak link in Thailand

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Thai soldier keeping watch at Erawan Shrine in central Bangkok.

Thai soldier keeping watch over Erawan Shrine in central Bangkok. 

Credit:

Mary Kay Magistad

In the heart of Bangkok, in a fenced off corner shrine, Thai dancers in brilliant silk costumes and gilded crowns dance before a statue of the Hindu god Brahma.

Chinese tourists pay for the dancers’ chanted blessing, they kneel, a minute or two, get tapped on the shoulder, with an "OK, finished" — and move on to make way for the next paying customer.

The story goes that this shrine was built back in the ‘50s, to counteract the bad karma from laying the foundation of the nearby Erawan Hotel on an inauspicious date. 

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Traditional Thai dancers with tourist at Erawan Shrine, Bangkok

Traditional Thai dancers with tourist at Erawan Shrine in Bangkok.

Credit:

Mary Kay Magistad

The Erawan Shrine was seen as a place of luck. Vendors sold lottery tickets just outside its gates. People came to pray for good fortune. Taxi drivers would take their hands off the steering wheel and put them together in a Thai gesture of respect or reverence. I would silently wonder about the luck of taxi drivers who take their hands off the wheel in busy intersections.

Thailand, back then, was enjoying a stretch of good luck, certainly in relative terms. Bad luck had fallen on many of its neighbors. There was war, and then isolation under Communist rule in Vietnam, Cambodia and Laos, isolation under a superstitious strongman in Burma, instability in the Philippines, corruption and nepotism in Indonesia. By comparison, Thailand was looking pretty good. So investors and tourists poured in, and economic growth soared.

A lot has happened since then — to Thailand, to the region, to the region’s place in the world. China is more powerful and more assertive. Indonesia is now a democracy. Vietnam’s economy is booming, and Myanmar’s and Cambodia’s are coming up fast. They’re growing faster than China’s — and faster than Thailand’s.

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Erawan Shrine in central Bangkok, where a bomb went off in August 2015, killing 20 people and injuring 120.

The Erawan Shrine in central Bangkok, where a bomb went off in August 2015, killing 20 people and injuring 120. 

Credit:

Mary Kay Magistad

Thailand has had more than a decade of political turbulence and even occasional violence, including gunfire on the street, right here near this shrine. Then came the coup, and now Thailand’s never deeply-rooted democracy is back on its heels. The military is detaining people who criticize it for what it calls “attitude adjustment.” Censorship is rife.

The revered king is now 88, and Thailand’s political future is uncertain. Even at this beloved shrine, last August, an explosion killed 20 people, and injured 120 more. Many of them were tourists from across the region. Thai authorities say the attackers were Uighur Muslims from China, retaliating for the Thai government sending back to China 121 Uighur men who’d been trying to flee. The Thai military wants to stay on China’s good side. The Uighurs, the theory goes, wanted to hit a target that would pack an emotional punch.

But in Thailand, something and its opposite can be true at the same time. So, last New Year’s Eve, Thailand joined nine other Southeast Asian nations in agreeing to form a single market, with the aim of becoming a major global player in this century, in a way no single country in the region could.

There’s great promise. There are big challenges. And luck no longer seems to have much to do with it.

If you want a positive vision of what Thailand’s future could be, start with a dinner party of young globalized Thais, teaching social entrepreneurship at one of the country’s top universities.  Many are in their 20s and 30s, and have come back to Thailand after years in top school abroad and leading companies.

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Globalized Thais, back from studying and working abroad, are teaching a new generation of Thais about how to be tech-savvy social entrepreneurs

Globalized Thais, back from studying and working abroad, are teaching a new generation of Thais about how to be tech-savvy social entrepreneurs.

Credit:

Mary Kay Magistad

“I was with Ashoka Foundation for a year, and then I was with Ideo.org in San Francisco, and they use design thinking. And I had worked in Bhutan in education for a year. And before that, I was at Stanford, social entrepreneurship, and I was a TA for two years,” says Viria Vichit-Vadakan. She’s now running the Social Innovation Lab at Thammasat University’s School for Global Studies in Bangkok.

“We have social innovation projects. We connect students with internships,” she says. “We bring in guest speakers to immerse students and guide students with different career paths. We call it ‘impact sector,’ which is like, if you can make an impact in different areas. It can be in corporate, international development, NGO.”

Another Thai woman at the table listens quietly, with a slight smile. She’s petite, with a ponytail. Others defer to her. One explains that she was in the US army for seven years. She used to fly Blackhawks, including for 15 months in Iraq.

“It was quite an experience. It was definitely a transformational experience,” says Pearl Phaovisaid, who was born in Chicago to Thai parents, grew up both in Thailand and the US, and went to West Point.

“I guess, as a soldier, you train to go to war. So, if you don’t go, I think there’s a feeling of, did I do everything I’m supposed to? And when I was in the army, we were fighting two wars. So, in one sense, I’m proud that I got a chance to serve. But looking at the geopolitical situation there right now, I mean, there’s always that question of, did we really make a difference, there? Beyond serving my country, were my efforts really worthwhile? And were the lives of people who died, not just died, but who were maimed, psychologically, physically. Was that worth it? I think there’s always that question.”

Pearl holds both US and Thai passports. And after serving one of her countries, she decided to come back and serve the other — as program director of Thammasat University’s new four-year undergraduate program in global studies and social entrepreneurship.

“We’re looking for leaders, change-makers and social entrepreneurs,” she says. “We search all over Thailand. We search all over ASEAN. And we have a global perspective.”

Which sounds great, right? Just what a modern economy needs to succeed in this century. Even better with the opportunities afforded by the new Association of Southeast Asian Nations, or ASEAN, Economic Community.

President Barack Obama is taking this seriously. He hosted ASEAN leaders in February at Sunnylands, in California — the same place where he’d meet with Chinese President Xi Jinping back in 2013. The symbolism was not coincidental.  The message was that Southeast Asia matters to the United States, as US Trade Representative Michael Froman said at a conference in San Francisco shortly after the Sunnylands gathering.

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US President Barack Obama pauses after being introduced at the Young Southeast Asian Leaders Initiative Town Hall at University of Malaya in Kuala Lumpur April 27, 2014. 

Credit:

Larry Downing

“President Obama has made cementing ties and strengthening America’s commitment in Asia to be a top priority,” Froman said at the conference, organized by the US-ASEAN Business Council. “He’s made separate separate visits to the ASEAN region, more than twice the number of any previous president. This past November, we elevated our partnership to the strategic level, and at the core of that strategic partnership is a shared vision for a peaceful, prosperous Asia-Pacific region, that offers security, opportunity and dignity to all of its citizens.”

Froman called the creation of the ASEAN Economic Community “a major accomplishment, linking 625 million-plus consumers. It advances ASEAN’s goal of creating a single market and production base, and in this time of economic uncertainty, the AEC reminds us of the positive pro-growth role that trade can play. It’s an important signal that ASEAN is committed to being an open, rules-based regional economy that is globally competitive.”

Even before the ASEAN Economic Community was created, Froman said, ASEAN nations, collectively, were the United States’ fourth-largest trading partner, ahead of Japan, and there’s more US direct investment in ASEAN countries than in Japan, Korea and China combined. 

But this is already true, without a new economic union. So, why create one, especially, one that does not seek to go as far as the European Union, in terms of bringing down borders, and having a common currency?

“I think we remain an oasis of stability — a young dynamic population, very ambitious,” said Mustapa Mohamed, Malaysia’s Minister of International Trade and Industry, at the conference. "We want to do more for our people. We want to create more jobs, better quality jobs.”

The idea is that the new ASEAN Economic Community will reduce protectionism, allow a freer flow of labor amongst ASEAN nations, and create an enticing environment for foreign investors — stable, peaceful, efficient.

Indonesian president Joko Widodo said at the conference that his government is already moving to reduce protectionist barriers. “But I’m not satisfied,” he told the conference audience. “Please understand that we still are only at the beginning. We will continue to simplify, continue to open up, continue to modernize our rules and regulations. To quote that famous ex-California governor, there are still many excessive permits, licenses and protections, to which we will say, hasta la vista, baby.” That earned him laughter and applause.

There’s one thing that speakers at the conference didn’t mention in so many words — how China’s aggressive actions as a rising power, in the South China Sea and elsewhere, are concentrating the minds of Southeast Asian leaders, looking for ways to protect their own rights and interests.

“Of course, China is the elephant in the room,” says Kavi Chongkittavorn, a senior Thai journalist, editor and analyst, now at Chulalongkorn University’s Institute for Security and International Studies. “

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Thai senior international journalist and analyst Kavi Chongkittavorn

Thai senior journalist and analyst Kavi Chongkittavorn

Credit:

Mary Kay Magistad

Chongkittavorn is a senior Thai journalist, editor and analyst, who I’ve known, respected and appreciated since the late ‘80s, when we were both reporting throughout Southeast Asia. Chongkittavorn speaks Chinese, and has lived and worked in China, and briefly, a couple of decades ago, for ASEAN. “The China factor has permeated in all spheres of ASEAN’s existence, whether it’s cultural or economic.”

ASEAN was formed during the Vietnam War as a way to prevent war among its members. Original members were Indonesia, Malaysia, the Philippines, Singapore and Thailand. Then, Brunei joined, and years later, Vietnam, Cambodia and Laos, and finally Myanmar.

Some people dismiss ASEAN as a talking shop that does little else. But talking rather than fighting is something. Just ask France and Germany.

And here’s something else. When ASEAN was formed in 1967, China, then under Mao Zedong, was funding Communist insurgencies in almost every Southeast Asian nation, and many Southeast Asian nations looked at China with anxiety. Then China opened up, the millions of ethnic Chinese in Southeast Asia helped connect their adopted homes with their ancestral home — and everybody profited. ASEAN started to loop in China, Japan and South Korea. Inclusive prosperity, why not?

But then China got a little too pushy with its neighbors — in the South China Sea and in other ways.  There was the now-infamous time then-Chinese foreign minister Yang Jiechi said in 2010, "China is a big country, and other countries are small countries, and that’s just a fact."

So, Kavi says, ASEAN is looking for ways to protect its interests, and its independence. It has embraced the Obama Administration’s “Asian pivot," and now has better leverage in its dealings with both the US and China.

“Competition between China and the United States is very real, and is getting more assertive, not only through rhetoric, but through actions,” he said. “The competition between China and America currently actually gives a very good opportunity to ASEAN to up its ante, in terms of political and economic matters. So ASEAN actually has more bargaining power, vis a vis the US, China and Russia.”

But ASEAN also has its challenges, in presenting itself as a genuine unified Economic Community. It’s hard to separate economics and politics, especially as related to rule of law, free speech, and transparency, and ASEAN leaders have a long tradition of not interfering with each other’s internal political affairs — and very different governing styles.

“Actually, Southeast Asia, ASEAN, is a miniature Disneyland of political culture,” Chongkittavorn says. “You have absolute monarchy, like the Sultan in Brunei. And then you have a constitutional monarchy, like Thailand. You have one-man show, like in Cambodia — 32 years, my goodness. And then you have one-party rule, what is the difference, between Communist one-party rule and UMNO or PAP of Singapore, Malaysia? They have continuity, stability, so everybody says, ‘hey, let’s invest there’, you know? And Thailand? Who knows what, the next day, will happen.”

Who knows, indeed?

Many Thais, and long-time foreign residents, are gloomy. The military government has increased censorship, detained critics, and is trying to push through a constitution that could give the military the upper hand politically, for years to come.

And the revered King Bhumibol is 88 years old and ailing, and what happens once he’s gone is far from clear. Many Thais have strong feelings about whether they’d prefer to see the crown prince, or the more widely beloved cown princess, take over, but are careful what they say in public lest the country’s lèse majesté law land them in prison.

“In Thailand, we hold a few things near and dear,” says Phaovisaid. “You have Buddhism. You have the nation, however you would define the nation — patriotism, or something, and you have the monarchy. And I think everything changes, meaning — what we’ve had in the past for many, many years may not be the case in the future. So I think people who have a mindset that is closed, or very much attached to traditional ways, which may not be consistent with the way things are going, I think that’s going to be hard for them.

Pearl says she hopes the ASEAN Economic Community will loosen up the rigid hierarchies that still exist in many Thai organizations.

“I don’t know if they’re going to survive when the times change, when you have LinkedIn, when talent can flow easily, when the AEC becomes more of a thing. Because the people who used to have to work in those organizations, maybe they won’t have to in the future. So when you have this kind of a brain drain in an organization, it’s possible that it won’t be sustainable. And that’s where things could be difficult.”

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Australian journalist Ron Corben has lived in and reported on Thailand since 1989.

Australian journalist Ron Corben has lived in and reported on Thailand since 1989.

Credit:

Mary Kay Magistad

Thailand is already transitioning in ways that are straining old systems, says Australian journalist Ron Corben, who has lived and worked in Bangkok since 1989.

“There’s been greater empowerment of people upcountry, as the provincial economies have grown,” he says.  You’ve got greater reliance between northeastern economies, like Cambodia and Laos, so they have their own economic centers. There’s a transition in the shift of power. And there’s also just a failure by governments to acknowledge, especially the government in Bangkok, at all levels, every level, from water resources to education, everything, to decentralize. This desire to keep control is having terrible effects. It’s holding the country back.”

What might help pull Thailand forward are efforts now underway, by individual ASEAN countries, by China and by others, to improve the network of roads, railways, ports and airports linking the 10 ASEAN countries. Thailand’s good luck here is to be in the center of mainland Southeast Asia, a natural hub. Thailand’s spending $53 billion on improving its own infrastructure, to help take advantage of this.

“We’re trying to move forward. We cannot stand still.” said Thailand’s Minister of Industry, Atchaka Sibunruang, on the sidelines of the San Francisco ASEAN conference. “Otherwise, we’ll soon be behind.”

In Business, Economics and JobsEconomicsPoliticsGlobal PoliticsHuman Needs.

Tagged: AsiaThailandSoutheast Asiagovernmentbusiness and economyhistoryDevelopment.