Vietnam and thailand strategic partners for logistics in the gms

VIETNAM AND THAILAND: ¡TRATEGIC PARTNERS FOR LOGISTICS IN THE GMS1 Narut Charoensri Introduction From Thai point of views, Vietnam is a competitor The high and steadily grwth of Vietnamese economy bothered Thai business sectors Considering herself asi hub and centre of South-East Asia, the promising of economy of Vietnam thus is sen as a threat to Thai economy and business opportunities Seeing Vietnam as a rejonal competitor, Thailand, however, is still optimistic The main believe in mass mdia are twofold; although the volume of rice export of Vietnam is slightly higher tha Thailand, the quality of Vietnamese rice is lower than Thai rice; and, the liberal democratic system c f Vietnam is not making a viable market, so unerdevelopment of social issues and political issues will be obstacles to economic deelopment It is an illusion that Thailand try to imagine that they are, one way or anther, has a better economy han Vietnam Thailand and Vietnam started their governmental official bilateral relations in 196 But the most progressive relations among the two countries are being a mmber in the GMS2 Programme, initiated and financed by Asian Development Bak (ADB) in 1992 It is a significant point of departure of multilateral relations A (International Affairs) Thammasat University, MA (International Relations) Ciulalongkom University He is now a lecturer in School o f International Affairs, Faculty o f Hitical Science and Public Administration, Chiang Mai University, Thailan He can be rached at narut.c@cmu.ac.tn his paper is prepared for The Fourth International Conference on Vietnamese Studies (I1VNS2012) with the theme “Vietnam on the Road to Integration and Sustainable Lvelopment” at the Vietnam National Convention Centre, Hanoi, Vietnam, 26-28 bvem ber, 2012 "he word ‘GM S’ signify '.wo connotations Firstly, this word indicates this area in terms o f gographical area that encompasses countries; namely, Burma, Thailand, Vietnam, Cmbodia, ar.d two provinces o f Southern China (Guangxi, and Yunnan) On the other hand, tis word also represents the international cooperation between six countries This word will u; interchangeably within the article So please be careful with the context 53 V lfT NAM HQC - KY Y tU HQl THAO QU6 C T t LAN THU* TU* between the two and the rest The GMS Programme has, until now, ten sector activities Their ultimate goals are to create market-driven economy, eliminate poverty, and develop human resources This paper contents that, however, although eleven flagships are considered equally important, the most important one is developing regional connectivity Regional connectivity in the GMS, nevertheless, is confronting with a paradox The development o f economic corridors are giving more opportunities to the local people in accessing public service and eliminating poverty, but on the other hand, the opportunities are not equally accessible and causing frustration among various groups Uneven development is now a phenomenon that can be found in every part o f Southeast Asia The so-called ‘development’ projects have just started not more than the end of the Second World War The legacies of American projects on trying to develop the subregion are now taking Southeast Asia into the new form o f underdevelopment The new form o f underdevelopment, as this paper contends, is not in the old underdevelopment concept The underdevelopment in the last decade concentrating on lacking o f financial flows in a particular set of activities or some societal organs and the lack o f progress o f science and technological transformation However, the new form o f underdevelopment in Southeast Asia might be understood as the phenomenon that the international structure is now manipulating the development process by intervene the discourse formulation process And the new form cannot be seen explicitly They implicitly embedded in economic and social structure The most provocative discourse in international development in Southeast Asia, to give an example, is ‘development’ and ‘human rights.’ Using Western perspective, we could say that the development process in Southeast Asia is still far behind the Western world Not mentioning about the ‘Asian Values’ that ignites loads of theoretical debate both regional and global whether it is an obstacle to economic development and human rights or not These two contested concepts are the legacies of Western imperialism during the Cold War and are strongly influencing the developmental process in the region The problematic concept of development impacts the way of thinking about how to develop relationship between countries If the development idea is regarded as domestic affairs, the international cooperation will not be deliberately organized But, on the other hand, if the development is recognized by international actors, the promising mechanisms are expected In Thailand and Vietnam case, the strategic partnership is the strategy that Thailand uses to deal with Vietnam The perception of Thailand about development 54 VIETNAM AND THAILAND: STRATEGIC PARTNERS remains orthodox But in the past decade, we have seen an uprising of alternative point of views on development Still the orthodox one remains strong The development in Thai perspective, thus, stress on the conventional methods, such as improving living standard by dams, electricity, giving money to the poor directly the so-called ‘populist policy,’ etc The mainstream development instruments are proposed, supported, and financed by Neoliberal international organizations, such as International Monetary Fund (IMF), World Bank, or ADB They are sources of ideas about how the area or countries should head their position to Thailand, as one of the actors in international system - created and structured by those organizations has to adapt herself into the market-driven structural policies We have seen not only Thailand but various countries around the world that have to change their economic system, and pursuing structural adjustment program that required by IMF, for example There are wide ranges of mainstream developmental mechanisms They can be any kinds of activities that spur economic opportunities by using hard infrastructure or soft infrastructure The hard infrastructures are roads, economic corridors, dams, electricity, power plants, etc, while the soft infrastructures are laws, regulations, or any kind of institutional arrangements Economic corridors are one o f the mainstream methods to tackle with poverty and helping supply chains in Southeast Asia They are financed by individual country and international organizations such as ADB, ASEAN, IMF, World Bank, UN The logistics in the GMS and throughout ASEAN are developing promisingly The linkages o f roads are opening chances to the poor to reach health services, educational institutions, markets, and those public service in need They are regarded as a great mechanism that will bring prosperity and wealth to the region Yet the questions about the economic corridors remain to be asked But the greatest social question that should be taken onto the discussion table is how should the economic corridors develop in order to link subregion while at the same time share prosperity equally? One of the most discussed topics in Thai business forums is the situation of comprehensive logistics network in the GMS Thai business sectors are trying to search for the opportunities that may come if the comprehensive network in this subregion is completed The questions that are brought into the discussion table are, for example, to what extent the networks will support the economic activities in the subregion, and how to provide or create operational mechanism that will support the logistics system, etc 55 V lfT NAM HQC - KY Y t U HQl THAO QU^C t £ LAN THU TU Looking back in Time: History of Economic Corridors1 Before discussing about the economic corridors, it is important to understand the initiation o f the GMS development scheme How the GMS development started and why? US became a ‘hyperpower’ in world economy and politics since the end of the Second World War The ultimate goal of the US was to support market-driven economy, or to put it differently, the main objective was to create fitting milieu around the world to support capitalism There were three significant US roles in the international arena; the support of Marshall Plan in Europe, the reverse course in Japan, and the creation o f the economic commissions around the world We have witnessed US roles in Europe after the World War Marshall Plan was granted in 1947 to revitalize European economy which was destroyed because of the Second World War The improvement o f the European economy was important to the US economy because after the WWII the US has been main supporter to support the European economy The US granted a large budget to revive the European economy so that the European market can survive and be a market for the US’s commodities.2 On the other side o f the world, Japan, as a defeated country, was occupied by the US during 1947-1953 The US, nonetheless, did not ‘punish’ Japan as some countries hope The US did not transform Japanese society, economy, and politics into the new form o f Japan What the US did was eliminating Zaibatsu group, amending Japanese constitution, reforming education and reforming land, etc These actions were to get rid o f powerful business group that once forced Japanese government to invade Korea and China; to shape Japanese security structure so as not to have her own army troops; to support analytical thinking; and, last but not least, to give the opportunities to the poor to be able to have their own land However, the US did not commit to socio-political reform in Japan for long, as Japan would probably turn to Communism if it was to suffer too greatly from punitive procedures This section is a revised and extended version o f the paper entitled “Japan and the East-West Economic Corridors: Intentions and Interests.” The previous version which was presented at the international conference entitled “Japan and Mekong Subregion - Historical Relations” organized by the Japanese Studies Centre, University o f Social Science & Humanities, National University o f Vietnam, Ho Chi Minh City, Vietnam, 29-30 October 2010 Geir Lundestad (1998), “Empire” by Integration: The United States and European Integration, 1945-1997 Oxford: Oxford University Press 56 VIETNAM AND THAILAND: STRATEGIC PARTNERS Besides, the US economy then was confronting with ‘dollar gap’ difficulties This, in order to further the cause for global capitalism, the US decided to shift her policies on Japan from punishment to economic recovery, which is also known as ‘reverse course.’1 Since the US believed that Japan could be a ‘fortress of captalism’2 in Asia, the United States had hoped that Japan would help advance global capitalism, instead of turning to the Communism To recreate Japanese economy, what needed were raw materials to support ecoiomic system and rice to run society But as geographical limitation, Japan caniot supply her need as much as she need Consequently, finding new source to supply economic activity was the main goal Southeast Asia was seen by Japanese as tie source of agricultural products and raw materials.3 Last but not least, the US also supported the creation o f the economic conmission in various regions; namely, Economic Commission for Europe (ECE), the iconomic Commission for Africa (ECA), the Economic Commission for Latin America (ECLA), the Economic Commission for Western Asia (WCEA), and the Ecoiomic Commission for Asia and the Far East (ECAFE) All o f them aimed to generate regional markets As mentioned earlier, since the United States wanted Souheast Asia to serve Japanese capitalism, the Economic Commission for Asia and the Far East (ECAFE) was established under the United Nations with the support o f the US.4 The first of its kind, the ECAFE aimed to promote development in the Lower Mekong region which comprised South Vietnam, Canbodia, Laos, and Thailand The development program consisted o f irrigation maragement, dam building and navigation in the Lower Mekong region The EC aFE, thus, can be considered the point where the US starts trying to involve herself in Southeast Asian affairs Until now, we can see that the US roles around the world were to create viaHe markets in various parts of the world market The economic commissions William S Borden (1984), The Pacific Alliance: United States Foreign Economic Policy and Japanese Trade Recovery, 1947-1955 Wisconsin: The University o f Wisconsin Press, p.3 Killada Kesboonchoo-Mead (2003), “A Revisionist history o f Thai-U S Relations”, Asian Riview 16: p.48 Dspatch, United States Embassy, Tokyo, to the Department o f State, “Japan’s Participation inthe Point IV Program,” July 24, 1952, National Archives 834.00-TA /7-2452; Report from th: Tokyo Economic and Commercial Conference, April 1950, National Archives ESSP CO-5687 Economic Commission for Asia and the Far East (1957), Developm ent o f Water Resources inthe Lower Mekong Basin: Flood Control Series No 12 Bangkok: ECAFE, p.iii 57 V IfT NAM HQC - KY YfcU HQl THAO QU6 C T t LAN THU" TU play important roles towards the formation o f the regional market The ECAFE, formed in 1947, was a first attempt to manage South-East Asian economy Hence, regional cooperation was created under the umbrella o f global capitalism, whiih aimed to support capitalism both on a global level and with respect to Japanese economic interests ADB, the successor o f ECAFE, was created with the support of the United States in 1966 The man behind the establishment o f the ADB, Eugene Black, w as a Special Advisor on Economic Affairs to President Lyndon B Johnson Black was appointed by President Johnson to support the formation o f the ADB, hoping that it would help the US set up cordial ties with Asia Black contacted Takeshi Watanabe, a former Ministry o f Finance official and the second Japanese executive director of the World Bank, to form a development bank in Asia.1 After the birth o f ADB in 1966, the ASEAN was formed in 1967 It is argues here that due to the liberal economy supported by the US around the globe, these two organizations are formed in order to enhance viable market in the subregion However, the ASEAN, at that time, embraces just only five countries The differences between politics and economies of Communist countries and proAmerican countries tear apart the relationship between neighbors In the mean time, the Plaza Accord which affects Japan to reallocate her factories to South-East Asia was the cornerstone Japan moved her production base from Japan to South-East Asia However, the firms cannot locate anywhere in the subregion due to political crisis in Indo-China By the end of 1991, after the Paris Treaty signed, the regional security circumstances turned to be something good to the business sector, as the conflict in Indo-China was decrease This section shows the historical dimension of the GMS It shows that the development o f the GMS was started since the end of the Second World War The subregion was since then a source of Japanese production bases Since numerous Japanese companies had moved their bases from Japan to the Mekong region especially Thailand - after the Plaza Accord in 1985, the Plaza Accord, as a result, is the decisive moment that brought Japan to the Mekong region With Japanese companies being relocated to different places, the quality o f logistics accompanying relocation also had to be built and maintained.2 For Takeshi W atanabe roles’ in establishing the ADB, see Eugene Black (1969), Alternative in Southeast Asia London, Pall Mall Press Narut Charoensri (2010), “Japan and the Greater Mekong Subregion Cooperation” paper presented at “Japan and M ekong Subregion - Historical Relations” which was organized by Center for Japanese Studies, University o f Social Science and Humanities, Ho Chi Minh City, 29-30 O ctober 2010 58 VIETNAM AND THAILAND: STRATEGIC PARTNERS Knowing the history of the economic corridors is important We can analyze the lidden agenda of the forces that back the project and the way ahead which will, direga La Thi [accessed October 2012], Social and Environmental Impacts of Economic Corridors, Regional Supports to address the impacts of Economic Corridors in the Greater Mekong Sub-region (GMS), South East Asia, 63 VI$T NAM HQC - KY y £ u H