Vietnam and thailand strategic partners for logistics in the gms

The main believe in mass mdia are twofold; although the volume o f rice export o f Vietnam is slightly higher tha Thailand, the quality of Vietnamese rice is lower than Thai rice; and, t

VIETNAM AND THAILAND:

¡TRATEGIC PARTNERS FOR LOGISTICS IN THE GM S1

Narut Charoensri

1 Introduction

From Thai point o f views, Vietnam is a competitor The high and steadily grwth of Vietnamese economy bothered Thai business sectors Considering herself asi hub and centre o f South-East Asia, the promising o f economy o f 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 o f rice export o f 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 o f departure o f multilateral relations

A (International Affairs) Tham masat University, MA (International Relations) Ciulalongkom University He is now a lecturer in School o f International Affairs, Faculty o f

H itical Science and Public Administration, Chiang Mai University, Thailan He can be rached at narut.c@ cmu.ac.tn

1 h is paper is prepared for The Fourth International Conference on Vietnamese Studies (I1VNS2012) with the theme “ Vietnam on the Road to Integration and Sustainable Lvelopm ent” at the Vietnam National Convention Centre, Hanoi, Vietnam, 26-28

bv em ber, 2012.

2 "he word ‘GM S’ signify '.wo connotations Firstly, this word indicates this area in terms o f gographical area that encompasses 6 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.

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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 o f 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 o f 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 o f development impacts the way o f 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

VIETNAM AND THAILAND: STRATEGIC PARTNERS.

remains orthodox But in the past decade, we have seen an uprising o f alternative point o f 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

o f 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 o f mainstream developmental mechanisms They can

be any kinds o f 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 o f 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 o f 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

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2 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 o f the Second World War The ultimate goal o f 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 o f 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

o f 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

1 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.

2 Geir Lundestad (1998), “ Em pire” by Integration: The United States and European Integration, 1945-1997 Oxford: Oxford University Press.

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 o f 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 o f 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 M ekong region The

ECaFE, 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

1 William S Borden (1984), The Pacific Alliance: United States Foreign Economic Policy and Japanese Trade Recovery, 1947-1955. Wisconsin: The University o f W isconsin Press, p.3.

2 Killada Kesboonchoo-M ead (2003), “A Revisionist history o f Thai-U S Relations”, Asian Riview 16: p.48.

3 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, N ational Archives ESS-

P CO-5687.

4 Economic Commission for Asia and the Far East (1957), D evelopm ent o f W ater Resources inthe Lower M ekong Basin: Flood Control Series No 12 Bangkok: ECAFE, p.iii.

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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 o f Communist countries and pro- American 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 o f 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 o f the GMS It shows that the development o f the GMS was started since the end o f the Second World War The subregion was since then a source o f 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

1 For Takeshi W atanabe roles’ in establishing the ADB, see Eugene Black (1969), Alternative

in Southeast Asia. London, Pall Mall Press.

2 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.

VIETNAM AND THAILAND: STRATEGIC PARTNERS.

Knowing the history o f the economic corridors is important We can analyze the lidden agenda o f the forces that back the project and the way ahead which will, dire<tly or indirectly, influenced by superpowers Thailand and Vietnam have a hug< amount of Japanese foreign direct investment (FDI) and have been receiving offiual development assistance (ODA) from Japan and China They both have to find their ways to gain the opportunity from both bilaterally and multilaterally in intenational arena

3 Rethinking about Logistics System

It is true that the almost linked and completed logistics networks o f the GMS will help connecting people and business sectors; however, the main point of linkng should not be put the less emphasize on distribution o f wealth Logistics shoild grant opportunity to people in ranges of groups

The first one links Yunnan, the Southern province o f China, to Burma, Laos, and rhailand These corridors are called North-South Economic Corridors (NSEC) The second one starts from Burma and line through Thailand, Laos, and Vietnam resp.-ctively This corridor named East-West Economic Corridors (EWEC) Last but not least, the Southern Economic Corridors (SEC) connects Thailand with Cunbodia, and Vietnam

This paper will not go into details about economic corridors that can be found

in research papers, but it will be instead talking theoretically about the impacts of ecoromic corridors and what Thailand and Vietnam should consider

Let’s us first start by considering the main objectives o f economic corridors ADB contends that the economic corridors will cut transport costs and travel time The; will also support economic activities in the subregion and they will eventually eradcate poverty

The argument towards the first thesis about economic corridors is that having the linkages is not guaranteeing about equally accessing to the economic oppirtunities Although there are researches conducted by the ADB reveals the relatons between poverty reduction and economic corridors, the results are still debitable Basically, as the ADB is the financer o f the research project and publsher how could we easily convinced by the results that the research represents the vhole situation of the GMS

How could we sure about the reveled research findings We have seen the emprical evidence that in the real world the situation o f uneven development is still

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persisting So what member countries o f the GMS Program have to think seriously are twofold; the way to distribute wealth equally; and at the same time, create accessible structure that allow poor people o f marginalized people able to reach economic opportunities People are not poor because o f lack o f money, but instead unable to access to the accessible structure These goals can be accomplished by using economic corridors as a measure

4 Thailand and Vietnam: Economic Corridors as a Tools

In the previous section, we have seen theses supporting the economic corridors construction Thailand shares the same idea on how useful economic corridors are

as well as Vietnam does However, as this paper argues, well-planned mechanism that will ensure wealth distribution must be created

Nga La Thi (2012) analyzes that there are numerous impacts that might happen due to the economic corridors He contends that there are four aspects hat might strongly impacted by economic corridors; displacement o f people,, highway and local community’s safety, social vulnerability and cultural values deterioratoin, and last but not least, environmental impacts

He explains that the displacement o f people, land values, and lanid speculations will be the most severe problem He cited the research conducted by Cambodian NGOs reveals that there was no compensation on land but a I ttHe compensation was actually given for affected families living on the SEC in Frey Veng province, the affected people complained that it was insufficient for the’ir relocation.1

Next he touches upon the poverty issue What he raises was the question how infrastructure development has caused poverty, whether the economic corridors vitll bring the poverty decrease in the GMS? He argues that it is hard to answer :h;at question

Nga La Thi raises very good interesting points on how the economic corridoirs might impacts the social and economic aspects in the subregion However, wha hie put a little emphasize on is about the distribution of the wealth

1 Nga La Thi [accessed 9 O ctober 2012] Social and Environmental Impacts o f Ecommiic Corridors, Regional Supports to address the impacts o f Econom ic Corridors in the Grtauer Mekong Sub-region (G M S), South East Asia, <http://idc.sdu.edu.tr/tam m etinler/kalkhm ia/ kalkinm a40.pdf>.

VIETNAM AND THAILAND: STRATEGIC PARTNERS.

Having environmental protection, and socio-cultural protection mechanism are not enough for community development What Thailand and Vietnam have to sericusly think about is about how to share wealth to local villagers They are affected by economic corridors as displace person in some families, or they must lost their farm It is true that economic corridors create employment opportunities duritg the construction process They directly and indirectly create economic activities along the construction venue But what about when the construction is compete? The employment rate o f workers stops The economic activities remain just )nly some small local groceries, and some small restaurants The employment ratet decline because o f construction is completed

5 Dawei Deep Seaport: Thailand and Vietnam Challenges?

Dawei deep seaport in Burma is now the central o f attention o f businessmen o f Asia Japanese and Chinese investors are now looking forward to investing and consructing new factories in the area The deep seaport will link Burma with Cairbodia and Vietnam by passing Thailand It is new challenges for Thailand and Vietiam to rethink about their positions in logistics strategy The Dawei deep seap)rt is challenge to Thailand and Vietnam Thailand thinks that the road that start.1 from Burma will not have great impacts on Thai economy, because Thai logistics analysts believe that the trucks will pass through Thailand without stop by

So low Thailand will benefits from being a ‘medium’ that link Burma with Vietiam and Cambodia is still the question

The seaport is also raises a question to us about how the economic zone in Buma, Cambodia, and Vietnam should be managed The governmental orgaiizations have to rethink about the management There are opening challenges

to nanage of expats, alien workers, and human resources in the area Not

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mentioning about structural problems, in terms o f business law, investment laws, and monetary and financial regulations These are difficulties that the GMS countries have to confront

6 What Thailand and Vietnam can do?

Thereby, it is challenges o f Thai and Vietnamese government Both countries should form bilateral agreements on how the two countries can contribute to the development o f the subregion

The opportunities o f the government in Thailand, for example, are sharing unoccupied lands for villagers, pursuing land reform policy The not-yet-developed lands along the economic corridors can be rented by those who in need with a low interest rate This land reform and land sharing policies will land chances to the poor and open up life opportunities Giving more opportunities to the poor or those who displaced by the economic corridors can be successful if two countries taking the economic disparities seriously

They should also pursue structural adjustment programs They should reorganize the legal structure or economic structure in the economic zones Such as they should have the regulations that force investors to hire local people or disable people Thailand has a strong policy on treating disability people equally, but it has

to make sure that the regulations are strictly enforced by using watchdog that has authority to do so

Thailand and Vietnam are strong in agricultural sectors They can exchange professors, technicians, and successful farmers by using track-two and track-three diplomacy The exchange program will inspire and give concrete knowledge about agriculture and it will bring visions to local communities

In medical and health care system, Thailand has a good reputation on medical technology Siriraj Hospital, Ramathibodi Hospital, and Chulalongkom Hospital provide good quality and reasonable price o f medical treatment These hospitals can

be a learning hub and contribute a leading role on improving local people health care system They can share knowledge to local communities and international communities However, the problem is the medical knowledge is centralized Provincial hospital, especially hospital that located at the border, still lack of modem technology and active staffs The government should put more incentive to interns and staffs to do active duty and purse an exchange program between hospital between Thailand and Vietnam in order to exchange their knowledge

They should organize an international conference on the impacts of the economic corridors to keep the problem updated This kind of conference should be