Life as a regional hub
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A recent article in the Interna-tional New York Times caught my attention.
It highlighted the decisions of some multinational companies to relocate their Asian headquarters and other offices from China to Singapore, and went on to discuss how Southeast Asia in general was receiving much more attention from these companies.
Strangely, amid the talk of how attractive Singapore has become as an Asean base, Thailand was never mentioned as an alternative, and it was quite a long article.
Why, I wondered? Aren’t we the logical geographic hub for Asean? With all the talk about getting ready for the AEC, what does Thailand need to do to ensure it becomes more attractive as a hub?
To clarify, companies aren’t abandoning China – nobody could afford to do that – but among those setting up in Singapore are some big names such as General Motors, which in August moved its international HQ from Shanghai, and IBM, which shifted some of its functions there, such as treasury operations.
The reasons for moving are mixed. They included push factors affecting expatriate employees such as air pollution and the shortage of space at English-language schools, as well as regulations that favour local competitors and weak protection for intellectual property.
The biggest pull factors relate to Asean’s growing economic strengths, as the Tom Yum Kung crisis of 1997 recedes further in the memories of Western corporations.
Greater opportunities in the wider Asia-Pacific region, including Australia and New Zealand, are also reasons for getting closer to the action by focusing more resources on Asean.
While Thailand is benefiting from Asean’s rise, it’s clear we need to enhance our competitiveness as a regional hub to ensure we don’t lose any ground in this contest to our Asean rivals.
Infrastructure development is very important – particularly in transport and logistics. Better roads, railways, air and water transport within Thailand and across our borders will be of huge benefit in helping connect the region.
The signs are good here, with the government’s renewed commitment to spending Bt2.4 trillion on transport and logistics over five years.
These transport links make Thailand the logical base for the Mekong region – the critical link in the manufacturing supply chain that is rapidly spreading out to countries such as Cambodia, Laos, Myanmar and Vietnam.
Many Chinese companies are keen to establish their own supply chains in Southeast Asia, with one of the most prominent examples being the joint venture of CP Group and Shanghai Automotive to produce right-hand drive cars under the former British MG marque.
Singapore’s strong competitive edge is based on research and development, science and education, technology and its position as a leading financial centre.
Besides logistics, Thailand also needs to target these areas, if we are to succeed in our goal to become a regional leader in the AEC.
