Thais grapple with the AEC bogeyman
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Chana in Thailand's southern border province of Songkhla is not far from where militants are waging a battle to separate the Malay-Muslim-dominated region from the rest of the country. Many of its residents breed zebra doves, teasing out highly prized coo
Trade in the most expensive zebra doves is done by connoisseurs. Yet even these steely-eyed breeders brighten up when they hear “AEC”, the acronym for the Asean Economic Community.
“It would make everyone promote trade between these countries,” says breeder Sommai Khwantongyim, who expects the economic integration to bring more buyers. “I think so. And I hope so.”
To call “AEC” Thailand’s buzzword would be an understatement: Large banners across Asean’s second-largest economy declare “Welcome to the Asean Economic Community”. Hardly a week passes without a seminar on the subject, or a minister commenting on it, or a poll on whether the Kingdom is prepared for it.
Thanks to state-sponsored hype, almost all people know about the AEC. But few are sure exactly what it means, or are aware that it starts on December 31, rather than the January just past.
The AEC is envisioned to be a common market of 600 million people with freer flow of services, investment, capital and skilled labour. But even the most optimistic observers admit it will be impossible for all 10 member states to streamline their patchwork of complex legislation by December 31.
Thammasat University logistics expert Ruth Banomyong has commented on how official or academic programmes often increase their chances of attracting funding by simply including some mention of AEC in their titles.
“Thailand has taken it too far and pushed it to the extreme,” he says. “There are study tours to see how other countries are preparing for the AEC. But at the end of the day, each country has different constraints. No one really tells the true story of any constraint.”
Nation journalist Kavi Chongkittavorn, who has studied the subject, estimates that the government led by ousted prime minister Yingluck Shinawatra spent more than Bt8 billion on AEC-related programmes over two years.
It is not clear how much is being spent by the current government, but it certainly occupies the mind of prime minister Prayut Chan-o-cha, who talks about it regularly in his weekly Friday evening television address. “We are about to become part of the Asean Community,” he said sternly on April 3. “We cannot stand still or fall behind.”
It is a narrative that mixes fear with hope. Small-scale entrepreneurs fret about being swallowed up by invading conglomerates. Teachers struggling to raise English standards – which are lower than those in Vietnam and Indonesia – evoke the AEC bogeyman to prod students into trying harder.
“My teacher said if I don’t work hard at English now, foreigners will come in to take our jobs,” said one student. That’s hardly objectionable as motivation when compared to the school in Bangkok that requires every pupil to buy an “Asean uniform” and wear it once a week – without teaching them about the countries being represented on that shirt.
But such unfocused frenzy begs the question of just how the AEC is shaping up.
Asean data shows average tariffs on intra-Asean imports by the older members – Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand – had steadily fallen to 0.04 per cent by last year. But the figure was 1.33 per cent for newer members Cambodia, Laos, Myanmar and Vietnam.
Based on its latest gauge, Asean has achieved about 80 per cent of targets envisioned in the AEC. But that understates how far the grouping is from its goal, Asian Development Bank economist Jayant Menon notes.
“The last 20 per cent of targets cover the most sensitive and difficult parts of the reform agenda,” he says. “The low-hanging fruit have all been picked by now, and the biggest challenges remain.”
Non-tariff barriers remain. Sensitive sectors like agriculture tend to be protected. Meanwhile, there needs to be harmonised standards on competition policy and intellectual property rights.
While the AEC allows free movement of skilled workers, these need to be licensed in their host countries, which sometimes creates language hurdles. In Thailand, for example, part of the licensing test for doctors is in Thai.
“A more realistic target would be 2025, with a major review on progress in 2020,” says Menon, adding that the “journey” is more important than deadlines.
In other words, not very much will change on December 31. At least not enough to veer the region too far from its trajectory of gradual economic liberalisation.
That anticlimax, however, might just be what is needed to inject a dose of reality into all that AEC chatter in Thailand.
