Vietnam, Thailand chart AEC connectivity as the way forward

Though Thailand has long been a country of great promise given its resources and geographic proximity to Vietnam, most experts say the potential has remained largely untapped, resulting in the two countries remaining among the world’s poorest.

Economic reforms that began in the mid-1980s have advanced in fits and starts, with much unfinished business lying ahead.

Key to the development agenda of both nations was their joining the World Trade Organization (WTO) and now the further implementation of the AEC underscores the continuation of their emphasis on not only regional, but global economic integration.

Given that the two nations are now at the dawn of the AEC, it is a good time to assess how well they have performed so far and what initiatives should be jointly undertaken to realize their fullest potential, they say.

Both nations have been on track in implementing their AEC commitments, notably in cutting tariffs, eliminating non-tariff trade barriers and creating a business climate conducive to expanding economic cooperation and trade with global partners.

But experts say this is just the start and long-term economic sustainability for both nations requires so much more in the way of well thought out coordinated reforms. The two nation’s peoples will have to work much harder than they have in the past to achieve success.

Speaking at a recent seminar, Prof Nguyen Mai, Chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE) talked about the potential for Vietnam given the backdrop of the AEC and the potential Trans Pacific Partnership (TPP).

Mai questioned the benefits of the TPP in an interview with Vietnamnet Bridge. "How foolish is it to let foreigners be the main beneficiaries in the Vietnamese market? Who instructs Vietnamese private businesses to benefit from the TPP?”

Dr Nguyen Tri Hieu, a financial expert, also was hesitant to fully back the TPP and was only moderately optimistic about it representing the best way forward for the Vietnam economy.

“Will Vietnam really benefit from the TPP, with growth in the gross national product (GNP) and exports?” Hieu was quoted as saying by Vietnamnet Bridge. “The challenge is huge.”

On the issue of the TPP, Thailand’s Deputy Prime Minister Somkid Jatusripitak in turn recently told the Bangkok Post that his country would be interested in joining the US led trade pact. “We are very interested but we must weigh the advantages and disadvantages carefully.”

Since the TPP is a ‘living agreement,’ additional countries such as Thailand would be able to join even once the current 12 members finish negotiations – which is far from a certainty at this point in time.

 The uncertainties surrounding the TPP and the current global environment leave little doubt that the peoples of both Vietnam and Thailand will have to work smarter to achieve high levels of growth in their domestic economies over future decades.

Connectivity between the two countries and coordinated reforms to streamline and simplify trade regulations can aid prosperity for both nations and is an economically viable way forward for prosperity, say most leading experts.

Both nations should strive to transform themselves into a ‘land-linked’ economic region and invest in both policy reform and infrastructure connectivity, most notably as it relates to tourism and developing manufacturing supply chains.

A transformative regional railway initiative should be considered to connect Thailand and Vietnam seaports and major cities and economic trade zones, they say.

The future economic growth of Vietnam and Thailand will depend largely upon how effectively the two countries can facilitate economic cooperation and trade in each other’s country, which is greatly dependent upon improving connectivity.

The effective integration into the AEC will spill over and result in sustained long-term growth and development that will result in increased earnings and standard of living lifting the nations to hitherto untold prosperity, these experts say.

VOV