INSIGHTS into the WORLD / ASEAN integration widening policy gaps

The ASEAN Community will come into being at the end of the year, embodying the Association of Southeast Asian Nations’ goal of regional integration. ASEAN is different from the European Union. Unlike the EU, which is a project to form a supranational polity, ASEAN is a regional entity for collectively enhancing the interests of its member states.

3:00 am, September 08, 2015

By Takashi Shiraishi / Special to The Yomiuri Shimbun

The ASEAN Community will come into being at the end of the year, embodying the Association of Southeast Asian Nations’ goal of regional integration. ASEAN is different from the European Union. Unlike the EU, which is a project to form a supranational polity, ASEAN is a regional entity for collectively enhancing the interests of its member states.

The forthcoming regional community will have three pillars, including the ASEAN Economic Community (AEC). The others will be the political-security and socio-cultural communities. What then is the aim of the AEC, the most important of the three? In ASEAN, multinational corporations, including those with headquarters in Japan, have already established regional networks of manufacturing facilities that transcend the national boundaries of its member states. For individual ASEAN countries, investments by those companies have been highly instrumental in achieving economic growth, creating new jobs and raising living standards in each of the countries in the 10-nation entity. To attract more direct investment, the association has adopted new incentives, such as the elimination of cross-national tariffs on components manufactured and shipped within the region, enabling firms to increase the efficiency of their regional production chains. In a nutshell, the goal of the AEC is to ensure economic development of the region by further facilitating the expansion of ASEAN-based production networks.

‘Mainland-maritime’ difference

However, it should be noted that ASEAN’s mainland and maritime member states have adopted different economic development strategies. The divergence has been accelerated by the rapid development of infrastructure across the Greater Mekong Subregion comprising the six countries in the Mekong River basin — five ASEAN member states of Cambodia, Laos, Myanmar, Thailand and Vietnam, as well as China.

In the meantime, there has been little progress in creating a cohesive security framework within ASEAN. The association has two groups of member states — those with territorial disputes with China in the South China Sea and those without such issues. The difference in diplomatic and security policies has of late become more pronounced between mainland member states, excluding Vietnam, and their maritime counterparts. The difference has been exacerbated by China’s two-faced policy of extending economic assistance to its neighbors, on the one hand, and attempting to change the territorial status quo coercively, on the other hand, as well as by the U.S. strategic rebalancing toward the Asia-Pacific region.

Under such circumstances, Myanmar is scheduled to hold general elections in November. In Vietnam, the Party Congress as well as the National Congress will elect a new leadership that will govern both the Communist Party of Vietnam and the government. In Thailand, the ruling military junta has pledged to hold a referendum on a new constitution and general elections in 2016 or later, before letting the country return to civil rule. What kind of impact will these political events have on the future of these continental Southeast Asian countries?

Vietnam: Integrating into region and world

Let’s begin with Vietnam. In the late 1980s, Vietnam shifted the trajectory of its national strategy to the Doi Moi (renovation) open-door policy. The country has since adapted to market economy principles and integrated into the world economy, while diversifying and increasing its regional and international cooperation.

Given its geopolitical situation, Vietnam’s most important challenge, as far as its foreign and security policies are concerned, is how to “manage” its asymmetric relations with China. In the South China Sea, Beijing is intensifying its coercive actions to change the territorial status quo in its favor. In 2014, Chinese and Vietnamese government vessels and fishing boats skirmished in waters claimed by both sides as a Chinese company set up an oil rig for seabed exploration.

As of 2014, China had a population 15 times larger than Vietnam’s while the Chinese economy was 56 times greater than its neighbor’s. Thus, China’s overall national power is far larger than Vietnam’s. What then can Hanoi do to manage the asymmetry? In reality, it has no choice but to employ every possible means for leverage to counterbalance the growing influence of China.

During the Cold War, Vietnam relied on the Soviet Union to maintain the balance of power with China. In recent years, the country has approached Japan, the United States and India, in addition to ASEAN and Russia. It has been active in security cooperation with Japan, for example. Hanoi has also further strengthened relations with Washington: In 2013, the U.S.-Vietnam Comprehensive Partnership agreement was signed and in July this year, General Secretary Nguyen Phu Trong, leader of the ruling Communist Party, became the first top Vietnamese leader to visit the White House. To modernize its armed forces, Hanoi made a deal with Moscow to buy six Russian submarines in 2009 and in 2014 had Washington lift a long-standing embargo on U.S. exports of military equipment to Vietnam.

In the economic sphere, Vietnam is set to integrate further into the regional and global economy by joining the AEC and the multilateral Trans-Pacific Partnership free-trade pact. The inception of the AEC will actually require Hanoi to bear additional costs to realign its industrial structure with the community’s norms, causing the less competitive automotive industry in particular to face a seriously uphill task. Nonetheless, Vietnam remains firmly determined to move ahead at all costs to seek further integration into the regional and global economy. The country’s new leadership to be elected next year is expected to carry on the existing national strategy.

Myanmar: Impact of 2011 accord

Myanmar adopted an open-door strategy in 2011 when Thein Sein assumed the presidency. His government has been essentially seeking to improve relations with the United States, Japan and other advanced countries, to put the country on a growth path by reforming and liberalizing its economy, and to realize political stability by reducing poverty, creating jobs and improving people’s living standards. These initiatives are in progress. In 2014, Myanmar served as chair of ASEAN. The World Bank and Japan have resumed economic assistance to the country, where there has also been an increase in foreign direct investment.

However, such positive developments there have little do with its inclination toward the United States and Japan. Rather, the favorable situation of today has been brought about by its correction of the now-defunct military junta’s lopsided pro-China stance and its strategy of forging “normal” relations with other countries.

The very basis of Myanmar’s successful change of its national strategy since 2011 was an agreement between Thein Sein and opposition leader Aung San Suu Kyi on national reconciliation and the improvement of Myanmar people’s livelihoods through economic growth.

In August, the chairman of the ruling Union Solidarity and Development Party (USDP), who had been known for his presidential ambition, was dismissed, a decision that is thought to have been made by Thein Sein and Min Aung Hlaing, commander in chief of the armed forces. As a result, the forthcoming elections in November will be held under the leadership of both the president and the military chief.

In the polls, it is generally expected that Suu Kyi’s National League for Democracy (NLD) party will emerge as the winner, but she is not eligible to seek the presidency because of a constitutional provision. Whatever the outcome of the presidential election, the collective leadership by the president, the lower house speaker of the national parliament and the commander in chief will remain vital for Myanmar’s future. Considering the existence of the accord between Thein Sein and Suu Kyi, the national strategy adopted in 2011 is more likely to be sustained in the years ahead.

Thailand: Growing political risk

Thailand has been politically adrift since the 2006 coup. As Kyoto University Prof. Yoshifumi Tamada correctly points out, “a democracy with the king as head of state” has reached an impasse for two reasons.

One reason is the confrontation between the old establishment, represented by the palace and the military and bureaucratic elite, and a new group of provincial upstarts and new capitalists. The second is the confrontation between Bangkok’s middle class and the “masses,” including rural middle-class people and lower middle-class urban dwellers.

The establishment in Thailand has been powerful enough to stage coups. In 2006, its coup ousted the emerging political group from power, but the new force, supported by the “masses,” regained power in 2011 in the elections. The existing military junta took power after a coup in May 2014.

In Thailand, there is a deep social divide between Bangkok and the rural areas, especially the northeast. The central government allocates more than 70 percent of its budget to the capital, home to only 13 percent of the country’s population (as of 2010). Bangkok’s per capita income is 10 times larger than that of the northeast. Without a national consensus to redress this disparity, the “masses” will only renew their outcries every time general elections are held.

The country is an ally of the United States and has no territorial dispute with China. Bangkok and its vicinities have a large concentration of Japanese and other multinational corporations, and, the country is also benefiting from China’s economic expansion. Such stable and favorable international circumstances allow the elite in Bangkok to indulge in the power struggle. However, the risk posed by Thailand’s political instability is rising. One example is the blunder it recently committed over its decision to purchase three submarines from China.

In July, the Royal Thai Navy announced the decision, prompting speculation that Thailand took into consideration — besides cost factors — the fact that the United States did not approve of the 2014 coup, whereas China has kept backing the military junta and extended various forms of assistance to it. The submarine deal triggered a negative reaction from Washington, forcing Bangkok to cancel the deal with China soon afterward. This stumble shows how serious the state of political impasse in Thailand has been.

As mentioned above, Vietnam is steadily pursuing its national strategy, while in Myanmar there probably will be no major change in its national strategy of late following the November elections. But in Thailand the risk of going politically adrift is increasing.


Shiraishi is president of the National Graduate Institute for Policy Studies and the Institute of Developing Economies, Japan External Trade Organization.Speech