ASEAN’s New Frontiers
Comment on “Regional Cooperation and Integration in the Mekong Region”
Article first published online: 15 MAY 2013
© 2013 The Author. Asian Economic Policy Review © 2013 Japan Center for Economic Research
Asian Economic Policy Review
Volume 8, Issue 1, pages 165–166, June 2013
How to Cite
Sussangkarn, C. (2013), Comment on “Regional Cooperation and Integration in the Mekong Region”. Asian Economic Policy Review, 8: 165–166. doi: 10.1111/aepr.12016
- Issue published online: 15 MAY 2013
- Article first published online: 15 MAY 2013
The Mekong region comprises economies that are very diverse, whether in terms of population size, gross domestic product (GDP) size, GDP per capita, resource base, or comparative advantages. Verbiest (2013) focused on some major regional cooperation and integration initiatives in this region, ranging from the Greater Mekong Subregion (GMS) program, the Mekong–Japan Cooperation Program, and initiatives from Korea, the USA, and Australia, as well as South–South initiatives within the region. A number of key future challenges were identified, including dealing with the software side of connectivity, water management of the Mekong River, and unskilled labor migration within the region.
Verbiest noted that most of these regional cooperation and integration initiatives strive to reduce the large development gaps within the region. It can be elaborated further that these initiatives are win–win–win strategies for reducing disparities. The win–win–win here refers to (i) reducing income disparities among countries of the GMS; (ii) reducing income disparities within Thailand (which currently ranks toward the lower end of countries in Latin America); and (iii) reducing income disparities within China, especially between the inner Southern provinces of China and those in the Eastern coastal areas. By linking South, China can accelerate the development of its inner Southern provinces by reducing logistic costs to facilitate the shift inlands of some manufacturing production from the Eastern coastal areas where wages are now quite high. Deepening connectivity to Thailand's neighbors and up to China can also help reduce Thailand's regional income disparities by generating more economic activities in the border areas which are now much less developed than areas around the Greater Bangkok and the Eastern Seaboard regions. Finally, a more integrated GMS will improve logistics within the CLMV countries – Cambodia, Lao People's Democratic Republic (PDR), Myanmar, and Vietnam – help spread manufacturing supply chains to the CLMV, and support a sustained high growth of CLMV, thereby reduce the disparities among GMS economies.
Verbiest noted the important role of China in the Mekong region. China's Yunnan Province was part of the GMS program from the beginning (1992), and Guangxi joined in 2004, so China has always been part of the various GMS programs. It is only more recently that Japan, the USA, and Korea developed formal cooperation programs with the Mekong countries. It should be noted, however, that these programs exclude China, so these programs were likely developed to counterbalance the influence of China in the Mekong region. This is similar to the development on free trade agreements between the Association of Southeast Asian Nations (ASEAN) and external partners. China was the first of the northern East Asian economies to propose a free trade agreement with ASEAN in 2001, which was concluded extremely quickly at the end of 2002. This bold move by China brought a quick response from Japan, and one day after the signing of the China–ASEAN Free Trade Agreement, a “Joint Declaration of the Leaders of ASEAN and Japan on the Comprehensive Economic Partnership” was announced, which eventually led to the ASEAN–Japan Economic Partnership Agreement. The Republic of Korea also eventually concluded a free trade agreement with ASEAN.
Verbiest correctly noted that the region will face greater challenges from the software side of connectivity development compared with hardware infrastructure development. The need to involve many institutions in each country and the uneven capacity levels of institutions within and between countries were indicated. On this issue, it is important to add that a critical problem is the lack of an adequate cooperation framework that will ensure appropriate benefit sharing among the various countries from the physical connectivity. A clear example is that of Lao PDR. While Lao PDR is a land-locked country, it is also a land-linked country in the sense that many major transport corridors connecting the Mekong region need to pass through the country. However, given its small population and economic size, Lao PDR will be mainly a transit country for these corridors. The likely costs to Lao PDR are clear, including road damages, accidents, and environmental pollution. However, the framework to make sure that a transit country gets adequate compensation, or to set up road maintenance funds contributed by the main beneficiaries of the various corridors, still needs to be developed and implemented. Until this is done, the physical infrastructures connecting the region will not be effectively utilized.
Finally, Verbiest's paper noted that better management of unskilled labor movement within the GMS is an important challenge. This is certainly very important for all the stakeholder countries. For Thailand, while the development gaps with CLMV have been declining in recent periods, the difference in income levels at present is still about four times. Thus, push factors will continue to draw undocumented migrants into Thailand from the neighboring countries for some time. A more formally managed unskilled labor migration system among the Mekong countries will benefit both the recipient and the sending countries. Migrant labor can benefit from better social protection and less exploitation. Thailand, as the main recipient country, can also benefit from better monitoring and control of the migrants to reduce various social and security problems.