Comment on “Regional Cooperation and Integration in the Mekong Region”

Authors


Correspondence: Giovanni Capannelli, Asian Development Bank Institute, Kasumigaseki Building, 8th Floor, 3-2-5 Kasumigaseki, Chiyoda-ku, Tokyo 100-6008, Japan. Email: gcapannelli@adbi.org

The Mekong River originates in China, crossing three of its provinces before reaching the Lao People's Democratic Republic (PDR), Myanmar, Thailand, Cambodia, and eventually Vietnam. Verbiest (2013) provides an accurate and stimulating account of the key issues and initiatives for regional cooperation and integration (RCI) focused on the five Association of Southeast Asian Nations (ASEAN) Mekong countries.

One important aspect to be stressed about the Mekong region is the presence of several important common features shared by its individual economies, together with striking differences. The Mekong River itself is a major economic asset shared by the countries it belongs to. Verbiest (2013) illustrates several important initiatives aimed at the joint management of Mekong-related natural resources, such as energy and environmental projects, which have important implications in terms of infrastructure development, regional security, and related social issues. In addition, ASEAN Mekong countries do share several development challenges, as highlighted by a recent study of the Asian Development Bank Institute (ADBI, 2013). The ADBI study suggests that fostering human capital, developing infrastructure, and diversifying their economies are common challenges for all ASEAN Mekong countries as they move along the next two decades of economic development.

At the same time, the ASEAN Mekong region is also marked by pronounced structural differences across countries, which deeply affect the effectiveness of regional cooperation initiatives. Cambodia and Lao PDR together cover only less than 5% of total gross domestic product and export of the five ASEAN Mekong economies, less than 10% of the total population, and less than 25% of their total land mass. Thailand, by far the most advanced economy in the region, plays a vital role for its dynamism, serving as a hub for production networks and other economic activities. For example, in 2011, Thailand was responsible for more than 80% of intraregional exports among the five countries, and accounted for about 58.5% of total foreign direct investment (FDI) cumulated flows to the region.

The presence of structural differences among ASEAN Mekong countries is an important factor to understand the evolution of the key issues analyzed by Verbiest. For example, managing intraregional labor migration may become increasingly difficult in consideration of the fact that while Thailand and Vietnam are net importers of skilled and unskilled labor from other ASEAN Mekong countries, Cambodia, Lao PDR, and Myanmar (CLM countries) are net exporters (Asian Development Bank, 2012). In particular, as employment opportunities increase in Myanmar, together with the progress of its economic and political reforms, Thailand – which according to unofficial estimates is employing some three million registered and unregistered workers from Myanmar – may suffer from a sudden relocation of Myanmarese migrant workers going back to their country.

Another strategically important difference relates to the relative importance played by China in the five ASEAN Mekong economies. As Verbiest (2013) suggests, China is today the largest foreign investors in terms of FDI in CLM countries, but only the 15th largest investor in Vietnam. Moreover, China has been funding large infrastructure projects in CLM countries, but not in Vietnam (or Thailand). As a consequence, China is often seen as a divisive factor among ASEAN Mekong countries, pushing CLM countries against Thailand and Vietnam, and more in general against all other ASEAN member countries when strategic decisions are to be made. In 2012 the ASEAN foreign ministers were unable, for the first time in their 45-year history, to sign a joint communique after their meeting, as they were allegedly unable to find consensus around territorial disputes in the South China Sea, with Vietnam (and the Philippines) harshly criticizing China's position, while Cambodia, serving as host country and ASEAN chair, supporting it.

Finally, Verbiest (2013) argues that the GMS cooperation program has largely contributed to leverage the impact of economic reforms, promoting trade and investment liberalization. This is an interesting proposition that needs, however, to be supported by clear evidence as it is difficult to prove the existence of a direct and unequivocal link between the adoption of domestic reforms and participation in regional cooperation schemes. Other studies on this issue suggest that in Asia the case for reciprocity in domestic reforms is weak and difficult to be drawn directly by regional cooperation initiatives (Dee & McNaughton, 2011). Similarly, the paper seems to attribute too much importance to RCI in reducing the income gap between CLMV and other ASEAN countries. As several factors may simultaneously contribute to narrowing development gaps, econometric analysis is needed to single out the impact of RCI alone.

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