Japan to provide Asean aid

Japan will provide 660 billion yen (212 billion baht) in financial assistance to Asean members' infrastructure projects over the next three years.

Much of the money, in the form of grants and loans, will go towards investment projects under the Greater Mekong Subregion (GMS) regional cooperation.

Arkhom Termpitayapaisith, secretary-general of the National Economic and Social Development Board, said the new financial aid stems from last month's Asean-Japan Commemorative Summit and Japan-GMS meeting.

At that time, the Japanese government agreed to provide the 660 billion yen.

Japan sees Asean as a strategic area due to the large amount of activity in the region by Japanese investors, especially industrial development and particularly in Thailand.

Infrastructure projects linking Asean members are therefore seen as crucial.

Mr Arkhom said of particular importance is the Southern Economic Corridor, which will create a smooth logistics link from Cambodia through Thailand and Myanmar to India.

The GMS has a five-year infrastructure plan comprising 55 projects with combined investment of US$44.4 billion to build roads, railways, bridges and ports.

A GMS ministerial meeting has already approved the plan, and the next step is individual countries setting their own budgets for the projects.

Previously, Japan supported infrastructure projects under the frameworks of the East-West and North-South economic corridors.

One example is the second Thai-Lao Friendship bridge, which links Mudahan and Savannakhet, for which the Japanese government provided soft loans totalling 4.01 billion yen to Laos and 4.07 billion to Thailand.

One new project will be to link Thailand with Myanmar's Dawei development.

"They see this as crucial even though Japanese investors have yet to settle on any projects in Dawei," said Mr Arkhom.

Another one will be an economic zone and industrial estate linking Poipet and Koh Kong in Cambodia with Thailand's Trat province.

Japanese and Thai investors are already active in this area.

Mr Arkhom said once Asean becomes a single market late next year, Thai investors should consider building manufacturing bases in low-wage countries to supply parts for assembly in Thailand.

For example, Thai industrialists could make auto parts in Cambodia and electronic components in Vietnam and ship them to Thailand for automobile assembly.

"Now is the time for Thai investors to consider three key strategies _ connectivity, community and competitiveness," said Mr Arkhom

"They must improve themselves in a comprehensive manner. Their competitiveness can improve by seeking cooperation from the Asean community to supply cheap raw materials and moving low-tech industries to neighbouring countries while keeping high-tech production here."

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