Thailand amid Asean economic integration

Signs promoting the Asean Economic Community (AEC) in Bangkok during the 2016 New Year celebrations. While it has been overhyped, the AEC is still a critical component that keeps Asean sufficiently together. (Photo by PANUPONG CHANGCHAI)

The first year and a half of the Asean Community has transpired not with a bang but a whimper. Thailand's role in it has been correspondingly uneventful. The first 18 months of the Asean Economic Community (AEC), one of three pillars together with the Asean Political-Security Community and Asean Socio-Cultural Community, witnessed no fundamental or qualitative differences from trade and investment patterns prior to its introduction. If the AEC is to work out as intended, it has to be reshaped and reoriented from traditional lenses to new realities based on intra-regional investments in tandem with global value chains.

Trade among Asean economies remains dominated by the original five founders of the 10-member organisation -- namely Indonesia, Malaysia, the Philippines, Singapore and Thailand. While Cambodia, Laos, Myanmar, and Vietnam (CLMV) have accounted more from a low base since their membership entries, their combined weight remains modest, whereas Brunei is simply a marginal player in the AEC. Most important, intra-Asean trade has stayed in the same range of 24% for more than two decades.

On trade, Asean remains dependent on external markets. Yet several new trends are worthy of attention. First, mainland Asean economies have shown signs of tighter trade linkages, especially between Thailand and Vietnam. This pattern portends a mainland Southeast Asia that may become more economically integrated versus the broader Asean.

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