Indochina needs good ties with ASEAN<\/p>\n
The countries of Indochina need to strengthen linkages with
\nthe dynamic ASEAN states and also with the rest of the Asia-
\nPacific if they are to achieve comprehensive development. This is
\nespecially in view of trends in global trade and investment
\nliberalization as shown in the recent APEC Summit in Indonesia
\nand in other international economic meetings. There are existing
\nmodalities and mechanisms within ASEAN from which the Indochinese
\ncountries can benefit, namely:<\/p>\n
- cooperative arrangements through the various mechanisms of
\nthe ASEAN Secretariat; and<\/p>\n
- other sub-regional development cooperation arrangements and
\nprojects among the ASEAN states, with reference to ASEAN's Six-
\nMinus-X principle.<\/p>\n
Although the ASEAN Free Trade Agreement (AFTA) currently
\ncovers only trade issues, it could be expanded in the future as
\n"AFTA Plus" to cover investment, services and environmental
\nissues. As to the status of the Indochinese countries regarding
\ntheir membership of ASEAN, Vietnam will in all likelihood be a
\nmember in July 1995; Cambodia is currently a special observer;
\nand Laos has already become an observer by signing the Treaty of
\nAmity and Economic Cooperation.<\/p>\n
AFTA has identified 15 specific product groups for tariff
\nreduction, many of which are resource-based commodities important
\nfor Indochina, such as vegetable oils, pulp, rubber products,
\ngems and jewelry. If the Indochinese countries are to join ASEAN,
\nthey will have to familiarize themselves with ASEAN's various
\nschemes. Singapore has provided some technical assistance in this
\nrespect, but more sub-regional coordination and research will be
\nnecessary.<\/p>\n
In strengthening linkages between ASEAN and Indochina, two
\nmajor principles in terms of sub-regional co-operation, resource
\npooling and market sharing, can be employed to mutual advantage.
\nASEAN can pool its diverse comparative advantages both in terms
\nof trade and investment with that of Indochina.<\/p>\n
Hence, the combination of foreign direct investments from the
\nASEAN states (Singapore, Malaysia, Thailand and Indonesia), the
\nentrepreneurial and organizational resources (or "soft
\ntechnology") from ASEAN's internationally competitive and
\nsuccessful public and private enterprises, abundant resources of
\nscenic and mineral-rich land, and the low-cost labor of the
\nIndochinese economies would generate positive-sum synergy and
\nefficiency leading to an expansion of productive capacity for the
\nbenefit of all parties. In addition, the ASEAN states and the
\nIndochinese countries can organize joint trade and investment
\npromotion activities, as has been done by individual ASEAN
\nmembers in major investor-countries, such as the U.S., Japan,
\nKorea and the countries of the European Union.<\/p>\n
Assistance from international agencies such as United Nations
\nIndustrial Development Organization and the Economic and Social
\nCommission for Asia and the Pacific will make these efforts even
\nmore effective. Human resource training, and capabilities in
\ninstitutional building in trade and investment promotion, are
\nalso important activities and require assistance from various
\npublic sector organizations.<\/p>\n
There is a similar need to stimulate entrepreneurship and an
\nemergent private sector in the Indochinese countries. This could
\nbe done through formulation of strategic business alliances with
\nAsean Chambers of Commerce and Industry. Such catalytic
\ninstitutional support can be instrumental in moving market forces
\nin the gradually liberalizing Indochinese economies, disciplined
\nby international competition.<\/p>\n
Additionally, focus should also be on small and medium-sized
\nenterprises, as they have intangible assets which are relevant
\nand useful for the Indochinese countries. Furthermore, such
\nfacilities as double-taxation agreements and investment
\nprotection and guarantee agreements should be effectively
\nimplemented, which would be instrumental in developing the
\nprivate sector in the Indochinese countries and in promoting
\nbusiness transactions and cooperation with the ASEAN states.<\/p>\n
To achieve the above recommendations, assistance from donor
\ncountries (Japan and the other OECD countries) will be crucial.
\nRecent meetings of the ASEAN-MITI Working Group for Economic
\nCooperation with Indochina, held in Chiangmai, has identified
\nseveral areas for technical cooperation such as industrial and
\ninvestment activities, trade promotion and facilitation,
\nharmonization of customs, technology transfer, human resource
\ndevelopment, and legal reform. The question now is how to act on
\nthese proposals and identify funding and modalities for
\nimplementation.<\/p>\n
Dr. Joseph L. H. Tan is a Senior Fellow and Coordinator of the
\nAsean Economic Research Unit, Institute of Southeast Asian
\nStudies.<\/p>",
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"sponsor": "Okusi Associates",
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