Achieving the ASEAN Economic Community 2015: Challenges for Member Countries and Businesses

17. Thailand’s Perspective on the Role of the Private Sector in the Process of Regional Integration

17 Thailand’s Perspective on the Role of the Private Sector in the Process of Regional Integration Eggaluck Suwannakarn and Pisesporn Wasawong The ASEAN Free Trade Area (AFTA) was one of the first ASEAN attempts towards integration of its member nations. Moving towards a zerotariff zone between its members is one result many regard as a success to date. Some argued initially that ASEAN nations produced similar products and were prone to compete more than cooperate, but this has proved to be wrong. In fact AFTA has been successful in expanding intraregional trade. For example, in the case of Thailand, the total trade (exports plus imports) with ASEAN nations increased from 17 per cent of her total trade in 1995 to 20 per cent in 2007, and ASEAN became the largest trade partner of Thailand. Thailand’s FDI, as well as that of other ASEAN members, increased substantially and in the last five years ASEAN experienced a surge in capital inflows. With the rise of China and India and in an increasingly globalized world, to remain competitive, ASEAN needs to move further along the integration path. The ASEAN Economic Community (AEC) therefore Thailand’s Private Sector’s Role in Regional Integration 287 represents a reaction to global competition and a means of maintaining a balance of trade and investment with China and India. In 2007 ASEAN agreed with the AEC Blueprint, which included plans to continue the integration process towards “a single market” by 2015. Given that the ASEAN Blueprint has been put in place for more than three years, it is timely to examine its progress, including the role of the private sector in the process of ASEAN integration. This chapter will focus on how Thai private businesses have responded to the single market initiative. The remainder of the chapter is structured as follows. The first section illustrates the level of Thai private business usage of the AFTA. The second section summarizes the private sector’s opinions on AFTA usage, using the results of in-depth interviews. Results from questionnaires distributed at a focus group with members of the Thai Chamber of Commerce are provided in the third section. The final section provides recommendations for further implementation and a conclusion. Usage of the AFTA by the Thai Private Sector It is worth noting that while ASEAN has become the largest trading partner of Thai businesses in various sectors (Figure 17.1), some rarely used AFTA privileges. As can be seen in Figure 17.2, many sectors have an AFTA utilization rate1 of less than 50 per cent during the 2001–09 period. Note also that the companies, in practice, were under no obligation to use the AFTA privileges they received from the Bureau of Trade Preferences. As a result, their officially reported export values can be less than the values they applied for. This means the utilization rates reported in Figure 17.2 can be overestimated. Table 17.1 shows the sectors that have the highest and lowest AFTA utilization rates between the years 2001–09. Specifically, manufacturers of plaiting material, basketwork, etc. (HS 46) is the sector that on average has the highest AFTA utilization rate, with more than hundred per cent, while some sectors, including manufacturers of pearls, precious stones, metals, coins, etc. and organic chemicals, have average utilization rates as low as 1.6 per cent. At the industry level (Figure 17.3), only nine of thirty-one industries had AFTA utilization rates greater than 50 per cent in 2009. Specifically, the nine industries are vegetable and fruit; paper pulp; wood; air-conditioning and refrigerator; motor vehicles; furniture; garments, silk and animal hair; and printing materials. 288 Eggaluck Suwannakarn and Pisesporn Wasawong FIgURe 17.1 The Importance of the ASeAN Market to Thai entrepreneurs by Sector Note: Y-axis: The ASEAN share of Thailand’s exports. Source: Trade Map, UNCTAD. 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 2001 2002 2003 2004 2005 2006 2007 2008 2009 Total Agricultural Products Mine and Mineral Chemical, Pharmaceuticals, and Cosmetics Energy Based Industry (Rubber, Steel, and Plastic) Textile, Clothing, and Apparels Electrical Tools and Machinery Car, Ship, and Aircraft Wood, Wood Products, and Paper Other Thailand’s Private Sector’s Role in Regional Integration 289 FIgURe 17.2 AFTA Utilization Rate by 2-digit HS (2001–09)2 2001 '01 '10 '17 '23 '32 '39 '47 '54 '60 '66...