Mekong subregion growing, Vietnam avoids relying on one particular country
Saturday, 16 February 2008
Takashi Shiraishi
In mid-January, the Japan-Mekong Foreign Ministers' Meeting took place in Tokyo, involving Japan as host and the five Southeast Asian nations through which the Mekong River runs: Cambodia, Laos, Myanmar, Thailand and Vietnam.
In the talks, Japan agreed to deepen its partnership with the Meong subregion in view of the area's rise in importance as a result of self-reliance efforts and infrastructure development, such as the east-west economic corridor. To that end, Japan will cooperate with the countries to promote regional stability and prosperity, enhance exchanges aiming to better integrate the Association of Southeast Asian Nations and extend economic assistance as required.
At the conference, Japan pledged to provide 20 million dollars for the improvement of distribution and customs services along the east-west corridor, linking Ho Chi Minh City, Phnom Penh and Bangkok, and another 20 million dollars for the "Development Triangle" project, which involves Vietnam, Laos and Cambodia.
A north-south corridor from Kunming, the capital of China's Yunnan Province, to Bangkok via Laos is being constructed, while China is increasing trade with and economic aid to the Mekong subregion. In light of this, Japanese initiatives are routinely read as Japan's countermove against China's southward expansion.
But this kind of simplistic geopolitical observation does not help us understand what is really going on. A road is a road regardless of who builds it. Besides, the east-west corridor and the north-east corridor both extend to China. The subregion is not an arena of Japan-China rivalry.
What, then, is happening there? I would like to touch on two things in particular.
First, the countries in the subregion, except for Thailand, are still in "transition." Vietnam and Laos are in transition from socialist party states to what I call "socialist market states" under one-party rule. Cambodia, where a long civil war ended in the 1990s, is also in transition as it embarks on national and economic reconstruction. In Myanmar, the military junta--which calls itself a "provisional" government pending the enactment of a new constitution--is eternally in transition, at least since the 1988 coup d'etat.
The success of all these transitions hinges to a large extent on viable economic development. The four countries are still poor. Annual national income per capita in 2005 stood at 620 dollars in Vietnam, 440 dollars in Laos, 380 dollars in Cambodia and 176 dollars in Myanmar. Nevertheless, except for Myanmar, their economies have been growing rapidly. From 2002 to 2006, Vietnam registered an annual average economic growth rate of 7.8 per cent, Cambodia 10 per cent and Laos 6.5 per cent.
Second, trade volume in the subregion has been rising sharply, reflecting remarkable economic growth. Trade with China is growing, but China is not the largest trading partner for all of the Mekong countries. According to 2005 trade statistics, China is the largest exporter to Cambodia and Myanmar at 47 per cent and 34 per cent, respectively. But the United States was the biggest destination of Cambodian exports at 63 per cent, while Myanmar's biggest export market is Thailand at 49 per cent. Thailand also was Laos' largest trading partner, receiving 43 per cent of Laotian exports and supplying 69 per cent of Laos-bound shipments.
As for Vietnam, 21 per cent of its exports were shipped to the United States, followed by 12 per cent to Japan and 6 per cent to China, while 17 per cent of its imports came from China, followed by 13 per cent from Singapore, 10 per cent from Japan, 9 per cent from South Korea and 7 per cent from Thailand. This means that Vietnam does not rely heavily on one particular country. The same goes for Thailand.
As these figures show, countries in the Mekong subregion are deepening their economic interdependence with the help of economic and infrastructure development. In this open regional network of mutual reliance, Thailand is functioning as a hub, with Vietnam emerging as a second hub. Regional trade with China is increasing, but trade with China is growing in tandem with the expansion of trade with Japan, the United States and other ASEAN member countries. Such a positive development is a natural consequence of deepening economic interdependence underpinned by transnational and regional business networks.
What is happening in the economic sphere has implications for diplomacy. Even as Thailand and Vietnam are enhancing ties with China, they are pressing ahead with the integration of ASEAN and maintaining strong diplomatic connections with Japan and the United States. Such an approach is possible thanks to the progress in economic interdependence in the subregion.
Here lies the significance of the development of the Mekong subregion. As the subregion develops economically and is integrated into the global and East Asian networks of interdependence, the countries there will be in a position to forge open and balanced foreign relations in both political and economic fields.
In this connection, however, there is one sticking point--Myanmar. In Myanmar, the National League for Democracy won a landslide victory in the 1990 general elections. But the junta ignored the results and has since ruled the country as a "provisional" regime. For this reason, the United States has called Myanmar an "outpost of tyranny" and imposed economic sanctions. ASEAN has adhered to a policy of constructive engagement toward Myanmar in an attempt to help the country "democratise" itself.
Given that the military junta has controlled Myanmar for 20 years now, both economic sanctions and constructive engagement have failed to help Myanmar achieve transition. Meanwhile, China has provided Myanmar with large official loans for the development of infrastructure, such as highways and electrical power stations, while India has been strengthening relations through natural resource development and joint military exercises.
So what should be done? Democratisation is a desirable goal for Myanmar. But it is wrong to wishfully think that Myanmar's economy and its junta are collapsing.
Koichi Fujita, professor at Kyoto University's Center for Southeast Asian Studies, has compiled an interesting report on the standard of living in Myanmar. Two points stand out in his report.
First, Myanmar's per capita income is far below that of Laos and Cambodia in terms of market-based foreign exchange rates to the dollar. However, the quality of people's diets in Myanmar is no different from that in Cambodia, Laos and Vietnam as far as consumption of oils and fats, seafood, fruit, eggs and drinks are concerned. The only difference seems to be that people in Myanmar eat a little less meat than Cambodians, Laotians and Vietnamese.
Second, consumer spending by the upper 20 per cent of Myanmar's households is about four times the comparable amount spent by the lowest 20 per cent. Despite such a big disparity, there is almost no difference between the two groups in terms of the ratio of food expenses, thereby challenging Engel's Law, which states that as income rises, the proportion of income spent on food tends to go down. In other words, the income gap mostly translates into differences in the choice of foods and the fact that the rich are eating better.
These findings reflect the insufficient state of the country's infrastructure, such as electricity, tap water and housing. People are not buying TVs, refrigerators and other household electrical appliances because electricity is supplied to less than 20 per cent of the country's farming villages.
In sum, everyone is eating every day even though they are poor, and the rich-poor divide has not resulted in major visible differences in lifestyles. Under such circumstances, a popular uprising may have difficulty catching fire.
There is no question that the political regime in Myanmar is a tyranny. Furthermore, last year's antigovernment campaigns spearheaded by monks were suppressed by force and a Japanese journalist was shot to death while covering the movement. Given such developments, Japan should not immediately resume economic assistance to Myanmar.
Nevertheless, it is realistic to foresee that a generational change in the military leadership will take place in the not-too-distant future since Myanmar strongman Than Shwe, the senior general who is chairman of the State Peace and Development Council and commander in chief of the armed forces, is 75 years old and sickly.
We need to adopt a long-term strategy aimed at further integrating Myanmar into the regional network of interdependence. To realise such a goal, assistance should be extended for human resource development and the construction of the Asia Highway by extending the north-east and east-west corridors from Bangkok to India via Myanmar, measures that will in the long run facilitate socioeconomic and political change in Myanmar.
Shiraishi is vice president of the National Graduate Institute for Policy Studies in Tokyo and president of the Institute of Developing Economies of the Japan External Trade Organisation. )
...................................
Daily Yomiuri Online
In mid-January, the Japan-Mekong Foreign Ministers' Meeting took place in Tokyo, involving Japan as host and the five Southeast Asian nations through which the Mekong River runs: Cambodia, Laos, Myanmar, Thailand and Vietnam.
In the talks, Japan agreed to deepen its partnership with the Meong subregion in view of the area's rise in importance as a result of self-reliance efforts and infrastructure development, such as the east-west economic corridor. To that end, Japan will cooperate with the countries to promote regional stability and prosperity, enhance exchanges aiming to better integrate the Association of Southeast Asian Nations and extend economic assistance as required.
At the conference, Japan pledged to provide 20 million dollars for the improvement of distribution and customs services along the east-west corridor, linking Ho Chi Minh City, Phnom Penh and Bangkok, and another 20 million dollars for the "Development Triangle" project, which involves Vietnam, Laos and Cambodia.
A north-south corridor from Kunming, the capital of China's Yunnan Province, to Bangkok via Laos is being constructed, while China is increasing trade with and economic aid to the Mekong subregion. In light of this, Japanese initiatives are routinely read as Japan's countermove against China's southward expansion.
But this kind of simplistic geopolitical observation does not help us understand what is really going on. A road is a road regardless of who builds it. Besides, the east-west corridor and the north-east corridor both extend to China. The subregion is not an arena of Japan-China rivalry.
What, then, is happening there? I would like to touch on two things in particular.
First, the countries in the subregion, except for Thailand, are still in "transition." Vietnam and Laos are in transition from socialist party states to what I call "socialist market states" under one-party rule. Cambodia, where a long civil war ended in the 1990s, is also in transition as it embarks on national and economic reconstruction. In Myanmar, the military junta--which calls itself a "provisional" government pending the enactment of a new constitution--is eternally in transition, at least since the 1988 coup d'etat.
The success of all these transitions hinges to a large extent on viable economic development. The four countries are still poor. Annual national income per capita in 2005 stood at 620 dollars in Vietnam, 440 dollars in Laos, 380 dollars in Cambodia and 176 dollars in Myanmar. Nevertheless, except for Myanmar, their economies have been growing rapidly. From 2002 to 2006, Vietnam registered an annual average economic growth rate of 7.8 per cent, Cambodia 10 per cent and Laos 6.5 per cent.
Second, trade volume in the subregion has been rising sharply, reflecting remarkable economic growth. Trade with China is growing, but China is not the largest trading partner for all of the Mekong countries. According to 2005 trade statistics, China is the largest exporter to Cambodia and Myanmar at 47 per cent and 34 per cent, respectively. But the United States was the biggest destination of Cambodian exports at 63 per cent, while Myanmar's biggest export market is Thailand at 49 per cent. Thailand also was Laos' largest trading partner, receiving 43 per cent of Laotian exports and supplying 69 per cent of Laos-bound shipments.
As for Vietnam, 21 per cent of its exports were shipped to the United States, followed by 12 per cent to Japan and 6 per cent to China, while 17 per cent of its imports came from China, followed by 13 per cent from Singapore, 10 per cent from Japan, 9 per cent from South Korea and 7 per cent from Thailand. This means that Vietnam does not rely heavily on one particular country. The same goes for Thailand.
As these figures show, countries in the Mekong subregion are deepening their economic interdependence with the help of economic and infrastructure development. In this open regional network of mutual reliance, Thailand is functioning as a hub, with Vietnam emerging as a second hub. Regional trade with China is increasing, but trade with China is growing in tandem with the expansion of trade with Japan, the United States and other ASEAN member countries. Such a positive development is a natural consequence of deepening economic interdependence underpinned by transnational and regional business networks.
What is happening in the economic sphere has implications for diplomacy. Even as Thailand and Vietnam are enhancing ties with China, they are pressing ahead with the integration of ASEAN and maintaining strong diplomatic connections with Japan and the United States. Such an approach is possible thanks to the progress in economic interdependence in the subregion.
Here lies the significance of the development of the Mekong subregion. As the subregion develops economically and is integrated into the global and East Asian networks of interdependence, the countries there will be in a position to forge open and balanced foreign relations in both political and economic fields.
In this connection, however, there is one sticking point--Myanmar. In Myanmar, the National League for Democracy won a landslide victory in the 1990 general elections. But the junta ignored the results and has since ruled the country as a "provisional" regime. For this reason, the United States has called Myanmar an "outpost of tyranny" and imposed economic sanctions. ASEAN has adhered to a policy of constructive engagement toward Myanmar in an attempt to help the country "democratise" itself.
Given that the military junta has controlled Myanmar for 20 years now, both economic sanctions and constructive engagement have failed to help Myanmar achieve transition. Meanwhile, China has provided Myanmar with large official loans for the development of infrastructure, such as highways and electrical power stations, while India has been strengthening relations through natural resource development and joint military exercises.
So what should be done? Democratisation is a desirable goal for Myanmar. But it is wrong to wishfully think that Myanmar's economy and its junta are collapsing.
Koichi Fujita, professor at Kyoto University's Center for Southeast Asian Studies, has compiled an interesting report on the standard of living in Myanmar. Two points stand out in his report.
First, Myanmar's per capita income is far below that of Laos and Cambodia in terms of market-based foreign exchange rates to the dollar. However, the quality of people's diets in Myanmar is no different from that in Cambodia, Laos and Vietnam as far as consumption of oils and fats, seafood, fruit, eggs and drinks are concerned. The only difference seems to be that people in Myanmar eat a little less meat than Cambodians, Laotians and Vietnamese.
Second, consumer spending by the upper 20 per cent of Myanmar's households is about four times the comparable amount spent by the lowest 20 per cent. Despite such a big disparity, there is almost no difference between the two groups in terms of the ratio of food expenses, thereby challenging Engel's Law, which states that as income rises, the proportion of income spent on food tends to go down. In other words, the income gap mostly translates into differences in the choice of foods and the fact that the rich are eating better.
These findings reflect the insufficient state of the country's infrastructure, such as electricity, tap water and housing. People are not buying TVs, refrigerators and other household electrical appliances because electricity is supplied to less than 20 per cent of the country's farming villages.
In sum, everyone is eating every day even though they are poor, and the rich-poor divide has not resulted in major visible differences in lifestyles. Under such circumstances, a popular uprising may have difficulty catching fire.
There is no question that the political regime in Myanmar is a tyranny. Furthermore, last year's antigovernment campaigns spearheaded by monks were suppressed by force and a Japanese journalist was shot to death while covering the movement. Given such developments, Japan should not immediately resume economic assistance to Myanmar.
Nevertheless, it is realistic to foresee that a generational change in the military leadership will take place in the not-too-distant future since Myanmar strongman Than Shwe, the senior general who is chairman of the State Peace and Development Council and commander in chief of the armed forces, is 75 years old and sickly.
We need to adopt a long-term strategy aimed at further integrating Myanmar into the regional network of interdependence. To realise such a goal, assistance should be extended for human resource development and the construction of the Asia Highway by extending the north-east and east-west corridors from Bangkok to India via Myanmar, measures that will in the long run facilitate socioeconomic and political change in Myanmar.
Shiraishi is vice president of the National Graduate Institute for Policy Studies in Tokyo and president of the Institute of Developing Economies of the Japan External Trade Organisation. )
...................................
Daily Yomiuri Online