We all have heard
about the Asean Economic Community many times. Experts from government agencies
and the private sector have helped point out the strengths, weaknesses,
opportunities and threats in all 10 Asean markets for hundreds of products and
industries in endless seminars and research papers.
But there is an observation that has been troubling me
for quite some time now, but still no one has quite rightly or publicly pointed
out this concern. So to write yet another piece on the AEC, I will try to say
something that is truly novel on this concern.
After all the energy we have poured into analysing the
AEC, the scope of conclusions is rather narrow. The typical recommendations are
either you must seize the opportunity by starting to export to Asean countries
or you must try to invest in neighbouring countries, whose resources are
abundant and cheap.
Even scare tactics have been employed on many stages,
telling businesses to fly outside and seek new and exciting opportunities or
stay home to grow stale and slowly wither away amid foreign competition. Only
some of these in my opinion are true. Most of them are highly debatable.
What I agree with is that the AEC provides a rare
business opportunity for those needing extra room to grow, new markets to test
products and cheaper resources to enhance their global competitiveness. It also
gives local entrepreneurs, especially those in border provinces, a business
edge over bigger competitors that are just beginning to understand the needs of
customers in neighbouring economies.
But let's face the facts. Not all businesses are ready
for such an exciting challenge. Some statistics may paint a picture worth a
thousand words here. There are 2.24 million firms in Thailand, and only about
385,000 of them are juristic, that is, properly registered with the Commerce Ministry.
The number of firms engaging in some exporting and
importing activities drops to roughly 45,000, or just under 12 per cent of
juristic firms and a mere 2 per cent of all firms in Thailand. And the number
of firms that actually invest abroad is even more thought provoking. The
statistics on these investors are hard to come by, but they probably don't
reach 1 per cent of juristic firms.
Of course, there are steps that these domestic firms
could take to prepare for dipping their toes in outside markets, but the fact
of the matter is that most Thai businesses will remain solely and wholly
domestic.
We have three options here. First, let them be.
Hopefully, they will not feel the full force of the AEC, nor will they reap any
benefits. This option cannot be a true answer, because if only Thailand's big
firms and corporations are ready to go abroad, so are other Asean countries'
big and powerful corporations. Future competition could be between less
efficient domestic SMEs and most efficient multinational Asean firms - an
unfair fight in all regards.
The second option is to push them out. This requires
the government to equip SMEs with whatever is deemed necessary and just push
them out.
However, business decisions are not that easy. Even
big and powerful corporations that are actively investing abroad nowadays took
many years and many steps to get ready to make the big jump. Even if
successful, this policy option will force SMEs to bet on only to pick a few
winners. Costs will surely outweigh benefits in this negative-sum game.
The final option is to find a way for local businesses
to reap the benefits of the AEC even if they operate locally. To me, this is
the most attractive option, however a lot of work will need to be done until we
get there, and many have not even started. To achieve this, we must also turn
our old notion of the AEC on its head and start thinking anew - how to grasp
the benefits of the AEC domestically.
This point has bothered me and some TMB executives for
quite some time, so much so that we decided to organise a public seminar to
answer it, inviting experts from the public and private sectors. I do have some
ideas but unfortunately am far from having a complete answer to share yet. But
after the event, things should become clearer and I will take the opportunity
next time to share our findings on domestically reaping the benefits of the
AEC.
Views expressed in
this article are those of the authors and not of TMB Bank or its executives.
Benjarong Suwankiri
Business & Investment Opportunities Saigon Business Corporation Pte Ltd (SBC) is incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Health care and Life Science with expertise in ASEAN 's area. We are currently changing the platform of www.yourvietnamexpert.com, if any request, please, contact directly Dr Christian SIODMAK, business strategist, owner and CEO of SBC at christian.siodmak@gmail.com. Many thanks.
No comments:
Post a Comment