Military intervention may help speed Thailand’s AEC preparedness
In 2013 cross-border trade within ASEAN amounted to the equivalent of 323 billion US dollars, a quite sharp rise of 26 percent year-on-year, according to an article published in The Diplomat in May.
With the AEC now just 19 months away, the political gridlock which ensued prior to the military assuming full control of the country on 22 May, meant there were many plans that needed to be put in place prior to 31 December 2015 were simply not being considered.
The Thai economy shrank by 0.6 percent in the first quarter of this calendar year and had the instability been allowed to continue, the long-term destabilising of the Thai economy was potentially going to impact Thailand’s potential to make the best of the start of the new economic community.
Of course the military takeover, apart from raising concerns about the future of representative government in Thailand, also led to grave fears of a foreign investor exodus. So far these fears have not been realized to any great degree.
In fact, two major foreign banks have instead begun negotiations to take a further stake inside Thailand. The Japanese Sumitomo Mitsui Trust Bank has received approval to open a subsidiary in the country. The bank said it considered Southeast Asia an important strategic region due to its rapid and ongoing economic growth and it was hoping to provide top-quality financial services to Japanese corporations, and others, in Thailand. This is a clear leap of faith in the future of the country and a probable acknowledgement of Thailand’s prominent geographical position when the AEC does come into being. After all, although no one is expecting the AEC to start and be fully formed and properly functional from day one, many overseas corporations recognize there will a period of settling in and gradual tweaking. They clearly hope to be in a position to be on the ground floor as it were and be able to benefit economically by taking the long-term view of the new economic powerhouse.
The other foreign bank keen to expand further into Thailand is Australia’s ANZ. Thailand’s finance ministry has given ANZ approval to also establish a subsidiary in the country. An ANZ spokesperson was quoted as saying, “The development of a presence in Thailand is an important step for ANZ given the size of Thailand’s economy, its importance as a regional manufacturing centre and connection to other countries in our network…”
ASEAN members are currently seeing some major regional banking shake-ups, much of the restructuring occurring because of the approach of the AEC. As long as Thailand can regain its economic footing and the military is seen to be moving towards ensuring local prosperity then the country should be assured of its place of prominence when the AEC finally becomes a reality.