September 5, 2013
Shuichi Ikeda, Chief Representative of the JICA Thailand Office
By Shuichi Ikeda
Chief Representative, JICA Thailand Office
Encompassing Cambodia, Laos, Myanmar, Thailand and Vietnam and bordering China and India, the Mekong River Basin holds a population that easily exceeds 200 million people. The volume of trade in the region is growing rapidly, experiencing an increase of 600 percent over the 10 years since 2000, and with Myanmar opening its doors, economic activities are expected to further accelerate in the region. Located at the pivot point of this region is Thailand, the country that holds the key to delivering the vitality of the Lower Mekong Basin to the world. It is therefore critical for the region that Thailand does not fall into what is known as the "middle-income trap." In conceiving of an aid strategy for economic development in the Lower Mekong Basin, it is essential that JICA re-evaluate the status of Thailand and keep foremost in mind the connectivity to a healthy Thai economy.
The five countries of the Lower Mekong Basin
Of particular importance is the business activity of the 50,000 Japanese people living in Thailand and the some 7,000 Japanese registered companies there. Providing a majority of the foreign direct investment in Thailand, Japanese companies have shown a powerful presence in the area since the 1980s, and investments in Thailand have accelerated in recent years due in part to avoid risks of investing in China. An economic development strategy is needed for the Lower Mekong Basin that is premised on links to industrial agglomeration in Thailand with Japanese enterprise at the core.
Toward Escaping from the Middle-Income Trap and Achieving Sustainable Growth
For Thailand to achieve sustainable economic growth going forward, connectivity must be strengthened with other nations in the Lower Mekong Basin, and a higher level of participation is essential for economic development in the region.
In 2012, the per capita nominal GDP was 5,678 dollars. As defined by the World Bank, that makes Thailand, which is already an up-and-coming semi-developed country, an upper middle-income country. However, the country has a high risk of falling into the middle-income trap, a situation where economic development for further growth cannot be sustained because the status as an upper middle-income country was built on an inexpensive labor force and foreign direct investment. Thailand must find and nurture highly competitive industries that utilize Thailand's strengths, push industry as a whole to a higher level, and work to get away from labor-intensive industries. To do so, Thailand must maximize its geographic and economic importance in the Lower Mekong Basin that was described above.
Major export destinations for Thailand's goods are China (12 percent), Japan (10 percent) and the U.S. (10 percent), with 25 percent going to ASEAN countries and a rapidly growing percentage going to other Lower Mekong Basin countries, a number that is expected to further expand going forward. As effective steps toward sustainable economic growth, Thailand should foster technological advancement in industry, relocate labor-intensive industries to other Lower Mekong Basin nations, and strengthen connectivity with industries in neighboring countries based on the present industrial agglomeration in Thailand, and then enhance international competitiveness using the advantages of the Lower Mekong Basin as a whole. As Thailand is in a position to reduce the gap and act as a bridge between advanced ASEAN countries and the Lower Mekong Basin countries, which are emerging ASEAN countries, the role of Thailand in forming the ASEAN Economic Community, or AEC, is vital.
Legal and Illegal Development on the Borders
The Thai-Myanmar Friendship Bridge crosses the border between Mae Sot in Thailand and Myawadi in Myanmar. Sixty percent of the border trade between the two countries takes place here.
With the goal of promoting economic development in the Lower Mekong Basin, work is gradually progressing with infrastructure in the East–West Economic Corridor and the Southern Corridor that is gradually being extended to Myanmar. Improvements are already in progress to make goods distribution across borders smoother. National borders are often located in remote areas distant from the country's center, but if the characteristics of border regions are utilized properly, effective socioeconomic development can be promoted in such outlying regions. From that perspective, regional development is moving forward with a focus on national border areas.
Minority ethnic groups, refugees and the poor live in large numbers in border regions, where development can be effective from the perspective of inclusiveness. The number of foreign laborers in Thailand is said to be nearly four million from Cambodia, Laos and Myanmar (three million of which are from Myanmar), many working in factories or on construction sites. These workers are playing an important role for supporting economic activities in Thailand. At some point, they will return home, taking with them the skills, knowledge and capital they acquired in Thailand, and can be expected to make important contributions to the economic development in their homelands.
A large percentage of these immigrants and laborers from neighboring countries are illegal, a fact that is fairly well known. Because of their illegal status, their rights are not adequately protected, and many work in substandard working environments. Many are also the victims of human trafficking, a problem that JICA has been addressing since 2008 with a technical cooperation project. And while Thailand receives many human trafficking victims from nearby countries, it also is the source of many trafficking victims as well. While national borders have the potential to stimulate economic activity, at the same time, they are fraught with the risks of human trafficking, drug and other illegal trade, illegal deforestation for lumber and the overhunting of valuable species. When fostering border development, it is therefore important to do so in an appropriate manner, keeping adequate watch on both legal and illegal activities.
New Problems from Social Maturity
Two JICA experts (at left) check on the nursing care needs of the elderly in a project for providing the elderly with assistance.
Another important aspect of the situation in Thailand is that as an upper middle-income country, Thailand faces a new set of problems differing from those during its development stage.
One example of these problems is the aging of society, a problem that is even more advanced in Japan. In Japan, where society is aging at a much more rapid rate than in Europe and the U.S., the transition from an aging society (where the percentage of the elderly to the entire population is 7 percent) to an elderly society (with an elderly population of at least 14 percent) took 24 years. In Thailand, it is estimated that the transition will take one year less than occurred in the Japanese experience, and Thailand will face the problems of this transition before graduating from the ranks of upper middle-income countries through utilizing the demographic bonus. The current government capacity, the size of the country's budget, and the affordability of individuals must be kept in mind when creating a system capable of handling an aging society.
When you gaze out of a window in a building in downtown Bangkok, you see skyscrapers lining the streets with highways and elevated railroads running among them, all part of a metropolis which looks larger than Tokyo. Take one step outside the building, however, and you will know you are not in a sophisticated urban town of a developed country. It is an urban space that is not easy to live in, with roads that are constantly congested and sidewalks that are difficult to walk along. The time has come when Thailand needs to implement urban planning to include more sophisticated considerations for the environment. To do so, decentralization should be emphasized and local municipalities given more autonomy, a framework developed for resident participation in urban building, and tax reforms carried out to strengthen the fiscal base of municipalities.
Thailand as a Partner in Cooperation
As an upper middle-income country, Thailand is no longer a main target to receive conventional ODA, but as discussed above, the importance of the country is growing, and it is critical that JICA continue with active development efforts there. However, Thailand should be positioned as a JICA partner and JICA should collaborate with Thailand in order to realize JICA's objectives. . One of the objectives of collaboration with Thailand is to strengthen the connectivity of the Thai economy for socioeconomic development in the Lower Mekong Basin that was described at the beginning of this article. Another objective is to distill the experiences that Thailand has had into knowledge that can be shared with other developing countries.
As an example, Thailand is one of the few developing countries that have achieved universal health coverage (UHC). The knowledge of how to achieve UHC and implement such a program is more valuable to many developing countries considering universal health coverage than the experiences of Japan and other developed countries. The process of trial and error in dealing with problems such as that come with an aging society will also become knowledge that can be shared with developing countries as well as with Japan. Forms of cooperation that provide bilateral benefits to Japan and Thailand include industrial human resources development, strengthening economic partnerships, building a base to strengthen competitiveness through the Government of Japan's growth strategy and improved research capacity through bilateral partnerships. Such cooperation encompasses the many Japanese living in Thailand, as well as the Japanese businesses there. With the Great East Japan Earthquake that struck in 2011 and the massive flooding of the Chao Phraya River that occurred in Thailand that same year, Thailand and Japan have reassessed their socioeconomic ties each other, and this cooperation should have a particularly large impact on society and the economy of Japan as well as Thailand.
Over the course of cooperation that began in the 1960s, JICA has built a human and organizational network in Thailand, as well as a storehouse of knowledge that are assets for cooperation. For example, King Mongkut's Institute of Technology Ladkrabang, which has received cooperation for more than 40 years, and the National Institute of Metrology (Thailand), which has received cooperation for strengthening organization through loan assistance and technical cooperation, have been great successes of Japanese cooperation in Thailand and may be considered assets for international cooperation. With the effective involvement of such cooperation assets in Thailand, JICA hopes to cooperate with the Thailand International Development Cooperation Agency and the Neighboring Countries Economic Development Cooperation Agency, to provide assistance in the Lower Mekong Basin and developing countries beyond that as well.
About the Author
Born in 1961 and raised in Yanai, Yamaguchi Prefecture, Japan, Ikeda joined the Japan International Cooperation Agency (JICA) in 1985. At the headquarters, he got his start in the Forestry & Fisheries Development Cooperation Department, and then moved on to the Training Affairs Department, Social Development Cooperation Department, Operations Strategy Department, Secretariat of Japan Disaster Relief Team and Global Environment Department. In 1988, he was posted overseas at the JICA Burma Office (now the JICA Myanmar Office) right in the middle of the democracy movement. He also served in the JICA USA Office and the JICA Laos Office. Ikeda has held his current post since May 2013.