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Rising Asia and the future of Thai foreign policy

Before looking ahead to the future, I think I will be telling a big lie if I do not accept from the outset that I have been somewhat disappointed with Thailand's foreign policy of late. I saw no justifiable reason for our relationship with one of our Asean next door neighbours, Cambodia, to deteriorate from bad to worse and from worse to hitting rock bottom. This relationship kept plummeting without any real and serious attempt at salvation.Cambodian vendors pass through a border gate at Chong Jom pass in Kap Choeng district of Surin on July 26, to do business in Thailand. Border trade is active once again, as locals grow confident of peace despite delays in establishing the demilitarised zone near the Preah Vihear Temple as ordered by the International Court of Justice.

Sour relationship moved to skirmishes, skirmishes moved to a battle zone. A series of exchanges of fire resulted in damage and casualties. Who was to gain and what has been gained from all of this? Only politicians in respective capitals have the answer. Certainly, innocent people along the border of both countries gained absolutely nothing and stood to lose everything.

I do not think that is the way we deal with our Asean neighbours.

I often like comparing the formulation of foreign policy with the shape of the rings of a dart board where Thailand is placed at the bull's eye. The nearer the ring to the bull's eye, the more important as well as the more delicate and difficult it is to score. The clear difference, however, is that these rings, unlike those on a real dart board, must be drawn to overlap each other. These rings will never be so clearly separate, for foreign policy is not a case of a separate and unrelated relationship. How to manage the overlapping of these rings is as important as how to manage the relationship within each ring itself.

These are rings of our foreign policy. The closest of the rings represents our immediate neighbours with common borders. All of them are not just neighbours with shared common boundaries but we are all Asean members with shared common values and visions. Our closest proximity must be considered in every aspect: physical, political, economic, social, cultural or even environmental.

Because this ring is the closest to the bull's eye, it must be aimed at with greatest attention. Once hit accurately, it will be handsomely scored. But once missed, it could be a big opportunity lost. And the conduct of our foreign policy in the past decade or so has seen this both well scored and badly missed.
I do hope that for the next decade we will pursue just the right policy towards these neighbours of ours and keep producing excellent scores.

Yes, countries with thousands of miles of common border must have problems. But the key is there must be bilateral mechanisms to resolve them and each mechanism must be functioning at all times for conflict prevention and peaceful resolution of disputes. Territorial dispute as a result of historic colonial powers influencing the delimitation must be handled with care and understanding. Boundary delimitation must be depoliticised, leaving it to technical experts of maps and international law to argue at the table in a smoke-filled room, never allow public nationalistic emotion to get involved which would lead to the battlefield. Cooperation on joint development of national resources and cultural assets in areas where there are overlapping claims should be explored, designed and implemented, with agreement that such cooperation will have no prejudice on each side's legal claims. Trust and mutual respect is, therefore, key to producing excellent scores in policy with neighbours.

Apart from our bilateral ties which must be kept real warm at all times, our cooperation with them also comes in different dimensions. Existing strategic multilateral ties must continue to be enhanced while new initiatives established. The existing ACMECS _ Ayawadee, Chaophraya, Mekong, Economic Cooperation Strategy _ must be strengthened to its utmost extent. This cooperation among Cambodia, Laos, Burma, Thailand and Vietnam is the only economic cooperation strategy in the Mekong sub-region that comprises exclusively Asean members.

The Mekong sub-region, where Thailand and our neighbours are situated, is economically highly strategic for Southeast Asia. Being shared by five riparian Asean countries and China, the Mekong River and its region has attracted a number of economic cooperation projects. Apart from the GMS _ the Greater Mekong Sub-region _ which is the cooperation between all the six riparian states, namely, China and all five Asean members, some non-Mekong states have also expressed their keen interest in this sub-region. Japan has set up the Japan-Mekong Cooperation, whose membership is all of the GMS minus China, but plus Japan's membership. The United States, similarly, also wants to be a Mekong State too.

Thailand's foreign policy must, therefore contain the Mekong strategy as part of our policy towards our immediate neighbours. The foreign policy regarding this innermost ring to the bull's eye must not merely receive the highest priority, it must be strategically well-thought-out since we have more players than just our neighbours. The power balancing of Thailand and four Asean Mekong riparian states, vis-a-vis China and other non-mainland Southeast Asian powers must be well handled.

Moving outward to the next ring is that of the Association of Southeast Asian Nations. This regional grouping is moving towards fully-fledged regional integration with the establishment of the Asean Community in 2015, with three major pillars: the Economic Community, Socio-Cultural Community, and Political and Security Community. The success of Asean is the success of Thailand. We must draw a masterplan to be implemented by all sectors, both government and non-government, leading to the 2015 objectives. We must be able to deliver to all our Asean citizens the benefits they should gain from the establishment of the Asean Community that must be felt in the conduct of their everyday life.

Accordingly, regarding the dispute between Cambodia and Thailand surrounding the issue of the Temple of Preah Vihear, both countries must cooperate more with Asean on peace and conflict resolution, otherwise confidence in Asean's mechanism for conflict avoidance and resolution will be greatly affected and eroded. Although the nature of conflict between Thailand and Cambodia is bilateral, the path to solution has been multilateral, that is Asean and beyond. My final observation on this issue is that perhaps Thailand should draft up her multilateral strategy in handling this conflict in the United Nations Security Council, Asean, World Heritage Committee and the International Court of Justice.

Because Asean is widely recognised as a strong regional grouping, it has generated several trans-regional cooperation initiatives where Asean is placed in the driving seat. Geography is no longer relevant when we come to a willingness to cooperate. The East Asia Summit or Asean +6 countries is no longer strictly East Asian, as it has incorporated a number of countries that are hardly East Asian such as India, Australia, New Zealand and newcomers the US and Russia.

Thailand must take a more proactive role not only in the realisation and implementation of the Asean Community but also in making Asean a political and economic strategic focus of the world throughout the next decade.

We strongly need a truly outward-looking policy. We must understand and build a strategic partnership with our Asian friends, not only just China and India. Thailand can be a strategic linkage between South Asia and Southeast Asia.
China's interest in Thailand and Asean is tremendous. In turn, it is important for us to fully understand China's regional development policy. In addition to the Asean-China Free Trade Agreement, this regional policy of China will create trade and economic partnership with different parts of Southeast Asia. Our cordial, close, warm, understanding and special relationship with China must always be maintained. I am sorry to notice that the past two or three years may have seen this relationship waning a little. It is time Thailand rectified and fully restored that.

The "Look East" policy of India and of increasing numbers of West Asian countries should be met with a carefully crafted "Look West" policy of Thailand, in order to benefit its economic growth and sustainability, and to enhance this country's proactive and balanced role in Asia in the next decade.

Japan and South Korea have been our long-term traditional allies and there is every reason to believe they will always remain so. At the same time, Central Asia has gained a much more distinguished prominence on the global radar. Emphasis should also be made on closer relations with many African countries, as they are Thailand's export markets, especially for agricultural and small- and medium-enterprise products.
The rise of Asia has been, to a large extent, due to the significant fast growth of countries in the region. Therefore, the need to manage our wealth and capital as a result of such growth in order to maintain our sustainability and stability is equally important. Thailand once played a key role in the Chiang Mai Initiative which later evolved into the Chiang Mai Initiative Multilateralisation in 2009.

By the same token, it was Thailand who initiated the first Asian continent-wide cooperation under the name Asia Cooperation Dialogue (ACD) with strong, wholehearted support of Asean and a number of major Asian countries. It incorporates almost all Asian countries as its members. Again, it is a pity that in the past 2-3 years, Thailand's foreign policy has trivialised these efforts. These were the efforts on which we strongly hoped to help build the future of Asia, especially in the case of ACD, which would lead to our hope of an Asian Community. The rise of Asia must be accompanied by a strong pan-Asian cooperation to help maintain common Asian purposes and to ensure that Asia as a continent, despite its huge diversity, will grow together.
All in all, the essence of our foreign policy is that Thailand cannot afford to have itself faded out of the world radar screen when things are moving so fast on all fronts. The world of interdependence is all round in every aspect. The world stage of diplomacy is clearly moving from boundary security to trade, commercial, financial and, most importantly, human security. Thai foreign policy must fully reflect this reality. If we have not done so, it is high time we did.

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Surakiart Sathirathai is a former foreign minister. He is at present President of the Saranrom Institute of Foreign Affairs Foundation. The above article is an edited version of a speech he delivered at the international conference on "Asia in the Next Decade", which was held in Bangkok yesterday.

Foreign Investment Brings Cambodia Growth, New Issues

Cambodian officials say the country's economic growth rate is set to exceed seven percent this year. According to financial analysts even if the global economy slows, Cambodia is well prepared to deal with it, partly because of strong foreign investment. But the billions of dollars flowing into the country are also raising concerns about the political and social impact from massive development projects.

Cambodia has posted strong economic growth in the two years since the 2008 global financial crisis. Foreign investment, a growing tourism industry and a strong agricultural sector have been key to that growth.

The country's garment and textiles sector is also doing well, with exports set to rise by 40 percent this year.

"The Cambodian economy is probably in the best shape it has ever been in - absent is what is going on the rest of the world," said Stephen Higgins, chief executive officer for ANZ Royal Bank in Phnom Penh. "The economic growth this year we think will be in the range of seven to eight percent, and the normal global environment we would expect probably eight to 10 percent in the next few years."

But Higgins says inflation must be kept under control, especially with regard to rising food prices.

Despite economic uncertainty in Europe and the United States, the Asian Development Bank (ADB) estimated growth this year at 6.8 percent and only expects the rate to decrease slightly next year.

Analysts say foreign investors from Japan are seeking alternatives to China and Thailand. They are joining long standing regional investors such as Vietnam and South Korea.

But China remains the country's top investor. Chinese state media report that investors have poured in about $5.5 billion in the first seven months of the year.

Among the investments is a luxury property development project worth $3 billion. China has also provided money for hydropower and road construction. And two of China's leading banks, the Industrial and Commercial Bank of China and the Bank of China, opened branches in Cambodia this year.

ADB senior economist Peter Brimble says while funds from China are welcome, Chinese aid can be restrictive.

"Chinese aid is extremely tied; [there is] no bidding.  It's quite likely - especially if it's a loan rather than a grant - you may actually be paying more for what you are getting just because the Chinese don't believe in competitive bidding. I think the government knows that."

Critics say China's economic influence is linked to its political concerns. They point to an incident in 2009 when Cambodia deported 20 Muslim ethnic Uighurs who sought asylum after fleeing violence in China. Soon after their departure, a senior Chinese official arrived in Cambodia to sign 14 trade deals worth $850 million.

David Carter, president of the Australian Business Association of Cambodia, says Cambodia has welcomed investment from China.

"Certainly it has a big influence on the place," said Carter.  "Bridges and roads are being built. So there's a feeling that a lot of Chinese money around the place, but I think most people are aware it will come with obligations attached. So it's good, but you have to pay your bills back at some time."

The development projects funded by those investments can have a dramatic impact on one of South East Asia's poorest nations. While officials have welcomed investments in upgrading Cambodia's infrastructure, there have also been thousands of evictions to make way for new projects. In 2010, rights groups estimate 30,000 people were forced from their homes by mining, agriculture and hydropower projects.

Khmer Invest was created in order for people to have maximum access to the potential of the Cambodian market.

Khmer Invest was created in order for people to have maximum access to the potential of the Cambodian market. While neighboring Thailand and Vietnam have gotten considerable attention Cambodia has languished in the background. This presents an opportunity for investors who are prepared to do the legwork to ensure they have a proper legal structure, as well as clear ownship rights to the investment of their choice.
The impetus for the creation of the site was my own personal experience in trying to locate potential investments in Cambodia via the internet. It was difficult to find things and much of what was found did not have a tremendous amount of available information.
My background is as founder and CEO of Omega Insurance Services. An American firm which employed over 300 people battling insurance fraud in the United States. After selling the firm and seeking new opportunties I fell in love with southeast Asia, in particular Cambodia. It has a much more authentic Asian feel, and is less polished than most of its neighbors,
For better or worse this is going to change. Cambodians are hungry for opportunity, and the country will grow and develop rapidly. For the curious I am eating my own cooking as they say, I have invested money in Cambodian opportunities myself, and thought the creation of a web site to assist others in doing so would benefit them, and frankly, myself.
We are open to modifications to the site you think would make it more useful, so please do not hestitate to contact me at fargo@khmerinvest.com.

Investment in Cambodia

Over the past few years, Cambodia has attracted investors from many Asian countries, including China, Vietnam and South Korea.  With the government’s push to bring development to Cambodia, local investment and foreign direct investment are both on the rise.
Economic analysts and investment experts agree that the increased appeal of Cambodia to local and foreign investors can be attributed to increased security and improved infrastructure.
According to Youn Heng, director of the Evaluation and Incentive Department at the Council for the Development of Cambodia, the government has employed a number of strategies to try to attract investment.  Along with improving power grids and paving roads, the government has implemented a package of favourable tax laws that acknowledge investors’ difficulties and try to help find solutions.
“It is a very good strategy to attract investors to run their businesses in Cambodia,”  Youn Heng said.
Youn Heng remarked that there was no racial discrimination in the approval process.  Although the government attempts to reduce their tax burden, foreign investors are still denied the right to own property afforded to local investors.
With regard to attracting both local and international investments, independent analyst Kang Chandararot claims there are two important strategies: (1) building Cambodia’s infrastructure to assure a more stable investment climate; and (2) creating laws that make investment in Cambodia easier and more profitable.
As we have seen, both strategies are being implemented nationwide to help investments run smoothly.
Kang Chandararot added that security is another important element to keep in mind.  If our country ceases to be peaceful and descends into chaos, investors will be dissuaded from running their businesses here.  We should therefore work actively to maintain peace and safety in our country in order to maintain investor confidence.
Kang Chandararot remarked that China used to be interested in Cambodia’s garment sector but has since changed its focus to mining, power and agriculture.  Their areas of investment are dictated by the vision of their investors, that is, which sectors they believe to be most profitable.
“The most important investors in Cambodia are the countries of China and Korea, as they have pumped the most money into our economy,” explained Kang Chandararot.  He also noted that, while not yet investing at the level of other Asian countries, Vietnam will become an increasingly important investor in the future.  Because of its many current and potential investment partners, the Cambodian economy is growing  every day.
Still, at present, many countries that feel deeply about protecting human rights and fighting corruption have resisted investing in Cambodia, choosing instead to donate and provide aid.
Cheam Yeap, chairman of the Commission on Economy, Finance, Banking and Audit of the National Assembly, said every investment, both local and international, needed to abide by the national investment law.  The Cambodian investment law in question has been amended six times since its creation in 1999.
“The government has cleared the way for investors to invest in Cambodia,” said Cheam Yeap.
However, some critics contend that more and more foreign investment increases the risks of Cambodians losing land and property.
Cheam Yeap denies these claims, emphasising that Cambodia has proper laws.  “We have land authorities, courts and village and commune chiefs.  The rule of law allays any fears that we will lose land,” he claimed, adding: “We will not allow foreigners to own Cambodian land, and we will not allow them to invest without checking their balances.”
He went on to explain that since modern Cambodia was more open to local and foreign investors, some people were simply afraid of losing out.  He provided China as an example of a country that is benefiting from its investments in Cambodia, especially in the hydro-electricity sector.
By 2015, Cambodia is slated to reap 1500 megawatts of electricity from Chinese investments at a very competitive price.  300 megawatts will be used in Phnom Penh, with the rest sent to other provinces throughout the country.
Cheam Yeap said there were many foreign countries that had not yet invested in the Cambodian economy.  He reasoned that these countries had not invested because of the global economic downturn, as well as their weariness over economic protests in Cambodia.