INSIGHTS INTO THE WORLD / Japan should enhance ties with Mekong nations

Takashi Shiraishi / Special to The Yomiuri Shimbun

This year, we have seen new governments emerge in Myanmar, Vietnam and Thailand. Since their inaugurations, we also have witnessed a noteworthy change in the diplomatic initiatives of these countries.

In January, Myanmar's parliament convened for the first time since 1962, electing Thein Sein the country's president. In May, he visited Beijing and agreed with Chinese President Hu Jintao to upgrade the China-Myanmar relationship to a comprehensive strategic partnership.

The May development came as no surprise. China, for its part, has extended an enormous amount of assistance to Myanmar since 1988, when the armed forces there staged a coup d'etat and formed a military junta to rule the country. Off the top of my head, I can cite several cases of Chinese assistance. For example, as of 2010, Chinese companies took part in a total of 63 hydroelectric power development projects in Myanmar. The Chinese also have been exploring oil and gas both on land and offshore and building gas and oil pipelines and roads between Myanmar's Indian Ocean port city of Kyaukphyu and Kunming, the capital of China's Yunnan Province. China has become the largest source of foreign direct investment in Myanmar by the end of 2010 with an accumulated total investment of $9.6 billion.

There have been some unexpected developments, too. In April, the new Myanmar government asked the Association of Southeast Asian Nations to accept its bid to chair the 10-member grouping in 2014. The same country gave up its bid to chair ASEAN in 2006, yielding to pressure from other members of the association, who feared the United States and the European Union might boycott ASEAN meetings under Myanmar's chairmanship.

To gain a mandate to chair the regional grouping in 2014, Myanmar will, no doubt, have to release political prisoners and carry out meaningful political reforms at home. Its chairmanship bid is testimony to the new leadership's willingness to take such domestic measures. Indeed, the general-turned-president held talks with Aung San Suu Kyi, the icon of Myanmar's pro-democracy movements, in August.

Why is the new regime doing what the military junta had refused to do? The new leadership apparently is giving priority to economic growth in order to improve the livelihoods of the Myanmar people as the country's basic policy. As part of this policy, it plans to improve the country's relations with the international community, hoping the United States and the EU will lift the economic sanctions they have imposed on Myanmar. In what is seen as the latest effort for national reconciliation, the new regime recently decided to suspend a Myanmar-Chinese project to construct a large dam in Myitsone, northern Myanmar.

Myanmar's economy has been thriving recently thanks to sharp rises in foreign direct investment. In 2010 alone, foreign investors poured a total of about $20 billion into the country, exceeding the $16 billion total for the period 1988-2009. Furthermore, Myanmar has also been undertaking joint economic development projects with countries other than China. The largest is an ambitious plan to construct a deep-sea port in Dawei, southern Myanmar, at the Indian Ocean end of the so-called Southern Corridor running from Vietnam via Cambodia and Thailand. This is a $58 billion project that aims to develop infrastructure such as harbor facilities to lure manufacturers and chemical companies from abroad to set up local operations.

In other words, the new Myanmar government has set its sights firmly on economic growth as its political goal. To achieve success, it needs to have the economic sanctions lifted, improve its relations with the international community and strengthen economic cooperation with Japan and other countries. Myanmar's new efforts will help reduce its dependence on China.

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Vietnam

Now, let's look at Vietnam. In January, the Vietnamese Communist Party held a party congress to choose a new Politburo headed by Nguyen Phu Trong, the newly appointed general secretary. Following a parliamentary election in May, the new National Assembly convened in July to elect Truong Tan Sang the country's new president and reelect Nguyen Tan Dung as prime minister.

Vietnam has a tradition of having a three-person collective leadership, comprising the general secretary of the ruling party, the president and the prime minister. This troika system remains intact alongside "doi moi," the Vietnamese term for market-oriented economic reforms.

With the start of the new leadership, Vietnam has taken a new step that deserves particular attention. The prime minister had directly assumed jurisdiction over matters related to Vietnam's sovereign rights in the South China Sea.

In recent years, tensions have been high between China and Vietnam as well as the Philippines over territorial disputes in the South China Sea. For Vietnam, the most important diplomatic agenda is how to manage its relationship with China. What has Vietnam been doing in reality vis-a-vis China?

First, Vietnam has repeatedly confirmed with China that South China Sea disputes should be settled by peaceful means. In September, Chinese State Councillor Dai Bingguo visited Vietnam and reaffirmed together with Prime Minister Nguyen Tan Dung that both countries would "maintain peace and stability" in the South China Sea.

At the same time, since the ASEAN Regional Forum in July 2010, Vietnam has been particularly active in pressing for a multilateral approach to settle the South China Sea issues, whereas China maintains those disputes should be resolved through bilateral negotiations. Vietnam also has been strengthening its naval capabilities, including a plan to deploy a submarine fleet, while aligning itself closer to the United States, India and other countries in the field of security cooperation.

Second, Vietnam obviously wants to avoid economic dependence on China. From 2000 to 2009, Vietnam's exports to China increased 2.6 times, while its imports from China posted a 9.4-fold growth. This trade pattern is expected to last for a while.

What is Vietnam doing, then, to reduce its economic dependence on China? It is hoping to participate in the Trans-Pacific Partnership multilateral trade agreement, while building a nuclear power plant, accelerating rare earth development, planning a north-south high-speed railway project between Hanoi and Ho Chi Minh City, upgrading domestic industries and promoting human resources development. To finance many of these initiatives, Vietnam is looking forward to receiving as much assistance as possible from Japan. In sum, Vietnam is reinforcing its partnerships with Japan, the United States and India and making full use of ASEAN as a leverage to facilitate the realization of its diplomatic goals so it will be able to "rebalance" its ties with China.

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Thailand

How about the latest state of affairs in Thailand? In July's general election, the Pheu Thai Party that nominated Yingluck Shinawatra, a younger sister of former Thai Prime Minister Thaksin Shinawatra, as its candidate for the premiership coasted to an overwhelming victory. As a result, the Thai National Assembly in August elected Yingluck prime minister, who then formed a coalition government. The Thai government recently announced that the new leader would go to China in mid-October on her first overseas trip outside ASEAN as prime minister. Why China?

Needless to say, Thailand is an ally of the United States. Japan is the largest source of foreign direct investment in Thailand. There are industrial clusters around Bangkok, making it a hub of the region's production networks, with an impressive presence of Japanese automotive companies, among others. As Thailand does not share borders with China, the world's most populous nation hardly poses a military threat to the kingdom. Furthermore, Thailand is so well integrated into the global marketplace that it does not need to worry about possible economic reliance on China in the future.

Meanwhile, Thailand is the hub of the Greater Mekong Subregion (GMS). All three GMS economic corridors--the North-South Corridor between Kunming, Yunnan Province, and Bangkok via Laos, the East-West Corridor from Vietnam to Thailand via Laos and Cambodia, and the Southern Corridor--lead to Thailand. Further infrastructure development in Bangkok, growth of industrial clusters in the areas around the Thai capital and trade promotion under the framework of free trade agreements, among other policies, will greatly contribute to Thailand's economy once the GMS successfully emerges as an integrated regional market.

China has been helping GMS countries build expressways, high-speed railway lines and hydropower stations and improve power grids. These Chinese endeavors can be a big plus for Thailand, which wants the GMS developed as an attractive market. It makes sense for Thailand to enhance its partnership with China.

What should Japan then do with regard to Myanmar, Thailand and Vietnam?

China has been taking a "hub-and-spokes" approach to the GMS area. It regards the broad north-south linkage, stretching from China--Yunnan Province and the Guangxi Zhuang Autonomous Region--to Vietnam, Thailand and Myanmar as the "hub" of its GMS economic development. For the "spokes," China is radially extending its reach to various places that dot the region along the main linkage. For the GMS area to facilitate regional economic integration and growth, it is essential for all mainland Southeast Asian countries to be linked horizontally and strengthen their mutual economic relations.

Japan should extend more economic assistance to Vietnam and resume economic cooperation with Myanmar, especially in the areas of human resources development and infrastructure development in Dawei. Myanmar has been under economic sanctions from the United States and the EU since 1988. But, given that a window of opportunity for change has opened, Japan should encourage Myanmar to undertake reforms as early as possible.

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Shiraishi is president of both the National Graduate Institute for Policy Studies and the Institute of Developing Economies, Japan External Trade Organization.