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3 Dec 2010


ASEAN Connectivity: Links within Region, Opportunities and Challenges (Business Brief No.3001)

The vision of ASEAN Connectivity will be a step closer to reality with the upcoming ASEAN Economic Community (AEC), wherein links will exist in three dimensions. First, physical connectivity will focus on infrastructure network links for transport, as well as information communications technology and energy networks between ASEAN member countries. Second, institutional connectivity will emphasize system, policy and work process links via closer collaboration within the ASEAN framework, which will complement physical links more effectively and efficiently. Third, people-to-people connectivity will place emphasis on fostering a sense of shared cultural and historical links within the community where we have a vast diversity of cultures, societies, religions and languages. However, it may take some time before a people-oriented ASEAN community materializes.
This vision will likely be beneficial to Thailand in terms of trade and investment. Our exports and tourism will benefit from better transport access across the region, especially overland transport to neighboring countries, e.g., China (the South) and Singapore, which have emerged as major export markets. Transport links, regulatory accommodation and common operational procedures across the region will foster free flow of goods due to fewer bureaucratic impediments and faster transport times, thus helping our exports to flourish. Meanwhile, more convenient travel across borders will serve as a magnet to draw foreign tourists from both within and outside of the ASEAN bloc into Thailand and other ASEAN countries, in addition to FDI inflows into our high-potential businesses.

Even though closer connectivity between ASEAN countries will offer greater opportunities for Thai businesses, it may also be a challenge amid possible higher competition. Thai SMEs – the largest segment of Thai business – should in particular brace for increased market rivalry by adjusting their production to achieve reduced costs and higher quality, in addition to the use of innovative, advanced technologies to maintain their market positions. For the government sector, short-, medium- and long-term strategic planning should be devised to cushion adverse effects on businesses and establish practical guidelines for their development.