Chapter 3 Theory and Literature Review

CHAPTER 3 THEORY AND LITERATURE REVIEW

ASEAN, a regional block and Thailand one of the member countries of the same is the primary focus in this study. As such it has been divided into three broad parts. The first part, will deal with an overview of the whole concept of Regionalism; the second part will deal with ASEAN as an emerging regional block and in the third there will be a general overview of the endurance of Thailand through the ages.

Part 1

1.1. The concept of Regionalism and Regional Trade Blocks

The concept of Regionalism has come from the basic idea of forming Regional groups in order to promote economic integration among them and it can be dated back to 1960s. In general, Regions in international politics has been described as

“a limited number of states linked by a geographical relationship and by a degree of mutual interdependence, and could be differentiated according to the level and scope exchange, formal organizations and political interdependence”. (Joseph S Nye1968, p. 149)

However, there are certain ambiguities regarding the definition of Regions, because, the issue of areas which constitute a region is something controversial. Although many regions are denoted by obvious geographic or cultural boundaries and there is some amount of arbitrariness present. For instance, the Asia – Pacific region is a classical example. Some observers consider it as one region, while for some others it consists of two different regions, yet for a third group, it is an amalgamation of more than three regions. For the formation of a region “the major criteria remain geographical contiguity, interaction, and a subjective perception of belonging to a distinctive community and having a collective regional identity”. (Hass 1958, p.16). However according to Bruce Russett, “the geographical criteria are too limiting in an increasingly interdependent and globalized world” (Russett 1967, p. 120). Today, the term Region implies a social system largely based on trans-local relations. It is

regarded as a dynamic process characterized by economic political as well as different socio- cultural matters.

“The region as international society is characterized by norms and rules which increase the level of predictability in the system. Regions can be ordered in the world system hierarchy and thus three structurally different types of regions can be distinguished: Core Regions, Peripheral Regions and between them, Intermediate Regions”. (Hettne. Bjorn 2005).

Thus, a useful definition of a Region in the present scenario is-

“Regions are distinguished by first by their relative degree of economic dynamism and second, by their relative political stability and the dividing separating line may run through existing states. The borderlines are impermanent. Rather, one could think of the hierarchical structures as consisting of zones which the region enter or leave depending on their economic position and political stability, as well as the level of regionness”. (Hettne Bjorn 2005)

Many studies have emphasized on these non-geographic criteria and argued that “besides proximity members of a region also share cultural, economic, linguistic or political ties” (Russett. 1967, p 75). On the basis of this, it can be argued that other factors like, common historical experiences, power and wealth distribution levels, cultural social and ethnic traditions, and ideological as well as political preferences etc also play its role in the formation of regions and regional groupings.

In spite of the contradicting ideas regarding Regions, Regionalism as a concept, holds its own good in the area of International Politics and Economy, and has often been described as the condition by which group of nation-states, usually in the same geographic region, agree to cooperate and share responsibility to achieve common goal (Balam. David M & Veseth. Michael. 2005). Thus, in a way, we can say that Regionalism is the logical solution to problems faced by nation-states that are too big to be solved alone. Joseph S Nye in his book International Regionalism (1968) has suggested that-

“the process of regionalism and integration across many areas of the globe were aided by the growing number of newly independent former colonies, by some degree of relaxation in the tensed superpower relations, by a growing realization that economic interdependence and an open multilateral trading regime brought their own pitfalls, and by a successful rapprochement of key west European countries through economic integration schemes” (Joseph S Nye 1968, p 124).

Regarding Regionalism, the definition given by Ernst B. Hass is worth noting. According to Hass – “Regional cooperation is a vague term covering any interstate activity with less than universal participation designed to meet commonly experienced need”. (Hass. 1958, p 49).

Based on the definitions provided by these scholars, we can say that, Regionalism is in fact a state- led project, characterized by a formal and law based inception as a result of the intergovernmental dialogues and treaties between states in order to solve some common problems or to achieve common needs.

At this point it is important to note the two concepts of Regionalism and Regionalization. Regionalization in its simplest refers to the tendency to form regions or we can say the process of doing so. “Regionalization can be conceived as the growth of societal integration with a given region, including the undirected processes of social and economic interaction among units” (Hurrell. 1995, p. 251). As a matter of fact, regionalization is a process that is characterized by transnational cooperation among the neighbouring states caused solely by non political forces, whereas, Regionalism is a deliberate attempt to steer the process of regionalization politically. Thus, the basic difference between these two concepts is that Regionalization is the tendency to form regions whereas Regionalism is the deliberate and purposive proneness to create regional institutions and arrangements. However, regionalism and regionalization as a matter of fact are very important variations of regionalism. These variations can be explained in accordance with various factors. According to Fiona Butler,

“the level of growth in socio-economic interdependence; the extent to which shared values and cultural traditions persist; the extent to which formal institutional arrangements are sought; the extent to which a regional grouping displays a cohesive identity and external presence” (Butler 1997, p. 410)

The key variables or the key actors of the different regional groupings may differ owing to the own uniqueness of the region or due to several other factors. Butler explains that,

“they may be governments and states as well as particular economic interests. The main objectives of the regional groupings may also vary. They may be concerned particularly with intra-regional trade and investment or with the defence and security, or even with the protection of social and cultural traditions” (idem).

In general, Regionalism has been divided into two kinds – the Old Regionalism and the New Regionalism.

“The Old Regionalism, developed in 1930s, is a regionalisation process that engages countries in the same geographical area which lead to the regional integration as its end goal. On the other hand the New regionalism, developed in 1990s, is not only engage countries in the same geographical position and does not aim to create a regional integration” (Hwee. Yeo Lay 2005, http://revistas.ucm.es/cps/16962206/articulos/UNIS0505230008A.pdf)

In a way, the old regionalism was mainly focussed around the emergence of the European regional organizations and was largely characterized by the focus on the internal functioning of the region and the changing pace and attributes of the intra-regional relations. Thereby this wave was often believed to be an inward looking process but was also considered to be a ray of hope for the progressive development that successfully moved from consultation and coordination among the different nation states with certain common objectives into a new era of integration. Thus, this can be seen as developing the very base for the next phase of cooperation and ultimately integration which is often referred to as New Regionalism. In fact, the growth of this concept of new regionalism as a worldwide phenomenon which though varies in scale, character and significance from region to region can be dated back to 1980s through the first half of 1990s. “What is ‘new’ about the regionalism that surfaced in the 1980s and became prominent in the 1990s is its outward-looking focus on external links with other regions” (World Wide Web Document: Hwee. Yeo Lay 2005, Realism and Reactive Regionalism: Where is East Asian Regionalism heading, http://revistas.ucm.es/cps/16962206/articulos/UNIS0505230008A.pdf , accessed on 28th October 2012)

Therefore, this new regionalism which is also called the open regionalism is often regarded as an outward-looking and market-driven process of integration characterized by increasingly by avoidance to a high level of protection. Also, it is believed to be a part of the ongoing process of globalization and internationalization of the world’s political economy. Professor Bjorn Hettne defines this new regionalism as

“a multidimensional process of regional integration which includes economic, political, social and cultural aspects... Regional integration is a package rather than a single policy, whether concerned with economies or foreign policy... It is spontaneous and from below (firm, market and customer driven), whereas the old type was imposed from above (bureaucratically flat driven) and was therefore more limited and more prone to failure of the kind that grand designs invariably suffer” (Hettne Bjorn & Inotai. A 1994, p.13)

3.1.1. Regionalism and Globalization

Globalization, as a concept has gained much attention and importance. It is a new age phenomena which “describe the breakdown of discrete economic spaces” (Rosamond 1999, p. 179). Globalization has always been linked to the liberalization of the global finance, the trans-nationalization of production, integration of the world markets, the growth of the world trade and a borderless world. In a way, we can say that “globalization refers to the shift towards a more integrated and interdependent world economy” (Hill & Hernandez-Requejo 2011, p. 33) Today, globalization is not only concentrated along economic lines, but has been extended to include an emerging global culture. This is supported by the fact that, today the

world population consumes similar goods and services, the growth of communication and technology and the use of a common business language, English. Globalization proposes the openness of the economies of the world and facilitates the movement of factors of production and labour across the national borders. The growth and recognition of globalization as world phenomena can be attributed to two basic macro factors:

“The first is the decline in barriers to the free flow of goods, services and capital that has occurred since the end of World War II. The second factor is technological change, particularly the dramatic developments in recent years in communication, information processing, and transportation technology” (Hill & Hernandez-Requejo 2011, p. 37)

A number of global institutions have been created in order to help and facilitate the wave of globalization, which includes General Agreement on Tariff and Trade (GATT) and its successors, The World Trade Organization (WTO), The International Monetary Fund (IMF) and its sister concerns, The World Bank and The United Nations.

However, globalization has often being criticized on several grounds. According to the renowned political scientist Toshiro Tanaka criticize that the basic problem of globalization is its selectiveness, “Execution is inherent in the process (of globalization) and the benefits are evenly balanced by misery, conflict and violence” (Tanaka & Inoguchi 1997, p. 45). As a matter of fact, the opponents of globalization often refer to globalization as ‘Americanization’ because of the US involvement in the post World War II era as a catalyst for the whole process of globalization and often regarded as a weakly regulated world system that favours the few big and tortures the weak many. According to Fiona Butler,

“Our understanding of globalization processes emphasizes rapid trans-nationalization of capital, trade, information and technology. The world has become smaller. However, human resources and social customs are less often transnational phenomena. Globalization dominated by Western corporate identities is often perceived as a threat to local customs and communities and thus, regionalism and integration may be seen as mechanisms to protect and enrich ‘local’ identity and values” (Butler Fiona 1997, p. 425)

Thus, we can say regionalism as a phenomena came to the floor to address the shortcomings of the bigger concept of globalization. It can said to be an undercurrent of globalization, which also believes in liberalization but on a regional basis first. Therefore, both the processes have the same basic ideology that is of trade liberalization in the global perspective and thus can be said to be two approaches of the same principle. Regionalism seems to address the important aspects of globalization like, interdependence among the world economies and the trans-nationalization of the nation states.

“globalization is a present time phenomena, which acts as a catalyst of the existing interdependence between the actors of international society” (Tomuschat 1999, p. 9) and “globalization trans-nationalizes problems of economic, financial and environmental nature

as well as those which are related to security and migration flows, which put the capacity of the state to react in question” (Fatouros. A.A, 1999, p 42)

So we can say, that its regionalism, which is dealing with these aspects through an institutionalised or in a decentralized way and is surely capable of opening up the individual economies to the world. The drivers of regional integration can be attributed to both Political and Economic aspects.

“Linking neighbouring countries and making them increasingly dependent on each other creates incentives for political cooperation between the neighbouring states and reduces the potential for violent conflict. In addition, by grouping their economies, the countries can enhance their political weight in the world...... The economic case for regional integration is straightforward. Unrestricted free trade will allow countries to specialize in the production of goods and services that they can produce more efficiently. The result is greater world production than would be possible with trade restrictions (Hill & Hernandez-Requejo 2011, p. 307)

Thus, the basic aim behind the process of regional integration is to achieve a peaceful coexistence and political cooperation among the member nations. And since economy can’t exist of its own and politics do have its say on economy, so these regional blocs also aims to achieve the additional gains from the free flow of trade and investment between countries, because it is easier to establish a free trade and investment regime among a limited number of adjacent countries than among the world community.

Fiona Butler has defined the different types of regionalism:

 Regionalism: a process involving the growth of informal linkages and transactions derived primarily from economic activity but involving social and political interconnectedness too.  Regional awareness and identity: where a mixture of historical, cultural and social traditions lead to a shared perception of belonging to a particular community.  Regional interstate cooperation: States or governments may sponsor agreements and co-ordination amongst themselves to manage common problems and protect and enhance the role of the state and the power of the government.  State-promoted regional economic integration: Often the most common form of regionalism, governments and business interests pursue economic integration (this can differ in terms of depth or sectoral scope) in order to promote trade liberalization and economic growth.  Regional cohesion: whereby a combination of these first four processes might lead to the emergence of a cohesive and consolidated regional unit. Such a highly political cohesive grouping can have a decisive impact upon both its ‘internal’ environment and upon global politics (Butler. Fiona 1997, p.410)

Owing to this basic underlying principle, Regional Trading Blocs were formed after the end of the World War II. These regional trading blocs are often known to have two important favourable effects. First, within the regional block the exchange rate volatility is somewhat less risky and secondly, with the growing level of macroeconomic integration within such blocks, there is a growing trend towards greater harmonization of standards for products and industry standards for different aspects like labour, pollution, safety, environment etc. The supporters of regionalism argue that “Article 24 of GATT permits regional trade agreements provided there is no increase in barriers to outsider countries” (Kotabe et al. 2011, p 548). They are also of the view that regionalism is actually a positive step toward globalization as it produces economies of scale and political and economic bases essential for developing countries that may not be possible on a global scale. However, in a way, the ultimate aim behind the formation of the regional trading block is trade liberalization but the scope and purpose is different from that of globalization

3.1.2. Regional Trade Block

The regional trading block has evolved as a new trend in the international economic activity which is often characterized by the formation of multinational trading blocs. The Trade liberalization in the global perspective is often known to have originated from two approaches.

“The first is a reciprocal reduction of trade barriers on a non-discriminatory basis. Under the general Agreement on Tariff and Trade (GATT) and its successor the World Trade Organization (WTO), member nations acknowledged that tariff reductions agreed on by any two other nations would be extended to all other members...... The second approach to trade liberalization occurs when a small group of nations, typically on a regional basis, form a regional trading arrangement. Under this system, member nations agree to impose lower barriers to trade within the group than to trade with non-member nations. Each member nation continues to determine its domestic policies, but the trade policy of each includes preferential treatment for group members” (Robert J Carbaugh 2011, p. 271).

The growth and development of this particular trend of forming regional trade blocks is often said to be due to three main reasons-

Firs reason being, the failure of the very principle of GATT and WTO to implement on a real basis, the process of the multilateral trade liberalizations. It is because when these organizations were formed i.e. after the Second World War, most off the Asian, African and Middle Eastern countries were still colonies. Moreover, these institutions were the brain child of the American and European counterparts and also these newly developed countries found the underlying premise that the international trade would be conducted on the basis of market

forces. It is because; these developing countries were characterized by a large amount of government involvement in the economic affairs.

Secondly, during 1970s and 80s the economic growth of the developed countries have slowed down. This provided an impetus to the intra- industry trade in the developing counterparts. Thus, “regional trade organizations appeared to provide the means to capitalize on trade’s ability to act as an engine of growth” (Yeng, Perdikis & Kerr, 1999, p. 5)

The third reason was the growing realization among the developing nations that the prevailing protectionist attitude for import substitution is not serving their purpose and thus they were looking for opening their economies. And in that scenario, the regional trade organizations provided the much needed change because, by means of regional trade, the pace of change would be under governmental control of the individual member states and moreover, there is a less economic difference than with the developed counterparts. (Yeng, Perdikis & Kerr, 1999)

The very first instance of it was European Coal and Steel Community in 1951 which then evolved into European Economic Community in 1958 and finally lead to the establishment of the present European Union under its current name in 1993 with 27 member countries.

Picture 5: EU Member Countries

(Source: Google Images, http://www.standupamericaus.org/economy/a-failed-union- members-may-want-to-leave-the-eurozone, accessed on 27th Oct 2012)

It has been argued that the general advantages of these regional trade blocks are threefold. First regionalism allows the member countries more economical and political bargaining power in international negotiations. Secondly, it expands and creates market opportunities for the member countries. Third, it helps in developing intra-firm and intra-governmental trade movements (Kotabe et al. 2011). Thus owing to these advantages, the reality is that, most member countries of WTO are members to some regional trade groupings. Apart from Europe, this undercurrent of regionalism have had its affect in the other parts of the world as well resulting in the formation of NAFTA (The North American Free Trade Agreement) in North America in 1994, MERCOSUR (Mercado Comun del Cono Sur) in South America in 1991 and In Asia, the emergent regionalism in the form of ASEAN (The Association of the South East Asian Nations) which came into existence in 1967 by Five members and now grown to be a full fledged organization with ten members and the growing integration among them as well as with other regional trade blocks in the form of ADEAN-EEC Cooperation Agreement with EU, ASEAN+3 and ASEAN+6 framework etc.

Picture 6: NAFTA Member Countries

(Source: Google Images, http://www.bigstockphoto.com/image-6774624/stock-photo-nafta- countries-map, accessed on 27th Oct 2012)

Picture 7: MERCOSUR Member Countries

(Source: Google Images, http://www.argentour.com/en/argentina_economy/mercosur.php, accessed on 27th Oct 2012)

Picture 8: ASEAN Member Countries

(Source: Google Images: http://yourviet.blogspot.com/2012/08/asean-asean-economic- community-in-2015.html, accessed on 27th Oct 2012)

Part II

1.2. The Association of South East Asian Nations (ASEAN)

With the signing of the “Bangkok Declaration” on 8th August 1967 in Bangkok Thailand, the new era of regional integration in Asia was formally laid down. It was signed by the Founding Fathers of ASEAN namely, Indonesia, Malaysia, Philippines, Singapore and Thailand. This was in fact the very first successful attempt at regional integration in Asia, though it represents only a part of the bigger Asian framework. It is because, describing regionalism in Asia as a whole is not easy.

“After repeated unsuccessful attempts in the past, this event was a unique achievement, ending the separation and aloofness of the countries of this region that had resulted from colonial times when they were forced by the colonial masters to live in cloisons etanches, shunning contact with the neighbouring countries” (Khoman 1992, p. xviii)

This lack of regionalism in the greater Asian context in the early decades immediately following the 2nd World War can be attributed to several factors like the vastness and the diversity of the region as a whole, the different historical backgrounds, the existence of strong extra regional ties, the different threat perceptions as well as political fragility and transition.

“It arose out of desire for member countries to express a sense of solidarity with one another, and the United States, at a time of a strong anticommunist sentiment and an increasing US involvement in the Vietnam War. The initial aim of the group was regional peace and security, along with the possibility of receiving US aid” (Kotabe et all. 2011, pg 549).

This describes the very purpose of the inception of ASEAN, which was essentially external unlike Europe, where the basic reason behind the integration was “generated by the wish to overcome lasting contention among the founding members” (Gramegna 1997). But in the ASEAN context, the very inception of ASEAN was driven by political motives of its founding members. “The underlying motivation for the creation of ASEAN was driven by external factors of a political and security nature” (idem). In fact, the growing communist fear from China, the potential Vietnam aggression and insurgency movements etc. were the guiding factors behind the formation of ASEAN.

“In 1967, when their respective political stability was believed to be at risk Indonesia, Malaysia, Philippines, Singapore and Thailand formed The Association of Southeast Asian Nations (ASEAN) in response to a perceived military threat from Vietnam. This fear was heightened in the mid 1970s due to the power void created by the USA departure from Vietnam” (Angresano James 1996, p 114)

Thus, ASEAN was primarily a political integration, in a level of intra – national collaboration and the strengthening of the cooperation among the governments of the member states. As suggested by Thanat khoman, the then Foreign Minister of Thailand when ASEAN was founded in Bangkok – “the decolonization and cold war rivalry for client states were instrumental in facilitating the emergence of common interest in order to be heard and to be effective”(Khoman 1992, p. xviii). On the same line, S. Rajaratnam, the then Foreign Minister of Singapore, and one of the Founder fathers of ASEAN has said that, “ASEAN was born out of fear rather than idealistic convictions about regionalism” (World Wide Web Document: Rajaratnam. S, 1992, ASEAN: The Way Ahead, http://www.aseansec.org/13991.htm , accessed on 29th October 2012)

Thus, in a way, the improvement of the external cohesion and increased bargaining power were the factors that were instrumental in the formation and development of ASEAN. According to Thanat Khoman, there were several reasons behind the need for an organization for regional cooperation by this region:

1. The most important of them was the fact that, with the withdrawal of the colonial powers, there would have been a power vacuum which could have attracted outsiders to step in for political gains. As the colonial masters had discouraged any form of intra-regional contact, the idea of neighbours working together in a joint effort was thus to be encouraged. 2. Secondly, as many of us knew from experience, especially with the Southeast Asia Treaty Organization or SEATO, co-operation among disparate members located in distant lands could be ineffective. We had therefore to strive to build co-operation among those who lived close to one another and shared common interests. 3. Thirdly, the need to join forces became imperative for the Southeast Asian countries in order to be heard and to be effective. This was the truth that we sadly had to learn. The motivation for our efforts to band together was thus to strengthen our position and protect ourselves against Big Power rivalry. 4. Finally, it was common knowledge that co-operation and ultimately integration serve the interests of all- something that individual efforts can never achieve.

(World Wide Web Document: Khoman. Thanat, ASEAN Conception and Evolution, http://www.aseansec.org/thanat.htm , accessed on 29th October 2012)

Thus on 8th August 1967, the five foreign ministers, Adam Malik of Indonesia, Narciso R. Ramos of Philippines, Tun Abdul Razak of Malaysia, S. Rajaratnam of Singapore and Thanat Khoman of Thailand – signed the Bangkok Declaration in the main hall of the Department of Foreign Affairs building in Bangkok, Thailand and thereby, The Association of Southeast

Asian Nations (ASEAN) was born. And the document that they signed is what is known today as Bangkok Declaration or ASEAN Declaration.

“It was a short, simply worded document containing just five articles. It declared the establishment of an Association for Regional Cooperation among the countries of Southeast Asia to be known as the Association of Southeast Asian nations (ASEAN) and spelled out the aims and purposes of that Association. These aims and purposes were about cooperation in the economic, social, cultural, technical, educational and other fields and in the promotion of regional peace and stability through abiding respect for justice and the rule of law and the adherence to the principle of the United Nations Charter. It stipulated that the Association would be open for participation by all states in the Southeast Asian region subscribing to its aims, principles and purposes. It proclaimed ASEAN as representing the collective will of the nations of Southeast Asia to bind themselves together in friendship and cooperation and through joint efforts and sacrifices, source for their peoples and for posterity the blessings of peace, freedom and prosperity”

On the very first speech after the formal inception of ASEAN, Narciso Ramos, the then Secretary of Foreign Affairs of Philippine said,

“The fragmented economies of Southeast Asia, each country pursuing its own limited objectives and dissipating its meagre resources in the overlapping for even conflicting endeavours of sister states carry the seeds of weakness in their incapacity for growth and their self-perpetuating dependence on the advanced, industrial nations. ASEAN, therefore, could marshal the still untapped potentials of this rich region through more substantial united action”

Adam Malik, the then Presidium Minister for Political Affairs and Minister for Foreign affairs of Indonesia described the Indonesian vision of a Southeast Asia through ASEAN,

“A region which can stand on its own feet, strong enough to defend itself against any negative influence from outside the region. Such a vision was not wishful thinking, if the countries of the region effectively cooperate with each other, considering their combined natural resources and manpower”

Tun Abdul Razak, the Deputy Prime Minister of Malaysia who was also the then concurrent Minister of Defence and Minister of National Development said:

“We the nations and people of Southeast Asia, must get together and form by ourselves a new perspective and a new framework for our region. It is important that individually and jointly we should create a deep awareness that we can’t survive for long as independent but isolated peoples unless we also think and act together and unless we prove by deeds that we belong to a family of Southeast Asian nations bound together by the ties of friendship and goodwill and imbued with our own ideals and aspirations and determined to shape our own destiny and with the establishment of ASEAN, we have taken a bold step on that road”

S. Rajaratnam, the Foreign Minister of Singapore has noted that the two decades of nationalist fervor had not fulfilled the expectations of the people of Southeast Asia for their better living. He stressed on the importance of national as well as regional thinking.

“We must now think at two levels. We must think not only for of our national interests but posit them against regional interests: that is a new way of thinking about our problems. And these are two different things and thinking in our respective countries. We must make these painful and difficult adjustments. If we are not going to do this, then regionalism remains a utopia”.

Finally Thanat Khiman the Foreign Minister of Thailand, the host country stressed on the point that “the goal of ASEAN is to create and not to destroy”. He was of the belief that the countries of Southeast Asia had no choice but to adjust to the exigencies at hand and “to move toward a more cooperation and even integration”. He spoke,

“Building a new society that will be responsive to the needs of our time and efficiently equipped to bring about, for the enjoyment and the material as well as the spiritual advancement of our peoples, conditions of stability and progress. Particularly what millions of men and women in our part of the world want is to erase the old and obsolete concept of domination and subjection of the past and replace it with the new spirit of give and take, of equality and partnership. More than anything else, they want to be master of their own house and to enjoy the inherent right to decide their own destiny.”

(World Wide Web Document: Flores. Jamil Maidan and Abad. Jun, The Founding of ASEAN, http://www.asean.org/asean/about-asean/history , accessed on 1st November 2012)

Thus, these statements by the Founding fathers of ASEAN proves that, at the beginning it was basically a formal political cooperation among these five member states “held together by political fear” (Krause 1999, p 5) rather than by a desire to benefit from economic integration. It was a formal state lead process rather than a market driven one. On ASEAN and its aim, S. Rajaratnam expressed his fear about the possibility of ASEAN being misunderstood. He said,

“We are not against anything, not against anybody. We want to ensure a stable Southeast Asia and not a balkanized Southeast Asia. And those countries, who are interested, genuinely interested, in the stability of Southeast Asia, the prosperity of Southeast Asia, and better social and economic conditions, will welcome small countries getting together to pool their collective resources and their collective wisdom to contribute to the peace of the world” (idem)

Thus, owing to its openness towards being joined by other Southeast Asian countries, keeping with the statement in the ASEAN declaration that “the association is open for participation to all states in the Southeast Asian region subscribing to its aims, principles and purposes”, Brunei Darussalam joined on 7th January 1984, six days after its independence,

Vietnam on 28th July 1995, Laos and Myanmar on 23rd July 1997 and Cambodia on 30th April 1999 3 and thus making the biggest association of its kind in Asia.

The two-page Bangkok Declaration, being the first formal draft of the association contains not only the rationale for the establishment of ASEAN, but also its modus-operandi and its specific objectives as well. The ASEAN Declaration laid down seven “aims and purposes” for the association which illustrate the determination of the founding states to prevent disputes between them from erupting into conflict and settle any such dispute by peaceful means and also to help hand in hand in order to improve the lives of the people.

As set out in the ASEAN Declaration (Bangkok Declaration) the seven general Aims and Purposes of ASEAN includes:

1. To accelerate the economic growth, social progress and cultural development in the region through joint endeavours in the spirit of equality and partnership in order to strengthen the foundation of a prosperous and peaceful community of Southeast Asian Nations;

2. To promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries of the region and adherence to the principles of the United Nations;

3. To promote active collaboration and mutual assistance on matters of common interest in the economic, social, cultural, technical, scientific and administrative fields;

4. To provide assistance to each other in the form of training and research facilities in the educational, professional, technical and administrative spheres;

5. To collaborate more effectively for the greater utilization of their agriculture and industries, the expansion of their trade, the improvement of their transportation and communication facilities and the raising of the living standard of their peoples;

6. To promote Southeast Asian studies; and

7. To maintain close and beneficial cooperation with existing international and regional organizations with similar aims and purposes, and explore all avenues for even closer cooperation among themselves.

Picture 9: ASEAN Logo (Emblem)

(Source: World Wide Web Document: http://www.asean.org/asean/about-asean/asean- emblem , accessed on 1st November 2012)

This present logo of ASEAN has been adopted on the 30th Anniversary of ASEAN and the sheaves on the logo has been increased to ten from the earlier five sheaves, to represent all the ten member countries of Southeast Asia and reflecting the colours of the flags of all of them. Whereas, “the original ASEAN logo presented five brown sheaves of rice stalks, one for each founding members. Beneath the sheaves is the legend “ASEAN” in blue. These are set on a field of yellow enriched by blue border. Brown stands for strength and stability, yellow for prosperity and blue for the spirit of cordiality in which ASEAN affairs are conducted” (idem). The description of the ASEAN logo (emblem) as provided by the ASEAN secretariat is:

1. The ASEAN Emblem shall be the official emblem of ASEAN.

2. The ASEAN emblem represents a stable, peaceful, united and dynamic ASEAN. The colours of the flag – blue, red, white and yellow- represent the main colours of the state crests of all the ASEAN Member states.

3. The blue represents peace and stability. Red depicts courage and dynamism. White shows purity and yellow symbolises prosperity.

4. The ten stalks of padi in the centre of the Emblem represent the dream of ASEAN’s founding Fathers for an ASEAN comprising all the countries in Southeast Asia, bounded together in friendship and solidarity.

5. The circle represents the unity of ASEAN.

6. The ASEAN emblem is the reserved copyright of ASEAN.

Picture 10: ASEAN Flag

(Source: World Wide Web Document: http://www.asean.org/asean/about-asean/asean-flag , accessed on 1st November 2012)

The ASEAN Secretariat has provided a similar description of the ASEAN flag:

1. The ASEAN flag is a symbol of member states’ unity and support for the principles and endeavour of ASEAN and is a means to promote greater ASEAN awareness and solidarity.

2. The ASEAN flag represents a stable, peaceful, united and dynamic ASEAN. The colours of the flag – blue, red, white and yellow- represent the main colours of the flags of all the ASEAN member states

3. The blue represents peace and stability. Red depicts courage and dynamism. White shows purity and yellow symbolises prosperity.

5. The circle represents the unity of ASEAN.

3.2.1. ASEAN Charter

A Charter is a legal written document, upon which any institution is created. As a matter of fact, in the four decades of ASEAN’s existence it has operated without a formal charter and

was mainly based on “informal arrangements, implicit understandings and personal relationships in moving towards its political solidarity, its economic integration and cooperation in many areas”(KNOW Your ASEAN 2007, p.48). It was only in the December 2005 in the 11th ASEAN Summit in Kuala Lumpur that the leaders decided to adopt a formal Charter, which will give ASEAN a “legal personality and would determine the functions and develop areas of competence of key ASEAN bodies and their relationship with one another” (idem). According to them, the ASEAN Charter will be,

“Embodying the fundamental principles, goals, objectives and structure of ASEAN Cooperation capable of meeting the needs of the ASEAN Community. The Charter would serve as a legal and institutional framework of ASEAN and will codify all ASEAN norms, rules, and values” (idem)

Thus, the leaders appointed an Eminent Persons Group (EPG), one from each members-state to draw the contents of the proposed ASEAN Charter and accordingly in January 2007, in the 12th ASEAN Summit in Cebu, Philippines, the EPG submitted it report to the leaders who endorsed it and thereby the drafting of the ASEAN Charter was started by a High Level Task Force of senior officials. Finally, on 15th December 2008, the ASEAN Foreign Ministers gathered together in the ASEAN Secretariat in Jakarta to mark the historic day of the formal adoption of the ASEAN Charter, thus giving the institution a legal character. The ASEAN Charter as perceived by the ASRAN members is:

“The ASEAN Charter serves as a firm foundation in achieving the ASEAN Community by providing legal status and institutional framework for ASEAN. It also codifies ASEAN norms, rules and values; sets clear targets for ASEAN; and presents accountability and compliance”. The importance of the ASEAN Charter can be seen in the following context:

 New political commitment at the top level  New and enhanced commitments  New legal framework, legal personality  New ASEAN bodies  Two new openly recruited DSGs  More ASEAN meetings  More roles of ASEAN Foreign Ministers  New and enhanced role of the Secretary- General of ASEAN  Other new initiatives and changes”

(World Wide Web Document: Charter of the Association of Southeast Asian Nations, http://www.asean.org/asean/asean-charter/asean-charter , accessed on 2nd November 2012)

3.2.2. ASEAN Structure

The present structure of ASEAN includes six main wings and the communities that are working abroad. The six main wings include:

1. ASEAN Summit: It is practically the highest decision making body of ASEAN which meets at least once a year. It is attended by the Foreign Ministers of the ten member nations annually, usually in the middle of the year and manages the affairs of the association. “They also discuss and if warranted, adopt common positions on current international and regional issues, particularly those involving peace and security” (Know Your ASEAN 2007 p. 40). In fact, these annual meets are the occasions when ASEAN members meet the other powers and also the Post- Ministerial conferences and the ASEAN Regional forum. The first ASEAN summit was held in Bali, Indonesia from on 23-24 February 1976. It was in this first summit that the ASEAN founding members signed the Treaty of Amity and Cooperation (TAC), a non aggression pact aimed at promoting regional stability. The fundamental principles of this treaty which laid down the basic principles of inter-state relations in the region are:

I. Mutual respect for the interdependence, sovereignty, equality, territorial integrity, and national identity of all nations;

II. The right of every state to lead its national existence free from external interference, subversion and coercion;

III. Non- interference in the internal affairs of one another;

IV. Settlement of differences or disputes by peaceful manner;

V. Renunciation of the threat or use of force; and

VI. Effective cooperation among themselves.

2. ASEAN Coordinating Council (ACC): The ASEAN Coordinating Council actually comprises the Foreign Ministers of the member states. It was established after the signing of the ASEAN Charter on 20th November 2007. The first meeting of ACC was held on 15th December 2008 at the ASEAN Secretariat Jakarta. As prescribed in the Article 8 of the ASEAN Charter, one of the key roles of ACC is approving the appointment of the Deputy Secretaries-General of ASEAN upon the recommendation of the Secretary General. The ACC meets twice a year and presently is composed of the following Ministers as on 24th August 2011:

I. Mohammad Bolkiah, Minister of Foreign Affairs and Trade, Brunei Darussalam. II. Hor Namhong, Deputy Prime Minister and Minister of Foreign Affairs and International Cooperation, Kingdom of Cambodia. III. Dr. R.M. Marty M. Natalegawa, Minister of Foreign Affairs, Republic of Indonesia. IV. Dr. Thongloun Sisoulith, Deputy Prime Minister and Minister of Foreign Affairs, Lao people’s Democratic Republic. V. Datuk Sri Anifah Bin Haji Aman, Minister of Foreign Affairs, Malaysia. VI. U Wunna Maung Lwin, Minister of Foreign Affairs, Republic of the Union of Myanmar. VII. Albert F. Del Rosario, Secretary of Foreign Affairs, Republic of Philippines. VIII. K. Shanmugam, Minister of Foreign Affairs and Minister of Law, Singapore. IX. Dr. Surapong Tovichakchaikul, minister of Foreign Affairs, Kingdom of Thailand and X. Pham Binh Minh, Minister of Foreign Affairs, Socialist Republic of Vietnam.

3. ASEAN Community Councils: It was in 2003 that all the ASEAN Leaders resolved that an ASEAN Community should be established by 2020. And finally in the 13th ASEAN Summit in 2007, they affirmed their strong collaborative commitment to establish an ASEAN Community by 2015, comprising the three pillars of ASEAN, i.e. The ASEAN Political-Security Council, The ASEAN Economic Community Council and ASEAN Socio-Cultural Community Council. 4. ASEAN Sectoral Ministerial Bodies: Each ASEAN Sectoral Ministerial Body may have under its purview the relevant senior officials and subsidiary bodies to undertake its functions. 5. Committee of Permanent Representatives: According to Article 12 of the ASEAN Charter, each ASEAN Member State shall appoint a Permanent Representative to ASEAN, with the rank of Ambassador based in Jakarta. These Representatives collectively form the Committee of Permanent Representatives (CPR) which shall: I. Support the work of the ASEAN Community Councils and ASEAN Sectoral Ministerial Bodies; II. Coordinate with ASEAN National Secretariats and other ASEAN Sectoral Ministerial Bodies; III. Liaise with the Secretary-General of ASEAN and the ASEAN Secretariat on all subjects relevant to its work; IV. Facilitate ASEAN cooperation with external partners; and V. Perform such other functions as may be determined by the ASEAN Coordinating Council. 6. National Secretariats: The ASEAN National Secretariats consists of all the offices of the ASEAN leaders of the member states.

Other Committees Abroad: These ASEAN Committees are scattered all over the world in order to promote ASEAN and the inter- regional cooperation with the various other parts of the world. There are total 32 such communities including places as follows:

1. ASEAN Community – Abuja (Nigeria) 2. ASEAN Community – Ankara (Turkey) 3. ASEAN Community – Amman (Jordania) 4. ASEAN Community – Abu Dhabi (UAE) 5. ASEAN Community – Beijing (China) 6. ASEAN Community – Berlin (Germany) 7. ASEAN Community – Brussels (Belgium) 8. ASEAN Community – Cairo (Egypt) 9. ASEAN Community – Canberra (Australia) 10. ASEAN Community – Caracas (Venezuela) 11. ASEAN Community – Doha (Qatar) 12. ASEAN Community – Geneva (Switzerland) 13. ASEAN Community – Helsinki (Finland) 14. ASEAN Community – Islamabad (Pakistan) 15. ASEAN Community – Kuwait (Arab) 16. ASEAN Community – Lima (Peru) 17. ASEAN Community – London (UK) 18. ASEAN Community – Moscow (Russia) 19. ASEAN Community – New Delhi (India) 20. ASEAN Community – New York (USA) 21. ASEAN Community – Ottawa (Canada) 22. ASEAN Community – Paris (France) 23. ASEAN Community – Pretoria (South Africa) 24. ASEAN Community – Pyongyang (North Korea) 25. ASEAN Community – Riyadh (Saudi Arabia) 26. ASEAN Community – Rome (Italy) 27. ASEAN Community – Seoul (South Korea) 28. ASEAN Community – Tokyo (Japan) 29. ASEAN Community – UNESCO 30. ASEAN Community – Vienna (Austria) 31. ASEAN Community – Washington (USA) 32. ASEAN Community – Wellington (New Zealand)

3.2.3. ASEAN Secretariat:

ASEAN established a Secretariat with the signing of the Agreement on the Establishment of the ASEAN Secretariat on 24th February 1976. The ASEAN Secretariat finally acquired a permanent location on May 9th 1981, in Jakarta, capital of Indonesia. The prima facie of the ASEAN secretariat is to facilitate for greater efficiency in the coordination of ASEAN organs and for more effective implementation of all the projects and activities as undertaken by ASEAN.

The Vision of ASEAN Secretariat by 2015 is:

“It will be the nerve centre of a strong and confident ASEAN Community that is globally respected for acting in full compliance with its Charter and in the best interest of its people”

The Mission of the ASEAN Secretariat is

“To initiate, facilitate and coordinate ASEAN Stakeholder collaboration in realising the purpose and principles of ASEAN as reflected in the ASEAN Charter”

(World Wide Web Document: Official homepage of ASEAN, ASEAN Secretariat, http://www.asean.org/asean/asean-secretariat , accessed on 2nd November 2012).

3.2.4 ASEAN Chair

Article 31 of the ASEAN Charter pronounces that “the chairmanship of ASEAN shall rotate annually based on the alphabetical order of the English names of Member States. A Member State assuming the Chairmanship shall chair the ASEAN Summit and related summits, the ASEAN Coordinating Council, The three ASEAN Community Councils, relevant ASEAN Sectoral Ministerial Bodies and Senior Officials and the community of Permanent Representatives” (World Wide Web Document: ASEAN Official Website, http://www.asean.org/asean/asean-chair , accessed on 3rd November 2012)

Owing to this very norm the present Chair of ASEAN is being incubated by the Kingdom of Cambodia with their vision: “ASEAN: One Community, One Destiny”. Therefore the 20th ASEAN Summit was held in Phnom Penh, Cambodia on 03-04 April 2012.

3.2.5 ASEAN: in the present scenario

Today, ASEAN with its motto of “One Vision, One Identity and One Community” is viewed as “the ten member association, comprising some 600 million people, and representing a significant portion of Asia and is viewed by many as a successful experiment in regional conflict regulation and cooperation” (Acharya, Amitabh 2002, p. 5). ASEAN is largely seen as a rising star from the larger Asian region and in the world scenario. According to Surin Pitsuwan the present Secretary-General of ASEAN,

“ASEAN has entered the place to play a central role in the evolving regional architecture by virtue of not only being the hub in economic integration initiatives in the region but also by being able to provide the platform for political and economic dialogue and engagement among major global players” (World Wide Web Document: Surin Pitsuwan, Speech made at 16th ASEAN Economic Ministers meeting, Putrajaya Malaysiaa, http://www.asean.org/news/item/chairman-s-statement-of-the-16th-asean-summit-towards- the-asean-community-from-vision-to-action , accessed on 2nd November 2012)

In fact, ASEAN in the present scenario is engaged in a three-fold endeavour, first to bring into reality the ASEAN Community in 2015 and secondly, to make the ASEAN+3 Forum a reality, and thirdly, to steer the Asia-Pacific region towards a dynamic east Asian community through the promising East Asia Summit.

3.2.5.1. ASEAN Economic Community 2015 (AEC)

The ASEAN vision for 2015, through ASEAN Economic Community is in itself a larger than life endeavour for the budding member states, which aims at turning ASEAN into a single market and production base, with free flow of goods and services, skilled labour and investment capital among the ASEAN member countries. The AEC blueprint was adopted by the member nations at the 13th ASEAN Summit on 20th November 2007 in Singapore.

“The ASEAN Economic Community (AEC) shall be the goal of regional economic integration by 2015. AEC envisages the following key characteristics:

a) A single market and production base b) A highly competitive economical region c) A region of equitable economical development and d) A region fully integrated into the global economy.

The AEC areas of cooperation include human resource development and capacity building; recognition of professional qualifications; closer consultation on macroeconomic and financial policies; trade financing measures; enhanced infrastructure and communications connectivity; development of electronic transactions through e-ASEAN; integrating industries across the region to promote regional sourcing; and enhanced private sector

involvement for the building of AEC” (World Wide Web Document, ASEAN homepage, http://www.asean.org/communities/asean-economic-community , accessed on 4th November 2012)

3.2.5.2. ASEAN+3

ASEAN+3 is largely known to be the most important forum that coordinates the cooperation between the Southeast Asian nations represented by ASEAN and the three big world powers houses of East Asia namely China, Japan and South Korea.

“Following the unsatisfactory progress of the Uruguay Round Ministerial meeting in December 1990, Malaysian Prime Minister Mohammad Mahathir proposed the formation of a regional trade grouping – comprised of ASEAN countries, Japan, China, Korea and Hong Kong. This group of economies was called the ‘East Asian Economic Group (EAEG)’. The objective behind the proposal were to establish a regional trade arrangement for the group in response to the emergence of preferential regional trade arrangements elsewhere, including in North America and to exercise a global impact on trade issues, like the Cairns Group. In October 1991, ASEAN Economic Ministers considered Mahathir’s proposal as useful and renamed the grouping as the ‘East Asian Economic Caucus (EAEC)’ which would facilitate the discussion on regional economic issues” (Kawai, Masahiro 2005, p. 31).

This proposal by the Malaysian Prime minister was in fact the ground preparation for the integration of ASEAN and the East Asian nations. However, USA showed its opposition on the EAEG/EAEC proposal on the ground that “it could divide the Asia-Pacific, by excluding the United States, and reduce the effectiveness of the trade/investment liberalization process with APEC” (idem). Thus, following US opposition all the East Asian countries followed a cautious approach towards the same. But the Asian Financial Crisis changed the entire scenario and their views towards this integration. In fact, in the words of Hwee, “The Asian Financial crisis of 1997 has served as a kind of catalyst for the formation of the ASEAn+3 process” (Hwee 2009, p. 7). Thus, in December 1997, in the midst of the Asian Financial Crisis, the leaders of Japan, China and Korea were invited to the informal ASEAN Leaders’ meeting and thus, the “de facto ASEAN+3 process began” (Kawai, Masahiro, 2005, p. 32).

As a matter of fact, the ASEAN+3 forum started on a financial base, in order to have a more stable financial situation in the region. A milestone achieved in this process of integration was the Chiang Mai Initiative (CMI), the hallmark liquidity support facility in East Asia, which was designed to reduce the risk of liquidity crisis in the region and to manage the regional currency attacks. The CMI is composed of two elements – first to strengthen the existing ASEAN Swap Arrangement among the ASEAN member countries and secondly to create a new network of bilateral swap arrangements (BSAs) among ASEAN+3. One important aspect of the ASEAN+3 forum is the proposed Asian Currency Unit, the weighted index of currencies for ASEAN+3 in line with the European Currency Unit now Euro. The

proposed ACU is basically a currency basket and not a real currency, a weighted index of the East Asian Currencies that will function as a benchmark for the regional currency movements. Presently, it is under process under the purview of the Asian Development Bank, who is considering the various technical aspect of the ACU calculation, including the nature of the basket, the choice of fixed weights vs. fixed units, the selection of currencies to be included, the criteria for periodical revision etc.

Picture 11: ASEAN+3 Member Countries

(Source: Google Images, http://globalautonomy.ca/global1/glossary_entry.jsp?id=OR.0026 , accessed on 4th November 2012)

ASEAN+3, which began mainly on the basis of financial cooperation and integration, now has been broadened and deepened to include other aspects as well:

“It includes cooperation in the areas of food and energy security, financial cooperation, trade facilitation, disaster management, people- to- people contacts, narrowing the development gap, rural development and poverty alleviation, social welfare, human trafficking, labour, communicable diseases, environment and sustainable development and transnational crime, including counter terrorism” (World Wide Web Document: Overview: ASEAN Plus Three Cooperation, http://www.asean.org/news/item/asean-plus-three-cooperation , accessed on 4th November 2012).

3.2.5.3. East Asia Summit

The last two decades have seen considerable development in bringing about a regional integration in East Asia as a whole. In fact the East Asian economies have substantially

liberalized their foreign trade and FDI regimes within the framework of GATT/WTO and APEC. Since early 1990s, they have also started their financial system and capital accounts, which has also exposed these economies to the financial vulnerabilities and thus, the culmination point was the Asian Financial Crisis of 1997-98.

“Following the crisis, the East Asian economies have embarked on various initiatives for economic regionalism in the areas of trade/investment and money/finance. The crisis prompted the regional economies which were increasingly interdependent t realise the importance of economic cooperation among themselves and to make efforts to institutionalise such interdependence. Economic regionalism, through various types of policy coordination can resolve the collective action problem by internalizing externalities and spill-over effects that arise from inter-dependence” (Kawai, Masahiro 2005, p. 19-20)

This regional integration of the greater East Asia as a whole can be attributed to three reasons:

1. As a defensive response to the proliferation of regional trade arrangements (RTAs) elsewhere – particularly in Europe and the Western Hemisphere – and due to their dissatisfaction with slow progress on trade/investment liberalization at the global and trams-regional levels; 2. Due to their willingness to enhance productivity and international competitiveness through exploitation of scale economies and dynamic efficiency; and 3. For promotion of deeper integration and institution building at the regional level (idem).

Thus, owing to this basic principle and belief, the regional leaders’ of East Asia, formed the East Asia Summit (EAS), a strategic dialogue and cooperation forum in order to collectively face the key challenges to the region. Formed on 14th December 2005 in Kuala Lumpur on the inaugural meeting, “The East Asia Summit is a significant regional grouping with an important role to in advancing closer regional integration and cooperation at a time of particular dynamism in East Asia” (World Wide Web Document: The East Asia Summit, http://www.dfat.gov.au/asean/eas/index.html , accessed on 4th November 2012). Formed with 16 founding members which includes, the ASEAN countries, India, China, Japan, Republic of Korea, Australia and New Zealand. Later on it also included USA and Russia to make the present day East Asian Summit of 18 member countries. Collectively, the 18 members EAS today represents “55 per cent of the world’s population, account for almost 55 percent of global GDP” (idem). The EAS hold a Leaders’ Summit annually, usually back to back with the annual ASEAN Summit. The last EAS, held at Bali, Indonesia on November 19th 20111, was a significant step towards strengthening this regional integration. It provided,

“valuable opportunities for the leaders to engage on key strategic, political and economic issues of common concern, with the aim of promoting stability and economic prosperity in the region. For the first time, the EAS was attended by both the United States, represented by President Barak Obama, and Russia, represented by Foreign Minister Sergey Lavrov. EAS leaders discussed a range of issues at the summit, including economic and financial

integration, disaster management, and energy, environmental and educational cooperation. They also discussed security challenges in the region, including maritime security and the peaceful denuclearization of the Korean Peninsula. Leaders expressed support of efforts to strengthen the foundations of regional and global economic growth” (idem).

3.2.6. ASEAN and the rest of the International Community

“ASEAN as an association is not only open to the world; it also maintains active links with countries and regions that are strategically and economically important to it and to its members” (Know Your ASEAN 2007, p. 43). This explains the relation that ASEAN and its member countries aim to have with the rest of the world. In fact it is the common policy of all the ASEAN members to be open to the rest of the world politically, economically, culturally and intellectually. ASEAN does it by means of the system of Dialogue Partnerships and the ASEAN Regional Forum for the political and security consultations, dialogues and cooperation. The member countries also take active part in the international organizations like the UN and its agencies, the international financial organizations like IMF and World Bank; in inter regional interactions like the Asian European Meeting and the regional groups like APEC and Asian Development Bank. In fact ASEAN’s most active and by far the most extensive external linkages include the ASEAN + 3 Forum and the East Asian Summit. Also, the AEAN system of dialogue partnership serves as an important channel for ASEAN as a whole to build and develop strong cooperative relationship with the major powers of the world as well as with the trading partners.

“It started in 1973 with the European Economic Community, now the European Union. Starting out as a platform for ASEAN to pray open markets for its products and to obtain development aid for its members, the dialogue system has developed into a forum for the consideration of security, as well as economic issues” (idem)

ASEAN, in today’s world is seen as a forward looking platform, which can be said to be a geo-political and economic organization covering near about 3 percent of the total area of earth and has a population of approximately 600 million, which is near about 8.8 per cent of the total world population. The basic indicators of ASEAN in the present world scenario have been provided in the following table which indicates the very strength of the organization. However, the Journey of ASEAN was not smooth. The Asian Financial Crisis of 1997-98, which originated in Thailand, affected all other ASEAN member countries. Other matters like, the Myanmar issue, where ASEAN has been urging Myanmar to step up the pace of the peace process of national reconciliation and dialogue among all the concerned parties and thereby to bring the country on democratic lines, the issue of South China Sea, in which four of the ASEAN member countries and China have conflicting claims over the jurisdiction of varying kinds over all or parts of the South China Sea. However, ASEAN has been successful till now in promoting peace and stability in the region, creating job opportunities, regional stability and thus in making the Southeast Asian region recognized in the global scenario.

Part 3

1.3. PEST Analysis of Thailand

Thailand, which literally means the “land of the Free”, is particularly attractive to the international community partly due to the aesthetic excellence, like- the beauty of the countries natural and constructed environments. It is known for the “beautiful orchids, temples, textiles, the civility and grace of its peoples; the appreciation of the present moment, and the ease with which the ugly and painful is slipped out of sight” (Esterik, Penny V 2000, p. 1). The other reason is Theravada Buddhism for Thailand being one of the major countries of the world adhering to Buddhism and its teachings. As a matter of fact, 95% of the population of Thailand are Buddhist and it is the official religion of the country and the Head of the State, his majesty the King himself as the believer, the upholder and the guardian of the faith.

“Saffron-robed monks, slender dancers, monumental ruins, gilded Buddha images, exquisite handicraft- here are some of the stereotypical images of Thailand featured in travel guidebooks. Such clichés of exoticism made the country one of the most popular tourist destinations over the last two decades. This international popularity generated wealth but also fears of an erosion of the distinctive Thai identity, leading academics and bureaucrats to rally behind the cri du caeur, ‘we love Thai culture!’Concurrently, the national agency for promotion of tourism reassured prospective visitors about the country’s enduring traditions in the face of rapid modernization with the slogan: ‘Thailand remembers its gracious past and anticipates its dynamic future’ (Maurizio Peleggi 2007, p.7)

Today, Thailand is seen as a mellow harmony of tradition and modernization, a synthesis of the old and the new. This as a matter of fact this enables the country to preserve a strong sense of the national identity while making a significant progress in its efforts to modernize the country and to improve the wellbeing of the people. Interestingly, Thailand is one of those countries which remained free from the colonial rule whereas most of its contemporary societies were the colonies of one or the other western powers. Like any other regions in South East Asia, Thailand’s culture and society is also got influenced by the culture and religions of India. Other cultures that have their own imprints in making the greater Thai culture are – Chinese, Islamic and to some extent the European culture. Today, Thailand is a medley of the ethnic, linguistic, religious and cultural nuances of all these cultures which has been finely blended together for centuries to be evolved into its present form.

Thailand- officially known as The Kingdom of Thailand is politically structures as a Constitutional Monarchy with the King as the Head of the State. It is located at the centre of

Indochina Peninsula, bordered in the west by Myanmar and the Andaman Sea, towards its east is the Kingdom of Cambodia and towards north is Laos, in the south it is bordered by Malaysia and the Gulf of Thailand. The total land mass of Thailand is consists of 513,120 square kilometres and the total water mass consists of 2,230 square kilometres making it the 51st largest country in the world by means of area. Thailand according to 2011 data consists of 69.5 million people, thereby making it the 20th most populous country of the world. Inhabited mainly by the indigenous Thai people, which consists of the 75 % of the total population it also has a significant amount of Chinese people consisting of 14 % of the total population. The other ethnic groups consist of 11 % of the total population of Thailand. By means of purchasing Power Parity (PPP) Thailand stands 24th in the world. (World Wide Web, CIA World Fact book, https://www.cia.gov/library/publications/the-world- factbook/rankorder/2119rank.html, accessed on 4th November 2012)

Picture 12: Map of Thailand

(Source: Google Images, http://www.thailand-map.net/ , accessed on 5th November 2012)

Capital : Bangkok

Language : Thai

Total Area : 514,000 square kilometres (198,000 sq mi)

Land: 511,770 square kilometres (197,600 sq mi)

Water: 2,230 cubic kilometres (540 cu mi)

Total Land Boundaries : 4,863 km

Border Countries : Myanmar 1,800 km, Cambodia 803 km, Laos 1,754 km, Malaysia 506 km

Currency : Baht

(World Wide Web doc: Official website, http://www.thailandoutlook.com/contents.php?Id=12 accessed on 04 Nov 2012.)

3.3.1 Thailand: Political

Thailand is the only regional state in Southeast Asia that has escaped the direct colonial rule, whereas its contemporary states were under one or the other foreign powers. Often represented by means of an absolute monarchy in the past, which was replaced some six decades ago by a constitutional version, but the role of the incumbent with over 50 years of tenure is a dominant symbol of the Thai national identity.

“On the paradigmatic level, the main characteristics of the modern Thai politics could be briefly listed as follows- authority is patrimonial and absolute, political behaviour is affected by the interplay of royal, military and bureaucratic power relations, the traditional political structure is hierarchical and segmented, the rigidity of the political structure persists in the face of rapid social change, which cause tension and eventual political instability” (Chaloemtiarana 2007, p. 1)

Thailand had been under the rule of various dynasties and thereby the various kings as the head of the state for more than seven centuries. Thailand witnessed some sort of reforms during the Chakkri reformation of Rama IV, and particularly later in Rama V’s reign. However, these were perceived as inadequate by the young generation of intellects and students studying abroad, who criticized the crown’s government as backward, corrupt and ineffective. Thus, on June 1932, the infamous 1932 Revolution took place in Thailand and thereby Thailand, then Siam assumed the characteristics of a Constitutional Monarchy from the earlier system of Absolute Monarchy with the formation of the very first political party the Peoples’ Party (Khana Ratsadon). However, since then, political instability has essentially been the norm in Thailand.

The tension between monarchy and the leadership of the People’s Party continued throughout the period from 1932 to 1957. In particular, Marshal Phibunsongkhram, who took over the real control of national leadership from the mid 1930s, tried first to ignore and undermine the thorn’s precarious position as the traditional legitimize roof political power by imposing upon the Thai society modern concepts of the state and the leadership. This tension between the King and the minister was not satisfactorily removed until the coming of age of Marshal Sarit Thanarat, who staged a coup against Phibun in 1957 and subsequently took power in 1958. This was followed by this even or the other. In 1973, the student-led uprising, aiming at liberating the country from military government formed a new civilian government in the midst of the fear of the communist victory in the Indochinese countries in 1975. However, in 1976 again Admiral Sa-ngad Chaloryu, staged a massacre and coup that bought hardliner anticommunists to power. This, along with the end of the Indochina war bought in considerable foreign investment to Thailand and there was some sort of alleviation of infrastructure and social problems. The 1992, Black May uprising lead to some more reforms propagating the adoption of the 1997 Constitution, thus known as the ‘The People’s Constitution’- aiming at creating checks and balance of power between strengthened government, separately elected senators and anti-corruption institutions.

However, the most recent period of unrest began in 2006 with the coup d’e/tat (the 18th in 70 years) that saw the Prime Minister Thaksin Shinawatra, who was forcibly removed from office and sent to exile and again Thailand came under the military rule. This was followed by an another set of political instability in the form of People’s Power Party (PPP) gaining majority in 2007 elections and Samak Sundaravej, an alleged Thaksin proxy coming into power. However, after six months, the middle- class Bangkok-based People’s Alliance for Democracy had boldly taken over Government House and demanded Samak’s resignation. And finally in June 2008, after several weeks of PAD demonstration, samak was found guilty of accepting money to host a cooking programme and was forced to stand down and was replaced by Somchai Wongsawat, Thaksin’s brother-in-law. However, as the situation intensified and the confrontations between the PAD and police and the pro-government supporters became increasingly violent, a new coalition government was formed in December 2008, led by the Oxford-educated Abhisit Vejjajiva, the leader of the Democrat Party and Thailand’s fifth Prime Minister in 2008. (Williams, China 2009)

“Abhisit’s appointment ushered a brief period of relative stability, but violent protests in early 2009 by red-shirted Thaksin supporters in Bangkok and Pattaya showed that although still in exile, the former Prime Minister remains the single most influential and polarising figure in Thai politics”(Williams, China 2009, p. 17).

The violent protests by the Thaksin supporters during the time, which lead to bloodshed and even casualty, ended with the 2011 general elections, which marked the victory of the red shirt and the Pheu Thai Party, the successor of the former People’s Power Party formed the government under the Prime Minister ship of Yingluck Shinawatra, the first ever women Prime Minister of Thailand and by default the sister of Thaksin Shinawatra.

1.3.1.1. A timeline view of Thailand and its politics (From 1939-2012)

1939 - Siam changes its name to Thailand ("Land of the Free").

1941 - Japanese forces land. After negotiations Thailand allows Japanese to advance towards British-controlled Malay Peninsula, Singapore and Burma.

1942 - Thailand declares war on Britain and US, but Thai ambassador in Washington refuses to deliver declaration to US government.

Post-war uncertainty

1945 - End of World War II. Thailand compelled to return territory it had seized from Laos, Cambodia and Malaya. Exiled King Ananda returns.

1946 - King Ananda assassinated.

1947 - Military coup by the wartime, pro-Japanese leader Phibun Songkhram. The military retain power until 1973.

1965 onwards - Thailand permits US to use bases there during the Vietnam War. Thai troops fight in South Vietnam.

Short-lived civilian rule

1973 - Student riots in Bangkok bring about the fall of the military government. Free elections are held but the resulting governments lack stability.

1976 - Military takes over again.

1978 - New constitution promulgated.

1980 - General Prem Tinsulanonda assumes power.

1983 - Prem gives up his military position and heads a civilian government. He is re-elected in 1986.

1988 - General Chatichai Choonhaven replaces Prem after elections.

1991 - Military coup, the 17th since 1932. A civilian, Anand Panyarachun, is installed as prime minister.

1992 - New elections in March replace Anand with General Suchinda Kraprayoon. There are demonstrations against him, forcing him to resign. Anand is re-instated temporarily. Elections in September see Chuan Leekpai, leader of the Democratic Party, chosen as prime minister.

1995 - Government collapses. Banharn Silpa-archa, of the Thai Nation party, elected prime minister.

1996 - Banharn's government resigns, accused of corruption. Chavalit Yongchaiyudh of the New Aspiration party wins elections.

Financial turmoil

1997 - Asian financial crisis: The baht falls sharply against the dollar, leading to bankruptcies and unemployment. The IMF steps in. Chuan Leekpai becomes prime minister.

1998 - Tens of thousands of migrant workers are sent back to their countries of origin. Chuan involves the opposition in his government in order to push through economic reforms.

1999 - Economy begins to pick up again. Thai media highlight high cost of drug treatments for Aids and HIV. Thailand begins to pressurise drugs companies to find ways to make the drugs cheaper.

2001 - New Thai Love Thai party wins elections after partial re-run of poll. Leader Thaksin Shinawatra forms coalition government. Burma-Thailand border crossing which was closed after clashes between respective troops in February re-opens after Thaksin pays visit to Burma.

2002 - Burma closes border with Thailand again after Thai army fires shells into Burma during battle between Burmese army and ethnic Shan rebels. Border reopens in October.

Temple row

2003 - Serious diplomatic spat with Cambodia over Angkor Wat temple complex. Controversial crackdown on drugs starts; more than 2,000 suspects are killed. The government blames many killings on criminal gangs; rights groups say extra-judicial killings were encouraged by the authorities.

2004 - Martial law imposed in largely-Muslim south after more than 100 killed in a wave of attacks blamed on Islamic militants. More than 100 Islamic militants die in coordinated attacks on police bases in the south. An inquiry finds that the deaths of 85 Muslim protesters in army custody not deliberate. Thousands killed as a tsunami, triggered by a powerful undersea earthquake, devastate communities on the south-west coast, including the resort of Phuket.

2005 - Thaksin begins a second term as PM after his party wins February's elections by a landslide. He is given new powers to fight continuing violence in south. By November, death toll stands at more than 1,000. Country also battling outbreaks of bird flu.

Coup

2006 - Snap election, called by Thaksin amid mass rallies against him, is boycotted by the opposition and is subsequently annulled, leaving a political vacuum. The PM takes a seven- week break from politics. Military leaders stage a bloodless coup while Thaksin is at the UN General Assembly. Retired General Surayud Chulanont is appointed as interim prime minister in October.

2007 - First draft of new constitution approved by committee appointed by the military administration. Ousted PM Thaksin Shinawatra's Thai Rak Thai party is banned. Voters in a referendum approve a new, military-drafted constitution. December general elections mark the first major step towards a return to civilian rule. The People Power Party (PPP), seen as the reincarnation of Thaksin's Thai Rak Thai (Thais Love Thais) party, wins the most votes.

2008 - An elected parliament convenes for the first time since 2006. Samak Sundaravej is sworn in as prime minister. Ousted premier Thaksin Shinawatra returns from exile, but flees to Britain after failing to appear in court to face corruption charges. Cambodia and Thailand move troops to disputed land near ancient Preah Vihear temple after decision to list it as UN World Heritage Site fans nationalist sentiments on both sides.

Unrest

2008 - State of emergency in Bangkok after thousands of pro- and anti-government demonstrators clash following a week of mass protests calling for the resignation of the premier. PM Samak Sundaravej is dismissed for breach of a conflict of interest law. Somchai Wongsawat becomes PM, but anti-government protests continue. Thaksin Shinawatra is found guilty of corruption in absentia. PM Somchai Wongsawat is forced from office after a court finds the governing People Power Party guilty of electoral fraud and bars its leaders from politics for five years. Opposition leader Abhisit Vejjajiva becomes third new leader in three months.

Hmong expulsion

2009 - Continuing unrest forces the cancellation of an Asean summit after anti-government protesters storm the venue. Thousands of pro- and anti-Thaksin protestors hold regular rallies in Bangkok and elsewhere. Row with Cambodia grows over the appointment of Thaksin as an economic adviser to Phnom Penh. Up to 20,000 Thaksin supporters rally in Bangkok to demand fresh elections. Thailand deports about 4,000 ethnic Hmong back to communist- ruled Laos, despite concerns raised by the UN refugee agency.

2010 - Tens of thousands of pro-Thaksin protesters - in trademark red shirts - paralyse parts of central Bangkok for two months to demand PM Abhisit's resignation and early elections; after negotiations fail, troops storm the protesters' barricades and end the demonstrations. Death toll from Thailand's worst political violence in modern history put at 91. Thailand resumes diplomatic ties with Cambodia after Phnom Penh announces Thaksin's resignation.

2011 Tensions rise as Cambodia charges two Thai citizens with spying after they were arrested for crossing the disputed border. After exchange of fire across the border, the two countries agree to allow Indonesian monitors access to the area to prevent further clashes. Sister of fugitive former leader Thaksin Shinawatra, Yingluck, is elected Thailand's first female prime minister. Cambodia and Thailand agree to withdraw troops from disputed border area. Worst floods in 50 years kill hundreds, engulf outskirts of Bangkok.

2012 February - Bomb blasts in Bangkok thought to target Israeli diplomats.

2012 June - Anti-government yellow-shirts blockade parliament to prevent debate on proposed reconciliation bill aimed at ending six-year-old political tensions. Group fears that a proposed amnesty would enable the return of ousted PM Thaksin Shinawatra.

2012 August - Human Rights Watch accuses Thai army chief of obstructing Thai justice ministry inquiry into deaths during 2010 political protests.

(World Wide Web Document: Official Homepage of BBC News Asia: http://www.bbc.co.uk/news/world-asia-15641745, accessed on 5th November 2012)

1.3.1.2. Important aspects of Thai Politics

When we say Thailand’s political scenario, the two most important aspects that is to be noted is the Monarchy under the role of the King and the second is the two strong dominant groups, namely the Red Shirts and the Yellow Shirts. As a matter of fact, Monarchy in Thailand is unique in its own way. The King of Thailand is the Head of the State and is a very important aspect of the Thai national Identity. The power of the king is limited to a symbolic figurehead, who reigns but does not rule. However, the love and reverence of the Thai people for their King dictate a large part of the moral authority. Today, His Majesty King Bhumibol Adulyadej (Rama IX), the ninth king of the Chakri Dynasty is the world’s longest reigning monarch, who ascended the throne in 1946. The King in his Oath of Accession has pledged to “reign with righteousness for the benefit and the happiness of the Siamese people” and has thereby dedicated his life and his resources for the same. Thus, today, though symbolic when comes to power, the King of Thailand is the moral binding force of the modern Thai community.

The other aspect of the Thai politics is the two dominant groups often referred to as the Red Shirts and the Yellow Shirts. The Yellow Shirts which allies itself with the People’s Alliance for Democracy (PAD) was formed in 2006 to protest against Thaksin Shinawatra, the then Prime Minister of Thailand which lead to the overthrew of Thaksin after the 2006 military coup. Although after Thaksin’s removal from power the Yellow Shirt coalition was dissolved after announcing that their aim has been achieved. However, they again came into action after People’s Power Party lead by Samak Sundaravej, who was known to be the proxy of Thaksin came to power. They began violent protests against the Samak’s coalition government and even seized Government House to pressurise Samak to resign. In November 208, they blocked the Parliament prior to a crucial legislative session, took control of the government’s provisional offices at Don Muang Airport and also seized Suvarnabhumi International Airport. However their protest ended with the formation of government by Abhisit Vejjajiva of the Democrat Party as the Prime Minister.

The Red Shirts is the political pressure group known as the United Front for Democracy against Dictatorship (UDD) which allies itself with the Pheu Thai Party which is presently in power. They are against the other political party called the People’s Alliance for Democracy and also the Thai Military Coup. It was formed in 2006 to protest against the military coup which overthrew the Thaksin government and lead to a military government. But the rallies of the Red Shirts became more aggressive during the Prime Minister ship of Abhisit Vejjajiva in 2008. In 2009, they also expanded their protest to Pattaya, the site for the Fourth East Asia Summit, which became violent and ultimately called for the Summit to be cancelled and

declaration of a state of emergency by the Prime Minister Abhisit Vejjajiva. These rallies and opposition to the Abhisit’s gpvernment continues in spite of the strong actons taken against them by the government and deployment of strong security forces in the capital city. This lead to violence and even bloodshed. Finally, these protests stopped after the 2011 general elections in Thailand which lead to the victory of the Pheu Thai Party and Yingluck Shinawatra, the sister of Thaksin Shinawatra becoming the Prime Minister.

3.3.1.3. Present Political condition of Thailand

The general election of 3rd July 2011, which marked the victory of the Pheu Thai Party lead by Yingluck Shinawatra was a decisive event in Thailand’s political scenario. It ended the two years long protests by the Red Shirts against the government of the Democratic Party lead by Abhisit vejjajiva and thus giving some relief to the very unstable nature of the Thai political environment. Moreover, it gave Thailand its first ever women Prime Minister, who is the present incumbent of the chair. After Yingluck Shinawatra became the Prime Minister on 10th August 2011 she introduced some reforms to assist Thai people for a better life and for a better society.

 On 23rd August 2011, prime Minister Yingluck Shinawatra delivered her government policy statement emphasizing the Government’s ‘determination to foster harmony and pursue reconciliation for the sake of the country’s economic, social and political development and for the benefit of all Thai’.  The Government formed a committee called Truth for Reconciliation Commission of Thailand (TRCT) in accordance with the Regulation of the Office of the Prime Minister on the ‘verification and seeking of Truth for reconciliation B.E. 2553 (2010) published in the Royal gazette on 16th July 2010, which aimed at creating a common understanding among Thais, providing restoration and preventing a reoccurrence of violence and damage from civil unrest whether through political protest or the violation of human rights’.  Several rounds of meetings were held to coordinate and follow-up on actions taken to implement the recommendations of the TRCT under the Chairmanship of Deputy Prime Minister Yongyoot Wichaidit.  The cabinet approved the measures for the reparation and rehabilitation of those Thai people who were affected by the earlier political violence. The cabinet also approved guidelines and procedures for the payment of monetary compensation to the affected.  The Government has emphasized its objectives to ensure a strong Thai economic structure and to bring about reconciliation and to prepare Thailand for the establishment of the ASEAN Community in 2015.  The Government has announced its policies which have been classified into two phases- the short term or the urgent policies that are to be implemented in the very first year and the long term policies that are to be implemented over the tenure of the government. The urgent policies includes prevention and fight against corruption, restore relation and promote cooperation with the neighbouring countries, raising the

standard of living of the people by means of wage increases and tax reliefs, prevent and define solutions to drug problems etc. Whereas, the long term policies of the present Government includes, the promotion of unity and cooperation among the ASEAN Member States, Promotion of the countries constructive role and interest in the international organizations, to promote technical cooperation with the other developing countries etc. The long term economic policies includes, enhancing the competitiveness as well as expansion of the market access for business, developing basic transportation and public utility infrastructure, promoting trade and investment by means of improves laws and regulations and investment promotion measures and intensifying its international economic linkage in the areas of trade and investment through cooperation frameworks and free trade agreements.

3.3.2. Thailand: Economical

“The performance of the Thai Economy in recent decades has nothing sort of stunning. In 1950, following an entire century of economic stagnation, Thailand was one of the world’s poorest countries. Since then, its economy has experienced rapid growth, declining poverty and macroeconomic stability. What is particularly impressive about this achievement is that it occurred in a volatile economic and political environment” (Warr and Nidhiprabha 1996, p. 1)

The above paragraph from the book, Thailand’s Macroeconomic Miracle: Stable Adjustment and Sustained Growth by Peter G. Warr and Bhanupong Nidhiprabha aptly describe the general course of the Thai economy. Today, the Thailand Economy is recognized as one of the fastest growing economies of the world in general and in the Southeast Asian region in particular. However, the economic journey of Thailand was not smooth. Like most of the developing countries of the world, Thailand had its own share of both political and economical upheavals both in the form of internal as well as external shocks. Politically, Thailand suffered political turmoil throughout the post world war period, altering between authoritarian military governments with democratic and semi democratic regimes for short periods. External shocks such as the perceived military threat from Vietnam during 1960s, certain side effects of the Vietnam War, the boom in the international primary commodity prices of 1972-73, the two petroleum crisis of 1973-74 and again in 1979-80s, the high interest rates in 1980s, the World recession in the first half of the 1980s and the foreign investment boom of the late 1980s. The areas of trade also suffered a long term decline from an index number of 100 in 1970s to about 60 in 1990. “Nevertheless, whereas many developing countries including some of Thailand’s Southeast Asian neighbours, were badly destabilized by these and even lesser shocks, Thailand showed surprising resilience” (idem).

3.3.2.1. Background of Thai Economy

If we look at the history of Thai economy, we can see that between the periods of 1965 to 1990, the real gross national product (GNP) per capita in Thailand grew at an annual rate of 4.2 percent as compared to the other contemporary low and middle class countries which averaged at 2.5 percent. As a matter of fact, Thailand actually experienced a period of accelerated economic integration into the world economy.

“Between 1986 and 1991, Thailand became one of the fastest growing economies of the world. The Kingdom’s economic performance during these years has been described as virtually unparalleled with the value of manufacturing exports growing at 26.6 per cent a year, total exports at 18.1 per cent and GDP at 9.6 percent. This growth was accompanied by a surge in foreign direct investment, particularly from Japan and the Asian newly independent economies” (Dixon Chris 1999, p. 7)

This, growth of the Thai economy is largely seen as a result of the correct governmental policies particularly in the direction of the liberalization of the economy. The period from 1950 to 1980 laid down the “basis for the rapid expansion of export oriented manufacturing and the international conditions” (idem).

However, after 1991, growth slowed, but GDP still grew at an average of 6.8 per cent between 1992 and 1996. But during the period of 1993, the foreign investment has declined considerably leading to an increased overseas debt. In fact during 1996, the rate of growth of export earnings contracted sharply, leading to a current account deficit of -7.887 percent of the country’s GDP. The shortage of capital in the country was an another problem. Owing to these difficult situation, the Thai Government in 1993, granted the infamous Bangkok International Banking Facilities to the Thai banks which allowed them to take a loan from a foreign financial institution with a low interest rate and then loaning it to the Thai Businesses on a higher rate but still at a rate lower than the domestic financial institutions. This actually prepared the ground for one of the biggest financial crisis of the world, the Asian Financial Crisis of 1997-98.

3.3.2.2. The 1997-98 Financial Crisis

The trade liberalization and the free flow of capital across countries were the dominant pictures during this period along with the unprecedented economic growth. During 1990 – 95, the gross domestic investment of Thailand grew by 15.3 percent, leading to an investment boom. This has considerably soared the value of the commercial as well as residential properties, industrial assets as well as infrastructure; however this boom was mainly based on the borrowed money especially in US dollar. But at the same time, the financial system of Thailand was not strong enough to handle the effects of the liberalization of the financial markets. “This booming economy with a fixed and stable nominal exchange rate inevitably brought about an appreciation of the real exchange rate, this in turn resulted in a market

slowdown in export growth in Thailand” (Eun, Resnick and Sabherwal 2012, p. 78). By mid 1997, the Thai financial institutions that have been borrowing dollars from international banks at lower interest rates and lending Thai baht to the local property developers at a higher interest rate were at the verge of default. It is because, due to speculative over building, these developers could not sell their commercial and residential property, thus, forcing them to default on their debt obligations. This, in turn lead to a situation of default by the Thai financial institutions on their dollar denominated debt obligations. Owing to this situation, the foreign investors fled the Thai stock market selling their position and converting them into US dollar. The Thai baht which has been pegged with US dollar for the past 13 years at an exchange rate of $1 = Bt 25, but the prevailing situation of increased demand for dollar and thus the increased supply of Thai baht pushed down the dollar/baht exchange rate. Initially the Thai government tried to defend the peg by injecting money, but that proved to be a futile effort which ended up with the depletion of the government’s foreign exchange reserve. After this attempt, the baht was allowed to float freely against dollar which brought the exchange rate down to $1 = Bt 55 by January 1998.

“The 55 percent decline in the value of the baht against the dollar doubled the amount of baht required to serve the dollar denominated debt commitments taken on by the Thai financial institutions and businesses. This increased the probability of corporate bankruptcies and further pushed down the battered Thai stock market. The Thailand Stock market index ultimately declined from 787 in January 1997 to a low of 337 in December 1997, on top of a 45 percent decline in 1996” (Hill & Hernandez- Requejo 2011, p. 392)

Finally the Thai government had to seek the help of the IMF to stabilize the financial turmoil. The IMF agreed to provide the Thai government with $17.2 billion bailout loan but the conditions for the same were restrictive. These included- increased taxation, cutting down of public spending, privatization of several state owned institutions, raising interest rates and also closing down of liquid financial institutions. Adhering to these conditions imposed by IMF, the Thai government shut 56 financial institutions laying off 16,000 people.

The crisis had a ripple effect and the wave of the same soon hit the other Asian countries. One after the other, in a matter of a week, the Malaysian ringgit, Indonesian rupiah and Singaporean dollar were all marked sharply lower leading to a foreign exchange reserve down to $28 billion. This lead to the third major currency crisis of the 1990s after the crises of European Monetary System (EMS) of 1992 and Mexican peso in 1994-95. “The Asian crisis however turned out to be far more serious than its two predecessors in terms of the extent of contagion and the severity of resultant economic and social costs” (Eun, Resnick & Sabherwal 2012, p. 77) In fact the crisis led to a unprecedentedly deep, widespread and a long lasting recession in the East Asian region which has enjoyed rapid economic growth in the previous decades.

3.3.2.3. Recovery from the Crisis

To everyone’s surprise, the Thai economy recovered quickly from the 1997-98 Asian Financial Crisis, and the economy took off again with growth averaging about 5% per year in the period between 2002-2007. Poverty, which had reached its peak of 21% owing to the financial crisis, has been reduced to 8% in 2009. This can be attributed to the sensible economic policies of the government. However in 2009- 2010, Thailand’s economic growth slowed down owing to the global economic downturn and its own political instability which stalled infrastructure mega projects, eroded investors as well as consumer confidence. Thailand’s economy is basically an export oriented economy with export accounting for more than two thirds of the economy. After the crisis, Thailand Balance of Trade recorded an all time high of US $ 3537.0 million in February 2009 owing to the growth of export sector.

Graph 1: Thailand’s GDP growth rate from 2009 – 2011

(Source: World Wide Web Document, Official homepage of Trading Economics, http://www.tradingeconomics.com/thailand/gdp-growth , accessed on 6th Nov 2012)

Graph 2: Annual GDP Growth rate of Thailand from 1998 to 2011

(Source: World Wide Web Document, Official homepage of Trading Economics, http://www.tradingeconomics.com/thailand/gdp-growth-annual , accessed on 6th November 2012)

3.3.2.4. Present Scenario of Thai Economy

“The World Bank has upgraded Thailand’s income categorization from a lower-middle income economy to an upper-middle income economy in July 2011. This is due to Thailand’s progress in social and economic development despite facing a number of financial/economic and political challenges” (World Wide Web Document: Official homepage: The World Bank, Thailand Overview, http://www.worldbank.org/en/country/thailand/overview , accessed on 7th Nov 2012)

This statement by World Bank aptly explains the growth and recognition of Thailand and its economy in the global scenario. Today, Thailand is Southeast Asia’s second largest economy with a GDP of US $ 345.649 billion in 2011. The characteristic features of the Thai economy are:

 Thailand is being characterized as a free-market economy with a strong domestic market and a growing middle class with the private sector being the main engine of growth.  The Kingdom of Thailand is an emerging economy which is heavily export- dependent, with exports accounting for more than two third of the GDP (more than 70%).

 The other two dominant sectors of Thai economy are the industrial sector which accounts for 40% of the total GDP and the growing service sector which accounts for 50% of the total GDP.  Traditionally an agrarian society and historically one of the Worlds few net food exporters, especially rice which started in the 14th century itself with the rise of the Ayutthaya Kingdom, today the agricultural sector of Thailand accounts for approximately 9% of the country’s GDP.  Thailand is the world’s largest exporter of cassava, 2nd largest exporter of gypsum, a leading exporter of rice and a major exporter of shrimp. In addition to this, industrial and high end technology products such as; integrated circuits and parts, electrical appliances and vehicles are also leading Thailand’s strong growth in exports. Thailand’s export partners include ASEAN, European Union, US, Japan and China.  In the Southeast Asian region Thailand has been a leader in terms of trade liberalization and facilitation with the rest of the economies of the world, starting with its Asian neighbours. Being the founding member of ASEAN, Thailand is a key player of the association, enjoying a strategic location that provides easy access to the large market of nearly 600 million people and which is expected to gain even more strength with the ASEAN vision of One Community through the ASEAN Economic Community (AEC) that is to be materialized by 2015 making it a single community of connectivity, a single market and production base.  Owing to its strategic location both by sea and road and of course air providing the ease of access to the two most important and biggest economies of the world, India and China and as well as East Asian giants like Japan and Korea takes the huge consumer market into bigger proportions.  The friendly relation of Thailand with foreign countries and the various Free Trade Agreements (FTAs) as a member of the ASEAN, further opens up its trade access to markets both inside and outside the region.  Thailand is known for its open, free and business friendly market economy with sensible macro-economic policies. Of late the country has been streamlining its laws and regulations, improving its infrastructure, enlarging its pool of the quality workforce and promoting research and development.  Thailand is one of the favourite destinations of the foreign investors looking for business opportunities and is being able to attract on an average US $ 10 billion of FDI every year.

3.3.2.5. Thai Economy at a glance (2011- 2012 data)

Table 1: Economic Indicators of Thailand

Sl No Economic Indicators Amount Data as on (In US $ and %) 1. GDP 345.649 billion 2011 2. GDP Growth Rate 1.5 % 2011 3. Export 228.835 billion 2011 4. Import 228.490 billion 2011 5. Inflation 3.8 % 2011 6. Unemployment 0.7 % 2011 7. Balance of Trade 1153 million Sep 2012 8. Current Account (deficit) 1516 million April 2012 9. Foreign Exchange Reserve 178 billion Aug 2012

(Source: world Wide Web Document: official website of Trading Economics, Thailand, http://www.tradingeconomics.com/thailand/indicators , accessed on 6th Nov 2012)

3.3.3. Thailand: Social

“Thailand’s historical narrative could locate the nation’s origin in the thirteenth century by virtue of the secular continuity of the two institutions – the monarchy and the Buddhist monastic order- upon which the third pillar of the state’s symbolic trinity- the nation itself is predicted” (Peleggi Maurizio 2007, p. 8)

The above lines describe the two main pillars of the Thai society – the Monarchy and Buddhism. Both are known as the binding and the most valued aspect of Thai society and the Thai identity. Monarchy in Thailand though symbolic in nature when it comes to power, but the command and the respect that it holds among the Thai people is nothing less than a phenomena in itself. Today, it serves as a guiding light and unifying force for the country at large and a focal point that brings together Thai people from all backgrounds and shades of life and political thought and provides them with an intense awareness of being Thai. The second aspect is Buddhism, more particularly the Theravada School of Buddhism, for which Thailand is known for. As a matter of fact, about 95% of the Thai population are Buddhist and the country is known for being one of the Buddhist strong holds. A country known for being a Buddhist country by heart and by soul, where the King, the Head of the state is still constitutionally stipulated to be a follower of Buddhism and a guardian of the faith, a country where Buddhism still exists as a living force.

3.3.3.1. Background of the Thai society

The ancient Thai society actually dates back to some 40,000 years, when first permanent settlement in Thailand began. “It was the Chao Phraya River valley in Western Thailand that became the nourishing ground of Thai civilization and history” (Mishra, Patit Paban 2010, p.1). The first kingdoms that arose in Thailand were strongly influenced by Buddhism and Hinduism. The first Thai kingdom was the Mon Kingdom of Dvaravati, which dates back to the sixth century C.E. In fact Thailand was under several Kingdoms like the Funan, the Chenla and Sri Vijaya Kingdoms. Moreover the neighbouring Khmers also established its authority in central Thailand.

It was in 1238, that the Thais declared themselves as independent after challenging the Khmer suzerainty and the first Thai state was set up under Sri Indraditya which they call the Sukhothai. In the middle of the fourteenth century, the Thai political power shifted from the Chao Phraya Basin to further South to Ayutthaya with the establishment of the new kingdom in central Thailand. Thus the Ayutthaya Kingdom under King Ramathibodi I was formed here. It was after more than 400 years later in 1776, that the Kingdom of Ayutthaya was brought down by the Burmese invasion. However, General Taksin managed to reunite the battered Thai Kingdom with Thonburi as its capital and declared himself as the King under the name of King Taksin the Great. But soon, he pronounced himself as a monk and ventured into the forest and was never seen again. After this incident, his General Chakri, succeeded him and become the King with the name Rama I and thus, the predecessors of the modern Thai Monarchy was established in 1782. By far the Chakri Kingdom is known to be the most successful Kingdom of Thailand with Bangkok as its capital and the present King of Thailand, His Majesty King Bhumibol Adulyadej is the ninth King of the Chakri dynasty.

Though in 1932, absolute Monarchy was abolished and Thailand was made a Constitutional Monarchy in the line of the West, and the King is symbolocally the Head of the State, who discharge his duties in accordance with the country’s constitution and remains above the partisan politics, still commands a large part of the moral authority among the Thai people by means of his contribution to the development and well-being of the Kingdom and its people.

3.3.3.2. Present day Thai society

Today, the modern Thai society is a reminiscent of its glorious past and the fine balance of modernity and tradition. “Thai culture took form out of the unique blend of Indian customs and indigenous elements involving cultural interaction with India rather than transplantation of Indian culture” (idem). In fact Buddhism, which is the most dominant factor of Thai culture, society and religion came from India and flourished here. Ethnically Thailand is not a purely homogeneous country. The Thai society consists of different ethnic groups. Among them the Thai ethnic group consists about 80% of the total population of Thailand, which can be further sub divided into Khon Thai, consisting 33%, the Isan Lao or the Northern Thai consisting of 34% and the Southern Thai which consists of 14% of the total Thai ethnic group. After the Thais comes the Chinese, which is the largest minority group consisting of

14% of the total population of Thailand. The rest of the population belongs to different other ethnic groups like the Malays, Burmese, Indians and also refugees from Indochinese countries. Buddhism is the dominant religion consisting of the 95% of the total population. Followers of Islam is the second largest religious group which accounts for 4%, the rest 1% consists of the followers of Hinduism, Christianity and other faiths.

Today’s Thai society is an amalgamation of all these ethnic groups living in harmony, either social or religious with each other. An interesting aspect of the Thai society at large is while not giving up their culture and language, a sizeable number of minorities have adopted Thai names and speak the Thai language, making it even far more difficult to determine the ethnic characteristic of the individuals from their names alone. The Thai society which was traditionally and essentially based on agriculture with 80% of its population living in the villages growing rice and other crops, today is advancing towards a society where modernization and globalization is accepted and in fact has considerable effects in changing the lives of the traditional people of Thailand. An important factor about Thai society is that it has never been de cultured by the imposition of foreign values. It is because; Thailand has never been formally colonized by any western power even during the height and might of the European colonialism of Asia.

“The Thai people have been quite successful in preserving and protecting their culture, religion, traditions and other values of their national heritage. This then is the foundation of their pride and the source of unique aspects of Thai nationalism, which is more culturally than ethnically based. And whatever foreign element has crept into the Thai society were consciously introduced by its modernizing monarchs over the decades and then accepted by its people. In view of this, it is difficult to overlook the emotional ties that the Thais have with the Europeans, Americans and Australians, and during the last decade with Japanese and others, perceiving them as no threat to their cultural identity” (Kapur, Alexandra R. 1998, p. 45)

The Thai society is very conscious of their position within a hierarchy, be it family, place of work or business. Another aspect of the Thai society is, they strongly believe in the concept of saving face. That is to say, they generally avoid confrontation and try not to embarrass either themselves or the others. The concept of ‘Sà-nùk’ which literally means ‘fun’ is often regarded as a necessary element of everything worth doing. Thais believe that everything, whether it be work or study, should have an element of Sà-nùk, otherwise everything becomes mundane. However, keeping its traditional values intact, today’s Thai society is continuously progressing towards a mother, wealthy society owing to the increasing contact with the outside world. The Thai people are well known for being friendly, generous and tolerant. The Thai society is open to learning and doesn’t believe in discrimination of any kind.

“Underpinned by eight centuries of chronicled history that is rich in tradition going back beyond that, Thai cultural heritage is a blend of customs, from the Siamese royal court and historical tributary principalities to distinctive regional folklore. Thai culture and society has also been influenced by religious tenets, largely inspired by Theravada Buddhism, but also incorporating a great deal of Indian, Chinese, Khmer and other traditions from the rest of the Southeast Asia and beyond” (World Wide Web Document: Official Homepage of Experience Thailand, Thailand Culture and Society, http://www.thailandtoday.org/culture-and- society/overview , accessed on 7th Nov 2012)

The Thai society has been largely open to the outside world and thus has adopted everything that it has perceived as beneficial for its growth and development through ages and the Thai society is trying to make a fine balance between its glorious past and the rapid pace of modernization in all aspects. Today, Thailand is a medley of the ethnic, linguistic, religious and cultural nuances of all these cultures which has been finely blended together for centuries to be evolved into its form.

3.3.4. Thailand: Technological

Thailand can be rightfully referred to as ‘phoenix’ because the country recovered and made continuous developments in spite of all the political, economical as well as the natural shocks that it has received. The political crisis which was ever present since 1932, when the country became a Constitutional Monarchy, the economic and financial crisis of 1997-98 which is regarded as one of the major crisis of the world having a ripple effect in almost all the Asian countries and outside, and also the plight of the nature in the form of Tsunami in 2004 – Thailand has witnessed everything but is still standing strong in spite of all these it has continuously made progress toward a modern wealthy society. Thailand continued to make improvements in its infrastructure with ambitious plans to expand both, the metro and the sky train, the long-awaited airport link, the road links to even the distant parts of the country has also improved, and there is an abundance of cheap domestic flights for one and all. Even the continuous political crisis have also done little to alter what makes the country arguably the most diverse and rewarding tourist destination of Southeast Asia.

3.3.4.1. Background

If we look at the history, we will find that the zest for technology has long been present in Thai culture and society and this is evident from the architectural excellence of the temples and residences of Thailand. The most stinking feature of Thailand’s architectural heritage and evidence of the technological excellence are the Buddhist temples, called ‘Wat’, which dazzle in the tropical sun with an array of colours and soaring rooflines. Even the traditional residential architecture of the Thais reflects a harmonious blend of function and style with

adaptation to the weather, the family and the artistic sensibility. In fact the Thai traditional culture has a vast reservoir of knowledge and technological knowhow. It can be dated back to the pre-historic Ban Chiang people who achieved one of the world’s earliest bronze civilizations some six thousand years ago. In fact the skills in the indigenous technologies that they used is reflected today in the arts and crafts, the houses, the objects of daily use, the impressive know-how in the construction of temples, the Buddha images and other religious objects.

“In contrast to indigenous science derived from religious teachings, technology was accumulated by the Thai by practical experience, refined and passed on in areas like traditional medicine, horticulture and food preservation. In these stocks of knowledge lie the potential for drugs of use to man today and new fermentative microorganisms yet to be exploited by modern science” (World Wide Web Document: The Kingdom in Modern Light: http://www.nectec.or.th/users/htk/SciAm/03NSTDA.html , accessed on 8th Nov 2012)

Along with the traditional knowledge, the Thais embraced the modern Western science enthusiastically when it arrived. This transformation can be dated back to the reign of King Rama IV, who is known to be the Father of Thai Science, who correctly predicted the time of the total solar eclipse in the south of Thailand.

3.3.4.2. Thailand today

The present day technological excellence of Thailand can be seen in the advancement in the fields of infrastructure, information and telecommunication, science and technology and the energy. Today’s Thailand is facing a series of infrastructural challenges and transformation owing to the ardent need to catch up with the economic development. Most of the infrastructure development of Thailand has been in accordance with the demand. Availability and accessibility appears no longer a challenge.

Highlights:

 The total road network coverage has reached 98.5% with a total of 61,586 km of roadways. The electricity has reached 99% of the population. Bangkok the capital city is beaming with skylines constructed with the use of high end technology.  The total coverage of railways is 4,071 km.  Waterways consist of 4000 km.  Thailand has total 6 ports and harbours in Bangkok, laem Chabang, Map Ta Phut Port, Songkhla, Phuket, Sriracha and Siam Sea Port.  It has a total of 65 airports in all over the country and 3 heliports.  In the telecommunication sector, the mobile phone penetration in Thailand according to the recent data of 2012 data is 113%, with 79 million subscribers over a population of over 66 million a steady increase from the earlier 82% in early 2008.  The demand for internet and internet related services has also increased considerably which is evident from the expanding volume of international bandwidth.

 The broadband internet market in Thailand also showed a strong growth trend with an annual rate of around 25% in 2011. However, the fixed broadband penetration is still low with 6% in the early 2012.  Also, the fixed-line market is not showing any sign of revival, which is showing a negative growth in 2011.  There was an increasing demand for Smartphone in 2011 and 2012 owing to the change in the user behaviour, especially with the increasing use of mobile data service.

(World Wide Web Documents: Infrastructure Development in Thailand, http://www.eria.org/publications/research_project_reports/images/pdf/PDF%20No.2/No.2- part2-9.Thailand.pdf , accessed on 8th Nov 2012 and Thailand: Telecom, Mobile and Broadband Forecast, http://www.budde.com.au/Research/Thailand-Telecoms-Mobile- Broadband-and-Forecasts.html , accessed on 8th Nov 2012)

In fact the 10th National Development Plan has given special emphasis to infrastructure development. The three areas that have been particularly identified are:

1. Development of infrastructure and logistics services to support production structural adjustment. This aims to support the competitiveness and enhance efficiency of the private sector both in production and service sectors. It includes: a) Development of up-to-date and efficient transport, logistics services and telecommunication systems with the development of both domestic and international logistics networks. Development of urban mass transit network and telecommunication networks, development of support transport modes and transport management which are energy efficient; particularly development of rail, waterways and delivery of energy through pipe lines. b) Transport efficient management of infrastructure under stakeholder’s participation. This includes, creation of stakeholder participation in infrastructure project development, emphasizing careful project studies on feasibility, environmental impacts, social impacts etc, to support public- private partnership in infrastructure investment, and to support demand management initiatives which aims to create awareness in efficient resource utilization. 2. Improved energy efficiency and expedition of alternative energy initiatives. The basic aim behind this is to reduce the energy importing costs. This includes: a) Find new energy sources, both domestic and international. b) Increase energy efficiency in transport, manufacturing and household sectors through incentives and law enforcements. c) Campaign for energy conservation and for alternative energy usage in every sector.

d) Research on alternative and renewable energy including new fuel and electricity generating technology. 3. A framework for fair distribution of benefits of infrastructure development. This gives particular emphasis to the rural areas in order to enhance access, to ensure sufficient provision and to be responsive to the demand for infrastructure.

(Source: World Wide Web Document: Overview of Thailand’s Infrastructure Development. Past and present: http://siteresources.worldbank.org/INTTHAILAND/Resources/333200- 1177475763598/3714275-1234408023295/5826366-1234408105311/chapter1-overview-of- thailand-infrastructure-development.pdf , accessed on 8th Nov 2012)

Thai government is particularly conscious about technological aspect of the country and the Ministry of Science and Technology of the Government of Thailand is particularly devoted to this. The Thai government has included Science and Technology in its five-year Economic and Social Development plans since the beginning of the 1980s. In fact the government wishes to strengthen its S&T base and believes that it will lead to economic value. Thailand’s policy measures include support of the interaction between scientific institutions and the private sector, the establishment of intermediary institutions and the private sector, the establishment of intermediary institutions such as incubators, the provision of better S&T networks and services, and the transfer and diffusion of technology. Presently the R&D budget of Thailand is contributed by both government and the private sector which is total 25 billion THB (0.25% of the GDP). This is a quite low as compared to other Southeast Asian neighbours. However during 1996 to 2007, Thailand has been able to double its gross expenditure on R&D as a percentage of its GDP. But Thailand is optimistic to further increase it R&D expenditure by the end of the 11th National Economic and Social Development Plan in 2016, to make it 100 billion THB, which is equal to 1% of its GDP.

The present Science and Technology Action Plan of Thailand (2004-13) mainly focuses on the development of a national innovation system and industrial clusters. The objective of this plan is to enhance Thailand’s capabilities in response to the rapid changes in the age of globalization and to increase the country’s long term competitiveness under the vision that ‘the Thai economy will be strong; the Thai knowledge-based society will be able to compete internationally; the Thai nation will be secure and Thai people will have a good quality of life’. Thus to ensure this, the present strategies of Thailand are:

1. The strength of human resources in science, technology and innovation. 2. The awareness raising on science, technology and innovation among youth and public and the development of a science knowledge society in Thailand. 3. The research and development of new innovations to enhance Science and Technology competitiveness and the strength of national innovation system. 4. The technology transfer and knowledge sharing to increase productivity commercially and for social services.

5. The capacity building of basic infrastructure in science, research funding system as well as the development of science policies and S&T management to be effective and up-to-date.

Along with these the Government has also introduced a broad range of new incentives such as the development of centres of excellence of international standards, the founding of science parks in the country as well as income tax deductions for R&D expenditure.

The main wing of the Government which is responsible and accountable for all this is the National Science and Technology Development Agency (NSTDA), which was established in 1991 and officially began operating in 1992. NSTDA is the amalgamation of the earlier three national technology centres: The National Centre for Genetic Engineering and Biotechnology (BIOTEC), the National Metal and Materials Technology Centre (MTEC) and the National Electronics and Computer Technology Centre (NECTEC). Moreover the government is also funding nine selected universities of Thailand under the project launched by the Higher Education Commission of the Ministry of Education named National Research Universities Project 2009 to build capacity of universities in Thailand to be world class universities. The motive behind this is to develop Thailand as the regional educational hub and to strengthen human resources in research and innovation to increase Thailand’s competitiveness at the global level.