Benefits of AEC for Thailand

by

Chanyut Yuvacharuksul

(Jean) G.1107
Benefits of AEC for Thailand Chanyut Yuvacharuskul (Jean) G.1107

Benefits of AEC for Thailand

Introduction

Humankind has long employed the strategy of cooperation to achieve many things they

cannot do by themselves. Similarly, AEC was created as an economic union in the South-East

Asia region that strives to improve the flow of economy of the participating countries. This

economic community has been in effect since 31 December 2015, and, according to the ASEAN

website, aims to fulfill its 4 main goals, which are to have a single market with no tariffs across

countries, a competitive economic area, a fair economic development, and an economy

integrated to the global one (What AEC is and how it works, n.d.). AEC is important to both

the participating and the surrounding countries because it affects the way people trade goods and

services over countries. Every country in the said community can gain an economic advantage

over others, but in some countries like Thailand, people may suspect that they are not developed

enough to be ready for it. However, many have said otherwise, because there are many evidences

pointing to the fact that Thailand is ready. This means that staying in AEC is beneficial to

Thailand, not only in economics but in other ways too.

Free Trade

One of the advantages of staying in the ASEAN Economic Community is the ability to

trade freely with other countries without tariffs, which is a good advantage for Thailand from an

economic standpoint. In other words, less expense to trade goods and products across the

national border is good for Thailands economy. Many evidences can be found to support this

argument, and one of which is the fact The Nation, an influential newspaper on Thailand, reports

expected improvements on Thailands income from the opening of AEC, which is confirmed in

2
Benefits of AEC for Thailand Chanyut Yuvacharuskul (Jean) G.1107

the later years by tradingeconomics report, a report from a reference site for economic data

(Pratruangkrai, 2014; Thailand Average Monthly Wages, n.d.). Specifically, the study from The

Nation found out that government and household income would increase by 0.96% and 0.98%

after the implementation of free trade, respectively. By this statistics, the premise that ability to

free trade gained from the community is beneficial to Thailand is confirmed, as in Thailand

benefited by getting more income. In addition, it can be seen that the cancellation of tariffs

benefits producers, which can be proven by looking at the exports and GDP of Thailand, given

by Thailands Ministry of Commerce and tradingeconomics (Value of exports, imports and

balance of trade for Thailand, n.d.; Husna, 2016). According to them, exports and GDP

increased by 4.4% and 3.2% respectively after the opening of AEC. This means that there is

indeed a correlation between AEC and increase in exports and GDP, which is good for the

economy. The service sector will also benefit from the economic community according to AFIC,

the ASEAN Federation Industries Council (ASEAN Economic Community, n.d.). To elaborate,

the free trade agreement from the community will enhance strong competition on services which

will improve the productivity of the service sector of Thailand, thus improving Thai economy.

According to AFIC, this means that the productivity of service sector, which is one of the aspects

of the wellbeing of economy, is improved by staying in the AEC and maintaining the free

market. All of these evidences point to the fact that the ability to trade freely with other countries

by AEC is indeed beneficial to Thailand's economy, among many other things.

Promotes Relationship

The other benefit gained from AEC is that the community promotes relationship

between countries so that the benefit of increased trades, investments and exports will a long-

term one. The relationship is improved by advocating international communication by, for

3
Benefits of AEC for Thailand Chanyut Yuvacharuskul (Jean) G.1107

example, transferring labors, hosting tourist attractions, and establishing a single market. One

example of an improved relationship between ASEAN countries after AEC is that Myanmars

state counselor, Suu Kyi, visited Thailand to affirm and improve the relationship between

Myanmar and Thailand in order to strengthen South-East Asian nation relationships. According

to a research analyst Qingzhen Chen (2016), Suu Kyis visit prepares increased investment and

alliance for both countries. In other words, the existence of AEC urged the Myanmar state

counselor to strengthen the relationship between Thailand and Myanmar. Another example of an

improved relationship between countries after the opening of AEC can be seen in the interview

of Mrs. Ureerat Ratanaprukse, a Thai consul general in Ho Chi Minh (Vietnam-Thailand

Making Use of Strategic Locations, 2016). The interviewer reported that Mrs. Ureerat evaluated

that the two-way trade and investment between Thailand and Vietnam will further be

strengthened, and will also benefit the neighbors. This means that the single market agreement is

useful to Thailand and its relationship with other countries. Furthermore, Thailand and China,

which according to OEC, an engine for visualizing international trade data, is Thailands top

export destination, will also become more connected, as claimed by The Nation (Simoes, Landry,

Hidalgo, & Teng., n.d.; Srimalee, 2015). Specifically, Thailand and China will become more

invested in each others trade and services and will exhibit a close relationship as described by

the ASEAN-China agreement to trade freely. This means that ASEANs economic community

allowed China to direct a considerable amount of its investment to ASEAN, which includes

Thailand. By now, one should be able to see that AEC promotes relationship between countries

in the long run, which in turn supports the point that AEC is beneficial to Thailand.

4
Benefits of AEC for Thailand Chanyut Yuvacharuskul (Jean) G.1107

Readiness for AEC

However, there are a considerable amount of people who suspect that Thailand might not

be ready for the ASEAN Economic Community. This can counter the fact that staying in the

economic community is beneficial to Thailand, because if Thailand was not ready, then Thailand

cannot prosper from AEC. One instance of suspicions of Thailands readiness can be seen in the

report of Kavi Chongkittavorn (2014), a journalist working for The Nation, saying that the

viability of Thailand's integration to AEC is dubious. He asserted that AEC might just remain as

an inspiration for Thailand, due to the fact that the country needs to improve on the political

situation and the population's understanding of AEC. Basically, he is saying that being in the

AEC might not be in the realm of possibility. On the other hand, there are many evidences that

point to the fact that Thailand is more than ready to reap in the benefits of AEC. One of the

examples of such evidence can be seen in The World Bank's report on Thailand's economy

(Countries / Thailand / Overview, 2016). According to The World Bank, Thailand has been an

upper-middle income country since 2011, implying that Thailand is well-suited enough to

withstand economic influence from other countries. This means that, by The World Bank's data,

Thailand is very ready for the implementation of AEC. In fact, Prayut Chan-o-cha has also

affirmed a general stance of Thailand's economy (Thailand more than ready for AEC, 2015).

Prayut says that Thailand is more than ready for AEC, and that Thailand is better prepared than

other participating countries. As stated, the Prime Minister of Thailand showed his confidence

for the readiness of Thailand for AEC. Overall, it seems like there is sufficient evidence, such as

The World Banks summary of Thailands economy and Prayut Chan-o-chas confirmation on the

readiness of AEC, to counter the opinion that Thailand is not ready for AEC, which in turn

supports the fact that Thailand can benefit from AEC.

5
Benefits of AEC for Thailand Chanyut Yuvacharuskul (Jean) G.1107

Conclusion

Once again, staying in AEC is beneficial to Thailand in various ways. The ability to trade

freely with other countries without tariffs, gained from being in AEC, is a good advantage for

Thailand, with the addition of the fact that AEC promotes relationship between countries, and

that contrary to some beliefs, Thailand is ready to reap in the benefits of AEC. Reasons above are

supported by various evidences: multiple sources including The Nation and Thailand's Ministry

of Commerce evaluates that profit is gained after joining AEC; Suu Kyi, among many people,

confirmed that relationship between countries is improved; and Prayut Chan-o-cha along with

The World Bank guarantees aptness of Thailand for AEC. Also, take note that the topic of AEC's

valuation for Thailand is of great importance because this can allow entrepreneurs to receive

benefits from AEC and at the very least, informs you what Thailand had become and will

continue to be a part of.

6
Benefits of AEC for Thailand Chanyut Yuvacharuskul (Jean) G.1107

References

ASEAN Economic Community. (n.d.). Retrieved February 7, 2017 from

http://www.thaifurnitureclub.or.th/EN/En-AEC.php

Chen Q. (2016). What Suu Kyis visit to Thailand means for ASEAN relations. Retrieved

February 10, 2017 from http://globalriskinsights.com/2016/06/suu-kyi-visit-thailand-

asean-relations/

Chongkittavorn K. (2014). Is Thailand ready for Asean Economic Community? Retrieved

February 17, 2017 from http://www.nationmultimedia.com/news/opinion/kavi/30224073

Countries / Thailand / Overview. (2016). Retrieved February 17, 2017 from

http://www.worldbank.org/en/country/thailand/overview

Husna R. (2016). Thailand GDP Growth Strongest in 3 Years. Retrieved February 7, 2017 from

http://www.tradingeconomics.com/thailand/wages

Pratruangkrai P. (2014). AEC integration to boost Thai export growth, study finds. Retrieved

February 7, 2017 from

http://www.nationmultimedia.com/news/business/EconomyAndTourism/30241568

Simoes A., Landry D., Hidalgo C., & Teng M. (n.d.). Thailand. Retrieved February 7, 2017 from

http://atlas.media.mit.edu/en/profile/country/tha/

Srimalee S. (2015). China's influence over Thailand and Asean to keep growing, experts say.

Retrieved February 10, 2017 from

http://www.nationmultimedia.com/news/business/EconomyAndTourism/30263302

7
Benefits of AEC for Thailand Chanyut Yuvacharuskul (Jean) G.1107

Thailand Average Monthly Wages. (n.d.). Retrieved February 7, 2017 from

http://www.tradingeconomics.com/thailand/wages

Thailand more than ready for AEC. (2015). Retrieved February 17, 2017 from

http://www.nationmultimedia.com/news/national/aec/30259706

Value of exports, imports and balance of trade for Thailand [Translated]. (n.d.). Retrieved

February 7, 2017 from http://www.ops3.moc.go.th/thtrade/monthly_ex/

Vietnam-Thailand Making Use of Strategic Locations. (2016). Retrieved February 10, 2017 from

http://vccinews.com/news_detail.asp?news_id=33784&parent_id=0&cate_id=16

What AEC is and how it works. (n.d.). Retrieved February 1, 2017 from

http://investasean.asean.org/index.php/page/view/asean-economic-

community/view/670/newsid/755/about-aec.html