When China joined the WTO in December 2001, its entry sparked jitters and a round of reassessments among Southeast Asian economies that were then just limping back to life after the devastating 1997 financial crisis.
Five years on, Vietnam's pending WTO entry has triggered a new rash of regional jitters, although certainly less pronounced this time around.
Vietnam is the rising star in ASEAN. It has boasted one of the world's fastest-moving economies in recent years following the classic ASEAN/Chinese success story of fueling growth on low-cost labor, export-oriented industrialization and foreign direct investment.
PHOTO: EPA
Entering the WTO will make Vietnam much more competitive when it comes to attracting investment away from ASEAN's former "little dragons" -- Indonesia, Malaysia, Singapore and Thailand.
And when its comes to attracting foreign investment, hype helps.
"For Thailand, it's not going to make it any easier," said Stefan Buerkle, head of business economics at the Thai-German Chamber of Commerce.
"Vietnam is a bit more sexy than Thailand, what with all the hype," he added.
Hype aside, Vietnam has made tremendous progress over the past decade in reducing its red tape, improving its business climate and generally putting out a more-welcoming welcome mat for investors.
With its entry into the WTO, the rest of the region will face stiffer competition for investment and trade, especially in labor-intensive industries such as footwear, garments and even electronics, adding to the pressure in these sectors are already coming under from low-cost giants China and India.
"The [electronics] sector is definitely being challenged from regional countries," said Ramya Subreameniem, economist with IDEAGlobal in Singapore.
Vietnam poses the prospect of more "hollowing out of computer peripherals," she said.
Singapore needs to continue concentrating on high-value products where it is doing well such as semiconductors, she noted.
Electronics factories produce nearly half of Singapore's non-oil domestic exports and account for 36 percent of the manufacturing sector.
Indonesia, where cheap labor continues to be a major selling point, can anticipate yet more competition from Vietnam as a WTO member, adding to the already stiff competition coming from low-cost China.
"If you're talking textiles and shoes, we're already threatened by China," acknowledged Chativ Basri, an economist at the University of Indonesia and sometimes advisor to Indonesian President Susilo Bambang Yudoyono.
Indonesia's once-prosperous shoe export industry, for instance, has been battered by slipping sales over the past five years after losing its competitive edge with China and up-and-coming Vietnam, while at the same time failing to move up the value-added chain.
MILESTONE: The foreign minister called the signing ‘a major step forward in US-Taiwan relations,’ while the Presidential Office said it was a symbol of the nations’ shared values US President Donald Trump on Tuesday signed into law the Taiwan Assurance Implementation Act, which requires the US Department of State to regularly review and update guidelines governing official US interactions with Taiwan. The new law is an amendment to the Taiwan Assurance Act of 2020 focused on reviewing guidelines on US interactions with Taiwan. Previously, the state department was required to conduct a one-time review of its guidance governing relations with Taiwan, but under the new bill, the agency must conduct a review “not less than every five years.” It must then submit an updated report based on its findings “not later
A trial run of the north concourse of Taiwan Taoyuan International Airport’s new Terminal 3 is to commence today, the Ministry of Transportation and Communications said yesterday. The eight additional boarding gates would allow for more aircraft parking spaces that are expected to boost the airport’s capacity by 5.8 million passengers annually, Deputy Minister of Transportation and Communications Lin Kuo-shian (林國顯) said. The concourse, designed by a team led by British architect Richard Rogers, provides a refreshing space, Lin said, adding that travelers would enjoy the tall and transparent design that allows sunshine to stream into the concourse through glass curtain walls. The
The Presidential Office today thanked the US for enacting the Taiwan Assurance Implementation Act, which requires the US Department of State to regularly review and update guidelines governing official US interactions with Taiwan. The new law, signed by US President Donald Trump yesterday, is an amendment to the Taiwan Assurance Act of 2020 focused on reviewing guidelines on US interactions with Taiwan. Previously, the department was required to conduct a one-time review of its guidance governing relations with Taiwan, but under the new bill, the agency must conduct such a review "not less than every five years." It must then submit an updated
STAYING ALERT: China this week deployed its largest maritime show of force to date in the region, prompting concern in Taipei and Tokyo, which Beijing has brushed off Deterring conflict over Taiwan is a priority, the White House said in its National Security Strategy published yesterday, which also called on Japan and South Korea to increase their defense spending to help protect the first island chain. Taiwan is strategically positioned between Northeast and Southeast Asia, and provides direct access to the second island chain, with one-third of global shipping passing through the South China Sea, the report said. Given the implications for the US economy, along with Taiwan’s dominance in semiconductors, “deterring a conflict over Taiwan, ideally by preserving military overmatch, is a priority,” it said. However, the strategy also reiterated
RSS