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Thaksin tries a delicate balancing act

May 11, 2001

Hong Kong – To all the bashers of globalisation, please take note. Even Communist China has declared that it will embrace globalisation as a fact of life. In today’s integrated world, you either have to be on the bandwagon or risk being left behind. If there is a middle route to this dilemma of having to join globalisation or closing your doors to the world (like Burma), then no one has really found it yet.

The speech of Jiang Zemin, the president of the People’s Republic of China, at the Fortune Global Forum, which ended yesterday, was hardhitting, taking globalisation by the horns.

“In today’s world, a country can hardly develop in isolation,” he declared. “The Chinese government will unswervingly implement the openingup policy. It will more vigorously promote alldirectional, multitiered and widerange opening up and take part in international economic cooperation and competition at a greater width and depth.”

Apart from expanding its foreign trade vigorously, Jiang emphasised that China will move to implement a strategy of diversifying markets on the strength of quality through science and technology. It will stick to the policy of making active, rational and effective use of foreign capital. “It will phase in the liberalisation of such service sectors as banking, insurance, telecom and trade, and promote the openingup in its MidWest,” Jiang added. “It will work hard on ecommerce, accelerate the process of informatisation and support enterprises in applying modern information network technology to international cooperation and exchanges.”

All the buzzwords that please the ears of the financial markets were there in Jiang’s speech, which was totally devoid of any socialist ideology. The Asian giant has not only awakened, but it is also taking big steps to become a big player in economic globalisation.

Thai Prime Minister Thaksin Shinawatra, who delivered his address on Wednesday, had an opportunity to match Jiang’s vision. He did so unapologetically. But as the leader of a smaller nation just reeling out of the financial crisis, Thaksin realised the limits he faced in driving his country. He could not go into overdrive as Jiang did, but opted for a lower gear to put Thailand’s house in order first. Yes, Thailand would continue to keep an opendoor policy and would not turn its back on globalisation. Yes, Thailand would be committed to all international obligations. Yes, Thailand would continue its reform efforts to overcome the crisis with resolve.

The message could not have been clearer. Yet his underlying intention was to air his social platform. “Eradication of poverty is a major socio-economic policy objective . . . A strong, stable social platform is imperative in generating investor confidence and a prerequisite for a conducive and desirable investment climate,” Thaksin said.

Ironically, Thaksin is more ideological than Jiang. Sometimes it is possible to be more Catholic than the Pope.

In a broader perspective, Thaksin called for Asian nations to integrate more and to cooperate more, particularly in technological development, to catch up with the West. In this regard, Jiang and Thaksin share the same view. During their bilateral talks on Wednesday, Jiang told Thaksin that Asia has always been left behind in the valueadded chain of production, with the West holding the edge in technology. In short, Asia has to sweat a lot to earn its meagre income. (Do you remember Paul Krugman’s “The Myth of Asian Growth”?)

Thaksin was flying home yesterday to face his constituency. Although he has received landslide support for the way he intends to run Thailand, he has yet to build up a consensus over globalisation. There are still a lot of antiglobalisation groups within the country. They view that the more Thailand opens up to the outside world, the more the poor majority of Thais will suffer. There is a point to their concern.

As Jiang pointed out, globalisation is a doubleedged sword. Those who make it in globalisation will enjoy foreign capital, foreign investment, technology and managerial skills. Those who flunk the test will be left behind in poverty and backwardness.

Thailand has already been punished by globalisation as evidenced by the 1997 crisis. Since it failed to maintain a macroeconomic balance and a sustainable foreign exchange regime, the global financial markets forced it to change. The result was brutal, with economic dislocation, a crippled banking system and a currency crisis. Now, after the knockout, Thailand is struggling to stand back up on its feet. Clearly, it wants to be part of the big league again. There is no turning back. So for Thaksin, building up the consensus for globalisation while strengthening the social platform is a big challenge for this generation and beyond.

Thanong Khanthong






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