Q: What will be the key emerging issues related to the socio-economic integration of Southeast Asia over the next decade?

A: Regional development is a major policy issue in East and Southeast Asia. From China’s Yangtze River Delta and Pearl River Delta, South Korea’s Seoul Metropolitan Area, and Taiwan’s Taipei–Hsinchu region, to Malaysia’s Penang and Selangor states and Thailand’s Greater Bangkok region, rapid industrialization and economic development are taking place at historically unprecedented rates on the back of high export propensities and, more recently, massive growth in domestic markets.

The role of state institutions during the past fifteen years has been particularly important in enhancing human resources and physical infrastructure in industrial districts and growth regions. Regional development can be viewed as a trans-regional dynamic process of growth, change and mobility, where multiple actors operate at a variety of geographical scales. The regional outcomes of this interaction are likely to be diverse and variable.

I think one key issue is related to increasing cross-border mobility of factor flows, e.g. capital and people. Borders within Southeast Asia remain quite visible and tightly controlled. A gradual loosening of this control will represent a major challenge to regional integration.

Another major issue will be the vast inequality within and among Southeast Asian countries. As this inequality widens in relation to globalization, I think ASEAN and the member states will find it very challenging to manage integration processes that may indeed worsen such inequality.

Q: Foreign Direct Investment (FDI) from multinational corporations (MNCs) in Southeast Asia has always been the most important bloodline for the region’s economic development and poverty reduction. With the emergence of Chinese economic power, how will investment in the region be shaped by China, particularly in transportation, energy, and banking?

A: Southeast Asia’s development trajectory is not a straightforward pattern of the ‘new international division of labor’ or ‘a global supply chain’. It reflects a much more complicated pattern of strategic coupling that has occurred over the past fifteen years when manufacturing firms in the Asian newly industrialized economies began to emerge as strategic partners for global lead firms. This is particularly the case in China’s Yangtze River Delta and the Pearl River Delta. Export-oriented production platforms have been well established to serve global lead firms and their Asian strategic partners – mostly from Hong Kong, Singapore, Taiwan, and recently Vietnam – in such diverse industries as clothing, footwear, consumer products, electronics, and ICT.

For example, in the electronics industry, Malaysia’s Penang has gained a strong foothold in the development of integrated computers and semiconductors manufacturing. Together with Singapore and Thailand, Penang is an integral part of the Southeast Asian ‘Golden Triangle’ that accounts for a massive majority of global hard disk drive (HDD) production. In Thailand’s Greater Bangkok region (that includes Rayong and Samut Prakarn provinces along the eastern seaboard), global lead firms in two contrasting Gross National Product (GNPs) have found favorable production platforms for their regional and global markets: automobile and HDD industries. In both industries, the Thai regions have successfully coupled with demand by global lead firms for low-cost and reliable production platforms.

The Thai regions are also intimately woven into the complex regional production networks of these global lead firms and their major suppliers based in Singapore. These show how production platforms in Southeast Asian regions can be enrolled into the international partnership of another regional state (Singapore).

I believe greater mainland Chinese investment in ASEAN will provide more opportunities for economic development and job creation. In the manufacturing sector, Chinese FDI will likely enhance the industrial linkages between ASEAN firms and customers in China. It will strengthen trade relationships between ASEAN and China.

In the resource sector, however, Chinese FDI may lead to significant resource depletion and associated environmental problems. It needs to be configured and regulated carefully in order to avoid these wider issues.

Q: As an economic geographer, what is your scenario on the future of forthcoming ASEAN Economic Community (AEC) with special reference to poverty reduction and human resource mobilization for the next decade?

A: In the Southeast Asian context, the challenge of economic integration is much more complicated as local firms and authorities remain relatively weak in their organizational and technological capabilities. And yet, these regions face tremendous pressure from cost-based competition.

I think the AEC is clearly a good thing to have because it is likely to promote intra-ASEAN cooperation through cross-border flows of capital and people. This enhanced mobility in factor movement within ASEAN countries can create a greater sense of regional identity, as people become more aware of the political, social-cultural and economic environments in other ASEAN countries.

Whatever the chosen development trajectory and policy regime, one important lesson is that they are unlikely to be effective and sustainable without a fuller appreciation of the trans-regional dynamics in which the region is located. This is the key contribution of thinking of regionalization as necessarily situated in the competitive dynamics of the AEC.