Thailand will prosper under the ASEAN Economic Community only if it has a proper strategic plan for dealing with it, as many sectors , notably agriculture and SMEs , are not ready for liberalisation, officials and experts say (The Nation, Thailand).

ASEAN, the 10-member regional grouping, dreams of becoming a single market and eventually a European-style economic community by 2015.

Thailand and five other founding members of the Association of Southeast Asian Nations (ASEAN) have already cut their import duties to zero on January 1 under the ASEAN Free Trade Agreement (Afta), the trade-opening blueprint initiated in the early 1990s to facilitate the free flow of goods within the region.

ASEAN has embraced a vision since the early 1990s of transforming the politics-driven regional grouping into a community like the European model of integration. The leaders of the grouping aim to take advantage of the 580 million population in the region to boost economies of scale to make it more competitive by creating a single market and production base.

In theory, Thailand should gain from the enlarged market of nearly 600 million consumers, as the country would have a better chance of expanding trade and investment, according to Assistant Professor Aat Pisanwanich, director of the University of the Thai Chamber of Commerce's Centre of International Trade Studies.

"Not only Thailand, but the nine other members of ASEAN also have the same opportunities, so the only way to get more benefit for Thailand is to increase competitiveness," he said.

Only those that can cut costs and improve the quality of their goods and services could get an advantage, he said.

Afta was created amid major concerns and debate that trade liberalisation would hurt domestic producers, notably in agriculture, which is the most sensitive sector for many ASEAN countries.

Although Thailand was then the leading country in pushing for Afta, people in the country have expressed concerns over the past years that the free-trade agreement will threaten the incomes of people in farming and related sectors. These sectors account for 38 per cent of the country's labour force.

The Finance Ministry's Fiscal Policy Office (FPO) reported that the tariff cut under Afta did not deal a drastic blow to agriculture, as had been widely expected, because the Thai import tax was already low. On the contrary, Thailand would come out ahead under the zero-duty scheme, as the country ships a lot of farm products to five other ASEAN countries, it said.

Thailand would profit from exports of rice, rubber, sugar and tapioca to other ASEAN countries, it said.

Thailand bought only US 941.3 million worth of farm products from five other ASEAN countries last year, or the equivalent of only one-third of the farm items it exported to those countries, the ministry said.

However, not all agricultural products will be helped by the free trade scheme since many other ASEAN members can do better with some items while Thai producers of many items are losing their price competitiveness. Some farm products such as rice, coffee and palm oil are facing fierce competition from other ASEAN members, economist Aat said.

Vietnam is a major rival for the global rice market while Malaysia and Indonesia are strong in palm oil, he said.

Thailand was losing rice orders from Malaysia and the Philippines to Vietnam, he said.

Thailand is now keen on rubber and tapioca as the country can do better than other members in terms of production and pricing, he said.

Thailand's industries are a mixed bag under the scheme, as some are thriving, while others are fading out, he said.

Automobiles, rubber-related products and textiles hold a bright future for Thailand, as they are competitive in the ASEAN market, he said.

Jewellery, chemical products and electric appliances are not so lucky. These products still bring in income for the country but the trend is not encouraging and they badly need more development to make them more saleable in the market, he said.

Ceramics, seafood processing and many agriculture-related producers could be regarded as belonging to sunset (declining) industries in Thailand, he said.

"We are not doing well in fishery sectors compared to Indonesia and Malaysia, which enjoy a good supply of raw materials from their seas," he said. "Thai waters are running out of fishery resources and our costs are rising above the competition."

Thailand needs to work harder to improve the service sector for competition in the ASEAN market, as other members such as Malaysia and Singapore are doing better in these areas, particularly in transportation and logistics, Aat said.

"Although our country seems to be enthusiastic about tourism, our small- and medium-sized hotels are not really strong enough for the competition as we open these sectors to other ASEAN members," he said.

For the whole region, economists see a clearer upside to trade liberalisation than a downside. The FPO also reported that trade liberalisation within ASEAN has boosted intra-regional trade.

Intra-regional trade grew from 19 per cent of the total in 1996 to about 27 per cent in 2008, it said.

From such an economic perspec tive, trade liberalisation is good for the region but it is not enough to turn ASEAN into a competitive region. Leaders of the grouping have a greater vision to integrate the 10 members into a unified and prosperous region. They mapped out a "Vision 2020" roadmap during their summit in Kuala Lumpur in 1997 to transform ASEAN into a seamless community.

At the Bali summit in 2003, the leaders vowed to establish ASEAN as a community by 2020. The three pillars in the community are the ASEAN Security Community, ASEAN Economic Community and ASEAN Socio-Cultural Community.

However, the world is moving fast. Other countries in other regions of the world are also gravitating towards trade libera-lisation. Many bilateral and multilateral free-trade pacts have been signed among countries throughout the world.

The ASEAN 2020 goal is too far ahead. The ASEAN leaders, at a summit in 2007, agreed to accelerate the establishment of the ASEAN Community by 2015. They also agreed to hasten the establishment of the ASEAN Economic Community (AEC) to 2015 to transform ASEAN into an economic region with a free flow of goods, services, investment, skilled labour and capital.

In practice, ASEAN might not be able to integrate all economies into one community as planned due to many factors such as the differences in the stage of development between the inaugural members and new members as well as a sense of protectionism among the members, Aat said.

As import duties are eliminated, countries in ASEAN are mulling non-tariff barriers to protect their domestic markets and this is a major obstacle for the AEC, he said.

Members of ASEAN will start discussing an "ASEAN standard" for goods in the region. Countries with more advance technology will set a standard for others to follow.

"For instance, a vaccine produced in Thailand for livestock will not be traded in the region unless it is approved by laboratories in Singapore or Indonesia," he said.

The AEC would play a significant role in changing economic structures in member countries but Thailand was unlikely to be fully aware of this structural change, he said. It was widely assumed that only exporters and importers need to know about the ASEAN community, but in fact, all people of ASEAN needed to know about it, he said.

The market will be opened for other members not only in goods but also in nearly all sectors. Skilled workers such as physicians and engineers may no longer be secure in their professions. Thai medical doctors might have more opportunities to land jobs in Cambodia but would also face the chance of losing out to counterparts from Singapore.

Aat said his study suggested that people in many sectors here, especially in agriculture, knew very little about the new challenges from the AEC while many other member countries were preparing thoroughly for it.

High school students in Singapore have learned a lot about ASEAN and its functions while students in Thailand barely know what ASEAN means, he said.

"Cambodian Prime Minister Hun Sen tells his people from time to time about ASEAN and urges them to gear up for the changes and challenges. Even Cambodian Buddhist monks in remote areas have to learn English," Aat said. "But 100 per cent of our farmers know nothing about ASEAN and free trade."

Thailand has many agencies handling ASEAN affairs but the work mostly stays in officials' hands while people in economic sectors and entrepreneurs still have no notion about ASEAN and how to take advantage of it or prepare for the challenges.

Only a few big local enterprises could do business across borders in the region and make good use of the arrangement of the ASEAN economic community while most SMEs rarely paid attention to the challenges and opportunities, Aat said.