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.
DEATH THREAT: A MAC official said that it has urged Beijing to avoid creating barriers that would impede exchanges across the Strait, but it continues to do so People should avoid unnecessary travel to China after Beijing issued 22 guidelines allowing its courts to try in absentia and sentence to death “Taiwan independence separatists,” the Mainland Affairs Council (MAC) said yesterday as it raised its travel alert for China, including Hong Kong and Macau, to “orange.” The guidelines published last week “severely threaten the personal safety of Taiwanese traveling to China, Hong Kong and Macau,” MAC Deputy Minister and spokesman Liang Wen-chieh (梁文傑) told a news conference in Taipei. “Following a comprehensive assessment, the government considers it necessary to elevate the travel alert to orange from yellow,” Liang said. Beijing has
Chinese President Xi Jinping (習近平) yesterday said that the Chinese Communist Party was planning and implementing “major” reforms, ahead of a political conclave that is expected to put economic recovery high on the agenda. Chinese policymakers have struggled to reignite growth since late 2022, when restrictions put in place due to the COVID-19 pandemic were lifted. The world’s second-largest economy is beset by a debt crisis in the property sector, persistently low consumption and high unemployment among young people. Policymakers “are planning and implementing major measures to further deepen reform in a comprehensive manner,” Xi said in a speech at the Great Hall
CIVIL DEFENSE: More reservists in alternative service would help establish a sound civil defense system for use in wartime and during natural disasters, Kuma Academy’s CEO said While a total of 120,000 reservists are expected to be called up for alternative reserve drills this year, compared with the 6,505 drilled last year, the number has been revised to 58,000 due to a postponed training date, Deputy Minster of the Interior Ma Shih-yuan (馬士元) said. In principle, the ministry still aims to call up 120,000 reservists for alternative reserve drills next year, he said, but the actual number would not be decided later until after this year’s evaluation. The increase follows a Legislative Yuan request that the Ministry of the Interior address low recruitment rates, which it made while reviewing
SOLUTIONS NEEDED: Taiwan must attract about 400,000 to 500,000 skilled foreign workers due to population decline, the minister of economic affairs said in Washington President William Lai’s (賴清德) administration is considering a plan to import labor to deal with an impending shortage of engineers and other highly skilled workers, Minister of Economic Affairs J.W. Kuo (郭智輝) said in Washington on Tuesday. Kuo was leading a delegation attending the SelectUSA Investment Summit. Taiwan must attract about 400,000 to 500,000 skilled foreign workers for high-end manufacturing jobs by 2040, he said. Ministry of Economic Affairs officials are still calculating the precise number of workers that are needed, as it works on loosening immigration restrictions and creating incentives, Kuo said. Taiwanese firms operating factories in the US and other countries would