Prasarn Trairatvorakul: The ASEAN Economic Community’s impact on the Greater Mekong Subregion’s economies Keynote address by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the Euromoney Conference “The Greater Mekong Investment Forum”, Bangkok, 12 June 2014. *  *  *  Excellencies, Honorable Speakers, Distinguished Guests, Ladies and Gentlemen, 1. It is an honor for me to be back here at the Euromoney Greater Mekong Subregion Investment Forum. Let me thank the organizers for inviting me to speak at such a distinguished forum once again. This conference takes place at an important juncture as we are on the eve of the ASEAN Economic Community which will be launched at the end of next year. My remarks today will focus on how the AEC will have meaningful impacts on the GMS economies. Also, I will share with you some thoughts on how we can overcome challenges to capitalize on the region’s growth and prosperity. 2. The GMS has become one of the most vibrant regions in the world, transforming itself into a new investment frontier. The global attention on this region is reflected in the large inflows of foreign direct investment, which have increased dramatically in the past two decades. According to World Bank statistics, the FDI inflows to the CLMV countries over this period increased forty-fold to around 13 billion dollars in 2012.1 This wealth of investment opportunity has been underpinned by the smooth transition to market-based economies, the rich and diverse resources as well as the improvement of intra-regional logistics. 3.
What ASEAN central banks are aiming for is to enable businesses and individuals to make and receive electronic payments more conveniently yet less costly. A prominent example here is the “Asian Payment Network” which translates to full regional ATM interoperability. Through this initiative, an ASEAN  1  World Bank website (2014) (http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD)  2  ASEAN-6 includes Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand. BIS central bankers’ speeches  1  resident, for instance, can use his or her local ATM card to withdraw cash from a machine in another ASEAN country without having to pay the fees charged by third-party payment providers. 8. We can see that the upcoming realization of the AEC is a springboard for a more vibrant GMS region. However, the benefits for the region go beyond the AEC. I can see some points where tangible outcomes will take place in the near future. 9. The first one is the more integrated production networks of the main industries which dominate the GMS. We all know that the region has a comparative advantage in primary industries which are demanded by other ASEAN countries. This is why we have observed the large inflows of investment into agro-industry, garment and mining sectors. Realizing the high potentials of these sectors, we have also seen contract farming practices in Laos, where key commodities such as corn and sugarcane are produced using advanced technology and practices. 10. The other point concerns the development of infrastructure.