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CPTPP Serving Vietnam as Opportunities and Challenges

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CPTPP is originated from the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP) (it is also so call P4) signed in 2005 by Singapore, Chile, New Zealand and Brunei. Since September 2008, the United States, Australia, Peru, Vietnam, Malaysia, Canada, Mexico and Japan have jointly negotiated at the aim of setting up the Trans-Pacific Partnership Agreement (TPP). The TPP negotiation process ended in 2015 under the agreement of the 12 member states; however, Trump administration announced its withdrawal from the agreement in January 2017. After a number of adjustments, including postponing the implementation of the 20 TPP provisions with the expectation that the United States would return to the Agreement, the 11 remaining TPP members unanimously continued to promote this process by establishing Comprehensive and Progressive Agreement for Trans-Pacific Partnership -CPTPP). After completely reviewing the content and approved by the member parliaments, estimated by March 2018, CPTPP will officially become a large economic zone in Asia-Pacific with a population of over 460 million, contributing 14% of world GDP and 1/6 of global trade.

The agreement is expected to establish a new common framework for regional free trade arrangement for Asia-Pacific countries, to support trade, to attract foreign investment, and to promote institution reformation in those countries. CPTPP has the basic advantages as the members of the negotiation are the countries that have been strongly committed to the trade liberalization. Given the disclosed commitments, CPTPP is considered as a model treaty for the 21st century because of its overwhelming scale and influence in comparison with other trade agreements regionally and globally.

Given the competitiveness, the economic size and the inadequacies of the current institutional system, it is surprised that Vietnam has strongly participated in CPTPP. Compared with other members, it has the least competitive economy and the loosest legal system. Despite its 20-year-old experience in the process of international economic integration, Vietnam lacks the practices in a highly competitive and demanding integration environment since it is only familiar with first-generation FTAs, where the open commitments and reform pressures are readily accepted in a transitional and distinctive economy.

Meanwhile, CPTPP’s regulations set out in the negotiations are evaluated as far beyond the ability of the current economy of Vietnam. What is the motive of Vietnam to join CPTPP?

Given the economic size of the members and the terms of trade liberalization, joining CPTPP is obviously advantage to empower Vietnamese economy in the Southeast Asia in terms of economic growth, trade as well as FDI attraction. In the economic perspective, Vietnam is a country to achieve the most benefit from the CPTPP.

Firstly, the opportunities to increase the export of goods that are the advantages of Vietnam (i.e. textiles, footwear, electronic products and equipments) are relatively high by combining the tariff reduction and the experiences in these markets.

Secondly, the attraction of foreign investment into Vietnam is greatly promising. The access to large markets such as Japan and Canada together with the clearer commitments to improve the investment environment and protect intellectual property rights will become a significant attraction for international investors. Moreover, Vietnam, under the framework of CPTPP, is able to attract large inflows from the member countries through the membership of regional economic organizations such as AFTA and ACFTA.

Thirdly, the chances of faster economic growth are strongly wide. The expansion of the major export industries such as textiles, footwear, fishery, etc., will help stimulate the income growth from domestic production, thereby support the increase of the overall demand.

Fourthly, Vietnam will have an opportunity to form a more comprehensive economic structure. CPTPP will urge the domestic investors as well as the regional ones to invest in the supporting industries to create local material resources given the extremely high standards on the place of origin.

Fifthly, it is a chance to complete the institutions that govern the market economy. CPTPP sets out a clear legal framework for not accepting concessions to any business. Because of its high and foreseen requirements on policy transparency, compared to many other agreements, CPTPP could become one of the important premises for Vietnam to carry out institutional and market reforms thoroughly and comprehensively.

However, among the countries participating in CPTPP, Vietnam achieves the lowest level of development and faces big challenges.

Firstly, the production industry structure is not consistent with the provisions of CPTPP. The economy is not well-prepared and the supporting industry is weak. With regard to the requirements of origin, the sectors which are the advantages of Vietnam’s export sector are not able to exploit the concessions from the CPTPP because their inputs do not contain domestic factors.

The second challenge is from the stagnation of the enterprise system. The adaptability to the market economy of Vietnamese enterprises is weak. The lack of an effective investment strategy for the supporting production industry and “traditional outsourcing” works have made the overall benefit of the economy declined.

Thirdly, the limitation of state enterprises’ role in the national economy becomes a content of CPTPP. The external pressure is positive only if it meets the community benefits. If the selection of CPTPP is purely commercial-economic aspect, it will not cause the objection against the reformation within the SOE system.

The fourth challenge is from the increasing competition of goods from the members of CPTPP. At present, Vietnamese enterprises are well-protected by the high tariffs. The trend and demand for zero tariff reduction will be applied to CPTPP members in the coming time. In the analysis of the export structure of CPTPP countries, it can be seen that the manufacturing industries of Vietnam facing difficulty are automobile industry and agriculture, especially the husbandry which remains mall and fragmented, and unable to compete against the large, experienced and traditional competitors.

The fifth challenge from the requirements of intellectual property protection in CPTPP is much more critical. The continuing possibility of “appearing to court” by infringing intellectual property law is present in countries previously without adequate preparation of intellectual property law. Furthermore, the requirements for increasing the level of protection of intellectual property rights over inventions, copyrights, and trade marks can lead to the escalation of drug prices and create a health burden to the emerging economy like Vietnam. More than that, the measures to protect intellectual property related to biology also affect agriculture which accounts for more than 60% of the population of Vietnam. The prices of agricultural products such as veterinary drugs, fertilizer, etc. will thereby grow significantly, which increases costs and reduces the efficiency of agricultural production in general.

In regard of the need for economic reform and the promotion of economic growth, the process of further integration into the world economy is not allowed to slow down. The question is what Vietnam needs to do to facilitate the upcoming integration roadmap.

Firstly, administrative reform and severely corruption offence are the most important things. It is shown that the WTO supports free market economy so that it could operate and develop only in a healthy competitive environment. Since the joining in the WTO, Vietnamese economy has not really created a healthy competitive environment. Meanwhile, corruption has created more conditions for interest groups to ramp up and distort even the good national policies. If the administrative procedures remain cumbersome and troublesome, corruption will still restrain the required transparency in corporate management. In accordance, CPTPP is not an opportunity, but a challenge to the whole system.

Secondly, the reformation of the legal environment and policies to ensure a single “standard” prescribed by CPTPP is a difficult for Vietnam. But in the long run, this reform of the institutional environment towards the international “rules” is a necessary condition for growth in the context of globalization. In this perspective, although adjusting the policy system involving the regulation of CPTPP is a difficult and costly process, Vietnam’s commitments can be seen as an external “push” to provide additional momentum for domestic efforts towards a transparent institutional environment and economic growth.

Thirdly, it is needed to organize the perfect communication to all classes of people, especially the business and the production circles in the countryside. The participation in CPTPP without fast updating to the farmers might cause the loss of market, the high pressure of competition, and even the legal disadvantage in disputes and sues.

Fourthly, the reform of SOE and the development of SMEs is the key solution. Given the population and economic growth, the number of enterprises in Vietnam is relatively low. This is a major constraint in economic development, employment, creation of competitive markets and the mobilization of resources from society.

In the context of limited resources and high demands of work, the development of these types of enterprise is appropriate not only to the internal capacity but also the preferences of CPTPP. Hence, it is essential to reform SOEs in a substantial way and enable them to have a transparent business environment.

Assoc.Prof.Dr.BuiThanh Nam, University of Social Sciences and Humanities, Vietnam National University, Hanoi

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Southeast Asia

Malaysia’s Efforts in Improving Education: Lessons for Developing Countries

MD Staff

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Image from the Malaysian Times

Malaysia’s efforts to tackle education challenges, particularly through the establishment of a ‘delivery unit’ that tracks results, can help other countries seeking to improve implementation in the sector, says a new World Bank report.

The report, Improving Education Sector Performance: Lessons from the Delivery Unit Approach, highlights the role of the Education Performance and Delivery Unit, or PADU, under the Ministry of Education, in improving education outcomes, a key government priority.

The report examines how PADU facilitated program implementation and delivery of results through the Literacy and Numeracy Screening program, or LINUS. Unlike other interventions, the LINUS task force – comprised of several divisions – worked closely with agencies across government to provide an effective framework for coordination, tracking, monitoring and reporting.

“Following the World Bank’s analysis of the LINUS approach, we are glad to share the approach with other countries seeking to improve education outcomes,” said Dato’ Seri Mahdzir bin Khalid, Minister of Education. “As we progress, we will constantly refine ways of delivery and continue to engage relevant institutions such as the World Bank to gather feedback and improve implementation.”

The Government Transformation Program, announced in 2009, set improving education outcomes as a key priority, and a detailed plan in the Malaysian Education Blueprint followed.  Making improving education outcomes a national priority can elevate the profile, stakes, and resourcing for the initiative. Building in evaluations of impact into the program design would further bolster efforts to improve education outcomes.

“The delivery of the essentials of a thriving nation – better schools, healthcare, public transportation – is a mutual goal of all nations, but implementation is a common challenge. The delivery unit approach taken by Malaysia is a creative and effective way to address this challenge,” said Faris Hadad-Zervos, World Bank Group Representative to Malaysia. “This report distills useful lessons learnt in improving the performance of its education sector, and makes recommendations to bring Malaysia one step closer towards its aspirations of becoming a high-income country.”

The study is the latest installment in the World Bank Group’s Outbound Knowledge Report Series that curates, distils and disseminates Malaysia’s development experience. This report is part of the Malaysia Development Experience Series, which strives to capture key learnings from Malaysia that are relevant for developing countries around the globe as they transition out of poverty and into shared prosperity.

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Asia’s dark underbelly: Conflicts threaten long-term stability and development

Dr. James M. Dorsey

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A host of conflicts, stretching across the Asian landmass from the Middle East to Southeast Asia and northwest China, are likely to spark violence, complicate economic development, and dash hopes for sustainable stability.

The conflicts and tensions range from ethnic strife in Kurdish areas of Syria and Iran, mortally wounded Israeli-Palestinian peace efforts, embattled Baloch nationalism in Pakistan, disposed Rohingya in Southeast Asia, and widespread discontent in Iran, to iron-grip repression in Egypt, Saudi Arabia, and Xinjiang. Individually and collectively, they promise to create black swans and festering wounds that threaten economic growth and social development.

Stripped to their bare essence, the conflicts and tensions have one thing in common: a quest for either cultural, ethnic or national, or political rights or a combination of those, that governments not only refuse to recognize but are willing to suppress with brutal force.

Repression and military action are designed to suppress political, ethnic and/or national, and economic and social grievances in the false belief that a combination of long-term suppression and economic development will weaken ethnic and/or national and political aspirations as well as undermine dissent.

That is true in case of the Rohingya and Uyghurs as well as for brutal repression in Egypt, Saudi Arabia, Iran, and northwest China, and military actions such as the Turkish intervention in Syria’s Afrin.

Problems in the Middle East and South Asia are aggravated by a debilitating struggle for regional hegemony between Saudi Arabia and Iran that threaten to destabilize the Islamic republic and Pakistan, have already produced a devastating war and a humanitarian catastrophe in Yemen, and are dragging the Horn of Africa into its orbit.

If history teaches anything, it is that only a minority of autocrats have achieved economic and social development. General Augusto Pinochet ensured that Chile is the only South American member of the Organization of Economic Cooperation and Development (OECD), albeit at a high human cost, while Asia gave birth to tigers like South Korea and Taiwan.

Moreover, Asia’s multiple conflicts and tensions do not distract from the fact that by and large, the continent is flourishing economically.

History, however, also teaches that ethnic and/or national aspirations explode with vehemence the moment opportunity arises. Seventy years of communist rule in the Soviet Union failed to smother nationalist sentiment in parts of the empire like Chechnya and the Caucasus or erase nationalist differences between Armenia and Azerbaijan.

Forty-seven years of communism did not prevent nationalist sentiment from breaking Yugoslavia apart in a series of bloody wars in the 1990s in the wake of the demise of the Iron Curtain.

Carved out of the ruins of the Ottoman empire, modern Turkey has failed to erase demands for Kurdish cultural, if not ethnic or national aspirations, through economic development and political integration based on the principle of Mustafa Kemal Ataturk, the visionary who founded the republic, that “happy is he who is a Turk.”

Similarly, Palestinian nationalism is alive and kicking 51 years into Israeli occupation of lands conquered during the 1967 Middle East war.

The aftermath of the 2011 Arab popular revolts, involving a concerted counterrevolution co-engineered by the United Arab Emirates and Saudi Arabia, has laid bare the essence of current conflicts and disputes: a determination of regimes to impose policies on minorities or states at whatever cost.

The UAE-Saudi-led diplomatic and economic boycott of Qatar is a case in point as are Asia’s multiple ethnic conflicts. They erupt in a world in which post-colonial borders are being called into question in countries like Syria, Iraq, Libya, Myanmar and Pakistan.

The Rohingya, amid the dizzying array of ethnic and national conflicts stretching from the Middle East or West Asia to China in the East, exemplify the problem in, perhaps, its purest form. Potentially, the Rohingya could become Southeast Asia’s Palestine.

What makes the Rohingya unique is the fact that their aspiration, unlike Palestinians, Kurds, Baloch or Uyghurs, does not involve attachment to a specific piece of land despite a centuries-old history in the Myanmar state of Rakhine. That is also what potentially enables creative thinking about a solution that could open the door to innovative thinking about a multitude of other conflicts.

To many Rohingya, lingering in abysmal conditions in Bangladesh’s Cox Bazaar, after some 650,000 fled repression and terror in Myanmar, securing a sense of belonging on whatever territory that guarantees them protection from persecution as well as economic and social development, is more important than returning to an uncertain existence in Rakhine state. “All I want, is a place to which I can belong,” one refugee said.

Few Rohingya, analysts and officials believe that an agreement that in theory allows Rohingya in Bangladesh to return to Rakhine state will solve the problem. Even if the Rohingya were allowed to return in significant numbers, something that many doubt, nothing in Myanmar government policies and statements suggests that they would be anything more than a barely tolerated, despised ethnic group in a country that does not welcome them.

The makings of a Palestine-like conflict that would embroil not only Myanmar but also Bangladesh and that could spread its tentacles further abroad are evident. In a rare interview with Al Jazeera, Mohammed, a spokesman for the Arakan Rohingya Salvation Army (ARSA) using a false name, predicted that suicide bombings constitute the next phase of their effort to secure a safe and stable existence.

The Falah-i-Insaniat Foundation, a charity associated with Lashkar-e-Taiba, one of South Asia’s deadliest groups, claimed in December that it had established operations in Rakhine state where it had distributed blankets and cash.

“We attacked them (the Myanmar military) because they refuse to give us our basic rights as citizens. Again and again, [the] Myanmar government lies to the world. They say they treat us well and give us rights, but they don’t. We are unable to travel from one place to another. We are not allowed to run a business. We are not allowed to go to university. The police and military use various way to suppress us. They beat, torture and humiliate us. That is why we decided to stand up,” Mohammed said.

Preventing the Rohingya issue from spiralling out of control and becoming a problem that can no longer be contained to a specific territory, much like the multitude of similar conflicts, disputes, and repression-based regime survival strategies across Asia, requires out-of-the box thinking. Short-term repression and efforts to impose one party’s will at best buys time and sets the scene for avoidable explosions.

With out-of-the-box thinking a rare commodity, nationalism and protectionism on the rise, and regimes, emboldened by an international community unwilling to stand up for basic rights, able to go to extremes like the use of chemical weapons against rebels in the Syrian province of Idlib, long-term prospects for stable and secure development in Asia are dimmed and potentially threatened by predictable black swans.

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Our teachers need a stern lesson

Rattana Lao

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Outspoken Thammasat graduate Rattana Lao has very definite ideas on how to reform the education system. (Photo courtesy Ms Rattana)

It is no surprise that our local news reports on education have usually been replete with how bad the Thai learning system is.

From a national perspective, the country’s recent Ordinary National Educational Test (O-Net) test results for Grade 12 students reveal the average scores are below par in all subjects. The only subject that the average score is higher than 50% in is Thai language. This does not mean the average quality of students’ Thai language competence is high or adequate.

The World Bank’s report provides a bleak picture of the level of Thai language attainment among students. Its report states that 32% of 15-year-old students in Thailand are “functionally illiterate”. This means their reading comprehension is so poor that they barely understand what they read, hence they even struggle to survive or cope with menial jobs.

When it comes to an international comparison, Thai students are falling behind their peers in Vietnam, Malaysia and Singapore. This is most evident in the Programme for International Students Assessment (Pisa) which evaluates the ability of randomly selected 15-year-old students to attain scientific literacy, reading literacy and mathematics literacy. Sadly, for the past 10 years, Thailand’s performance in the Pisa test has never met the world standard. The average 15-year-old Thai student is 1.5 years academically less competent than their peers in Vietnam.

Thai educators are well aware of how bad the system is. For decades, considerable energy, attention and resources have gone into education reform in order to revamp the system. However, the system has not changed much. Since the National Education Act was promulgated in 1999, the system is still heavily centralised and overtly unequal resulting in low academic achievement of students.

One of the main problems of the Thai education system is the rampant rote learning pedagogy. Thai classrooms apply a top-down approach that lacks interactive engagement with students. Teachers stand in front of the class with the expectation to know it all and be the masters of knowledge, while students are given limited engagement and thus show little enthusiasm.

To make matters worse, teachers are not always present in class. The Quality Learning Foundation reported that Thai teachers spend more than 42% of their time outside the classroom.

Worst of all, Thai schools are overloaded with demanding curriculums. Students are expected to know so many topics without being provided with substantive explanation or examples of difficult concepts. They are expected to learn through memorisation rather than understanding, or acquisition of knowledge.

In the recent bi-annual meeting of Anandamahidol scholars, Charas Suwanwela, President of the Education Reform Committee appointed by the current government, offers a compelling insight to the reform process. He highlighted why the two decades of education reform do not produce the needed result and what needs to be done.

Firstly, our education system must shift from a top-down approach to a bottom-up one. By all standards, the Thai system needs greater decentralisation. Reformers of the 1999 National Education Act were aware of this and put decentralisation at the forefront. However, realistically speaking, most — if not all — decisions and resource allocations still depend largely on the discretion of the Ministry of Education, which is heavily bureaucratised and highly hierarchical. Such reliance and dependency has limited the ability of educational service areas to be able to perform.

“To successfully implement any kind of reform, such effort must be bottom up where everyone owns it. As things stand, nobody is accountable for educational problems in Thailand. We all blame each other but nobody takes charge of how things must change”, Mr Charas said.

Greater participation of the public and private sectors is needed. For so long, educational responsibility has belonged to the state, which leaves the rest of the society inert and irresponsible for change. But education is the responsibility of every party: The state, schools, families, private sectors, communities and even temples. Everyone must participate to make a difference.

Second, there must be a renewed sense of hope for teachers and students.

“Teachers and students must be empowered to become active agents. For teachers, they must be motivated to constantly acquire new knowledge to inform and inspire students. While specialisation teachers in all subjects are needed, we do not have the resources to do so. Therefore, teachers must be eager and empowered to improve themselves”, Mr Charas said.

The heart of it all, however, is that students must be awakened. In the new era of digital technology, students cannot rely on top-down, rote learning and memorisation as the method of education. They must learn to be digitally literate so that they can acquire information on their own. A digital revolution is needed for students to learn online, on-air and on the ground.

Third, education reform must take the issue of inequality seriously. Prasarn Trairatvorakul, National Economic Reform Chairman, recently shared his vision of the state-run Equitable Education Fund that aims to address educational disparity.

“A new law is being drafted to mobilise [financial] resources from national budgets, donations and lottery profits to create an Equitable Education Fund in order to mitigate educational inequality,” Mr Prasarn said.

“The annual educational budget is around 500 billion baht. This new law will propose that 5% of that will be allocated precisely to offer educational resources to support the most marginalised and underprivileged in the country. Starting from early childhood education, this new fund aims to offer financial supports for students up to upper secondary schools.”

The system cannot be overhauled overnight. However, with vision, collaboration and real commitment, there is a beaming light of hope that education in Thailand might improve over time.

First published in Bangkok Post, repost under author’s permission

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