Stable China to benefit Asean in the long run, says Koh

The 7th World Chinese Entrepreneurs Convention: STORIES BY PAULINE S.c. NG, P.W. THONG, HONG BOON HOW AND KATHY FONG

A STRONG and stable China with a booming economy would eventually benefit the “Little Tiger” economies of Malaysia, Thailand and the Philippines in the long run, but in the short run or over the next few years, China looms more as a competitor than a benefactor, said Penang chief minister Tan Sri Dr Koh Tsu Koon. 

Following reforms over the past 25 years, China has in recent years emerged as the biggest hub in the global supply chain for the electronics and information and communications technology (ICT) sectors.  

With the massive relocation of production operations to China, Koh said the phenomenon of “hallowing-out” had already begun to take place in the Little Dragons – Taiwan, Hong Kong and Singapore – and Little Tiger areas. 

“This has been true especially for Taiwan and to a lesser extent, Hong Kong, Singapore and Malaysia in that order,” Koh said, adding that “hallowing-out” posed a great challenge because it threatened to lead to serious unemployment with its negative social consequences, especially for a multi-racial country like Malaysia. 

He emphasised that the threat of “hallowing-out” would require the Little Tiger governments, be they of Malaysia, Thailand or the Philippines, to try their very best to retain and sustain the existing industrial base built up over the years so that they could continue to provide jobs and better living standards for the people. 

Koh said yesterday on the “Role and Contributions of Chinese Enterprises in the World Economy” that in so doing however, the need for individual firms to explore the China market and even to move their substantial operations to China could not be denied. 

But for the Little Tigers to enjoy a healthy relationship and mutual benefit with the Big Dragon, he pointed out both the Little Tigers and the Big Dragon must share a larger and longer-term common perspective.  

Also needed is a genuine commitment for all to work hard to further improve respective comparative advantages and to promote genuine mutual complementarities. 

To consolidate the competitiveness and comparative advantages, Koh suggested three basic strategies: focusing on niche areas and upgrading technologies, promoting greater cooperation between Asean and China, and moving towards a global win-win strategy. 

In focusing on niche areas, he stressed the urgent need to quickly move up the technological ladder of these niche areas, so as to remain highly competitive.  

“It is only by being competitive in certain niche areas that the Little Tigers will be able to complement China more effectively. This is because however big China may be, China also cannot do everything. 

“There are surely certain areas where we can do better than China. It is in China's long-term interest to let us do what we do well for greater efficiency overall, and not for charity,” he said. 

Koh said it is also vital for Asean to quickly get its act together, both domestically and collectively.  

More concerted efforts should be made collectively to realise the Asean Free Trade Area and promote greater cooperation among Asean countries. 

In this respect, entrepreneurs and engineers of Chinese descent play an important role as they can use their linguistic and cultural connections. 

Koh said in the rapid development of the electronics and ICT sectors, engineers and entrepreneurs of Chinese origin played important and dominant roles.  

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