Industrialization in late-developing ASEAN countries

As a crystallization of a four-year research program sponsored by the Institute of Developing Economies (IDE), this edited volume mainly focuses on the tensions and interconnections between the foreign-oriented industries led by foreign companies and the domestic market-oriented industries in the late-developing ASEAN countries. The brilliant contributors have rich experiences in ASEAN studies. They consider industrialization in these late-developing countries as a context-sensitive theme. This makes the arguments in the edited volume more tenable.

This edited volume is divided into 6 chapters. In chapter 1, Naomi Hatsukano reviews the industrialization of the garment manufacturing industry in Cambodia, which has been dominated by foreign-affiliated companies (e.g., China, South Korea and the United Kingdom). As Hatsukano argues, the garment manufacturing industry in Cambodia is an important case, because it "represents 80% of Cambodia's economy in the manufacturing sector" (p.53), and the workers employed in this industry does "account for 52.8% of workers employed by medium and large sized companies" (p.36). As Hatsukano points out, the foreign-affiliated companies have played leading roles in the garment manufacturing industry, but the domestic companies hardly take a firm hold of the industry. The domestic companies only maintain their superiority in food processing, which "accounts for the other 20% of the manufacturing sector" (p.54). How could the industrialization in Cambodia achieve its goals? In Hatsukano’s view, it depends on whether the domestic companies maintain their competitiveness.

In Chapter 2, Motoyoshi Suzuki analyzes the intentions between foreign-oriented industries and market-oriented industries in Laos. Unlike Cambodia, the most critical problem in Laos is labor shortage. Is there any hope for Laos to establish labor-intensive industries with higher added value? In Suzuki’s opinion, the priority “must be given to the formulation and implementation of policies offering employment opportunities" (p.64). However, it raises another big question: how to offer employment opportunities in Laos, which has been suffering from human trafficking for several decades? In other words, it’s essential to find proper resolutions to prevent human trafficking in Laos, which are not addressed in this volume.

Chapters 3 and 4 focus on the tensions in Myanmar. In chapter 3, As San Thein argues, though agro-based industries represent "45% of the total industrial output value" (p.121), Myanmar has not transited "from an agrarian economy to an agro-based industrial economy" (p.100). The agro-based industries in Myanmar have two weak points. First, there is a shortage in supply of raw materials; second, the effectiveness of state-owned enterprises in Myanmar is questionable. Concerning the countermeasures, long-term partnerships between agro-based industries and farmers should be established through "transparent contractual terms, fair pricing, good extension and a sound marketing system"(p.125). Next, in chapter 4, Toshihiro Kudo discusses the structure, ownership and key constraints of agro-based industries, and analyzes what lay behind the growth and decline of industrialization in Myanmar. Different from the garment industry in Cambodia, the garment industry in Myanmar is "abundant, cheap and relatively high-quality labor force" (p.140).   

In my view, the most attractive chapter is chapter 5, which clearly shows the interconnections between foreign-oriented industries and domestic market-oriented industries in the late-developing ASEAN countries. Different from the previous chapters, chapter 5 by Akie Ishida and Mai Fujita, addresses the interconnections between the export-oriented and domestic market-oriented industries in Vietnam, rather than highlighting the tensions. According to Ishida and Fujita’s survey of the major export industries (e.g., sewing products, footwear industry and shipbuilding industry), Vietnam is still lacking some essential elements of production (e.g., human resources, capital and technology), but the foreign companies’ abilities to provide new technology and information are limited by the piecemeal policies (e.g., customs tariffs). The piecemeal policies could not strengthen the competitiveness of local companies, but prevent foreign companies from “acting as catalysts for extracting the inherent development potential of Vietnam” (p.198). As Ishida and Fujita address, the local companies also have their own advantages, so it’s probably to establish a mutual-beneficial partnership between foreign companies and local companies in Vietnam. For example, the distribution network built by the local companies would provide them outstanding advantages.

In the final chapter, Koji Kubo examines whether there is a dynamic causal relationship between financial development and industrialization in the late-developing ASEAN countries. As Kubo concludes, it depends on three factors that vary significantly: first, size of banking sector; second, relationship between financial development and economic development; third, economic openness to the outside world and learning process in the banking sector. In addition, Kubo explores whether state-owned banks and foreign banks would promote financial development in the late-developing ASEAN countries.

No volume is perfect and one point of concern is raised here. This well-researched edited volume would be more convincing if more de-industrialized factors in the late-developing ASEAN countries could be taken into account. In fact, de-industrialization does overwhelm industrialization in some areas of the late-developing ASEAN countries. The de-industrialization factors (e.g., human smuggling and drug trafficking) have seriously determined the industrialization of these late-developing countries. For instance, in the border areas of Myanmar, human smuggling and drug trafficking have not merely led to a disastrous impact on human resources, but also caused a vicious circle in Myanmar, especially the border areas; the worst-hit areas of de-industrialization in the late-developing ASEAN countries. On one hand, drug trafficking accelerates low-intensity armed conflicts among drug-traffickers, ethnic-based militias, and the armed forces in Myanmar. On the other hand, thousands of people were forced to wander from village to village, who then become very vulnerable to human smugglers and drug-traffickers. What are the dynamics of de-industrialized factors in the late-developing ASEAN countries? How to take effective countermeasures? The answers to these questions are also urgently needed.

In short, ‘Industrialization in Late-Developing ASEAN Countries’ is a coherent collection of essays, which explore the current situations, challenges and prospects of industrialization in late-developing ASEAN countries. It is of interest of both academics and students looking for new perspectives on industrialization and the late-developing ASEAN countries. At the same time, this volume is necessary reading for anyone interested in ASEAN studies.

Kai Chen, Zhejiang University, China (chenkai_zju@yahoo.com)