Prasarn Trairatvorakul: Attributes of quality global citizens in the next
decade
Speech by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the International
Conference on General Education "Roles and Experiences in Cultivating Global Citizens",
Bangkok, 11 January 2012.
* * *
Distinguished panelists and moderator,
Ladies and Gentlemen,
It is an honor and pleasure to be invited to share my views on the issue of global citizenship
in the next decade. On this issue, I wish to focus on two important dimensions, namely
driving forces and readiness. First, I will look at the progress of ASEAN integration as the
major driving force toward global citizenship. And second, I will briefly discuss the necessity
to develop global competencies to ensure the readiness of local talents with an aim to
integrate with global talents.
On the first issue, I should stress that global citizenship is linked to the relationship between
an individual with the state. Since we now live in a virtual world connected by technology,
today's global relationship should perhaps be better defined as an association with economic
opportunities available to an individual irrespective of physical presence. Moreover, global
citizenship implies the shift from domestic focus to global focus with the ultimate aim of
attaining global standards in terms of operating environment and resource management.
At this juncture, however, I see it as unrealistic to think about global citizenship without first
attaining regional citizenship. Naturally, we in Asia should see this regional citizenship linked
to the economic opportunities available in our own region and to the degree of economic
integration between Asia and the rest of the world. Thus, going forward, Thai and other
ASEAN nationals need to put more emphasis on the growing ASEAN Economic Community
or AEC, which will start officially in 2015 only a few years from now.
Ladies and Gentlemen,
As a major driving force of regional citizenship, the AEC is part of a larger plan for the
ASEAN Community, which involves security, economic, and socio-cultural cooperation. It
aims to transform ASEAN into a single market and production base, a highly competitive
economic region, a region of equitable economic development, and a region fully integrated
into the global economy. To this end, the AEC blueprint focuses on free flow of goods,
services, investment, and skilled labor, and freer flows of capital, to help minimize transaction
costs and maximize trade gains.
On trade liberalization, the ultimate target is not only to reduce all tariffs to zero, but also to
eliminate non-tariff barriers, including subsidies, restrictions, and sensitive industry
classification. And as of 1 January 2010, ASEAN-6 applied zero tariffs to 99 percent of
goods, while the CLMV countries plan to achieve the same goal by 2015. A unified trading
region will facilitate development of production networks, bridge fragmented trade
opportunities, and allow ASEAN to become central to global supply chains. This model is
supportive of Asia's new growth model of a regional production hub and increasing
intraregional trade. Moreover, it is a key development strategy for ASEAN to ride with rising
Asia as part of an even bigger economic hub of ASEAN+3 and ASEAN+6. The +3 include
China, Japan, and Korea, with the+6 expanding to cover India, Australia, and New Zealand.
In addition to trade liberalization in goods, liberalization in services will also spur competition.
This in turn would lead to lower prices and increased quality of services, as well as better
transfer of know-how from outside and within the region, in areas such as business
organization and management, and risk management capacity through foreign participation
in financial services, for example. But, since services liberalization can involve short term
adjustment costs, its progress has been subject to domestic regulations as a country's
institutional and regulatory environment needs to be strengthened before and during
liberalization in order to reap eventual benefits.
A single market and production base for ASEAN cannot be complete without the free flow of
skilled labor. It is also complementary to other freedoms, such as freedom of capital flows
(particularly FDI) and services, and together they have important implications for productivity
growth and investment. Indeed, it is logical to expect that ASEAN integrated business
organizations would be more effectively run by regional than local managers. This is because
regional managers have incentives to optimize the economies of scale and scope through
the use of regional factors of production to achieve competitiveness. Moreover, regional
managers are likely to promote more regional-oriented investment, which means outward
investment, direct as well as portfolio, from one local economy into other local economies
within and outside ASEAN.
Ladies and Gentlemen,
Turning to the dimension of readiness, ASEAN labor mobility pertains only to skilled
labor at present. Various country specific regulations continue to prevent completely free
labor mobility. While greater mobility should yield substantial economic benefits especially for
integration objectives, opponents of labor mobility tend to highlight the short term potential
threats, particularly the "brain-drain" away from home countries. Mobility also raises fears
relating to immigration and cultural impacts. What then can be done to improve readiness for
labor mobility thereby strengthening ASEAN citizenship?
For the benefit of further exploration, I would like to propose that we consider a
threepronged strategy as part of a sustainable solution to this problem:
First, we should try to reduce short and long-term obstacles to labor mobility. It is
critical to recognize that greater labor mobility brings greater competition for local
professionals. This means that, in the medium and longer term, the "brain drain" is usually
offset by remittances and a "reverse brain drain", which brings wealth, skills, experience, and
their business and social networks back home. Therefore, actions are needed to further
enhance the free flow of labor through increased use of mutual recognition of professional
qualifications. Forging university and regional professional networks will surely be supportive
of this endeavor. Visa, work permits, and regulatory requirements on foreign employment are
all important issues that need to be quickly addressed to ensure that the investment
environment is competitive.
Over the longer term, I also see it as very crucial that we address obstacles to integration at
the root cause, which is the weak integration mindset. This integration mindset means that
we need to assess the benefits and costs of integration more deeply and strategize how they
fit with the overall economic development plans of individual ASEAN member countries.
There are dangers in allowing such an important assessment to remain vague. My concern is
that many key stakeholders of ASEAN integration still view the AEC with cynicism; that life
will go on, with few changes to the status quo. And this complacency is very dangerous
because we may wake up and find that we are already too late to catch the rising wave of
ASEAN.
Distinguished Participants,
The second part of this three-pronged strategy deals with human capital development
to meet global competencies. My personal opinion as a CEO in the financial industry is
that we need people or our human resources in the next decade to be assertive, flexible,
analytical and quantitative, technology competent, as well as having strong leadership,
people skills, foreign language proficiency, and cultural awareness. CEOs in other industries
can add more qualifications to this list according to what they need to satisfy future business
solutions. Moreover, to promote mobility, our local talent competency should also aim for a
better fit with regional and global competency. In the case of Thailand, broad statistical
profile points to above 50 percent share of education in social sciences, business, and law;
with about 20 percent in engineering manufacture and construction, and about another
10 percent in science. This means that we currently have comparative advantage in terms of
good quality social scientists, which should be augmented by English language and ICT
skills. Having said that, we also need to put much more resources into education areas with
significant impact on wages and work flexibility, such as engineering and science.
The third part of the strategy relates to the market environment and government policy
to support labor mobility and human capital development. In many ASEAN countries,
the labor market environment has been that of persistent shortage. With plenty of job
opportunities at home, the lack of urgency to compete for jobs may have lessened the
incentives for long-term planning to develop new skills and change human capital profile to
take advantage of global mobility. This problem has been amplified by the demographic trend
of an ageing society with young talents becoming scarce in the future.
On the public policy front, public investment in education is particularly necessary for
enhancing productivity gains for future growth. Moreover, as people become global citizens,
we cannot always rely on rules and regulations, or market rules of the game to bring about
their right behavior. In this regard, the educational curriculum needs to embrace elements on
transparency, accountability, governance, and ethics. This will help lessen the corruption
problem which ranks high in the list of factors that can undermine competitive strength of any
economy.
While the role of public investment in education is vital, I see increasing financial constraints
in this area, as well as in public health and social safety nets, because of short-term fiscal
limits and lack of long-term fiscal planning in a number of countries. For education, in
particular, while in the short term private sector initiatives for in-house training or vocational
educational support may help bridge skill mismatch, this is unlikely to be a sustainable
solution. Faced with fiscal limitations, the public sector will need to explore creative
publicprivate partnerships to avoid undermining necessary developments in this important area.
Ladies and Gentlemen,
I would like to conclude by emphasizing that in the era of global citizenship, we should
capitalize on the major driving force in advancing toward full global citizenship. For Thailand
and ASEAN countries, we have the AEC as a natural stepping stone to embrace regional
citizenship. Looking ahead, much work remains to be done for a number of countries to
improve the readiness of human capital to evolve toward global citizenship. Our people must
be developed to the degree that they possess similar competencies as those in the global
workforce. I therefore hope that this conference will pave way for further progress of this
important agenda.
Thank you for your attention.