The paper portraits the preconditions, features of economic policy and the path to rapid success in the economic sphere in South-East Asia. It revolves around the comparing sustainable economic growth model among economies within South-East Asia. The first aspect to point out is that according to the Nations online (2013) South-East Asia includes two geographic regions: mainland Southeast Asia, or Indochina, and Maritime Southeast Asia (Malay Archipelago). Thailand, Vietnam, Cambodia, Burma, Laos and West Malaysia are included to the first region. Indonesia, Brunei, the Philippines, East Timor (Timor-Leste), East Malaysia, Singapore comprise Malay Archipelago.
To compare the economies of South-East Asia countries, quantitative and qualitative methods of research will be applied. Quantitative methods will provide numerical analysis of the most influential economic indicators, in particular GDP, real growth rate of GDP, GDP per capita, unemployment rate, investments, inflation rate and public debt. Qualitative method will be used for the characteristics of the economic policy instruments and strategy that was implemented for such a rapid economic progress in the region.
It should be stated that sustainable economic growth implies “an increase over time in the output of an economy that integrates economic, social, and environmental considerations and that is supported by efficient institutions and sound policies”. The strategy of sustainable economic growth includes three state policy directions, in particular building economic foundations, investing in people and growing businesses. It is undeniable that such challenges and opportunities as effective state policies and institutions, investing in infrastructure, skilled workforce, and environmental management are facilitators of the sustainable economic growth. Reduced vulnerability, reduction in poverty level, improved market access and increased local business entities competitiveness and productivity, fight with corruption, long-term vision of the economic progress drive sustainable economic growth.
Moreover, such a sustainable path that integrates economic, social and environmental realms could not be implemented without accountable governments that promote transparent policies and public management guaranteeing equal opportunities for the economic development, open market that stimulates entrepreneurship and is based on the fare competition, sustainable vision of natural resources usage.
The comparison of the sustainable economic growth policy in South-East Asia countries is essential for understanding the state policy that was directed at the guaranteeing the equal opportunities and fare competition market for business entities; assuring stable and sound economic environment for the foreign investors; increasing investment in the infrastructure and workforce development. It should be stated that South-East Asia demonstrates robust economic growth during pre-crisis years 2000-2007, and “growth of the South-East Asia region is projected to average a robust rate of 5.5% over 2013-17”.
It is projected that Indonesia will demonstrate 6.4 percent of economic growth during the next years and will be the leader among above mentioned countries of South-East Asia. It will be achieved through the implementation of the sustainable economic growth strategy that implies “significant improvement in the country’s standing with international investors and the ambitious infrastructure investment and economic reforms specified in Indonesia’s medium-term development plan”. The Philippines, Thailand, Singapore and Malaysia will be the closest countries to Indonesia with slower economic growth due to the lower level of productivity.
Singapore could be characterised as highly developed country with the free-market economy. Its real GDP growth accounting for more than 8 percent annually is supported by the corruption-free environment, open market for economic entities development and foreign investment inflow, stable prices and high GDP per capita. In the long-term run and with the aim to support sustainable economic growth, the government of Singapore strives to focus its policies on raising productivity and stimulating investments growth in such spheres as medical technology and pharmaceuticals. Singapore is positioned by the government as high-tech and financial centre of the Southeast Asia.
Describing the main pillars of Thailand economic growth, it should be pointed out that this country is proud of a free-enterprise economy with a high level of infrastructure development. The government’s stable support for investments inflow and strong export industries, in particular electronic components, machinery, jewellery and agriculture commodities are the preconditions for the solid level of economic growth averaging at 4 percent annually.
According to the General Statistics Office in Vietnam (2013), Vietnam recovers from the consequences of war and disadvantages of the centrally-planned economy and records almost 6 percent of the real GDP growth in 2011. It is the most challenging task for the Vietnam’s government to begin to follow a new growth path with the sustainability emphasis. Vietnam state’s policy is directed towards international integration and liberalization of the economy. However, numerous obstacles impede the government to implement economic reform plans revealed in early 2012 and based on the restructuring of state-owned enterprises, the public investment and reforming a banking sector. They are huge trade deficit, devaluation of the local currency, the highest inflation rate in the region, borrowing difficulties, and undercapitalized banking sector. Therefore, current efforts of the Vietnam’s government address issues of monetary and fiscal policies stabilization and regulation.
It should be noted that Malaysia made a great structural breakthrough in economic terms and transformed since the 1970s into a middle-income country characterised as the multi-sector economy. Prime Minister Najib chose such an economic growth direction based on the attraction of the investments in the high technology, finance industries, services volumes increase and biotechnology and thus providing status of the high-income country for Malaysia by 2020. State administration put a priority on the reducing Malaysia’s dependence on exports and increasing domestic demand. It is noteworthy that Malaysia is gas and oil exporter, the main drivers of countries exports revenues, thus, it is dependent on the commodity prices.
As Manurung (2012) argued, Indonesia’s government established such an economic policy that aimed to achieve long-term economic prospects by investing in infrastructure. Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development that includes 55 projects with a total value of $40 billion is the target task for the government. It also stands to mention that Indonesia was successful in customs and tax reforms, as well as the financial sector reformation and strong supervision and development of capital market. Indonesia’s government conducts fiscally restrained policies that keep current account surplus at the low level, as well as assure low rates of inflation. The priorities in the economic development of Indonesia are put on the elimination of corruption, reduction of unemployment and poverty rate, increase in wages level to reduce any tensions in society, substantial infrastructure development, and complex regulatory environment.
According to the National Statistical Coordination Board (2013), the Philippines economy has more favourable conditions for recovery from the economic recession. They are correlated with lower level of export’s dependence, resilient level of domestic consumption, and low dependence on the international securities stability. However, despite the 3.9 percent of real GDP growth in 2011, the problematic issue of poverty in the country remains one of the most essential issues. It is also necessary to note that economic growth is slowed by the low level of government spending, in particular on the infrastructure projects, and inefficiency in country’s taxation system, on which the government relates heavily for social programs financing.
As for the Cambodia’s economic backgrounds and sustainable economic growth strategies, it is necessary to mention that Cambodia demonstrated one of the biggest figures in real GDP growth in 2011. Agriculture, garment sector, tourism and construction are the drivers of the Cambodia’s economy. Sustainable economic growth for Cambodia is a daunting challenge. It is connected with the issues of supporting private sector for new working places creation to address specific for Cambodia demographic imbalance. IMF and World Bank are international donors for the country to develop adequate infrastructure, stimulate new industries development, such as mining, struggle with poverty and invest in education and work skills of local citizens.
Riefel (2012) argues that Burma despite the availability of multiple resources remains the poorest country comparing to other South-East countries. The reasons for the low economic growth rate and the areas where the government efforts have to be the toughest are rural poverty (over 32 percent), inefficient economic policy related to the total control over the economy from the government side. Foreign investors do not fund essential projects due to the corrupt and opaque business climate. Few industries that are still financed by foreign investments are mining, natural gas, timber and power generation. However, the extensive development of such industries influences the environment situation negatively. Government should address its attention to the infrastructure development, political reform and improvement of the investments climate, invest in education and human resources. The improvement aims at long-term economic development.
Laos and Timor-Leste remain the countries with underdeveloped infrastructure. The parliament of Timor-Leste approved ambitious budget amounting to $1.67 billion addressed mainly at infrastructure and new working place creation. Laos focuses its structural reforms on the creation of such business environment that will attract foreign investors in such industries as mining, construction and hydropower. Regarding such a specific country as Brunei, No and Begawan (2012) claim that Brunei is one of the richest countries in the world due to the natural gas and crude oil production. Moreover, sultan conducts wise economic policy that promotes entrepreneurship development, both domestic and foreign, free education and medicine, wise government regulation and village tradition.
According to the Regional Resource Centre for Asia and the Pacific (2004) and World Economic Forum (2012), with the aim to reach sustainable development goals countries of South-East Asia should develop participatory governance mechanisms that assure anti-corruption policies implementation, strengthen accountability of the private sector and its social responsibility, and improve transparency of trade policy and investments regulation.