Profile: Don Hobart, ’07, USA
February 2007
SAME, SAME…BUT DIFFERENT
Posted January 26, 2007
The Night Market, Chiang Mai, Thailand (November 28, 2006). There’s an expression that’s big over here – in Thailand and elsewhere in Southeast Asia.
“Same, same.”
People tend to use it when speaking English and comparing things that are more or less alike.
It also shows up on shirts for sale in T-shirt stalls in places like the Night Market (often alongside shirts declaring “No Money, No Honey” – another, not surprisingly popular, motto around here).
The fronts of these shirts say “Same, Same” and the backs say “But Different.”
To give you some idea of the degree to which the expression has seeped into the popular culture, in Cambodia the Red Piano restaurant in Siem Reap (made famous by Angelina Jolie’s entourage as a hang-out when filming Tomb Raider) sells T-shirts that say “Red, Red…But Piano.”
Yeah, I know, I don’t get it either, but someone obviously finds it the height of wit.
I have no idea where the term comes from, but the expression is a useful way to describe where I have ultimately wound up in my thinking about Thailand and North Carolina, a few days away from pulling up stakes here and heading off to Singapore.
Over the past few days, I have had a series of meetings and site visits that have offered me some useful perspective on the similarities I initially noticed between our respective situations.
One of the issues I have always been intellectually curious about is the degree to which governmental entities can effectively influence private sector decisions about where to locate investments and new jobs.
It’s popular for free market advocates and critics of governmental-business collaboration to pooh-pooh the idea that the government can influence location decisions by business. Businesses, they say, go where the costs and resources they need are the cheapest. Government officials attempting steer and plan for balanced economic growth are simply on a fool’s errand.
They’ll point to North Carolina’s Global Transpark or academic studies of the Bill Lee Act tax credits and say, “See how pointless it all is?”
But the reality is not so simple.
One of the things I wanted to explore on my fellowship was the how governments in Southeast Asia had used economic incentives and public investments to drive investment to rural or underdeveloped regions as a means of alleviating the pressures of increasing urbanization and creating more balanced growth.
What I learned was that the issue is a fairly tangled one. Governments can definitely influence these sorts of decisions by private companies, but a wide variety of factors can come into play when attempting to determine what makes such efforts succeed, fail or yield mixed results.
I have to thank Paul Wedel at the Kenan Institute for recommending that I visit the city of Rayong in Thailand’s eastern seaboard region.
The visit involved getting up around 5:00 in the morning and driving for hours to get there. It was complicated by the fact that my interpreter failed to connect with us and my driver couldn’t find some meeting sites in an unfamiliar city. But those were just minor distractions in an otherwise fascinating visit.
The two most important kernels of insight that I gleaned from the visit were:
1. A better appreciation for the role that strong (or weak) state and local governments can play in achieving the goal of regional economic growth in underserved regions, and
2. The advantages that a national government seeking to achieve economic growth has over states like North Carolina that seek to achieve similar results.
Rayong’s success – and the success of the cluster of industrial growth that has occurred along Thailand’s eastern seaboard over the past 30 years or so – is owed to a centrally planned effort, led by the national government, to disperse growth away from overcrowded Bangkok.
The plan was reportedly hatched during a period when the Thai military controlled the government and was apparently willing to give pretty much free rein to the economists, planners and visionaries housed at the National Economic and Social Development Board (the NESDB). The period when the Eastern Seaboard project was hatched was arguably the NESBD’s finest hour – a golden age for central economic development planning that has since passed. It was a time when big ideas – really big ideas – were the order of the day.
Before I left, Paul explained to me that I would be seeing the Map Ta Phut industrial estate while I was there. Map Ta Phut seems to have been the central government’s first “stake in the ground” in an effort to catalyze economic growth in this region.
I knew a little about the system of government-sponsored or sanctioned industrial estates in Thailand from my reading and from meeting with Tom Reese, a creator of the Amata Industrial Estate south of Bangkok. These, however, did little to prepare me for the reality of Map Ta Phut.
I was expecting an office or industrial park – something like you see along Highway 70 between Clayton and Smithfield.
What I found was a sprawling industrial complex dominated by heavy industry and fed by vast quantities of petrochemicals piped in from offshore drilling operations in the gulf.
A network of huge pipes runs along the roadsides, rising up at forty-five degree angles to form gates at road crossings. These carry the gas that fuels the heavy industries located here. Rails sidings and spurs branch out into park. Giant refineries and processing plants dominate landscape, which you can view from atop a tall viewing tower in the center of the estate.
There really isn’t anything even remotely comparable in North Carolina.
The estate, however, demonstrates what a central government can do when it has vast resources at its disposal and the ability to steer large quantities of natural gas into an otherwise undeveloped region.
There were, of course, additional factors that enabled the region succeed industrially. The government put a quality superhighway in place to speed transport to and from the region, which is in reasonably close proximity to the Bangkok airports and the country’s primary deepwater port. It sweetened the pot for industry by creating significant tax incentives for industries locating in the estate – typically providing many years of targeted income tax exemption and relief from restrictions to market entry that foreign companied would otherwise face.
All of this cost money. A lot of money. Billions of dollars worth of money.
And it could all be done because the central government ran the show right down to the local level.
Map Ta Phut appears to have succeeded. It is pretty much full. And there are around five or six other industrial estates (some sponsored by the government, some by private interests) that have sprung up and are now operating in the region.
This is central government-driven clustering on the grandest of scales.
Of course, it hasn’t come without a price. The people who live in Rayong aren’t exactly in love with the whole operation. Yes, it provides jobs and ensures a growing economy, but it is the “eight hundred pound gorilla” around these parts.
The people with the hardest job in Rayong, in my opinion, are the local and provincial government officials.
One of the very things that made Rayong possible – a strong central government and a very limited local government – is the thing that makes it a hard neighbor to live with.
Because the central government built it, the central government gets the lion’s share of the revenues derived from it. The taxes it spins off for the local governments do not fund the costs associated with living next to it.
The factory operations tend to attract low-wage labor from the eastern provinces and Cambodia. This creates vexing social problems.
The operations at the estate aren’t exactly the cleanest industries. While things have no doubt improved over the years from an environmental standpoint, there is a sense among the leaders there that the environmental costs and risks to the people are not being fairly addressed or funded by the central government.
To bring all this back into focus – this type of regional economic development is a very hard model from which to draw lessons for North Carolina. About the only thing it could shed light on would be the potential for transforming the economy in eastern North Carolina if we were to open up the continental shelf for drilling off the coast or succeed in establishing an east coast terminal for import and gasification of liquid natural gas.
I suspect we could do a better job of managing environmental impact and social costs than the Thais were able to do at Map Ta Phut, and the impact of such a project could be huge, but this type of publicly funded regional development is simply beyond the scope of a state government such as North Carolina to implement.
Another aspect of my “Same, same…but different” realization was a fascinating meeting I had with the Ministry of Industry division responsible for developing Thailand’s automotive parts cluster.
When we talk about developing North Carolina’s automotive cluster, we think about recruiting suppliers to major automotive manufacturing plants, building up the presence of our motorsports teams, forging research alliances between the auto industry and the university system, attracting new research and testing facilities, and turning out highly skilled machine operators and engineers that can keep the factories and testing labs all humming at top speed.
That’s what I thought I was going to learn about in my meeting on Thailand’s motorsports cluster.
What I learned instead was that Thailand’s history as the “Detroit of Southeast Asia” has been deeply complicated by the nature of the foreign investment involved, the lack of an indigenous Thai motor vehicle or parts industry, and the now intense competition that Thailand’s fledgling automotive suppliers face from established auto and parts-makers like the Japanese.
I won’t bore you with details, but at the end of the day, I learned that the government’s efforts to build a motor vehicle parts cluster have been aimed primarily at developing a manufacturing supply chain and distribution network for local Thai businesses that develop, manufacture and sell motorcycle parts to the Thai market.
It seemed to be all about developing a purely Thai network capable of competing with an already well-integrated and established foreign motorcycle and parts industry that is both producing and importing goods for the local market.
The effort uses all the economic development buzzwords and theories for “clustering,” but puts a uniquely Thai spin on them. It is also designed to solve what seems to be a uniquely Thai problem – or at least a problem that does not exist for states like North Carolina.
Same, same. But different.
There is no question that Thailand and North Carolina face similar challenges in the face of an increasingly global economy. But as my time in Thailand grows to a close, experiences such as these have been useful counterweights to the tendency to search for and identify parallels and similarities.
We face many of the same challenges and employ many of the same broad strategies, but we are nonetheless very, very different.
To read more of Don’s blog, visit http://seasiafellowship.blogspot.com.