Feature: Thailand and Singapore's tango

SINGAPORE, Aug. 27 (UPI) -- Singapore and Thailand started an economic "tango" last year when they launched the Singapore-Thailand Enhanced Economic Relationship (STEER) framework to promote closer economic cooperation. The two countries want to promote the idea of "one economy, two countries," and they see their project as a pathfinder for the older Association of Southeast Asian Nations (ASEAN), with the potential of having far-reaching implications for the ASEAN economic landscape.

On Wednesday, Singapore and Thailand made the first step toward their vision by signing several memoranda of understanding (MOUs). The initial agreements are meant to facilitate bilateral trade in heat-processed pork and pork products, while enhancing collaboration in the automotive and tourism industries, furthering cooperation between their stock exchanges and fostering closer linkages between their small and medium sized enterprises.

"Bilateral relations have been brought to a new level (with STEER). The two countries have deep complementarity in our strengths and we believe we will greatly benefit if we work closely together," says George Yeo, Singapore Minister for Trade and Industry.

"This is an important milestone in our joint cooperation. The MOUs are our first concerted effort to move forward together," added Somkid Jatusripitak, Deputy Prime Minister of Thailand. "I have a high hope that STEER will represent more than just bilateral trade talks," he added.

Historic ties between the two countries have always been strong and the two countries also shares strategic interest.

Talking to reporters after the signing of the MOUs, Yeo pointed that the Thai government envisages a future for Thailand as a center for services and manufacturing, tourism, food production and agriculture exports, while seeing Singapore as being strong in management, having an ability to raise funds and strength in logistic and transportation.

"Indeed if you look at it, there is a big complementarity that we can exploit and benefit from to create projects for businesses and to create employment for both sides. The key is, there is a common political will to develop this relationship, which is slowly trickling down to business leaders," Yeo said.

He added that the next step for STEER was to ensure "closer networking amongst businesses on both sides."

Last year, bilateral trade grew 6.2 percent. Thailand ranked as the seventh largest trading partner of Singapore, while Singapore is Thailand's fourth largest. In investments, Singapore was Thailand's second largest investor in terms of approved projects in 2002, and has consistently been the largest investor from ASEAN.

STEER envisages cooperation between the two countries in many areas, including agriculture and food, the automotive industry, finance, tourism and transport. The two countries' strategic locations could breed exciting possibilities, they argue. While Thailand serves as the hub connecting all high-potential sub-regions, including the North-South economic corridor linking the vast market of the Greater Mekong Sub-region and China, Singapore shines as a leading international port.

Both countries have high hopes STEER can play a "pathfinder role" for further ASEAN integration or as Jatusripitak put it "one that helps promote a new area of high-performance, intra-ASEAN economic cooperation."

Singapore and Thailand have been strong supported of free trade. The Lion-state has negotiating several Free Trade Agreements within the last couple of years (amongst other one with Japan and one with the United States), while Thai Prime Minister Thaksin Shinawatra sees free trade as integral to economic growth in his country and is speeding up efforts to conclude talks on free-trade agreements with no less than five countries, including Japan and China.

Thailand has also been a strong supporter of the creation of AFTA (ASEAN Free Trade Area), which includes all 10 ASEAN members.

At the start of this year, Thailand, Brunei, the Philippines, Malaysia, Singapore and Indonesia lowered tariffs on most their common imports to 5 percent or lower and all tariffs should be abolish by 2010. The remaining ASEAN countries have in principle agreed to remove their tariffs in 2015.

However, some members have also been dragging their feet on the implementation of AFTA, asking for delay and exemptions.

"Thailand really has an ambitious plan to revitalize ASEAN, but we can't do it alone," Jatusripitak noted, adding that he expected the STEER partnership to transform into a "prime mover" of innovative economic ties that will pan out across ASEAN.

"I believe it can inspire other initiatives in ASEAN," added Yeo.

Aviation, healthcare and tourism have all been identified as priority sectors for further ASEAN integration, and all these sectors are at the heart of STEER.

"We need to work with a greater perspective that transcends the scope of usual trade negotiations. I believe Singapore and Thailand are in a unique position to forge a comprehensive economic partnership, a dynamic partnership propelled by a bold vision, creative synergy and progressive actions," said Jatusripitak.