Laying the track towards Southeast Asia connectivity Challenges
Transcription
Laying the track towards Southeast Asia connectivity Challenges
Laying the track towards Southeast Asia connectivity Challenges faced by Western Contractors Final year dissertation presented by Kori R. Cicero, under the supervision of Jean Berger 2013 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 2 Avertissement The views, opinions and positions expressed are those of the author and do not necessarily reflect those of the Institut d’Études Politiques de Toulouse. * * L’IEP de Toulouse n’entend donner aucune approbation, ni improbation dans les mémoires de recherche. Ces opinions doivent être considérées comme propres à leur auteur. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 3 Foreword I would like to thank my dissertation director Jean BERGER for the help he gave me in defining its subject and for his advice. I also wish to thank all those who have participated in this dissertation and have responded to my requests for interview or questions by mail, often on their own work schedule and just willing to help. Because of the subject of this dissertation, their input was more valuable than anything I could find in official documents, articles, and websites. A special thanks to Stéphane CARBONNEL, Thomas CHABOUSSANT, Theresa DEVASAHAYAM, Nathalie FAU, José MORA, François PETIT and Thanut TRITASAVIT, and all other sources who wished to remain anonymous but kindly offered their point of view over the phone or by mail. Last but not least, I thank Alexandre BESSON, for his help with the bibliography and support. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 4 Table of Contents ABBREVIATIONS & ACRONYMS ........................................................................................................................ 6 TECHNICAL VOCABULARY .................................................................................................................................. 7 INTRODUCTION ..................................................................................................................................................... 8 WHAT IS ASEAN? ..................................................................................................................................................................... 8 WHAT IS SOUTHEAST ASIA’S RAILWAY REGIONAL CONNECTIVITY POLICY AND HOW DID IT START? ....................... 8 DIFFICULTIES ............................................................................................................................................................................ 10 METHOD & LESSONS LEARNED ALONG THE WAY .............................................................................................................. 10 BIAS ............................................................................................................................................................................................ 12 DEFINING THE SUBJECT OF STUDY ........................................................................................................................................ 12 PART ONE – UNDERSTANDING THE REGIONAL CONTEXT ................................................................... 14 I. OVERVIEW OF REGIONAL AND INFRAREGIONAL RAILWAY PROGRAMS .................................................................. 14 A. The Singapore – Kunming Railway Line, an ASEAN initiative ............................................................... 15 B. The Chinese – Laos– Thailand HSR project spearheaded by China ...................................................... 19 C. The Greater Mekong Sub‐Region: ADB’s idea of soft infrastructure cooperation ......................... 23 II. NEIGHBOR FEUDS SLOWING DOWN PROJECTS ........................................................................................................... 27 A. Thailand – Cambodia border fights ................................................................................................................... 27 B. Singapore – Malaysia HSR ..................................................................................................................................... 28 C. Regional competition for Multimodal projects: Deep‐sea ports ............................................................ 30 III. PRIORITY GIVEN TO NATIONAL INFRASTRUCTURE DEVELOPMENT ..................................................................... 32 A. Singapore and the national upgrade of an extensive network by 2030 ............................................ 32 B. Thailand and its four HSR lines ............................................................................................................................ 34 PART TWO – ASSESSING AND REDUCING RISKS ...................................................................................... 39 I. PREPARING FOR A DIFFERENTLY STRUCTURED ENVIRONMENT .............................................................................. 39 A. Assessing the normative system: legal and economic indicators .......................................................... 39 B. Labor market ............................................................................................................................................................... 41 C. Cultural challenges and miscommunication .................................................................................................. 43 II. IDENTIFYING AND AVOIDING CORRUPT PRACTICES .................................................................................................. 46 A. Definition of Corruption, Bribery and Extortion .......................................................................................... 47 B. Institutionalizing “gray areas” ............................................................................................................................. 48 C. Due diligence ................................................................................................................................................................ 52 PART THREE – ADAPTING CORPORATE SOCIAL RESPONSIBILITY POLICIES ................................ 56 I. WHAT IS CORPORATE SOCIAL RESPONSIBILITY AND HOW DOES IT IMPACT INTERNATIONAL ENTERPRISES’ ACTIVITIES OVERSEAS? ........................................................................................................................................................... 56 A. Definition of Corporate Social Responsibility (CSR) ................................................................................... 56 B. Major international CSR Guidelines and Principles .................................................................................... 57 C. Examples of CSR policies ......................................................................................................................................... 59 II. NECESSARY ADJUSTMENTS TO LOCAL EMPLOYEES’ NEEDS AND EXPECTATIONS ................................................ 61 A. Thailand Case study: the buddhist influence .................................................................................................. 61 B. Cambodia Case study: paternalist HR management .................................................................................. 63 CONCLUSION & PERSPECTIVES ..................................................................................................................... 68 RESOURCES .......................................................................................................................................................... 69 ANNEXES ............................................................................................................................................................... 76 TABLE OF FIGURES ............................................................................................................................................ 76 TABLE OF CONTENTS ...................................................................................................................................... 118 ABSTRACT .......................................................................................................................................................... 121 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 5 Abbreviations & Acronyms ADB AEC AJTP AMCHAM AMS ASEAN ASEC ATAP BACP BAP BIMP BOT CBA CLMV CSR EC ERIA EU FDI FTA FTCC GDP GIACC GMS HSR ILO IMT IRASEC ISEAS ISO JV ML MNC MPAC MRT NGO OECD QHSE PDS RO-RO ROW RSIS SEA SKRL SRT UNDP UNESCAP UNODOC Asian Development Bank ASEAN Economic Community ASEAN-Japan Transport Partnership American Chamber of Commerce ASEAN Member State Association of Southeast Asian Nations ASEAN Secretariat ASEAN Transport Action Plan (2005-2010) Business Anti-Corruption Portal Brunei Action Plan (ASEAN Strategic Transport Plan 2011-2015) Brunei – Indonesia – Malaysia – Philippines (sub-region) Build, Operate and Transfer Collective Bargaining Agreement Cambodia – Laos – Myanmar – Vietnam (sub-region) Corporate Social Responsibility European Commission Economic Research Institute for ASEAN and East Asia European Union Foreign Direct Investment Foreign Trade Agreement (often for bilateral trade) Franco-Thai Chamber of Commerce Gross Domestic Product Global Infrastructure Anti-Corruption Centre Greater Mekong Sub-region High Speed Railway International Labor Organization Indonesia – Malaysia – Thailand (sub-region) Institut de Recherche sur l’Asie du Sud-Est Contemporaine Institute of Southeast Asian Studies International Organization for Standardization Joint Venture Missing Link (between two railway lines) Multi-National Company Master Plan on ASEAN Connectivity Mass Rapid Transportation (Metro line) Non Governmental Organization Organization for Economic Cooperation and Development Quality, Health, Safety, Environment Project Data Sheets Roll On – Roll Off Right Of Way S. Rajaratnam School of International Studies Southeast Asia Singapore – Kunming Railway Link State Railway of Thailand United Nations Development Program United Nations Economic and Social Commission for Asia and the Pacific United Nations Office on Drugs and Crime Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 6 Technical Vocabulary Feasibility study A feasibility study is an evaluation of a proposal designed to determine the difficulty in carrying out a designated task. It precedes technical development and project implementation. Gauge Track width Platform A railway platform is the basic elevated structure on which the track will be assembled, and the whole railway apparatus will be built. The platform base is made with successive layers of compacted earth. It must be a certain height and width depending on the track specifications and environment. Building the platform is the first physical step in railway construction. Right of way (ROW) ROW is the width on either side of the railway line that is needed for the Contractor to properly perform the Works. Right of Way encroachments can happen when an old railway line ceased activities and landless people establish and organize their village life around the old track, which is Government property. Their presence and makeshift homes interfere with the Contractor’s work and they must be resettled elsewhere. This can be subject to much controversy as they are often not provided adequate alternative living spaces and/or may be uprooted with repressive methods. Spur Line A spur line is a secondary railway line that branches off a more important route, usually a main line. Railways a secondary route to a place or places not served by a main line. Strip sodding Also referred to as ‘engrassment’: this method consists in tapping pieces of fresh grass on the sides of a newly built road or railway platform. Depending on the situation, to prepare for rainy season this can be a more effective way to reinforce light slopes than cementing for example (because cement cracks then slides under heavy water volumes). Grass roots will grow fast and dig deep, compacting the earth underneath. Grass will absorb excess water and prevent earthworks from collapsing. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 7 INTRODUCTION What is ASEAN? “The Association of Southeast Asian Nations (ASEAN) was established on 8 August 1967. The Member States of the Association are Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam. The ASEAN Secretariat is based in Jakarta, Indonesia”. This is the introductory text to all the official ASEAN publications. Figure 1 – ASEAN Members Map1 What is Southeast Asia’s railway regional connectivity policy and how did it start? It started out in 1995 with the Singapore – Kunming project. The Singapore – Kunming Rail Link (SKRL) was first proposed at an ASEAN summit in 1995. The SKRL covers several routes through Singapore – Malaysia – Thailand – Cambodia – Vietnam – China (Kunming) and spur lines in Thailand – Myanmar and Thailand – Lao. The goal was for SKRL to be completed by 1 Source: Pattaya Times. http://pattaya-times.com/a7855-thailand-facing-competition-battle-in-asean-economic-community Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 8 2015, which coincides with the general connectivity objectives with the ASEAN Economic Community (2015). In the connectivity objectives, “physical connectivity” through transportation, and thus railway infrastructure is just one of the aspects. Freight transport is a priority, which may later allow people-to-people connectivity, once legislations are in line about migrant workers rights’ in Southeast Asia, who would probably be the primary users of railway between ASEAN countries. It emerged in 2010-2011 in the Economic Research Institute for ASEAN and East Asia (ERIA) reports that some SKRL lines hadn’t even been initiated, for example the Cambodia – Vietnam connection. ERIA attributes this to the lack of vision and practical work on the financial aspect.2 Study groups would meet and talk about the technical aspect, almost omitting the crucial question of “how do we finance all these projects”? That is really when governments were urged by ASEAN, the Asian Development Bank (ADB) and ERIA to seek ways to include the private sector and make the construction or rehabilitation of railways possible notwithstanding Southeast Asian countries’ limited resources. In fact the CLMV countries (Cambodia, Laos, Myanmar and Vietnam) had to be prioritized to catch up with the other countries. This is when Western Contractors enter the picture, as they are awarded contracts by national Governments or the Asian Development Bank through national governments to build or rehabilitate old colonial era railways, or Build, Operate and Transfer (BOT) concessions. The second formula allows national governments to delegate the operating and ticketing activity, with time for hand-over and training of local staff. The Contractors also benefits from this, usually making small margins in the construction part, and then remunerating themselves and their investment in the 20 to 40 year concessions. We must note that freight and goods transportation has always been the priority. Unlike in Europe, people transportation has not been considered until very recently. For that to happen, there must be a strong coordination in national migrant policies, which is still in the works. ASEAN is a pragmatic collaboration, and will not prematurely debate about a subject and impose regulations if all the sovereign countries haven’t given their approval. 2 We could also talk about the lack of coordination between SKRL special working group, the Master Plan on ASEAN connectivity staff and the Greater Mekong Sub-region initiative mainly carried by the ADB. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 9 This dissertation aims to be a practical paper, not a scholar research: it is a photography of experiences with added (geo) political and economical background and at a given time. I wanted to understand what major railway infrastructure policies were being pursued in Southeast Asia. I tried to identify conflicting ideas of regional integration and how that can affect an enterprise’s activity. I also shed light on hurdles Western contractors face while doing business in Asia and expose their contact with corruption, how to avoid it. Too often, there is an angelic vision of what business transparency and good practices should be versus a stigmatization of “gray area” business practices in South East Asia. Difficulties In the process of writing this dissertation, many people were contacted, and few actually interviewed. Some never answered, others agreed but didn’t follow up. Some interviews were in English, others in French. It was quite a long process to take notes from the interviews and send them back to interviewees for approval. It was challenging to translate bits and pieces of French into English in the text of the dissertation. Finally, on the touchy subject of corruption and unclear business practices, interviewees agreed that there are examples they have observed especially in the 1980’s and 90’s when there was less control and international scrutiny, and in some aspects tolerance or lack of support from the top Management, but did not wish to be cited. Method & Lessons learned along the way To write this dissertation, I conducted intensive research with feedback from annual reports and guidelines from ERIA, ADB, UNESCAP, ASEAN, GMS and many other regional cooperation organizations. I also consulted a lot of documentation regarding anti-corruption and CSR policies recommendations from international NGOs, associations and corporate websites. The most time-consuming and interesting part of my research was finding relevant professionals who could tell me about infrastructure regional integration in Southeast Asia from a geopolitical and economic viewpoint, and railway enterprises established in Southeast Asia who had worked as Contractors on different countries in the region. They reported the main challenges they faced and the lessons they’d learned from their experience. Most importantly, they gave me examples to illustrate my ideas. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 10 I researched a lot of profiles on LinkedIn with key words (name of a railway company, and country), and simply sent them a five-line message with the object of my request. I also sent messages to fellow IEP students and contacted friends living in Singapore, Thailand and Cambodia asking them if they had relevant contacts to recommend. Social media, people met at networking events in Bangkok, conferences attended and friends’ recommendations were instrumental in giving me these opportunities. Whenever possible, I requested an interview with professionals either physically or on Skype rather than asking them to answer questions by mail. Because I am the person enquiring information, it made sense that I should be the one doing the ‘hard work’ as answering an email is more of a hassle for interviewees. They had already agreed to set time aside in addition to their daily workload, and putting in the extra work of writing a well-thought text often leads them to procrastinate. Interviewees also reveal much more through a conversation in a relaxed setting. I usually explained to them my subject and quickly introduced them to each of my four chapters, mentioning they can give one answer per chapter with an illustrated example, and elaborate on the subject they feel more comfortable with. Open-ended questions often lead to them to talk most about the chapter to which they can identify more and to which they can give more answers about related to their daily work observations. Occasionally when they will start talking about a very interesting topic, I can encourage them to develop the idea, and I can also redirect them easily if I wish more details or if I don’t understand what they mean. Finally, allowing them to talk in their native language (usually French) was important, even though they were all fluent in English and the translation process involved extra work. They would usually give more details and express their opinion in a familiar language, whereas English was more of a working language. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 11 Bias I share my point of view in this dissertation, and it is biased, because I probably have more empathy for railway enterprises since working for 6 months in a railway enterprise during my gap year in Cambodia in 2012. My experience is what gave me the idea to write about this. Despite efforts to reach out to other enterprises, and international organizations, I almost exclusively interviewed French nationals, which also gives a limited overall vision to this dissertation. I’m glad that I was also able to obtain information from international political and economic analysts though: researchers from ISEAS, a Singaporean institute, and STRATFOR, an American company providing economic and geopolitical intelligence reports. Defining the subject of study This dissertation talks about Railway connectivity projects in Southeast Asia (SEA). Thanks to articles and professionals’ input, there is a special focus on Singapore, Malaysia, Thailand, Cambodia, Laos, Vietnam, and to a certain extent Myanmar and China (the Yunnan region being a gateway and connection-point to Southeast Asia). China and Japan are not technically in SEA, and the railway projects will only be studied as linked to other South East Asian countries or subsidized by their respective governments. Myanmar is still too young in the race to speculate about what will be done. I choose to focus on continental ASEAN, and will not talk about insular and maritime ASEAN territories (the Philippines, Borneo island including the country of Brunei, Malay and Indonesian territories). These countries also develop multimodal connectivity, but by definition they cannot have overland railway connections with neighbor countries. Of course there are many economic opportunities and positive ways of describing the surge of activity around infrastructure development in Southeast Asia. The multiplication of ambitious regional and national railway projects in the past 20 years spark railway contractors’ interest who strive to position themselves well in the international bidding race for multimillion dollar contracts in Asia. Southeast Asian countries are at a development stage where they still need foreign know-how to build and implement railway technology. Chinese and Japanese are in competition with European contractors in that area. Being awarded a contract in SEA after a Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 12 grueling tendering process is a victory in itself, but are Western contractors really prepared to face daily challenges on the work site? Do they underestimate the challenges of working in a different cultural, economical, and social environment? My goal is not to give a negative image of Southeast Asia. I merely choose to focus on examples of challenges for the companies mobilizing workforce and resources to build railways in SEA. In a way, they are contributing to ASEAN integration and economic development. I try to sum up the regional railway policies and conflicting powers at work regarding railway integration policy in Southeast Asia. I also identify what may be the key factors to take into account before settling in SEA, and how to remain aware of the environment both to prevent corruption and have a positive impact in local communities, which finally leads me to giving ideas to Contractors through pragmatic examples of what can be done to adapt Corporate Social Responsibility to the local context. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 13 PART ONE – Understanding the regional context Figure 2 – Continental Southeast Asia's Railways3 I. Overview of regional and infraregional railway programs The Singapore – Kunming Railway project is the genesis of all ASEAN railway connectivity projects. Later, China came up with a middle line in addition to SKRL’s eastern and western lines that would directly connect China to Thailand via Laos. Finally, the GMS Railway Strategic Framework is not a railway project per se, but reaffirms ADB’s commitment to spark transborder coordination initiatives to enhance railway connectivity between Mekong connected neighbors. 3 Source: PERLEZ, Jane & Bree FENG. “Laos could bear cost of Chinese railroad.” The New York Times, 01 January 2013. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 14 A. The Singapore – Kunming Railway Line, an ASEAN initiative The idea of implementing the Singapore – Kunming Railway Line (SKRL) started in 1995 at the 5th ASEAN Convention. The project was discussed under various regional cooperation programs, namely ASEAN Transport Ministers (ATM) or ASEAN Mekong Basin Development Cooperation (AMBDC) meetings. In 1999, the routes were approved and it was determined that there would be an Eastern line from Kunming in Southern China through Vietnam, Cambodia, Thailand, Malaysia all the way down to Singapore. A spur line would branch out from the Eastern line linking Vietnam to Laos. The Western line would go from Kunming through Myanmar, then Thailand. SKRL therefore performs a complete loop connecting seven ASEAN member countries. Figure 3 - Singapore – Kunming Rail Link (SKRL) Route Network Feasibility studies for construction of missing railway links or existing colonial era railway that needed rehabilitation started in the 2000 decade. However, there was not much actual construction, despite the regular reminders of the missing railway links to be completed at different sub-regional cooperation meetings (ASEAN Transport Ministers, ASEAN Mekong Basin Development Cooperation and even general ASEAN summits). The SKRL Special Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 15 working group was criticized for only considering technical aspects and not seeking ways to finance the railway projects or to involve the private sector. 1. Cash strapped ASEAN member states turn to China By 2010, it seemed the SKRL project was piloted by China, who spearheaded the railway construction efforts, starting from Yunnan (Kunming, Yuxi branching outwards towards all Southeast Asian borders). This was something ASEAN was grateful for as the other member countries were not able to finance the works needed for this ambitious project, at least not by 2015 the target date of completion. It can arguably be said that the loop the SKRL project will accomplish will mainly benefit China with access to neighbor Asian countries from which it wishes to import basic commodities. SKRL would set up an alternative and cost effective route reducing dependence on the Malacca Strait, through which 80% of Chinese imports currently transit. Geographer Nathalie FAU reminds this configuration is a source of concern for China who considers Malacca Strait as under American and Japanese influence.4 In the event of a blockade, this could very well lead to a national energy crisis and paralyze China for a while. Access by land through Myanmar – with maybe soon-to-be Dawei port –, and both Malaysia and Singapore’s ports are a nice step to gain independence from Malacca. 2. Yunnan, the gateway province Political analyst José MORA reminds Yunnan region in China also seeks to export manufactured goods to neighboring countries.5 He compares the relation between Yunnan and Vietnam or Laos to that between Texas and Mexico. The particular province has so much economical power in the region that is seen as a political entity in itself to which Southeast Asian countries can address to directly in trans border trade relations. In empowering Yunnan as a gateway to Southeast Asia, he outlines China also seeks political stability and security. Mora recalls the country’s revolutions had always started with poor peasants in central regions of China who felt left out. China today must find an outlet to channel the flows of migration from rural backlands to its overcrowded, 4 5 Nathalie FAU is a Researcher at the Research Institute on Contemporary Southeast Asia. See interview in annex. José MORA is an Analyst at STRATFOR Asia, a private intelligence company. See interview in annex. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 16 now expensive cities on the coastline and find alternative directions for Chinese businesses to expand. “Overflowing” through Yunnan towards Southeast Asia, and making freight transport infrastructure available will give Chinese new opportunities to expand their clientele in the whole of Southeast Asia. Interestingly enough, as China accepted to play a greater part in the Singapore – Kunming Railway project and began working on the track departing from Yunnan region the expression “Pan-Asian railroad” was starting to be used in Chinese press. Lines branching out from key locations in Yunnan are clearly sketched in the following map: Figure 4 – Yunnan Province: A Gateway to Southeast Asia6 A quick personal email exchange with the Yunnan editor of China Daily newspaper confirmed that Pan-Asian railroad and SKRL are historically the same project, as the Pan-Asian railroad originated in 1995 at the 5th ASEAN summit, aimed to connect China to Singapore through all 6 Source: China Daily http://www.chinadaily.com.cn/cndy/2013-07/04/content_16722813.htm Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 17 Southeast Asian countries and was set to be completed by 2015 which is the same narrative as SKRL. Why rename the project then? 3. What is the ‘Pan‐Asian railroad’? The major difference with SKRL is that China’s ‘Pan-Asian railroad’ integrates a 3rd line in this railway plan to connect to Singapore, which they call “the middle line”. This line would also depart from Kunming, directly through Laos and capital city Vientiane to Thailand (Nong Khai – Bangkok) with high-speed rail technology. Another China Daily article written in June 2013 suggests this line is not secured yet: “The central line will run from Kunming to Jinghong, also in Yunnan. Later, if negotiations are successful, it will progress at Vientiane, the capital of Laos, and then Bangkok.”7 4. Confusion to determine SKRL scope In contrast, in ASEAN notes about SKRL progress even as recent as 2012, officials persist in describing only the Eastern and Western line. This is maybe an identified point of friction between the ASEAN and ADB vision on the one hand and Chinese vision on other. However, ADB’s recent decision of approving funds for technical assistance on a Yuxi – Mohan sub regional railway link project is surprising.8 7 HU, Yongqi. “Tunnel builders sweat it out on new rail line.” China Daily, 04 July 2013. In June 2013, the ADB awarded USD 800,000 for special technical assistance on that railway link, which is not that much as railway projects usually amount to hundreds of millions of dollars. 8 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 18 Consider the following text in the ADB Project Data Sheets9: PROJECT RATIONALE AND LINKAGE TO COUNTRY/REGIONAL STRATEGY “The Yuxi – Mohan railway is a part of the Singapore-Kunming Rail Link Route 2, a priority rail route for connecting the countries of the Greater Mekong Sub-region. Improving rail connectivity in the GMS countries will help to move freight and passengers seamlessly around the sub-region and beyond to meet the increasing needs of trade and travel. It will also enhance sub-regional cooperation and accelerate socioeconomic development in the GMS through integration of their markets and economies. To realize this potential, railway transport and trade facilitation on cross- border transport between the PRC and Lao PDR needs to be developed to ensure efficient cross-border movement by removing nonphysical constraints.” The first phrase highlighted in italics contradicts the second one. This beginning of this railway project cannot conform to the SKRL if it goes through the northern Lao border, unless ADB finally approved the existence of a middle line in SKRL corresponding to the Chinese – Laos – Thai High-Speed Railway (HSR) project. Anyhow, this decision blurs the lines and makes ADB’s stance seem unclear. B. The Chinese – Laos– Thailand HSR project spearheaded by China China is planning to grant a loan to Laos to build a high-speed railway line going directly from Kunming, to Vientiane, then to Thailand through Nong Khai, making an impasse on the Vietnamese coastline which was originally integrated in the SKRL loop. China Daily calls this the “Pan-Asian railroad” with the middle route going through Laos. An article from the Bangkok Post explains China’s railway vision. 9 Project Data Sheets (PDS) contain summary information on the project or program: because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 19 Figure 5 – China's Asian Link Railway Project10 The simplified version below allows a clear view of the middle line route. This map can be found on 2014 Exporail Southeast Asia website.11 Figure 6 – Southeast Asian High Speed Rail12 10 Source: Bangkok Post article illustration (reference unknown). Exporail SEA is an international Exhibition of Railway Equipment, Systems & Services that will be organized on 12-14 March 2014 in Bangkok. 11 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 20 1. Leaving out Vietnam? There is speculation among experts about strained relations with Vietnam explaining the choice to go south directly through Laos, which is not an optimal choice from a technical and costeffective viewpoint (northern mountainous landscape). That was the reason Laos was to be accessed sideways from Vietnam (SKRL spur line) in the first place. Criticism over undercutting the SKRL project and ADB priorities by leaving out one of the CLMV countries (Cambodia, Laos, Myanmar, Vietnam) that need to catch up infrastructure-wise is to be mitigated. China confirms the eastern route through Vietnam is still scheduled, as the Yuxi – Mengzi line was completed in 2012. Yuxi, south of Kunming, to Mengzi on the route to the Vietnamese border is mainly intended for freight transport with a maximum speed of 120km/h. 2. A battle of words in the press The section of the project from Kunming to Vientiane is linked to much controversy, for the weaker position of Laos in the “negotiation” and questionable solvency of a high-speed railway line which would cut through mountainous areas, and cost Laos 86% of their current GDP. According to many journalists, Lao officials seem to have agreed to mortgage their whole country and natural resources letting go of their last shred of independence as they also forget about their traditional Vietnamese political allies in the same move. The title of a Time article quotes: “Laos was left to push forward with the project alone – albeit with borrowed Chinese cash. Buoyed by talk of a new Thai express railway to link Nong Khai, by the Laos border, with Bangkok, Laos’ 11-member Politburo unanimously approved negotiating the $7.2 billion loan from the state-owned Export-Import Bank of China. Chinese state media quoted the Laos Minister for Energy and Mines in October saying the deal would involve 5 million metric tons of minerals, mainly potash, being imported from Laos every year until 2020, as well as timber and agricultural concessions.”13 The title of the article leaves no ambiguity regarding the author’s opinion of the project. 12 13 Source: Exporail Southeast Asia. CAMPBELL, Charlie. “Laos’ Mammoth train project a fast track to debt and despair.” Time, 15 April 2013. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 21 On the other hand, a China Daily Mail article quotes rather bluntly: “Out of jealousy at China’s rise, the western media fiercely opposed China’s loan to the project of the railway linking Laos with China’s Kunming, alleging that the railway is detrimental to the environment due to the construction rubbish along the railway, and that the cost of borrowing is too huge. In fact, China lends the loan at a low interest rate for a long term of 30 years and Laos is to repay the loan by its mineral and agricultural products. The New York Times quotes an anonymous expert and advisor to UNDP14 as saying that the terms of the loan are too harsh, and will threaten Lao’s macroeconomic stability. It moreover quotes an anonymous Asian diplomat as alleging that both the Asian Development Bank and World Bank have expressed their worries over the project, and that the International Monetary Fund has warned Laos that it must be prudent.”15 Asian Development Bank, and its main donors Japan and the United States are skeptical and see this as a Chinese political gesture, while Laos, already the poorest country in the region takes a risk. Feasibility studies in 2000 suggested a whopping 76 tunnels and constructing 152 bridges would be needed for 420 Km of track – representing two-thirds of the entire route – which is reportedly why China bailed out of the “middle line” project as a contributor and now apparently leaves Laos to bear the cost of railway. 3. Japanese vs Chinese regional influence In the backdrop of the HSR project through Laos, there is somewhat of a clash of titans between Japan and Chinese regional visions. Japan has secured regional influence via the Asian Development Bank, an Asian version of the World Bank. Japan are the top contributors with the United States (who are also firmly opposed to this project) and since the institution’s creation to combat poverty in Asia in 1966, high-level officials of the ADB remain Japanese nationals year after year, despite international criticism. Japanese aid has long operated in Laos and ADB publicly expressed concern over the debt Laos is ready to contract with China via their ExportImport Bank. The configuration likens Laos’ situation to Cambodia, literally bought over by China with local population suffering from land grabbing and displacement as officials sold off so much national territory to China. Another concern is that China will most likely flood northern Laos with Chinese labor instead of hiring locally. 50,000 Chinese workers are to be sent to Laos for the 5-year period of railway construction. 14 15 United Nations Development Program. “China-Laos high-speed railway link meets fierce western opposition.” China Daily Mail, 15 January 2013. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 22 José MORA explains that both Japan and China see Southeast Asia as an extension of their national economic policy. Their main concern is to secure the territory and create infrastructures for their national companies’ benefits in SE Asia. The slight difference resides in their priorities. Japan traditionally finances the East-West axis in Southeast Asia, for it wants an efficient supply chain for Japanese enterprises dotted along Southeast Asian countries; China on the other hand essentially subsidizes North-South connections as it wishes to use railway for import of raw materials and export of manufactured goods. 4. Thai – Chinese relations On the Thai side, Researcher Ian STOREY describes the HSR railway project via Laos to Nong Khai, then Bangkok as one of the many maneuvers to reinforce ties with China. “Since 2010, the two countries have been discussing a joint venture high-speed rail network that would eventually link Yunnan province with Laos, Thailand, Malaysia and Singapore. The Bt 150 billion ($4.8 billion) project envisages a 385-mile line from Nong Khai province in the northeast of the country to Bangkok. Construction is expected to begin in 2012 with completion set for 2016, per a Memorandum of Understanding signed in December 2011 (Straits Times, February 18, 2011).”16 C. The Greater Mekong Sub‐Region: ADB’s idea of soft infrastructure cooperation The Greater Mekong Sub-region (GMS) is an initiative that was born as early as 1992 with the realization that Asian countries with access to the Mekong River shared many specific development issues and could cooperate in a smaller group and a more efficient way than in the extended ASEAN frame. GMS is one of the three sub-regions in ASEAN. 16 STOREY, Ian. “From Strength to Strength: Military Exercises Bolster Sino-Thai Relations.” The Jamestown Foundation, 22 June 2012: China Brief vol. 12, issue 12. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 23 Figure 7 – ASEAN Sub-Regions17 1. Members of the Greater Mekong GMS member countries are Myanmar, Thailand, Vietnam, Laos, Cambodia and China (for the Southern region of Yunnan connection). Thinking projects in sub-regions and economic corridors is the Asian Development Bank’s line of vision. The ADB built on the idea that sub-regions can produce better results by focusing on smaller and pinpointed geographical areas, cooperating on different topics in preparation of the AEC in 2015. 2. Road infrastructure, a priority Once road infrastructure development connecting territories within the GMS had considerably advanced, railway transportation entered in the GMS working scope in 2008. Following suit, an extensive report published in August 2010 called “Connecting Greater Mekong Sub-region Railway Strategic Framework” noticed that aside from the SKRL, there were no regional railway projects.18 17 18 Source: Economic Research Institute for ASEAN and East Asia (ERIA). http://www.adb.org/publications/connecting-greater-mekong-subregion-railways-strategic-framework Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 24 3. Definition of Soft infrastructure More importantly, there was no plan to interconnect the different national railways of the GMS member states. In addition to the need of addressing technical aspects (different track gauges and track interruptions at the border), there was simply no “soft infrastructure”. The expression “soft infrastructure” covers all the non-technical standards GMS countries would need to work on to ensure seamless travel between countries. This meant flattening out potential hurdles beforehand to encourage international railway connectivity. It includes the legal aspect of signing agreements to avoid border law enforcement delays driving up the cost of cargo railway transportation, or even agreeing on the ticketing prices on an itinerary covering two or more border countries. 4. ADB’s instrumental role Nathalie FAU says as early as 1997, the ADB policy required a previously signed trade agreement (often bilateral) between countries involved in a potential project for an infrastructure grant or loan approval. The Bank realized there had to be premises to not only building but also operating the infrastructures. The GMS Transportation section reminded the importance of defining common technical standards before pursuing further connections, and most importantly working on coordinating legal and commercial aspects.19 19 http://www.adb.org/sites/default/files/pub/2010/connecting-gms-railways.pdf Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 25 For Contractors, it is easy be subject to a little confusion about which lines will be developed under the SKRL project, or which ones will be done with the Chinese – Thailand High-Speed railway. It is also still unclear whether all these projects will be financed soon, and by whom (ADB, National Governments, China?), whether they are scheduled to start anytime soon or even if they are classical or high-speed railway lines. It is of upmost importance for prospective Contractor to do their homework and “sort out” information. Political discourse and regional alliances can change, and even projects written on paper can be abandoned and replaced by new ones, or simply forgotten for lack of political will. They can also be reshaped and taken over by a more powerful country in the region, after all China added it’s own vision to the SKRL project with a HSR line through Laos. As an illustration, the brochure of upcoming 2014 Exporail Southeast Asia states that in Laos, there are business opportunities for Contractors for a $5 billion section of the Singapore – Kunming Railway link from China to Vientiane that will is scheduled to start in 2016. Time will tell if this information is inaccurate or incomplete, for nothing is confirmed yet. Figure 8 – Rail Projects in Southeast Asia20 As we have demonstrated earlier, this section is not in the initial Singapore – Kunming project and the China – Vientiane HSR section is at best highly controversial. It is still a bit premature to communicate a starting date. There also seems to be little margin possible for a Western Contractor considering the high costs of a line where 2/3 of the railway are to be built on bridges and tunnels, alongside all the political, economical uncertainty and moral issues that could arise from this unclear deal. 20 Source: Exporail Southeast Asia. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 26 II. Neighbor feuds slowing down projects Disputed ownership over the Preah Vihear temple at the Thai-Khmer border caused military casualties on both sides. Despite the fact UN ruled in favor of Cambodia, stating Preah Vihear was Khmer, tensions still prevail today as Thailand does not recognize UN’s input as legitimate. How can strained neighbor relations affect railway policy to link ASEAN countries? As we’ve mentioned earlier, facts suggest that behind all the regional plans, if political wills of all parties involved do not coincide, it is of little use to establish timelines for bilateral projects. A. Thailand – Cambodia border fights In the context of the Thailand – Cambodia border tensions, three facts undermining railwaylinking efforts confirm this: 1. Thailand: Aranyaprathet – Klongluk missing link Despite the ADB and ASEAN repeatedly reminding the (only) 6 Km of missing railway between Aranyaprathet to Klongluk on the Thai side needed priority construction efforts from Thailand for the Singapore – Kunming Project, the section has never been completed. 2. Cambodia: Poipet – Sisophon missing link Likewise, the Poipet – Sisophon 48 Km section on the Cambodian territory has never fully been rehabilitated although ADB financed the project under the GMS Initiative for development of priority countries (Cambodia) and according to the SKRL project. The first reason for non-completion of works was financial, as the French rule era railway was much more degraded than initial studies had determined. Although ADB did agree to extra funding, it did not extend the budget to the Contractor’s expressed needs. The second reason were social issues, as the Contractor had to face many unforeseen resettlement issues including that of a whole traditional marketplace near the right of way. This impeded the works, and Contractor refused to carry on with the works without a proper Right Of Way (ROW) access. There were subsequent accusations of poor management of the arising problems on both sides, as not much railway track was effectively completed by the Contractor on this line, and the Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 27 project was abandoned. 21 On the other hand resettlement issues lingered on without clear establishment of responsibility between the Cambodian Government and the ADB. Perhaps the third and most important reason was the least obvious one: if Thailand was making no efforts to smooth relations with Cambodia, and did not work on linking Aranyaprathet to the Khmer border, what was the hurry in doing so on the Khmer side? Perhaps the Cambodian Government did not have enough motivation in pushing for the project to be completed. 3. Joint‐Venture with AS‐Nawarat A Joint-Venture (JV) that had been established between French Contractor TSO and Thai company AS-Nawarat for the railway rehabilitation works in Cambodia went bust. The Thai partner backed out a very short time before officially starting the works, although their name was still on some official documents. It is possible AS-Nawarat had foreseen the complications of working in a country that did not welcome them at a time of strained relations with Thailand. As a result of all these combined factors, the project stagnated and to date no link from Aranyaprathet to Klongluk, nor from Poipet to Sisophon has been completed. These two missing links undermine the SKRL vision. Given the tense relations between both countries, the warning sign for Contractor TSO should have been the withdrawal of AS-Nawarat, and the lesson learned is that a Western company must think twice before accepting a contract in a country with poor governance, for the moral issue of being in between resettlement issues. To defend the Contractor, the backing by the Asian Development Bank should have provided a guarantee in terms of payment and good practices, but evidence suggests despite all the transparency and control processes a development bank cannot control every step of the way, and their main leverage will be to toughen conditions or suspend access to future loans to a country. B. Singapore – Malaysia HSR Singapore and Malaysia’s relationship has been warming up recently, but bilateral squirmishes over the past decades about many issues have also fed a lot of resentment between these 21 Despite other resettlement issues on the Southern Line Contract, which was also awarded to the same Contractor TSO, the Southern line from Phnom Penh to Sihanoukville is today almost completed. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 28 neighbors.22 This may explain why a high-speed railway project has been object of endless discussions since 2006 despite the fact that it serves both countries’ economic interests and even reinforces regional connectivity. In February 2013, both parties agreed to schedule the beginning of HSR works in 2020. 15 years from an idea to its realization is quite a long time, and nothing is guaranteed yet! 1. Who’s paying ? Commentaries on the different news articles online describing the Singapore – Malaysia HSR project are eloquent. They can be summed up in two perspectives and in a way reflect their respective leaders’ arguments about who will benefit more from the project: • Singaporeans replying Malaysia will benefit more from the HSR because of the expected hike of real estate prices on the Malaysian side of the border, and the opportunities to commute and work in Singapore. • Malaysians affirming Singapore will be the main beneficiary because of the city-state’s increasing lack of space. Both sides make valid points, and these bickering remarks are a reflection of the “who should pay more” attitude that Singapore and Malaysia have always sported regarding common interest infrastructure projects. However, relations have been warming between both countries and the project seems to be on the go. The Malaysian government may call for an international open tender for the HSR link between Kuala Lumpur and Singapore by the end of this year. 2. Electoral motivations Perhaps another way of understanding this accelerated agreement is that both actual Singaporean and Malaysian Prime Ministers wish to leave their mark and secure their position in the next elections by starting a popular (or populist?) infrastructure initiative that will require “continuity”. 22 “Singapore was part of Malaysia for two years from 1963 to 1965, before it was kicked out from the federation amid ideological differences. In the years following that, the two nations disagreed over issues including a new bridge linking the nations, the price the city-state pays for water and the ownership of an uninhabited island near both countries.” in: CHEN, Sharon. “Singapore, Malaysia set 2020 target for high-speed rail link.” Bloomberg, 19 February 2013. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 29 “Asked how the upcoming Malaysian polls, in which Mr. NAJIB’s ruling Barisan Nasional Party is expected to face a tough fight, would affect this plan and others that the two leaders have made, Prime Minister NAJIB said that these are ‘long term plans’ that require continuity and stability’. ‘It's quite obvious what I mean’, he said with a smile.”23 Singapore and Malaysia nurture complex relations of interdependence and competition, a translation for Contractors would be to wait until the elections and see if the project is withheld. C. Regional competition for Multimodal projects: Deep‐sea ports Geographer Nathalie FAU argues that it is difficult to study Southeast Asia’s regional railway connectivity without considering interaction with other networks: highways and even pipelines may follow a parallel route to a railway. Deep-sea ports may have a connection with a railway line for freight transportation. The purpose of the Master Plan on ASEAN connectivity was to regroup all the different initiatives and connectivity programs, and identify multi-modal nodes to further build on for better regional logistics performance. In that perspective, rivalry between neighbor countries can sometimes extend to building not only railway but multi-modal infrastructures in direct competition with each other seeking to capture someone else’s traffic and clients. 1. Tanjung Pelepas, a challenger for Singapore Tanjung Pelepas and Singapore ports are an example of rival infrastructure projects, they cater to the same needs and are very near from each other but do not collaborate. N. FAU recalls experts worldwide were astonished by Malaysia’s project of setting up competition so close to Singapore, a top performing port with world-class facilities. Today Malaysia won their bid as Tanjung Pelepas has secured a placement in the top 20 ranking of world ports in terms of activity. She also notes they managed to attract Maersk, a major shipping company and formerly Singapore account. 23 CHANG, Rachel. “PMs agree on high speed rail linking KL, Singapore.” Straits Times, 19 February 2013. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 30 2. Three deep sea ports on the Indian Ocean? Likewise, N. FAU identifies Sittwe, Dawei (in Myanmar) and Pak Bara (in Thailand) as three deep-sea ports projects all located on the Indian Ocean coast. Dawei and Pak Bara ports are so near from each other, it seems at least one port’s development will be privileged over the other. Figure 9 – Deep Sea Port Projects in Indian Ocean24 N. FAU concludes that regional initiatives will never totally eradicate nationalistic ambitions. 24 Source: ASEAN – India Connectivity: The Comprehensive Asia Development Plan, Phase II, ERIA Research Project Report, December 2011. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 31 III. Priority given to national infrastructure development One of the reasons regional railway infrastructure is slower to fall into place is because national connectivity policies are priority, and do not require the same coordination as bilateral projects. A. Singapore and the national upgrade of an extensive network by 2030 Figure 10 – Crowded MRT in Singapore25 1. The early bird policy Perhaps one other of the reasons Singapore – Malaysia HSR has taken so much time to define is that Singapore has a great problem of it’s own: the overcrowding of transport infrastructure. The city-state has a very particular situation in Southeast Asia, with a 7,546 persons / Km2 density, the 3rd highest ranking in the world. As a result, a government trial was launched in April 2013 stating: “Early starters who travel into the city area's 16 MRT stations before 7.45am on weekdays will get free train rides. Those who get off trains there between 7.45am and 8am will enjoy a 50 cent discount on fares.”26 This is a quick fix, and public opinion is pressuring the government and leading People’s Action Party (PAP) to find a solution to the lack of space and infrastructure capacity. Upgrades, more frequent routes and extensions are required, and an ambitious program is to be implemented by 2030. 25 26 Source: unknown. CHOW, Jermyn. “Early birds get free MRT rides from today.” The Straits Times, 24 June 2013. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 32 Figure 11 – Singapore’s New Rail Transit Projects27 2. A demographic strain makes upgrades urgent Upgrading public transportation is both a political and national security priority, because of the large discontent following the publication of the White paper and will override any regional railway plan. An online article from the Diplomat, sums up the situation: “Not long after losing a by-election, the ruling People’s Action Party (PAP) launched a White Paper entitled ‘A Sustainable Population for a Dynamic Singapore’. The paper outlined the government’s plans to sustain economic growth and deal with a rapidly aging population, but for the most part only one thing captured the public imagination: the projected population of 6.9 million by 2030. It’s a very unattractive prospect, especially when strains have already begun to show with 5.3 million people crammed onto an island of only 714.3 square kilometers. Flooding and train breakdowns are only some of the problems that have begun to annoy Singaporeans used to taking efficiency for granted.”28 27 28 Source: Singapore Land Transport Authority. HAN, Kirsten. “Singapore’s population debate grows heated.” The Diplomat, 18 February 2013. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 33 Because of the outcry, amendments have been made to this white paper, which also include transport measures: “(a) place priority on resolving current strains on the infrastructure, particularly in transport; (b) plan, invest in, and implement infrastructure development ahead of demand.”29 B. Thailand and its four HSR lines Chula SUKMANOP, Director General of SRT (State Railway of Thailand) says the first phase of the four projects will start at the earliest in 201819. Bidding for the new technology is expected to be opened by 2013’s third quarter.30 Thai Ministers have approved a plan to borrow USD 67.6 billion to build HSR lines and other infrastructure over the next seven years. In this loan for infrastructure budget are included the four HSR lines and 13 lines to MRT system of the capital for a total of 410 kilometers added to rail routes across Bangkok and its outskirts. Figure 12 – Thailand's High Speed Railway Projects31 The benefits of developing MRT and national railway solutions are threefold: • Bangkok struggles with traffic issues, and extending the MRT lines will allow Thais living in the outskirts of Bangkok to access the city easily and commute efficiently. • The 500,000 job creations linked to the four HSR lines will be spread out across the territory and also give work opportunities to Thai population in the Northern provinces. 29 “Amended motion on white paper adopted; 6.9 million is not a target.” The Straits Times, 09 February 2013. “New agency to be set up to run high-speed rail project.” Bangkok Post, 29 April 2013. 31 Source: Exporail Southeast Asia. 30 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 34 This will contribute to redistributing economic activity at a time when public opinion complains that infrastructure-wise, “everything is for Bangkok”. Job creations are most welcome in this critical period, as Thailand growth has slowed down in the last semesters. 1. Regional integration ambitions The four HSR lines are part of a coherent plan to propel Bangkok as a major logistics hub in Southeast Asia, according to the Kingdom’s ambition. Thailand plans on hinging international extensions on three of the four national HSR lines. Thailand will create access to the Laotian border through Nong Khai, potentially Cambodia via Aranyaprathet and Malaysia through Hat Yai. In short, Thailand wants to develop the national vision first, but also plans ahead with a long-term strategy to access neighbors through high-speed rail.32 François PETIT, Economic Counselor at the French Embassy in Thailand, estimates that Thailand is probably the most determined and active country in implementing a national and regional railway policy because both interests collide.33 In a nationalist perspective, both the tourism and logistic hub ambitions justify the need for a better internal and trans-border railway connectivity. 32 33 “Thai Cabinet backs plan for ports and rail lines.” The New York Times, 20 March 2013. See interview in annex. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 35 Figure 13 – Route and Station Concepts of High-Speed Rail in Thailand Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 36 2. Ensuring Transparency STRATFOR Analyst José MORA reports critics say these large-scale railway projects will funnel corruption and Contractors with political links will probably be awarded contracts. PM Yingluck SHINAWATRA pushed for government to adopt a bill allowing Thailand to borrow funds without going through the annual government budget process, which according to her would prevent delays by securing the budget even in the event of a change of government, and give investors confidence. Financing these projects outside the annual budget process will have as an effect to reduce government transparency. It seems like this is a manoeuver for PM SHINAWATRA to seal the project for the next seven years, regardless of the outcome in the next elections. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 37 Regional and Bilateral projects have been thought over since a long time 1995-2013, almost 20 years, but newly formulated National policies seem to go faster as the political will coincides with the financial will. It’s also about momentum and the economic viability of a project. Western Contractors should keep in mind ASEAN is not European Union (EU). There is a Secretariat but no other organism, or rather, there are multiple organizations. Regional Funding does not guarantee a project will be backed, and Contractors need all the national support they can get in navigating through a very different ecosystem to carry out the works. In a regional project, there may be funds but no consensus or political will, or there may be political will but no funds. It is important to keep in mind even the regional institutions such as ADB, or countries with economic power such as China can back out due to internal fights, or people protesting on the negative impact of railway construction (resettlements, badly prepared feasibility studies underestimating the scope of works) leaving the Contractor to lose all the initiated work. That is why it is a good idea to work in collaboration with one or several other Contractors with each their own specialty to mitigate risks. Contractors may even decide to turn to their Embassy for collaboration in the preliminary work of interesting the government stakeholders, as is doing ALSTOM with the French Embassy in Thailand. Economic Counselor M. François PETIT reports joint lobbying has been carried out with both the French and Thai Transport Ministers to highlight French technical capacity. The final objective is to place French Contractors at the forefront of Thailand’s scheduled four highspeed rail line projects when it will be time to open bids. Relations initiated this way mean the Embassy can potentially weigh in if a major Contractor or a collaboration of several Contractors faced with unexpected interruption or freezing of financing, and is a better incentive for completion of works on both sides to avoid jeopardizing good diplomatic relations. ASEAN Economic Community in 2015 and the Master Plan on ASEAN connectivity may contributing to shifting regional priorities into national ones, but there is still a lot of work to do. So far, regional railway projects were for freight, and to extend that for “people-to-people” connectivity, there must be law harmonization on migrant workers. This aspect still remains an issue in sovereign Southeast Asian countries. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 38 PART TWO – Assessing and reducing risks It is important for Western Contractors to not make the mistake of underestimating everyday challenges in a new environment. Things that are taken for granted in Western societies do not work the same way or do not work at all in another country. This statement even applies to companies with international experience. There are many factors to consider, for instance: • Developing countries in different regions do not all face the same type of issues. • Corruption does not take on the same forms everywhere. • Southeast Asian countries host very different economic and education development levels.34 • Finally although some elements can be similar, cultural values are different from one country to another. Adjusting to all these factors require a basic knowledge of the legal and economic context, thanks to a local network. Anticipation of potential corruption issues and clearly defining a corporate policy for gray areas can contain both moral and financial costs. I. Preparing for a differently structured environment Building railway infrastructure and contributing to giving a developing country access to a clean energy efficient transportation is a noble cause. However, one must not forget railway contractors are businesses and focus on securing revenue. In the last decade, and this especially applies to Southeast Asia, bids for railway projects are increasingly issued by developing countries either financed by their fast growing economies and centralized governments, or aid through the Asian Development Bank coupled with other international donors (Australian Government aid for example is committed to several projects in Asia-Pacific). These stakeholders require very functional infrastructures with low maintenance needs to keep costs down. Competition has also become worldwide and fierce. Japanese, Chinese, Spanish or Swiss contractors may be in the race for the same railway project. A combination of both these factors has driven prices down, and Western Contractors’ margins have significantly dropped. That is why a Contractor must weigh the balance of risks and opportunities much more carefully than three decades ago. A. Assessing the normative system: legal and economic indicators 34 Surprisingly enough, education levels are not as intimately related to economic development as one may expect. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 39 In developing countries, you can’t have everything. There will usually be a lack of legal structure, and if a political system is stable and the ruling party has been in position for many years, it is probably because there is an authoritarian government. However, It would be nonsensical for Western contractors to require a “perfect” legal and political environment to be able to consider working on a project abroad. 1. Legal structure There are simple prerequisites according to Thomas CHABOUSSANT, TSO Finance Director. The Contractor must be assured that there is enough legal structure to secure opportunity of a fair arbitration in case of major disagreement. “It is imperative that the judicial system be independent from the political system. There is much more risk of losing a lot of money on opportunities which seem interesting, in a country with a weak legal backbone. The enterprise is so much more exposed that sometimes it is just not worth it. In a country like Cambodia, when something goes wrong, it becomes tragic. There is no safeguard. It is almost impossible to go to court, I mean with a guarantee of fair trial. In a country like Cambodia, when things don’t go well at a higher level, the conflict becomes highly political.” Contractors should also consider the political and financial risks of establishing a Joint - Venture with a local enterprise, as this can constitute a legal obligation. This is especially relevant to state companies, which may have an opaque functioning system, with close ties with the political realm. If a disagreement occurs in that configuration, a Western contractor will often be stuck and count losses alone, as the government will defend a state company whatever the outcome. 2. Access to a clear database of economic indicators An enterprise should be ready to start working as soon as the contract has been awarded. Having a local network in the country as a base to work on is very important. Thomas CHABOUSSANT describes how difficult it was to build a network of trusted suppliers. Even more challenging, not having access to clear economic indicators made every first business transaction difficult. Since there had been so few international infrastructure building and construction Contractors to previously work in Cambodia (they were mainly Chinese companies), there were no records of prices of basic commodities, hiring machinery, hiab trucks. Despite having local negotiators and Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 40 Logistic Managers to deal with suppliers, TSO sometimes ended up paying “Western” prices because they did not know what local firms paid for the same services. TSO had to hire HR Consultant firm studies to determine the paying scale for their workforce, in different positions (qualified and non-qualified labor). With Myanmar opening up and planning to award many infrastructure contracts, Western contractors can imagine suffering from similar lack of information, and the pioneers would probably face similar tasks to have access to basic information. B. Labor market A combination of misunderstanding at work, booming economic activity meaning full employment for nationals of ASEAN countries often mean Contractors seem to struggle to hire and retain qualified workforce until the end of a project. 1. Hiring locally can be a challenge… Thomas CHABOUSSANT laments the fact that even though TSO wanted to hand responsibility roles to locals, they were confronted with lack of qualified and experienced management in Cambodia. “Something that has really disadvantaged our activity in Cambodia was that we were not able to hire local employees for top Management. For example in Algeria, -where TSO also operates- where there are many things in common with Cambodia, there is a big difference because our Branch Director is Algerian. It makes a huge difference: he understands the environment very well, and knows exactly what to do. We have not been able to find his counterpart in Cambodia. I think it’s related to the country’s history, and the fact that the civil war35 has mainly affected a certain age group, precisely in the one we would be looking for an experienced Project Director.” Alexandre BESSON develops the problematic of hiring locally: “Recruiting people is a very big issue in Cambodia. When we decided to change our security services’ provider, the new contractor also had trouble in finding the right people for the job. They needed to recruit guards from the neighborhood. It was easier for them on an HR point-of-view. Infrastructures are very poor in Cambodia, which makes the workforce’s mobility very limited. It was also a good idea to have guards from the same 35 See next page: “Focus on: Khmer Rouge Regime in Cambodia”. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 41 province, so they would know how to deal and be accepted by the villagers. And it’s also a way to contribute to the local development. But the downside is having local people made them very vulnerable to bad influences from people organizing the fuel embezzlement, who could put pressure on them knowing their family and where they lived.” Khmer Rouge Regime in Cambodia Between 1975 and 1979, Cambodia suffered the Khmer rouge regime, a distorted interpretation of communism. Khmer rouge forced a massive exodus from Phom Penh city to rural areas, organizing population into forced labor communities. Mass execution of educated people (ranging from elite families with overseas education to simple elementary school teachers) and general starvation is estimated to have led to more than 1/5th of the total population loss. Khmer Rouge political discourse was the creation of a “new Cambodian identity” linked to agricultural values. Cambodia still suffers today from the major loss of intellectual capital and has not yet recovered the education gap over several generations. 2. …Keeping talent as well Germain THOMAS and Jonathan BLAINE, both speakers at different presentations, reached the same conclusion when talking about the Thai workforce high mobility: with less than 1% unemployment in the Kingdom, employees with potential will easily switch employers, or resign knowing they will easily find an equivalent or better position. As a result, they are more demanding and expect employers to provide them a nice working environment, with responsibilities and career evolution perspectives. It is not uncommon for Thais to “job hop” with an average of 1-year stints in a company. Nathalie FAU paints a similar portrait about qualified employees in Malaysia, reporting an international engineering company shared their frustration about hiring local Engineers which are hard to find, and harder to keep. Once Engineers have acquired enough experience, they will often move to Singapore for a higher income. This effect is reinforced concerning ethnic Chinese Malaysians, discriminated against in their own country by public policies that favor Malays. They aspire to live in an environment where they can raise their own children with equal opportunities. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 42 A source also reported that as an interviewee with a Risks department Manager at Maybank (one of the top Malaysian Banks) in Kuala Lumpur, the Manager insistently enquired about his longterm commitment capacity. The Manager explained that Maybank faced a recurring problem: after training young talents extensively and giving them access to expensive international certifications, Maybank saw promising employees headhunted by competition for a higher salary. This was indeed confirmed just a year later, as the interviewee’s contact in Maybank who had forwarded his resume to the Risks department Manager had himself moved on to another bank operating in Malaysia for a position with a bigger scope of responsibilities. J. BLAINE thinks that Thai workforce should now focus on improving their competitiveness, for they are taking the current advantageous economic situation for granted. They may fall hard when the country opens up with the ASEAN Economic Community objectives and will be in competition with foreign ASEAN workforce. Countries like Bangladesh or the Philippines, produce more Engineers which are qualified and cheaper to hire. It does seem that even in less mature developing economies such as Vietnam or Myanmar, employees trying to move up the ladder strive to improve their English communication skills more than in Thailand. Thanut TRITASAVIT, a Researcher and Thai national with American college education concurs “Language would also be a problem as the Thai standard of English is not very high.”36 C. Cultural challenges and miscommunication Miscommunication and misunderstanding at work is common in Asia. Interviewees often report that employees, subcontractors, suppliers are reluctant to say “no” and would rather ignore a proposal or neglect a project until its forgotten, than express disagreement. 1. Non‐confrontational communication and the power of hierarchy During his presentation about overcoming the cultural gap in Thailand, Germain Thomas Business development Manager at Comin Asia told the anecdote of an employee who resigned allegedly because her room on a business trip did not have a nice view. This quite extreme example gives an idea of how discussing real issues are avoided in Asia. The person obviously did not want to bring up the real motive behind her resignation. Perhaps she did not get along with her colleagues, perhaps she disagreed with Management over a fundamental issue, or maybe 36 See interview in annex. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 43 she found a better opportunity, the fact is she did not want to confront hierarchy with her real motives. Thanut Tritasavit, a researcher at ISEAS in Singapore gives an explanation in that regard: “Speaking from Thailand's perspective (which you might already know quite a bit about), the Thai culture seems to permeate throughout local organizations (respecting seniority, doing as asked while keeping quiet regardless of whether the action is right or wrong, etc.)” In TSO Cambodia, Alexandre Besson was faced with a case of mismatched communication linked to the fact the interpreter felt she was in an inferior position and did not want to take the freedom to communicate clearly. “Hierarchy is so much important in Cambodia that you need to be very careful when choosing your interpreters. Having people from within your company who can translate things for you is not sufficient and does not ensure you good conditions for a deal. You have to make sure your interpreter’s social status is adequate for who you want to deal with. If you don’t have the ‘same level’ on both sides, your interpreter won’t be able to make you understood by your counterpart. When I decided to stop the contract with our previous security services’ provider, the employee translated short sentences by very long phrases. The day after, the provider came back at the office and was very angry because we started replacing their guards. In fact, they didn’t understand we were not happy with their services. The interpreter put so many precautions in dealing with the company owner the day before that she covered all our reproaches…” 2. Cash culture and losing face Finance Director Thomas CHABOUSSANT describes “cash culture” in Cambodia. According to him, it is specific to a developing country. “Paying dues on time is a matter of respect. There is a cash culture here. In Europe, if you pay 15 days later this will not be a problem but here is it different. In Europe, suppliers or employees will naturally trust respectively their client or their boss who will tell them they will be paid. They will not be suspicious if the company doesn’t pay at the exact moment they said they would. In Cambodia they will be deeply disturbed if you pay later than they expect. It is something quite irrational because they will sometimes prefer to leave before even having the chance to be paid. It is a matter of losing face because they feel mocked.” Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 44 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 45 II. Identifying and avoiding corrupt practices Liu Zhijun, China’s ex-railway minister was condemned in July 2013 to a life-sentence imprisonment and confiscation of all personal belongings. His nickname “Mr. 4%” was an indication of the ‘private’ fees a Contractor had to pay to secure a project. Mr. Zhijun’s case served as both an example and warning, as he was the first anti-corruption trial under the Xi Jinping governance, indicating to high level officials they are no longer ‘protected’ by their status. It is interesting to observe that high levels of corruption are traditionally observed in the infrastructure industry, where tenders can easily be ‘rigged’, whether by securing a contract with a ‘special’ envelope, by communicating the lowest bid to friends or family in the business so it can be matched with a slightly lower offer, or even by agreeing with other bidders to keep price and quality high in the tender process. In the same way Southeast Asian countries present very contrasted levels of economic development, and thus infrastructure investments and projects, there are high variations from a country to another in transparency legislation and corruption levels in business. Professionals also stated that despite a high level of economic development, ‘you would be surprised’ at how cronyism and illegal intimidation still permeate in some countries’ business culture, in a more subtle way. Stéphane CARBONNEL, Project Director at ALSTOM Singapore with a regional scope admits that because of ALSTOM’s strict policy regarding transparency processes37, thinks in an interview (see annex) that ALSTOM loses on business opportunities in Asia. But it’s the correct attitude to have, as he already senses a change in mentality and forecasts more pressure from both newly elected politicians and public opinion to put a halt to corruption. These past few years, most of international organizations – UNO, ILO, OECD, UE, ADB… – strongly encouraged Corporate Social Responsibility (CSR) policies through declarations, charters or codes of conduct on best practices, with often a strong focus on anticorruption. 38 If some provide guidelines to help enterprises facing corruption in their business activities – the most commonly referred document being the OECD Guidelines for Multinational Enterprises39, advice remains very general and does not really help companies dealing with their every day issues. For instance, the practical advice given in the 10th principle of the UN Global Compact advice to fight corruption is very limited: “To introduce anti-corruption policies and programs within business operations; to report corruption cases; to share experiences and best practices; and to join forces with industry peers and other stakeholders.”40 37 He says that ALSTOM as a corporate policy refers to OECD guidelines on that matter. See part 3 for more details on CSR. 39 OECD Guidelines for Multinational Enterprises (2011) 40 http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html 38 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 46 A. Definition of Corruption, Bribery and Extortion 1. Corruption Corruption can take many forms that vary in degree from the minor use of influence to institutionalized bribery. This can mean not only financial gain but also non-financial advantages. Generally speaking, Transparency International defines corruption as “the abuse of entrusted power for private gain”.41 Corruption can be classified as grand, petty and political, depending on the amounts of money lost and the sector where it occurs. Grand corruption consists of acts committed at a high level of government that distort policies or the central functioning of the state, enabling leaders to benefit at the expense of the public good. Petty corruption refers to everyday abuse of entrusted power by low- and mid-level public officials in their interactions with ordinary citizens, who often are trying to access basic goods or services in places like hospitals, schools, police departments and other agencies. Political corruption is a manipulation of policies, institutions and rules of procedure in the allocation of resources and financing by political decision makers, who abuse their position to sustain their power, status and wealth. 2. Bribery In its Business Principles for Countering Bribery, Transparency International defines bribery as “an offer or receipt of any gift, loan, fee, reward or other advantage to or from any person as an inducement to do something which is dishonest, illegal or a breach of trust, in the conduct of the enterprise's business.”42 3. Extortion The OECD Guidelines for Multinational Enterprises define extortion as: “The solicitation of bribes is the act of asking or enticing another to commit bribery. It becomes extortion when this demand is accompanied by threats that endanger the personal integrity or the life of the private actors involved.”43 41 http://www.transparency.org/whoweare/organisation/faqs_on_corruption Transparency International’s Anti-Corruption Plain Language Guide 43 OECD Guidelines for Multinational Enterprises (2011) 42 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 47 B. Institutionalizing “gray areas” At times the line between cultural adaptation and corrupt practices is hard to draw, this is what can be called a “gray area”. There is nothing wrong with giving or receiving a gift, especially in countries where it is a customary sign of respect. Everyone enjoys a good meal shared with business partners in a relaxed the atmosphere, and there is nothing wrong about that either. On the other hand, does one feel righteous in categorically refusing a largely underpaid civil servant any “contribution” for work accomplished from which the company will benefit? The question could be: are we considering the problem the wrong way, through ‘western goggles’? Where is the limit between cultural differences and corruption? Is it possible to institutionalize and adapt to Asian specificities? In this chapter, I will explore tools that can be used to shed gray areas in the spotlight and how contractors can do their part by give clear instructions to their employees. 1. Gifts and hospitality (GIACC) Refusing a gift may be perceived as rude, insensitive or culturally offensive. There is no need to stigmatize a gesture, rather there are ways to make sure these practices do not lead to complacency and corruption. Gifts and hospitality should be subject to reinforced corporate policy guidelines. Although the definition of what a gift may be is quite clear, hospitality may be a bit more challenging to pinpoint. It can range from an invitation to a banquet or a sporting event to a paid-for hotel getaway. In general, it can be categorized as free of charge entertainment. A source wishing to remain anonymous who works for an international infrastructure enterprise recalls that not so long ago in the 90’s, a Customer Representative presented a Chanel designer bag as a gift to the wife of a Business contact. The company’s policy has since drastically changed and with the increased risk of prosecution for corruption, it has been decided that there would be a radical approach: gifts between professional contacts and prospects are forbidden. It is possible though with adequate monitoring to give employees a little margin. There should be a threshold value, depending on the cost of living in the country over which employees cannot accept or cannot give (for example: USD 50 in a western country, and USD 25 in a developing Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 48 country). Strangely enough, “OECD Guidelines for Multinational Enterprises” mention neither gifts nor hospitality in the sixty pages report, although it is probably the most likely disguise for corruption. On the other hand the GIACC44 extensively covers the subject by giving clear and applicable procedures to Contractors. A document is even provided as a model for reporting gifts. Explaining the procedure to employees can avoid many issues. Even if an employee is found to have engaged in corrupt practices, and is the object of judicial scrutiny, an enterprise that can provide proof of seriously enforced procedures and “bona fide” can convince judges that it is an isolated act and all has been done to prevent such behavior in the corporate setting. A Design and topography specialist shared that it is common practice for a Contractor in France to invite Consultant Engineers – whose mission is to control the Contractor’s road or tunnel building works on the technical aspects – for lunch. This simple gesture often allows the two parties to talk in a relaxed setting and contributes to good relations on a project. This doesn’t mean the Consultant Engineers will subsequently become complacent and overlook their professional duty. So when is inviting or gift-giving appropriate in the professional realm, and when does it go too far? GIACC recommends using the “newspaper test”. If the news of the exact facts leaked to the press, would an article implying corruption be likely published? “What would the public perception be? For example, a bottle of whisky given at Christmas would be unlikely to be reported or to give rise to an adverse impression. On the other hand, an all expenses paid overseas golfing week-end prior to a tender evaluation would almost certainly give rise to an adverse impression if reported.” 44 The Global Infrastructure Anti-Corruption Centre (GIACC) is an independent not-for-profit organization that provides resources to assist in the understanding, identification and prevention of corruption in the infrastructure, construction and engineering sectors, so it is particularly relevant to railway Contractors. The GIACC Resource Center provides free on-line information advice and tools: www.giaccentre.org Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 49 2. Facilitation payments Promoting corruption-free businesses not take into account the reality of corruption, which often plagues a whole country or system. Corruption or gray area practices should at least be monitored rather than ambitiously claiming they will be fully eradicated. MAERSK shares on it’s website that it does tolerate the company’s agents to make facilitation payments as a last resort, when asking to meet a superior or asking for a receipt do not work. This is an open policy, for many companies deny engaging in this practice but still do so. Facilitation payments are regarded as illegal in international standards and guidelines. What is modestly called a ‘facilitation payment’ consists in releasing money to officials for something one should normally get.45 While bribery is getting something you can’t legally get by giving money to someone, ‘facilitation payments’ is also a way of avoiding greater disturbances. Here the difficult question of a company’s tolerance level is raised. A Maersk HSE & CSR46 internal source told me the maximum amount was USD 150, and in some African countries for example, the company de facto contributes to the income of underpaid public agents, who cannot live on their salary alone. The source confirms instructions are to avoid payments whenever possible, and practice on the job suggests categorically refusing to “tip” will lead to greater costs as transit agents have a great power of nuisance by withholding passage, and know that for the shipping industry time is literally money. Also, the company’s main concern is an employee’s safety. If one senses the situation could be dangerous, the instructions are to pay whatever amount is requested and report afterwards for MAERSK to follow-up. The company does plan to progressively eradicate all facilitation payments. Figure 14 – Maersk on Facilitation Payments47 45 ”Facilitation payments [are] small sums demanded by government employees in exchange for performing administrative tasks they are legally obliged to perform without such payments.” Source: MAERSK Corporate Website http://www.maersk.com/Sustainability/ResponsibleBusinessPractices/Pages/Anti-corruption.aspx 46 Health, Safety, Environment and Corporate Social Responsibility. 47 Source: Maersk Corporate Website. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 50 Should a Contractor be faced with this type of situation, it is always better to brief employees beforehand on what is the maximum amount to be given, and implement an internal reporting system, just as for gifts. There is no use in putting the employee’s personal safety in jeopardy. In a threatening situation, it is sensible to pay then see what the company may do later to avoid this from recurring. When operating in Cambodia for the renovation of the national railway, TSO had to face several situations in which they were asked to pay officials to continue their activities. “I remember that one day, while on my way to Sihanoukville, my boss called me to see if I could clarify a situation. The police, at an intersection between two main roads, systematically stopped all our trucks. I stopped by and asked my driver to speak with the policemen and the drivers to see what was the problem. They were asking all the trucks’ drivers – from our company only – to pay a special fee to access the road leading to our works. Our management had to contact Cambodian officials to solve the problem.48 Finding the right local business partners big enough to stop or at least limit extortion can be an interesting alternative for Contractors. “The difficulty is to find trustful and influential partners or suppliers who, because you make business with them and make them earn money, will chose to protect you and will have the sufficient leverage to tell others you can’t be extorted too much or too often…”49 Regarding gray areas, the summed up recommendations to Contractors would be: writing down, rather than ruling out. Ignoring issues exist will not make them disappear. Putting a lid over a known problem and letting employees sort out situations by themselves with no instructions is probably the worst thing to do. Management should take responsibilities and realistically brief employees, and control everything that’s done internally. Having an open policy about how to face these issues like Maersk can also force International guideline issuers to think about more practical and down to earth solutions. In its Guidelines for Multinational Enterprises, OECD states that “Enterprises should carry out risk-based due diligence, for example by incorporating it into their enterprise risk management systems, to identify, prevent and mitigate actual and potential adverse impacts.”50 48 See in annex: interview with Alexandre BESSON, former Security & Safety Manager at TSO Cambodia. Idem. 50 Paragraph num. 10 of General policies. 49 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 51 C. Due diligence Fighting against corruption while doing business implies anticipation and a real networking effort of top-level management, also oriented in meeting other companies’ executives with experience in a region to share experience, practices, and contacts. 1. Internal network / resources / informants Stéphane CARBONNEL explains that ALSTOM has a local business network in each country they work in. In Southeast Asian countries, whenever possible having a Customer Director who knows the context, the culture and speaks the language is what ALSTOM strives for. This also allows the company to take the temperature and have an idea about interesting opportunities or not, not only with the economic factor in mind, but also depending on social and political context. That is how for example ALSTOM decides not to position themselves in Laos because of the Chinese dominance over the country, or to a lesser extent Malaysia, where the law clearly discriminates non-Malays. The government will push towards doing business with Malay rather Chinese companies, and both communities do business in very distinct and ‘racialized’ entities, which is ethically challengeable and not a positive framework for integration. TSO Cambodia asked HR Consultant companies to conduct Market Researches on cost of living, cost of basic commodities and Construction industry related costs for a better overview of the market prices in Cambodia. This resulted in a complicated exercise, for even today, Construction and infrastructure projects are not often done by Western Contractors, but rather local small companies or Chinese companies. The results were limited, as even the Consulting firms warned the little information they were able to obtain was probably not accurate. Access to basic information being so hard, leaves enterprises to imagine how hard it can be to adapt in daily work where everything so easy to obtain in Europe becomes a struggle for information in Cambodia. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 52 2. Sharing information with peers Thomas CHABOUSSANT, TSO Finance Director explains that during their project in Cambodia the most helpful advice has been given by peers. In the absence of economic data, other enterprises shared experiences were really what helped T. CHABOUSSANT understand what could or could not be done. T. CHABOUSSANT talks about how in Cambodia he realized that corruption was fueled by fear. In the same way someone may feel compelled to give a policeman a bribe by fear of facing further problems, a company may give in to a “financial inspector” by fear of retribution for refusing to pay bribes. Through the French Chamber of Commerce networkings for example, he was able to connect with other Businesses who told him that they hadn’t paid and subsequently had not had any problems. It is all about sensing things, saying no is just not as dangerous as one can imagine. 3. Business Anti‐Corruption Portal One of the most interesting and practical tool is the Business Anti-Corruption Portal (BACP)51, a website providing free comprehensive up-to-date information on corruption. This can be particularly useful for small and medium enterprises that may not have their own – or limited – assessment capacities to effectively manage corruption risk. Figure 15 – Snapshot of the Business Anti-Corruption Portal (homepage) 51 www.business-anti-corruption.com Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 53 The Portal is owned by a Denmark-based consulting firm called Global Advice Network and financed by five Northern European governments, namely: Austria, Germany, Norway, Sweden and the United Kingdom. The website contains around 70 country profiles presenting the last developments on investment and corruption and giving general information on local politics and regulations. You can also find an assessment of corruption levels for each country, with a focus on particular sectors such as the police, tax administration or public procurement and contracting. It also covers and evaluates public and private anti-corruption initiatives and policies. Figure 16 – Snapshot of the Business Anti-Corruption Portal (page: corruption in Cambodia) The presentation for each country of the existing anti-corruption agencies, their achievements and their level of independency and reliability, shows the information is well – researched and personalized. This is a precious source of information for enterprises needing practical help. It also covers Non-Governmental Organizations (NGOs), the media and civil society’s freedom level and their involvement or capacity in fighting or reporting corruption. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 54 In addition, another chapter provides reliable reports, references, anti-corruption legislation and treaties, contact information of private anti-corruption organizations. There is information on due diligence tools on agent screening and consultant evaluation processes, partnerships, jointventures and consortiums, contractor procedures or public procurements can be downloaded online.52 For an effective anti-corruption policy, it is necessary for a supportive and realistic Management to brief employees beforehand, local or expatriate. ISEAS Researcher Thanut TRITASAVIT, sums up the idea about anti-corruption policies in Asia: “I'm not an expert in this area but I think that while international and regional institutions can insist on increasing transparency and anti-corruption regulations, there is so much said on the surface but not really much done deep down under. There are always cases where contractors are supposedly guaranteed something and at the end, are not rewarded with what was promised. (…) At the end of the day, as globalization and further economic integration comes around, the countries which house these problems will have to start complying more with international standards to be accepted for future business.” In recent years, anti-corruption policies have been integrated to what is called “Corporate Social Responsibility”. Beyond corruption, CSR is a wider vision of enterprises’ role and responsibility in economic and social development, democracy‘s promotion and environment’s protection. 52 See in annex for a detailed example of a due diligence tool provided on the portal: “Vetting of Partners Flowchart”. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 55 PART THREE – Adapting Corporate Social Responsibility policies Corruption has always seemed to be an expression covering a very large array of practices. In the 90’s the idea of “good governance” was the preferred term to talk about overall transparency and accountability. Today, Corporate Social Responsibility (CSR) seems to have taken over, encompassing both good governance and employer’s responsibilities not only in employee’s wellbeing in daily work activities but also in terms of long term impact resulting from their activity: respect of the environment, ensuring education and wealth created thank to activity can be redistributed through the local community etc. I. What is Corporate Social Responsibility and how does it impact international enterprises’ activities overseas? The European Commission (EC) defines Corporate Social Responsibility as “the responsibility of enterprises for their impacts on society”.53 This wide definition has an important impact on doing business overseas, as international enterprises have to define their own CSR policy. This has to be done in accordance with their corporate identity, image and activity, and in the respect of general international guidelines. A. Definition of Corporate Social Responsibility (CSR) There are many different interpretations of Corporate Social Responsibility, as the discipline is large and encompasses very different fields, all related to the positive impact an enterprise can make. Different enterprises will have their own conception of what is priority. 1. Expanding the scope of Enterprise responsability If the 10th principle of the United Nations Global Compact (2004) clearly states the private sector “shares responsibility for the challenges of eliminating corruption”54, CSR is not limited to anticorruption. The EC considers enterprises “should have in place a process to integrate social, environmental, ethical human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders”. 53 http://ec.europa.eu/enterprise/policies/sustainable-business/corporate-social-responsibility/index_en.htm In October 2011, the European Commission published a new policy on CSR, along with an agenda for action covering the period 2011-2014: cf. European Commission Communication on CSR 2011: Implementation Table http://ec.europa.eu/enterprise/policies/sustainable-business/files/doc/csractionstimeline121213webversion_en.pdf 54 “Businesses should work against corruption in all its forms, including extortion and bribery.” http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 56 This means CSR closely links business activities to regional development, making expected from international companies to adopt a CSR policy, especially when operating overseas in developing countries. 2. For AMCHAM, CSR is about having a generous attitude Nowadays, institutions like the American Chamber of Commerce in Thailand (AMCHAM) promote CSR as a core mission, in addition to their traditional role of promoting American businesses’ development.55 AMCHAM believes CSR is a part of US companies’ business DNA, because of the widespread professional tradition of companies giving to charity and providing scholarships in the US. AMCHAM Thailand speaker said American companies should endeavor to continue in that direction even outside of the US, to set them apart as an example for other companies in Asia, and to show their commitment. There is – among the 24 committees of the chamber – a committee specifically dedicated to CSR, identified as “rallying point and resource center for AMCHAM members who are either developing or improving their CSR strategies.”56 3. Higher exposure means higher standards on CSR In the past few years, CSR has become a real tool for most of enterprises, with integration levels depending on their activities and/or corporate vision. The most media-exposed companies make CSR a very central point of interest and part of their corporate identity. CSR is actually a good way to improve enterprises’ image by showing their involvement in the local economy is a winwin situation and not only in a way to take advantage of local resources. CSR can also considered by companies as a tool to reduce risk exposure. B. Major international CSR Guidelines and Principles The European Commission identifies 5 instruments that together make up “an evolving and increasingly coherent global framework for CSR”.57 55 Presentation of AMCHAM during a networking event organized by ‘Bangkok Americans’ at Hemingway’s Restaurant: Bangkok, August 21st 2013. 56 Also see: https://www.amchamthailand.com/ACCT/asp/cmtedetails.asp?MenuCatID=8&CmteID=112&MenuItemID=3&Spon sorID=1002 57 http://ec.europa.eu/enterprise/policies/sustainable-business/corporate-social-responsibility/guidelinesprinciples/index_en.htm Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 57 1. The most widely referred to international documentation OECD Guidelines for Multinational Enterprises58 The OECD Guidelines for Multinational Enterprises are far reaching recommendations for responsible business conduct that 44 adhering governments – representing all regions of the world and accounting for 85% of foreign direct investment – encourage their enterprises to observe wherever they operate. The 10 principles of the UN Global Compact59 The United Nations Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labor standards, the environment and anti-corruption. Companies can sign up to the UN Global Compact, which subsequently commits them to submit a yearly communication on progress report. 2. Voluntary based recommendations ISO 26000 Guidance Standard on Social Responsibility60 The ISO 26000 guidance standard on social responsibility is a voluntary international standard. It provides guidance rather than requirements, so it cannot be certified, unlike some other wellknown ISO standards. It is aimed at all types of organizations, not just enterprises. 3. A focus on working conditions UN Guiding Principles on Business and Human Rights61 The UN Guiding Principles on Business and Human Rights define what governments and enterprises should do to avoid and address possible negative impacts on human rights by enterprises. Based on the UN Guiding Principles, the European Commission has been developing an introductory guide to human rights for small businesses, and guidance for 3 business sectors. 58 http://www.oecd.org/corporate/mne/1922428.pdf http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html 60 http://www.iso.org/iso/home/standards/iso26000.htm 61 http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf 59 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 58 ILO Tripartite Declaration of Principles concerning Multinational Enterprises on Social Policy62 This declaration offers guidelines to multinational enterprises, governments, and employers' and workers' organizations in such areas as employment, training, conditions of work and life, and industrial relations. This declaration is the only International Labor Organization (ILO)’s text that is also addressed to enterprises. The ILO provides a help-desk for enterprises on international labor standards. In addition, for questions related to reporting and transparency, enterprises frequently refer to the Global Reporting Initiative63 and to the International Integrated Reporting Council64. C. Examples of CSR policies If most of companies integrate CSR into their Human Resources policies, some make it a responsibility of their QHSE department.65 For example, MAERSK considers the combination of HSE and CSR as a way to achieve sustainability.66 1. Adapting CSR to the immediate environment CSR vary according to enterprises’ environments, locations and interests, and can also vary within the same group according to local stakes. For instance, business units operating in Australia will be particularly oriented towards aborigine workforce promotion while those having activities in Southeast Asia will target poverty reduction. An oil & gas company will probably spend more on environment protection than on sex equality. 2. Energy efficiency DSV, an international logistics company, identifies environment and climate as its CSR top priorities, as “warehousing and transporting millions of shipments every year put a large strain 62 http://www.ilo.org/empent/Publications/WCMS_094386/lang--en/index.htm https://www.globalreporting.org/ 64 http://www.theiirc.org/ 65 QHSE: Quality, Health, Safety and Environment. 66 See in annex: case study on Maersk CSR policy. 63 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 59 on the environment”. As a consequence, its CSR programs target “energy efficiency improvement and lower carbon emissions from [their] transport activities”. They also promote paper, plastic and cardboard recycling at their different locations around the world.67 3. HIV Prevention When TSO was operating in Cambodia, the Security & Safety Manager was in charge of all CSR programs in addition to core missions in accidents’ prevention and protection. These programs ran from HIV prevention trainings to workers’ living conditions’ improvement or conflicts with local population’s mitigation. All were part of the contract signed with the Cambodian government and the Asian Development Bank. “We had a partnership with a local NGO to organize HIV prevention sessions on a monthly basis. This was a contractual obligation. Our workforce was very mobile and moving along with the works (the Southern line was 264 Km far, from Phnom Penh to Sihanoukville). Training our workers was a way to preserve the Cambodian society of diseases’ spreading along that line. All the sessions were attended half by our workers and half by villagers.”68 67 68 http://www.dsv.com/About-DSV/csr See in annex: interview with Alexandre BESSON. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 60 II. Necessary adjustments to local employees’ needs and expectations To understand how an Enterprise can adapt to local employees’ expectations, it is better to illustrate by examples. Two case studies will be presented here: COMIN Asia in Thailand, an engineering solutions company regularly organizes employee field trips with a group project of painting a local school or temple in need of a touch-up. TSO in Cambodia, a railway construction company negotiated a Collective Bargaining Agreement (CBA), and helps small income workers and their family cover health expenses. A. Thailand Case study: the buddhist influence Germain THOMAS, Business Development Manager at COMIN Asia, company established in Thailand and other Southeast Asian (Cambodia, Vietnam) countries, was a guest speaker at a Franco-Thai Chamber of Commerce (FTCC) event on June 25th, 2013. The subject of his presentation was: “How to overcome the cultural gap in the professional world?” He explained how COMIN Asia’s international Management adapts to their Thai workforce in daily professional life. Two of his PowerPoint slides sum up the main cultural influences he identifies in Thailand and how the workplace must adapt to that: Figure 17 – COMIN Asia’s Presentation on Understanding Thai Society Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 61 Figure 18 – COMIN Asia’s Presentation on Thai Staff’s expectations 1. Giving back G. THOMAS explains that regarding the Buddhist influence, employees expect to give back to society. They expect companies to conduct active solidarity policies in which they can participate. In Thailand, that can translate in charity events or even physical teamwork where the company organizes a day-trip to work on helping to repaint and perform small repair works in a temple or a school. This goes hand-in-hand with the idea of respect, kindness and CSR activities. Instead of a top-down CSR policy (where Human Resources and Communication Departments will seek to implement new activities and work hard to get participation and positive feedback from employees), in Thailand there is a bottom-up motivation also coming from employees to engage in solidarity and charity activities. 2. Enjoying work It is also a component of what G. THOMAS describes as “work has to be sanook”, which means employees expect to have fun at work and love what they do. They will also expect to be rewarded for their achievements, and having a well-perceived managerial policy is even more Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 62 important in Thailand where the workforce is very mobile. With less than 1% unemployment, if employees do not feel satisfied, it is not a problem for them to resign and look elsewhere. 3. Being sensitive to regional cultures About the main culture gaps, ethnic minorities and regional cultures play a big part in setting up teams, as people from “the North” or “the South” have a very different mindset and G. THOMAS has learned over the years to be sensitive to personnel’s backgrounds and potential frictions before making them work together. 4. Buying power and promotion Finally, G. THOMAS noticed there is a different relationship to money, employees do not wish peers to know their salary, and they occasionally flaunt high spending habits. He reports a particular example of being surprised to see a staff member coming to work with a new iPad, which was nearly worth his monthly salary. Thailand, as most other countries in Southeast Asia (perhaps excluding Laos and Myanmar) belongs to a more consumerist society model compared to European conservative spending habits. As a result, and coupled with the low unemployment numbers, employees expect to gain competence and promotions faster. A lot of these examples are also valid for Vietnam and Cambodia, and Thomas CHABOUSSANT adds that in addition to a regularly expected rise, Cambodian employees give great importance to their official work title. In the Cambodian case study, I will explore how TSO strived to make a positive impact in their adaptive HR Management. B. Cambodia Case study: paternalist HR management A Collective Bargaining Agreement (CBA) between Building and Wood Workers Trade Union of Cambodia Railway Rehabilitation Project (BWTU-CRP) and TSO Cambodia was signed in March 2012. T. CHABOUSSANT explains that TSO had a different approach to Corporate Social Responsibility, applied to the local environment. The negotiated CBA serves as an official document and blueprint for Human Resources Management, in addition to Cambodian local law Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 63 which is not so detailed in regard to employee protection. In fact, the CBA is one of the few written documents in Cambodia according to T. CHABOUSSANT. Aside for garment workers in factories’ CBAs there is not much record of Employer – Worker rights and obligations. 1. Local traditions and holidays “The Employer will provide each worker US$10.00 as an allowance for Khmer New Year and an additional US$10.00 for Pchum Ben Days.”69 T. CHABOUSSANT explains that TSO respected local tradition of giving employees a special bonus on important cultural festivities. This is a very common gesture in Cambodian enterprises, so that employees can participate in gift giving and meals with extended family. This became an expectation for local workers, which became apparent during syndicate negotiations on the CBA drafting. 2. Mobility and Skill Change “Any change made to a worker's station of work further than a 50 km distance from the original station of work (stated in the Contract) shall be subject to prior approval of the worker. Any change made to a worker's job responsibilities or position shall be subject to prior approval of the worker. The worker shall be informed at least seven (7) days before the intended change, without any pressure by the Employer or Management to agree. The worker mayor may not consult the Union on this matter. If the worker refuses the new conditions of work, the worker shall be entitled to severance pay as per article 12.8.”70 “While the worker is attending the relevant training, the wage and other benefits shall remain the same. After training, if the worker demonstrates competence in the new skill, the worker's income shall be increased based on the salary scale.”71 Contracts were short-term because they were directly linked to progress of the works.72 When a railway section is over, manual work is over. It then depended on the workers to continue working in a different location or not, and it was understandable for the employer if they were not mobile along the 260 Km track because of family obligations. This meant workers were entitled 69 CBA: article 12.2 on Wages & Payment. CBA: article 4.1 on Job & Skill Change. 71 CBA: article 4.2 on Job & Skill Change. 72 They were themselves sometimes linked to uncertain factors such as the weather: a long rainy season could make progress stall. 70 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 64 to severance pay. However, if a worker was willing to be mobile, TSO did what was in their power to recycle workers’ skills and offer them evolution, assigning them to other positions after adequate training. It was also a way to compensate with the uncertainty factor of short-term contracts, rewarding workers for their flexibility and loyalty. 3. Gender dispositions “The Employer shall allow a pregnant worker to perform light work which does not harm her health or the health of her baby. She shall be allowed to see a doctor one full day every month without her wage being deducted. This clause shall be applied from when the worker knows she is pregnant and has informed to the Employer.”73 “As general guidance, all workers shall be provided living accommodation, which has free and easy access to clean drinking water, sanitation facilities (…) shall have gender partitioned living and sleeping arrangements.”74 The CBA contains dispositions to adapt to female workers, as in Cambodia, and in fact many countries of Southeast Asia there is a tradition of gender equality in entry-level physical jobs (security guards and construction positions will also be largely occupied by females).75 There was also female workforce in TSO, so the company also had to include a rule exempting female workers from carrying out physical jobs while pregnant, and providing gender separate sleeping facilities for workers living further than 15 Km from their work station, which incurred quite a lot of additional work to re-organize the Campsite barracks. In practice, it also meant that all the Site Supervisors had to re-order Personal Protective Equipment (PPE) for women sizes according to composition of their teams (mainly gloves). Although TSO had not initially planned on hiring women for track laying labor, they did not mind to adjust as local women applied and ensured female workers received the same income and compensation. Women also had access to teamleading responsibilities if they desired (in fact, I saw a particularly dynamic woman myself on one of my visits). 73 CBA: article 5.7 on Leave & National Holiday. CBA: article 8.3 on Living Conditions & Provision of Accommodation to Workers. 75 See interview of Theresa DEVASAHAYAM on women working on infrastructure projects in Cambodia, Vietnam and socio-economical explanations. A few people told me Cambodian women working in a rice paddy field earn between 1 and 2 USD per day. Being part of the track laying or strip sodding (a method which consists in planting grass on either sides of a railway platform for reinforcement, see technical vocabulary) teams gave rural women access to more than double or triple the income. 74 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 65 4. Medical expenses The Employer will constitute a Welfare fund in its books by allocating towards it every month a sum of 150 USD. This Welfare fund is to enable donation to worker(s) in case of death of an immediate family member and/or serious sickness and/or natural disaster affecting their living conditions. Such donation will be awarded on a "case by case" basis by the Employer upon request of the worker. This request may or may not be assisted by the Union representative.76 T. CHABOUSSANT insists the “case by case basis” is important, and actually in this context advantages the employee, because TSO pursued a policy of helping out even when a worker’s close family member who didn’t work there had medical problems. Rather than stick to the rules and only cover the worker, TSO also considered the extended responsibility of the Employer in a developing country: when a low-income worker has to provide for more people than his nuclear family in intergenerational support, medical expenses can put the worker in financial distress. T. CHABOUSSANT said this resulted in TSO covering a worker’s parents or even grandparents, spouse or children’s health bills when this didn’t cost the company too much, after assessing the worker’s request. TSO’s understanding was that a small difference in budget made a big difference for workers’ wellbeing and financial stability. The downside is that there was always an element of uncertainty as the language barrier remained, and T. CHABOUSSANT says they received reports of abusive requests for cash for fictive sickness or hospital bills. He recognizes this configuration with no established processes makes control harder. T. CHABOUSSANT mitigates this by saying it is impossible to verify to what extent such accusations are true, as they may be sparked by rivalry or jealousy between workers. TSO’s Finance Director thinks that all in all, it is a small collateral price TSO accepted to pay in return for the relief they brought families. Throughout both examples of COMIN Asia in Thailand and TSO in Cambodia, it is possible to see that cultural sensitivity and flexibility are the main requirements for Western companies or Managers to create an adequate CSR policy. It is not necessary to know absolutely everything about professional practices in Southeast Asian, as much is learned on the spot, but remaining open to new ideas and different Management structures is crucial. Generally, in Southeast Asia there will be a higher respect according to age, and sense of belonging to a group and feeling 76 CBA: article 13.1 on Welfare Fund & Usage. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 66 good at work is as important as personal advancement. Basic information before setting up can be learned through informational books with cultural and historic overview, and once established through learning at least expressions and numbers in the local language, to be able to interact with people outside of work. When in doubt, one can always consult Human Resources Department to ask about current practices. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 67 CONCLUSION & PERSPECTIVES The past five decades ASEAN policy has been lead thanks to strong and charismatic political leaders in Southeast Asia. Most of them have been the founding fathers of their nations or political systems. Long lasting Leaders like LEE Kuan Yew in Singapore, MAHATIR Mohamad in Malaysia and HUN Sen in Cambodia shaped ASEAN and their countries’ participation according to their own points of view. Political change in influential countries can reasonably be expected in the next decade. This will definitely have an impact on how ASEAN’s evolution and priorities. If political power is diluted and less centralized, this could have an impact on regional programs and ambitions. Economic perspectives for the next decade are less spectacular than the 2000 decade, where Asian dragons wowed investors with double-digit annual growth. Structural insufficiencies and poor logistic coordination between countries slow down economic groth and development. Two reactions can be expected: an acceleration of infrastructure development to make up for this gap between ASEAN economies; or cutting down on the regional budget to prioritize national infrastructure investments. There is a tug of war between increasing trade among Southeast Asian neighbors, and a protectionist fear of legislating on migrant workers. ASEAN Economic Community is wants to create more “people-to- people connectivity” for up until now, only freight transportation cooperation has been implemented. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 68 RESOURCES Interviews BESSON, Alexandre: (form.) Security & Safety Manager at TSO Cambodia (EN) CARBONNEL, Stéphane: Project Director at ALSTOM Singapore (FR) CHABOUSSANT, Thomas: Finance Director at TSO Cambodia (FR) DEVASAHAYAM, Theresa: Fellow Researcher at ISEAS (EN) FAU, Nathalie: Researcher at IRASEC (FR) MORA, José: Analyst at STRATFOR Asia (EN) TRITASAVIT, Thanut: Research Associate at ISEAS (EN) Networking Events & Conferences (attended) ASEAN Integration 2015 by Jonathan BLAINE, Associate Principal at KPMG Thailand and Special Lecturer at Bangkok Chulalongkorn University. Event organized by InterNations Bangkok on 15 June 2013, Royal Bangkok Sports Club. How to overcome the cultural gap in Thailand by Germain THOMAS, Business Development Manager at Comin Asia. Event organized by the Franco-Thai Chamber of Commerce on 25 June 2013, Novotel Silom Bangkok. Two Economic Crises: Two Different Outcomes by Jack M. FORCEY, Professor of Political Science for Study of East Asian Politics, Department of Political Science, University of California, Berkeley. Distinguished Public Lecture organized on 7 August 2013, Marina Mandarin Hotel Singapore. Legal Document Collective Bargaining Agreement (CBA) between Building and Wood Workers Trade Union of Cambodia Railway Rehabilitation Project (BWTU-CRP) and TSO Cambodia; signed in March 2012. Research Papers & Academic Articles ALI, Mushahid. “Malaysia-Singapore Connectivity: Increased Rail, Road and Sea Links.” RSIS Commentaries, 20 February 2013: No. 034/2013. http://www.rsis.edu.sg/publications/Perspective/RSIS0342013.pdf “ASEAN – India Connectivity: The Comprehensive Asia Development Plan, Phase II.” ERIA Research Project Report, December 2011. http://www.eria.org/CHAPTER%201%20%20ASEAN%20%20India%20Connectivity%20A%20Regional%20Framework%20and%20Key%20Infrastructur e%20Projects.pdf Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 69 LAM, Willy. “Beijing’s Aggressive New Foreign Policy and Implications for the South China Sea.” The Jamestown Foundation, 21 June 2013: China Brief vol. 13, issue 13. http://www.jamestown.org/regions/chinaasiapacific/single/?tx_ttnews%5Btt_news%5D=41056& tx_ttnews%5BbackPid%5D=52&cHash=b702a69617a58b57006dbc4430cfb900#.Uh8zBcsayK1 PARAMESWARAN, Prashanth. “China and Cambodia: With Friends Like These...” The Jamestown Foundation, 04 January 2013: China Brief vol. 13, issue 1. http://www.jamestown.org/regions/chinaasiapacific/single/?tx_ttnews%5Bpointer%5D=3&tx_ttn ews%5Btt_news%5D=40266&tx_ttnews%5BbackPid%5D=52&cHash=38e9d44f78c7490aa579 0538fbbd6f92#.Uh8m0MsayK2 —. “China’s Strategic Recalibration in Burma.” The Jamestown Foundation, 25 April 2013: China Brief vol. 13, issue 9. http://www.jamestown.org/regions/chinaasiapacific/single/?tx_ttnews%5Bpointer%5D=1&tx_ttn ews%5Btt_news%5D=40785&tx_ttnews%5BbackPid%5D=52&cHash=e01f40ce9efc7a2b4536f 4ff1b8ec955#.Uh8nPcsayK3 STOREY, Ian. “From Strength to Strength: Military Exercises Bolster Sino-Thai Relations.” The Jamestown Foundation, 22 June 2012: China Brief vol. 12, issue 12. http://www.jamestown.org/regions/chinaasiapacific/single/?tx_ttnews%5Bpointer%5D=1&tx_ttn ews%5Btt_news%5D=39529&tx_ttnews%5BbackPid%5D=663&cHash=d2b1226b67bb5f11a5d 51966ff178eec#.Uh8mzMsayK2 TRAJANO, Julius Cesar I. “Between Developmentalism and Populism: Walking a Tightrope in Southeast Asia.” RSIS Commentaries, 17 December 2012: No. 227/2012. http://www.rsis.edu.sg/publications/Perspective/RSIS2272012.pdf Press Articles “Amended motion on white paper adopted; 6.9 million is not a target.” The Straits Times, 09 February 2013. BOONSU, Wanrapa. “Thailand facing competition battle in ASEAN Economic Community.” Pattaya Times, 20 August 2012. http://pattaya-times.com/a7855-thailand-facing-competition-battle-in-asean-economiccommunity CAMPBELL, Charlie. “Laos’ Mammoth train project a fast track to debt and despair.” Time, 15 April 2013. http://world.time.com/2013/04/15/laoss-mammoth-train-project-a-fast-track-to-debt-anddespair/#ixzz2dM6kZvIi CHANG, Rachel. “PMs agree on high speed rail linking KL, Singapore.” The Straits Times, 19 February 2013. http://www.straitstimes.com/breaking-news/singapore/story/pms-agree-high-speed-rail-linkbetween-kuala-lumpur-and-singapore-2013 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 70 CHEN, Sharon. “Singapore, Malaysia set 2020 target for high-speed rail link.” Bloomberg, 19 February 2013. http://www.bloomberg.com/news/2013-02-19/singapore-malaysia-set-2020-target-for-new-highspeed-rail-link.html “China-Laos high-speed railway link meets fierce western opposition.” China Daily Mail, 15 January 2013. http://chinadailymail.com/2013/01/15/china-laos-high-speed-railway-link-meets-fierce-westernopposition/ CHOW, Jermyn. “Early birds get free MRT rides from today.” The Straits Times, 24 June 2013. http://www.straitstimes.com/breaking-news/singapore/story/early-birds-get-free-mrt-rides-today20130624 HAN, Kirsten. “Singapore’s population debate grows heated.” The Diplomat, 18 February 2013. http://thediplomat.com/2013/02/18/singapores-population-debate-grows-heated/ HU, Yongqi. “Tunnel builders sweat it out on new rail line.” China Daily, 04 July 2013. http://www.chinadaily.com.cn/cndy/2013-07/04/content_16722813.htm “New agency to be set up to run high-speed rail project.” Bangkok Post, 29 April 2013. http://www.bangkokpost.com/business/news/347490/new-agency-to-be-set-up-to-run-highspeed-rail-project PERLEZ, Jane & Bree FENG. “Laos could bear cost of Chinese railroad.” The New York Times, 01 January 2013. http://www.nytimes.com/2013/01/02/world/asia/china-builds-a-railroad-and-laos-bears-thecost.html?pagewanted=all&_r=0 “Thai Cabinet backs plan for ports and rail lines.” The New York Times, 20 March 2013. http://www.nytimes.com/2013/03/21/business/global/thai-cabinet-backs-plan-for-ports-and-raillines.html “Thailand facing competition battle in ASEAN Economic Community.” Pattaya Times, 20 August 2012. http://pattaya-times.com/a7855-thailand-facing-competition-battle-in-asean-economiccommunity Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 71 Websites International Organizations Asian Development Bank (ADB) www.adb.org Association of Southeast Asian Nations (ASEAN) www.asean.org European Commission (EC) www.ec.europa.eu International Labor Organization (ILO) www.ilo.org International Organization for Standardization (ISO) www.iso.org Office of the High Commissioner for Human Rights (OHCHR) www.ohchr.org Organization for Economic Cooperation & Development (OECD) www.oecd.org United Nations Global Compact www.unglobalcompact.org United Nations Office on Drugs & Crime (UNODC) www.unodc.org World Bank Organization www.worldbank.com Other Organizations American Chamber of Commerce in Thailand (AMCHAM) www.amchamthailand.com ASEAN-Japan Transport Partnership (AJTP) www.ajtpweb.org Business Anti-Corruption Portal (BACP) www.business-anti-corruption.com Business & Human Rights Resource Center www.business-humanrights.org Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 72 Embassy of France in Thailand www.ambafrance-th.org Exporail Southeast Asia www.exporail-southeastasia.com Global Infrastructure Anti-Corruption Centre www.giaccentre.org Global Reporting Initiative www.globalreporting.org International Business Leaders Forum www.iblf.org International Federation of Consulting Engineers www.fidic.org International Integrated Reporting Council www.theiirc.org Publish What You Pay www.publishwhatyoupay.org The Fight Against Corruption www.thefightagainstcorruption.org Transparency International www.transparency.org International Enterprises / Corporate websites DSV www.dsv.com MAERSK www.maersk.com TSO www.tso.fr Intelligence and Research Institutes Stratfor www.stratfor.com Institut de Recherche sur l’Asie du Sud-Est Contemporaine (IRASEC) Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 73 www.irasec.com Economic Research Institute for ASEAN and East Asia (ERIA) www.eria.org Institute of Southeast Asian Studies (ISEAS) www.iseas.edu.sg S. Rajaratnam School of International Studies (RSIS) www.rsis.edu.sg Online Resources, Reports & Documents ADB Greater Mekong Sub Region Program http://www.adb.org/countries/gms/main Business Against Corruption http://www.unglobalcompact.org/docs/news_events/8.1/bac_fin.pdf Business Fighting Corruption: Experiences From Africa http://www.unglobalcompact.org/docs/news_events/8.1/bfc_web.pdf Business Fighting Corruption: Resource Centre for Business http://www.info.worldbank.org/etools/antic/index.asp Facing Up to Corruption 2007: A Practical Business Guide. John BRAY, Director (Analysis) at Control Risks. http://www.giaccentre.org/documents/CONTROLRISKS.CORRUPTIONGUIDE.pdf FIDIC Code of Ethics and Business Integrity Management System http://www1.fidic.org/resources/integrity ILO Tripartite Declaration of Principles Concerning Multinational Enterprises on Social Policy http://www.ilo.org/empent/Publications/WCMS_094386/lang--en/index.htm ISO 26000:2010 – Guidance on Social Responsibility http://www.iso.org/iso/home/standards/iso26000.htm OECD Guidelines for Multinational Enterprises (2011) http://www.oecd.org/corporate/mne/1922428.pdf Presentation of Report to United Nations Human Rights Council. Professor John G. RUGGIE, Special Representative of the Secretary-General for Business and Human Rights: Geneva, 1 June 2010. http://198.170.85.29/Ruggie-statement-to-UN-Human-Rights-Council-1-June-2010.pdf Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 74 Report of the Special Representative of the Secretary-General John Ruggie on the issue of human rights and transnational corporations and other business enterprises. Human Rights Council, 17th Session, Agenda item 3 http://www.business-humanrights.org/SpecialRepPortal/Home/Protect-Respect-RemedyFramework/GuidingPrinciples Rio Declaration on Environment and Development http://www.un.org/documents/ga/conf151/aconf15126-1annex1.htm Transparency International’s Anti-Corruption Plain Language Guide http://www.transparency.org/whatwedo/pub/the_anti_corruption_plain_language_guide Transparency International's Integrity Pacts http://www.transparency.org/global_priorities/public_contracting/integrity_pacts UN Convention Against Corruption http://www.unodc.org/unodc/en/treaties/CAC/ UN Guiding Principles on Business and Human Rights http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 75 ANNEXES Interview Scripts BESSON, Alexandre: (form.) Security & Safety Manager at TSO Cambodia (EN) CARBONNEL, Stéphane: Project Director at ALSTOM Singapore (FR) CHABOUSSANT, Thomas: Finance Director at TSO Cambodia (FR) DEVASAHAYAM, Theresa: Fellow Researcher at ISEAS (EN) FAU, Nathalie: Researcher at IRASEC (FR) MORA, José: Analyst at STRATFOR Asia (EN) TRITASAVIT, Thanut: Research Associate at ISEAS (EN) Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 76 Alexandre BESSON, TSO Cambodia TSO (Travaux du Sud-Ouest)77 is a French company specialized in renewal and maintenance of railway tracks, founded in 1927. TSO Cambodia is in a Consortium for the renovation of the Cambodian railway, a project financed by the ADB under its Greater Mekong Sub Region Program.78 The Southern Line links Phnom Penh to Sihanoukville (264 Km). Alexandre BESSON was based in Kampot from March 2012 to August 2012 where he was Security & Safety Manager for the Southern Line. Hereafter is the script of an email interview made in August 2013. Where you involved in CSR policy? Yes. CSR policies’ implementation was under my responsibility as HSE Manager. It made sense at that time as I was dealing with safety training in close collaboration with our outsourced HR agency and the Workers’ Union. I was also in charge of supervising our workers’ camps. How did you elaborate the CSR policy? Well, CSR has to be seen as a whole. It deals with labor, human rights, environment… Our programs were part of the agreement signed with the Cambodian government and the ADB, and later on part of the Collective Bargaining Agreement (CBA) signed with our workers. Some were contractual, and some were the result of a negotiation. Can you tell me more about the different CSR programs/ aspects you had to deal with? We had a partnership with a local NGO to organize HIV prevention sessions on a monthly basis. This was a contractual obligation. Our workforce was very mobile and moving along with the works (the Southern line was 264 Km far, from Phnom Penh to Sihanoukville). Training our workers was a way to preserve the Cambodian society of diseases’ spreading along that line. All the sessions were attended half by our workers and half by villagers. A huge effort was made in the improvement of our workers’ living conditions by improving the camps’ comfort and hygiene conditions. At the beginning, we just provided basic equipment, which was monitored by the HR agency, but we realized that we had to closely monitor their action in this field to match with the Union expectations. The CBA clearly mentioned the camps’ condition. We negotiated the responsibility share between the HR agency, the workers and our company. It was a huge task as camps were moving sometimes several times during the same week. We had to involve the workers on the camps’ management to make sure hygiene and equipment’s care was optimal. Clean water supply in remote areas and waste management was often tricky, but it was part of our health and environmental responsibilities. Do you have any example on the difficulties you had to face while dealing with CSR? I can give you two examples. 77 78 http://www.tso.fr/ http://www.adb.org/countries/gms/main Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 77 First, we had the ADB pushing hard to make us put in place Western standards while our resources couldn’t be sufficient. For example, they asked us to spray water to limit dust during the works, while water is so rare in Cambodia and dust so… everywhere! They also asked us to have a strict environmental policy regarding waste management on camps while there are no waste management services in Cambodia. Even if we collected the waste, there was at the end of the day no other solution than burning the waste, which the workers and villagers did. As foreigners, it was like we had to make miracles, and critics were not often matching our real efforts in dealing with these kind of issues. I’ve also been involved in a complaint mitigation process, which was a good idea at first glance, but it was a tough job as it was in the middle of a responsibility conflict… The ADB wanted us to assess and compensate damages made on private properties in Sihanoukville. Some wooden houses close to the track had been affected in their structures by vibrations caused by engines’ works. The problem was that the properties were in a zone where the government should have relocated the people, as initially agreed with the ADB that provided funds to do so. In one hand you had the ADB asking us to handle our responsibilities as our works affected the houses, and in another hand you had the government representatives denying their own responsibility. We did negotiate with the villagers to compensate their loss, but we had the impression money was the only matter. We raised the problem of the villagers’ security, but the only goal was to make us pay. Sometimes it was like a bureaucratic conflict between a regional organization that wanted to show they could improve the populations’ life and a government which wanted to hide it was not doing enough. And in the middle you had a western company that could easily take responsibility of all the problems. What about corruption? Did you have to face it and how did it occur? I was not directly facing it as the top management was dealing with the matter and had the networks to complain about abuses. Corruption is everywhere in Cambodia. From the policeman at a traffic light who wants to make you pay “a Coca-Cola” for not having stopped at a light that was green for all other bikers except you, to mandatory bribes you have to pay to officials for common administrative procedures. You can’t do business in Cambodia without having to face corruption on a daily basis. I remember that one day, while on my way to Sihanoukville, my boss called me to see if I could clarify a situation. All our trucks were systematically stopped by the police at an intersection between two main roads. I stopped by and asked my driver to speak with the policemen and the drivers to see what was the problem. They were asking all the trucks’ drivers – from our company only – to pay a special fee to access the road leading to our works. It lasted a day only, as if the policemen needed money that day. Our management had to contact Cambodian officials to solve the problem. So you mean CSR works on the paper, but can’t help with daily issues? It helps to have a good framework, but it’s surely not efficient enough to deal with petty daily corruption and bribery. You know, it’s like for hostages. Some countries will pay for their hostages. Negotiation leverage will depend on the price they will pay. When you start paying, it’s difficult not to pay more the next time, or to stop paying. It’s the same here. You can chose not to Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 78 pay, but at the end of the day, you need things to move on. You can proceed in a different manner. I met the CEO of a Security Services Company well established in the region. They decided not to pay, but they know they have to lend a favor from time to time to the right people if they want to continue their activities, for example sending guards for punctual missions, free of charge. The difficulty is to find trustful and influential partners or suppliers who, because you make business with them and make them earn money, will chose to protect you and will have the sufficient leverage to tell others you can’t be extorted too much or too often… So you mean suppliers can also be useful partners Yes I do think so. For example, we knew that we were paying slightly more than the market price. It was because we were a Western company, so it made the prices inflate, it was the price to pay to get the materials and equipment we needed. Paradoxically, It was also a good leverage tool to limit daily issues. Clever suppliers knew that we could stop willing to pay more if any problem occurred. They also knew other suppliers would be ready to take over the contracts for a slightly lower revenue.” How was it to deal with local providers? It was tricky. The problem is that at some point, you can’t really replace local employees to make deals; nor fully rely on them. When I started getting interested in our abnormal fuel consumption, I realized I had to clean up our security device, made of local security officers supposed to ensure access control and surveillance of our resources. I took over the relationship with our outsourced security services’ provider from one of our best employee who was at that time also in charge of logistics. The thing is that another employee warned me I couldn’t change everything. She explained all our guards where somehow relatives of the guy previously in charge of assignments! I then realized those in charge of its protection largely tolerated the fuel embezzlement… It was like ‘the more you dig, the more you find things’… So I had to change the whole security device by recruiting a new security services’ provider, which was costly in time and money. The difficulty to deal with local providers made us very vulnerable, as we couldn’t really monitor everything. Especially when you don’t know the local language. Didn’t you have interpreters who could help you? Hierarchy is so much important in Cambodia that you need to be very careful when choosing your interpreters. Having people from within your company who can translate things for you is not sufficient and does not ensure you good conditions for a deal. You have to make sure your interpreter’s social status is adequate for who you want to deal with. If you don’t have the ‘same level’ on both sides, your interpreter won’t be able to make you understood by your counterpart. When I decided to stop the contract with our previous security services’ provider, the employee translated short sentences by very long phrases. The day after, the provider came back at the office and was very angry because we started replacing their guards. In fact, they didn’t understand we were not happy with their services. The interpreter put so many precautions in dealing with the company owner the day before that she covered all our reproaches… Did you face any other issue when dealing with local workforce? Recruiting people is a very big issue in Cambodia. When we decided to change our security services’ provider, the new contractor also had trouble in finding the right people for the job. They needed to recruit guards from the neighborhood. It was easier for them on an HR point-ofLaying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 79 view. Infrastructures are very poor in Cambodia, which makes the workforce’s mobility very limited. It was also a good idea to have guards from the same province, so they would know how to deal and be accepted by the villagers. And it’s also a way to contribute to the local development. But the downside is having local people made them very vulnerable to bad influences from people organizing the fuel embezzlement, who could put pressure on them knowing their family and where they lived. Can you tell me more about the fuel embezzlement itself? How did it take place? How was it organized? This was a long story. We had on one hand a very organized structure, with people re-selling our own carburant to our provider for a better price. On the other hand, some employees helped themselves to the surplus of engines’ tanks for their own consumption. When we tackled the problem, it was like stirring up a hornet’s nest. It added so many disturbances to our activities that we were almost compelled to tolerate a certain level of embezzlement… If you add the fact there is no reliable police force, you feel somehow quite alone! We also discovered that some trucks’ drivers used their vehicle as a collective taxi system to transport villagers at night, using our own fuel. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 80 Stéphane CARBONNEL, ALSTOM Singapore Stéphane CARBONNEL is a Project Director at ALSTOM Singapore (regional mission). Hereafter is the script of a phone interview that took place on July 24th 2013. Présentation M. Carbonnel gère des appels d’offres et projets dans toute la région Asie-Pacifique pour ALSTOM Singapour (poste régional) : infrastructures ferroviaires – voie ferrée et électrification – et projet clé en main. Il a notamment travaillé sur des projets de métro à Singapour, HongKong, en Thaïlande, et à Chennai en Inde. Sur le projet de connectivité ferroviaire en ASEAN et les tensions entre pays voisins versus le pragmatisme économique. Les villes grandissent, et la volonté des gouvernements dans la région est d’accompagner et développer les projets urbains. Il y a un grand rêve de toutes les villes d’Asie du Sud-Est de relier les pays par le ferroviaire depuis plus de 50 ans. La réalité ferroviaire est qu’il y a eu des obstacles historiques, telles que la crise économique des années 90’ en Thaïlande, et surtout les pays de l’ASEAN ne sont pas tous au même niveau économique : le Laos, Vietnam et Cambodge manquent de ressources propres. Un nouvel acteur est arrivé : la Chine. Le projet de relier Singapour – Kunming par le rail correspond surtout à des intérêts chinois et leur facilite l’importation de matières premières des pays voisins, bois et minerais notamment. C’est la raison pour laquelle la Chine proposait de financer le projet pour avoir accès au Laos. Les populations locales sont très réticentes. Aujourd’hui la Thaïlande a un vaste programme ferroviaire avec 4 projets, et la Malaisie souhaite relier Kuala Lumpur et Singapour. A mon avis les projets qui marchent sont les liaisons économiques rentables, comme Bangkok – Chiang Mai par exemple. Ce sont les connections qui coûtent cher (entre les pays ndlr). Nous avons l’exemple de l’Europe, où chaque pays développait ses lignes et son réseau dans années 80’, à partir des années 90’ on parlait d’interconnecter les résaux et à ce jour peu de projets ont été réalisés (Eurotunnel, Thalys…) conformément aux plans initiaux. Sachant que l’UE ne peut financer que 10% de ces projets et que la crise frappe le continent, ces projets sont très compliqués à mettre en œuvre. Sur les difficultés auxquelles font face les Entreprises en ASE En Malaisie, les barrières culturelles sont énormes. Il y a une discrimination inscrite dans la loi qui favorise les Malais. Des postes sont réservés aux personnes d’ethnie malaise, dans l’administration notamment. Cela veut dire que le Business favorise les Malais. Il y a des entreprises à dominance malaise, et des entreprises à dominance chinoise. Il y a une barrière à l’entrée et il faut montrer patte blanche. Plus généralement, nous évitons aussi les projets où il peut y avoir de la corruption dans les méthodes d’attribution. Nous ne répondons pas aux appels d’offres quand les chances ne sont pas égales, car le processus coûte cher et prend du temps. Nous arrivons à identifier ce genre de situation grâce à notre reseau commercial dans chaque pays d’asie du Sud-Est. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 81 Au Vietnam, Laos et Cambodge c’est plus facile car ces pays reçoivent des financements internationaux d’Allemagne, du Japon, de la France, et ça limite la concurrence. Il y a aussi plus de garanties que si c’était un contrat local. Je n’ai encore pas vu d’appels d’offres de ces pays sans financements internationaux. Nous adaptons notre stratégie selon qui finance le projet, quels sont les concurrents. Au Laos, il y a toujours des doutes. Il y a peu d’habitants, c’est peu habité et c’est plus souvent pour servir des intérêts chinois. Au Cambodge encore une fois ça dépend des financements. Nous n’avons pas vraiment de préoccupations concernant la protection de la propriété intellectuelle dans d’autres pays que la Chine. Sur les frontières entre la corruption et les pratiques culturelles Aujourd’hui, les « ententes » sont très limitées. Nous essayons juste d’instaurer des relations professionnelles. Nous nous conformons aux règles de l’OCDE, et l’activité des agents commerciaux est réglementée. Nous préférons être trop prudents car la ligne est trop fine entre corruption et pratiques culturelles de business en Asie telles que le cadeau, les soirées en dehors du cadre professionnel. Nous prenons soin de l’expliquer à nos interlocuteurs bien sûr, mais nous savons qu’en nous positionnant ainsi nous perdons peut-être des parts de marché. Nous faisons cela car tôt ou tard en termes d’accusation de corruption, les juges peuvent remonter très loin, et certaines personnes se retrouvent en prison. D’un autre côté les mentalités changent. La population ne supporte plus la corruption. Même s’il s’agit d’un vaste chantier, les présidents nouvellement élus vont dans le bon sens. Sur la politique d’Alstom pour influencer positivement son environnement. Employés Nous essayons de ‘localiser’ au maximum (attribuer des postes de responsabilité clés aux personnes locales ndlr): en Malaisie le Customer Director est un Malais, au Vietnam, un Vietnamien. Et c’est comme cela sur toutes les étapes : offre, projet, exécution. Nous avons une très grande cellule de Ressources humaines qui s’en occupe. Nous avons vraiment une main d’œuvre multiculturelle, sur les chantiers à Singapour par exemple, nous avons une vingtaine de nationalités. Cela ne pose pas de difficultés en particulier, d’autant que souvent ces personnes très mobiles sont habituées à travailler dans un environnement multiculturel. La seule difficulté que nous puissions avoir, ce sont les ouvriers qui ne parlent pas anglais. Les conducteurs de travaux en théorie devraient tous bien s’exprimer en anglais, mais lorsque ce n’est pas le cas, nous nous y adaptons. Nos panneaux sont toujours en 4 ou 5 langues. Responsabilité Sociale de l’Entreprise (RSE) Nous n’avons pas d’objectifs RSE en particulier. Ce que nous essayons de faire, c’est de travailler sur le long terme. Notre but n’est pas de travailler sur un chantier puis de partir. Nous essayons de nous établir durablement là où nous allons. C’est ainsi qu’en Inde, à Chennai nous avons une équipe, à Singapour nous avons environ 500 personnes qui travaillent pour Alstom. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 82 En Thaïlande, nous sommes en train de créer une équipe avec pour but à terme d’avoir une équipe locale et autonome. Bien sûr, c’est surtout pour des raisons de pragmatisme économique, nous envoyons de moins en moins d’expatriés, mais cette politique a aussi des retombées positives sur l’environnement économique local. Enfin nous participons à des projets humanitaires via une fondation, nous avons mené des actions en Chine au Sichuan. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 83 Thomas CHABOUSSANT, TSO Cambodia TSO (Travaux du Sud-Ouest)79 is a French company specialized in renewal and maintenance of railway tracks, founded in 1927. TSO Cambodia is in a Consortium for the renovation of the Cambodian railway, a project financed by the ADB under its Greater Mekong Sub Region Program.80 The Southern Line links Phnom Penh to Sihanoukville (264 Km). Thomas CHABOUSSANT was based in Kampot and is now working in Phnom Penh, where he is Finance Director. Hereafter is the script of a phone interview that took place on August 12th 2013. Les différences culturelles dans la communication au travail Les Cambodgiens ont un mode d'expression qui est très loin du notre, ils ont des difficultés à établir des rapports directs, qui les déstabilisent. On se comprend très difficilement. Pour l'illustrer avec un exemple professionnel, lors de négociations de prix avec des fournisseurs, plutôt que de mettre cartes sur table et d'essayer de s'entendre sur un prix, ils vont faire des allusions en attendant qu'on trouve la bonne réponse. Ils sont prêts à laisser la transaction échouer plutôt que d'énoncer ce qu'ils veulent vraiment, même sur des "deals" assez gros, nous n'en revenions pas! Pour eux, il y avait un embarras à nommer bien les choses. Ils préféraient qu'on comprenne ce qu'ils veulent et qu'on le propose. Comment avez-vous essayé de remédier à ces incompréhensions culturelles? Un aspect qui nous a beaucoup handicapé ici, c'est que nous avons eu du mal à recruter un encadrement de haut niveau. Par exemple en Algérie, où il y a beaucoup de points en commun avec le Cambodge, il y a une grande différence car nous avons réussi à mettre en place un directeur de la branche TSO qui soit Algérien. C'est un Algérien qui dirige la branche TSO en Algérie. C'est le jour et la nuit: il comprend très bien son environnement, il sait comment il faut faire. Mais nous n'avons pas trouvé son équivalent ici. Je pense que c'est très spécifique au Cambodge, ça se rapporte à la pyramide des âges. Le profil que nous cherchions appartient probablement à une tranche d'âge qui a été très touchée par la guerre civile. Les difficultés liées au cadre économique C'est pas un marché structuré, c'est un marché en plein développement. Il y a très peu de sociétés vraiment établies. Il n'y a pas de tissu économique. C'est en devenir, il n'y a pas encore de sociétés centenaires ou bicentenaires comme en Europe. Nous n'avons pas de repères économiques, nous ne savions pas combien on paie la main d'oeuvre, les matériaux de construction, comment on établit une relation de confiance avec les fournisseurs. On a fait plusieurs consultations d’entreprises qui font des études de marché, mais au Cambodge la construction était un marché relativement vierge. Ce sont surtout les petites entreprises locales qui construisent, et ces entreprises là manquaient de données. Même avec le peu de données qu'elles avaient, elles nous mettaient en garde sur leur pertinence, n'étant pas très sûres des chiffres qu'elles avançaient. 79 80 http://www.tso.fr/ http://www.adb.org/countries/gms/main Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 84 C'est le premier pays où on avait une visibilité aussi faible sur des choses très basiques. La dernière difficulté économique, qui n'est pas propre à l'Asie du Sud Est, car on la trouve partout, c'est la corruption. Elle est très déformatrice, car il faut s'empêcher de devenir trop suspicieux pour autant. Si à cause de la corruption nous devenons trop méfiants, nous plombons nous-même le climat ambiant. Du coup, nous négocions trop agressivement, et ce n'est pas bon, ce n'est pas productif non plus. Nous avons demandé conseil à des avocats pour comprendre les pratiques du pays. Nous ne les avons pas consultés spécifiquement sur la corruption. Ce qui nous a réellement aidés, ce n'étaient pas vraiment ces conseils, mais le fait de partager nos expériences avec d'autres entreprises, à travers des évènements d'organismes comme ceux des Chambres de commerces, des rencontres avec d'autres professionnels. Cela nous a permis de mieux nous situer. Je pense que nous sommes devenons un peu paranos avec le temps, c'est très difficile de distinguer, car en fait la plus grande crainte quand des agents corrompus qui viennent vous solliciter, c'est que si tu ne les satisfait pas, il va y avoir des problèmes. La corruption tient avec la peur, si un policier t'arrête au bord de la route et te demande de l'argent, tu lui donnes parce que tu as peur qu'il te cause des soucis. C'est pareil avec une entreprise, mais d'autres entreprises nous ont expliqué qu'il refusaient de se faire ponctionner par les "collecteurs d'impôts" qui les sollicitaient, et ça ne créait pas de problème. Il s'agit de sentir les choses, sentir s'il ne s'agit pas d'une démarche réglementaire, et savoir si l'on peut dire non. Je parle là de la corruption à grande échelle, et non de la "petite" corruption. Quels sont pour vous les indicateurs de situations à éviter par rapport au risque de corruption? Ce que nous allons rechercher maintenant, forts de l'expérience du Cambodge, c'est le niveau du cadre légal. Il faut impérativement qu'il y ait une justice indépendante. Il y a beaucoup plus de risques de perdre beaucoup d'argent sur des opportunités qui paraissent très bonnes, avec un cadre moins bon. Ce risque soumet l'entreprise à un niveau d'exposition tellement élevé que parfois cela n'en vaut pas la peine. Dans un pays comme le Cambodge, si quelque chose se passe mal, c'est catastrophique, il n'y a pas de garde-fous. C'est quasiment impossible de faire recours à la justice, de manière indépendante je veux dire. Dans un pays comme le Cambodge, quand quelque chose se passe mal à haut niveau, c'est forcément politique. Est-ce que vous ne pensez pas que le financement de la part d'une Banque de développement apporte des garanties supplémentaires ?81 Non, et il s'agit pour nous d'une grande déception, la Banque asiatique de développement est totalement impuissante. Elle est pour le moins impuissante et nous la trouvions parfois un peu trop complaisante. La manière dont ils opèrent, c'est de laisser des décisions au Gouvernement avec l'argent de la BAD. Les Chinois eux, lorsqu'ils commencent un projet de construction, ils le font sous le modèle de la concession en apportant les fonds, ils ne laissent aucun argent transiter par le Gouvernement. Cela n'empêche pas qu'il y ait peut être des "bakchichs" qui circulent, mais les fonds sont contrôlés. C'est un système beaucoup plus intelligent que d'allouer des fonds à des Gouvernements très corrompus. 81 Les travaux de réparation du chemin de fer au Cambodge sont financés par la Banque Asiatique de Développement (ADB). Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 85 Nous n'avons pas été très bons sur certaines choses, mais le fait est que le projet a été très mal mené, et ce parce que nous sommes face à un Gouvernement qui ne sait pas gérer les fonds de manière efficace. Ils se jettent trop sur l'argent. Donc votre ressenti, c'est que la Banques de développement ne contrôlent pas forcément la corruption. Oui, en tout cas, elles n'ont aucun levier sur le pouvoir politique. Parfois elles peuvent avoir des problèmes de corruption internes à la structure. Le responsable de l'ADB au Cambodge est resté en poste cinq ans, et le fait que les employés restent si longtemps leur fait courir le risque de tomber eux mêmes dans l'engrenage. Est-ce que le système des concessions doit selon vous être une inspiration pour les Contracteurs internationaux ? Oui, je pense que c'est possible. Le problème des boîtes occidentales est leur structure de coûts. Si une entreprise française propose une concession au Cambodge, ce sera cinq plus coûteux que ce que peut proposer une entreprise chinoise. C'est pour cela qu'elles n'y arrivent pas. Maintenant Vinci par exemple a remporté un contrat de concession sur l'aéroport de Phnom Penh. Je pense que dans des domaines assez pointus, de niche, comme pour un aéroport où les règles de sécurité sont très spécifiques, cela devient intéressant. Il en est de même l'opération de centrales électriques, qui requièrent un certain savoir-faire. De toute façon les Européens adapteront leur structure de coûts à l’Asie, ils vont devoir trouver un moyen de faire moins cher. Passons au chapitre de la RSE, Quels ont été les mesures prises par TSO en termes de politique d'entreprise pour s'adapter aux besoins locaux ? Nous avons respecté des coutumes prescrites par la loi, le fait de donner des bonus avant une certaine fête locale etc. Nous avons essayé d'avoir une dimension sociale qui est très importante pour les ouvriers: il y a cette fameuse Convention collective que nous avons signé en Mars 2012, je crois d’ailleurs que c'est un des seuls écrits en la matière au Cambodge. Nous avons aussi fait beaucoup de gestion sociale individualisée. Plutôt que d'avoir un département RH qui appliquait des procédures, nous avons fait au cas par cas. Nous avons essayé de nous adapter aux ouvriers pour les apporter des aménagements de travail, des transports pour venir au travail et rentrer, des bonus. Nous avons payé l'hôpital pour des membres de famille proches: la mère, la grand-mère… Une fois que nous avons eu une meilleure connaissance de notre environnement, nous avons essayé d'apprécier ce qui nous paraissait quasiment du devoir d'un employeur. Dans des cas de détresse, surtout concernant des problèmes de santé, où l'employé se retrouve dans une situation très précaire, nous avons jugé qu'il était dans notre devoir de l'aider, en nous assurant de sa bonne foi. En faisant beaucoup de social, nous nous sommes aussi fait avoir. Beaucoup nous ont dit a posteriori que nous avions été des bonnes poires et que nous nous sommes fait arnaquer, mais c'est difficile d'apprécier, car les personnes qui nous ont informées le disaient peut être parfois par jalousie. L'effort que nous avons fait quasiment automatiquement était sur la protection santé. Tous les employés à faible revenu qui ont eu des problèmes de santé, et leurs membres de famille ont été pris en charge. Je pense que c’est un bilan que nous pouvons défendre. Quelles sont les principales différences culturelles auxquelles vous avez fait face sur le lieu Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 86 de travail ? Les cambodgiens attachent beaucoup d'importance au titre, et ils sont très fiers. A la moindre marque d'irrespect, ils ne s'énerveront pas mais partent. Sur les marques de respect, j'inclus le paiement à temps des frais. Ici il y a une culture du cash. Dès que l'on dit que nous allons payer, il faut le faire car il y a une culture du cash ici. En Europe, si nous payons 15 jours plus tard cela ne pose pas problème, mais ici ce n'est pas pareil. Si un patron français dit qu'il va payer, tu lui fais naturellement confiance, tu ne seras pas perturbé par le fait qu'il ne te paie pas dans la minute. C'est une culture cash d'un pays en voie de développement. Beaucoup de fournisseurs ou d'employés sont partis car nous ne les avons pas payés à temps, ils ont l'impression que nous nous moquons d'eux. D’ailleurs ils préfèrent partir avant même d'avoir touché l'argent, c'est assez irrationnel. Dans le travail au quotidien, le grand classique, c'est que nous nous énervons contre un employé, et ils ne disent rien mais le lendemain ils ne reviennent pas. Enfin, quelle est la limite selon vous entre entretenir des bonnes relations et la corruption ? C'est très compliqué, car dans notre expérience il est impossible d'avoir des bonnes relations sans sortir le cash. Nous n'avons pas trouvé cet équilibre. Nous avons clairement mené une politique anti-corruption. C'était la volonté de la patronne de TSO, Mme Perron avant, et cela a été suivi par NGE (TSO a été racheté par le groupe NGE en cours de travaux au Cambodge ndlr). Cependant ça ne marche pas dans ces pays, c'est incontournable. Tout le monde nous le dit, on ne peut pas faire sans, c'est utopique. Absolument toutes les entreprises au Cambodge avec qui nous avons interagi nous l'ont rapporté, personne n'a trouvé la solution. C'est également le cas pour les entreprises qui ont traité avec Sam Rainsy, le leader de l'opposition qui a été Ministre des Finances. Beaucoup d'entreprises ont eu des problèmes avec lui parce que contrairement à ce qu'il dit aux médias occidentaux il était très corrompu. Le marché ici est très déraisonnable, ils demandent des paiements très élevés "upfront". Ils n'associent pas des bakchichs à un travail à accomplir. Le Bangladesh est un pays où la corruption marche. C'est un pays très pauvre et très corrompu, mais les gens étaient quand même très bien formés. Quand les entreprises payaient ça marchait, c'est à dire qu'il fallait payer, c'était incontournable, mais le travail était fait. Il était possible de dire "Ecoutez, faites d'abord ça pour moi, et si ça marche je vous paierai", et la personne le faisait. Ici c'est plus un système de racket ou de mafia, tu ne paies pas pour avoir quelque chose, mais pour ne pas avoir de problèmes. Les entreprises au Cambodge que vous avez évoqué plus tôt qui refusaient de payer des bakchichs, se retrouvent à payer finalement ? Ils sont obligés de céder à un moment ou un autre. Elles sont obligées de choisir parmi les sollicitations, lesquelles sont les moins déraisonnables. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 87 Theresa DEVASAHAYAM, Institute of Southeast Asian Studies (ISEAS) Theresa DEVASAHAYAM is a Research Fellow in the Gender Studies department of ISEAS in Singapore.82 Hereafter is the script of an email interview made in August 2013. How come women in Southeast Asia do not have the physical barrier of working in physical demanding jobs like the construction industry? Is there a historical root or cultural explanation to that? In many developing countries, there is no gender segregation in some employment sectors like the construction industry. Clearly there is a desperate need for labor particularly in construction for these countries are at a stage in their development where the infrastructure needs to be developed. Moreover because it is a less developed country, we can expect greater numbers of women with very little education. Which sectors do they enter especially if they have very little education and if they are looking for work? There are not many jobs these women can take on but manual labor. The alternatives in countries like Cambodia would be home-based work such as sewing buttons on sweaters for very paltry sums. Women who are mothers of little children take on such jobs that enable them to engage in some sort of wage work while providing care towards their children. The construction industry, I would surmise, would pay much more since men as well work in that industry compared with industries like the garment industry that is predominantly a woman's employment sector. Moreover, women who do not need to take care of their children would go into this industry. You have to note as well that in countries like socialist Vietnam, every person regardless of sex is considered an important contributor to the labor force. Tapping on women's labor becomes particularly important when the country is developing. And as for reasons mentioned above, women with not much education have no qualms about entering the construction sector. Conditions may be harsh and difficult but it would pay much more than going into the informal sector such as selling food by the roadside, etc. Whether there is a cultural explanation is difficult to say. I understand that in India, one also sees women working in the construction sector. But usually women end up carrying bricks. If you go back in time in to Singapore's history, there were the samsui women in Singapore who also worked in the construction sector. They carried buckets of cement, usually balancing them on a pole resting on their shoulders. But interestingly in Singapore today, one never sees women working in the construction sector as much as you don't find men working in the domestic work sector. Construction work is macho activity as much as domestic work is considered feminine work. Coming back to why women enter these difficult, dirty and dangerous (three D) jobs in Vietnam and Cambodia is that these industries tend not to be highly mechanized but labor intensive. One look for example at the construction industry in Singapore and we see many machines. I doubt this is the case in Vietnam and Cambodia where there is less use of mechanization and a greater use of labor. Being more labor-intensive would mean that many more hands are needed to get a job done and this is where women's contribution comes in useful. And to keep costs low, 82 http://www.iseas.edu.sg/ Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 88 employers prefer women as their incomes are usually regarded as supplemental to the incomes of their households and therefore employers can get away by paying them a little less than men. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 89 Nathalie FAU, Research Institute on Contemporary Southeast Asia (IRASEC) IRASEC is a French research institute interested in contemporary Southeast Asian studies and based in Bangkok. Nathalie FAU is a Geographer and Lecturer at the University of Paris VII. She is also an IRSAEC Researcher.83 This interview took place in Kuala Lumpur on August 6th 2013. Présentation d’une intervention de N. FAU sur les enjeux de la connectivité de l’ASEAN (PowerPoint). Tout ce qui a trait à la connectivité fait partie du plan de communauté économique de l’ASEAN en 2015 (AEC, ASEAN Economic community). Dans ce plan économique de communauté de l’ASEAN, vous avez le Master Plan of ASEAN connectivity adopté en 2012, décliné en 3 parties: ‐ ‐ ‐ le développement des infrastructures le développement des accords commerciaux favoriser la mobilité de la population (mobilité des touristes plutôt que celle des travailleurs, car il y a plutôt un renforcement des législations dans ce domaine) Qu’entendent-ils par connectivité ? La définition de connectivité dans le Master Plan aborde les trois parties évoquées : liens physiques, institutionnels et relations culturelles entre la population. Pour moi en tant que géographe, ce qu’est la connectivité, c’est la mise en réseau des territoires. L’Asie du Sud-Est a été coupée à un moment donné, pendant la période de la Guerre Froide. Les Etats étaient séparés les uns des autres par des routes fixées pendant la période coloniales : la route de la soie par exemple. Le territoire asiatique a été coupé d’abord par la période coloniale, effet renforcé ensuite par la Guerre froide. L’objectif a donc été de reconnecter les réseaux de transport qui avaient été coupés pour essayer de développer et de faciliter des flux commerciaux notamment à l’échelle de l’Asie du Sud-Est continentale. C’est surtout là que ça s’est joué. L’autre objectif, c’est de proposer des routes alternatives, car certaines routes sont congestionnées, notamment les routes maritimes. L’idée est d’éviter des zones de nœuds dans les transports, notamment le détroit de Malacca. La construction d’un réseau ferroviaire s’inscrit aussi dans cette volonté de contourner le détroit de Malacca pour éviter de ne dépendre que de ce détroit. C’est un objectif majeur de la Chine, car elle considère que le détroit de Malacca est plutôt sous l’influence de Singapour, des Etats –Unis dans la gestion. Le dernier point de ce plan de connectivité, c’est d’essayer de diminuer toutes les barrières tarifaires aux frontières, parce que la Banque Asiatique de Développement s’est rendue compte qu’il ne servait à rien de développer des infrastructures si les véhicules sont bloqués aux frontières. Maintenant, la BAD ne veut plus financer des projets si parallèlement il n’y a pas la signature d’accords bilatéraux entre les pays pour justement faciliter le transport aux passages frontières. Comment s’est effectuée cette mise en réseau de l’Asie du Sud-Est ? 83 http://www.irasec.com/ Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 90 De trois façons, une approche sectorielle, une approche régionale et une approche intégrée. Une approche sectorielle, c’est que le plan qui a été mis en place entre 2005-2010, reprend exactement les grands projets de routes trans-asiatiques. Les deux grandes nouveautés sont le développement du multi-modalisme, c’est à dire développer des axes où vous avez non seulement la route, mais aussi les voies ferroviaires, l’eau etc. Il y a également une interconnexion entre les différents systèmes de transport. On peut parler du système ferroviaire, mais ce qui est important de considérer, c’est aussi de voir à quoi ce système ferroviaire est relié. Est-il relié à un port en eau profonde, à une autoroute ? Souvent il est parallèle à un système d’oléoducs. Il faut essayer de comprendre l’objectif d’interconnexion entre chaque réseau de transport mais aussi entre les réseaux de transports. Une autre priorité, c’est de favoriser ce qu’ils appellent le développement des CLMV, c’est à dire le Cambodge, le Laos, le Myanmar et le Vietnam. Il y a vraiment un gros financement à destination de ces quatre pays pour essayer de rattraper le retard dans le domaine des infrastructures. Cette approche sectorielle est déclinée pour chaque type de transport : le plan pour les autoroutes, qui est raccordé au plan vers l’Europe. L’objectif est de mettre aux normes les routes et de les interconnecter, ainsi que s’assurer que toutes ces routes soit asphaltées. Missing links L’autre idée, c’est de relier Kunming à Singapour avec au départ la priorité de relier ces tronçons manquants : Ho Chi Minh – Cambodge, Cambodge … pour pouvoir relier en même temps tous ces pays de l’Asie du Sud-Est continentale en passant par le Vietnam jusqu’à Singapour. L’autre axe, c’est en passant de Kunming au Myanmar, qui n’était pas forcément une priorité mais qui se développe très rapidement, car la construction avance à vitesse grand V. Il faut savoir que la connectivité a d’abord été routière, dans un deuxième temps, on a développé la connectivité ferroviaire, dans un troisième temps, on parle maintenant de plus en plus de réseau maritime. RO-RO On s’aperçoit qu’il y a vraiment, à mon avis, une césure actuellement entre l’Asie du Sud-Est continentale où vous avez des projets d’infrastructures qui se développent très rapidement, et l’Asie du Sud-Est maritime où il n’y a pas de volonté de développement aussi affirmée de cette connectivité. Ce plan a donc été mis en place pour répondre à la demande des pays d’Asie du Sud-Est maritime. On a donc voulu créer les 47 ports prioritaires, le développement du système de RO-RO (roll on, roll off) : ce sont des camions qui peuvent rentrer dans de grands ferrys, toujours dans cette idée d’inter-modalisme. Pour ce dispositif, il faut des aménagements particuliers dans les ports. C’est un projet qui a d’abord été développé aux Philippines, puis on a décidé de l’appliquer à l’Asie du Sud-Est car il fait diminuer les coûts de 30% à 40%. Un des objectifs est de favoriser les relations entre l’Asie continentale et l’Asie archipélagique, notamment les Philippines à l’écart de tous les réseaux en Asie du Sud-Est. Dry ports / Ports secs Toujours dans la perspective de la mise en réseau, il y a aussi les ports secs. Au Cambodge, il y en a un à Phnom Penh, situé juste à côté de l’autoroute et de la voie ferrée. Qu’est-ce qu’un port sec ? C’est une zone qui fonctionne comme un port à l’intérieur d’un pays. Quand vous arrivez dans un port sec, au lieu de faire ce qu’on appelle l’empotage et le dépotage des containers, c’est Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 91 à dire la maintenance -les sortir des boîtes, les ranger, les redistribuer- dans les ports maritimes congestionnés, on transporte les containers par la route ou par axe ferroviaire (en général c’est plutôt le train). Les containers sont transportés jusqu’à l’intérieur du pays où un espace est aménagé : des entrepôts et des zones industrielles où les opérations de dédouanement peuvent se faire. L’avantage est que cela permet de désengorger les ports, et de créer de nouveaux pôles à l’intérieur du pays. Mekong Development Project Pour l’instant tous les containers du Laos, et beaucoup du Cambodge sont exportés par la Thaïlande. Or, les ports vietnamiens sont en plein développement, donc on crée des réseaux d’infrastructures ferroviaires entre le Laos et le Vietnam, entre le Cambodge et le Vietnam. L’objectif c’est d’exporter par le Vietnam grâce à ces ports secs au lieu de la Thaïlande. Des pays complètement enclavés comme le Laos peuvent ainsi avoir plusieurs accès sur la mer, et exporter plus facilement. Ils peuvent avoir accès à tout le système de réseau de transport, notamment maritime alors que pour l’instant c’était un état enclavé. Le système ferroviaire à considérer dans son ensemble géographique, aux côtés d’autres moyens de transport. Le système ferroviaire n’est qu’une partie de l’ensemble de tous les projets de transport, d’interconnexion, et de connectivité à l’échelle de l’ASEAN. Ces projets ne datent de 2010, ils sont beaucoup plus anciens, mais il y a vraiment une volonté de développer les liens. C’est également important car dans la mise en place de ces infrastructures, il y a une approche régionale. On a crée à l’intérieur de ces plans de transport des projets régionaux où on va essayer d’interconnecter les réseaux en priorité dans ces sous-régions. Il y a trois sousrégions : ‐ Le Grand Mékong (GMS), qui est actuellement la région la plus dynamique en termes d’infrastructures. Elle bénéficie de plus d’investissement, notamment chinois de plus en plus massifs, des investissements japonais ainsi que des investissements par l’intermédiaire de la Banque Asiatique de Développement. ‐ L’IMT : Indonésie, Malaisie, Thaïlande qui correspond au Sud de la Thaïlande, la Malaisie et l’île de Sumatra en Indonésie. ‐ Le BIMP : Brunei, Indonésie, Malaisie, Philippines. C’est donc à la fois sectoriel et régional. Ce qui fonctionne le mieux actuellement, c’est le développement de corridors économiques du Grand Mékong. L’idée est de développer aussi bien des liaisons Nord-Sud que des liaisons transversales. En termes d’investissements, il est intéressant de voir que les liaisons Est-Ouest sont surtout financées par les Japonais, alors que les liaisons Nord-Sud attirent surtout les investissements chinois, encore plus vers le Myanmar. Il y a une réelle « spécialisation » des investissements. Dans la région du grand Mékong, le réseau routier a été développé en priorité, avant même le ferroviaire. Vous voyez ici les réseaux de transports routiers aux normes en 1992, puis en 2005, et enfin les projets pour 2015. Dans la sous – région BIMP, il y a une politique de ciel ouvert : elle vise à favoriser le trafic aérien en donnant la possibilité aux compagnies aériennes d’autres pays d’assurer des liaisons qui Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 92 ne se font pas forcément au départ de leur propre pays. Il s’agit donc de faciliter les possibilités d’implantation des compagnies étrangères. Dans la sous-région IMT, les projets qui dominent sont des projets de développement de RO-RO: liaisons entre les 2 rives du détroit de Malacca. Cette approche est volontairement intégrée. Le temps de passage et l’immobilisation aux frontières a des répercussions directes sur les coûts de transports. Il faut se référer aux études de Ruth Banomyong pour le compte de la BAD. Ils en concluent qu’il faut développer la Hard Infrastructure autant que la Soft Infrastructure (harmonisation du domaine législatif, douanes etc.). En 1994, quand on a commencé à développer la région du Grand Mékong, la priorité était de construire des infrastructures routières, des ponts, de relier les infrastructures. A partir de 1997, la politique a changé, l’idée est de développer les infrastructures uniquement s’il y avait eu un accord préalable de nature bilatérale entre les états qui développaient des infrastructures, pour éviter que les bénéfices de la construction d’infrastructures soit rogné par l’absence de législation commune. Pourquoi une connectivité en ASEAN ? La question qu’on peut se poser aussi est quel est l’intérêt de développer la connectivité en ASEAN ? L’objectif n’est pas seulement de favoriser la construction de l’ASEAN, mais de favoriser aussi des réseaux régionaux de production, l’intégration verticale. Ce qui est très net en Asie du Sud-Est, si l’on étudie l’industrie automobile ou électronique, est qu’il existe une fragmentation de l’échelle de production en Asie du Sud-Est en fonction du niveau de compétences. Chaque « pièce » est construite en ASE par un pays. La Thaïlande est le pôle dans l’automobile pour les pièces détachées par exemple. Pour qu’il y ait cette intégration industrielle, et pour que des pays nouveaux comme le Laos, le Cambodge ou le Vietnam puissent y participer, il faut des infrastructures. C’est un commerce essentiellement intra-asiatique avant d’être exporté à l’Europe ou aux Etats-Unis (moins le cas pour la Chine). Cette tendance se renforce : C’est avant tout une intégration industrielle basée sur la décomposition et la fragmentation des productions industrielles. Regardez l’étude ERIA, faite par les Japonais, en coopération avec la Banque Asiatique de Développement. Les pôles de production sont très concentrés (10 % du revenu régional brut était leur critère pour faire apparaître des pôles). L’objectif est d’opérer un mouvement de déconcentration de la production industrielle, à l’échelle de l’Asie du Sud-Est. Cela ne peut se faire qu’avec le développement des infrastructures. Il ne suffit pas d’avoir des pays avec un bas coût du salaire, si les frais de transport sont élevés. L’idée des corridors, ce n’est pas seulement de développer des pôles, mais aussi de favoriser le développement de zones marginales, en transition, en retard économique. Cette idée de corridors se retrouve également en Amérique latine. Avec un risque que les zones qui se retrouvent en dehors des corridors se retrouvent davantage marginalisés. Le système ferroviaire est moins souple que le système routier. Pour le système de TGV surtout, on a constaté que cela avait plutôt tendance à renforcer les pôles. Même en France un Paris-Lille qui s’arrête à une gare à michemin ne fait absolument pas profiter cette zone du développement économique. Il y a un effet tunnel, on relie les pôles tout en renforçant les pôles. La Banque Asiatique de Développement essaie de lutter contre ça. L’Index de performance logistique développé par la Banque Mondiale permet de voir le niveau de liaisons logistiques du pays, c’est à dire la facilité des connexions avec l’extérieur. Il y a une très forte disparité, avec un très bon niveau pour la Chine, la Thaïlande, la Malaisie, par contre pour les CMLV, surtout le Cambodge et le Laos, Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 93 l’indice de performance logistique est très faible. Cela veut dire que ces pays ont très peu de capacités à développer concrètement des liaisons avec l’extérieur. Une étude ERIA a été produite pour recenser les projets de corridor développés en ASE, et leur impact économique. Les pays qui vont en profiter le plus sont la Birmanie parce qu’on part de très loin, ainsi que le Vietnam et le Laos. Difficultés & Limites Lorsque l’on parle des infrastructures et de la connectivité, on a tendance à oublier qu’au départ c’est un projet géopolitique. Derrière tous ces projets d’infrastructures, on a des projets géopolitiques importants. Le premier projet géopolitique, c’est de développer la centralité de l’ASEAN, concept lancé depuis la fin des années 2000. C’est l’idée de créer un bloc qui ne soit pas fermé comme l’Union européenne – car il s’agit de régionalisme ouvert – mais qui soit autonome, c’est à dire que l’ASEAN parvienne à subvenir à ses besoins. Dans le domaine de la production de composants électroniques, dans le domaine énergétique etc., il faut que l’ASEAN puisse être autonome dans un espace économique afin d’être plus compétitif par rapport au reste du monde. Toujours dans le concept de centralité, l’objectif est de créer un pont ou un pôle économique entre la Chine, l’Inde et l’Australie. Réalité ou non c’est autre chose, il y a beaucoup de débats autour de cela. En tout cas c’est devenu le terme à la mode depuis 2009 pour parler de l’ASEAN. Etre relié à la Chine ou à l’Inde se traduit par des projets comme l’axe Mékong – Gange pour relier l’ASEAN via la Thaïlande à l’Inde. Il ne s’agit pas seulement de l’ASEAN, mais de relier l’Inde, et plus loin l’Europe. Il en est de même avec la Chine. Il y a vraiment un développement régional des réseaux de transport. Pourquoi est-ce que cela devient de plus en plus géopolitique ? Les investissements chinois deviennent massifs dans le développement des infrastructures en ASEAN, comme un moyen d’assurer leur hégémonie. Le cas le plus net est avec le Myanmar, puisqu’il y a des projets de liaisons entre Kunming (Chine du Sud) directement avec un nouveau port en eau profonde, Sittwe. L’objectif pour la Chine est d’avoir un accès à la mer d’Andaman par ce port en eau profonde sans passer par le détroit de Malacca. Actuellement 80% des ressources énergétiques acheminées vers la Chine passent par le détroit de Malacca. La Chine est donc dans une situation de dépendance, de risque économique. C’est ce qu’on appelait le dilemme de Malacca. Si par exemple pour une raison ou une autre, les pays riverains surtout ceux qui sont associés avec les Etats-Unis -le scénario est très fictif- décidaient de bloquer le détroit de Malacca, la Chine se retrouverait dans une crise énergétique majeure. La Chine tente de développer des liens avec la Birmanie pour avoir une liaison alternative. Sur cette ligne il y a la construction d’un oléoduc et d’un réseau ferroviaire. C’est ce que je vous disais tout à l’heure avec l’inter-modalisme, il n’y a pas seulement une ligne ferroviaire mais aussi un port en eau profonde et un oléoduc. Cela permettra d’acheminer pétrole, production industrielle au départ du port. Il est intéressant de noter que la Chine cherche également à développer un axe Kunming – Asie centrale avec ligne ferroviaire et oléoduc notamment avec le Pakistan, afin de profiter d’un autre accès à la mer et des ressources pétrolières. Nous voyons bien qu’il y a un enjeu d’indépendance nationale. Ce qui est d’autant plus troublant, c’est que ce projet de développement Kunming – Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 94 Sittwe est un projet conçu par les Chinois, avec une volonté de développement économique chinoise. La ligne traverse le Myanmar, donc cela peut quand même contribuer à l’essor de la ville de Mandalay, mais le projet n’est pas du tout pensé pour développer l’intégration nationale du Myanmar. On crée d’abord des programmes régionaux avant des programmes nationaux, ce qui crée un certain nombre de problèmes. Voilà un exemple d’hégémonie de la Chine sur la Birmanie. Est-ce que des pays comme la Birmanie ou le Laos y trouvent quand même leur compte ? Qui retrouve son compte ? Le PIB va augmenter, mais la population locale va-t-elle en profiter ? C’est nettement moins sûr. Par exemple, pour le Laos, il y a des études dans un livre qui va sortir en Octobre, où la Chine a développé des liaisons routières entre la Chine et le Laos. Avec ces réseaux routiers des Chinois sont venus pour développer des plantations et des marchés. On s’aperçoit que tous les marchés tenus par des laotiens dans le Nord du Laos sont maintenant tenus par des Chinois. Le constat est similaire pour les travailleurs dans les plantations. Cette population est remplacée par des Chinois. Ce qui au départ a été accepté par le Gouvernement laotien justement pour favoriser un développement économique, se fait au prix d’une exclusion de la population laotienne. Pour la population locale, le bilan n’est pas toujours positif. On constate en plus un accaparement des terres. Les gens qui pratiquaient l’agriculture vivrière se font évincer sous la pression des Gouvernements, de toute façon ils n’ont pas le choix. La suprématie de la Chine se retrouve dans l’axe Kunming – Bangkok, avec un prolongement sur Singapour et une extension vers Ho Chi Minh ville. La priorité pour la Chine, c’est Kungming – Bangkok et après Singapour. Le dernier projet en date, c’est le développement d’un réseau de transport à grande vitesse, non seulement sur le territoire national mais le nouveau projet de relier le projet de transport à grande vitesse entre Kunming et Bangkok vient d’émerger. Cette orientation a surpris tout le monde puisque les projets de la Banque Asiatique de développement étaient de développer d’abord ce projet ici (en montrant le littoral du Vietnam ndlr). Or on s’aperçoit que la Chine veut passer par Vientiane et Bangkok sans passer par le Vietnam. La Banque Asiatique de développement est complètement dépassée par ces choix chinois. Dans le domaine ferroviaire, en tout sur les LGV, la Chine est en train de prendre le pas dans les initiatives sur la Banque asiatique de développement. C’est d’autant plus étonnant car le coût de cet axe est beaucoup plus élevé en passant par le Nord du Laos que par le Vietnam. Il ne veulent pas participer au développement de leur concurrent, frère ennemi. C’est donc un projet plus guidé par des choix géopolitiques que par des choix économiques. NIETC : Mékong – Inde Il y a un projet de relier Bangkok a l’Inde par un port en eau profonde à Dawei, puis des liaisons routières et ferroviaires entre Dawei et Bangkok. C’est un projet qui doit relier les 2 parties océaniques. A nouveau, il n’est pas nécessaire de passer par le détroit de Malacca. A nouveau il ne s’agit pas seulement de réseau ferroviaire, mais aussi d’autoroutes et d’oléoducs, et de créer un pont terrestre entre Dawei et Da Nang au Vietnam. Le Japon investit massivement dans les corridors Est-Ouest, car de nombreuses entreprises de sous-traitance japonaises se trouvent sur cet axe. L’une des raisons aussi, c’est de trouver d’autres axes que de passer par le détroit de Malacca. Le Japon a toujours participé à la sécurisation du détroit de Malacca. (études de barymétrie dans le détroit pour éviter les bancs de sable, radars…). Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 95 Pourquoi des rivalités entre tous les projets ? On ne peut pas subitement effacer toutes les rivalités en ASEAN. La Thaïlande a aussi le projet de port en eau profonde : Pak Bara tjrs dans l’idée d’éviter le détroit de Malacca. Ca fait donc 3 projets en eau profonde (Dawei et Pak Bara en Thaïlande). Dawei est économiquement plus rationnelle, mais à cause de l’instabilité politique au Myanamr, Pak Bara paraît plus sécurisée. Il y aura toujours des flux importants dans le détroit de Malacca. Il y a un clivage entre la partie continentale et la partie insulaire. Si le système ferroviaire jusqu’à Singapour marche bien, on peut commencer à relier les deux Asies du Sud-Est. La Malaisie est entre les deux. Elle a Port Klang proche de Kuala Lumpur mais aussi le port de Tanjung Pelepas, port ouvert en 2000, juste en face de Singapour avec pour objectif clair de concurrencer Singapour. Maintenant, c’est le 18ème port mondial. De grands armateurs comme MAERSK qui s’arrêtaient à Singapour vont maintenant à Tanjung Pelapas. La Malaisie développe également beaucoup de ports secs. Elle pose ses pions. L’Indonésie et les Philippines sont beaucoup plus marginalisées. Ce sont plutôt des projets nationaux ou bi-nationaux dans les parties insulaires. La Thaïlande et le Vietnam ont proposé des plans d’intégration sub-régionaux qui se concurrencent, en excluant le partenaire. De même entre Singapour et la Malaisie, il y a énormément de rivalités. Il y aurait pu avoir une coopération entre les deux ports, mais ce n’est clairement pas l’objectif. La Thaïlande est un pôle pour le développement d’infrastructures terrestres (routières et ferroviaires). La Thaïlande prend sa revanche en tant que hub logistique grâce au développement de tout ce qui est terrestre. La Thaïlande développe des liaisons avec la Birmanie et le Laos. Dans la partie continentale, la stratégie est de multiplier les interlocuteurs. A mon avis, elle sera en mesure de concurrencer la Malaisie et Singapour. Y a –t-il une concordance entre projets d’infrastructures régionaux et nationaux ? Pour la Birmanie, tout est d’abord pensé en termes d’intégration régionale. L’axe Mandalay – Yangon autour du fleuve Irrawady est en conflit avec l’axe d’intégration régional. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 96 José MORA, STRATFOR Asia SRATFOR84 is a geopolitical intelligence firm providing strategic analysis and forecasting. José MORA is an Asia Area Specialist. This interview took place in Bangkok on August 16th 2013. How would you say ASEAN 2015 railway connectivity objectives from Singapore to Kunming and maritime tensions between member countries contradict or complement each other? I don’t think they contradict each other at all, because the countries that China has tensions with are basically the Philippines and Vietnam, and maybe to a little extent Indonesia and Malaysia, but it’s mainly the Philippines. Even in Vietnam with whom China has historical rivalry, the communist party is very close to their counterpart in China. Furthermore, there is a lot of Chinese investment in Vietnam. When all is said and done, it is a conflict with the Philippines, which is an island so there’s no problem there in terms of railway connectivity. It’s interesting in the point of view of ASEAN- China relations, because ASEAN got together precisely for the objective of having small countries getting together and being able to talk directly to the great powers. When ASEAN was formed, it was the US, the Soviet Union, and to an extent China. Now China has interests that it’d rather pursue bilaterally, so a lot of the times you will see China trying to solve disputes and strike deals with ASEAN countries bilaterally because it knows that it can divide ASEAN. Some countries like Cambodia are very supportive of China because they are so poor that China just pours money in and they own the country in many ways. Talking about rail connectivity, this means Laos, Myanmar, Cambodia, Thailand and to a certain extent Malaysia, which is mainland Southeast Asia and separate from maritime Southeast Asia (Indonesian archipelago, the Philippines) If you look at the map, the western regions of China, not only Xinjiang and Tibet which are to an extent colonial possessions because they are not ethnically and culturally Chinese. So you have those regions plus you have the western regions of what is “China proper” so Yunnan, Guanxi, Guizhou and Sichuan province, most of the Han Chinese population lives in inland China, not on the coast. After 78, when China started to open up, and shared communist ideology, the communist party has known that its grip and power depends on economic development because they don’t have the ideological claim anymore. So for the last 30 years, China has sustained the 10% growth, and that’s worked so far but they know that: A. It’s not going to last forever, we’re seeing this now as the Chinese economy is suffering. B. Lots of people live in the western areas, and the coast can only absorb a certain amount of population. In that perspective, the development of the western areas is national security concern for China, it’s not just economics. They know that they have to develop there, otherwise people will tend to rebel. If you look at Chinese history, every rebellion that toppled the dynasty has been instigated by poor peasants in the center. So now if you look 84 http://www.stratfor.com/ Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 97 at the south west provinces, these are the ones that are next to South East Asia, particularly Yunnan. China is aiming to connect its South Western provinces to both the Indian Ocean through Myanmar and the Andaman coast and to the South China Sea, the gulf of Thailand, to the sea in general. Not only to the sea, but it sees the population of these countries as markets for its own goods. As a result, China has planned to develop railways not only in China but also the railways that connect with all these countries, particularly with Thailand. All these efforts are part of a plan to make Southeast Asia an extension of Chinese economy. Is railway extension and development also a means to send out diaspora? No, it is not for population transfer, but for goods. China wants to export, and of course import as well, it goes both ways. They mainly seek to reduce transportation costs from the western areas to international markets, to the sea. If you want to set up a manufacturing company in China, and you want to do it on the coast it’s already very expensive: salaries and high. China wants to lure investors to the West, but the problem is transportation. Overland transportation makes it more expensive per unit. China is trying hard to develop it’s infrastructure but it’s still relatively bad, so what they are trying to do now is ignore the border and have the quickest connection to the sea and Southeast Asia. Yunnan province trades a lot with Southeast Asia. It’s like Texas, for Mexico it’s a country because they produce and buy a lot of stuff, and it’s a region with a lot of investments. Which is very similar to what Yunnan represents for Myanmar, it’s not the whole of China, but just that province. The same goes for the other economies, Lao is a very small economy, so a lot of the companies trying to get contracts there come from Yunnan. Thailand as well, they do a lot of trade through the Mekong river and it’s a lot of agricultural trade, Thailand exports flowers, onions, to Yunnan. So it’s mainly about the goods and about accessing the ports. Would you say that Cambodia, Lao & Myanmar have no choice but to be flooded by these goods or is there also a positive economic outcome for them? Well, from a trade perspective, the increase in Chinese trade is good because they are getting cheaper stuff easily, and their wealth is increasing. Having the Chinese market there also gives them the opportunity to sell goods to China, and get investment from China. Trade is not the problem, it is the sense of cultural threat. This is what we are seeing in Myanmar right now, they see the influx of Chinese people, goods, power, influence and they are afraid of losing their culture. It’s rarely the case of an economic threat, it’s more a cultural threat that is perceived. There is also the environmental factor, but in that sense local authorities are very complacent: they are building dams in Myanmar. I don’t know how good their environmental standards are. Chinese companies do their thing, and local governments approve. This goes both ways. How would you say that regional powers like Thailand and Malaysia position themselves regarding Chinese infrastructure projects? Do they try to develop their own in parallel? I don’t know much about Malaysia, but I think the approach is similar to Thailand. I think they don’t try to counter China, they try to exploit the growth they bring. Thailand tries to balance China via trading with Japan, with the US, so basically with the major powers. You can see it here in Bangkok: there is Chinese influence, but there is as much or more Japanese influence, Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 98 people from everywhere. Thailand definitely tries to balance its relation with China but I don’t think it’s afraid of China, it’s trying to harness that growth. It attracts capital, it has military cooperation with them. It’s also participating in all the projects for building infrastructure in Southeast Asia. There is this big program that the Asian development Bank has to develop economic corridors in the Greater Mekong sub-region. Thailand is participating; they want to connect with China so they are partially financing all of these infrastructure projects because it is in their interest as well. They also have interests in seeing Laos, Cambodia, Myanmar and even Vietnam develop. I don’t think that Thailand is opposed to China. It seems that Thailand is really trying to develop their railway infrastructure, be it through metro or skytrain or Bangkok, or high-speed railway projects connecting other cities like Chiang Mai or Pattaya… Is that something they want to do before the regional projects? They have these projects that they want to do, and it gets complicated because there are many factors: the local politics, the domestic politics… They want to do this because it will generate a lot of employment, especially in the provinces. In Thailand, a lot of people complain that those who always benefit are in Bangkok. By creating high- speed railway to Chiang Mai, they are creating jobs along the way. There is that aspect, and a lot of people say that part of the reason they want to do this is because of the corruption: a lot of preferred Contractors will have their share. You have to take into account that Thailand want to position itself as the regional hub of Southeast Asia, for them to actually be able to do this they have to build the infrastructure. They want to improve the national railway connectivity because they want to be beneficiaries of Southeast Asia’s growth. What are your thoughts on the Singapore-Kunming project? This is China wanting to connect with these markets, and also the ports: Bangkok that is a big port, Singapore, which is also a big port, and Kunming, which is an inland city. It’s an inland city but it’s a major regional hub, so there you see the Chinese strategy of connecting its major inland hub with Southeast Asia. From the point of view of Singapore and Thailand this also makes sense because they are big ports, and they’re reducing transportation costs with the region. This is part of China’s strategy of developing its western area. What are your thoughts on China – Myanmar relations? Kunming – Myanmar railway has just been completed. The Burmese are afraid of the growing Chinese influence. That’s the main reason Myanmar is opening the country, or is trying to open the country: they were feeling that they were becoming a protectorate of China. There was China and nobody else. So now they are opening to Japanese, Korean, American and European investments to counter that. If anything, I would say that Chinese and Myanmar projects are slowing down, I mean, not the projects but the pace of creation of new projects. The Myitsone dam got cancelled, and there have been some mines that were suspended. Especially with the opposition within Myanmar, I don’t think that they will be going at a faster pace for development of new projects. Do you think invoking environmental reasons to suspend projects is kind of a cover? Environmental problems were always there, but they didn’t care. Now that Burmese Government got afraid of Chinese influence, the whole project of opening the country comes from that fear. Cancelling the dam project was like sending a message: not just to China but also to the West, Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 99 “Ok we’re not cutting down on our Chinese partnership and opening up to others”. Of course they could never say “oh, we’re slapping you in the face China”, they have to say it’s for an environmental reason. It’s like in Russia when they put an oligarch in jail for corruption: everyone is corrupt! They just chose someone and apply the law to him. Would you say Vietnam is left out in the railway infrastructure project? I don’t think so, there are three economic corridors, which are well funded by China as well: one going from North to South, another East to West, one that’s basically Vietnam. Vietnam just two months ago inaugurated a new railway line: the unification express going from HCMC to Hanoi which existed since a while, but I guess it was too slow- so they just opened a higher speed railway. They are going ahead with a lot of infrastructure projects themselves: ports etc. Vietnam is a country that is thin and long, so I don’t think that we’ll see as much investment as in Thailand. People I have interviewed tell me of the Asian Development Bank, and the difficulty in implementing an efficient regional policy. It seems they are struggling with a regional vision and the Chinese vision that has a growing part in the region. ADB is an international bureaucracy like the United Nations; there will always be inefficiencies and politics in that sense. The ADB’s governor is always a Japanese person, because the biggest funder of ADB is Japan. But Chinese influence is growing, so it’s part of the reasons there is so much inner conflict. It’s like the UN Security Council, when you have powers that are in conflict and want to exert influence at the same time, I guess there must be a lot of internal disagreement. I mean, I don’t know much about the ADB but that’s what I would say. Japanese invest a lot in ADB, in securing Malacca Strait, and infrastructure we do not hear so much about because everyone is focused on China. What is their interest in keeping on financing all these projects? Japan before the 90’s was kind of what we hear about China today, Japan was the next big thing, the power that was going to overthrow the US. All of the big banks were becoming Japanese, I mean the top ten global banks, these guys were everywhere. After the crisis, they retreated a lot and you hear a lot less from them and a lot more from China. China has been growing not only in economic power but also in political power. The Japanese feel that they are being left out a little bit and that they are becoming second to China, so they are always trying to increase their power. You also have to take into account that there has been a twenty-year or thirty-year process of moving Japanese manufacturing abroad: a lot of Japanese products are not made in Japan anymore but in Thailand, Laos or Vietnam, even in the United States or China. Basically, what you see Japanese diplomacy doing, not only in Asia, but also in Latin America or Africa, is that they are trying to secure their political influence there so that they can secure their property rights. If you’re investing in another country you want your property rights respected. They want a good investment environment, they want to have good infrastructure, and they want to have the political influence to secure all this. You see them investing everywhere in Southeast Asia and in Africa because they want to be able to compete with the Chinese. The problem is that the Japanese government just doesn’t have as much money as the Chinese, because the Chinese are still very centrally controlled so they get a lot of money to spend. That’s Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 100 why you see them building crazy things in China, and Japan wants to counteract that but they are a near liberal state, so they just do not count with the same amount of money and they cannot force their companies to spend as much as the Chinese can force their own state-owned companies. So Japanese, just like China, sees Southeast Asia as an extension of their own manufacturing economic activity? Oh yeah, the Japanese manufacturing plant has moved to Southeast Asia. If you go anywhere in Thailand or Laos, you will see that it’s full of Japanese companies. Any Japanese here (in Bangkok), if they do not work for Agoda, they work for a Japanese company, the Koreans follow a similar model. Japanese invest in the greater Sub-Mekong region because here they have cheap labor, they have been doing this for a while and they also have access to skilled labor, to an extent. Japanese are very present in the auto industry. If you’re going to build cars, you need the plant where you assemble the cars, you also need a plant where you produce the seats, and the leather, the lights, a lot of things. Once you start having some things here, it makes sense to move other things. It becomes a network. They already have a big network here and it keeps on growing. So they connect the dots between Japanese manufactures in different countries of Southeast Asia? Yes. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 101 François PETIT, Embassy of France in Thailand François PETIT is Economic Counselor at the French Embassy.85 This interview took place in Bangkok on July 2nd 2013. Pensez-vous qu’il y ait une contradiction entre les tensions géopolitiques entre les pays de l’ASEAN et la volonté d’une politique régionale de transports transfrontalière ? Sur le lien qui puisse exister, en tout cas la caté-connexion que vous ressentez entre les tensions qui existent en Mer de chine et la volonté de relier l’ensemble des pays du SE asiatique notamment... Oui je crois qu’il y a une forte volonté d’outrepasser les difficultés politiques et de toute façon construire l’espace économique, très clairement. Dans et espace économique, on va oublier la Chine à un moment, parce que la problématique est propre à l’Asie du Sud-Est, et vous avez entendu parler de l’AEC (ASEAN Economic Community). Dans le cadre de ce projet qui va prendre une nouvelle envergure à partir de la fin de 2015 -si ce n’est pas en 2015 ce sera en 2016, je crois que les pays du Sud-Est asiatique, en particulier la Thaïlande qui est probablement le plus déterminé, le plus actif, le plus dynamique en la matière… ces pays du SE asiatique sont engagés dans une intégration économique, quelque soit la volonté de la Chine ou non de participer à cette intégration, en sachant que les motivations de la Chine sont tout autres que celles du SE asiatique. Si on fait devait faire un parallèle avec les motivations qui pourraient être celles de la Chine, je le ferais avec le Pakistan. La Chine ayant financé la construction de la route qui s’appelle le Karakoram highway. Cette route avait pour vocation de rejoindre le Sud du Pakistan et donc d’offrir un accès à la mer aux Chinois, mais ils ne sont pas parvenus à leurs fins. Ils ont construit cette route jusqu’à Islamabad à six mille mètres d’altitude, qui donne sur la province du Xinjiang. Les motivations de la Chine et les motivations des pays du SE asiatique peuvent se rejoindre mais elles sont diamétralement opposées. Est-ce que les motivations de la Chine et de l’ASEAN convergent, ou est-ce que chacun des pays souhaite juste se connecter à ses voisins pour des raisons économiques? Je pense que les motivations de la Chine sont essentiellement politiques, avant d’être économiques. C’est comme cela que je perçois les choses, mais je ne suis pas le mieux placé pour vous répondre. Pour les pays du SE asiatique, La Thaïlande et le Vietnam qui sont les seuls pays que je connaisse – j’ai aussi été en poste au Vietnam – je crois que c’est au contraire une motivation économique. En faisant de la Thaïlande un hub comme les thaïlandais le souhaitent, sachant que c’est un projet qui remonte aux années 2000 le ‘Greater Mekong Sub-Region project’, qui a été initié par l’ADB notamment, je n’ai jamais lu et je ne ressens pas une volonté de domination de la part des thaïlandais, que ce soit sur les pays voisins ou en allant plus loin au Vietnam qui ne partage pas de frontières avec la Thaïlande. Je ne serais pas surpris que le Chinois qui ont des relations historiques avec la Thaïlande ne soient pas nécessairement les bienvenus en Thaïlande. Je pense que la Thaïlande comme les 85 http://www.ambafrance-th.org/ Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 102 Pakistanais ont envie de se protéger, et que de faire rentrer les Chinois au travers la construction de lignes de trains, c’est prendre un risque politique qu’ils n’ont pas forcément envie de prendre. C’est prendre un risque hégémonique comme ce qui est en train de se passer au Cambodge où les Chinois sont en train d’acheter le pays. Comment se positionnent les constructeurs français sur le marché ferroviaire thaïlandais au niveau de la construction et de l’exploitation? Quand je suis arrivé, il n’y avait rien, on parlait des Japonais, des Chinois et de Allemands. Aujourd’hui on est entrés dans la course, en tout cas c’est Jean-Marc Ayrault le Premier ministre qui l’a décidé lors de son passage en Février (2013) qui a acheté l’idée que l’ambassadeur, moi et ses collaborateurs à Paris lui ont vendu – car nous n’avons pas de contact direct avec Jean-Marc Ayrault… Nous avons réussi à le convaincre à travers sa garde rapprochée. Jean-Marc Ayrault a pris la décision de prendre le risque et la décision du Premier ministre nous a permis d’enclencher un processus avec la visite du Ministre français des transports début Mai, la visite du Ministre thaïlandais au Bourget il y a 15 jours, la signature d’un accord cadre bilatéral de coopération technique entre la France et la Thaïlande, à l’instar de ce que les Japonais, les Chinois et les Coréens depuis ont signé. Le processus est donc lancé, nous essayons de mettre en place – et c’est notre rôle – un cadre qui permette aux entreprises françaises, aux premier rang desquels Alstom puisque ce sont eux qui ont la technologie des trains à grandes vitesse, d’être en position au moins équivalente à celle de leurs principaux concurrents. ALSTOM a pris la décision, également en interne de faire de ce projet une priorité. Aujourd’hui nous n’avons malheureusement pas de visibilité, nous ne connaissons pas l’agenda. Est-ce que la construction des quatre lignes sera lancée en même temps, est-ce qu’ils vont y aller par étapes? Pour l’instant on n’en sait strictement rien, d’autant moins que les études ne sont pas finalisées. La société française d’ingénierie SYSTRA réalise les études de faisabilité allant jusqu’à la rédaction des termes de référence de l’appel d’offre. Elle rendra les conclusions de cette étude en Septembre. Les Thaïlandais n’ont pas tous les éléments pour prendre une décision, ils n’ont pas en interne les compétences techniques nécessaires pour mettre en musique un tel projet, qui est d’une ampleur considérable. Ils s’en sont aperçus il y a quelques mois, et je pense qu’ils vont faire appel à un cabinet d’ingénierie étranger, ce qu’on appelle un Project Manager – en espérant que ce soit SYSTRA – pour justement les aider à mettre en place l’organisation avec un opérateur global sur l’ensemble du réseau. Ce serait donc une SNCF thaïlandaise, avec un point d’interrogation sur le fait de savoir si cette structure qui sera chargée de gérer ces lignes à grande vitesse sera partie prenante de la SRT (State Railways of Thailand) ou si ce sera une structure indépendante, en sachant que la SRT comme vous le savez peut-être a une très mauvaise réputation. Il suffit de voir l’état du réseau actuel pour s’en rendre compte. Au niveau des entreprises françaises et la répartition des intérêt, il y a Thalès sur les simulations, les télécommunications, la billetterie; ALCATEL sur la télécommunication; VOSSLOH sur les rails; EURAVIA et ETF sur la construction. COLAS RAIL et des entreprises de génie civil sont également à l’affût. C’est plutôt bon signe quand vous avez une quinzaine d’entreprises françaises sur le même pays qui sont intéressés par un projet. Cela veut dire qu’ils sont convaincus que le projet va se faire. A mon avis, il va se faire Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 103 car le projet de la grande vitesse est aujourd’hui un projet politique contrairement à la modernisation des chemins de fer existants, qui est un projet qui va être mené en parallèle avec le doublement de certaines voies. La Thaïlande a communiqué sur le sujet, c’est un projet qui s’inscrit dans le cadre d’un désenclavement de Bangkok et d’une meilleure répartition des pôles économiques nationaux: un désenclavement des régions du Nord et du Nord-Est principalement. C’est un projet politique, c’est un projet d’aménagement du territoire, et c’est un projet d’inter-connectivité pour placer la Thaïlande au cœur de l’Asie du Sud-Est et septentrionale. L’objectif très ambitieux d’avoir un chemin de fer reliant Singapour à Kunming d’ici 2015, vous en pensez quoi ? Les études pour le tracé entre Singapour et la Malaisie ne sont pas encore lancées, de là à ce que les Malaisiens fassent la jonction avec la frontière thaïlandaise, il va se passer quelque temps. Economiquement, la rentabilité de cette jonction entre Kuala Lumpur et la frontière thaïlandaise, je ne connais pas bien la géographie de la Malaisie mais à mon avis cela concerne une faible population et ça ne va pas être évident. Pour ce qui est du Nord, en effet la Chine doit construire une ligne jusqu’à Vientiane, là aussi nous ne sommes pas à l’abri de surprises. Est-ce que les Chinois construiront la ligne de Vientiane à Bangkok, je n’en suis pas du tout certain. En bref, la liaison Kunming – Singapour, dans cinquante ans oui ce sera fait ! Qui sont d’après vous les pays les plus dynamiques et porteurs de ce projet? La Thaïlande est très clairement en pointe, ce sont les seuls à avoir un vrai projet. Les Laotiens ont réagi à l’initiative chinoise, les Singapouriens et les Malaisiens parlent de ce tronçon entre Kuala Lumpur et Singapour depuis des années. Ils viennent seulement de lancer le projet. Il y a aussi des raisons techniques qui poussent la Thaïlande à développer ce projet, jusqu’à présent ils utilisent le standard du mètre pour la voie, alors que le standard international est plutôt d’un mètre quarante. C’est pour ça que le TGV leur permettra d’adopter un standard international. Est-ce que la Thaïlande se concentre pour l’instant sur son réseau national ? Oui, la Thaïlande procède par étapes, mais cela n’empêche pas les Thaïlandais d’anticiper pour faire de la Thaïlande le nœud logistique de cette partie du monde. Ils voient bien l’avantage qu’ils vont en tirer, d’autant plus que c’est un pays qui a fait du tourisme l’une de ses principales forces économiques. Les Thaïlandais demandent de faire des études pour le transport de fret, d’autant plus que le pourcentage total de transport de fret est de 3%, et ce chiffre est très éloigné des moyennes d’autres pays, leur objectif étant de passer à 10%. L’avantage des Français, c’est que nous savons faire du fret avec de la grande vitesse, ce que personne d’autre ne sait faire. Est-ce que ces entreprises françaises vous sollicitent, ont-elles besoin de vos conseils? Non, la façon dont on travaille, en tout cas c’est un travail d’équipe, avec d’un côté l’administration française représentée ici par l’Ambassade, et les entreprises. Encore hier on avait Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 104 une réunion à l’Ambassade, un débriefing de la visite du Ministre thaïlandais des transports. Nous, notre rôle est d’être à l’origine, parce que si on en est là c’est parce que le service économique a travaillé dans un premier temps en binôme avec Alstom, dont le directeur pays avait pris la décision d’y aller sur ce projet et avait obtenu le feu vert de son côté. Lorsque le nouvel ambassadeur qui est là depuis six mois est arrivé, je lui ai dit voilà il faut que vous alliez voir le Ministre des transports, il a acheté le projet, et nous l’avons vendu avec une stratégie en ciseaux au Premier Ministre. Nous avons défini un cadre avec cet accord de coopération technique. Nous sommes en relation constante avec l’administration thaïlandaise, bien évidemment tous les signaux que l’on peut capter, on les renvoie aux entreprises. Ceci étant, restons modestes, on ne reçoit pas beaucoup de signaux. J’ai reçu le signal que le Gouvernement actuel n’avait pas envie de travailler avec les Chinois, j’ai passé le message mais je n’en suis pas du tout convaincu. J’ai reçu le signal comme quoi -ce dont je vous parlais tout à l’heure- on veut faire appel à un cabinet étranger pour mettre tout cela en musique : leur organisation, les choix technologiques etc. J’ai reçu le signal disant que SYSTRA est très bien placée, ceci étant je n’en ai aucune certitude. Bon, ce sont des messages que l’on passe, les entreprises ont l’habitude de travailler à l’étranger, leurs dirigeants de missions ont de l’expérience donc ce n’est pas à ce niveau là que nous sommes en mesure de leur apporter une valeur ajoutée. Par contre, dans le cadre de l’accord de coopération technique qui a été signé il y a une dizaine de jours, nous avons dit aux entreprises, maintenant vous avez cet accord cadre de coopération, à vous de jouer ! Montrez-nous et montrez aux thaïlandais que vous êtes en mesure de faire vivre ce projet, et montez des opérations de formation, de training, de transmission d’information, de séminaires, éventuellement de partenariats technologiques, mettez cela en place. Montrez aux Thaïlandais que vous avez vraiment envie de travailler avec eux. Notre rôle est donc de les titiller en leur disant écoutez on a travaillé pour vous, vous nous avez demandé de travailler pour vous, en tout ca vous n’avez pas dit non alors maintenant démontrez-nous que l’investissement que nous avons réalisé à notre niveau puisse apporter un retour d’investissement. Deuxième point, il faut aussi canaliser les entreprises, car elles ne sont pas connues pour travailler en équipe, c’est souvent du chacun pour soi. On va donc essayer de mettre en place des opérations collectives, sur une présentation de l’offre globale française, les points forts de l’offre française -je faisais ça encore ce matin- . Nous ne devons pas empêcher les entreprises françaises d’avoir des spécificités, des thématiques qu’elles maîtrisent mieux que d’autres. Il y a le génie civil, la construction des voies, le matériel roulant, l’ingénierie, la signalisation, la transmission, l’électricité, les télécommunications, la billetterie. Pour l’instant ALSTOM fait quasiment tout, THALES ne fait pas tout mais ils sont très redondants avec ALSTOM, donc on leur a dit écoutez, lancez des projets mais avant informeznous pour qu’on puisse vous dire si une autre entreprises française a avancé un projet sur une thématique équivalente. Evitons d’être redondants, soyons complémentaires. Les énergies dépensons-les de manière intelligente. Donc notre rôle va être de cadrer cela, de coordonner la réaction des entreprises en sachant que de toute façon si les entreprises ont envie de faire ce qu’elles veulent, elles le feront, que c’est le poids de l’administration qui pourrait faire qu’elle se dise « j’accepte jouer le jeu ». Voilà à ce stade, ce que nous avons mis en place, ce que nous essayons de mettre en place parce qu’il faut continuer à maintenir la pression et maintenir l’intérêt que peuvent avoir les Thaïlandais à l’égard de la technologie française. On travaille actuellement sur la visite du Ministre des finances thaïlandais en France, et un nouveau déplacement du Ministre des transports français à l’automne. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 105 L’année a été particulièrement chargée. Pensez-vous que la Thaïlande attende en retour un transfert de technologies ? Point d’interrogation: aujourd’hui les Thaïlandais ne sont pas connus pour lier l’octroi de grands contrats à un transfert de technologies ou à de l’offset, comme on dit. Je me suis ému à plusieurs occasions notamment auprès du Ministre des transports, je lui ai dit vous avez un mégaprojet, pourquoi n’en profiteriez-vous pas pour créer une industrie ferroviaire ici en Thaïlande ? Vous avez une industrie automobile, vous voulez développer une industrie aéronautique, pourquoi pas une industrie ferroviaire sachant que vous avez quand même du potentiel là, si vous arrivez à mettre en musique, vous allez être les rois du pétrole, vous allez avoir un petit joyau. Ils y réfléchissent. Et je dis ça parce que je sais que nous avons un avantage comparatif par rapport à la concurrence, parce que je sais que les Chinois ne le font jamais, les Japonais ce n’est pas dans leur habitude, ils font très rarement du transfert de technologies ou de l’offset. En dehors de ça, les Coréens – qui sont un autre concurrent – à mon avis ne sont pas prêts pour le faire, le quatrième concurrent aujourd’hui c’est l’Espagne, et c’est peut être le plus dangereux. Donc vous êtes dans l’état d’esprit de proposer… Moi je ne suis dans l’état d’esprit de rien! Simplement je suis là pour faire passer des signaux. Déjà si j’ai tenu ces propos, c’est parce que j’avais un feu vert de la part du représentant d’Alstom pour le dire, il l’a dit lui-même en conférence de presse devant les Thaïlandais donc c’est plus facile de le dire. C’est un des avantages des entreprises françaises. C’est un des avantages comparatifs, et ce n’est pas le seul heureusement. Il y a aussi cette compétence en matière d’inter-connectivité. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 106 Thanut TRITASAVIT, Institute of Southeast Asian Studies (ISEAS) Thanut TRITASAVIT is a Research Associate involved in the Regional Economic Studies Program of ISEAS in Singapore.86 Hereafter is the script of an email interview made in August 2013. What are your thoughts on economic pragmatism versus nationalist tensions with neighboring countries in ASEAN? As far as I am aware (take this with a pinch of salt), I don't know if there is any sort of integrated regional transportation policy, especially for ASEAN, but there are definitely plans to push for completion of these projects once the AEC becomes active (they're trying very hard). As far as geopolitical tensions go, I think that while they may be minor nuisances, countries ultimately have to grow/expand so I feel that these issues will just be road bumps along the way and that they will complete it with no problem. What are the main hurdles "Western" contractors may face in establishing themselves in South East Asia in a Joint Venture for example? I think in terms of openness, specifically in Southeast Asia and ASEAN in particular, there is a lot of work that needs to be done in terms of transparency. Last that I checked, Singapore, Malaysia and Thailand were at the top of the transparency list for ASEAN but that pertains to trans-border. For the actual hiring of contractors, I feel that there is less negative bias now towards foreigners in some areas but if any hairy situations arise, I am relatively certain that laws and regulations would side heavily in favor of the local company. What can be done to that extent would have to come from reforms from the government, and at the moment that seems quite unlikely. Do you think Contractors feel support from international or regional institutions that produce norms concerning transparency, anti-corruption regulations, especially in Southeast Asian countries with unstable judicial norms? I'm not an expert in this area but I think that while international and regional institutions can insist on increasing transparency and anti-corruption regulations, there is so much said on the surface but not really much done deep down under. There are always cases where contractors are supposedly guaranteed something and at the end, are not rewarded with what was promised. I think that the big companies (state-owned enterprises/ MNCs) won't have this problem but local companies will especially be likely to use these measures. At the end of the day, as globalization and further economic integration comes around, the countries which house these problems will have to start complying more with international standards to be accepted for future business. How do you think Contractors manage their very diverse workforce of local staff and regional qualified expats to ensure collaboration and optimal work environment? This one, I'm not entirely sure. I can give some opinions though but this is entirely speculative so I apologize if it doesn't make any sense. Speaking from Thailand's perspective (which you might already know quite a bit about), the Thai culture seems to permeate throughout local 86 http://www.iseas.edu.sg/ Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 107 organizations (respecting seniority, doing as asked while keeping quiet regardless of whether the action is right or wrong, etc.), but less so in MNCs. Not entirely sure how this would be tackled as cultural differences can sometimes be quite the issue. Language would also be a problem as the Thai standard of English is not very high. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 108 Vetting of Partners Flowchart Example of a due diligence tool dealing with partnerships, joint ventures and consortiums, provided on the Business Anti-Corruption Portal87 “The current vetting procedure has been devised for companies planning to enter into a partnership, joint venture or consortium. The vetting procedure is based on an active business Code of Conduct on corruption and bribery. The use of it can minimize the large number of problems related to corrupt partners and will reduce the overall risk associated with doing business in the country in question. (…)” Figure 19 – Vetting of Partners Flowchart (Due Diligence Tool) 87 http://www.business-anti-corruption.com/tools/due-diligence-tools/joint-venture-consortium.aspx Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 109 UN Global Compact88 The 10 Principles The United Nations Global Compact's 10 principles in the areas of human rights, labor, the environment and anti-corruption enjoy universal consensus and are derived from: ‐ The Universal Declaration of Human Rights; ‐ The International Labor Organization's Declaration on Fundamental Principles and Rights at Work; ‐ The Rio Declaration on Environment and Development; ‐ The United Nations Convention Against Corruption. The UN Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labor standards, the environment and anti-corruption: HUMAN RIGHTS 1. Businesses should support and respect the protection of internationally proclaimed human rights; and 2. Make sure that they are not complicit in human rights abuses. LABOR 3. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; 4. The elimination of all forms of forced and compulsory labor; 5. The effective abolition of child labor; and 6. The elimination of discrimination in respect of employment and occupation. ENVIRONMENT 7. Businesses should support a precautionary approach to environmental challenges; 8. Undertake initiatives to promote greater environmental responsibility; and 9. Encourage the development and diffusion of environmentally friendly technologies. ANTI-CORRUPTION 10. Businesses should work against corruption in all its forms, including extortion and bribery. 88 http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 110 Principle #10: Anti‐Corruption “Businesses should work against corruption in all its forms, including extortion and bribery.” Origin of the 10th principle On 24 June 2004, during the UN Global Compact Leaders Summit it was announced that the UN Global Compact henceforth includes a tenth principle against corruption. This was adopted after extensive consultations and all participants yielded overwhelming expressions of support, sending a strong worldwide signal that the private sector shares responsibility for the challenges of eliminating corruption. It also demonstrated a new willingness in the business community to play its part in the fight against corruption. Underlying legal instrument With the adoption of the United Nations Convention against Corruption in Merida, Mexico in December 2003, an important global tool to fight corruption was introduced. The Convention is the underlying legal instrument for the 10th principle against corruption and entered into force on 14 December 2005. Objectives of the 10th principle The adoption of the 10th principle commits UN Global Compact participants not only to avoid bribery, extortion and other forms of corruption, but also to develop policies and concrete programs to address corruption. Companies are challenged to join governments, UN agencies and civil society to realize a more transparent global economy. Practical steps to fight corruption The UN Global Compact suggests to participants to consider the following three elements when fighting corruption and implementing the 10th principle. Internal: As a first and basic step, introduce anti-corruption policies and programs within their organizations and their business operations; External: Report on the work against corruption in the annual Communication on Progress; and share experiences and best practices through the submission of examples and case stories; Collective: Join forces with industry peers and with other stakeholders. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 111 Anti‐Corruption tools and resources Several documents can be downloaded on the UN Global Compact’s website for a corporate use89: ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 89 Global Compact for the 10th Principle: Corporate Sustainability with Integrity; The Fight Against Corruption: E-Learning Tool; Fighting Corruption in the Supply Chain: A Guide for Customers and Suppliers; Reporting Guidance on the 10th Principle Against Corruption; Collective Action: Building a Coalition Against Corruption; Anti-Corruption Tools Inventory; RSIST: Resisting Extortion and Solicitation in international Transactions; Fighting Corruption through Collective Action: A Guide for Business; Clean Business is Good Business; Business Fighting Corruption: Experiences from Africa; Business Against Corruption: Case Stories and Examples; Business Against Corruption: A Framework for Action. http://www.unglobalcompact.org/AboutTheGC/tools_resources/anti_corruption.html Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 112 OECD Guidelines for Multinational Enterprises90 General Policies Enterprises should take fully into account established policies in the countries in which they operate, and consider the views of other stakeholders. In this regard: Enterprises should: 1. Contribute to economic, environmental and social progress with a view to achieving sustainable development. 2. Respect the internationally recognized human rights of those affected by their activities. 3. Encourage local capacity building through close co-operation with the local community, including business interests, as well as developing the enterprise’s activities in domestic and foreign markets, consistent with the need for sound commercial practice. 4. Encourage human capital formation, in particular by creating employment opportunities and facilitating training opportunities for employees. 5. Refrain from seeking or accepting exemptions not contemplated in the statutory or regulatory framework related to human rights, environmental, health, safety, labor, taxation, financial incentives, or other issues. 6. Support and uphold good corporate governance principles and develop and apply good corporate governance practices, including throughout enterprise groups. 7. Develop and apply effective self-regulatory practices and management systems that foster a relationship of confidence and mutual trust between enterprises and the societies in which they operate. 8. Promote awareness of and compliance by workers employed by multinational enterprises with respect to company policies through appropriate dissemination. 9. Refrain from discriminatory or disciplinary action against workers who make bona fide reports to management or, as appropriate, to the competent public authorities, on practices that contravene the law, the Guidelines or the enterprise’s policies. 10. Carry out risk-based due diligence, for example by incorporating it into their enterprise risk management systems, to identify, prevent and mitigate actual and potential adverse impacts as described in paragraphs 11 and 12, and account for how these impacts are addressed. The nature and extent of due diligence depend on the circumstances of a particular situation. 90 OECD (2011), OECD Guidelines for Multinational Enterprises, OECD Publishing. http://www.oecd.org/corporate/mne/1922428.pdf Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 113 11. Avoid causing or contributing to adverse impacts on matters covered by the Guidelines, through their own activities, and address such impacts when they occur. 12. Seek to prevent or mitigate an adverse impact where they have not contributed to that impact, when the impact is nevertheless directly linked to their operations, products or services by a business relationship. This is not intended to shift responsibility from the entity causing an adverse impact to the enterprise with which it has a business relationship. 13. In addition to addressing adverse impacts in relation to matters covered by the Guidelines, encourage, where practicable, business partners, including suppliers and subcontractors, to apply principles of responsible business conduct compatible with the Guidelines. 14. Engage with relevant stakeholders in order to provide meaningful opportunities for their views to be taken into account in relation to planning and decision making for projects or other activities that may significantly impact local communities. 15. Abstain from any improper involvement in local political activities. Enterprises are encouraged to: 1. Support, as appropriate to their circumstances, cooperative efforts in the appropriate form to promote Internet Freedom through respect of freedom of expression, assembly and association online. 2. Engage in or support, where appropriate, private or multi-stakeholder initiatives and social dialogue on responsible supply chain management while ensuring that these initiatives take due account of their social and economic effects on developing countries and of existing internationally recognized standards. Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 114 Case Study: Maersk CSR Policy Generally speaking, Maersk sees CSR as a very positive input in international business. CSR, along with HSE, is seen as a way to achieve sustainability. Sustainability itself is seen as a source of business innovation. Figure 20 – Maersk’s Sustainability Strategy91 On its corporate website, Maersk presents its “deep commitment to responsible corporate behavior and good citizenship around the world” and establish as a priority for social responsibility “labor, human rights, diversity, disaster response and community involvement”.92 CSR is seen as “[a] work [which] is and will remain an on-going journey”, with efforts made in the recent years “to implement formalized principles and forge partnerships that integrate social responsibility more tightly into (…) business and (…) operations”. For instance, a code of labor standards that applies to all Maersk employees, “wherever they work in the world”, is now implemented (Maersk Global Labor Principles). Other “significant steps” have been taken in the areas of diversity, disaster relief and community involvement, including “forging partnerships and establishing new entities and roles within the company”. In 2011, they established the Maersk Human Rights Framework, based on the UN Guiding Principles on Human Rights and Business (the company is closely committed to the UN Global Compact). In 2012, they released the Third Party Code of Conduct, a document promoting responsible practices in general and throughout their supply chain around the world.93 91 Source: Maersk Corporate Website http://www.maersk.com/Sustainability/OurApproach/Pages/OurApproach.aspx 92 http://www.maersk.com/Sustainability/SocialResponsibility/Pages/SocialResponsibility.aspx 93 http://www.maersk.com/Sustainability/Documents/APMM_Third_Party_Code_of_Conduct_March_2012.pdf Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 115 For anti-corruption, Maersk launched a whistleblower system in January 2011. The system is available in 140 countries in more than 40 languages. Employees can submit reports by telephone, on the corporate website or via intranet. They can also use the (internal) “traditional channels” of reporting concerns to managers and/or legal departments. Employees can report “cases of fraud, corruption, competition law breaches, insider trading, foreign trade controls violations, deliberate breaches of IT security, discrimination and harassment.”94 Figure 21 – Maersk's Sustainability Journey95 94 http://www.maersk.com/Sustainability/ResponsibleBusinessPractices/Pages/Anti-corruption.aspx Source: Maersk Corporate Website http://www.maersk.com/Sustainability/SocialResponsibility/Pages/SocialResponsibility.aspx 95 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 116 TABLE OF FIGURES FIGURE 1 – ASEAN MEMBERS MAP ................................................................................................................................................................. 8 FIGURE 2 – CONTINENTAL SOUTHEAST ASIA'S RAILWAYS ......................................................................................................................... 14 FIGURE 3 ‐ SINGAPORE – KUNMING RAIL LINK (SKRL) ROUTE NETWORK ........................................................................................... 15 FIGURE 4 – YUNNAN PROVINCE: A GATEWAY TO SOUTHEAST ASIA ......................................................................................................... 17 FIGURE 5 – CHINA'S ASIAN LINK RAILWAY PROJECT .................................................................................................................................. 20 FIGURE 6 – SOUTHEAST ASIAN HIGH SPEED RAIL ....................................................................................................................................... 20 FIGURE 7 – ASEAN SUB‐REGIONS ................................................................................................................................................................. 24 FIGURE 8 – RAIL PROJECTS IN SOUTHEAST ASIA .......................................................................................................................................... 26 FIGURE 9 – DEEP SEA PORT PROJECTS IN INDIAN OCEAN .......................................................................................................................... 31 FIGURE 10 – CROWDED MRT IN SINGAPORE ............................................................................................................................................... 32 FIGURE 11 – SINGAPORE’S NEW RAIL TRANSIT PROJECTS ........................................................................................................................ 33 FIGURE 12 – THAILAND'S HIGH SPEED RAILWAY PROJECTS ..................................................................................................................... 34 FIGURE 13 – ROUTE AND STATION CONCEPTS OF HIGH‐SPEED RAIL IN THAILAND ............................................................................. 36 FIGURE 14 – MAERSK ON FACILITATION PAYMENTS .................................................................................................................................. 50 FIGURE 15 – SNAPSHOT OF THE BUSINESS ANTI‐CORRUPTION PORTAL (HOMEPAGE) ........................................................................ 53 FIGURE 16 – SNAPSHOT OF THE BUSINESS ANTI‐CORRUPTION PORTAL (PAGE: CORRUPTION IN CAMBODIA) ................................. 54 FIGURE 17 – COMIN ASIA’S PRESENTATION ON UNDERSTANDING THAI SOCIETY .............................................................................. 61 FIGURE 18 – COMIN ASIA’S PRESENTATION ON THAI STAFF’S EXPECTATIONS .................................................................................... 62 FIGURE 19 – VETTING OF PARTNERS FLOWCHART (DUE DILIGENCE TOOL) ....................................................................................... 109 FIGURE 20 – MAERSK’S SUSTAINABILITY STRATEGY ............................................................................................................................... 115 FIGURE 21 – MAERSK'S SUSTAINABILITY JOURNEY .................................................................................................................................. 116 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 117 TABLE OF CONTENTS FOREWORD ............................................................................................................................................................. 4 TABLE OF CONTENTS ........................................................................................................................................... 5 ABBREVIATIONS & ACRONYMS ........................................................................................................................ 6 TECHNICAL VOCABULARY .................................................................................................................................. 7 INTRODUCTION ..................................................................................................................................................... 8 WHAT IS ASEAN? ..................................................................................................................................................................... 8 WHAT IS SOUTHEAST ASIA’S RAILWAY REGIONAL CONNECTIVITY POLICY AND HOW DID IT START? ....................... 8 DIFFICULTIES ............................................................................................................................................................................ 10 METHOD & LESSONS LEARNED ALONG THE WAY .............................................................................................................. 10 BIAS ............................................................................................................................................................................................ 12 DEFINING THE SUBJECT OF STUDY ........................................................................................................................................ 12 PART ONE – UNDERSTANDING THE REGIONAL CONTEXT ................................................................... 14 I. OVERVIEW OF REGIONAL AND INFRAREGIONAL RAILWAY PROGRAMS .................................................................. 14 A. The Singapore – Kunming Railway Line, an ASEAN initiative ............................................................... 15 1. 2. 3. 4. Cash strapped ASEAN member states turn to China ................................................................................................................ 16 Yunnan, the gateway province ........................................................................................................................................................... 16 What is the ‘Pan‐Asian railroad’? ...................................................................................................................................................... 18 Confusion to determine SKRL scope ................................................................................................................................................ 18 1. 2. 3. 4. Leaving out Vietnam? ............................................................................................................................................................................. 21 A battle of words in the press ............................................................................................................................................................. 21 Japanese vs Chinese regional influence .......................................................................................................................................... 22 Thai – Chinese relations ........................................................................................................................................................................ 23 1. 2. 3. 4. Members of the Greater Mekong ....................................................................................................................................................... 24 Road infrastructure, a priority ........................................................................................................................................................... 24 Definition of Soft infrastructure ......................................................................................................................................................... 25 ADB’s instrumental role ........................................................................................................................................................................ 25 1. 2. 3. Thailand: Aranyaprathet – Klongluk missing link ..................................................................................................................... 27 Cambodia: Poipet – Sisophon missing link .................................................................................................................................... 27 Joint‐Venture with AS‐Nawarat ......................................................................................................................................................... 28 1. 2. Who’s paying ? ........................................................................................................................................................................................... 29 Electoral motivations .............................................................................................................................................................................. 29 1. 2. Tanjung Pelepas, a challenger for Singapore ............................................................................................................................... 30 Three deep sea ports on the Indian Ocean? .................................................................................................................................. 31 1. 2. The early bird policy ............................................................................................................................................................................... 32 A demographic strain makes upgrades urgent ........................................................................................................................... 33 1. 2. Regional integration ambitions .......................................................................................................................................................... 35 Ensuring Transparency ......................................................................................................................................................................... 37 B. The Chinese – Laos– Thailand HSR project spearheaded by China ...................................................... 19 C. The Greater Mekong Sub‐Region: ADB’s idea of soft infrastructure cooperation ......................... 23 II. NEIGHBOR FEUDS SLOWING DOWN PROJECTS ........................................................................................................... 27 A. Thailand – Cambodia border fights ................................................................................................................... 27 B. Singapore – Malaysia HSR ..................................................................................................................................... 28 C. Regional competition for Multimodal projects: Deep‐sea ports ............................................................ 30 III. PRIORITY GIVEN TO NATIONAL INFRASTRUCTURE DEVELOPMENT ..................................................................... 32 A. Singapore and the national upgrade of an extensive network by 2030 ............................................ 32 B. Thailand and its four HSR lines ............................................................................................................................ 34 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 118 PART TWO – ASSESSING AND REDUCING RISKS ...................................................................................... 39 I. PREPARING FOR A DIFFERENTLY STRUCTURED ENVIRONMENT .............................................................................. 39 A. Assessing the normative system: legal and economic indicators .......................................................... 39 1. 2. Legal structure ........................................................................................................................................................................................... 40 Access to a clear database of economic indicators .................................................................................................................... 40 1. 2. Hiring locally can be a challenge… .................................................................................................................................................... 41 …Keeping talent as well ......................................................................................................................................................................... 42 1. 2. Non‐confrontational communication and the power of hierarchy ..................................................................................... 43 Cash culture and losing face ................................................................................................................................................................ 44 1. 2. 3. Corruption ................................................................................................................................................................................................... 47 Bribery .......................................................................................................................................................................................................... 47 Extortion ...................................................................................................................................................................................................... 47 1. 2. Gifts and hospitality (GIACC) ............................................................................................................................................................... 48 Facilitation payments ............................................................................................................................................................................. 50 1. 2. 3. Internal network / resources / informants .................................................................................................................................. 52 Sharing information with peers ......................................................................................................................................................... 53 Business Anti‐Corruption Portal ....................................................................................................................................................... 53 B. Labor market ............................................................................................................................................................... 41 C. Cultural challenges and miscommunication .................................................................................................. 43 II. IDENTIFYING AND AVOIDING CORRUPT PRACTICES .................................................................................................. 46 A. Definition of Corruption, Bribery and Extortion .......................................................................................... 47 B. Institutionalizing “gray areas” ............................................................................................................................. 48 C. Due diligence ................................................................................................................................................................ 52 PART THREE – ADAPTING CORPORATE SOCIAL RESPONSIBILITY POLICIES ................................ 56 I. WHAT IS CORPORATE SOCIAL RESPONSIBILITY AND HOW DOES IT IMPACT INTERNATIONAL ENTERPRISES’ ACTIVITIES OVERSEAS? ........................................................................................................................................................... 56 A. Definition of Corporate Social Responsibility (CSR) ................................................................................... 56 1. 2. 3. Expanding the scope of Enterprise responsability .................................................................................................................... 56 For AMCHAM, CSR is about having a generous attitude ......................................................................................................... 57 Higher exposure means higher standards on CSR ..................................................................................................................... 57 1. 2. 3. The most widely referred to international documentation ................................................................................................... 58 Voluntary based recommendations ................................................................................................................................................. 58 A focus on working conditions ........................................................................................................................................................... 58 1. 2. 3. Adapting CSR to the immediate environment ............................................................................................................................. 59 Energy efficiency ...................................................................................................................................................................................... 59 HIV Prevention .......................................................................................................................................................................................... 60 1. 2. 3. 4. Giving back .................................................................................................................................................................................................. 62 Enjoying work ............................................................................................................................................................................................ 62 Being sensitive to regional cultures ................................................................................................................................................. 63 Buying power and promotion ............................................................................................................................................................. 63 1. 2. 3. 4. Local traditions and holidays .............................................................................................................................................................. 64 Mobility and Skill Change ..................................................................................................................................................................... 64 Gender dispositions ................................................................................................................................................................................. 65 Medical expenses ...................................................................................................................................................................................... 66 B. Major international CSR Guidelines and Principles .................................................................................... 57 C. Examples of CSR policies ......................................................................................................................................... 59 II. NECESSARY ADJUSTMENTS TO LOCAL EMPLOYEES’ NEEDS AND EXPECTATIONS ................................................ 61 A. Thailand Case study: the buddhist influence .................................................................................................. 61 B. Cambodia Case study: paternalist HR management .................................................................................. 63 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 119 CONCLUSION & PERSPECTIVES ..................................................................................................................... 68 RESOURCES .......................................................................................................................................................... 69 INTERVIEWS .............................................................................................................................................................................. 69 NETWORKING EVENTS & CONFERENCES (ATTENDED) .................................................................................................... 69 LEGAL DOCUMENT ................................................................................................................................................................... 69 RESEARCH PAPERS & ACADEMIC ARTICLES ....................................................................................................................... 69 PRESS ARTICLES ....................................................................................................................................................................... 70 WEBSITES .................................................................................................................................................................................. 72 International Organizations ........................................................................................................................................... 72 Other Organizations ........................................................................................................................................................... 72 International Enterprises / Corporate websites .................................................................................................... 73 Intelligence and Research Institutes ........................................................................................................................... 73 Online Resources, Reports & Documents ................................................................................................................... 74 ANNEXES ............................................................................................................................................................... 76 INTERVIEW SCRIPTS ................................................................................................................................................................ 76 Alexandre BESSON, TSO Cambodia ............................................................................................................................. 77 Stéphane CARBONNEL, ALSTOM Singapore ............................................................................................................ 81 Thomas CHABOUSSANT, TSO Cambodia ................................................................................................................... 84 Theresa DEVASAHAYAM, Institute of Southeast Asian Studies (ISEAS) .................................................... 88 Nathalie FAU, Research Institute on Contemporary Southeast Asia (IRASEC) ........................................ 90 José MORA, STRATFOR Asia ............................................................................................................................................ 97 François PETIT, Embassy of France in Thailand ................................................................................................ 102 Thanut TRITASAVIT, Institute of Southeast Asian Studies (ISEAS) ........................................................... 107 VETTING OF PARTNERS FLOWCHART ............................................................................................................................... 109 UN GLOBAL COMPACT ......................................................................................................................................................... 110 The 10 Principles .............................................................................................................................................................. 110 Principle #10: Anti‐Corruption ................................................................................................................................... 111 Origin of the 10th principle .......................................................................................................................................................................... 111 Underlying legal instrument ....................................................................................................................................................................... 111 Objectives of the 10th principle ................................................................................................................................................................ 111 Practical steps to fight corruption ............................................................................................................................................................ 111 Anti‐Corruption tools and resources ........................................................................................................................ 112 OECD GUIDELINES FOR MULTINATIONAL ENTERPRISES ............................................................................................. 113 CASE STUDY: MAERSK CSR POLICY .................................................................................................................................. 115 TABLE OF FIGURES .......................................................................................................................................... 117 TABLE OF CONTENTS ...................................................................................................................................... 118 ABSTRACT .......................................................................................................................................................... 121 Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 120 ABSTRACT In the past decades, Southeast Asian countries have been experiencing a surge in developing their national infrastructures. Railway is a major component in these infrastructure policies, both nation-wide and region-wide as this transportation medium is both energy and cost efficient. There is a growing trend to develop ASEAN connectivity and interconnect national networks, for a better logistics performance in the whole region and increased trade relations between neighbors. At this stage of infrastructure development, Southeast Asia needs Western Contractors technology and know-how to work on building or rehabilitating railway and mass transit system networks. Railway Contractors usually have extensive experience abroad, but they should not make the mistake of underestimating the preparation process when establishing to work on a project in a Southeast Asian country. What are the everyday challenges these Contractors face on the workplace and how can they be prepared to be operational? How can they mitigate corruption in countries where corruption permeates the system? What are their responsibilities as employers and how can they adapt to local expectations and situations? KEY WORDS ASEAN – Connectivity – Corruption – CSR – Infrastructures – Railway – Regional integration – Southeast Asia – Western Contractors Laying the track towards Southeast Asia connectivity: Challenges faced by Western Contractors – Kori R. Cicero (2013) 121