AN excerpt from a question and answer session The Nation’s Suthichai Yoon conducted with former Malaysian Prime Minister Mahathir Mohamad in Bangkok.

Suthichai: Apart from Singapore and Malaysia, which are ready for the Asean Economic Community in 2015, how do we handle the rest? I think Indonesia, the Philippines are in good condition, not too bad. I’m not sure about Thailand. You can tell me about Thailand. What about the rest, how do they get ready?

Mahathir Mohamad: Among the things we want to do is to remove our import duties between Asean countries. Whereas some countries like Singapore, even Malaysia, do not depend on import duties for their revenue but the other countries still depend a lot on import duties. Maybe Indonesia might have some oil but still (depends on import duties). If they allow free flow to the country, the goods they produce, motorcars they produce, cannot compete with the cars from a country where it’s much better developed.

Thailand, for example, exports more than a million cars and of course, Malaysia tries to produce its own cars. If we import Thailand’s cars into Malaysia, of course it would be cheaper than our national cars.

So we should take into consideration the strength and weakness of each member country and make allowances for these countries to retain their import duties, allow them some exclusivity on certain areas including among professions, things like that including studying the impact of the currency rate.

I propose that we should have a trading currency, purely for trading, but you retain your own national currency. We have to study carefully otherwise we might fall into a trap like the Europeans allowed themselves to be trapped in.

Suthichai: Trading currency means you’re talking about the currency of not the US dollar or euro or the yuan of China. What do you have in mind?

Mahathir: A special currency which is particular for Asean or East Asia that is based on gold.

Suthichai: But the gold price goes up and down every day.

Mahathir: Not as bad as the US dollar. The US dollar was 35 per one ounce of gold previously. Today it is 1,000-odd dollars per ounce of gold.

Suthichai: You sound like you are jealous of Thailand in the automobile industry. You went your own way to build your national car. Thailand decided on a different direction, inviting outsiders to come and assemble their cars here. Now, would you confess that you made a mistake on the national car and that Thailand made a successful strategy?

Mahathir: When we proposed our national car, Thailand had gone far beyond us in terms of manufacturing cars. Thailand is adopting the strategy of assembling cars and when we give Thailand the right to call this as a national car, if they have 40-per-cent local content, we have 90-per-cent local content, so because of that our cars do not sell very well.

Yes, we export some cars to Thailand but a lot of cars built in Thailand are imported to Malaysia because they are cheaper. If they are imported from Japan, they cannot compete with our cars. It’s not a question of being jealous. We are happy that Thailand is richer now. Because, we have the belief in the prosperity of our neighbours. We want our neighbours to prosper, because when they prosper, they create less problems for us and they become very good markets for our exports.

Suthichai: I’m sure we also want our neighbour to be prosperous. Now what exactly should we do now, 2015 is very close. Otherwise, as you suggested, we might fall in the EU trap and we might fail, but we cannot afford to fail, as we are poorer than many countries in the world. For example if you look at Laos, Cambodia, Myanmar, how can these poorer countries cope with 2015?

Mahathir: Firstly, we need to study the reason why the European Union went into a crisis. If we understand that then we can avoid what caused them to fail. One particular thing I want to point out is the use of a common currency, not only for trading but also for domestic use. Now if you are selling in baht, the baht is one-tenth of the ringgit. We name our price in ringgit, that about 10 times (the value) of the baht, but when you convert into a common currency, what is the rate?

The Europeans did not consider the varying value so when they converted their national currencies into the common currency, the prices (of goods and services) shot up. You see, the euro is stronger than the peso in Spain or the currency in Greece and Portugal, so the price (of goods and services) is going up and when the price goes up tourists do not come. The prices of things you export become expensive. So you lose competitiveness.

So we must understand this before we come together in a single community. We must understand what happened to Europe and avoid the mistake they made. We have to understand the reality and position of the countries when we come together - which one is poor, which one is rich. What is the cause of poverty and other things. And then, we formulate a structure for the AEC that tries to avoid all the problems that may arise in the future.

Suthichai: What will happen if they proceed with the original schedule in 2015?

Mahathir: I think some countries might find this very difficult for themselves. Suthichai: Will they be like Greece or Turkey?

Mahathir: If they stay out, they might be like Turkey but if they go in, they might be like Greece, which is bankrupt (laughs).

Suthichai: So it is equally bad.

Mahathir: No, I think we should come together but we should make allowances for Myanmar, for Laos, for Cambodia. We should know why their economies are not developing as fast. We should have more investment from other Asean countries. We should allow them to protect their economies to a certain extent. Maybe if the tariff is 10 per cent, 20 per cent - we reduced it - but not to zero, while the others are reduced to zero. So consideration should be given to the level of economic development of these three countries.

— By arrangement with The Nation/ANN