Economic czar signals shift from stimulus to reforms

Thailand’s economic czar Somkid Jatusripitak said last week that the government would begin shifting away from stimulus measures to focus on fundamental reforms with the objective of raising the country’s competitiveness and reducing income inequality.

The comments by Deputy Prime Minister Somkid to a forum of over 1,000 business leaders and policymakers sponsored by the Bangkok Post newspaper came just days after several experts called for a restructuring of exports the adoption of more innovation for Thailand to stay competitive in the longer term. Most attributed the current export slowdown to weaknesses in major markets, especially China, which consumes a significant share of the Kingdoms goods and has been going through its own economic slowdown.

Somkid said the administration would draft reforms designed to move Thailand’s economy away from an over dependence on exports for growth to a new model that is “more inclusive of the entire population.” He gave few details, however, about what policies and measures would be created to achieve that goal, which many economists have been recommending for the past two decades.

“There are 30 million people who account for less than 10 percent of gross domestic product. How can Thailand develop if we don’t raise their incomes, if these people have no purchasing power,’’ Somkid told the forum.

Echoing the suggestions of many experts he said, “Innovation has to drive competitiveness. We can’t just be an economy driven only by a handful of large companies. How can we encourage new start-ups?”

He insisted that Thailand is well positioned to drive and benefit from regional economic integration in the about to be launched 10-country free-trade area known as the ASEAN (Association of Southeast Asian Nations) Economic Community, or AEC.  But the Kingdom will have to raise its levels of connectivity – not just with new physical infrastructure, which is already on the drawing board, but also digitally.

He added that corruption needed to be curbed and that barriers to business need to be removed.

“We are not an emerging economy. We emerged decades ago. But the problem is that growth has not been sustainable,’’ he said.

Several economists told the Bangkok Post that Thailand’s export structure needs to be revamped. “Our export structure is hardly changed from 20 and 30 years ago,’’ said Aat Pisanwanich, director of the Center for International Trade Studies at the University of the Thai Chamber of Commerce.

“We expect Thailand to take up to five years to fine-tune labor-intensive industries and create products that are innovative and add value, the so-called Industry 4.0,” he said.

“Innovation seems to be the single lifeline for Thai exports right now,” said Nopporn Thepsithar, chairman of the Thai National Shippers’ Council. “Innovation-driven development means not only adopting new technology but also improving the production process by applying innovations that are affordable and easy for all business sectors to use. More importantly, we also need proactive marketing.”

 

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Thailand Focus Week of October 19, 2015
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