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A Public Forum on “Thailand’s outlook 2013: Politics, Economy, Borders and Beyond”

Moderator:                        Asso.Prof.Thitinan Pongsudhirak

                                                Director, Institute of Security and International Studies

                                                Faculty of Political Science, Chulalongkorn University

In his introductory remarks, Dr.Thitinan noted the importance of this public forum which focused on Thailand’s outlook from the different perspectives of various speakers including politicians, analysts and the private sector. He pointed out the aim of this forum was to provide insight into Thailand’s current situation in terms of its economy, politics and the roles and relationships with neighboring countries and beyond.


Welcome remarks:         Prof.Supachai Yavaprabhas


                                                Faculty of Political Science, Chulalongkorn University

Professor Dr.Supachai Yavaprabhas gave welcome remarks to all guests to the first ISIS forum of 2013. The forum was a great opportunity to have speakers expressing different political and economic views to come together for a constructive dialogue. He hoped that everyone would learn more about Thailand in different aspects.



Jarun Ditapichai started his talk with a brief overview of the condition of the country in 2012. He claimed that although many voters doubted Yingluck’s government after the general election in August 2011, she could easily pass through 2012 without a stumble. Her administration had successfully carried out Pheu Thai’s policies to benefit the Thai people particularly the rice pledging, first car/home owner rebate, and the one child one tablet policies.


From his political perspective, Jarun predicted that the number of Red Shirt members would continue to grow while the Yellow Shirt’s political ideology would need to be clarified. Jarun compared Thailand’s political situation to Deng Xiaoping’s quote ‘no war, no peace’. Jarun said he expected that the conflict would last at least for another 10 years. However, a positive relationship between Yingluck’s government and the military, as well as ‘delay tactics’ would assure that a coup d’état would not occur in the near future and would allow Yingluck to stay her full term.


Jarun finished his talk noting that the Red Shirts were not pro-Thaksin. He was surprised that many well-educated Thai agreed with the coup d’état as no citizens from developed countries throughout the world would condone such unconstitutionally behavior.  


Korn Chatikavanij argued that although the government has successfully executed some of its promised policies, the government’s policy implementation would create trouble to Thailand in numerous aspects. Korn evidenced an optimistic perspective on the Thai economy. As a former Minister of Finance, he predicted a 5% growth yearly with 3% inflation in the next 20 years unless there was social and political upheaval. The country was in a better position than ever with strong trade and friendly foreign relations especially in ASEAN which is the most dynamic region in the world. Moreover, at the corporate level, the private sector is thriving both in finance and operation. Korn said that he expected significant progress for Thai firms since Thailand is a major producer of automotive parts, food and rubber, and he anticipated some global Thai brands in the future.


Given the changing regional environment, Korn pointed out that although Thailand’s level of competitiveness was positive given its existing basic infrastructure, the regional integration to be put in place in 2015 would allow neighboring countries such as Vietnam and Myanmar to compete with Thailand. Therefore, some projects and policies needed to be reconsidered. First of all, the improved quality of education, as well as R&D, should be encouraged. Second, the government should increase the share of the service sector altogether with support for the value-added activities of firms to enlarge their profit margin. Third, the transportation and telecommunication sectors should be improved in order to be more competitive and efficient.


The private sector plays crucial role in driving the growth of the Thai economy. The government, therefore, should help support it. First, the level of participation in public investment programs should be increased to allow the private sector to co-invest in public projects. Second, due to the aging of the population phenomenon in Thailand that would cause labor shortages in manufacturing industries, the freedom of labor movement is crucially important and directly affects Thailand’s competitiveness. As a consequence, the government should have a systematic set of policies to assure the productive use of such workers. Third, freedom of capital would permit free and fair competition for global players to compete in the local market. So, rather than just nurturing Thai firms, there should be a comprehensive adaptation and development of products and service quality in order to face challenges from multinational corporations.


Korn criticized current government monetary policies as utterly undisciplined. For instance, the rice pledging policy was one of money leakage and was distorting and destroying the rice trading market. Money that was meant to provide full benefit to Thai farmers was instead diverted through corruption. Korn supported his argument by noting that if the government continued to spend money on this scheme alone, public debt would increase to 1 trillion baht in the next 5 years. Also, another obstacle to the sustainable growth mentioned above was the lack of transparency of government administrators and the ease of the procurement process which leads to a highly corrupted system and the weakness of Thai formal institutions. Thus, the government has to review its poor policies and the lack of transparency of their administration.


In addition, Korn proposed some amendments to laws and regulations that would help ensure sustainable economic growth. For example, all populist policies should be financed by the State’s revenue. Since the Yingluck government has won more than half of the parliament seats at the last general election, it has the mandate to administer the country and hopefully the government would lead Thailand to sustainable growth in the future.


Dr.Supavud Saicheua stated that recently, the populist policies had boosted short term growth for the Thai economy. However, it would slow down during the end of the year period. Although there had been some actions such as investment in mega projects in basic infrastructure, problems would still occur unless the government had other policies to reinvigorate the economy.


There were 2 idealistic approaches for the Thai economy Dr.Supavud stressed; export recovery and infrastructure investment for lower logistic costs. A historic flood in 2011 that disrupted large industrial areas in the central part of Thailand had severely limited exports in the third and fourth quarters. As a result, export growth in 2012 was only 3.1 percent instead of 15 percent as predicted. Thus, even though there has been an economic decline in the USA, Japan and EU countries, Thailand has to independently accelerate its own growth to recover from the disaster.


Moreover, the infrastructure investment plan had not delivered expected results since 2005 which raised investors’ concern as to investment direction. Thailand now has underutilized railroads which are the most cost effective mode of transport as opposed to overused road transport which is the most expensive and least safe mode of transport. This could explain the reason for the high cost of logistics in the country which also includes the costs of production. Therefore, the government should encourage building and improving the quality of railroad transport. However, there are 3 obstacles for the government to achieve such an objective. First, there is both the Environmental Impact Assessment (EIA) and the Health Impact Assessment (HIA) that probably will cause delays due to the  poor reputation of Thai management system. Second, according to Korn’s concern, Thailand’s labor shortage could postpone the project’s realization. Third, the prevalence of corruption could compromise the potential of the project.


Dr.Supavud mentioned 4 key issues that would lead to a sustainable Thai economy: monetary policy and stability of the Baht, fiscal policy, energy consumption and education. First of all, one of the major challenges for the government is an inflation targeting policy. The adjustment in a timely manner is the key to this policy. Dr.Supavud raised the question whether Thailand would be able to independently set its own interest rate given the G4 (Japan, USA, UK and the EU) situation. Second, both the fiscal policy and the rice pledging policy would keep prices rising yearly because the government has been encouraging farmers to overproduce rice every year. Unlike oil, rice is perishable and the market is uncontrollable. Hence, the government could not control the rice market mechanism in the global market especially when India and Vietnam have started to export more rice than ever. An implication of this situation is that the price of land would skyrocket in the future beyond the product value. Therefore, Dr.Supavud expected another real estate boom in the countryside of Thailand. Although the public debt rate was still low and the government felt confident in spending money judiciously, it was gradually destroying the system. Dr.Supavud suggested that we should closely monitor whether the government effectively and transparently manages its budget.


Another unaddressed issue was the imbalance between the education system and the stages of development in Thailand. In order to industrialize the country, Dr.Supavud suggested that there would be a need for a well-educated workforce to serve an advanced economy. The discontinuity of the political system in the last decade has led to a decay of the education system in Thailand whereby people have to struggle, not always successfully, to enhance their store of knowledge and experience.


Finally, Dr.Supavud mentioned State-owned Financial Institutions such as the Government Savings Bank, the Government Housing Bank and the Government Bank for Agriculture. These banks are currently larger than any private bank in Thailand. They are under the supervision of the Thai Government rather than the Bank of Thailand which means that they are likely to carry out the government’s policies. The key concern of Dr.Supavud is that there should not be a great number of bad loans.


In Kavi’s perspective, Thailand has not had a viable foreign policy and it has been controlled by one person outside the country. He emphasized that the rising daily wage to 300 Baht attracted more Rohinyan illegal immigrants who are willing to take low wages to find work in the southern part of the country as cheap labor is essential. Furthermore, Kavi highlighted the failures of the government to acknowledge the need for Thai citizens’ awareness and understanding about ASEAN Economic Integration in 2015. Most people understood regional integration in terms of more intensive competition rather than as collective bargaining power for all ASEAN countries. He added that Thai people had what was called “the Galapagos Syndrome” thinking they were unique and special, not realizing that neighboring countries such as Myanmar, Laos and Vietnam were taking accelerated steps beyond Thailand.


Kavi suggested that Thailand needed a wide range of outside inputs into government policies from people in different fields. Without a basic foundation, Thailand would not be able to enjoy advantages from the regional integration.



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