Firms 'need support' for ASEAN investment

The government must do more to facilitate Thai investment in the region, particularly by making funding more accessible, ahead of implementation of the Asean Economic Community in 2015, said Bandit Nitthavorn, managing director of the Thai Institute of Directors.

The integration of regional markets under the AEC will enhance its members' ability to maintain growth amid global economic volatility, particularly in the United States and Europe, Bandit said.

Delivering the keynote speech, "Changes in Geo Global Economics", at a seminar on the AEC's implementation, Bandit said the world economy was likely to enter a recession. Economic growth in many countries will decline, he said, not only because of problems in the US and Europe, but also as a result of the Chinese government's policy of slowing growth to curb inflation.

He pointed to the fact that HSBC recently lowered its forecast for world economic growth in the second half to 2.6 per cent from a previous estimate of 3 per cent, while projected growth for 2012 was revised to 2.8 per cent from 3.4 per cent.

Emerging markets will be the key drivers of economic growth,

 rather than major economies such as the United States, Europe and China, the bank said.

"The most important problem is that the US and European governments' policies for tackling their economic and financial problems are unclear. So the world economy is likely to face a short-term recession due to the economic problems in the US, while public debt in many European countries is likely to be a problem in the long term," he said.

Bandit said Asian countries would have to become less reliant on exports and retool to focus more on domestic markets.

At the same time, he said, Asian countries had to find other ways to boost growth.

"The framework of the AEC is actually a good solution to help Asean countries to cope with the global economic changes. These countries have to increase trade volume in this region.

"The Thai government needs to focus on effective financial and monetary policies, not the hot-button issues it is dealing with now. This is my concern, and I want to warn the government about this," he said.

Bandit said the government should facilitate and encourage Thai investors in Asean so they can benefit from the AEC implementation as much as possible. The financial system must be revamped as well, to help small and medium-sized enterprises access funds more easily, he said.

Finally, the government should promote good governance among Thai businesses to make the country more attractive to foreign investors, he said.