Private sector will rely heavily on govt to help restore economy

At a seminar on “Direction for the Rehabilitation of the Thai Economy in 2012” hosted yesterday by the Federation of Thai Industries (FTI), Kosit Panpiemras, Bangkok Bank’s executive chairman, said the private sector would need to rely on the public sector for restoration of investor confidence, financial and fiscal rehabilitation policies, and monitoring of the execution of rehabilitation packages.
“The most important thing is that the government should keep local politics stable and peaceful. If there is political unrest, the country will have trouble rehabilitating its economy,” Kosit said.
According to the economic forecasts of many agencies, Thailand’s gross domestic product could see zero growth or even a decline in the first quarter of next year, he said. The government should look at the stimulus package launched previously by the US government, which injected money and reduced interest to near zero, but was not quite successful. Any similar campaign should be made at the appropriate time and be relevant to the country’s position as a member of Asean.
“Thailand is not a labour-intensive country any more. We also do not have plentiful natural resources to attract foreign investment. Foreign investors who have been negatively affected by the floods have been watching the policies launched by the government in handling the problem,” Kosit said.
Payoongsak Chatisuthiphol, president of the FTI, said Thailand still had strong investment potential compared with other countries in Asean.
“Despite the floods, we believe that foreign firms will still choose Thailand for their investments. However, they will be more cautious about selecting locations that have been affected or show any risk of future impact by floods.
“However, the government needs to speed up campaigns for restoring investor confidence and to have a policy for spreading investment into other regions throughout the Kingdom, such as in the South, which is appropriate for setting up new industrial zones close to the Gulf of Thailand and Andaman Sea.”
Anusorn Thamjai, dean of the economics faculty at Rangsit University, believes that the economy will have a rapid, V-shaped recovery driven by higher government expenditures, resulting in a higher budget deficit. But he said the proportion of public debt to GDP in Thailand was only 42-43 per cent, lower than many developed markets in Europe. Therefore government expenditures should be increased quickly and transparently.
FTI vice president Chainoi Puankosoom said small and medium-size enterprises had suffered a severe impact from the floods, and would recover slowly. The government should target assistance packages especially at this sector, including pressing for speedy payments of insurance claims. Revenue from insurance claims should not be counted as income for the purpose of corporate income tax.
Supachai Suthipongchai, chairman of the Electrical and Electronics Club under the FTI, said this sector was hit hard by the floods. He said SMEs in this segment would take longer to restore themselves to health than large companies.
“We do not believe that electrical and electronics companies will rapidly relocate their factories from Thailand. They will, however, look at other countries in which to set up new factories to diversify their business risks if the Thai government is not able to build confidence on prevention of floods or other natural disasters,” Supachai said.