Fewer subsidies, greater focus on human resources
The administration needs to change the platform of investment support and should slash some subsidies in order to enhance Thailand's competitiveness, experts said yesterday.
Investment in the development of human resources, as well as in research and development (R&D), is also seen as crucial.
Questions have been raised over the country’s lagging competitiveness ahead of the implementation of the Asean Economic Community (AEC) in 2015, after its international competitiveness ranking in 2011 fell to 39th out of 162 countries, a drop of 11 places in just five years.
Nipon Poapongsakorn, president of the Thailand Development Research Institute (TDRI) Foundation, said the economy used to grow rapidly as a result of enhancing investment expansion, lower wage costs, exports and waiving tax for local and foreign companies to expand in the Kingdom.
Speaking at the "Thailand Outlook 2012" seminar, organised by Kasikornbank, the TDRI chief, along with Praipol Kumsap, an economics professor at Thammasat University, and PTT president and CEO Pailin Chuchottaworn, shared views on how to enhance Thai competitiveness.
Nipon said the country could not use the same platform at present because of the changing global economy and the shifting population structure, especially the decreasing proportion of younger persons in Thailand. With the number of working-age adults having fallen amid an increasingly greying population, Thai industries need to hire more foreign labour.
With only a small proportion of the workforce earning high wages, the country faces a widening gap between rich and poor. Thailand is becoming a country caught in a middle-income trap and the speed of economic growth will be slower than in other Asean countries, he added.
Nipon said the country must seriously invest in human-resources development and R&D to sustain economic growth and competitiveness.
The Board of Investment is also changing its mindset to offer tax incentives only to companies that invest in development of human resources and R&D, which will pressure other companies do the same.
Praipol said investment in infrastructure was essential for Thailand to get out of the middle-income trap.
He suggested the government should improve the railway system beyond merely investing in hi-speed rail, and said it was time for it to focus on investing in power plants in light of predicted higher energy demand in the future. He added that although the government is providing a special tariff to encourage electricity power investors, some subsidies such as those on natural gas should be slashed so as to reflect actual costs.
Praipol said subsidies should not, however, distort the market because this would not benefit the country in the long term.
Pailin said it would not be easy for Thailand to reap more benefit from the AEC than other Asean countries based on its current competitiveness.
Yet, the country has a high chance of becoming a market leader if it limits its scope to its immediate neighbouring countries instead of focusing on all 10 Asean economies, he said.
The PTT chief also urged companies to place importance to doing real-time business and engaging in corporate social responsibility, both of which are part of the changing business mindset under the current competitive environment.
