By Wichit Chaitrong,
The former chief of the United Nations Conference on Trade and Development (Unctad) suggests that Thailand and its neighbours in the Greater Mekong Subregion (GMS) cooperate to promote industrial policy and strengthen regional development.
At the same time, Supachai Panitchpakdi is cautious about the Thai plan to conduct barter trade with China, exchanging farm products for investment from the latter in a high-speed-rail system.
Deputy Commerce Minister Yanyong Phuangrach is travelling to Shanghai to negotiate a barter-trade contract this week.
Supachai, former secretary-general of Unctad, said yesterday that the GMS should have a common industrial policy to promote investment for the benefit of ordinary people. He made the comment at a seminar on “GMS Connectivity: Key to Future Growth” co-hosted by the Economic Research Institute for Asean and East Asia (ERIA), Jetro (Japan External Trade Organisation) Bangkok and the Ministry of Commerce. Senior officials from the GMS participated in the event.
As Thailand and other members of the GMS have built road and rail links, it has led to land speculation along these routes, while big businesses like casinos and shopping malls have taken advantage of the economic integration, he said. But in addition to these powerful interests, the linkage should be beneficial to local people, so GMS countries should promote manufacturing investment together.
For example, Laos could be supported by investment in electricity generation, Myanmar in food processing and Thailand in global marketing of regional products, research and development. Countries have to harmonise rules and regulation to promote trade and investment, he said.
Regarding the high-speed-rail project, Supachai said the Thai government should be very careful about the idea of tying farm products to investment from China.
“The government should be more concerned about rail-technology transfer, since building hardware is easier, but the important thing is how to promote technological development for Thailand,” he said.
He noted that there were many high-speed-rail technologies developed not only by China but by Japan, France and Germany, so the government should be open to competitors rather than to only one country. “Barter trade may be a good idea for exporting farm products that are hard to sell in the global market, but our high-quality products are in global demanded. What is wrong is government policy, not the market,” he said.
He stressed there would continue to be international demand for Thai food products including rice as world economic development moved forward. However, he refused to comment in great detail on the controversial rice-price subsidy scheme implemented by the current government.
Supachai said the Thai economy would continue to face volatility of capital flows for many years because the economic troubles in Europe and the United States had not yet come to an end.
He suggested that the government should not only look at what is going on in the US but should carefully look at its own policies, while companies and people should also look at their own strengths, and not be complacent when money flows into the country.
He believes that Asian central banks including the Bank of Thailand are trying to reduce their holding of US government bonds, as they diversify their risk. “But they cannot do this faster, for if they do it will cause a sharp depreciation of the US dollar, leading to too much loss for everyone.”
Olarn Chaipravat, president of the Thailand Trade Representative Office, forecast that in the next 20 years road and rail links in the region plus southern China and parts of India and Malaysia would create a market of 1.2 billion people. The loop of road and rail links will total about 5,000 kilometres, he said.
The region has to double or triple the road and rail routes available today. Thailand is expected to start an investment programme in infrastructure projects worth Bt2 trillion next year after it is approved by Parliament, he said. This Bt2-trillion investment plus unknown amounts from other countries will facilitate the flow of goods and people, leading to expansion of intra-regional trade and investment, estimated to be two to three times a great in next 10-15 years, he said.
Over the next 20 years, average economic growth in the region should be about 5 per cent per annum, significantly higher than the average 2 per cent in Europe and the United States, he noted.