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SMEs will suffer most if conflict hits economy

Nov 01. 2013
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By Watchara Pussayanawin
The Nat

The Federation of Thai Industries has expressed concerns that political conflicts are likely to put pressure on the economy, fearing that small and medium-sized enterprises could suffer the worst impact.
FTI vice chairman Tanit Sorat said the country could be heading for a dead end as political conflicts undermine confidence in the parliamentary system. Opinions vary widely, with no reconciliation in sight.  
He said no one knew how the dispute over the amnesty bill would end, which could prevent the fragile Thai economy, which is also affected by the global economic situations, from making a recovery. 
SMEs, given their limited liquidity, will likely be the first to see adverse impacts if the Thai economy does not recover strongly, he said. The government therefore should use its energy to solve the economic problems rather than concentrating on legal amendments.
“I have never seen anywhere in the world that does not adhere to the principle of rule of law, with no confidence in the judicial and parliamentary systems but only in their own opinions. In the past seven years, the nation has seen enough suffering. No one makes reconciliation,” Tanit said. 
If the political chaos continues next year, the economy can be expected to slow further, he said.
About 120,000 new graduates failed to get jobs this year, signalling a crisis, he said. If politic turmoil remains along with an economic slowdown, that could lower new employment. 
Based on a survey of FTI members, most had not hired new employees in the past three to four months. 
Payoongsak Chartsuttipol, chairman of the federation, said the private sector could not reach an analytical conclusion on the current political chaos, which arose from objections against the amnesty bill, but believed all would be concerned over the foreign-investment climate if violence occurred.
Udom Wongviwatchai, secretary-general of the Board of Investment (BOI), said there might not be impact on investment, as periodic political problems have long been a fact of life in Thailand, and some foreign investors might wait for the situation to resolve itself.
Udom expressed confidence that if foreign business interests really needed to invest in Thailand they would do so regardless of what was going on in the political sphere, and the BOI’s investment-promotion policy would not be changed.
Total investment in Thailand is expected to reach the Bt1-trillion target this year. In the first nine months, about 1,431 projects have applied for BOI privileges, down 6.3 per cent from the same period last year. In terms of value, however, total investment was up 0.7 per cent, to Bt737.8 billion.
Next year’s target for applications has not been determined yet, Udom said, explaining that it remained to be seen how the global economic situation progressed. He expected the 2014 target would be close to this year’s at no more than Bt1.3 trillion to Bt1.4 trillion.
On the FTI proposal that the BOI postpone enforcement of its new promotional policy to 2016, he said the federation had acknowledged the new policy since 2012 and a two-year adjustment period should be sufficient. 
 

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