NIDA urges urgent action on economy

The institute has meanwhile lowered its predictions for the country’s 2015 gross-domestic-product growth, from its 4.3-per-cent prediction at the end of last year to the current 3.8 per cent.

Bunluasak Pussarungsri, vice chairman of the Service and Investment Committee at the Thai Chamber of Commerce (TCC) and a professor at NIDA’s School of Development Economics, yesterday said that while trade tariffs between Thailand and CLMV (Cambodia, Laos, Myanmar and Vietnam) countries were virtually zero because of the Asean Free Trade Area (AFTA) agreement already in place, customs regulations in the border areas were still the main problem that the government had to urgently resolve with the Kingdom’s neighbours.

"Almost 80 per cent of trade with CLMV countries takes place via the borders, and it is the only market beside the US that is doing well at the moment, but the main obstacle to export growth to CLMV is still the outdated customs regulations. The government therefore has to find common ground with our neighbours regarding this issue right now, in order to help compensate for weaker demand from the European Union, Japan and China," he said.

"Laos is still collecting tax from us when we try to export automobiles to Vietnam [via Laos], even though the tariff duty between the areas is already at zero. This is something that can be negotiated right now, and the Finance Ministry along with the TCC should take a closer look at this together," he suggested. Assistant Professor Yuthana Sethapramote, from NIDA’s School of Development Economics, said the Bank of Thailand should – and has the potential to – lower the policy interest rate a further two or three times this year, because economic growth was slower than what they and many others had expected.

If they took such steps, the benchmark lending rate could be around 1.25 per cent by the end of the year, he said.

The policy rate currently stands at 1.75 per cent, following the central bank’s cut on March 11.

"The policy interest rate is on a downward trend, and will probably increase by the earliest in the second quarter of 2016," he predicted.

Bunluasak recommended that the Finance Ministry and the TCC support Thai financial institutions with their expansion into CLMV countries, since many Thai manufacturers and large corporates were already venturing into those markets.

The Immigration Bureau should also consider getting rid of the visa-on-arrival policy because the current lack of operational efficiency is a hassle for inbound tourists, he said.

Nobody wants to wait three to six hours at the airport for a visa, as it should have been done before departure. Many countries have got rid of this [type of] policy in order to concentrate their resources on improving their efficiency at the other end," he stressed.

The number of Chinese tourists is expected to rise by 25 per cent in the next five years and they like to shop more than eat when abroad, so the government should come up with policies to support this behaviour, he added.

Bunluasak also said martial law should be replaced by Article 44 of the provisional constitution or with other measures that have a different, less-foreboding name, in order to attract more Western tourists, while the Finance Ministry should enhance its communication with the public in terms of its tax policy to lessen grievances. "The Finance Ministry should not concentrate on telling people how much it would be able to collect from the [on-hold] land and construction tax, and they should be talking about how this tax would replace the old household tax and how the money would increase the income of local administrations," he suggested.