Tourism, rise in govt spending set to drive economic growth
IN SPITE of global economic sluggishness dampening overseas shipments this year, the Thai economy should grow more strongly during the current quarter, driven by tourism growth, rising government spending and recovering exports, ministers said yesterday.
At the annual meeting of the Thai National Shippers Council, Deputy Prime Minister MR Pridiyathorn Devakula said during a discussion on the topic “Driving the Thai economy under current global economic circumstances” that the government would try to promote the economy by focusing on budget-disbursement stimulation, helping promote farmers’ incomes and driving exports over the remainder of the year.
He acknowledged that amid a global economic slowdown, Thai shipments would be also affected, expanding this year at a lower rate than had previously been projected.
“Thai exports are expected to grow by only 1 per cent this year, while they faced negative growth of 4 per cent in the first quarter due to the serious impact from the global economic slowdown. However, exports should recover from the bottom in the months to come,” said Pridiyathorn.
The deputy PM pointed to the high unemployment rate of 20 per cent in the European Union, and 5.7 per cent in the United States, as one of the major causes of lower import demand in major markets.
The slowdown of economic growth in China to about 6-7 per cent this year has also influenced Thai shipments, he said.
Pridiyathorn also blamed the rise in the minimum wage to Bt300 per day and less development in the manufacturing sector for having decimated Thai export competitiveness in the global market.
Small and medium-sized enterprises have been seriously hit by the dramatic increase in wages, while large enterprises have shifted to expanding their businesses in other countries due to higher production costs at home, he said.
Exports hit by wage hike
As a result, exports have shrunk in the past couple of years since the minimum daily wage was hiked to Bt300, he added. To promote more export growth, he urged enterprises to focus on quality development, and to create differentiation for their products and services.
Meanwhile, the government has facilitated businesses that invest overseas by waiving double taxation on their income from foreign operations, so that all the maximum amount returns to Thailand and helps promote the national gross domestic product, he added.
Pridiyathorn also said Thai GDP should expand as expected this year, as revenue from VAT collection had risen by 9.75 per cent in the first quarter of the fiscal year, while the government’s budget disbursement in the first half of the fiscal year had exceeded 51 per cent of the full-year budget.
To help farmers suffering from falling crop prices, he said the government would give Bt1 million to each rice-farming village, while also providing soft loans to encourage rubber farmers to grow other economic crops.
During the same seminar, Finance Minister Sommai Phasee said that due to lower overall tax collection as a result of previous populist policies, the government now only had a relatively small budget to promote development in various sectors, as well as for infrastructure development.
Populist policies also resulted in only short-term development for the country, which meant Thailand now needed to promote infrastructure development, as well as development in the manufacturing sector by increasing value-added production, so that the Kingdom could become a fully fledged trading nation.
Energy Minister Narongchai Akrasanee told the seminar that to drive Thailand as a trading nation, it was crucial for the country to create integrated transportation linkage involving its road, rail, water and air systems. Laws should also be amended to facilitate more investment in the country, he said.
Meanwhile, enforcement of Article 44 of the provisional charter, which has replaced martial law, should enable faster law amendment and benefit the country in terms of stable growth, he added.
