By SASITHORN ONGDEE
THAILAND should shift its export focus to the Greater Mekong Sub-region (GMS) rather than rely on traditional trade counterparts like the European Union countries and Japan, in order to brace for the "new normal", the Thailand Future Foundation has sugg
The foundation, which was established by a group of leading business people a few years ago and has former finance and commerce minister Somkid Jatusripitak – an adviser to the ruling junta on economic affairs – as its chairman, yesterday revealed its latest study on the issue of “Thailand’s new normal”.
Sethaput Suthiwart-Narueput, director and secretary of the foundation, said “new normal” was a paradigm for a slowing pace of economic growth, and Thailand fitted this situation, as it was likely to experience annual expansion of not more than 3 per cent from now on.
The phenomenon is just like what is happening in the global economy, and especially in the US, Japan and China, he said.
Asian countries are no exception, but Thailand seemed to be experiencing a more rapid lowering of economic growth than other nations, said Sethaput, adding that this raised more concerns that the new normal for the Thai economy at a rate of around 3 per cent was not enough to spread benefits to the poor and provide them with a better standard of living.
Exporting more to other GMS countries – Cambodia, Laos, Myanmar, Vietnam and Southern China – is one choice under the new paradigm, and trade between the Kingdom and GMS members is now not far short of that between Thailand and Japan, he added.
Another option is that the country should shift its focus to investment rather than consumption in a bid to spur the economy.
This should be investment from both the government sector and private companies, said Setthaput.
The third option suggested by the foundation is that city expansion should be shifted more to suburban areas. However, he also suggested that a quick way to help stimulate the economy was for the government to focus more on promoting temporary tax allowances for corporates, in order to expedite their investment decision-making.
Sethaput added that the lower growth rate of the economy would be neither the same as had happened in the past, when it was always believed that things would swing back, nor just a so-called “recession”.
He said the main reasons behind pushing for a new normal are “borrowing” potential growth, under which the government is content to spend a great deal of money from its coffers on economic stimulus in exchange for a higher level of public debt; re-regulation, which leads to deleveraging of returns on investment; and changes in the productivity structure of each sector to fit with resources and changed domestic demand. Over the past five years, Thai gross domestic product grew by 3.6 per cent on average per annum, compared with an annual average of 4.7 per cent over the past 10 years.
Sethaput said the new normal for Thailand had been caused by structural problems in demographic terms, with the country facing a labour shortage amid an ageing society. Labour skills are developed more slowly than technology advances, as the country has been familiar with older production methods for such a long time, resulting in low productivity and cost inefficiency, he explained.
Moreover, Thai business start-ups lack access to funding, a factor that could stand in the way of economic growth, while freer trade dampens the competitiveness of Thai product prices in some industries.
With major trade counterparts of Thailand such as the EU and China, which are entering the new normal, accounting for one-fifth of the Kingdom’s exports, the country’s growth is also likely to decline as part of the new-normal trend, he added.