Structural changes to the economy now an imperative

A looming export crisis became clearer after Commerce Minister Chatchai Sarikulya confirmed that the export growth target for this year would be at least 1 per cent, which is in accordance with the private economic houses’ revised target, down from the previous estimate of 4 per cent. This came after a drop of 4 per cent in exports in the first two months of the year. That could also imply falling short of the gross domestic product growth target of 3.5-4 per cent.

The “mission” to boost exports is back in the spotlight, forcing the government to mobilise all strategies to restore a positive figure. Some are working more intensely on finding new markets and pushing for every product category to fit in potential markets, to make up for loss in exports to major markets like the US, EU, China and Japan. 

Perhaps, the “baht” may be affected, as exporters are mounting pressure to depreciate the currency blaming its strength for the drop in exports. 

This is quite a reasonable excuse for the drop in exports amid the global economic slowdown, putting Thailand in the same bracket as other countries with shrunken exports. Only three of 40 countries – China, Switzerland, and Chile – reported in a survey by Global Trade Atlas enjoyed an increase in trade.

Meanwhile, the EU’s warning over “illegal fishing” – though this does not necessarily mean trade sanctions on Thai fishery products – will act as a dampener and further lower exports. Thailand is the third-largest exporter of fishery products to the EU, worth US$700 million, behind Japan and the US. A downgrade could cost the country exports worth about US$500 million.

To fix this problem quickly, the government may use Article 44 of the provisional charter as a wand. 

In the short run, different methods can be adopted to shore up the falling exports to at least be on par year on year. 

But in the long term, the export crisis should be fixed at its root for that’s where the problems are embedded. 

All the problems on this matter have been discussed by concerned people, including experts from the public and private sectors for years, but nothing concrete has happened in terms of achievements. 

The strategic plan to boost exports proposed by the private sector to the government a few days ago is something it has never done in the past. The plan mostly focuses on a structural change in state agencies – the Industry Ministry and Commerce Minister are proposed to be merged – in a bid to enable supervision of private enterprises in an integrated way. The other points are about a reduction of regulatory barriers and support for research and development, and human resources.

Many economic gurus have said that over a period, Thailand should undergo a structural change in its economy, creating more of its own champion products like the “Apple” brand of the US or the luxury bag brands from European countries to boost its exports beyond agricultural products. Though the Kingdom had the pride of place in Asean and is among the top 10 in the world as a base for car production and exports, we should not forget that’s just as part of Japan’s car-supply chain.

How can we boost our export growth with the prices of commodities like rice, rubber and sugar on a declining trend?

Whether one considers the “yellow card” or the flat export growth as more worrying, if the government does not outline a long-term plan and execute it in parallel, we might see more widespread use of the “wand” as long as the junta stays in power.