Thailand starting to lag behind its neighbours' as crisis takes hold

After the Bangkok shutdown, what will foreign investors think about the situation and its impact on their investments?

The political issues which lie beneath the proposed shutdown are for the Thai people to decide on. We can say as foreign investors and participants deeply engaged in the economy what a shutdown will obviously have a negative impact. Long-term investors in Thailand do realise that there are issues to be resolved, including issues of electoral reform. We note the recommendations of the seven major business groups in Thailand seeking, amongst other changes, electoral reform. We encourage peaceful and non-disruptive means to resolve issues in order to find lasting solutions. The proper day-to-day functioning of government is an important part of doing business.

How are foreign enterprises preparing for the shutdown? Businesspeople have said there has been some shift of export orders and investment to other countries – is this true? And do you know what kinds of businesses have been affected?

We are currently assessing members’ views on the likely impact. It is normal for business owners and operators to make contingency plans, and inevitably this will impact on the short-term and possibly medium-term attractiveness of Thailand.

We will continue to show the long-term benefits of doing business in Thailand but at the same time continue with our trade and investment advocacy agenda. The tourism sector is seriously affected, and not just for Bangkok but for the whole country. Many have cancelled or postponed their trips to Thailand. It is not only tourists but also conferences and business trips that are affected.

How do you want involved sectors to solve Thailand’s conflict?

The political issues are for the Thai people to resolve. Growth will inevitably be impacted.

As the Asean Economic Community approaches, is Thailand losing its attractiveness because of the political conflict, and does the mess in Thailand affect the Asean integration?

Yes, Thailand is losing its attractiveness because of the political conflicts, and yes the current situation in Thailand affects Asean integration plans.

To make Asean integration work smoothly, all countries involved need to implement various changes to ensure that the various elements (goods, services, investment, capital and labour) operate as planned and agreed.

Different countries need to make changes to different parts of their local regulations. Some countries need to change labour laws, some need to change investment laws, and others need to change processes involving equal treatment of foreigners and local nationals. A large effort is also needed to harmonise many definitions, including university qualifications, taxes and customs.

To amend laws and regulations, the Thai system uses an elected government that comes together to discuss the best approach to make the changes, agree the changes and then enact these into law.

The conflicts in Thailand ever since 2005 have meant that the Thai government has not maintained any focus on the complicated changes needed to facilitate the changes that the Asean integration requires.

For example, to allow the labour changes to work, the Thai labour law needs amendment. To allow the services changes involving Asean national foreign ownership of up to 70 per cent, the Foreign Business Act and some other procedures need to be changed.

Other changes are also required.

None of these are being addressed today as the Thai government is in caretaker mode, and it is not clear what the outcome of the elections will be.

This all means that the foreign investors do not know what the rules of operation will be in Thailand over the coming years, and this means that foreign investors look to other locations when making their decisions. Thailand will lose foreign investors.

Thailand is already lagging in the Asean context in implementing the necessary reforms, especially in the services sector. These anticipated events will mean a greater catch-up is needed.