By The Nation
Thailand’s post-election economic outlook will largely hinge on political stability and the continuity of key economic policies, especially those designed to drive growth over the next decade or two via investment in the so-called new S-curve industries.
The Eastern Economic Corridor (EEC) mega-investment programme is expected to figure prominently if the next government has at its head some of the same people who formulated the plan. If not, the new administration will have to start from square one to chart a fresh economic development course.
In the past four years, the outgoing administration has implemented
multiple preparatory measures for the EEC project, whose objective is to promote investment in the next-generation automotive industry, intelligent electronics, advanced agriculture and biotechnology. Other S-curve enterprises targeted are food processing, medical tourism, digital industry, robotics, aviation and logistics, comprehensive healthcare, biofuel and biochemicals.
The groundwork has been laid in three EEC provinces. More importantly, potential investors from Japan, Europe and China have expressed serious interest in the EEC programme. They are awaiting the outcome of the March 24 general election and whatever implications it might hold for the future of this massive investment scheme. The programme’s economic prospects are good, but the crucial political component will remain uncertain until the new government is formed.
Due to the EEC plan’s long-term strategic significance, the next government will face an uphill battle in attracting further foreign investment amid unprecedented and disruptive technological changes. Thailand has reaped substantial benefit from the last round of major investment in the industrial sector, marked by the launch of the Eastern Seaboard programme more than three decades ago. But unless the country ushers in a fresh and comparable mega-investment programme to draw in new investors and cultivate more projects, it will no longer be competitive against the rapid development underway in Vietnam and other emerging economies.
Japan, which remains the largest foreign investor in Thailand, has for example adopted the “Thailand-plus” investment strategy for all of Southeast Asia, in which it aims to connect its sprawling investment and manufacturing assets here with new projects in neighbouring countries, especially in Cambodia, Laos, Myanmar and Vietnam (CLMV).
Chinese conglomerates such as e-commerce giant Alibaba are also keen to use Thailand’s EEC programme and its advantageous location as a springboard to tap the CLMV markets. For European conglomerates such as Airbus, the EEC scheme is suitable for servicing the fast-growing regional aviation industry. All these foreign investors along with their Thai counterparts are hoping simply that the election goes smoothly and Thailand returns to the democratic path with the level of political stability essential to supporting another round of private investment projects.
In the end, the Thai economy needs fresh foreign and domestic capital to finance the new generation of industries and businesses that take advantage of new technologies. This will be crucial if GDP is to be sustained in the 4-5-per-cent per-annum range over a decade or two, amid worries about accommodating an ageing population and rising competitive challenges from emerging economies.
To demonstrate such confidence, the country’s political landscape must be conducive to investors’ aims and ambitions. If the election results are not acceptable and politics remains unstable, we would have to brace for another round of disaster.