Martial law not the only problem plaguing our SEZs

A few days ago, Prime Minister Prayut Chan-o-cha was reported to be “acknowledging” problems facing Thailand’s special economic zones. But as expected, only the “usual suspect” was discussed when he met with members of the Policy Committee on Special Economic Zone Development. The meeting focused only on the impact of martial law, and that might belie the impression those responsible for Thailand’s SEZs want to create – that everyone is on top of the scheme and ready to go for the kill.

The martial law is negatively affecting the SEZs, but it is just one of many problems plaguing the SEZs. Prayut vowed to address investors’ concerns regarding martial law, yet he sounded more like someone wanting to say the right thing rather than someone who really knows what needs to be done. Thailand’s SEZs have been facing an identity crisis, and a comprehensive review of the entire scheme is required.

In a strongly worded article on Thailand’s SEZs, Kasemsant Weerakul, an academic and expert on the Asean Economic Community (AEC), pointed out several flaws in the scheme. First and foremost, he said the country was unclear on incentives and benefits and that alone is driving foreign investors away to SEZs in neighbouring countries. Then we seem to attach our SEZs too much to border trade, which can be a wrong approach. Last, but not least, Kasemsant said that land speculation should have been legally prohibited because it pushes investment costs up, thus discouraging investors and developers.

According to Kasemsant, SEZs require the most strategic thinking and vision, based exclusively on national interests. If SEZs are politicised one bit or launched merely as a showcase because the government needs to be seen as doing something, the scheme is doomed. If politicians seek to exploit SEZs through nepotism or land speculation, the projects will amount to little more than decorative flowers in development rhetoric. 

Just as the existence of martial law can make potential investors sceptical, the lack of clear-cut incentives and management methods can further undermine their confidence. And the issue of incentives has evolved with time, meaning some old concepts may not work any more. In today’s world, “incentives” have been complicated by access to new technology, cheap labour, labour migration, legal conveniences and political transparency.

Thai politics has somewhat placed SEZs in a no-man’s land. Which is to say that while SEZs are an equivalent of a private company’s crucial new product, whose market performance requires clear-cut accountability and responsibility, nobody really has to be taken to task if our SEZs are to become a big flop. 

From top to bottom, the mechanism of Thailand’s SEZs is poor compared with that of neighbouring nations.

Thailand is good at “writing” but very bad at “implementing”. This characteristic flaw has hampered countless political reforms, mocked national development master plans and is threatening the SEZs as well. 

At the last meeting between Prayut and the SEZs policy committee more SEZs were designated, to add to the ones declared earlier. 

Should it be a cause for celebration or concern that 16 districts in five additional provinces have been earmarked for the second phase of Thailand’s scrappy SEZ push?