Politics, corruption haunting Thai economy

Thailand has ushered in 2016 amid signs it will continue to struggle economically. And the political situation is not helping. It’s a bad year to be in this economic situation, given the official launch of the Asean Economic Community that will put the nation’s competitiveness in a much more glaring spotlight. But there is no use dwelling on what might have been. Thailand’s economic situation is more complicated than that of most of its neighbours and hence will require extraordinary measures to make it sustainably good.
Thailand’s GDP growth is expected to be between 3 and 4 per cent this year. Even a best-case scenario is unlikely to match those of key Asean competitors namely Vietnam, the Philippines, Malaysia and Indonesia. Exports are expected to be minus 3 per cent, but next year Thailand will be gunning for a 5-per-cent growth. Some 29 million foreign tourists visited Thailand this year, and the tourism industry anticipates a 10-per-cent growth in income next year.
Thailand’s geographical, agricultural and cultural attractions have in recent years been compromised by political conflicts. Key economic factors have been closely linked with politics, which have been affecting – and will continue to affect – exports, tourism and the well-being of important sectors. The inter-connection exists, both domestically and internationally, creating a complex situation in which some “right” political moves are not necessarily right for the economy.
But ultimately, the Thai economy requires to be on a solid footing, and one requisite factor has never been there: It’s the issue of “transparency”, which can help any country economically in the long run. The global transparency index has never been kind to Thailand, whether under civilian or military rule. Thailand has been scoring way under 100, making it rank below the 100th spot on the global table. It simply means that when “honesty” is concerned, we are not appealing to investors at all.
Yet the low transparency score has been ours for so long that many business people may not know how to operate otherwise. In other words, many businesses, whether they are local or foreign, have become accustomed to the way things are. They have become part of a dirty economic system in which bribes, political connections and dressing up of balance sheets can determine successes or failures. It will take a lot of political courage to effect economic reforms that matter. Some measures may draw plenty of outcries, not just from local operators but also from foreign investors. Others, if not well planned, can promote the very thing that we want to eradicate – corruption. A tax clampdown is one example. It will lead to protests, more conspiracies and more graft.
But true reform is like surgery. It will be painful for a considerable period of time, but in the long term it will be worth it. With the Thai economy in a bad shape, and much of the past few years seeing Thailand registering the lowest growth in the AEC, it remains a big challenge. The powers-that-be are confronted with a dilemma – reform now and face substantial risks or do the right things later to avoid disrupting the “wrong” way that can at least deliver immediate results.
The road ahead is full of challenges, although what Thailand has to do sounds quite simple. Sustained economic prosperity needs time, patience and a collective national push.