Economy will be better under democracy: Pheu Thai

Pichai said that although the United States’ economy was recovering, Thailand would not benefit much because the US was set to cut the Kingdom out of its Generalised System of Preferences (GSP) and encourage its citizens not to buy Thai seafood over allegations of slave labour being used in Thailand’s seafood industry.

The same situation applies to the Kingdom’s trade relationship with the European Union, he said. 

The EU has cut Thailand from its GSP and it will not discuss a free-trade agreement until the country is returned to democracy, he said.

“This is sort of like a sanction,” he said, adding that Thai products would be more expensive because the country does not have a tariff advantage, which make it less competitive against other nations.

Pichai said turning to Japan for an economic lift was not a realistic option because its economy had not fully recovered, while China’s was slowing.

However, trade within Asean is a one positive, he said, although Thailand might import more than it exports because of a decrease in investment in this country.

It is not possible that exports, estimated to decline by 5.5 per cent last year, would bounce back to 5-per-cent growth this year, he said. 

Worse still, investment in the country will continue to shrink because foreign investors will not want to take the risk, fearing that Thailand will be hit with more trade barriers besides the GSP issue, he said.

Foreign investors are also put off by the decisions by the International Civil Aviation Organisation and the US Federal Aviation Authority to downgrade Thailand over aviation standards, as well as by the issue of illegal, unreported and unregulated fishing, he said. Pichai said the country’s human-rights violations and people being charged with offences that were not in line with international norms also shook investor confidence in the country.

There have been many shifts in investment bases, especially to Vietnam, he added. And hopes of investment clusters could be forlorn because there is no major foreign investment coming into the country. 

The Board of Investment advantages given to foreign players has not resulted in an investment boost. Investors are only adding to their current interests here when it is necessary,

Pichai said the dramatic decrease in imports, especially capital goods, would reflect a future decrease in exports.

Agricultural-product prices are also very low, especially for rubber, because of decreasing oil prices, he said, adding that it will continue that way for a very long time.

Drought has also hurt the economy, he said.

Pichai said the middle class was likely to have lower purchasing power after the New Year holiday due to spending sprees in December, while small and medium-sized enterprises will continue to face slow trade and many will close down. 

Measures to help SMEs will only temporarily delay disaster for many of them. Pichai said tourism might be Thailand’s only hope, but high-income tourists were not visiting the country because of the political atmosphere and the aviation-safety and terrorism issues.

Investment and expenditure in the government sector are still suffering from inefficiency and the worthiness of major investments. 

Thailand will watch its neighbours’ economies grow as it continues to suffer from an ailing economy this year, Pichai said.

He said there were several things the government needed to do to improve the situation including enhancing Thailand’s image by stopping human-rights violations, accepting different opinions, and improving the country’s overall performance, especially in relation to the economy. 

There also needs to be a concrete plan to return the nation to democracy and an election date should be set with a new democratic charter, Pichai said.