Economic prospects sound – if we hold steady

By The Nation

 

 

Foreign investors, skittish of political unrest, need to be lured back to ensure Thailand can progress

 

The international community is closely watching political and economic trends in Thailand, a country governed by the National Council for Peace and Order-backed government of Prime Minister Prayut Chan-o-cha for the past four years.

 

Prayut yesterday presented his fifth annual budget proposal, worth Bt3 trillion, to the National Legislative Assembly for the 2019 fiscal year beginning on October 1. Budget-wise, the outlook remains reasonable, with a deficit of Bt450 billion to be covered by state borrowings since tax and other revenues will fall short of the expenditure bill.

 

Economically, a major challenge has long been a relatively small budget for investment, as nearly 80 per cent of the Bt3 trillion is earmarked for fixed expenditures such as salaries of government employees, leaving a meagre amount for state investment to drive economic growth.

 

However, the government has been dependent on the private sector – both domestic and international investors – to play the leading role, especially in the Eastern Economic Corridor (EEC) mega-infrastructure and investment programme.

 

The EEC, which covers parts of Chon Buri, Rayong and Chachoengsao, is designed to propel the country’s economic growth over the next several decades, with a focus on a new generation of industries and enterprises that use digital and other technologies.

 

Overall, the EEC programme is expected to attract a massive investment – around Bt1.7 trillion – the majority of which coming from private investors. Among the key components of this programme are a high-speed railway linking Suvarnabhumi, Don Mueang and U-tapao international airports, as well as the expansion of Laem Chabang and Map Ta Phut seaports.

 

Hence, the role of private investors is crucial to the success of this programme, which is also aimed at positioning Thailand as a transportation, industrial and business hub of mainland Southeast Asia, covering Myanmar, Laos, Cambodia and Vietnam.

 

The timing is good for foreigners to ponder new investment schemes in this country after more than a decade of insufficient private interest due to political upheaval and other unfavourable factors.

 

According to the National Economic and Social Development Board, the Thai economy has been on a solid recovery path in the past four years since the political chaos was choked off by the coup. This is evidenced by GDP growth in the first quarter of 2018 of a strong 4.8 per cent, beating most analysts’ forecast of just 4-per-cent growth.

 

In other words, strong export earnings, tourist arrivals, domestic demand and fiscal activities have contributed to better growth performance, even though the distribution of wealth remains uneven. Consumer confidence has increased, as reflected by higher spending on durable products, while private investments also rebounded with an increase in capital goods and machinery imports.

 

In terms of capital flow, the outlook is manageable, with some outflow of funds due to sales of Thai bonds and stocks.

 

Politically, it is more challenging. On May 22, the Prayut government completed its fourth year in office. Major Western countries initially broke off engagement with Thailand in the wake of the 2014 coup. The international community is now closely watching the country’s efforts to return to the democratic path in a general election. Organic laws on MP election have been approved and other preparatory work is underway, so there is cautious optimism that the polls will take place early next year.

 

Any further delay in the election schedule would bode ill for the country. It would be seen as a downside risk by international investors, whose confidence is crucial to the Thai economy.

 

Source: http://www.nationmultimedia.com/detail/opinion/30347256

 

-- © Copyright The Nation 2018-06-08

48 minutes ago, webfact said:

Any further delay in the election schedule would bode ill for the country. It would be seen as a downside risk by international investors, whose confidence is crucial to the Thai economy.

toughest job of the top ruler here: choosing which excuse to use for the Next delay

56 minutes ago, webfact said:

In other words, strong export earnings, tourist arrivals, domestic demand and fiscal activities have contributed to better growth performance, even though the distribution of wealth remains uneven. Consumer confidence has increased, as reflected by higher spending on durable products, while private investments also rebounded with an increase in capital goods and machinery imports.

I think the paragraph above is quite instructive as it does hold some truths, but only some.

 

By everything that I read in the newspapers, exports are up and tourist arrivals are up, BUT domestic demand and confidence are actually down and 'fiscal activities' have contributed to a slower growth, not a faster growth.

 

Export growth. This is reliant on outside factors; as not much can be done except hope external factors are favourable, then Thailand hopes.

 

Tourist arrivals. There seems to be a great shift in tourism in the country. Overall, the numbers do seem to be going up, BUT the places where the funds are going are changing, and perhaps not for the better. On Koh Samui, the trend is for the monies to stay inside the (usually Bangkok-owned) large hotels, and not reach the proverbial 'little guy' on the island; in my small tourist town alone there have been several closures of restaurants and shops despite the numbers being high. By all accounts that I read in the papers, this seems to be the pattern; large-scale businesses are getting the benefits of tourism while small operators are not so much. This is a serious problem in the making and will contribute to social unrest if the benefits aren't spread around more evenly. Why would the 'little guy' tolerate hordes of Chinese tourists if they aren't seeing benefit from it?

 

Domestic demand. In the last day or two, I have read that domestic consumer confidence is down, not up. This seems to be a simple lie in the article. Outside of big business, Thailand's economy does not seem to be doing well, and that is a serious problem in the making.

 

'Fiscal activities'. I have seen story after story for a couple of years on how the government is not spending monies efficiently or quickly enough; this seems to be another simple lie in the story. Further, a government that buys idiotic submarines does NOT inspire confidence, which is arguably the key factor in future economic growth.

 

Overall, one can't help but think that, based on a quick comparison with her neighbours, Thailand should be at around 6-7% growth, not 4.5% or so. The coup caused a significant slowdown in economic growth for the country and it has not yet full recovered. Looking to the future, Thailand under the Junta is focused on security, and while security is an important issue, a Junta/military government tends to focus too much on it to the detriment of economics; the old adage applies; when all you have is a hammer, every problem is a nail.

 

If Thailand wants to return to being a regional economic growth leader and future economic power, it needs to get rid of the Junta sooner rather than later. It is that simple. A country is a lot like a family or a small business writ large; if the leadership of the family/small business cares for all the members, invests in their future, ensures fairness and justice and creates opportunities for all to contribute, they will thrive and succeed. if they do not, then they will not succeed.

 

It really is that simple...

 

 

I agree with much of what you've written, just a few comments:

 

"based on a quick comparison with her neighbours, Thailand should be at around 6-7% growth, not 4.5% or so".

 

Many of the neighbours are Johnnie come lately economies which have boomed but may not be sustainable over the longer term, the Thai economy has a lower growth rate but is consistent over time.

 

" the trend is for the monies to stay inside the (usually Bangkok-owned) large hotels, and not reach the proverbial 'little guy"'

 

The above is true across the board in all industry types, mom and pop stores are loosing out to the big guys. Part of the problem here is quality versus cost, people are finally beginning to understand that there's no point paying a higher price for lower quality products and services from a stall that may not be there tomorrow, when they can simply go to the larger chain store which offers competitive price, customer service and air con, all at a lower price. The same is true of restaurants where product consistency, hygiene, product quality and customer service are winning out over only slightly cheaper prices.

A troll post has been removed

5 hours ago, webfact said:

Economic prospects sound – if we hold steady

Interpretation

 

If we pay for three submarines and a spy satellite we will be broke - yes lets all hold steady lol

 

 

Three times now in the last six months I have read about some financial issues with Thailand in general and all three times the central bank has dismissed them, a recent statement that a dramatic increase in personal debt was somehow a good key economic indicator was a serious red flag for me, something is not quite right, the recent announcement of the out flow of foreign capital is a key indicator that something really is not quite right in the Thai coffers

Edited June 8, 20188 yr by smedly

5 hours ago, webfact said:

Economically, a major challenge has long been a relatively small budget for investment, as nearly 80 per cent of the Bt3 trillion is earmarked for fixed expenditures such as salaries of government employees,

Some of the ministries like Education and Interior have bloated civil servants and need serious down sizing, work processes reforming and more technology to improve productivity. The army also need re-structuring to reduce the total military personnel especially the generals and cancel conscription. 

2 hours ago, smedly said:

Interpretation

 

If we pay for three submarines and a spy satellite we will be broke - yes lets all hold steady lol

 

 

Three times now in the last six months I have read about some financial issues with Thailand in general and all three times the central bank has dismissed them, a recent statement that a dramatic increase in personal debt was somehow a good key economic indicator was a serious red flag for me, something is not quite right, the recent announcement of the out flow of foreign capital is a key indicator that something really is not quite right in the Thai coffers

I took the headline to be an endorsement of the junta's performance since they grabbed power. Hopefully, with the general election round the corner, few Thais will draw the same conclusion.

Sound proof you mean. So they can't here the screams for help. The faster this lot are gone The faster Future Forward can go into repair mode. Block numbers on China and boot Immigration. Bring farang back. Change charter jail many

Edited June 8, 20188 yr by Media1