Will Thailand break out of middile income status?

[saengd]

12 hours ago, Max69xl said:

"Many people with a middle income"? Really? Do you know how large the total workforce is? It's a very low number of people with a good salary compared to the ones with a very low salary = minimum wages up to 15,000 baht/month. 

The workforce is 23 million, the population is 68 million.

[ExpatOilWorker]

23 hours ago, cmarshall said:

Thailand will not be able to escape from the "middle income trap" as economists refer to it.  Thailand's growth beginning from the 1980's has been achieved by supplying cheap labor to foreign companies that manufacture products such as hard drives and automobiles in Thailand mostly for export.  But even after 40 years, there are no Thai-owned companies exporting hard drives and automobiles.  Compare that situation with South Korea, which started off in the post-war period by letting the Japanese build factories that produced automobiles, electronics, pianos, etc.  However, the Koreans insisted on transfer of technology and eventually started their own companies to produce and export their own brands of those products.  South Korea has the second largest steel manufacturer even though there is no coal or iron ore on the peninsula.  They also lead the world in building the most complicated ships such as LNG transporters.  All of this was the deliberate policy of development to achieve a rich economy established by Park Chung-Hee in the 50's and 60's who recognized that they had to develop their own products that could compete in the global market.  Education was certainly part of the whole industrialization program.  In 1960 South Korea had a lower literacy rate than Thailand.

 

Thailand, like all the other SE Asian countries, has no globally-recognized company like Samsung or product like flat-screen TVs.  The elite families that control the Thai economy have been so far content to maintain their positions within Thai society without attempting to compete on the global market.  Lately there is some expansion of Thai companies, such as banks, into Asean, but there is no national attempt to export from Thai-owned companies, except for food products.

 

It must be said that the drive to develop their economies among the now rich nations of Northeast Asia: Taiwan, South Korea, and Japan, was driven not by a desire to raise living standards, but by the need for self-defense.  That was the motivation behind the revolution of Meiji Japan, Park Chung-Hee's South Korea, Taiwan, and, indeed, the PROC itself.  The nations of SE Asia are under no fear of invasion by their neighbors and so remain economically inward-looking.  

Brilliant post. Thanks for sharing.

[saengd]

12 hours ago, Brunolem said:

At the beginning of this still young century, debt among the large majority of the Thai population was about zero, because there was no access to it, save via loan sharks.

 

Then a new billionaire prime minister introduced credit to the masses, via schemes such as the one million baht per village.

 

Since then, multiple similar schemes have mushroomed, sending people ever more into debt (that's 100% of the families in my village).

 

Obviously, when a country starts with very low debt and goes into a debt binge, as has been the case in Thailand, it gets an economic boom (just ask the US or China).

 

Unfortunately, this is unsustainable, as Thailand (and the rest of the world) is discovering, because there is only so much debt that the population can take on.

 

From then on, the affected countries are stuck in a state of economic limbo, out of which they hope to escape with some central bank magical trick...

Nonsense that is unrelated to factual history!

 

Household debt was around 40% of GDP at the turn of the century, today it is 69%. It was only that low in 2000 because the banks and the economy were still restructuring following the crash three years earlier and the ability of banks to lend was very low.

 

In reality consumer debt was far higher in the early 2000's due to loan shark lending which has now been substantially reduced as those loans have been transferred to banks or to government:

"household debt in Thailand hit an all-time record high of 31 percent of gross domestic product (GDP) in August 2007, and that 32 percent of people were using loan sharks, indicating an increase from 26 percent in the previous year (24 Aug. 2007)".

 

https://tradingeconomics.com/thailand/households-debt-to-gdp

https://www.ceicdata.com/en/indicator/thailand/household-debt--of-nominal-gdp

 

https://www.refworld.org/docid/47ce6d80c.html

[CNXexpat]

5 hours ago, Assurancetourix said:

I was walking in Central PlaZa de Udon Thani a few weeks ago; it was almost deserted, and the only establishment where there were a few people was the "food court" where the dishes are at 40 or 50 baht.
The restaurants of international chains were deserted

It seems there is a huge difference between Chiang Mai where I live and what I see here and Udon. 

[Brunolem]

4 hours ago, saengd said:

Nonsense that is unrelated to factual history!

 

Household debt was around 40% of GDP at the turn of the century, today it is 69%. It was only that low in 2000 because the banks and the economy were still restructuring following the crash three years earlier and the ability of banks to lend was very low.

 

In reality consumer debt was far higher in the early 2000's due to loan shark lending which has now been substantially reduced as those loans have been transferred to banks or to government:

"household debt in Thailand hit an all-time record high of 31 percent of gross domestic product (GDP) in August 2007, and that 32 percent of people were using loan sharks, indicating an increase from 26 percent in the previous year (24 Aug. 2007)".

 

https://tradingeconomics.com/thailand/households-debt-to-gdp

https://www.ceicdata.com/en/indicator/thailand/household-debt--of-nominal-gdp

 

https://www.refworld.org/docid/47ce6d80c.html

Try to think (and calculate) before talking about nonsense.

 

From 31% in 2007 to 69% today (your numbers above).

 

That more than doubles the debt in only 12 years!

 

And you think that such a debt binge is not going to massively influence the economy?

 

Actually, this has been the same almost everywhere...the debt has doubled since the 2008 crisis caused by...too much debt!

 

The party has been fantastic, don't even think about the coming hangover...

[saengd]

1 hour ago, Brunolem said:

Try to think (and calculate) before talking about nonsense.

 

From 31% in 2007 to 69% today (your numbers above).

 

That more than doubles the debt in only 12 years!

 

And you think that such a debt binge is not going to massively influence the economy?

 

Actually, this has been the same almost everywhere...the debt has doubled since the 2008 crisis caused by...too much debt!

 

The party has been fantastic, don't even think about the coming hangover...

It's a start that you agree 31% is not the 0% you mentioned earlier!

 

I think 69% is almost respectable, compared to many other countries, who cares that it doubled in 12 years, it did so from a low base: https://tradingeconomics.com/country-list/households-debt-to-gdp

[ICELANDMAN]

3 hours ago, CNXexpat said:

It seems there is a huge difference between Chiang Mai where I live and what I see here and Udon. 

Yes Chiang Mai have more strong economies included gold jewellery export 

[ThomasThBKK]

On 1/10/2020 at 8:07 AM, cmarshall said:

Thailand will not be able to escape from the "middle income trap" as economists refer to it.  Thailand's growth beginning from the 1980's has been achieved by supplying cheap labor to foreign companies that manufacture products such as hard drives and automobiles in Thailand mostly for export.  But even after 40 years, there are no Thai-owned companies exporting hard drives and automobiles.  Compare that situation with South Korea, which started off in the post-war period by letting the Japanese build factories that produced automobiles, electronics, pianos, etc.  However, the Koreans insisted on transfer of technology and eventually started their own companies to produce and export their own brands of those products.  South Korea has the second largest steel manufacturer even though there is no coal or iron ore on the peninsula.  They also lead the world in building the most complicated ships such as LNG transporters.  All of this was the deliberate policy of development to achieve a rich economy established by Park Chung-Hee in the 50's and 60's who recognized that they had to develop their own products that could compete in the global market.  Education was certainly part of the whole industrialization program.  In 1960 South Korea had a lower literacy rate than Thailand.

 

Thailand, like all the other SE Asian countries, has no globally-recognized company like Samsung or product like flat-screen TVs.  The elite families that control the Thai economy have been so far content to maintain their positions within Thai society without attempting to compete on the global market.  Lately there is some expansion of Thai companies, such as banks, into Asean, but there is no national attempt to export from Thai-owned companies, except for food products.

 

It must be said that the drive to develop their economies among the now rich nations of Northeast Asia: Taiwan, South Korea, and Japan, was driven not by a desire to raise living standards, but by the need for self-defense.  That was the motivation behind the revolution of Meiji Japan, Park Chung-Hee's South Korea, Taiwan, and, indeed, the PROC itself.  The nations of SE Asia are under no fear of invasion by their neighbors and so remain economically inward-looking.  

Agree about Thailand.

 

However - Korea has other issues that are fascinating: 

Read this. Korea is weird and also a cardhouse collapsing sooner or later.

 

 

 

I am one of the few with the unpopular opinion that Asia itself is totally overrated despite a few economies that are Japan, Taiwan and Singapore.

 

I don't see asia, nor africa nor the middle east overtaking the western world.

 

There are so many issues persisting here, it's unbelieveable... India was also supposed to be a first world country since the 70s... oh well, till today you can be happy if you don't step into burning trash while walking around in mumbai.

 

 

Why i think so? 
Weird culture that will hold them back forever.

Too DAMN MANY PEOPLE everywhere here. Compare the population of asia and soon africa to the West - and then keep in mind that more and more jobs will simply stop existing and be automated away in the next decade...

Sustainability doesn't seem to be heard of anywhere here either.

 

[Thaidream]

When a coun try takes on huge debt such as Thailand has done and continues to  run a deficit- and at the same time there is such a huge disparity in income distribution- it is only a matter of time before the house of cards collapse .

 

Compared to 1971 when I first arrived- most Thai people earned their living off the land and were able to survive nicely and  happily.   Hardly any middle class and most people would be considered poor.

 

As one poster indicated with  the advent of international companies  coming into Thailand for low wages- many people working the land decided it was easier and more money to work in a factory.  Higher wages- meant more credit- meant more debt but  undoubtedly some people were thrust into a middle class existence.  I don;t know the eaxct figures but the eye test says more houses built; more cars on the road etc.

 

However- just like in the West -these Thais face a situation of comptetion from lower cost countries. In addition- automation and AI are just around the corrner and unless the Thai Government  starts to develop a real technology industry and start building products in Thailand the the rest of the World wants and needs, Thailand will continue to regress.  The middle class will consterict just as it has in the USA and Europe.

 

Donald Trump was elected President by a shrinking middle class and rightist moves ala Brexit exist across Europe. Thailand cannot sustain that which is unsustainable no matter how much pork the powers that be dole out.

 

Thailand is beset with an elute structure that controls huge amounts of wealth and fuelled by economic capitalism-  expand- pay as little as possible to the workers- and bank the rest.  

 

Since tourism is a large part of the Thai budget and employment scene and it is struggling and IMO will continue so as  the powers that be refuse to admit the errors that caused the downturn - Thailand will face large unemployement in the future. It used to be that during periods of unemplyment that  aby Thai could return to the family rice plot.   Not this time- Mom and Dad sold the land and bought a new car.

 

 

 

 

 

 

[CNXexpat]

13 hours ago, Assurancetourix said:

I was walking in Central PlaZa de Udon Thani a few weeks ago; it was almost deserted

I am in one of the best sushi restaurants in Chiang Mai right now. Not cheap. All tables are full, around 70 guests. I am the only foreigner, the rest are Thai.

[saengd]

1 hour ago, CNXexpat said:

I am in one of the best sushi restaurants in Chiang Mai right now. Not cheap. All tables are full, around 70 guests. I am the only foreigner, the rest are Thai.

I'm not trying to be a smart ahse but are you sure they are Thai and not Chinese, many people can't always tell the difference.

[CNXexpat]

1 hour ago, saengd said:

I'm not trying to be a smart ahse but are you sure they are Thai and not Chinese, many people can't always tell the difference.

Don´t worry, I can mostly see the difference - and hear the difference in the language. Also the restaurant is far from the tourist area. 

[saengd]

14 hours ago, Thaidream said:

When a coun try takes on huge debt such as Thailand has done and continues to  run a deficit- and at the same time there is such a huge disparity in income distribution- it is only a matter of time before the house of cards collapse .

 

Compared to 1971 when I first arrived- most Thai people earned their living off the land and were able to survive nicely and  happily.   Hardly any middle class and most people would be considered poor.

 

As one poster indicated with  the advent of international companies  coming into Thailand for low wages- many people working the land decided it was easier and more money to work in a factory.  Higher wages- meant more credit- meant more debt but  undoubtedly some people were thrust into a middle class existence.  I don;t know the eaxct figures but the eye test says more houses built; more cars on the road etc.

 

However- just like in the West -these Thais face a situation of comptetion from lower cost countries. In addition- automation and AI are just around the corrner and unless the Thai Government  starts to develop a real technology industry and start building products in Thailand the the rest of the World wants and needs, Thailand will continue to regress.  The middle class will consterict just as it has in the USA and Europe.

 

Donald Trump was elected President by a shrinking middle class and rightist moves ala Brexit exist across Europe. Thailand cannot sustain that which is unsustainable no matter how much pork the powers that be dole out.

 

Thailand is beset with an elute structure that controls huge amounts of wealth and fuelled by economic capitalism-  expand- pay as little as possible to the workers- and bank the rest.  

 

Since tourism is a large part of the Thai budget and employment scene and it is struggling and IMO will continue so as  the powers that be refuse to admit the errors that caused the downturn - Thailand will face large unemployement in the future. It used to be that during periods of unemplyment that  aby Thai could return to the family rice plot.   Not this time- Mom and Dad sold the land and bought a new car.

 

 

 

 

 

 

I'm sorry but that is pure nonsense also, Thailand hasn't taken on huge debt, their foreign debt is extremely low and their internal debt is very low, the total of which is under 40% of GDP. 

 

The budget deficit is also extremely low by any measure, The World Bank and the IMF actually urged the government to increase the deficit in order to build out infrastructure. So it's not exactly something that's being done lightly or without good reason and purpose. 

 

And Thailand doesn't have a tourism budget, tourism represents a significant part of GDP but there is no direct budget for tourism.

 

If Thailand's debt was an issue the Baht wouldn't be strong, the reason it is strong is because the debt levels are so low.

Edited January 12, 2020 by saengd

[intheheartoftheheart]

On 1/10/2020 at 8:07 AM, cmarshall said:

Thailand will not be able to escape from the "middle income trap" as economists refer to it.  Thailand's growth beginning from the 1980's has been achieved by supplying cheap labor to foreign companies that manufacture products such as hard drives and automobiles in Thailand mostly for export.  But even after 40 years, there are no Thai-owned companies exporting hard drives and automobiles.  Compare that situation with South Korea, which started off in the post-war period by letting the Japanese build factories that produced automobiles, electronics, pianos, etc.  However, the Koreans insisted on transfer of technology and eventually started their own companies to produce and export their own brands of those products.  South Korea has the second largest steel manufacturer even though there is no coal or iron ore on the peninsula.  They also lead the world in building the most complicated ships such as LNG transporters.  All of this was the deliberate policy of development to achieve a rich economy established by Park Chung-Hee in the 50's and 60's who recognized that they had to develop their own products that could compete in the global market.  Education was certainly part of the whole industrialization program.  In 1960 South Korea had a lower literacy rate than Thailand.

 

Thailand, like all the other SE Asian countries, has no globally-recognized company like Samsung or product like flat-screen TVs.  The elite families that control the Thai economy have been so far content to maintain their positions within Thai society without attempting to compete on the global market.  Lately there is some expansion of Thai companies, such as banks, into Asean, but there is no national attempt to export from Thai-owned companies, except for food products.

 

It must be said that the drive to develop their economies among the now rich nations of Northeast Asia: Taiwan, South Korea, and Japan, was driven not by a desire to raise living standards, but by the need for self-defense.  That was the motivation behind the revolution of Meiji Japan, Park Chung-Hee's South Korea, Taiwan, and, indeed, the PROC itself.  The nations of SE Asia are under no fear of invasion by their neighbors and so remain economically inward-looking.  

Holy <deleted>, there's an intelligent, worldy, well-read person on this board. Very impressed!

 

[saengd]

A big difference between the development of Thailand and South Korea is the extent to which US money and support was pumped into the economy as a result of the Korean "war", in many respects S. Korea is a purpose made designer economy, constructed in order to influence the North.

 

A second factor is that S. Korea has had economic support from the US since 1950, their economy has therefore had 70 years to evolve. Thailand's economy is essentially new since the crash of 1997, 23 years ago.

Edited January 12, 2020 by saengd

[Thaidream]

56 minutes ago, saengd said:

And Thailand doesn't have a tourism budget, tourism represents a significant part of GDP but there is no direct budget for tourism.

 

If Thailand's debt was an issue the Baht wouldn't be strong, the reason it is strong is because the debt levels are so low.

Thailand has a Ministery of Tourism , therefore it must have a budget to support that ministry.

 

Thailand's overall budget is in deficit-  it has to fund that deficit somehow.  Therefore- hot money has been allowed to park in Thailand .  The Baht  is strong not because of normal fundamentals but funds inflow.  The problem is now that tourism is affected and exports  on the decrease. The Baht is way over valued and banks are now restircting lending for the ourchase of consumer goods and big ticket items.

 

Thailand will ve lucky to get 2.5% growth.   The economy is lousy but if one is a dollar/pound/euro milloinaire or of the elite class- noworries- let the rest eat cake.

[saengd]

2 hours ago, Thaidream said:

Thailand has a Ministery of Tourism , therefore it must have a budget to support that ministry.

 

Thailand's overall budget is in deficit-  it has to fund that deficit somehow.  Therefore- hot money has been allowed to park in Thailand .  The Baht  is strong not because of normal fundamentals but funds inflow.  The problem is now that tourism is affected and exports  on the decrease. The Baht is way over valued and banks are now restircting lending for the ourchase of consumer goods and big ticket items.

 

Thailand will ve lucky to get 2.5% growth.   The economy is lousy but if one is a dollar/pound/euro milloinaire or of the elite class- noworries- let the rest eat cake.

Funding for a budget deficit is totally different from funds inflow or hot money.

 

Budget deficits become debt and the Ministry of Finance issue bonds to cover that debt, those bond sales are always oversubscribed.

 

Hot money inflows is a bi-product of having a stable economy and a strong currency. Hot money refers to temporary funds looking for yield and may range from a few days to many months, typically hot money goes into the SET.

 

FDI is often confused with hot money but these are funds that typically invest in business here for the longer term. Bond purchases are also included in this category although BOT has cancelled bond sales recently in order to keep flows of that money low.

 

The Baht is strong because of the enduring budget surplus combined with the high levels of Foreign Currency Reserves, hot money inflows and FDI described above are a bi-product of those things, both of which are supportive of a strong Baht.

 

Yes the Baht is over valued.

 

Yes there is a Ministry of Tourism which has a budget. But that budget is not exactly a major expense budget, it is a marketing support budget hence fairly small by comparison to other budget categories such as Education, Health or Defense.

 

 

 

 

 

[saengd]

If anyone wants to try and write a scholarly piece about Thailand's economic development by comparing it to other countries, how about comparing it to its neighbours in SE Asia rather than the Korean peninsula....apples and apples and all that!

[saengd]

Here's a comparison of the economies of eight countries in SE Asia:

 

https://southeastasiaglobe.com/how-southeast-asian-countries-compare-growth-development/

 

GDP per capita is third behind Singapore and Malaysia

Life expectancy is second behind Singapore

Overall Inclusive Development Index ranking, second behind Malaysia

 

And here's an interesting piece that talks about Thailand's overseas investments in recent years, the consensus is that Asia and in particular ASEAN is the growth market globally so that's where their investments are targeted.

 

https://www.nationthailand.com/premium/30372894

Edited January 12, 2020 by saengd

[GeorgeCross]

On 1/10/2020 at 6:25 AM, Assurancetourix said:

Yes, it's a big number ;

But if you want to compare you have to compare everything.
In Europe individual houses or apartments are very expensive;
In Paris it is not uncommon to see apartments sold at 10,000 euros per m2 (330,000 baht per m2), often more in prestigious districts.
In London it is still much more expensive.
However, in Thailand for 330,000 baht you can build an entire house in the countryside.

In France the middle class is in debt on the purchase of an apartment or a house which will be used, when it is paid, of social cover for its inhabitants or inheritance to their children.

The French do not go into debt to buy the latest Apple smartphone that has just come out or a car beyond their means.

 

did you actually just compare real-estate prices in Paris to Nakhon Nowhere in your lecture on fair comparisons??!

 

haha nice 

 

[Thaidream]

1 hour ago, saengd said:

https://southeastasiaglobe.com/how-southeast-asian-countries-compare-growth-development/

 

GDP per capita is third behind Singapore and Malaysia

Life expectancy is second behind Singapore

Overall Inclusive Development Index ranking, second behind Malaysia

 

And here's an interesting piece that talks about Thailand's overseas investments in recent years, the consensus is that Asia and in particular ASEAN is the growth market globally so that's where their investments are targeted.

 

https://www.nationthailand.com/premium/30372894

While these stats are interesting- they do not provide ample proof that Thailand will actually ever attain a middle income status xecept on paper.

 

To me the eye test is the most import thing that economists fail to mention or what is happening 'on the ground'.

 

1.  Thailand is controlled by an elite wealthy group that controls anywhere from 67% to 75% of the total wealth in the country.  That means that about 500,000 people (less than 1% of the population) control staggering amounts of income while the remainder is split among the remaining 99%- the largest imbalance in the World.

 

As we know wealth builds more wealth so unless there is some change in distribution the  current wealthy will continue to  get wealthier while the rest will have to live on what remains.

 

In order for this split to continue and bring some of the remaining 99% upward- there has to be a  GDP growth well above 2.5% otherwise the status quo remains or everyone  gets less. The wealthy still remain wealth even with less but the greatest impact is felt by the 99%

 

2.  Thailand is  faced by a declining economy due to several factors, namely, less tourist spending (not necessarily numbers);  a decline in exports and severe competition among Asean .  Other countries can do it for less.

 

3. Education is lacking  throughout the system- no forward thinking- an Education Ministry stuck in the past and not meeting the challenges of language and technology.

 

4.  A lack of entrepneurship= stifled by  a bureacracy  that is bloated and an excise tax regime that blocks any type of competition that would  increase the GDP and employment opportunities.

 

5.   The final straw and this applies not only to Thailand but the World is the increasing automation and Artificial Intelligence that will cause massive unemployment and huge social problems.  Actually, Thailand is in a better position to resist this trend because of its backward systems/

 

IMO- the World does not need autonomous vehicles or work systems that employ ony robotics  if it will cause huge numbers of unemployed.  Just because you can build it , doesn't mean you have to if the effect is negative.  Wesstern countries are already  thinking about guaranteed incomes.

 

Those pushing these changes are the already wealthy who believe in materialistic capitalism and the concept that 'greed is good'= except neither is good for everyone.

 

Is Thailand better now than when I first came in 1971- IMO- it is not- simply because the vast majority of the population does not share in the economic success and the future looks somewhat bleak unless there is a change in thinking among those in power.

 

The trckle down theory only works if there is something to trickle down.  At present, all the money is going up.

 

4.  

Edited January 12, 2020 by Thaidream

[saengd]

Agreed on all points except 2. Exports have declined because of the strong Baht and the US/China trade war, those things are temporary.

 

I was not trying to show conclusively that Thailand will attain middle income status, I posted those things in rebuttal to cmarshall's post regarding Korea and to confirm to a sceptical greater audience that Thailand is more than smoke and mirrors and to compare against a country a little closer to home than the Korean Peninsula.

 

 

 

 

Edited January 12, 2020 by saengd

[cmarshall]

17 hours ago, saengd said:

If anyone wants to try and write a scholarly piece about Thailand's economic development by comparing it to other countries, how about comparing it to its neighbours in SE Asia rather than the Korean peninsula....apples and apples and all that!

Since the question on the table is will Thailand escape the middle income trap, it is instructive to compare Thailand with the countries of NE Asia, especially South Korea which, starting from a position of lower economic development than Thailand in 1960, has surpassed Thailand and escaped the middle income trap to join the wealthy nations along with Japan and Taiwan.  

 

None of the Asean countries, except for the unique depot economy of Singapore, have escaped the middle income trap, since their economies all remain dominated by small elites extracting rents from monopolies and duopolies in their countries.  None of them have globally recognized companies or well-known products that can compete internationally.  Malaysia's Proton automobiles aren't fit for export and Habibie's airplane manufacturing industry never materialized in Indonesia.

 

So, if we are trying to answer the question of whether Thailand will become one of the rich nations, comparing it with the other Asean nations doesn't really inform the question unless you can make the case for geographical factors determining the outcome.  My own theory, that in the absence of a military threat requiring an up-to-date army, the Asean countries have no compelling need to develop their economies beyond the gains that can be achieved by renting out their cheap labor forces to foreign manufacturers.  Indeed, the Asean countries would generally benefit by disbanding their militaries if they could with the possible exception of Viet Nam.

 

On the other hand I don't see the case for any kind of imminent collapse in the Thai economy that some of the expats here fervently wish for.  It's true that the Thai economy slowed down in the second half of last year, but it has not lapsed into recession.  That slowdown is probably due to the effects of the trade war between the US and the PROC, which will eventually pass.  In the meantime Thailand has a strong current account balance even while exports have declined somewhat recently.  So, the likely economic future for Thailand is neither boom nor bust, but the status quo.

[saengd]

I think a potential problem with your earlier comparison might be that Korea is something of an anomaly by virtue of its long standing economics and financial support from the US , that factor sets it apart from all the countries in SE Asia, not just Thailand. The small group of ASEAN countries are themselves unique to a degree in that most were occupied by colonial forces before, during and after WWII, achieving stable independence took many years and was often problematic. I think that (fairly recent) history probably goes some way towards explaining why ASEAN countries are still so focussed on their respective military's. Only Singapore truly excelled on its own, all of the others, as you note, showed lacklustre performance by comparison to the West.

 

At the centre of today's debate about the Thai economy is whether GDP growth of 2.5% is stellar, lacklustre or the status quo. Neighbouring economies with a far smaller GDP have achieved higher headline rates but most are newly emerging economies so rapid growth is to be expected. Most observers seem to confuse the core economy with an array of socio economic and political factors and this muddies the picture: yes the economy would be better if the education system was improved; yes the economy would be stronger if a harmonious democratic government was in place; yes the economy would be stronger if the wealth distribution wasn't so scewed. But none of things directly impacts exports and tourism to a meaningful degree today, they both continue robustly despite those factors, GDP growth of 2.5% is therefore, all factors considered, really quite good....I think. 

 

 

 

 

 

 

[saengd]

Not to digress but since the subject of the military has been raised:

 

I don't know how many posters understand this but Thailand still faces armed conflict on various borders, with separatist in the South, with Karen rebels in the West and North and from time to time, with Cambodia to the East. Also, the drug factories along the West, North and North East borders are the root cause of frequent military action in an attempt to disrupt and intercept supply lines to the South. Perhaps the current military budget is too high although it remains under the 2% global guideline and substantially under the amounts spent by neighbouring countries.

[cmarshall]

10 minutes ago, saengd said:

I think a potential problem with your earlier comparison might be that Korea is something of an anomaly by virtue of its long standing economics and financial support from the US , that factor sets it apart from all the countries in SE Asia, not just Thailand. The small group of ASEAN countries are themselves unique to a degree in that most were occupied by colonial forces before, during and after WWII, achieving stable independence took many years and was often problematic. I think that (fairly recent) history probably goes some way towards explaining why ASEAN countries are still so focussed on their respective military's. Only Singapore truly excelled on its own, all of the others, as you note, showed lacklustre performance by comparison to the West.

Actually, the opposite is true.  After WWII the IMF and World Bank, both dominated by the US, determined that South Korea and Japan should be developed to exporting agricultural products only.  The governments of both countries nodded politely to the Americans and then turned to intensive national programs for developing their industries.  For Japan this meant that the Ministry of International Trade and Industry subsidized and directed manufacturing for export.  This support very much included Toyota which lost money on its attempts to export for the first seventeen years of attempting to do so.  

 

Following Korea's civil war Park Chung-Hee found himself surrounded by long-time enemies China and Japan and one friend, the US, which was nevertheless bent on controlling Korea and suppressing its industrial development.  Immediately on coming to power Park put the heads of the leading chaebols in prison for a month after which he assigned each of them goals to export products that could compete on the world market under the threat of dissolution for failure.  Hyundai, which had been making tractors, was now ordered to produce automobiles for export.  Posco would manufacture steel for export, at which business it also lost money for sixteen years before reaching its current global leadership position.  All of S. Korea, Japan, and the PROC achieved their substantial economic gains as the result of national drives to change their economies and become rich enough to support a first-class military.  None of the Asean countries have ever even attempted similar all-out national programs of development.  Instead, they have left their economies in the hands of small rent-seeking elites.

 

You post-colonialism theory makes no sense.  Are you unaware that Korea and Taiwan had also been colonies of Japan for the thirty plus years preceding the end of WWII? Do I need to point out that China itself was long under foreign domination before its revolutions.

 

It also strikes me as odd that you characterize military dictatorship as merely a "focus" on the military.  

 

I would have enjoyed a well-informed discussion of an opposing view, but frankly you need to read more books on the history and economic development of Asia.

 

 

[saengd]

41 minutes ago, cmarshall said:

Actually, the opposite is true.  After WWII the IMF and World Bank, both dominated by the US, determined that South Korea and Japan should be developed to exporting agricultural products only.  The governments of both countries nodded politely to the Americans and then turned to intensive national programs for developing their industries.  For Japan this meant that the Ministry of International Trade and Industry subsidized and directed manufacturing for export.  This support very much included Toyota which lost money on its attempts to export for the first seventeen years of attempting to do so.  

 

Following Korea's civil war Park Chung-Hee found himself surrounded by long-time enemies China and Japan and one friend, the US, which was nevertheless bent on controlling Korea and suppressing its industrial development.  Immediately on coming to power Park put the heads of the leading chaebols in prison for a month after which he assigned each of them goals to export products that could compete on the world market under the threat of dissolution for failure.  Hyundai, which had been making tractors, was now ordered to produce automobiles for export.  Posco would manufacture steel for export, at which business it also lost money for sixteen years before reaching its current global leadership position.  All of S. Korea, Japan, and the PROC achieved their substantial economic gains as the result of national drives to change their economies and become rich enough to support a first-class military.  None of the Asean countries have ever even attempted similar all-out national programs of development.  Instead, they have left their economies in the hands of small rent-seeking elites.

 

You post-colonialism theory makes no sense.  Are you unaware that Korea and Taiwan had also been colonies of Japan for the thirty plus years preceding the end of WWII? Do I need to point out that China itself was long under foreign domination before its revolutions.

 

It also strikes me as odd that you characterize military dictatorship as merely a "focus" on the military.  

 

I would have enjoyed a well-informed discussion of an opposing view, but frankly you need to read more books on the history and economic development of Asia.

 

 

When I refer to colonization of ASEAN countries I refer to that by the British and French in Laos, Malaysia, Cambodia, Burma and Vietnam, not other countries colonised by the Japanese or Chinese which is another discussion entirely. I can't comment about Korea other than I already have since I have not studied the country or its economy. And since this discussion is about Thailand's middle class, perhaps we could at least refocus on ASEAN at least, rather than your specialist subject!

Edited January 13, 2020 by saengd

[saengd]

2 hours ago, saengd said:

Not to digress but since the subject of the military has been raised:

 

I don't know how many posters understand this but Thailand still faces armed conflict on various borders, with separatist in the South, with Karen rebels in the West and North and from time to time, with Cambodia to the East. Also, the drug factories along the West, North and North East borders are the root cause of frequent military action in an attempt to disrupt and intercept supply lines to the South. Perhaps the current military budget is too high although it remains under the 2% global guideline and substantially under the amounts spent by neighbouring countries.

All this talk about the military made me curious so I checked, it seems that Thailand's military budget is well under the 2% that most countries target to spend on such things, AND, the size of their military is about the same as most other countries, 0.5% of the population on active service. Personally I think the military argument is overdone.

 

https://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures

https://www.globalfirepower.com/country-military-strength-detail.asp?country_id=thailand

[Hal65]

I know becoming a world renowned exporter is one way to develop an economy -- Germany, Japan, South Korea. All nations we consider as petro-states.

 

Is it the only way? America is a net importer. Also, I'd like to consider France, the UK, Chile, Australia. 

 

Maybe some of them are export driven also. But I doubt every rich country except the US must follow the path of building multi-national companies to thrive.

 

When I think of Thailand, I think of a uniquely valuable tourism sector. In the current sense is a mix of exotic and cheap. One day the mix may change to exotic and expensive, something like Hawaii.

 

Of course there is Bangkok. I should probably look up what is going on there as the Bangkok economy is likely to be the epicenter of whatever major industries Thailand is working towards.

 

Edited January 13, 2020 by Hal65

[Hal65]

Answering my prior question, the answer is apparently "yes," a country needs to export high value products or services to achieve high income status, according to one report I've read.

 

I did some research into the Thai and Bangkok metro economy and here are the highlights:

https://en.wikipedia.org/wiki/Economy_of_Thailand#Industries

"industry" is almost half of GDP. Electronics are 15% of exports. Hard drives are the biggest export although factories are relocating to Vietnam.

A World Bank survey showed that 83.5 percent of the Thai workforce is unskilled.[96]

A joint study by the Quality Learning Foundation (QLF), Dhurakij Pundit University (DPU), and the World Bank suggests that 12 million Thais may lose their jobs to automation over the next 20 years, wiping out one-third of the positions in the workforce.

The World Bank estimates that Thai workers are two times and five times less productive than Malaysian and Singaporean workers respectively. 

A 2016 report by the International Labor Office (ILO) estimates that over 70 percent of Thai workers are in danger of being displaced by automation.

 Factories in Thailand are estimated to be adding from 2,500–4,500 industrial robots per year.[98]:18
    
    

Although the economy has grown moderately since 1999, future performance depends on continued reform of the financial sector, corporate-debt restructuring, attracting foreign investment and increasing exports. 
    
    
    
Bangkok

 

In 2010, the city had an economic output of 3.142 trillion baht (US$98.34 billion), contributing 29.1 percent of the gross domestic product (GDP). This amounted to a per-capita GDP value of 456,911 baht ($14,301), almost three times the national average of 160,556 baht ($5,025).
    

Bangkok's economy ranks as the sixth among Asian cities in terms of per-capita GDP, after Singapore, Hong Kong, Tokyo, Osaka–Kobe and Seoul.[78]
    
    

Wholesale and retail trade is the largest sector in the city's economy, contributing 24 percent of Bangkok's gross provincial product. It is followed by manufacturing (14.3 percent); real estate, renting and business activities (12.4 percent); transport and communications (11.6 percent); and financial intermediation (11.1 percent). Bangkok alone accounts for 48.4 percent of Thailand's service sector, which in turn constitutes 49 percent of GDP. When the Bangkok Metropolitan Region is considered, manufacturing is the most significant contributor at 28.2 percent of the gross regional product, reflecting the density of industry in the Bangkok's neighbouring provinces.[79] The automotive industry based around Greater Bangkok is the largest production hub in Southeast Asia.[80] Tourism is also a significant contributor to Bangkok's economy, generating 427.5 billion baht ($13.38 billion) in revenue in 2010.[81]

 

Seventeen Thai companies are listed on the Forbes 2000, all of which are based in the capital,[85] including PTT, the only Fortune Global 500 company in Thailand.[86]

The 17 Thai Multinationals on the Fortune Global 2,000

 

Rank    Company    Country/Territory    Sales    Profits    Assets    Market Value
    #165    PTT PCL    Thailand    $72.3 B    $3.7 B    $74.8 B    $43.8 B
    #632    Siam Commercial Bank    Thailand    $7.1 B    $1.2 B    $97.9 B    $13.7 B
    #648    Siam Cement    Thailand    $14.8 B    $1.4 B    $18.1 B    $17.3 B
    #669    Kasikornbank    Thailand    $6 B    $1.2 B    $96.9 B    $14.5 B
    #756    Bangkok Bank    Thailand    $5.3 B    $1.1 B    $95.7 B    $12.5 B
    #834    PTT Global Chemical    Thailand    $16 B    $1.2 B    $14.4 B    $9.8 B
    #881    CP All    Thailand    $15.7 B    $616 M    $11.5 B    $21.7 B
    #972    Krung Thai Bank    Thailand    $4.9 B    $881 M    $84.3 B    $8.5 B
    #1044    Thai Beverage    Thailand    $7.9 B    $713 M    $12.8 B    $15.3 B
    #1202    Indorama Ventures    Thailand    $10.7 B    $786 M    $11.6 B    $8.4 B
    #1206    Airports of Thailand    Thailand    $1.9 B    $783 M    $5.8 B    $30.9 B
    #1211    Advanced Info Service    Thailand    $5.3 B    $918 M    $8.9 B    $17.9 B
    #1220    Charoen Pokphand Foods    Thailand    $16.8 B    $456 M    $19.3 B    $4.6 B
    #1988    Thanachart Capital    Thailand    $2.1 B    $243 M    $32.6 B    $2 B
    #1996    Thai Oil    Thailand    $12 B    $314 M    $8.3 B    $4.6 B

 

5 of them are banks. I have never heard of any of the others. So the other poster was right to say, Thailand is not doing things correctly with regard to high value exports.