Will Thailand break out of middile income status?

[saengd]

It's hard to find good data reliable data on Thailand on the internet plus it's also hard to find up to date data, World Bank, IMF and BOT are all good sources however. Some notes on what you've quoted:

 

Things move quite quickly here and can change substantially over a few years. Last I read the workforce is 23 million out of a population of 68 million, automation has the potential to decimate the economy so it's easy to see why there's such concern, the combination of any aging population and automation is not good.

 

Workforce productivity is a serious issue, the lowest in the region.

 

The overly strong Baht has provided an opportunity for large companies to restructure their debt, to expand overseas and to modernise, foreign earnings will provide a diversified income flow but may compound Baht strength problems. Central Group (for one) is investing in hotels overseas, outside of ASEAN  

 

https://thethaiger.com/news/business/strong-thai-baht-helps-central-group-invest-overseas

 

Other overseas expansion that is taking place by Thai companies include:

 

“Among Asean countries, Thailand comes third in overseas investment after Singapore and Malaysia,” Chokedee said. The main reason for Thai investment overseas was to reduce production costs in wages and raw materials, while expanding markets. Thai investors, mostly large companies, have invested in the Europe and the United States to secure technologies. Chokedee said that the BOI previously trained 479 SME operators, about 104 of which have established businesses overseas".

 

https://www.nationthailand.com/Economy/30348576

 

Two things come to mind: 

 

1) Thailands overseas investment is less so in Western countries and more so in emerging countries, Africa and Bangladesh for example so they are less visible to Westerners.

 

2) I think there is a economics role for an assembler/exporter such as Thailand, I'm not sure how vital it is to have global brand recognition, perhaps being an assembler/exporter is in itself that recognition. For that strategy to work, wages and costs must remain low, if they don't businesses will move to cheaper locations such as Vietnam, Thai businesses are already moving to Africa for this reason. That doesn't bode well for more people moving into the middle class and for the rural poor to escape low income levels. BUT it does assure a future economy, unlike some Western countries that manufacturer/assemble as much as possible overseas, the US being one, simply because labour costs are so high.

 

 

 

 

 

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[ICELANDMAN]

 

I congratulate many of the really interesting comments to better evaluate the future of Thailand and it was a real pleasure to read you, to add a small grain of sand I added this map of the silk road where the interest of the force must be taken into consideration economic crisis as a transit and investment corridor where there is a potential US / China conflict of interest in my view that could be very negative for Thailand, and it is in this perspective that one should read why the big Thai companies are looking for to diversify abroad off the silk road.

[saengd]

I agree that conflict of interest with the West is an issue. It doesn't make a lot of sense (to me) that Thailand would try to compete with the West on its home ground because that is territory that is mature and saturated with existing global players. The new growth territories, the battle ground if you like, is other emerging countries such as Africa and Bangladesh and anywhere that is in support of China, those are the places that Thai business has chosen to invest. I think that Thailands economic future is hanging onto the shirt tail of China, it's like the small guy in the playground who has a bigger pal who protects from the school yard bully, in years to come I can easily imagine ASEAN and China becoming a single economic unit. 

[Brunolem]

1 hour ago, saengd said:

 I think that Thailands economic future is hanging onto the shirt tail of China, it's like the small guy in the playground who has a bigger pal who protects from the school yard bully, in years to come I can easily imagine ASEAN and China becoming a single economic unit. 

I think the same, yet there are (at least) two issues with this. 

 

First, China's economy is not as strong as many are led to believe, with massive, and probably underestimated, debt (lots of it used to finance white elephant projects), as well as highly massaged stats that are as reliable as those of the former Soviet Union (GDP growth, for example, is probably half, or even less, of what is published).

 

The second issue is that Thailand is too close to the US military for its own good. 

 

It's as if the country wanted to play for both teams at the same time. 

 

I am among (the ever growing number of) those who are convinced that a conflict between the US and China is inevitable, because the former will not give up its crown without a (real) fight... 

[saengd]

13 minutes ago, Brunolem said:

I think the same, yet there are (at least) two issues with this. 

 

First, China's economy is not as strong as many are led to believe, with massive, and probably underestimated, debt (lots of it used to finance white elephant projects), as well as highly massaged stats that are as reliable as those of the former Soviet Union (GDP growth, for example, is probably half, or even less, of what is published).

 

The second issue is that Thailand is too close to the US military for its own good. 

 

It's as if the country wanted to play for both teams at the same time. 

 

I am among (the ever growing number of) those who are convinced that a conflict between the US and China is inevitable, because the former will not give up its crown without a (real) fight... 

I don't think it matters whether the Chinese economy is as advertised or not, the longer term picture is very clear and there's no way that is ever going to reverse and see Thailand suddenly become America's best pal etc.

[ThomasThBKK]

19 hours ago, Hal65 said:

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

 

I guess one could argue these other countries especially america are also net exporters, it's just not physical produce these days - it's software and services.

 

Microsoft, Google, Facebook, Apple, Netflix and co rule the IT world, their products are used everywhere and generate returns for America. Not physically exported through the borders, simply downloaded - the result is the same imo.

[ICELANDMAN]

2 hours ago, Brunolem said:

I think the same, yet there are (at least) two issues with this. 

 

First, China's economy is not as strong as many are led to believe, with massive, and probably underestimated, debt (lots of it used to finance white elephant projects), as well as highly massaged stats that are as reliable as those of the former Soviet Union (GDP growth, for example, is probably half, or even less, of what is published).

 

The second issue is that Thailand is too close to the US military for its own good. 

 

It's as if the country wanted to play for both teams at the same time. 

 

I am among (the ever growing number of) those who are convinced that a conflict between the US and China is inevitable, because the former will not give up its crown without a (real) fight... 

I hope if a case of war like it seems to me also soon or later that it is inevitable that Thailand will not receive bombs from China and the US on our heads ????, play two game is not neutrality but stupidity

 

 

 

 

[cmarshall]

On 1/12/2020 at 11:01 PM, saengd said:

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

How you can manage to ignore the fact that currently the only military dictatorship in the world is Thailand is beyond me.

 

But the economic power of the military goes far beyond the official budget.  For example, right after the coup in 2014 the junta replaced the leadership of Thaland's largest state enterprise, the PTT, putting in military or pro-military board members.  I am sure that happened to a large number of corporations, both state-owned and private, whose boards we know have long had many military members.

 

Just to remind you, the topic at hand is the development of an economy beyond the stage of the middle income trap to the level of a rich nation for which successful Asian models are quite germane, indeed, the most relevant of all.

 

 

[cmarshall]

21 hours ago, ThomasThBKK said:

 

I guess one could argue these other countries especially america are also net exporters, it's just not physical produce these days - it's software and services.

 

Microsoft, Google, Facebook, Apple, Netflix and co rule the IT world, their products are used everywhere and generate returns for America. Not physically exported through the borders, simply downloaded - the result is the same imo.

Breaking news:tThe US is not a net exporter.

 

[cmarshall]

On 1/12/2020 at 9:23 PM, saengd said:

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. 

You exclude former Japanese colonies from a discussion of the economic effects of colonization, because... reasons.

[saengd]

4 minutes ago, cmarshall said:

How you can manage to ignore the fact that currently the only military dictatorship in the world is Thailand is beyond me.

 

But the economic power of the military goes far beyond the official budget.  For example, right after the coup in 2014 the junta replaced the leadership of Thaland's largest state enterprise, the PTT, putting in military or pro-military board members.  I am sure that happened to a large number of corporations, both state-owned and private, whose boards we know have long had many military members.

 

Just to remind you, the topic at hand is the development of an economy beyond the stage of the middle income trap to the level of a rich nation for which successful Asian models are quite germane, indeed, the most relevant of all.

 

 

I don't ignore anything, as long as it's directly Thailand related rather than say solely related to Korea, at a minimum it needs to be ASEAN or the close proximity!

 

The current government is one step removed from a military dictatorship, which given Thailand's propensity for military coups is a good thing, there is today at least some semblance of a more normal government other than those provided in the past by over twenty coups! I believe that today's government is nothing more than another step in the  process, it's an evolutionary process that takes time.

[saengd]

7 minutes ago, cmarshall said:

Breaking news:tThe US is not a net exporter.

 

I for one don't really want to discuss the US economy except in the context of the topic although I understand your desire to want to try to correct a misperception. I'm bound to ask however whether that statista graph really dies include profits from the foreign parts of the companies that poster mentioned along with all the profits that Trump is trying to get those companies to repatriate. I mean, if you're going to make a comparison make it an accurate one.

[saengd]

9 minutes ago, cmarshall said:

You exclude former Japanese colonies from a discussion of the economic effects of colonization, because... reasons.

Because the topic is Thailand, not Korea and certainly not the US, do you understand that yet!

Edited January 15, 2020 by saengd

[cmarshall]

5 minutes ago, saengd said:

Because the topic is Thailand, not Korea and certainly not the US, do you understand that yet!

You're hopeless.  When the Thai leadership announced the goal of achieving rich nation status within twenty years, the models they have in mind are the rich nations of NE Asia, not the relatively poor nations of Asean.

 

It is not up to you to set the limits of the discussion.

[cmarshall]

10 minutes ago, saengd said:

I for one don't really want to discuss the US economy except in the context of the topic although I understand your desire to want to try to correct a misperception. I'm bound to ask however whether that statista graph really dies include profits from the foreign parts of the companies that poster mentioned along with all the profits that Trump is trying to get those companies to repatriate. I mean, if you're going to make a comparison make it an accurate one.

The graph was directed at the other poster who made the incorrect claim that the US is a net exporter.  If you want to insert yourself into that discussion by making the ridiculous claim, unsupported by any economist, that somehow the US is indeed a net exporter, be my guest.

[saengd]

2 minutes ago, cmarshall said:

You're hopeless.  When the Thai leadership announced the goal of achieving rich nation status within twenty years, the models they have in mind are the rich nations of NE Asia, not the relatively poor nations of Asean.

 

It is not up to you to set the limits of the discussion.

The convention on this site is that the topic describes the boundaries of the discussion, if you want to have a more generic or more specific discussion about other things, go start your own thread accordingly. If you have a problem with these things feel free to contact the moderators.

[cmarshall]

5 minutes ago, saengd said:

The convention on this site is that the topic describes the boundaries of the discussion, if you want to have a more generic or more specific discussion about other things, go start your own thread accordingly. If you have a problem with these things feel free to contact the moderators.

And since you are not a moderator, your opinion as to what I should post about is not relevant.

But thanks anyway.

[saengd]

1 minute ago, cmarshall said:

And since you are not a moderator, your opinion as to what I should post about is not relevant.

But thanks anyway.

You seem unnecessarily aggressive and argumentative so I'm going to leave you to it, if you get bored you could always try reading the forum rules which are here: https://forum.thaivisa.com/terms/

 

Byee!

 

[cmarshall]

3 minutes ago, saengd said:

You seem unnecessarily aggressive and argumentative so I'm going to leave you to it, if you get bored you could always try reading the forum rules which are here: https://forum.thaivisa.com/terms/

 

Byee!

 

If you would like to address your misconceptions on the economies of SE Asia and the strategies of development they have attempted and the models they based them on, including Thailand, there are many books that would be of help, such as this one, for example.  

 

https://www.amazon.com/Asian-Godfathers-Money-Power-Southeast-ebook/dp/B008V4621S/ref=sr_1_2?keywords=joe+studwell&qid=1579054752&sr=8-2

[Roy Baht]

On 1/14/2020 at 9:37 AM, Brunolem said:

It's as if the country wanted to play for both teams at the same time.

That's nothing new. Look at Thailand in World War 2.

[intheheartoftheheart]

Does anyone have access to up to date stats on Thailand's demographic projections?

 

I know South Korea's are dismal (they're importing Vietnamese slave-brides into the countryside, paying young strivers in the cities to breed despite the tiny officetels they've forced them into). A graying population does not bode well.

 

China's aren't much better.

 

What about Thailand?

 

Demography and Geography play a lot into future economic projections as well.  

[intheheartoftheheart]

Expanding upon this: South Korea, China, Japan, Canada, the United Kingdom, Germany, Italy, Spain. They have the largest work-force and the largest tax base that they are ever going to have right now. It shrinks every year from now on.

 

And with the exception of Spain and Britain, every country on that list is already past the point of possible demographic regeneration (aside from a massive importation of non-native proles with all the goodies that entails) .

 

These are terminal countries.

 

Where is Thailand? Indonesia? Bangladesh? Vietnam?

 

Edited January 15, 2020 by intheheartoftheheart

[NorthernRyland]

On 1/11/2020 at 7:50 PM, 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.

Well Thais will spend 3 full day wages on a single meal and that's in a nutshell why Thailand is failing, because they won't invest in the future but merely spend on disposable consumer goods and food.

[NorthernRyland]

On 1/13/2020 at 7:42 AM, cmarshall said:

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.

As a thought experiment what would happen if you magically removed every single "elite" from Thailand? How would the average person actually benefit from them not being there? Does the food stall worker suddenly become the owner of a Tesco Lotus or something?

 

I'd bet that if you removed the upper class the lower class would suffer greatly and wouldn't be able to recreate the existing business structures on their own. Not just Thailand but the entire world for that matter.

[NorthernRyland]

On 1/13/2020 at 7:42 AM, cmarshall said:

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.

I like this theory a lot. The average Thai person in my experience does not have any real ambition to improve their situation in life even though they like to fantasize about how great it would be to be rich.

 

As an example the people in my housing project have stray dogs they allow to run around and poo in front of their houses and on the grass where they play. They don't even bother to pick it up and just ignore it. That's a metaphor for how Thais see maintenance and development in general, i.e. it's not worth investing time/effort to make marginal gains which then accumulate over generations.

[ChaiyaTH]

5 hours ago, saengd said:

You seem unnecessarily aggressive and argumentative so I'm going to leave you to it, if you get bored you could always try reading the forum rules which are here: https://forum.thaivisa.com/terms/

The fact you refer to this, and keep yourself busy with this, says so much more about you than the person you complain about. Get a life.

[ChaiyaTH]

If you ask me, Thailand is not even close to the 'Middle Income Status' and will not get there anytime soon either.
Vietnam is going to take over, that is really just a matter of time. People seem to underestimate how powerful the trade deal with Europe etc. is as well, TH lost their chances, which is really a shame and huge missed opportunity for a country that was on the right track for many years until the coup.

The same counts for TH their ruined chance on Digital / IT level, by not providing the right visas, the future is all IT / AI / Robots etc, VN walks away with it again.

 

In terms of TH future; richer will just get richer, a minority of a few million have half decent to good jobs, the rest will remain poor for another X decades.

Edited January 15, 2020 by ChaiyaTH

[CNXexpat]

27 minutes ago, genericptr said:

Well Thais will spend 3 full day wages on a single meal and that's in a nutshell why Thailand is failing, because they won't invest in the future but merely spend on disposable consumer goods and food.

Do you can imagine that they earn much more than the minimum wage and can pay it so easily like you and me?

[ChaiyaTH]

1 minute ago, CNXexpat said:

Do you can imagine that they earn much more than the minimum wage and can pay it so easily like you and me?

Some can indeed but most just have a special promotion from DTAC, True or one of the VISA cards and go once a month only. 
With a huge population, it just seems to always be busy, we tend to forget that the individuals themselves only go out 1-2 times a month.

Edited January 15, 2020 by ChaiyaTH

[NorthernRyland]

24 minutes ago, CNXexpat said:

Do you can imagine that they earn much more than the minimum wage and can pay it so easily like you and me?

Sure but the point still stands that Thais that appear wealthy may doing things we wouldn't expect. I've watched Thais drive nice cars into totally broken down junk houses with dirt lawns.